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 811-5696
RIVERSOURCE GLOBAL 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: 10/31
Date of reporting period: 4/30
Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
ABSOLUTE RETURN CURRENCY AND INCOME FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE
RETURN.
(ADVANCED ALPHA(R) STRATEGIES ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 7
Portfolio of Investments........... 9
Statement of Assets and
Liabilities...................... 15
Statement of Operations............ 16
Statements of Changes in Net
Assets........................... 17
Financial Highlights............... 19
Notes to Financial Statements...... 26
Approval of Investment Management
Services Agreement............... 40
Proxy Voting....................... 43
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Absolute Return Currency and Income Fund Class A shares declined
1.27% (excluding sales charge) for the six month period ended April 30, 2009.
> The Fund underperformed its benchmark, the Citigroup 3-Month U.S. Treasury
Bill Index, which rose 0.19% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
inception
6 months* 1 year 6/15/06
- ------------------------------------------------------------------
RiverSource Absolute Return Currency
and Income Fund Class A (excluding
sales charge) -1.27% +1.74% +3.54%
- ------------------------------------------------------------------
Citigroup 3-month U.S. Treasury Bill
Index(1) (unmanaged) +0.19% +1.01% +3.30%
- ------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 3.00% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
(1) The Citigroup 3-month U.S. Treasury Bill Index, an unmanaged index,
represents the performance of three-month Treasury bills. The index reflects
reinvestment of all distributions and changes in market prices.
- --------------------------------------------------------------------------------
2 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR INCEPTION
Class A (inception 6/15/06) -1.27% +1.74% +3.54%
- --------------------------------------------------------------------
Class B (inception 6/15/06) -1.67% +0.88% +2.85%
- --------------------------------------------------------------------
Class C (inception 6/15/06) -1.67% +0.86% +2.85%
- --------------------------------------------------------------------
Class I (inception 6/15/06) -1.05% +2.14% +3.97%
- --------------------------------------------------------------------
Class R4 (inception 6/15/06) -1.16% +2.04% +3.81%
- --------------------------------------------------------------------
Class R5 (inception 10/18/07) -1.15% +1.91% -0.66%
- --------------------------------------------------------------------
Class W (inception 12/1/06) -1.37% +1.59% +2.85%
- --------------------------------------------------------------------
With sales charge
Class A (inception 6/15/06) -4.24% -1.30% +1.79%
- --------------------------------------------------------------------
Class B (inception 6/15/06) -6.56% -4.12% +1.54%
- --------------------------------------------------------------------
Class C (inception 6/15/06) -2.65% -0.14% +2.85%
- --------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR INCEPTION
Class A (inception 6/15/06) +0.83% +1.87% +3.61%
- --------------------------------------------------------------------
Class B (inception 6/15/06) +0.46% +1.06% +2.93%
- --------------------------------------------------------------------
Class C (inception 6/15/06) +0.45% +1.12% +2.94%
- --------------------------------------------------------------------
Class I (inception 6/15/06) +0.98% +2.19% +4.02%
- --------------------------------------------------------------------
Class R4 (inception 6/15/06) +0.80% +2.11% +3.84%
- --------------------------------------------------------------------
Class R5 (inception 10/18/07) +0.97% +2.16% -0.77%
- --------------------------------------------------------------------
Class W (inception 12/1/06) +0.72% +1.70% +2.90%
- --------------------------------------------------------------------
With sales charge
Class A (inception 6/15/06) -2.18% -1.18% +1.81%
- --------------------------------------------------------------------
Class B (inception 6/15/06) -4.53% -3.94% +1.59%
- --------------------------------------------------------------------
Class C (inception 6/15/06) -0.55% +0.12% +2.94%
- --------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 3.00%. 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, Class R5 and Class W shares. Class I, Class R4
and Class R5 are available to institutional investors only. Class W shares are
offered through qualifying discretionary accounts.
*Not annualized.
**For Class B shares purchased on or after June 13, 2009 the CDSC percentage for
the third year will be 3%.
- --------------------------------------------------------------------------------
4 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund expenses
- -----------------------------------------
Class A 1.39%
- -----------------------------------------
Class B 2.16%
- -----------------------------------------
Class C 2.15%
- -----------------------------------------
Class I 1.03%
- -----------------------------------------
Class R4 1.34%
- -----------------------------------------
Class R5 1.07%
- -----------------------------------------
Class W 1.50%
- -----------------------------------------
</Table>
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
The RiverSource Absolute Return Currency and Income Fund is designed for
investors with an above average risk tolerance. Risks associated with the Fund
include, but are not limited to, derivatives risk, counterparty risk, interest
rate risk, credit risk, and tax risk. Derivative instruments are financial
instruments that have a value dependent on the value of something else, such as
one or more underlying securities. Gains or losses may be substantial, because a
relatively small price movement in an underlying security may result in a
substantial gain or loss for the Fund. A counterparty to a financial instrument
entered into by the Fund may become bankrupt or otherwise fail to perform its
obligations due to financial difficulties. In general, bond prices rise when
interest rates fall and vice versa. This effect is usually more pronounced for
longer-term securities. The issuer of a security could default or otherwise
become unable or unwilling to honor a financial obligation, and the Fund may be
unable to recover its investment or may only obtain a limited or delayed
recovery. Gains from some of the Fund's foreign currency-denominated positions
may not meet Treasury Department regulations for "qualifying income," in which
case, the Fund might not qualify as a regulated investment company for one or
more years, requiring the Fund's Board of Directors to authorize a significant
change in investment strategy or Fund liquidation. A significant portion of the
Fund is invested in forward currency contracts, which are subject to a number of
risks. Gains and losses may be substantial if prices do not move in the
direction anticipated. See the Fund's prospectus for information on these and
other risks associated with the Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
SECTOR BREAKDOWN (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Asset-Backed 2.0%
- ------------------------------------------------
Commercial Mortgage-Backed 0.5%
- ------------------------------------------------
Consumer Discretionary 1.0%
- ------------------------------------------------
Energy 0.5%
- ------------------------------------------------
FDIC-Insured Debt(1) 0.6%
- ------------------------------------------------
Financials 1.0%
- ------------------------------------------------
Foreign Government 0.3%
- ------------------------------------------------
Health Care 0.5%
- ------------------------------------------------
Industrials 1.0%
- ------------------------------------------------
Mortgage-Backed 0.2%
- ------------------------------------------------
Telecommunication 0.5%
- ------------------------------------------------
Other(2) 91.9%
- ------------------------------------------------
</Table>
(1) Debt guaranteed under the FDIC's Temporary Liquidity Guarantee Program
(TLGP).
(2) Cash & Cash Equivalents.
QUALITY BREAKDOWN (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
AAA bonds 3.5%
- ------------------------------------------------
AA bonds 0.8%
- ------------------------------------------------
A bonds 2.2%
- ------------------------------------------------
BBB bonds 1.5%
- ------------------------------------------------
Non-investment grade bonds 0.1%
- ------------------------------------------------
A1/P1/F1 short-term securities 91.9%
- ------------------------------------------------
</Table>
Bond ratings apply to the underlying holdings of the Fund and not the Fund
itself. Whenever possible, the Standard and Poor's rating is used to determine
the credit quality of a security. Standard and Poor's rates the creditworthiness
of corporate bonds, with 15 categories, ranging from AAA (highest) to D
(lowest). Ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
If Standard and Poor's doesn't rate a security, then Moody's rating is used.
RiverSource Investments, LLC, the Fund's investment manager, rates a security
using an internal rating system when Moody's doesn't provide a rating. Ratings
for 0.2% of the bond portfolio assets were determined through internal analysis.
For short-term securities, A1/P1/F1 represent the rating designation with the
highest quality within the Standard and Poor's, Moody's, and Fitch short-term
credit rating scales, respectively.
- --------------------------------------------------------------------------------
6 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the 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 April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 7
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 987.30 $ 6.75 1.37%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 6.85 1.37%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 983.30 $10.47 2.13%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.23 $10.64 2.13%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 983.30 $10.43 2.12%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.28 $10.59 2.12%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 989.50 $ 4.98 1.01%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.79 $ 5.06 1.01%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 988.40 $ 6.51 1.32%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.25 $ 6.61 1.32%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 988.50 $ 5.23 1.06%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.54 $ 5.31 1.06%
- -------------------------------------------------------------------------------------------
Class W
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 986.30 $ 7.14 1.45%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.60 $ 7.25 1.45%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: -1.27%
for Class A, -1.67% for Class B, -1.67% for Class C, -1.05% for Class I,
-1.16% for Class R4, -1.15% for Class R5 and -1.37% for Class W.
- --------------------------------------------------------------------------------
8 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (8.1%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
SUPRANATIONAL (0.3%)
Inter-American Development Bank
03-16-11 1.52% $2,000,000(c,g) $1,998,812
- -------------------------------------------------------------------------------------
ASSET-BACKED (2.2%)
Capital Auto Receivables Asset Trust
Series 2006-SN1A Cl A4B
03-20-10 0.56 696,605(d,g) 691,711
Capital Auto Receivables Asset Trust
Series 2007-SN2 Cl A2
01-15-10 1.34 136,538(d,g) 136,200
Citibank Credit Card Issuance Trust
Series 2007-A1 Cl A1
03-22-12 1.22 1,000,000(g) 981,927
Countrywide Home Equity Loan Trust
Series 2005-H Cl 2A (FGIC)
12-15-35 0.69 171,013(e,g) 68,403
Ford Credit Floorplan Master Owner Trust
Series 2006-3 Cl A
06-15-11 0.63 900,000(g) 859,149
Keycorp Student Loan Trust
Series 2003-A Cl 2A2 (MBIA)
10-25-25 1.40 416,962(e,g) 403,867
Northstar Education Finance
Series 2007-1 Cl A2
01-29-46 1.09 750,000(g) 733,107
SLC Student Loan Trust
Series 2006-A Cl A4
01-15-19 1.25 1,800,000(g) 1,713,938
SLM Student Loan Trust
Series 2004-3 Cl A3
04-25-16 1.18 138,327(g) 138,158
SLM Student Loan Trust
Series 2005-5 Cl A1
01-25-18 1.09 5,696(g) 5,687
SLM Student Loan Trust
Series 2005-5 Cl A2
10-25-21 1.17 1,000,000(g) 970,000
SLM Student Loan Trust
Series 2005-8 Cl A2
07-25-22 1.18 1,415,618(g) 1,390,060
SLM Student Loan Trust
Series 2005-B Cl A1
12-16-19 1.36 300,953(g) 283,272
SLM Student Loan Trust
Series 2006-2 Cl A2
01-25-17 1.09 13,439(g) 13,422
SLM Student Loan Trust
Series 2006-5 Cl A2
07-25-17 1.08 294,033(g) 292,517
SLM Student Loan Trust
Series 2006-A Cl A1
03-16-20 1.34 774,298(g) 741,149
SLM Student Loan Trust
Series 2006-A Cl A2
12-15-20 1.40 2,000,000(g) 1,807,500
SLM Student Loan Trust
Series 2006-C Cl A2
09-15-20 1.37 1,000,000(g) 932,969
SLM Student Loan Trust
Series 2007-2 Cl A2
07-25-17 1.09 1,000,000(g) 935,781
---------------
Total 13,098,817
- -------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED (0.5%)(f)
GS Mtge Securities II
Series 2007-EOP Cl A2
03-06-20 0.62 1,200,000(d,g) 867,776
GS Mtge Securities II
Series 2007-EOP Cl A3
03-06-20 0.67 1,770,000(d,g) 1,241,086
Morgan Stanley Dean Witter Capital I
Series 2002-TOP7 Cl A1
01-15-39 5.38 971,305 969,554
---------------
Total 3,078,416
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 9
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
MORTGAGE-BACKED (0.2%)(f)
Deutsche Bank Alternate Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR6 Cl A3
02-25-37 0.53% $216,212(g) $202,992
Downey Savings & Loan Assn Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR2 Cl 2AB1
11-19-37 0.54 361,206(j) 304,836
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-12 Cl 2A11
01-19-38 0.54 385,786(j) 350,152
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-8 Cl 2A1B
08-21-36 0.70 897,065(j) 172,165
---------------
Total 1,030,145
- -------------------------------------------------------------------------------------
AUTOMOTIVE (0.4%)
American Honda Finance
Sr Unsecured
02-05-10 1.63 2,500,000(d,g) 2,462,958
- -------------------------------------------------------------------------------------
BANKING (1.0%)
ANZ Natl Intl
Bank Guaranteed
08-07-09 1.28 750,000(c,d,g) 749,655
Bank of New York Mellon
Sr Unsecured
02-05-10 1.63 3,000,000(g) 2,990,416
Citigroup
Sr Unsecured
06-09-09 1.42 640,000(g) 637,226
US Bancorp
Sr Unsecured
02-04-10 1.63 1,250,000(g) 1,243,290
---------------
Total 5,620,587
- -------------------------------------------------------------------------------------
BROKERAGE (--%)
Lehman Brothers Holdings
Sr Unsecured
10-22-09 0.00 640,000(b,g,i) 89,600
- -------------------------------------------------------------------------------------
CONSTRUCTION MACHINERY (1.1%)
Caterpillar Financial Services
Sr Unsecured
02-08-10 1.69 2,000,000(g) 1,972,144
John Deere Capital
Sr Unsecured
01-18-11 1.81 4,500,000(g) 4,376,511
---------------
Total 6,348,655
- -------------------------------------------------------------------------------------
HEALTH CARE (0.4%)
Cardinal Health
Sr Unsecured
10-02-09 1.46 2,080,000(g) 2,048,486
- -------------------------------------------------------------------------------------
HEALTH CARE INSURANCE (0.3%)
UnitedHealth Group
Sr Unsecured
06-21-10 1.41 1,500,000(g) 1,470,227
- -------------------------------------------------------------------------------------
INDEPENDENT ENERGY (0.5%)
Anadarko Petroleum
Sr Unsecured
09-15-09 1.72 3,000,000(g) 2,995,458
- -------------------------------------------------------------------------------------
LIFE INSURANCE (0.1%)
Pricoa Global Funding I
12-15-09 1.37 400,000(d,g) 376,796
- -------------------------------------------------------------------------------------
MEDIA CABLE (0.5%)
Comcast
07-14-09 1.44 2,920,000(g) 2,917,676
- -------------------------------------------------------------------------------------
RETAILERS (0.1%)
Home Depot
Sr Unsecured
12-16-09 1.45 750,000(g) 742,624
- -------------------------------------------------------------------------------------
WIRELINES (0.5%)
Telefonica Emisiones
06-19-09 1.59 3,190,000(c,g) 3,183,474
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $50,501,071) $47,462,731
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
10 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
FDIC-INSURED DEBT (0.7%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
U.S. AGENCIES
Bank of America
FDIC Govt Guaranty
06-22-12 1.43% $2,000,000(g) $2,001,400
General Electric Capital
FDIC Govt Guaranty
03-11-11 1.41 2,000,000(g) 1,995,946
- -------------------------------------------------------------------------------------
TOTAL FDIC-INSURED DEBT
(Cost: $4,000,000) $3,997,346
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (100.1%)
ISSUER SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 586,000,971(h) $586,000,971
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $586,000,971) $586,000,971
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $640,502,042)(k) $637,461,048
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------
May 28, 2009 69,691,000 56,478,435 $-- $(1,948,868)
Canadian Dollar U.S. Dollar
- ---------------------------------------------------------------------------------------------
May 28, 2009 65,180,000 85,548,098 -- (705,639)
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------
May 28, 2009 163,349,000 139,454,812 -- (3,704,842)
Swiss Franc U.S. Dollar
- ---------------------------------------------------------------------------------------------
May 28, 2009 139,981,778 13,758,249,000 -- (407,052)
U.S. Dollar Japanese Yen
- ---------------------------------------------------------------------------------------------
May 28, 2009 58,070,668 102,061,000 (454,578)
U.S. Dollar New Zealand Dollar
- ---------------------------------------------------------------------------------------------
May 28, 2009 84,242,338 572,836,000 2,963,696 --
U.S. Dollar Norwegian Krone
- ---------------------------------------------------------------------------------------------
Total $2,963,696 $(7,220,979)
- ---------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted. At April 30, 2009, the value of foreign securities represented 1.0%
of net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
transactions exempt from registration, normally to qualified institutional
buyers. At April 30, 2009, the value of these securities amounted to
$6,526,182 or 1.1% of net assets.
(e) The following abbreviations are used in the portfolio security descriptions
to identify the insurer of the issue:
<Table>
FGIC -- Financial Guaranty Insurance Company
MBIA -- MBIA Insurance Corporation
</Table>
(f) Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities and
collateralized mortgage obligations. These securities may be issued or
guaranteed by U.S. government agencies or instrumentalities, or by private
issuers, generally originators and investors in mortgage loans, including
savings associations, mortgage bankers, commercial banks, investment
bankers and special purpose entities. The maturity dates shown represent
the original maturity of the underlying obligation. Actual maturity may
vary based upon prepayment activity on these obligations. Unless otherwise
noted, the coupon rates presented are fixed rates.
(g) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30,
2009.
(h) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(i) This position is in bankruptcy.
(j) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on April 30, 2009.
(k) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $640,502,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $6,000
Unrealized depreciation (3,047,000)
-----------------------------------------------------------
Net unrealized depreciation $(3,041,000)
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
12 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
---------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------
Investments in
securities $586,000,971 $51,109,925 $350,152 $637,461,048
Other financial
instruments* -- (4,257,283) -- (4,257,283)
- ----------------------------------------------------------------------------------
Total $586,000,971 $46,852,642 $350,152 $633,203,765
- ----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as forwards,
which are valued at the unrealized appreciation (depreciation) on the
instrument.
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
INVESTMENTS IN
SECURITIES
- ---------------------------------------------------------------
Balance as of Oct. 31, 2008 $2,389,080
Accrued discounts/premiums 445
Realized gain (loss) (512,642)
Change in unrealized appreciation
(depreciation) 400,901
Net purchases (sales) (1,927,632)
Transfers in and/or out of Level 3 --
- ---------------------------------------------------------------
Balance as of April 30, 2009 $350,152
- ---------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
14 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $54,501,071) $ 51,460,077
Affiliated money market fund (identified cost $586,000,971) 586,000,971
- --------------------------------------------------------------------------------------
Total investments in securities (identified cost $640,502,042) 637,461,048
Capital shares receivable 922,518
Dividends and accrued interest receivable 233,526
Receivable for investment securities sold 3,773,597
Unrealized appreciation on forward foreign currency contracts 2,963,696
- --------------------------------------------------------------------------------------
Total assets 645,354,385
- --------------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 46,245,924
Payable for investment securities purchased 6,494,204
Unrealized depreciation on forward foreign currency contracts 7,220,979
Accrued investment management services fees 14,340
Accrued distribution fees 3,097
Accrued transfer agency fees 1,809
Accrued administrative services fees 1,277
Other accrued expenses 84,066
- --------------------------------------------------------------------------------------
Total liabilities 60,065,696
- --------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $585,288,689
- --------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 597,692
Additional paid-in capital 597,672,176
Excess of distributions over net investment income (2,135,629)
Accumulated net realized gain (loss) (3,547,273)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (7,298,277)
- --------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $585,288,689
- --------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $182,180,287 18,615,651 $9.79(1)
Class B $ 4,077,258 418,436 $9.74
Class C $ 10,687,738 1,098,206 $9.73
Class I $179,674,190 18,305,561 $9.82
Class R4 $ 27,399 2,796 $9.80
Class R5 $ 9,242 942 $9.81
Class W $208,632,575 21,327,604 $9.78
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $10.09. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 3.00%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 15
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest 807,397
Income distributions from affiliated money market fund 1,510,368
- -------------------------------------------------------------------------
Total income 2,317,765
- -------------------------------------------------------------------------
Expenses:
Investment management services fees 2,995,048
Distribution fees
Class A 235,016
Class B 20,374
Class C 51,678
Class W 349,635
Transfer agency fees
Class A 105,777
Class B 2,431
Class C 5,964
Class R4 6
Class R5 2
Class W 279,708
Administrative services fees 264,778
Plan administration services fees -- Class R4 32
Compensation of board members 11,457
Custodian fees 17,360
Printing and postage 33,890
Registration fees 29,831
Professional fees 23,419
Other 9,117
- -------------------------------------------------------------------------
Total expenses 4,435,523
Expenses waived/reimbursed by the Investment Manager and
its affiliates (13)
Earnings and bank fee credits on cash balances (343)
- -------------------------------------------------------------------------
Total net expenses 4,435,167
- -------------------------------------------------------------------------
Investment income (loss) -- net (2,117,402)
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (930,780)
Foreign currency transactions (6,872,712)
- -------------------------------------------------------------------------
Net realized gain (loss) on investments (7,803,492)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 1,390,287
- -------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (6,413,205)
- -------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(8,530,607)
- -------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
16 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ (2,117,402) $ 7,642,623
Net realized gain (loss) on investments (7,803,492) 8,195,721
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies 1,390,287 (8,644,591)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (8,530,607) 7,193,753
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (3,686) (1,692,140)
Class B -- (6,719)
Class C -- (44,738)
Class I (38,612) (4,161,402)
Class R4 (1) (1,188)
Class R5 (2) (203)
Class W -- (1,798,725)
Net realized gain
Class A (1,035,644) (1,516,443)
Class B (22,568) (355)
Class C (55,949) (52,812)
Class I (1,077,400) (4,183,105)
Class R4 (115) (1,945)
Class R5 (51) (334)
Class W (1,582,466) (175)
- ---------------------------------------------------------------------------------------------
Total distributions (3,816,494) (13,460,284)
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 17
STATEMENTS OF CHANGES IN NET ASSETS (continued) -------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 64,910,433 $ 218,918,102
Class B shares 1,802,004 4,089,168
Class C shares 3,259,464 10,433,303
Class I shares 14,403,416 296,949,913
Class R4 shares 10,000 48,000
Class W shares 28,748,253 339,484,475
Reinvestment of distributions at net asset value
Class A shares 1,016,629 3,137,018
Class B shares 22,416 6,562
Class C shares 48,467 87,221
Class I shares 1,115,956 8,343,932
Class R4 shares 61 2,560
Class W shares 1,582,439 1,650,890
Payments for redemptions
Class A shares (55,956,952) (53,765,268)
Class B shares (927,598) (877,774)
Class C shares (1,856,322) (1,255,226)
Class I shares (34,604,140) (219,491,271)
Class R4 shares (3,500) (64,521)
Class W shares (120,396,302) (38,075,600)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions (96,825,276) 569,621,484
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (109,172,377) 563,354,953
Net assets at beginning of period 694,461,066 131,106,113
- ---------------------------------------------------------------------------------------------
Net assets at end of period $ 585,288,689 $ 694,461,066
- ---------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (2,135,629) $ 24,074
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
18 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(m) 2008 2007 2006(b)
Net asset value, beginning of period $9.97 $10.58 $10.09 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.03)(c) .15(c) .41(c) .12
Net gains (losses) (both realized and
unrealized) (.10) (.22) .57 .11
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.13) (.07) .98 .23
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(d) (.18) (.39) (.12)
Distributions from realized gains (.05) (.36) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.54) (.49) (.12)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.79 $9.97 $10.58 $10.09
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $182 $176 $9 $10
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e),(f) 1.37%(g) 1.39% 1.36% 1.59%(g)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(f),(h),(i) 1.37%(g) 1.39% 1.36% 1.37%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.69%)(g) 1.50% 3.98% 3.89%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36% 12%
- --------------------------------------------------------------------------------------------------------------
Total return(j) (1.27%)(k) (.57%) 9.96%(l) 2.37%(k)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(f) 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.
(g) Adjusted to an annual basis.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(i) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(j) Total return does not reflect payment of a sales charge.
(k) Not annualized.
(l) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(m) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 19
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(l) 2008 2007 2006(b)
Net asset value, beginning of period $9.96 $10.58 $10.09 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.07)(c) .04(c) .34(c) .09
Net gains (losses) (both realized and
unrealized) (.10) (.18) .59 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.17) (.14) .93 .21
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.12) (.34) (.09)
Distributions from realized gains (.05) (.36) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.48) (.44) (.09)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.74 $9.96 $10.58 $10.09
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $3 $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.13%(f) 2.16% 2.10% 2.38%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.13%(f) 2.16% 2.10% 2.16%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.47%)(f) .38% 3.26% 3.11%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36% 12%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (1.67%)(j) (1.35%) 9.38%(k) 2.16%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(l) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(l) 2008 2007 2006(b)
Net asset value, beginning of period $9.95 $10.57 $10.09 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.07)(c) .06(c) .34(c) .09
Net gains (losses) (both realized and
unrealized) (.10) (.20) .58 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.17) (.14) .92 .21
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.12) (.34) (.09)
Distributions from realized gains (.05) (.36) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.48) (.44) (.09)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.73 $9.95 $10.57 $10.09
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $11 $9 $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.12%(f) 2.15% 2.12% 2.38%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.12%(f) 2.15% 2.12% 2.16%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.45%)(f) .66% 3.42% 3.11%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36% 12%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (1.67%)(j) (1.31%) 9.37%(k) 2.16%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(l) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 21
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(k) 2008 2007 2006(b)
Net asset value, beginning of period $9.98 $10.59 $10.10 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02)(c) .21(c) .44(c) .13
Net gains (losses) (both realized and
unrealized) (.08) (.24) .59 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.10) (.03) 1.03 .25
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.22) (.44) (.13)
Distributions from realized gains (.05) (.36) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.58) (.54) (.13)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.82 $9.98 $10.59 $10.10
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $180 $202 $122 $68
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.01%(f) 1.03% 1.07% 1.34%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.01%(f) 1.03% 1.07% 1.12%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.32%)(f) 2.10% 4.30% 4.37%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36% 12%
- --------------------------------------------------------------------------------------------------------------
Total return (1.05%)(i) (.25%) 10.49%(j) 2.56%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(i) Not annualized.
(j) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(k) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(l) 2008 2007 2006(b)
Net asset value, beginning of period $9.97 $10.58 $10.09 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.03)(c) .22(c) .42(c) .13
Net gains (losses) (both realized and
unrealized) (.09) (.26) .59 .11
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.12) (.04) 1.01 .24
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(d) (.21) (.42) (.13)
Distributions from realized gains (.05) (.36) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.57) (.52) (.13)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.80 $9.97 $10.58 $10.09
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e),(f) 1.32%(g) 1.34% 1.36% 1.45%(g)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(f),(h),(i) 1.21%(g) 1.09% 1.31% 1.23%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.55%)(g) 2.27% 4.13% 4.04%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36% 12%
- --------------------------------------------------------------------------------------------------------------
Total return (1.16%)(j) (.26%) 10.27%(k) 2.42%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(f) 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.
(g) Adjusted to an annual basis.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(i) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(j) Not annualized.
(k) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(l) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007(b)
Net asset value, beginning of period $9.98 $10.59 $10.58
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) (.02) .22 .02
Net gains (losses) (both realized and
unrealized) (.09) (.26) .03
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.11) (.04) .05
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.21) (.04)
Distributions from realized gains (.05) (.36) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.57) (.04)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81 $9.98 $10.59
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.06%(f) 1.07% 1.06%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.39%)(f) 2.23% 4.43%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.15%)(g) (.30%) .44%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Oct. 18, 2007 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007(b)
Net asset value, beginning of period $9.97 $10.58 $10.13
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) (.04) .11 .36
Net gains (losses) (both realized and
unrealized) (.10) (.19) .55
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) (.08) .91
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.17) (.36)
Distributions from realized gains (.05) (.36) (.10)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.53) (.46)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.78 $9.97 $10.58
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $209 $304 $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.45%(f) 1.50% 1.54%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.76%)(f) 1.09% 3.88%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 39% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.37%)(g) (.66%) 9.21%(g),(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended April 30, 2009 and for the year ended Oct.
31, 2008.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) During the period ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, the total return would have been lower by 0.05%.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 25
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Absolute Return Currency and Income Fund (the Fund) is a series of
RiverSource Global Series, Inc. and is registered under the Investment Company
Act of 1940 (as amended) as a non-diversified, open-end management investment
company. RiverSource Global 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 short-term
debt obligations and forward foreign currency contracts.
The Fund offers Class A, Class B, Class C, Class I, Class R4, Class R5 and Class
W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership. Class B shares are currently closed to investors for new
purchases.
- - Class I, Class R4 and Class R5 shares are sold without a front-end sales
charge or CDSC and are offered to qualifying institutional investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares, and the Investment Manager owned 100% of Class R5 shares. At
April 30, 2009, the Investment Manager and the RiverSource affiliated funds-of-
funds owned approximately 31% 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.
- --------------------------------------------------------------------------------
26 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the NYSE.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At April 30, 2009, the Fund had no outstanding forward-commitments.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the Fund may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of being unable to enter into a closing transaction
if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. 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
- --------------------------------------------------------------------------------
28 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
paid. At April 30, 2009, and for the six months then ended, the Fund had no
outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires. At April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Fund will enter into forward foreign currency exchange contracts to produce
incremental earnings. The net U.S. dollar value of foreign currency underlying
all contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the credit
risk that the counterparty will not complete its contract obligations.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
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 recognition of
unrealized appreciation (depreciation) for certain derivative investments. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At April 30, 2009, the Fund did not
- --------------------------------------------------------------------------------
30 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
own nor was it a party to any credit derivative contracts within the scope of
these amendments.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within the Fund's financial statements.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, when
available, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
is a percentage of the Fund's average daily net assets that declines from 0.89%
to 0.70% annually as the Fund's assets increase. The management fee for the six
months ended April 30, 2009 was 0.89% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $2,910.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $20.50 for Class A, $21.50
for Class B and $21.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R4 and Class R5 shares and an
annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets
attributable to Class W shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
- --------------------------------------------------------------------------------
32 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class W shares and a fee at
an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, up
to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $187,000 and $54,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$84,548 for Class A, $720 for Class B and $5,916 for Class C for the six months
ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*), were as follows:
<Table>
Class R4............................................ 1.21%
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4............................................ $13
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
acquired funds*), will not exceed the following percentage of the class average
daily net assets:
<Table>
Class R4............................................ 1.35%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the six months ended April 30, 2009, the Fund's custodian and transfer
agency fees were reduced by $343 as a result of earnings and bank fee credits
from overnight cash balances. Effective Dec. 15, 2008, the Fund pays custodian
fees to JPMorgan Chase Bank, N.A. For the period from Nov. 1, 2008 to Dec. 15,
2008, the Fund paid custodian fees amounting to $1,555 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 $6,000,000 and $24,367,161, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 6,567,827 103,312 (5,681,085) 990,054
Class B 182,564 2,280 (94,574) 90,270
Class C 331,072 4,936 (189,068) 146,940
Class I 1,457,906 113,149 (3,518,345) (1,947,290)
Class R4 1,018 6 (356) 668
Class W 2,914,708 160,817 (12,241,848) (9,166,323)
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
34 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 21,957,179 315,740 (5,483,597) 16,789,322
Class B 416,595 671 (90,100) 327,166
Class C 1,050,240 8,774 (128,574) 930,440
Class I 30,071,137 837,081 (22,170,858) 8,737,360
Class R4 4,723 256 (6,584) (1,605)
Class W 34,206,023 168,788 (3,881,378) 30,493,433
- ----------------------------------------------------------------------------------
</Table>
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 $126,353,528 and $122,864,037, respectively, for the six
months ended April 30, 2009. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
6. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
amount of the credit facility. The Fund had no borrowings during the six months
ended April 30, 2009.
7. INVESTMENTS IN STRUCTURED INVESTMENT VEHICLES
In 2007 and 2008 structured investment vehicles ("SIVs") generally experienced a
significant decrease in liquidity as a result of the reduction in demand for
asset-backed commercial paper as well as the lack of liquidity and overall
volatility in the markets for the collateral underlying these investment
structures. During the six months ended April 30, 2009, the Fund closed its only
remaining SIV position which was in WhistleJacket Capital LLC (WJC). As of April
30, 2009, the Fund had no SIV positions remaining.
WJC breached a financial covenant on Feb. 11, 2008 relating to the market value
of its underlying collateral, resulting in the occurrence of an "enforcement
event." This resulted in the appointment of receivers on Feb. 12, 2008. On Feb.
15, 2008, the receivers declared WJC to be insolvent. The Fund's holding in WJC
went into default as of its Feb. 25, 2008 maturity date ($3 million). The Fund
received a partial payment of $0.7 million from WJC on Oct. 27, 2008, reducing
the remaining outstanding principal amount for WJC to $2.3 million. On April 29,
2009, the Fund chose the cash payout option in the restructuring of WJC and
received cash proceeds totaling $1.8 million, resulting in a realized loss of
$0.5 million on the position which is reflected in the Statement of Operations.
8. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN CURRENCY RISK
The Fund's exposure to foreign currencies subjects the Fund to constantly
changing exchange rates and the risk that those currencies will decline in value
relative to the U.S. dollar, or, in the case of short positions, that the U.S.
dollar will decline in value relative to the currency being sold forward.
Currency rates in foreign countries may fluctuate significantly over short
periods of time for a number of reasons, including changes in interest rates and
economic or political developments in the U.S. or abroad.
GEOGRAPHIC CONCENTRATION RISK
The Fund may be particularly susceptible to economic, political or regulatory
events affecting companies and countries within the specific geographic region
in
- --------------------------------------------------------------------------------
36 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
which the Fund focuses its investments. Currency devaluations could occur in
countries that have not yet experienced currency devaluation to date, or could
continue to occur in countries that have already experienced such devaluations.
As a result, the Fund may be more volatile than a more geographically
diversified fund.
COUNTERPARTY RISK
The risk that a counterparty to a financial instrument entered into by the Fund
or held by special purpose or structured vehicle becomes bankrupt or otherwise
fails to perform its obligations due to financial difficulties. The Fund may
experience significant delays in obtaining any recovery in a bankruptcy or other
reorganization proceeding. The Fund may obtain only limited recovery or may
obtain no recovery in such circumstances. The Fund will typically enter into
financial instrument transactions with counterparties whose credit rating is
investment grade, or, if unrated, determined to be of comparable quality by the
Investment Manager.
9. 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 (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
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
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. As a result, AEFC was
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New
- --------------------------------------------------------------------------------
38 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
York staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 39
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
40 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
- --------------------------------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index and the net assets of the Fund; and (ii) a
report detailing the Fund's performance over various periods, recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2007 to December 2008. The Board observed that the Fund's investment performance
was appropriate in light of the particular management style and the
exceptionally challenging market conditions involved.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board observed that there has not yet
developed an adequate comparable peer group against which to compare the Fund's
expense ratio. The Board took into account that the management services and
administrative fee schedules were in line with those applicable to other global
fixed income funds in the Fund's family
The Board members considered data showing the Fund's contribution to RiverSource
Investments' profitability. They also reviewed information in the report
comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 41
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
42 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 SEMIANNUAL
REPORT 43
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource is part
of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6512 D (6/09)
</Table>
Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
EMERGING MARKETS BOND FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
RIVERSOURCE EMERGING MARKETS BOND FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH
CURRENT INCOME AND, SECONDARILY, THROUGH CAPITAL
APPRECIATION.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 8
Portfolio of Investments........... 10
Statement of Assets and
Liabilities...................... 17
Statement of Operations............ 19
Statements of Changes in Net
Assets........................... 20
Financial Highlights............... 22
Notes to Financial Statements...... 28
Approval of Investment Management
Services Agreement............... 45
Proxy Voting....................... 48
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Emerging Markets Bond Fund (the Fund) Class A shares increased
25.01% (excluding sales charge) for the six month ended April 30, 2009.
> The Fund outperformed its benchmark, the J.P. Morgan Emerging Markets Bond
Index-Global (J.P. Morgan EMBI-Global), which rose 20.31%.
> The Fund also outperformed the Lipper Emerging Markets Debt Funds Index,
representing the Fund's peer group, which gained 13.90%, during the same
period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
inception
6 months* 1 year 3 years 2/16/06
- ----------------------------------------------------------------------
RiverSource Emerging Markets
Bond Fund Class A (excluding
sales charge) +25.01% -10.26% +1.44% +1.09%
- ----------------------------------------------------------------------
J.P. Morgan EMBI-Global(1)
(unmanaged) +20.31% -4.52% +3.78% +3.24%
- ----------------------------------------------------------------------
Lipper Emerging Markets Debt
Funds Index(2) +13.90% -13.54% +0.06% +0.01%
- ----------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
- --------------------------------------------------------------------------------
2 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
(1) The J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-
Global), an unmanaged index, is based on U.S. dollar-denominated debt
instruments issued by emerging market sovereign and quasi-sovereign
entities, such as Brady bonds, Eurobonds and loans. The index reflects
reinvestment of all distributions and changes in market prices.
(2) The Lipper Emerging Markets Debt Funds Index includes the 10 largest
emerging markets debt funds tracked by Lipper Inc. The index's returns
include reinvested dividends.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 2/16/06) +25.01% -10.26% +1.44% +1.09%
- ------------------------------------------------------------------------
Class B (inception 2/16/06) +24.44% -10.95% +0.64% +0.33%
- ------------------------------------------------------------------------
Class C (inception 2/16/06) +24.47% -10.96% +0.65% +0.32%
- ------------------------------------------------------------------------
Class I (inception 2/16/06) +25.26% -9.84% +1.86% +1.49%
- ------------------------------------------------------------------------
Class R4 (inception 2/16/06) +25.18% -9.98% +1.74% +1.37%
- ------------------------------------------------------------------------
Class W (inception 12/1/06) +24.88% -10.26% N/A -1.19%
- ------------------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) +19.10% -14.50% -0.19% -0.45%
- ------------------------------------------------------------------------
Class B (inception 2/16/06) +19.44% -15.18% -0.51% -0.47%
- ------------------------------------------------------------------------
Class C (inception 2/16/06) +23.47% -11.81% +0.65% +0.32%
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 2/16/06) -8.43% -15.53% -1.01% -1.24%
- ------------------------------------------------------------------------
Class B (inception 2/16/06) -8.88% -16.20% -1.79% -1.99%
- ------------------------------------------------------------------------
Class C (inception 2/16/06) -8.78% -16.20% -1.78% -2.00%
- ------------------------------------------------------------------------
Class I (inception 2/16/06) -8.30% -15.14% -0.60% -0.85%
- ------------------------------------------------------------------------
Class R4 (inception 2/16/06) -8.27% -15.22% -0.72% -0.96%
- ------------------------------------------------------------------------
Class W (inception 12/1/06) -8.52% -15.53% N/A -4.31%
- ------------------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) -12.81% -19.55% -2.60% -2.78%
- ------------------------------------------------------------------------
Class B (inception 2/16/06) -13.32% -20.16% -2.92% -2.80%
- ------------------------------------------------------------------------
Class C (inception 2/16/06) -9.67% -16.99% -1.78% -2.00%
- ------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 4.75%. 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.
** For Class B shares purchased on or after June 13, 2009 the CDSC percentage
for the third year will be 3%.
- --------------------------------------------------------------------------------
4 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
HIGH
MEDIUM QUALITY
X LOW
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
<Table>
Weighted average life(1) 12.1 years
- --------------------------------------
Effective duration(2) 6.4 years
- --------------------------------------
Weighted average bond
rating(3) BBB-
- --------------------------------------
</Table>
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund Net fund
expenses expenses(a)
- -----------------------------------------
Class A 1.41% 1.27%
- -----------------------------------------
Class B 2.19% 2.04%
- -----------------------------------------
Class C 2.18% 2.03%
- -----------------------------------------
Class I 0.91% 0.85%
- -----------------------------------------
Class R4 1.22% 1.15%
- -----------------------------------------
Class W 1.35% 1.30%
- -----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), will not exceed 1.27% for
Class A, 2.04% for Class B, 2.03% for Class C, 0.85% for Class I, 1.15% for
Class R4, and 1.30% for Class W.
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) EFFECTIVE DURATION measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels of
interest rates from two years out to 30 years). Positive duration means that
as rates rise, the price decreases, and negative duration means that as
rates rise, the price increases.
(3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
underlying bonds in the portfolio.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
There are risks associated with an investment in a bond funds, including credit
risk, interest rate risk, and prepayment and extension risk. See the Fund's
prospectus for information on these and other risks associated with the Fund. In
general, bond prices rise when interest rates fall and vice versa. This effect
is usually more pronounced for longer-term securities. Non-investment grade
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
securities, commonly called "high-yield" or "junk" bonds, generally have more
volatile prices and carry more risk to principal and income than investment
grade securities.
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.
COUNTRY DIVERSIFICATION(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Argentina 1.0%
- ------------------------------------------------
Brazil 13.6%
- ------------------------------------------------
Cayman Islands 1.4%
- ------------------------------------------------
Colombia 5.3%
- ------------------------------------------------
Dominican Republic 1.3%
- ------------------------------------------------
El Salvador 2.3%
- ------------------------------------------------
Gabon 0.5%
- ------------------------------------------------
Indonesia 8.8%
- ------------------------------------------------
Iraq 1.0%
- ------------------------------------------------
Kazakhstan 1.8%
- ------------------------------------------------
Luxembourg 4.9%
- ------------------------------------------------
Mexico 11.0%
- ------------------------------------------------
Netherlands 1.7%
- ------------------------------------------------
Panama 0.4%
- ------------------------------------------------
Peru 2.2%
- ------------------------------------------------
Philippine Islands 3.5%
- ------------------------------------------------
Qatar 1.1%
- ------------------------------------------------
Russia 7.3%
- ------------------------------------------------
South Korea 2.5%
- ------------------------------------------------
Turkey 9.9%
- ------------------------------------------------
Ukraine 0.4%
- ------------------------------------------------
United Kingdom 1.3%
- ------------------------------------------------
Uruguay 2.7%
- ------------------------------------------------
Venezuela 8.0%
- ------------------------------------------------
Other(2) 6.1%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
6 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUALITY BREAKDOWN (at April 30, 2009; % of portfolio assets excluding
cash equivalents and equities)
- ---------------------------------------------------------------------
<Table>
<Caption>
AA bonds 1.2%
- ------------------------------------------------
A bonds 5.4%
- ------------------------------------------------
BBB bonds 39.6%
- ------------------------------------------------
BB bonds 43.6%
- ------------------------------------------------
B bonds 4.2%
- ------------------------------------------------
Non-investment grade bonds 1.6%
- ------------------------------------------------
Non-rated bonds 4.4%
- ------------------------------------------------
</Table>
Bond ratings apply to the underlying holdings of the Fund and not the Fund
itself. Whenever possible, the Standard and Poor's rating is used to determine
the credit quality of a security. Standard and Poor's rates the creditworthiness
of corporate bonds, with 15 categories, ranging from AAA (highest) to D
(lowest). Ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
If Standard and Poor's doesn't rate a security, then Moody's rating is used.
RiverSource Investments, LLC, the Fund's investment manager, rates a security
using an internal rating system when Moody's doesn't provide a rating. Ratings
for 0.5% of the bond portfolio assets were determined through internal analysis.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 7
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
8 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING Annualized
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(a) expense ratio
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,250.10 $ 7.09 1.27%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.50 $ 6.36 1.27%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,244.40 $11.35 2.04%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.68 $10.19 2.04%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,244.70 $11.30 2.03%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.73 $10.14 2.03%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,252.60 $ 4.75 .85%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.58 $ 4.26 .85%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,251.80 $ 6.42 1.15%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.09 $ 5.76 1.15%
- -------------------------------------------------------------------------------------------
Class W
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,248.80 $ 7.25 1.30%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.35 $ 6.51 1.30%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: +25.01%
for Class A, +24.44% for Class B, +24.47% for Class C, +25.26% for Class I,
+25.18% for Class R4 and +24.88% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (91.8%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (0.9%)
Banco Hipotecario
Sr Unsecured
04-27-16 9.75% $975,000(d) $336,375
Industrias Metalurgicas Pescarmona
Sr Unsecured
10-22-14 11.25 1,100,000(d) 363,000
Republic of Argentina
09-12-13 7.00 1,000,000 377,500
Republic of Argentina
Sr Unsecured
12-15-35 0.00 12,950,000(g) 379,435
---------------
Total 1,456,310
- -------------------------------------------------------------------------------------
BRAZIL (13.3%)
Banco Nacional de Desenvolvimento Economico e Social
Sr Unsecured
06-16-18 6.37 5,200,000(d) 5,005,000
Bertin Ltda
Sr Unsecured
10-05-16 10.25 580,000(d) 290,000
Federative Republic of Brazil
01-20-34 8.25 600,000 682,500
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 4,800,000 4,869,600
10-14-19 8.88 3,538,000 4,210,220
Marfrig Overseas
11-16-16 9.63 1,130,000(d) 802,300
Morgan Stanley
(Brazilian Real) Sr Unsecured
05-03-17 10.09 4,850,000(d) 1,441,407
Nota do Tesouro Nacional
(Brazilian Real) Series F
07-01-10 10.00 139,600 658,498
01-01-12 10.00 320,000 1,465,510
Telemar Norte Leste
Sr Unsecured
04-23-19 9.50 900,000(d) 921,375
---------------
Total 20,346,410
- -------------------------------------------------------------------------------------
CAYMAN ISLANDS (1.4%)
Peru Enhanced Pass-Thru
Sr Secured Zero Coupon
05-31-18 5.28 3,472,181(d,j) 2,083,308
- -------------------------------------------------------------------------------------
COLOMBIA (5.1%)
Republic of Colombia
01-27-17 7.38 650,000 695,500
09-18-37 7.38 4,450,000 4,461,125
Republic of Colombia
(Colombian Peso)
10-22-15 12.00 2,168,000,000 1,144,001
Republic of Colombia
Sr Nts
03-18-19 7.38 1,000,000 1,051,100
Santa Fe de Bogota
(Colombian Peso) Sr Unsecured
07-26-28 9.75 1,377,000,000(d) 534,979
---------------
Total 7,886,705
- -------------------------------------------------------------------------------------
DOMINICAN REPUBLIC (1.3%)
Aes Dominicana Energia Finance
12-13-15 11.00 1,050,000(d) 698,250
Cerveceria Nacional Dominicana
03-27-12 16.00 1,450,000(d) 1,066,185
EGE Haina Finance
04-26-17 9.50 450,000(d) 231,750
---------------
Total 1,996,185
- -------------------------------------------------------------------------------------
EL SALVADOR (2.2%)
Republic of El Salvador
04-10-32 8.25 1,850,000(d) 1,581,750
06-15-35 7.65 2,310,000(d) 1,848,000
---------------
Total 3,429,750
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
10 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
GABON (0.5%)
Republic of Gabonese
12-12-17 8.20% $1,000,000(d) $800,000
- -------------------------------------------------------------------------------------
INDONESIA (8.6%)
Govt of Indonesia
(Indonesian Rupiah)
10-15-14 11.00 6,000,000,000 559,617
07-15-17 10.00 10,000,000,000 847,690
09-15-19 11.50 9,000,000,000 814,771
07-15-22 10.25 25,200,000,000 2,051,728
Perusahaan Penerbit SBSN
04-23-14 8.80 1,900,000(d) 1,935,806
Republic of Indonesia
Sr Unsecured
03-04-19 11.63 1,250,000(d,f) 1,487,500
10-12-35 8.50 2,450,000(d) 2,241,750
02-17-37 6.63 1,450,000(d) 1,102,000
01-17-38 7.75 2,500,000(d) 2,175,000
---------------
Total 13,215,862
- -------------------------------------------------------------------------------------
IRAQ (1.0%)
Republic of Iraq
01-15-28 5.80 2,900,000(d) 1,566,000
- -------------------------------------------------------------------------------------
KAZAKHSTAN (1.8%)
Kazkommerts Intl
11-03-15 8.00 450,000(d) 236,250
KazMunaiGaz Finance
07-02-18 9.13 2,645,000(d) 2,231,789
Temir Capital for JSC TemirBank
Bank Guaranteed
05-21-14 9.50 850,000(d) 307,547
---------------
Total 2,775,586
- -------------------------------------------------------------------------------------
LUXEMBOURG (4.8%)
Gaz Capital
Secured
11-22-16 6.21 4,350,000(d,f) 3,327,750
08-16-37 7.29 2,950,000(d) 2,006,000
MHP
Sr Secured
11-30-11 10.25 850,000(d) 453,688
TNK-BP Finance
03-20-17 6.63 800,000(d) 527,000
03-13-18 7.88 1,525,000(d) 1,067,500
---------------
Total 7,381,938
- -------------------------------------------------------------------------------------
MEXICO (10.8%)
Controladora Comerical Mexicana
(Mexican Peso)
03-30-27 8.70 31,700,000(b,d) 687,479
Mexican Fixed Rate Bonds
(Mexican Peso)
12-20-12 9.00 6,100,000 479,370
12-18-14 9.50 24,500,000 1,971,408
Pemex Project Funding Master Trust
03-01-18 5.75 7,500,000(f) 6,787,499
06-15-35 6.63 4,804,000 3,884,558
06-15-38 6.63 1,500,000 1,192,500
Petroleos Mexicanos
05-03-19 8.00 700,000(d) 744,648
Vitro
02-01-17 9.13 2,120,000(b,f) 704,900
---------------
Total 16,452,362
- -------------------------------------------------------------------------------------
NETHERLANDS (1.7%)
Intergas Finance
05-14-17 6.38 300,000(d) 197,600
Majapahit Holding
10-17-16 7.75 1,600,000(d) 1,368,000
06-28-17 7.25 1,150,000(d) 908,500
06-29-37 7.88 200,000(d) 132,000
---------------
Total 2,606,100
- -------------------------------------------------------------------------------------
PANAMA (0.4%)
Republic of Panama
Sr Unsecured
01-26-36 6.70 600,000 579,000
- -------------------------------------------------------------------------------------
PERU (2.1%)
Republic of Peru
Sr Unsecured
03-30-19 7.13 400,000 431,000
03-14-37 6.55 2,900,000 2,805,170
---------------
Total 3,236,170
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
PHILIPPINE ISLANDS (3.4%)
Natl Power
11-02-16 6.88% $900,000(d) $857,026
Republic of Philippines
10-21-24 9.50 621,000 723,465
Republic of Philippines
Sr Unsecured
06-17-19 8.38 3,350,000(f) 3,705,938
---------------
Total 5,286,429
- -------------------------------------------------------------------------------------
QATAR (1.1%)
State of Qatar
Sr Nts
04-09-19 6.55 1,600,000(d) 1,651,652
- -------------------------------------------------------------------------------------
RUSSIA (7.2%)
Gazstream
07-22-13 5.63 493,887(d) 464,254
Russian Federation
03-31-30 7.50 6,106,560(d) 5,923,363
Russian Standard Finance
Sr Secured
05-05-11 8.63 850,000(d) 510,000
TransCapitalInvest for Transneft
Secured
08-07-18 8.70 4,700,000(d) 4,124,020
---------------
Total 11,021,637
- -------------------------------------------------------------------------------------
SOUTH KOREA (2.4%)
Export-Import Bank of Korea
Sr Nts
01-21-14 8.13 1,100,000 1,160,690
Korea Development Bank
Sr Nts
01-23-14 8.00 1,450,000 1,522,866
POSCO
03-26-14 8.75 1,000,000(d) 1,063,822
---------------
Total 3,747,378
- -------------------------------------------------------------------------------------
TURKEY (9.8%)
Republic of Turkey
03-15-15 7.25 1,500,000 1,530,000
04-03-18 6.75 2,150,000 2,069,375
03-11-19 7.00 2,700,000 2,602,125
06-05-20 7.00 2,600,000 2,470,000
03-17-36 6.88 5,750,000 4,945,001
03-05-38 7.25 600,000 534,000
Republic of Turkey
Sr Unsecured
11-07-19 7.50 700,000(e) 694,995
---------------
Total 14,845,496
- -------------------------------------------------------------------------------------
UKRAINE (0.4%)
Credit Suisse First Boston Intl for Ex-Im Bank of Ukraine
Secured
02-09-16 8.40 300,000 126,000
Govt of Ukraine
06-26-12 6.39 850,000(d) 471,750
---------------
Total 597,750
- -------------------------------------------------------------------------------------
UNITED KINGDOM (1.2%)
UK SPV Credit Finance for JSC Commercial Bank Privatbank
Secured
02-06-12 8.00 700,000(d) 252,000
Vedanta Resources
Sr Unsecured
07-18-18 9.50 2,300,000(d) 1,644,500
---------------
Total 1,896,500
- -------------------------------------------------------------------------------------
URUGUAY (2.6%)
Republic of Uruguay
05-17-17 9.25 400,000(f) 433,000
Republic of Uruguay
Pay-in-kind
01-15-33 7.88 500(i) 440
Republica Orient Uruguay
(Uruguay Peso)
04-05-27 4.25 79,307,067(h) 2,035,097
06-26-37 3.70 16,186,786(h) 356,031
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 1,383,939 1,183,268
---------------
Total 4,007,836
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
VENEZUELA (7.8%)
Petroleos de Venezuela
04-12-17 5.25% $8,250,000 $3,741,375
Republic of Venezuela
02-26-16 5.75 4,999,500 2,849,715
05-07-23 9.00 5,950,000 3,451,000
03-31-38 7.00 1,800,000 868,500
Republic of Venezuela
Sr Unsecured
10-08-14 8.50 1,594,000 1,109,424
---------------
Total 12,020,014
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $165,484,625) $140,886,378
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (5.9%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 9,091,287(k) $9,091,287
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $9,091,287) $9,091,287
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (2.9%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 4,492,235 $4,492,235
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $4,492,235) $4,492,235
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $179,068,147)(l) $154,469,900
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT APRIL 30, 2009
<Table>
<Caption>
UNAMORTIZED
PREMIUM
REFERENCED BUY/SELL PAY/RECEIVE EXPIRATION NOTIONAL (PAID) UNREALIZED
COUNTERPARTY ENTITY PROTECTION FIXED RATE DATE AMOUNT RECEIVED DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank CDX Emerging Buy 2.65% June 20, 2013 $2,000,000 $(344,620) $(155,939)
Markets Index
- ----------------------------------------------------------------------------------------------------------------------
Merril Lynch Intl CDX Emerging Sell 2.65 June 20, 2013 2,000,000 -- (177,957)
Markets Index
- ----------------------------------------------------------------------------------------------------------------------
Total $(333,896)
- ----------------------------------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At April 30,
2009, the value of these securities amounted to $59,669,873 or 38.9% of net
assets.
(e) At April 30, 2009, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$694,995. See Note 1 to the financial statements.
(f) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(g) This is a variable rate security that entitles holders to receive only
interest payments. Interest is paid annually. The interest payment is based
on the Gross Domestic Product (GDP) level of the previous year for the
respective country. To the extent that the previous year's GDP exceeds the
'base case GDP', an interest payment is made equal to 0.012225 of the
difference.
(h) Inflation-indexed bonds are securities in which the principal amount is
adjusted for inflation and the semiannual interest payments equal a fixed
percentage of the inflation-adjusted principal amount.
(i) Pay-in-kind securities are securities in which the issuer makes interest or
dividend payments in cash or in additional securities. The securities
usually have the same terms as the original holdings.
(j) For zero coupons, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(k) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(l) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $179,068,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $3,209,000
Unrealized depreciation (27,807,000)
-----------------------------------------------------------
Net unrealized depreciation $(24,598,000)
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
14 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
----------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------
Investments in
securities $13,583,522 $136,057,904 $4,828,474 $154,469,900
Other financial
instruments* -- (333,896) -- (333,896)
- ----------------------------------------------------------------------------------
Total $13,583,522 $135,724,008 $4,828,474 $154,136,004
- ----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as swap
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
INVESTMENTS IN OTHER FINANCIAL
SECURITIES INSTRUMENTS
- ------------------------------------------------------------------------
Balance as of Oct. 31, 2008 $4,355,051 $257,106
Accrued discounts/premiums 44,041 --
Realized gain (loss) (43,983) *
Change in unrealized appreciation
(depreciation) 858,055 (257,106)
Net purchases (sales) (384,690) --
Transfers in and/or out of Level 3 -- --
- ------------------------------------------------------------------------
Balance as of April 30, 2009 $4,828,474 $--
- ------------------------------------------------------------------------
</Table>
* The realized gain (loss) earned during the period from Nov. 1, 2008 to April
30, 2009 for Other financial instruments was $1,196,000.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
16 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $165,484,625) $140,886,378
Affiliated money market fund (identified cost $9,091,287) 9,091,287
Investments of cash collateral received for securities on loan
(identified cost $4,492,235) 4,492,235
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $179,068,147) 154,469,900
Foreign currency holdings (identified cost $52,962) 55,007
Capital shares receivable 305,983
Premiums paid on outstanding credit default swap contracts 344,620
Dividends and accrued interest receivable 2,694,749
Receivable for investment securities sold 1,314,851
Cash deposits and collateral held at broker 700,000
- -------------------------------------------------------------------------------
Total assets 159,885,110
- -------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 329,937
Capital shares payable 478,593
Payable for investment securities purchased 787,744
Payable upon return of securities loaned 4,492,235
Unrealized depreciation on swap contracts 333,896
Accrued investment management services fees 3,016
Accrued distribution fees 689
Accrued transfer agency fees 556
Accrued administrative services fees 335
Other accrued expenses 58,614
- -------------------------------------------------------------------------------
Total liabilities 6,485,615
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $153,399,495
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 179,959
Additional paid-in capital 193,494,566
Undistributed net investment income 2,302,915
Accumulated net realized gain (loss) (17,662,531)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (24,915,414)
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $153,399,495
- -------------------------------------------------------------------------------
*Including securities on loan, at value $ 4,414,485
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 17
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $ 8,752,290 1,026,023 $8.53(1)
Class B $ 1,508,708 177,059 $8.52
Class C $ 222,515 26,148 $8.51
Class I $57,462,477 6,737,120 $8.53
Class R4 $ 18,739 2,198 $8.53
Class W $85,434,766 10,027,387 $8.52
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $8.96. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 4.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
18 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 6,910,880
Income distributions from affiliated money market fund 52,831
Fee income from securities lending 3,024
- -------------------------------------------------------------------------------
Total income 6,966,735
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 604,866
Distribution fees
Class A 10,502
Class B 6,100
Class C 1,008
Class W 122,289
Transfer agency fees
Class A 13,013
Class B 2,061
Class C 329
Class R4 4
Class W 97,831
Administrative services fees 67,207
Plan administration services fees -- Class R4 21
Compensation of board members 2,874
Custodian fees 16,370
Printing and postage 8,430
Registration fees 26,312
Professional fees 14,398
Other 3,751
- -------------------------------------------------------------------------------
Total expenses 997,366
Expenses waived/reimbursed by the Investment Manager and its
affiliates (36,285)
- -------------------------------------------------------------------------------
Total net expenses 961,081
- -------------------------------------------------------------------------------
Investment income (loss) -- net 6,005,654
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (13,817,226)
Foreign currency transactions (92,976)
Swap transactions (928,126)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (14,838,328)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 45,369,007
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 30,530,679
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 36,536,333
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 6,005,654 $ 10,826,078
Net realized gain (loss) on investments (14,838,328) (1,897,585)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 45,369,007 (75,049,499)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 36,536,333 (66,121,006)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (247,224) (513,077)
Class B (35,872) (77,784)
Class C (5,916) (12,305)
Class I (2,141,973) (6,894,152)
Class R4 (563) (1,280)
Class W (3,299,504) (2,557,686)
Net realized gain
Class A -- (47,559)
Class B -- (11,052)
Class C -- (1,687)
Class I -- (1,321,379)
Class R4 -- (167)
Class W -- (304,713)
- --------------------------------------------------------------------------------------------------
Total distributions (5,731,052) (11,742,841)
- --------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
20 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 6,597,885 $ 11,877,937
Class B shares 286,040 1,305,864
Class C shares 12,383 219,661
Class I shares 3,818,996 30,579,666
Class R4 shares 303 7,982
Class W shares 7,650,181 146,655,956
Reinvestment of distributions at net asset value
Class A shares 233,141 534,907
Class B shares 33,542 77,569
Class C shares 5,362 11,620
Class I shares 2,141,705 8,214,784
Class R4 shares 302 692
Class W shares 3,299,381 2,862,056
Payments for redemptions
Class A shares (9,265,717) (3,149,341)
Class B shares (224,301) (774,759)
Class C shares (25,430) (117,014)
Class I shares (25,135,785) (89,988,110)
Class R4 shares (26) (2,694)
Class W shares (47,556,876) (40,766,868)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (58,128,914) 67,549,908
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (27,323,633) (10,313,939)
Net assets at beginning of period 180,723,128 191,037,067
- --------------------------------------------------------------------------------------------------
Net assets at end of period $153,399,495 $180,723,128
- --------------------------------------------------------------------------------------------------
Undistributed net investment income $ 2,302,915 $ 2,028,313
- --------------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 21
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(k) 2008 2007 2006(b)
Net asset value, beginning of period $7.05 $10.57 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .27(c) .61(c) .59(c) .33
Net gains (losses) (both realized and
unrealized) 1.46 (3.43) .39 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.73 (2.82) .98 .51
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.25) (.61) (.55) (.33)
Distributions from realized gains -- (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.25) (.70) (.57) (.33)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.53 $7.05 $10.57 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $9 $10 $5 $12
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.44%(f) 1.41% 1.33% 1.81%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.27%(f) 1.40% 1.33% 1.39%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 7.13%(f) 6.31% 5.61% 5.20%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) 25.01%(j) (28.44%) 9.94% 5.25%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(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
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred 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 April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(k) 2008 2007 2006(b)
Net asset value, beginning of period $7.05 $10.55 $10.16 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .24(c) .55(c) .52(c) .28
Net gains (losses) (both realized and
unrealized) 1.45 (3.42) .37 .19
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.69 (2.87) .89 .47
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.54) (.48) (.28)
Distributions from realized gains -- (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.63) (.50) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.52 $7.05 $10.55 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $1 $1 $1
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.22%(f) 2.19% 2.13% 2.62%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.04%(f) 2.17% 2.13% 2.20%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.22%(f) 5.61% 4.90% 4.51%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) 24.44%(j) (28.85%) 8.94% 4.80%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(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
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred 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 April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(k) 2008 2007 2006(b)
Net asset value, beginning of period $7.04 $10.54 $10.15 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .24(c) .55(c) .53(c) .28
Net gains (losses) (both realized and
unrealized) 1.45 (3.42) .36 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.69 (2.87) .89 .46
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.54) (.48) (.28)
Distributions from realized gains -- (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.63) (.50) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.51 $7.04 $10.54 $10.15
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.21%(f) 2.18% 2.13% 2.61%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.03%(f) 2.16% 2.13% 2.19%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.23%(f) 5.64% 5.00% 4.46%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) 24.47%(j) (28.88%) 8.94% 4.75%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(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
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred 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 April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007 2006(b)
Net asset value, beginning of period $7.05 $10.57 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .28(c) .69(c) .65(c) .35
Net gains (losses) (both realized and
unrealized) 1.47 (3.46) .38 .17
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.75 (2.77) 1.03 .52
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.27) (.66) (.60) (.34)
Distributions from realized gains -- (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.27) (.75) (.62) (.34)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.53 $7.05 $10.57 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $57 $65 $147 $47
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .89%(f) .91% .93% 1.52%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .85%(f) .91% .93% 1.10%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 7.43%(f) 6.89% 6.14% 5.70%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return 25.26%(i) (28.08%) 10.38% 5.44%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(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
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007 2006(b)
Net asset value, beginning of period $7.05 $10.56 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .27(c) .67(c) .60(c) .34
Net gains (losses) (both realized and
unrealized) 1.47 (3.43) .39 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.74 (2.76) .99 .52
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.26) (.66) (.57) (.34)
Distributions from realized gains -- (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.26) (.75) (.59) (.34)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.53 $7.05 $10.56 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.19%(f) 1.22% 1.24% 1.67%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.06%(f) .97% 1.24% 1.25%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 7.20%(f) 6.82% 5.75% 5.37%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return 25.18%(i) (27.98%) 9.97% 5.36%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(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
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007(b)
Net asset value, beginning of period $7.05 $10.55 $10.24
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .26(c) .56 .57
Net gains (losses) (both realized and
unrealized) 1.46 (3.36) .28
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 1.72 (2.80) .85
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.25) (.61) (.52)
Distributions from realized gains -- (.09) (.02)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.25) (.70) (.54)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.52 $7.05 $10.55
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $85 $104 $38
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.33%(f) 1.35% 1.33%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.30%(f) 1.35% 1.33%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.98%(f) 6.08% 5.86%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 82% 41%
- --------------------------------------------------------------------------------------------------------------
Total return 24.88%(i) (28.29%) 8.49%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Emerging Markets Bond Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a non-diversified, open-end management investment company.
RiverSource Global 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 fixed income securities
of emerging market issuers.
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 April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares. At April 30, 2009, the Investment Manager and the RiverSource
affiliated funds-of-funds owned approximately 37% 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.
- --------------------------------------------------------------------------------
28 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
current market conditions as of the close of the NYSE. Swap transactions are
valued through an authorized pricing service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At April 30, 2009 the Fund has outstanding when-issued securities
of $694,995.
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment. The Fund records
the incremental difference between the forward purchase and sale of each forward
roll as realized gain or loss. Losses may arise due to changes in the value of
the securities or if a counterparty does not perform under the terms of the
agreement. If a counterparty files for bankruptcy or becomes insolvent, the
Fund's right to repurchase or sell securities may be limited. The Fund did not
enter into any mortgage dollar roll transactions during the six months ended
April 30, 2009.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the
- --------------------------------------------------------------------------------
30 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Fund may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option
or the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At April 30, 2009, and for the year then
ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires. At April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings were entirely
comprised of Mexican pesos.
The Fund may enter into forward foreign currency contracts to produce
incremental earnings, for operational purposes, or to protect against adverse
exchange rate fluctuation. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Fund is subject to the
credit risk that the counterparty will not complete its contract obligations. At
April 30, 2009, the Fund had no outstanding forward foreign currency contracts.
CREDIT DEFAULT SWAP TRANSACTIONS
The Fund may enter into credit default swap contracts to increase or decrease
its credit exposure to an issuer, obligation, portfolio, or index of issuers or
obligations, to hedge its exposure on an obligation that it owns or in lieu of
selling such obligations. As the purchaser of a credit default swap contract,
the Fund purchases protection by paying a periodic interest rate on the notional
amount to the counterparty. The interest amount is accrued daily as a component
of unrealized appreciation (depreciation) and is recorded as a realized loss
upon payment. If the credit event specified in the contract occurs, the Fund
will be required to deliver either the referenced obligation or an equivalent
cash amount to the protection seller and in exchange the Fund will receive the
notional amount from the seller. The difference between the value of the
obligation delivered and the notional amount received will be recorded as a
realized gain (loss). As the seller of a credit default swap contract, the Fund
sells protection to a buyer and will generally receive a periodic interest rate
on the notional amount. The interest amount is accrued daily as a component of
unrealized appreciation (depreciation) and is recorded as a realized gain upon
receipt of the payment. If the credit event specified in the contract occurs,
the Fund will receive the referenced obligation or an equivalent cash amount in
exchange for the payment of the notional amount to the protection buyer. The
difference between the value of the obligation received and the notional amount
paid will be recorded as a realized gain (loss). As a protection seller, the
maximum amount of the payment that may be made by the Fund may equal the
notional amount (shown in the Credit Default Swap Contracts Outstanding table
following the Portfolio of Investments), at par, of the underlying index or
security as a result of the related credit event.
- --------------------------------------------------------------------------------
32 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
The notional amounts of credit default swap contracts are not recorded in the
financial statements. Any premium paid or received by the Fund upon entering
into a credit default swap contract is recorded as an asset or liability and
amortized daily as a component of realized gain (loss) on the Statement of
Operations. Credit default swap contracts are valued daily, and the change in
value is recorded as unrealized appreciation (depreciation) until the
termination of the swap, at which time a realized gain (loss) is recorded.
Credit default swap contracts can involve greater risks than if a fund had
invested in the referenced obligation directly since, in addition to general
market risks, credit default swaps are subject to counterparty credit risk,
leverage risk, hedging risk, correlation risk and liquidity risk. The Fund will
enter into credit default swap agreements only with counterparties that meet
certain standards of creditworthiness.
INTEREST RATE SWAP TRANSACTIONS
The Fund may enter into interest rate swap agreements to produce incremental
earnings, to gain exposure to or protect itself from market changes, or to
synthetically add or subtract principal exposure to the municipal market.
Interest rate swaps are agreements between two parties that involve the exchange
of one type of interest rate for another type of interest rate cash flow on
specified dates in the future, based on a predetermined, specified notional
amount. Certain interest rate swaps are considered forward-starting; whereby the
accrual for the exchange of cash flows does not begin until a specified date in
the future (the "effective date"). The net cash flow for a standard interest
rate swap transaction is generally the difference between a floating market
interest rate versus a fixed interest rate.
Interest rate swaps are valued daily and unrealized appreciation (depreciation)
is recorded. Certain interest rate swaps may accrue periodic interest on a daily
basis as a component of unrealized appreciation (depreciation); the Fund will
realize a gain or loss upon the payment or receipt of accrued interest. The Fund
will realize a gain or a loss when the interest rate swap is terminated.
Risks of entering into an interest rate swap include a lack of correlation
between swaps and the portfolio of municipal bonds the swaps are designed to
hedge or replicate. A lack of correlation may cause the interest rate swap to
experience adverse changes in value relative to expectations. In addition,
interest rate swaps are subject to the risk of default of a counterparty, and
the risk of adverse movements in market interest rates relative to the interest
rate swap positions entered. At April 30, 2009, the Fund had no outstanding
interest rate swap contracts.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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.
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 recognition of
unrealized appreciation (depreciation) for certain derivative investments and
losses deferred due to wash sales. The character of distributions made during
the year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the Funds.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and
- --------------------------------------------------------------------------------
34 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FIN 45-4 also require additional disclosures about the current status of the
payment/performance risk of a guarantee.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within the Fund's financial statements.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, when
available, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income, if any, is recognized on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income, including amortization of premium, market discount and original
issue discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.52% annually as the Fund's assets increase. The management fee for the six
months ended April 30, 2009 was 0.72% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $717.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $20.50 for Class A, $21.50
for Class B and $21.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class 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 in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
- --------------------------------------------------------------------------------
36 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class W shares and a fee at
an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, up
to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $65,000 and $18,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$7,813 for Class A and $624 for Class B for the six months ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*), were as follows:
<Table>
Class A............................................. 1.27%
Class B............................................. 2.04
Class C............................................. 2.03
Class I............................................. 0.85
Class R4............................................ 1.06
Class W............................................. 1.30
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $5,853
Class B........................................... 895
Class C........................................... 146
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4............................................. $7
</Table>
The management fees waived/reimbursed at the Fund level were $29,384.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), will not exceed the following percentage of the class average
daily net assets:
<Table>
Class A............................................. 1.27%
Class B............................................. 2.04
Class C............................................. 2.03
Class I............................................. 0.85
Class R4............................................ 1.15
Class W............................................. 1.30
</Table>
* 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.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period Nov. 1, 2008 to Dec. 15, 2008, the Fund paid custodian fees
amounting to $2,446 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 $25,165,040 and $60,764,874, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
38 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 853,625 30,590 (1,229,159) (344,944)
Class B 35,106 4,390 (29,615) 9,881
Class C 1,541 704 (3,220) (975)
Class I 500,930 280,842 (3,298,934) (2,517,162)
Class R4 40 39 (3) 76
Class W 993,022 433,819 (6,212,528) (4,785,687)
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 1,206,737 54,556 (332,734) 928,559
Class B 131,117 7,815 (80,424) 58,508
Class C 21,942 1,173 (12,061) 11,054
Class I 3,444,578 822,959 (8,936,995) (4,669,458)
Class R4 781 70 (264) 587
Class W 15,118,235 298,553 (4,196,818) 11,219,970
- ----------------------------------------------------------------------------------
</Table>
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments, and any uninvested
cash collateral balance, are disclosed in the Statement of Assets and
Liabilities along with the related obligation to return the collateral upon the
return of the securities loaned. At April 30, 2009, securities valued at
$4,414,485 were on loan, secured by cash collateral of $4,492,235 invested in
short-term securities or in cash equivalents.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$3,024 earned from securities lending from Dec. 1, 2008 through April 30, 2009,
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008, through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $36,577,655 and $61,498,626, respectively, for the six
months ended April 30, 2009. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
- --------------------------------------------------------------------------------
40 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
7. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$2,399,388 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. 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. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
9. 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
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman
- --------------------------------------------------------------------------------
42 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
also provided information concerning mutual fund trading practices to the SEC
and the Office of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
44 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 45
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance was appropriate in light
of the particular management style and the exceptionally challenging market
conditions involved.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
- --------------------------------------------------------------------------------
46 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) approximated the peer group's median ratio.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT 47
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
48 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 SEMIANNUAL REPORT
RIVERSOURCE EMERGING MARKETS BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource is part
of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6511 E (6/09)
</Table>
Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GLOBAL BOND FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
RIVERSOURCE GLOBAL BOND FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH INCOME
AND GROWTH OF CAPITAL.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 8
Portfolio of Investments........... 10
Statement of Assets and
Liabilities...................... 26
Statement of Operations............ 28
Statements of Changes in Net
Assets........................... 29
Financial Highlights............... 31
Notes to Financial Statements...... 37
Approval of Investment Management
Services Agreement............... 53
Proxy Voting....................... 56
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Global Bond Fund (the Fund) Class A shares increased 7.50%
(excluding sales charge) for the six month period ended April 30, 2009.
> The Fund outperformed its benchmark, the Barclays Capital Global Aggregate
Index, which rose 6.68%.
> The Fund also outperformed its peer group, the Lipper Global Income Funds
Index, which increased 4.03% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
6 months* 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------
RiverSource Global Bond
Fund Class A (excluding
sales charge) +7.50% -4.50% +3.59% +3.78% +4.49%
- ------------------------------------------------------------------------
Barclays Capital Global
Aggregate Index(1)
(unmanaged) +6.68% -2.20% +5.47% +4.87% +5.32%
- ------------------------------------------------------------------------
Lipper Global Income
Funds Index(2) +4.03% -8.76% +1.43% +2.88% +4.17%
- ------------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(1) The Barclays Capital Global Aggregate Index, an unmanaged market
capitalization weighted benchmark, tracks the performance of investment
grade fixed income securities denominated in 13 currencies. The index
reflects reinvestment of all distributions and changes in market prices.
(2) The Lipper Global Income Funds Index includes the 30 largest global income
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
3/20/89) +7.50% -4.50% +3.59% +3.78% +4.49% N/A
- --------------------------------------------------------------------------------------
Class B (inception
3/20/95) +7.06% -5.15% +2.81% +2.98% +3.70% N/A
- --------------------------------------------------------------------------------------
Class C (inception
6/26/00) +7.12% -5.16% +2.82% +3.01% N/A +4.77%
- --------------------------------------------------------------------------------------
Class I (inception
3/4/04) +7.80% -4.06% +3.98% +4.22% N/A +3.79%
- --------------------------------------------------------------------------------------
Class R4 (inception
3/20/95) +7.61% -4.18% +3.89% +4.06% +4.72% N/A
- --------------------------------------------------------------------------------------
Class W (inception
12/1/06) +7.58% -4.44% N/A N/A N/A +2.07%
- --------------------------------------------------------------------------------------
With sales charge
Class A (inception
3/20/89) +2.35% -9.04% +1.94% +2.78% +3.96% N/A
- --------------------------------------------------------------------------------------
Class B (inception
3/20/95) +2.06% -9.61% +1.58% +2.64% +3.70% N/A
- --------------------------------------------------------------------------------------
Class C (inception
6/26/00) +6.12% -6.05% +2.82% +3.01% N/A +4.77%
- --------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
4 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
3/20/89) -0.53% -6.98% +3.73% +2.65% +4.34% N/A
- --------------------------------------------------------------------------------------
Class B (inception
3/20/95) -1.01% -7.72% +2.95% +1.86% +3.54% N/A
- --------------------------------------------------------------------------------------
Class C (inception
6/26/00) -1.01% -7.74% +2.95% +1.88% N/A +4.61%
- --------------------------------------------------------------------------------------
Class I (inception
3/4/04) -0.27% -6.55% +4.18% +3.09% N/A +3.49%
- --------------------------------------------------------------------------------------
Class R4 (inception
3/20/95) -0.43% -6.67% +4.04% +2.92% +4.57% N/A
- --------------------------------------------------------------------------------------
Class W (inception
12/1/06) -0.46% -6.92% N/A N/A N/A +1.36%
- --------------------------------------------------------------------------------------
With sales charge
Class A (inception
3/20/89) -5.30% -11.37% +2.04% +1.66% +3.80% N/A
- --------------------------------------------------------------------------------------
Class B (inception
3/20/95) -5.69% -12.06% +1.71% +1.52% +3.54% N/A
- --------------------------------------------------------------------------------------
Class C (inception
6/26/00) -1.95% -8.61% +2.95% +1.88% N/A +4.61%
- --------------------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 4.75%. 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.
**For classes with less than 10 years performance.
***For Class B shares purchased on or after June 13, 2009 the CDSC percentage
for the third year will be 3%.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
X X HIGH
MEDIUM QUALITY
LOW
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
<Table>
Weighted average life(1) 6.8 years
- --------------------------------------
Effective duration(2) 5.2 years
- --------------------------------------
Weighted average bond
rating(3) AA-
- --------------------------------------
</Table>
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund Net fund
expenses expenses(a)
- -----------------------------------------
Class A 1.32% 1.25%
- -----------------------------------------
Class B 2.09% 2.01%
- -----------------------------------------
Class C 2.08% 2.01%
- -----------------------------------------
Class I 0.85% 0.82%
- -----------------------------------------
Class R4 1.14% 1.12%
- -----------------------------------------
Class W 1.30% 1.27%
- -----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds) will not exceed 1.25% for
Class A, 2.01% for Class B, 2.01% for Class C, 0.82% for Class I, 1.12% for
Class R4 and 1.27% for Class W.
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) EFFECTIVE DURATION measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels of
interest rates from two years out to 30 years). Positive duration means that
as rates rise, the price decreases, and negative duration means that as
rates rise, the price increases.
(3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
underlying bonds in the portfolio.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
There are risks associated with an investment in a bond funds, including credit
risk, interest rate risk, and prepayment and extension risk. See the Fund's
prospectus for information on these and other risks associated with the Fund. In
general, bond prices rise when interest rates fall and vice versa. This effect
is usually more pronounced for longer-term securities. Non-investment grade
- --------------------------------------------------------------------------------
6 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
securities, commonly called "high-yield" or "junk" bonds, generally have more
volatile prices and carry more risk to principal and income than investment
grade securities.
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.
SECTOR BREAKDOWN(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Asset-Backed 0.9%
- ------------------------------------------------
Commercial Mortgage-Backed 4.4%
- ------------------------------------------------
Consumer Discretionary 0.9%
- ------------------------------------------------
Consumer Staples 0.5%
- ------------------------------------------------
Energy 2.6%
- ------------------------------------------------
Financials 8.3%
- ------------------------------------------------
Foreign Government 51.7%
- ------------------------------------------------
Health Care 0.5%
- ------------------------------------------------
Industrials 0.9%
- ------------------------------------------------
Materials 0.3%
- ------------------------------------------------
Mortgage-Backed 10.5%
- ------------------------------------------------
Telecommunication 5.5%
- ------------------------------------------------
U.S. Government Obligations & Agencies 6.0%
- ------------------------------------------------
Utilities 6.0%
- ------------------------------------------------
Other(2) 1.0%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
TOP TEN COUNTRIES (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
United States 41.1%
- ------------------------------------------------
Japan 11.6%
- ------------------------------------------------
Germany 7.7%
- ------------------------------------------------
Netherlands 5.1%
- ------------------------------------------------
United Kingdom 4.6%
- ------------------------------------------------
Canada 4.1%
- ------------------------------------------------
Italy 4.0%
- ------------------------------------------------
France 3.7%
- ------------------------------------------------
Spain 2.7%
- ------------------------------------------------
Belgium 2.2%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 7
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
8 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING Annualized
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(a) expense ratio
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,075.00 $ 6.43 1.25%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.60 $ 6.26 1.25%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,070.60 $10.32 2.01%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.83 $10.04 2.01%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,071.20 $10.32 2.01%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.83 $10.04 2.01%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,078.00 $ 4.22 .82%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.73 $ 4.11 .82%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,076.10 $ 5.77 1.12%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.24 $ 5.61 1.12%
- -------------------------------------------------------------------------------------------
Class W
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,075.80 $ 6.54 1.27%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.50 $ 6.36 1.27%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: +7.50%
for Class A, +7.06% for Class B, +7.12% for Class C, +7.80% for Class I,
+7.61% for Class R4 and +7.58% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (95.5%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (0.1%)
Republic of Argentina
09-12-13 7.00% $748,000 $282,370
Republic of Argentina
Sr Unsecured
12-15-35 0.00 2,900,000(j) 84,970
---------------
Total 367,340
- -------------------------------------------------------------------------------------
AUSTRALIA (2.0%)
Commonwealth Bank of Australia
(European Monetary Unit) Sr Unsub
11-12-09 3.38 745,000 985,844
New South Wales Treasury
(Australian Dollar)
05-01-12 6.00 6,300,000 4,786,336
Queensland Treasury
(Australian Dollar)
07-14-09 6.00 3,265,000 2,386,453
Telstra
Sr Unsecured
04-01-12 6.38 500,000(r) 505,016
---------------
Total 8,663,649
- -------------------------------------------------------------------------------------
AUSTRIA (1.4%)
Republic of Austria
(European Monetary Unit)
07-15-14 4.30 4,295,000 5,992,410
- -------------------------------------------------------------------------------------
BELGIUM (2.1%)
Fortis Bank
(European Monetary Unit) Sr Unsecured
05-30-14 4.50 420,000 542,221
Kingdom of Belgium
(European Monetary Unit)
03-28-10 3.00 3,965,000 5,334,491
09-28-12 5.00 2,185,000 3,144,639
---------------
Total 9,021,351
- -------------------------------------------------------------------------------------
BERMUDA (0.2%)
Intelsat Subsidiary Holding
01-15-15 8.88 95,000(d) 94,050
Weatherford Intl
03-01-19 9.63 895,000(r) 965,907
---------------
Total 1,059,957
- -------------------------------------------------------------------------------------
BRAZIL (0.9%)
Banco Nacional de Desenvolvimento Economico e Social
Sr Unsecured
06-16-18 6.37 535,000(d) 514,938
Federative Republic of Brazil
01-15-18 8.00 299,000 322,920
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 307,000 311,452
Nota do Tesouro Nacional
(Brazilian Real) Series F
07-01-10 10.00 579,000 2,731,162
---------------
Total 3,880,472
- -------------------------------------------------------------------------------------
CANADA (4.0%)
Canadian Natural Resources
Sr Unsecured
02-01-39 6.75 310,000 270,825
Canadian Pacific Railway
(Canadian Dollar)
06-15-10 4.90 380,000(d) 323,612
EnCana
Sr Unsecured
11-01-11 6.30 1,140,000 1,191,209
Govt of Canada
(Canadian Dollar)
06-01-18 4.25 1,330,000 1,229,309
Nexen
Sr Unsecured
05-15-37 6.40 1,970,000 1,433,374
Petro-Canada
Sr Unsecured
05-15-38 6.80 1,630,000(r) 1,275,765
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
CANADA (CONT.)
Province of British Columbia
(Canadian Dollar)
06-18-14 5.30% 1,640,000 $1,536,618
Province of Ontario
(Canadian Dollar)
03-08-14 5.00 3,635,000 3,358,887
Province of Quebec
(Canadian Dollar)
12-01-17 4.50 1,500,000 1,285,403
Royal Bank of Canada
(European Monetary Unit) Sr Unsecured
01-18-13 3.25 630,000 818,567
TELUS
Sr Unsecured
06-01-11 8.00 980,000 1,040,809
Thomson Reuters
10-01-14 5.70 2,465,000 2,425,451
07-15-18 6.50 150,000(r) 143,744
Toronto-Dominion Bank
(European Monetary Unit) Sr Unsecured
05-14-15 5.38 600,000 820,037
Videotron
04-15-18 9.13 130,000 135,037
04-15-18 9.13 70,000(d) 72,713
---------------
Total 17,361,360
- -------------------------------------------------------------------------------------
COLOMBIA (0.1%)
Republic of Colombia
01-27-17 7.38 230,000 246,100
09-18-37 7.38 260,000 260,650
---------------
Total 506,750
- -------------------------------------------------------------------------------------
CZECH REPUBLIC (0.5%)
Czech Republic
(Czech Koruna)
10-18-10 2.55 17,510,000 862,664
06-16-13 3.70 27,500,000 1,317,914
---------------
Total 2,180,578
- -------------------------------------------------------------------------------------
DENMARK (0.9%)
Danske Bank
(European Monetary Unit)
03-16-10 1.70 750,000(h) 990,659
Nykredit Realkredit
(Danish Krone)
04-01-28 5.00 10,802,574 1,915,441
Nykredit Realkredit
(European Monetary Unit)
01-01-10 5.00 750,000 1,011,903
---------------
Total 3,918,003
- -------------------------------------------------------------------------------------
FRANCE (3.8%)
BNP Paribas
(European Monetary Unit) Sr Sub Nts
12-17-12 5.25 555,000 754,608
Caisse Refinance Hypothe
(European Monetary Unit)
10-11-10 4.38 700,000 948,226
Credit Agricole
(European Monetary Unit) Sr Unsecured
06-24-13 6.00 550,000 793,573
Electricite de France
(European Monetary Unit) Sr Unsecured
02-05-18 5.00 750,000 994,256
France Telecom
(European Monetary Unit) Sr Unsecured
02-21-17 4.75 1,180,000 1,570,592
Govt of France
(European Monetary Unit)
04-25-12 5.00 2,365,000 3,403,600
04-25-13 4.00 5,420,000 7,604,335
10-25-16 5.00 80,000 117,935
Veolia Environnement
(European Monetary Unit)
01-16-17 4.38 225,000 269,188
---------------
Total 16,456,313
- -------------------------------------------------------------------------------------
GERMANY (7.5%)
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 300,000,000 2,940,958
Bundesrepublik Deutschland
(European Monetary Unit)
07-04-10 5.25 4,015,000 5,567,535
07-04-27 6.50 4,650,000 8,039,392
07-04-28 4.75 2,225,000 3,212,719
07-04-34 4.75 4,585,000 6,653,131
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
GERMANY (CONT.)
Corealcredit Bank
(European Monetary Unit) Series 501
09-02-09 5.00% 1,800,000(d) $2,396,319
DEPFA Deutsche Pfandbriefbank
(European Monetary Unit) Series G6
01-15-10 5.50 1,375,000 1,839,199
Rheinische Hypothekenbank
(European Monetary Unit) Series 803
07-05-10 5.75 1,305,000(d) 1,796,209
---------------
Total 32,445,462
- -------------------------------------------------------------------------------------
GREECE (1.1%)
Hellenic Republic
(European Monetary Unit)
08-20-12 4.10 1,545,000 2,070,866
Hellenic Republic
(European Monetary Unit) Sr Unsub
10-22-22 5.90 2,010,000 2,817,691
---------------
Total 4,888,557
- -------------------------------------------------------------------------------------
INDONESIA (0.6%)
Govt of Indonesia
(Indonesian Rupiah)
07-15-22 10.25 21,944,000,000 1,786,633
Republic of Indonesia
Sr Unsecured
01-17-18 6.88 500,000(d) 452,500
10-12-35 8.50 190,000(d) 173,850
---------------
Total 2,412,983
- -------------------------------------------------------------------------------------
ITALY (3.8%)
Buoni Poliennali Del Tesoro
(European Monetary Unit)
01-15-10 3.00 3,140,000 4,210,454
04-15-12 4.00 1,970,000 2,721,026
02-01-19 4.25 420,000 559,586
11-01-26 7.25 2,536,283 4,257,240
11-01-27 6.50 1,025,000 1,590,973
Intesa Sanpaolo
(European Monetary Unit) Sr Unsecured
12-19-13 5.38 400,000 556,453
Telecom Italia Capital
11-15-13 5.25 $2,870,000 $2,721,363
---------------
Total 16,617,095
- -------------------------------------------------------------------------------------
JAPAN (11.3%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 417,000,000 4,286,888
Govt of Japan CPI Linked
(Japanese Yen)
12-10-17 1.20 429,429,000(g) 3,771,522
03-10-18 1.40 464,665,000(g) 4,149,180
Govt of Japan
(Japanese Yen)
09-20-10 0.80 185,000,000 1,889,582
06-20-12 1.40 280,000,000 2,915,849
12-20-12 1.00 913,000,000 9,381,956
12-20-14 1.30 120,000,000 1,241,622
09-20-17 1.70 641,000,000 6,733,994
12-20-22 1.40 306,000,000 2,968,717
12-20-26 2.10 884,000,000 9,055,677
12-20-34 2.40 203,000,000 2,160,494
---------------
Total 48,555,481
- -------------------------------------------------------------------------------------
JERSEY (0.3%)
ASIF III Jersey
(Japanese Yen) Sr Secured
10-15-09 0.95 130,000,000 1,269,265
- -------------------------------------------------------------------------------------
LUXEMBOURG (--%)
Gaz Capital
Secured
08-16-37 7.29 230,000(d,r) 156,400
- -------------------------------------------------------------------------------------
MALAYSIA (0.3%)
Petronas Capital
05-22-12 7.00 1,350,000(d) 1,470,123
- -------------------------------------------------------------------------------------
MEXICO (1.3%)
Mexican Fixed Rate Bonds
(Mexican Peso)
12-20-12 9.00 24,060,000 1,890,763
12-17-15 8.00 41,010,000 3,073,533
Pemex Project Funding Master Trust
03-01-18 5.75 617,000 558,385
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
MEXICO (CONT.)
United Mexican States
Sr Unsecured
09-27-34 6.75% $270,000 $262,170
---------------
Total 5,784,851
- -------------------------------------------------------------------------------------
NETHERLANDS (5.0%)
Allianz Finance II
(European Monetary Unit)
11-23-16 4.00 400,000 507,092
BMW Finance
(European Monetary Unit)
09-19-13 8.88 650,000 952,091
Deutsche Telekom Intl Finance
(European Monetary Unit)
01-19-15 4.00 1,335,000 1,730,439
E.ON Intl Finance
(European Monetary Unit)
10-02-17 5.50 535,000 737,347
Govt of Netherlands
(European Monetary Unit)
07-15-12 5.00 2,880,000 4,146,175
07-15-13 4.25 5,545,000 7,841,057
07-15-16 4.00 1,500,000 2,074,150
ING Groep
(European Monetary Unit) Sr Unsecured
05-31-17 4.75 1,205,000 1,425,099
Nederlandse Waterschapsbank
(British Pound) Sr Unsub
06-07-10 5.38 850,000 1,301,554
Rabobank Nederland
(European Monetary Unit) Sr Unsub
04-04-12 4.13 600,000 813,171
---------------
Total 21,528,175
- -------------------------------------------------------------------------------------
NEW ZEALAND (0.6%)
Govt of New Zealand
(New Zealand Dollar)
04-15-13 6.50 4,300,000 2,625,336
- -------------------------------------------------------------------------------------
NORWAY (0.9%)
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 23,000,000 3,768,275
- -------------------------------------------------------------------------------------
PHILIPPINE ISLANDS (0.1%)
Republic of Philippines
01-15-16 8.00 100,000 109,250
01-14-31 7.75 190,000 192,613
---------------
Total 301,863
- -------------------------------------------------------------------------------------
POLAND (1.3%)
Govt of Poland
(Polish Zloty)
03-24-10 5.75 18,330,000 5,540,314
- -------------------------------------------------------------------------------------
QATAR (0.1%)
State of Qatar
Sr Nts
04-09-19 6.55 550,000(d,r) 567,756
- -------------------------------------------------------------------------------------
RUSSIA (--%)
Russian Federation
03-31-30 7.50 139,200(d) 135,024
- -------------------------------------------------------------------------------------
SOUTH AFRICA (0.3%)
Republic of South Africa
(South African Rand)
08-31-10 13.00 9,782,500(r) 1,251,427
- -------------------------------------------------------------------------------------
SOUTH KOREA (0.4%)
Korea Development Bank
(Japanese Yen)
06-28-10 0.87 200,000,000 1,933,298
- -------------------------------------------------------------------------------------
SPAIN (2.6%)
AyT Cedulas Cajas Global
(European Monetary Unit)
06-14-18 4.25 1,500,000 1,749,819
Caja de Ahorros y Monte de Piedad de Madrid
(European Monetary Unit)
03-25-11 3.50 1,800,000 2,390,733
Govt of Spain
(European Monetary Unit)
07-30-17 5.50 2,050,000 3,065,672
Instituto de Credito Oficial
(European Monetary Unit)
06-30-09 3.50 1,400,000 1,858,194
Santander Intl Debt
(European Monetary Unit) Bank Guaranteed
04-11-11 5.13 1,200,000 1,640,935
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
SPAIN (CONT.)
Telefonica Emisiones SAU
(European Monetary Unit)
02-02-16 4.38% 550,000 $699,907
---------------
Total 11,405,260
- -------------------------------------------------------------------------------------
SUPRA-NATIONAL (0.7%)
European Investment Bank
(British Pound) Sr Unsecured
12-07-11 5.50 1,945,000 3,117,465
- -------------------------------------------------------------------------------------
SWEDEN (0.7%)
Govt of Sweden
(Swedish Krona)
03-15-11 5.25 14,300,000 1,913,740
05-05-14 6.75 7,570,000 1,130,321
---------------
Total 3,044,061
- -------------------------------------------------------------------------------------
TUNISIA (0.4%)
Banque Centrale de Tunisie
(Japanese Yen)
08-02-10 3.30 190,000,000 1,929,961
- -------------------------------------------------------------------------------------
TURKEY (0.2%)
Republic of Turkey
04-03-18 6.75 204,000 196,350
03-17-36 6.88 540,000 464,400
---------------
Total 660,750
- -------------------------------------------------------------------------------------
UKRAINE (--%)
Govt of Ukraine
Sr Unsecured
11-14-17 6.75 230,000(d) 135,700
- -------------------------------------------------------------------------------------
UNITED KINGDOM (4.4%)
Abbey Natl Treasury Services
(European Monetary Unit) Bank Guaranteed
05-27-09 1.97 850,000(h) 1,123,260
BT Group
Sr Unsecured
12-15-10 8.63 550,000 574,762
SABMiller
01-15-14 5.70 1,275,000(d) 1,227,457
United Kingdom Treasury
(British Pound)
03-07-12 5.00 840,000 1,346,795
09-07-14 5.00 3,890,000 6,508,129
03-07-18 5.00 1,260,000 2,108,628
03-07-25 5.00 660,000 1,063,157
12-07-27 4.25 1,100,000 1,619,779
03-07-36 4.25 880,000 1,268,743
12-07-38 4.75 1,090,000 1,718,309
12-07-49 4.25 400,000 575,429
---------------
Total 19,134,448
- -------------------------------------------------------------------------------------
UNITED STATES (35.3%)
AmeriCredit Automobile Receivables Trust
Series 2007-DF Cl A3A (FSA)
07-06-12 5.49 912,302(o) 894,800
Anadarko Petroleum
Sr Unsecured
09-15-16 5.95 970,000 877,606
AT&T
Sr Unsecured
01-15-38 6.30 400,000 372,356
02-15-39 6.55 1,485,000 1,428,150
Banc of America Commercial Mtge
Series 2007-1 Cl A3
01-15-49 5.45 2,075,000(f) 1,599,056
Bank of America
Sr Unsecured
05-01-18 5.65 1,290,000 1,050,558
Bear Stearns Commercial Mtge Securities
Series 2003-T10 Cl A1
03-13-40 4.00 277,446(f) 268,960
CC Holdings GS V LLC
Sr Secured
05-01-17 7.75 45,000(d,m) 45,450
05-01-17 7.75 775,000(d) 782,750
CenterPoint Energy Houston Electric LLC
Series U
03-01-14 7.00 605,000 639,023
CenterPoint Energy Resources
Sr Unsecured
02-15-11 7.75 1,230,000 1,268,228
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Chesapeake Energy
01-15-16 6.63% $150,000 $133,500
Citigroup Commercial Mtge Trust
Series 2006-C5 Cl A4
10-15-49 5.43 1,700,000(f) 1,396,547
Citigroup Mtge Loan Trust
Collateralized Mtge Obligation
Series 2005-7 Cl 2A3A
09-25-35 5.17 3,610,054(f,i) 2,147,517
Citigroup
(European Monetary Unit) Sr Unsecured
08-02-19 5.00 595,000 564,304
Citigroup
Sr Unsecured
05-15-18 6.13 170,000 142,871
Cleveland Electric Illuminating
1st Mtge
11-15-18 8.88 750,000 845,231
Colorado Interstate Gas
Sr Unsecured
11-15-15 6.80 1,570,000 1,559,866
Comcast
03-15-37 6.45 160,000 148,304
Commercial Mtge Pass-Through Ctfs
Series 2006-CN2A Cl BFL
02-05-19 0.80 400,000(d,f,h) 186,019
Community Health Systems
07-15-15 8.88 450,000 447,750
Cott Beverages USA
12-15-11 8.00 271,000 200,540
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2005-6CB Cl 1A1
04-25-35 7.50 697,284(f) 448,888
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2006-22R Cl 1A2
05-25-36 6.00 1,189,586(f) 1,030,545
Coventry Health Care
Sr Unsecured
08-15-14 6.30 460,000 338,103
CPS Auto Trust
Series 2007-A Cl A3 (MBIA)
09-15-11 5.04 811,266(d,o) 791,343
CS First Boston Mtge Securities
Series 2004-C2 Cl A1
05-15-36 3.82 768,590(f) 734,303
CSC Holdings
Sr Unsecured
04-15-14 8.50 580,000(d) 591,600
CSX
Sr Unsecured
04-01-15 6.25 1,000,000 1,000,503
Denbury Resources
03-01-16 9.75 310,000 314,650
DIRECTV Holdings LLC/Financing
05-15-16 7.63 425,000(r) 420,750
DISH DBS
10-01-14 6.63 740,000 688,200
Dr Pepper Snapple Group
05-01-18 6.82 490,000 477,196
Duke Energy Indiana
1st Mtge
08-15-38 6.35 940,000 978,010
Dunkin Securitization
Series 2006-1 Cl A2 (AMBAC)
06-20-31 5.78 1,600,000(d,o) 1,108,832
El Paso
Sr Unsecured
12-12-13 12.00 555,000 599,400
Erac USA Finance
10-15-17 6.38 2,395,000(d) 1,755,715
Exelon
Sr Unsecured
06-15-10 4.45 1,000,000 988,515
Federal Home Loan Mtge Corp #A11799
08-01-33 6.50 186,621(f) 199,425
Federal Home Loan Mtge Corp #A15881
11-01-33 5.00 1,100,358(f) 1,141,790
Federal Home Loan Mtge Corp #E91486
09-01-17 6.50 135,478(f) 143,059
Federal Home Loan Mtge Corp #E99684
10-01-18 5.00 477,623(f) 496,777
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Federal Natl Mtge Assn
10-15-14 4.63% $3,880,000(r) $4,268,904
11-15-30 6.63 2,300,000(r) 2,900,916
Federal Natl Mtge Assn #254686
04-01-18 5.50 565,961(f) 592,734
Federal Natl Mtge Assn #254722
05-01-18 5.50 578,701(f) 606,076
Federal Natl Mtge Assn #545874
08-01-32 6.50 187,643(f) 202,453
Federal Natl Mtge Assn #555528
04-01-33 6.00 846,030(f) 892,644
Federal Natl Mtge Assn #555734
07-01-23 5.00 757,164(f) 783,347
Federal Natl Mtge Assn #555740
08-01-18 4.50 1,016,533(f) 1,054,693
Federal Natl Mtge Assn #555851
01-01-33 6.50 977,482(f) 1,048,518
Federal Natl Mtge Assn #575487
04-01-17 6.50 472,138(f) 502,908
Federal Natl Mtge Assn #621581
12-01-31 6.50 233,263(f) 251,478
Federal Natl Mtge Assn #633966
03-01-17 6.00 103,768(f) 109,506
Federal Natl Mtge Assn #634749
03-01-17 5.50 502,103(f) 526,869
Federal Natl Mtge Assn #640996
05-01-32 7.50 401,718(f) 435,424
Federal Natl Mtge Assn #643381
06-01-17 6.00 263,195(f) 277,747
Federal Natl Mtge Assn #645053
05-01-32 7.00 690,753(f) 744,741
Federal Natl Mtge Assn #646147
06-01-32 7.00 307,489(f) 333,539
Federal Natl Mtge Assn #652284
08-01-32 6.50 314,304(f) 336,753
Federal Natl Mtge Assn #653145
07-01-17 6.00 170,537(f) 179,248
Federal Natl Mtge Assn #653730
09-01-32 6.50 143,901(f) 154,930
Federal Natl Mtge Assn #655589
08-01-32 6.50 1,203,048(f) 1,300,109
Federal Natl Mtge Assn #666424
08-01-32 6.50 231,567(f) 248,106
Federal Natl Mtge Assn #670461
11-01-32 7.50 165,757(f) 179,665
Federal Natl Mtge Assn #677333
01-01-33 6.00 3,341,287(f) 3,525,381
Federal Natl Mtge Assn #688034
03-01-33 5.50 402,698(f) 421,039
Federal Natl Mtge Assn #688691
03-01-33 5.50 698,738(f) 726,974
Federal Natl Mtge Assn #711503
06-01-33 5.50 890,086(f) 928,946
Federal Natl Mtge Assn #735029
09-01-13 5.32 618,968(f) 647,543
Federal Natl Mtge Assn #741850
09-01-33 5.50 1,600,437(f) 1,665,110
Federal Natl Mtge Assn #753507
12-01-18 5.00 1,775,662(f) 1,848,337
Federal Natl Mtge Assn #755498
11-01-18 5.50 832,230(f) 872,973
Federal Natl Mtge Assn #756236
01-01-34 6.00 3,286,508(f,k) 3,498,173
Federal Natl Mtge Assn #756788
11-01-33 6.50 214,812(f) 228,812
Federal Natl Mtge Assn #845229
11-01-35 5.50 1,430,424(f) 1,485,768
Federal Natl Mtge Assn #928019
01-01-37 5.50 1,853,048(f,k) 1,922,428
Forest Oil
Sr Nts
02-15-14 8.50 320,000(d) 310,400
Freeport-McMoRan Copper & Gold
Sr Unsecured
04-01-17 8.38 435,000 426,300
Frontier Communications
Sr Unsecured
05-01-14 8.25 400,000 393,000
General Electric Capital Assurance
Series 2003-1 Cl A4
05-12-35 5.25 450,000(d,f) 432,781
General Electric Capital
(New Zealand Dollar) Sr Unsecured
02-04-10 6.63 3,450,000 1,962,156
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
General Electric Capital
Sr Unsecured
01-10-39 6.88% $615,000 $481,876
Genworth Financial Assurance Holdings
(Japanese Yen) Sr Unsecured
06-20-11 1.60 198,000,000 713,512
Georgia-Pacific LLC
05-01-16 8.25 285,000(d) 285,000
Goldman Sachs Group
(European Monetary Unit) Sr Unsecured
05-02-18 6.38 350,000 433,326
Goldman Sachs Group
Sr Unsecured
02-15-19 7.50 530,000 546,751
Govt Natl Mtge Assn #604708
10-15-33 5.50 839,140(f) 875,834
Govt Natl Mtge Assn
Collateralized Mtge Obligation
Interest Only
Series 2002-80 Cl CI
01-20-32 626.02 372,156(e,f) 4,285
Greenwich Capital Commercial Funding
Series 2003-C1 Cl A3
07-05-35 3.86 725,000(f) 686,140
Greenwich Capital Commercial Funding
Series 2004-GG1 Cl A5
06-10-36 4.88 500,000(f) 471,470
GS Mtge Securities II
Series 2007-EOP Cl J
03-06-20 1.34 1,250,000(d,f,h) 790,865
GS Mtge Securities II
Series 2007-GG10 Cl
08-10-45 5.99 775,000(f) 105,897
GSR Mtge Loan Trust
Collateralized Mtge Obligation
Series 2004-10F Cl 6A1
09-25-34 5.00 3,924,863(f) 3,330,003
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2004-1 Cl A4
04-19-34 4.78 2,098,164(f,i) 1,765,424
HCA
Sr Secured
02-15-17 9.88 675,000(d,r) 691,031
Indiana Michigan Power
Sr Nts
03-15-19 7.00 800,000 804,173
Indiana Michigan Power
Sr Unsecured
03-15-37 6.05 850,000 685,703
INVISTA
Sr Unsecured
05-01-12 9.25 500,000(d) 453,750
Jarden
Sr Unsecured
05-01-16 8.00 80,000(m) 78,000
05-01-16 8.00 220,000 214,500
JPMorgan Chase & Co
Sr Unsecured
01-15-18 6.00 720,000 700,008
JPMorgan Chase Commercial Mtge Securities
Series 2003-LN1 Cl A1
10-15-37 4.13 210,336(f) 200,678
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A1
03-12-39 3.97 146,648(f) 137,738
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A2
03-12-39 4.77 1,200,000(f) 1,092,078
JPMorgan Chase Commercial Mtge Securities
Series 2005-LDP4 Cl AM
10-15-42 5.00 2,425,000(f) 1,446,008
JPMorgan Chase Commercial Mtge Securities
Series 2007-CB20 Cl E
02-12-51 6.40 675,000(d,f) 41,425
Lamar Media
08-15-15 6.63 560,000 439,600
Lamar Media
Sr Nts
04-01-14 9.75 255,000(d) 254,363
LB-UBS Commercial Mtge Trust
Series 2004-C2 Cl A3
03-15-29 3.97 750,000(f) 693,926
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
LB-UBS Commercial Mtge Trust
Series 2006-C4 Cl AAB
06-15-32 6.05% $750,000(f) $689,826
LB-UBS Commercial Mtge Trust
Series 2006-C6 Cl A4
09-15-39 5.37 800,000(f) 635,296
Lehman Brothers Holdings
Sr Unsecured
05-02-18 6.88 1,320,000(b,p) 196,350
Liberty Media LLC
Sr Unsecured
05-15-13 5.70 395,000 331,804
Manufacturers & Traders Trust
Sub Nts
12-01-21 5.63 1,500,000 1,029,825
Metropolitan Life Global Funding I
Sr Secured
04-10-13 5.13 915,000(d) 872,089
Morgan Stanley Capital I
Series 2003-T11 Cl A2
06-13-41 4.34 261,271(f) 259,008
Morgan Stanley Capital I
Series 2004-HQ4 Cl A5
04-14-40 4.59 750,000(f) 709,483
Morgan Stanley Capital I
Series 2006-T23 Cl AAB
08-12-41 5.97 575,000(f) 544,360
Morgan Stanley
(European Monetary Unit) Sr Unsecured
10-02-17 5.50 625,000 656,999
Morgan Stanley
Sr Unsecured
04-01-18 6.63 205,000 195,090
Natl Collegiate Student Loan Trust
Collateralized Mtge Obligation
Interest Only
Series 2006-3 Cl AIO
01-25-12 5.88 2,400,000(e) 399,000
NewPage
Sr Secured
05-01-12 10.00 380,000 178,600
News America
11-15-37 6.65 430,000 341,310
Nextel Communications
Series D
08-01-15 7.38 785,000 560,294
Nielsen Finance LLC
08-01-14 10.00 200,000 188,000
NiSource Finance
01-15-19 6.80 700,000 607,063
Northern States Power
1st Mtge Series B
08-28-12 8.00 515,000 576,849
Northwest Pipeline
Sr Unsecured
04-15-17 5.95 1,085,000 999,378
NRG Energy
02-01-16 7.38 875,000 842,188
Omnicare
12-15-13 6.75 305,000 288,988
12-15-15 6.88 60,000 56,250
PacifiCorp
1st Mtge
07-15-38 6.35 750,000 769,869
PetroHawk Energy
Sr Nts
08-01-14 10.50 480,000(d) 482,400
Potomac Electric Power
1st Mtge
12-15-38 7.90 460,000 537,125
PPL Electric Utilities
1st Mtge
11-30-13 7.13 2,850,000 3,168,786
Pricoa Global Funding I
Sr Secured
10-18-12 5.40 1,310,000(d) 1,196,251
Principal Life Income Funding Trusts
Sr Secured
12-14-12 5.30 1,370,000 1,266,373
Quicksilver Resources
08-01-15 8.25 870,000 691,650
Qwest
Sr Unsecured
10-01-14 7.50 175,000 168,875
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Renaissance Home Equity Loan Trust
Series 2005-4 Cl A3
02-25-36 5.57% $505,418 $481,210
RR Donnelley & Sons
Sr Unsecured
01-15-17 6.13 2,940,000 2,214,088
SandRidge Energy
06-01-18 8.00 370,000(d) 321,900
Select Medical
02-01-15 7.63 290,000 220,400
Seneca Gaming
Sr Unsecured
05-01-12 7.25 95,000 66,975
Sierra Pacific Power
Series M
05-15-16 6.00 2,935,000 2,817,452
Southern California Gas
1st Mtge
03-15-14 5.50 845,000 916,326
Southern Natural Gas
Sr Unsecured
04-01-17 5.90 790,000(d,r) 718,902
Starwood Hotels & Resorts Worldwide
Sr Unsecured
10-15-14 7.88 300,000(m) 288,855
Structured Asset Securities
Collateralized Mtge Obligation
Series 2003-33H Cl 1A1
10-25-33 5.50 1,320,190(f) 1,206,221
Toledo Edison
Sr Unsecured
05-15-37 6.15 450,000 363,834
Toyota Motor Credit
(European Monetary Unit)
02-12-10 4.00 150,000 199,877
Transcontinental Gas Pipe Line
Sr Unsecured
04-15-16 6.40 3,590,000 3,516,405
U.S. Treasury
04-15-12 1.38 600,000(r) 600,186
04-30-14 1.88 4,335,000 4,305,522
02-15-15 4.00 1,600,000 1,750,374
02-15-19 2.75 2,320,000(r) 2,247,129
05-15-38 4.50 2,385,000 2,566,484
U.S. Treasury Inflation-Indexed Bond
01-15-14 2.00 5,677,849(g) 5,785,267
01-15-15 1.63 538,879(g) 536,276
Verizon New York
Sr Unsecured Series A
04-01-12 6.88 2,380,000 2,480,147
Visant
10-01-12 7.63 55,000(r) 53,350
Wachovia Bank Commercial Mtge Trust
Series 2003-C8 Cl A2
11-15-35 3.89 777,247(f) 776,163
Wachovia Bank Commercial Mtge Trust
Series 2005-C20 Cl A5
07-15-42 5.09 800,000(f) 683,630
Wachovia Bank Commercial Mtge Trust
Series 2006-C24 Cl APB
03-15-45 5.58 500,000(f) 469,337
Wachovia Bank Commercial Mtge Trust
Series 2006-C27 Cl APB
07-15-45 5.73 900,000(f) 814,743
Waste Management
03-11-19 7.38 275,000 278,877
Wells Fargo & Co
(European Monetary Unit) Sr Unsecured
11-03-16 4.13 200,000 216,387
Wells Fargo & Co
Sr Unsecured
12-11-17 5.63 720,000 671,268
Wells Fargo Mtge Backed Securities Trust
Collateralized Mtge Obligation
Series 2005-14 Cl 2A1
12-25-35 5.50 4,185,535(f) 3,426,579
West Corp
10-15-14 9.50 72,000 62,460
Windstream
08-01-16 8.63 215,000 213,925
03-15-19 7.00 40,000 37,600
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
XTO Energy
Sr Unsecured
01-31-15 5.00% $720,000 $701,266
06-30-15 5.30 1,880,000 1,821,756
---------------
Total 152,168,333
- -------------------------------------------------------------------------------------
URUGUAY (0.1%)
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 275,000 235,125
- -------------------------------------------------------------------------------------
VENEZUELA (0.2%)
Petroleos de Venezuela
04-12-17 5.25 770,000 349,195
Republic of Venezuela
02-26-16 5.75 290,000 165,300
05-07-23 9.00 346,000 200,680
Republic of Venezuela
Sr Unsecured
10-08-14 8.50 160,000 111,360
---------------
Total 826,535
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $432,803,309) $413,317,506
- -------------------------------------------------------------------------------------
<Caption>
SENIOR LOANS (0.4%)(l)
COUPON PRINCIPAL
BORROWER RATE AMOUNT VALUE(a)
UNITED STATES
Charter Communications Operating LLC
Incremental Term Loan
03-05-14 5.23-6.25% $1,224,206 $1,036,205
Fairpoint Communications
Tranche B Term Loan
TBD TBD 1,160,000(m,n) 584,350
- -------------------------------------------------------------------------------------
TOTAL SENIOR LOANS
(Cost: $1,767,826) $1,620,555
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (0.9%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 4,098,747(q) $4,098,747
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $4,098,747) $4,098,747
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (3.3%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 14,268,837 $14,268,837
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $14,268,837) $14,268,837
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $452,938,719)(s) $433,305,645
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT APRIL 30, 2009
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- -------------------------------------------------------------------------------------
Euro-Bobl, 5-year 12 $1,841,783 June 2009 $(12,883)
Euro-Bund, 10-year 64 10,377,591 June 2009 (88,723)
Japanese Govt Bond, 10- 6 8,336,190 June 2009 (117,267)
year
United Kingdom Long GILT, 13 2,319,529 June 2009 (17,643)
10-year
U.S. Long Bond, 20-year 41 5,025,063 June 2009 (136,978)
U.S. Treasury Note, 2- 46 10,007,157 July 2009 15,000
year
U.S. Treasury Note, 5- (95) (11,128,360) July 2009 99,286
year
U.S. Treasury Note, 10- (4) (483,750) June 2009 10,556
year
- -------------------------------------------------------------------------------------
Total $(248,652)
- -------------------------------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------
May 5, 2009 238,711 42,478 $58 $--
Danish Krone U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 5, 2009 139,750 79,434 461 --
New Zealand Dollar U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 6, 2009 44,700,000 2,272,612 57,995 --
Czech Koruna U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 7, 2009 4,200,000 42,674 77 --
Japanese Yen U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 14, 2009 12,630,000 3,779,966 -- (1,715)
Polish Zloty U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 15, 2009 527,000 698,470 1,073 --
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 18, 2009 27,470,000 2,085,627 98,164 --
Mexican Peso U.S. Dollar
- -----------------------------------------------------------------------------------------------
May 19, 2009 1,817,737 2,230,000 51,950 --
U.S. Dollar Canadian Dollar
- -----------------------------------------------------------------------------------------------
May 22, 2009 1,470,000 1,000,000 9,613
U.S. Dollar British Pound
- -----------------------------------------------------------------------------------------------
May 28, 2009 23,953,242 2,364,185,000 30,949 --
U.S. Dollar Japanese Yen
- -----------------------------------------------------------------------------------------------
May 29, 2009 2,324,655 3,500,000 39,512 --
U.S. Dollar Singapore Dollar
- -----------------------------------------------------------------------------------------------
June 2, 2009 10,710,000 1,606,797 -- (23,079)
Norwegian Krone U.S. Dollar
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
(CONTINUED)
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------
June 2, 2009 1,606,797 1,222,393 $10,808 $--
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------------
Total $300,660 $(24,794)
- -----------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At April 30,
2009, the value of these securities amounted to $21,629,517 or 5.0% of net
assets.
(e) Interest only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of an
interest only is extremely sensitive to the rate of principal payments on
the underlying mortgage assets. A rapid (slow) rate of principal repayments
may have an adverse (positive) effect on yield to maturity. The principal
amount shown is the notional amount of the underlying mortgages. The
interest rate disclosed represents yield based upon the estimated timing
and amount of future cash flows at April 30, 2009.
(f) Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities and
collateralized mortgage obligations. These securities may be issued or
guaranteed by U.S. government agencies or instrumentalities, or by private
issuers, generally originators and investors in mortgage loans, including
savings associations, mortgage bankers, commercial banks, investment
bankers and special purpose entities. The maturity dates shown represent
the original maturity of the underlying obligation. Actual maturity may
vary based upon prepayment activity on these obligations. Unless otherwise
noted, the coupon rates presented are fixed rates.
(g) Inflation-indexed bonds are securities in which the principal amount is
adjusted for inflation and the semiannual interest payments equal a fixed
percentage of the inflation-adjusted principal amount.
(h) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30,
2009.
(i) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on April 30, 2009.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(j) This is a variable rate security that entitles holders to receive only
interest payments. Interest is paid annually. The interest payment is based
on the Gross Domestic Product (GDP) level of the previous year for the
respective country. To the extent that the previous year's GDP exceeds the
'base case GDP', an interest payment is made equal to 0.012225 of the
difference.
(k) At April 30, 2009, investments in securities included securities valued at
$1,050,861 that were partially pledged as collateral to cover initial
margin deposits on open interest rate futures contracts.
(l) Senior loans have rates of interest that float periodically based primarily
on the London Interbank Offered Rate ("LIBOR") and other short-term rates.
Remaining maturities of senior loans may be less than the stated maturities
shown as a result of contractual or optional prepayments by the borrower.
Such prepayments cannot be predicted with certainty.
(m) At April 30, 2009, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$1,032,284. See Note 1 to the financial statements.
(n) Represents a senior loan purchased on a when-issued or delayed-delivery
basis. Certain details associated with this purchase are not known prior to
the settlement date of the transaction. In addition, senior loans typically
trade without accrued interest and therefore a weighted average coupon rate
is not available prior to settlement. At settlement, if still unknown, the
borrower or counterparty will provide the Fund with the final weighted
average coupon rate and maturity date.
(o) The following abbreviations are used in the portfolio security descriptions
to identify the insurer of the issue:
<Table>
AMBAC -- Ambac Assurance Corporation
FSA -- Financial Security Assurance
MBIA -- MBIA Insurance Corporation
</Table>
(p) This position is in bankruptcy.
(q) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(r) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(s) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $452,939,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $13,736,000
Unrealized depreciation (33,369,000)
-----------------------------------------------------------
Net unrealized depreciation $(19,633,000)
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
----------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------
Investments in
securities $39,832,131 $387,645,133 $5,828,381 $433,305,645
Other financial
instruments* (248,652) 275,866 -- 27,214
- ----------------------------------------------------------------------------------
Total $39,583,479 $387,920,999 $5,828,381 $433,332,859
- ----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as futures and
forwards, which are valued at the unrealized appreciation (depreciation) on
the instrument.
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
INVESTMENTS IN OTHER FINANCIAL
SECURITIES INSTRUMENTS
- ------------------------------------------------------------------------
Balance as of Oct. 31, 2008 $4,636,313 $28,672
Accrued discounts/premiums 12,538 --
Realized gain (loss) (64,190) *
Change in unrealized appreciation
(depreciation) (122,578) (28,672)
Net purchases (sales) (1,535,818) --
Transfers in and/or out of Level 3 2,902,116 --
- ------------------------------------------------------------------------
Balance as of April 30, 2009 $5,828,381 $--
- ------------------------------------------------------------------------
</Table>
* The realized gain (loss) earned during the period from Nov. 1, 2008 to April
30, 2009 for Other financial instruments was $14,423,970.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $434,571,135) $414,938,061
Affiliated money market fund (identified cost $4,098,747) 4,098,747
Investments of cash collateral received for securities on loan
(identified cost $14,268,837) 14,268,837
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $452,938,719) 433,305,645
Cash 118,757
Foreign currency holdings (identified cost $8,060,233) 8,180,316
Capital shares receivable 260,036
Dividends and accrued interest receivable 6,488,564
Receivable for investment securities sold 806,360
Unrealized appreciation on forward foreign currency contracts 300,660
- -------------------------------------------------------------------------------
Total assets 449,460,338
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 854,405
Payable for investment securities purchased 1,428,480
Payable upon return of securities loaned 14,268,837
Variation margin payable on futures contracts 78,034
Unrealized depreciation on forward foreign currency contracts 24,794
Accrued investment management services fees 8,431
Accrued distribution fees 2,878
Accrued transfer agency fees 2,114
Accrued administrative services fees 951
Accrued plan administration services fees 1
Other accrued expenses 134,356
- -------------------------------------------------------------------------------
Total liabilities 16,803,281
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $432,657,057
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 691,808
Additional paid-in capital 480,120,112
Excess of distributions over net investment income (8,178,579)
Accumulated net realized gain (loss) (20,438,223)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (19,538,061)
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $432,657,057
- -------------------------------------------------------------------------------
*Including securities on loan, at value $ 22,659,223
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $225,559,084 36,079,192 $6.25(1)
Class B $ 36,750,784 5,822,253 $6.31
Class C $ 4,140,182 661,354 $6.26
Class I $136,444,964 21,854,224 $6.24
Class R4 $ 128,056 20,475 $6.25
Class W $ 29,633,987 4,743,340 $6.25
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $6.56. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 4.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 27
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 10,825,377
Income distributions from affiliated money market fund 15,090
Fee income from securities lending 24,978
- -------------------------------------------------------------------------------
Total income 10,865,445
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 1,804,633
Distribution fees
Class A 294,818
Class B 199,025
Class C 21,156
Class W 75,397
Transfer agency fees
Class A 309,392
Class B 55,315
Class C 5,697
Class R4 30
Class W 60,318
Administrative services fees 203,750
Plan administration services fees -- Class R4 153
Compensation of board members 8,709
Custodian fees 116,450
Printing and postage 38,250
Registration fees 29,753
Professional fees 20,065
Other 8,959
- -------------------------------------------------------------------------------
Total expenses 3,251,870
Expenses waived/reimbursed by the Investment Manager and its
affiliates (241,551)
- -------------------------------------------------------------------------------
Total net expenses 3,010,319
- -------------------------------------------------------------------------------
Investment income (loss) -- net 7,855,126
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (11,839,696)
Foreign currency transactions 1,559,264
Futures contracts (5,591)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (10,286,023)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 44,024,762
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 33,738,739
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 41,593,865
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 7,855,126 $ 24,285,681
Net realized gain (loss) on investments (10,286,023) 9,721,813
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 44,024,762 (100,650,487)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 41,593,865 (66,642,993)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (14,451,166) (8,771,172)
Class B (2,363,546) (1,230,738)
Class C (247,912) (86,601)
Class I (12,198,283) (7,773,703)
Class R4 (7,374) (4,806)
Class W (5,231,186) (4,581,936)
- --------------------------------------------------------------------------------------------------
Total distributions (34,499,467) (22,448,956)
- --------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 11,159,821 $ 103,694,288
Class B shares 2,189,396 26,745,270
Class C shares 386,292 4,044,562
Class I shares 8,769,890 171,903,867
Class R4 shares 7,520 95,770
Class W shares 5,097,598 259,629,317
Reinvestment of distributions at net asset value
Class A shares 13,585,257 8,236,440
Class B shares 2,243,075 1,157,449
Class C shares 228,357 78,743
Class I shares 12,197,728 7,773,342
Class R4 shares 7,374 4,806
Class W shares 5,230,912 4,581,771
Payments for redemptions
Class A shares (50,968,379) (90,849,153)
Class B shares (10,495,046) (27,193,143)
Class C shares (818,379) (1,808,860)
Class I shares (92,633,872) (106,857,080)
Class R4 shares (7,000) (79,105)
Class W shares (117,133,788) (155,446,712)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (210,953,244) 205,711,572
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (203,858,846) 116,619,623
Net assets at beginning of period 636,515,903 519,896,280
- --------------------------------------------------------------------------------------------------
Net assets at end of period $ 432,657,057 $ 636,515,903
- --------------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (8,178,579) $ 18,465,762
- --------------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of period $6.16 $6.89 $6.60 $6.59 $7.02
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09(b) .22(b) .20(b) .19 .16
Net gains (losses) (both realized and
unrealized) .38 (.73) .35 .14 (.23)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .47 (.51) .55 .33 (.07)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.22) (.26) (.32) (.36)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.25 $6.16 $6.89 $6.60 $6.59
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $226 $249 $259 $276 $353
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.39%(e) 1.32% 1.37% 1.39% 1.37%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.25%(e) 1.25% 1.25% 1.25% 1.35%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.99%(e) 3.26% 3.08% 2.77% 2.42%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77% 68% 73%
- --------------------------------------------------------------------------------------------------------------
Total return(h) 7.50%(i) (7.66%) 8.63% 5.17% (1.18%)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of period $6.23 $6.96 $6.67 $6.59 $7.02
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .17(b) .15(b) .13 .10
Net gains (losses) (both realized and
unrealized) .38 (.73) .35 .16 (.23)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .45 (.56) .50 .29 (.13)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.17) (.21) (.21) (.30)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.31 $6.23 $6.96 $6.67 $6.59
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $37 $42 $47 $63 $111
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.15%(e) 2.09% 2.13% 2.16% 2.13%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 2.01%(e) 2.01% 2.01% 2.02% 2.12%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.22%(e) 2.49% 2.30% 1.98% 1.65%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77% 68% 73%
- --------------------------------------------------------------------------------------------------------------
Total return(h) 7.06%(i) (8.28%) 7.68% 4.45% (1.98%)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of period $6.18 $6.91 $6.62 $6.57 $6.99
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .17(b) .15(b) .14 .11
Net gains (losses) (both realized and
unrealized) .38 (.73) .35 .13 (.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .45 (.56) .50 .27 (.11)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.17) (.21) (.22) (.31)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.26 $6.18 $6.91 $6.62 $6.57
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $4 $3 $3 $4
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.14%(e) 2.08% 2.13% 2.16% 2.14%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 2.01%(e) 2.01% 2.01% 2.02% 2.12%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.23%(e) 2.51% 2.32% 2.00% 1.65%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77% 68% 73%
- --------------------------------------------------------------------------------------------------------------
Total return(h) 7.12%(i) (8.27%) 7.75% 4.25% (1.83%)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $6.14 $6.87 $6.59 $6.61 $7.03
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .25(b) .23(b) .21 .19
Net gains (losses) (both realized and
unrealized) .38 (.73) .34 .14 (.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .48 (.48) .57 .35 (.03)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.25) (.29) (.37) (.39)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.24 $6.14 $6.87 $6.59 $6.61
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $136 $206 $157 $145 $89
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .87%(e) .85% .87% .88% .91%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) .82%(e) .82% .87% .88% .91%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.42%(e) 3.68% 3.47% 3.18% 2.87%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77% 68% 73%
- --------------------------------------------------------------------------------------------------------------
Total return 7.80%(h) (7.30%) 8.91% 5.52% (.56%)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
34 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $6.16 $6.89 $6.60 $6.61 $7.04
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .25(b) .22(b) .20 .16
Net gains (losses) (both realized and
unrealized) .37 (.72) .35 .13 (.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .47 (.47) .57 .33 (.06)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.26) (.28) (.34) (.37)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.25 $6.16 $6.89 $6.60 $6.61
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.17%(e) 1.14% 1.17% 1.20% 1.20%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) .99%(e) .87% 1.08% 1.08% 1.18%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.25%(e) 3.64% 3.27% 2.95% 2.60%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77% 68% 73%
- --------------------------------------------------------------------------------------------------------------
Total return 7.61%(h) (7.19%) 8.84% 5.29% (1.00%)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007(b)
Net asset value, beginning of period $6.15 $6.88 $6.79
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .22 .20
Net gains (losses) (both realized and
unrealized) .38 (.73) .17
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .47 (.51) .37
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.22) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.25 $6.15 $6.88
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $30 $135 $54
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.31%(f) 1.30% 1.35%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.27%(f) 1.27% 1.26%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.99%(f) 3.27% 3.34%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 75% 77%
- --------------------------------------------------------------------------------------------------------------
Total return 7.58%(i) (7.62%) 5.71%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Global Bond Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a non-diversified, open-end management investment company.
RiverSource Global 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 debt obligations of U.S.
and foreign issuers.
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 April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares. At April 30, 2009, the Investment Manager and the RiverSource
affiliated funds-of-funds owned approximately 32% 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 GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the
- --------------------------------------------------------------------------------
38 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
current market conditions as of the close of the NYSE. Swap transactions are
valued through an authorized pricing service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At April 30, 2009, the Fund has outstanding when-issued securities
of $411,684 and other forward-commitments of $620,600.
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment. The Fund records
the incremental difference between the forward purchase and sale of each forward
roll as realized gain or loss. Losses may arise due to changes in the value of
the securities or if a counterparty does not perform under the terms of the
agreement. If a counterparty files for bankruptcy or becomes insolvent, the
Fund's right to repurchase or sell securities may be limited. The Fund did not
enter into any mortgage dollar roll transactions during the six months ended
April 30, 2009.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Fund may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When options on debt securities or futures
are exercised, the Fund will realize a gain or loss. When other options are
exercised, the proceeds on sales for a written call option, the purchase cost
for a written put option or the cost of a security for a purchased put or call
option is adjusted by the amount of premium received or paid. At April 30, 2009,
and for the year then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
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
- --------------------------------------------------------------------------------
40 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings consisted of
multiple denominations, primarily British pounds.
The Fund may enter into forward foreign currency contracts to produce
incremental earnings, for operational purposes, or to protect against adverse
exchange rate fluctuation. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Fund is subject to the
credit risk that the counterparty will not complete its contract obligations.
CMBS TOTAL RETURN SWAP TRANSACTIONS
The Fund may enter into swap agreements to earn the total return on a specified
security or index of fixed income securities. CMBS total return swaps are
bilateral financial contracts designed to replicate synthetically the total
returns of commercial mortgage-backed securities. Under the terms of the swaps,
the Fund either receives or pays the total return on a reference security or
index applied to a notional principal amount. In return, the Fund agrees to pay
or receive from the counterparty a floating rate, which is reset periodically
based on short-term interest rates, applied to the same notional amount.
The notional amounts of swap contracts are not recorded in the financial
statements. Swaps are valued daily, and the change in value is recorded as
unrealized appreciation (depreciation) until the termination of the swap, at
which time realized gain (loss) is recorded. Payments received or made are
recorded as realized gains (losses).
Swap agreements may be subject to liquidity risk, which exists when a particular
swap is difficult to purchase or sell. It may not be possible for the Fund to
initiate a transaction or liquidate a position at an advantageous time or price,
which may result in significant losses. Total return swaps are subject to the
risk that the counterparty will default on its obligation to pay net amounts due
to the Fund. At April 30, 2009, the Fund had no outstanding CMBS total return
swap contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures and options
contracts, foreign currency transactions, recognition of unrealized appreciation
(depreciation) for certain derivative investments and losses deferred due to
wash sales. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires
- --------------------------------------------------------------------------------
42 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
enhanced disclosures about a fund's derivative and hedging activities. SFAS 161
is effective for financial statements issued for fiscal years and interim
periods beginning after Nov. 15, 2008. As of April 30, 2009, management does not
believe the adoption of SFAS 161 will impact the financial statement amounts;
however, additional footnote disclosures may be required about the use of
derivative instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within the Fund's financial statements.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared and paid each calendar quarter,
when available, are reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income, if any, is recognized on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income, including amortization of premium, market discount and original
issue discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.52% annually as the Fund's assets increase. The management fee for the six
months ended April 30, 2009 was 0.70% of the Fund's average daily net assets.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $2,991.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $20.50 for Class A, $21.50
for Class B and $21.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class 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 in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
- --------------------------------------------------------------------------------
44 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class W shares and a fee at
an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, up
to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $1,204,000 and $36,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$70,131 for Class A, $15,648 for Class B and $319 for Class C for the six months
ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*) were as follows:
<Table>
Class A............................................. 1.25%
Class B............................................. 2.01
Class C............................................. 2.01
Class I............................................. 0.82
Class R4............................................ 0.99
Class W............................................. 1.27
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $96,638
Class B........................................... 17,272
Class C........................................... 1,733
</Table>
The waived/reimbursed fees and expenses for plan administration services fees at
the class level were as follows:
<Table>
Class R4............................................ $77
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The management fees waived/reimbursed at the Fund level were $125,831.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*) will not exceed the following percentage of the class average
daily net assets:
<Table>
Class A............................................. 1.25%
Class B............................................. 2.01
Class C............................................. 2.01
Class I............................................. 0.82
Class R4............................................ 1.12
Class W............................................. 1.27
</Table>
* 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.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Nov. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $13,048 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 $113,909,635 and $351,806,217, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
46 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 1,808,766 2,146,170 (8,270,357) (4,315,421)
Class B 351,382 349,934 (1,689,487) (988,171)
Class C 62,531 35,905 (132,370) (33,934)
Class I 1,418,299 1,933,079 (14,994,823) (11,643,445)
Class R4 1,221 1,165 (1,140) 1,246
Class W 829,086 826,368 (18,900,654) (17,245,200)
- ----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 14,979,267 1,211,499 (13,367,693) 2,823,073
Class B 3,822,733 168,457 (3,926,341) 64,849
Class C 583,922 11,530 (267,833) 327,619
Class I 25,302,709 1,145,677 (15,862,285) 10,586,101
Class R4 13,757 706 (11,545) 2,918
Class W 37,609,351 674,090 (24,172,875) 14,110,566
- ----------------------------------------------------------------------------------
</Table>
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments, and any uninvested
cash collateral balance, are disclosed in the Statement of Assets and
Liabilities along with the related obligation to return the collateral upon the
return of the securities loaned. At April 30, 2009, securities valued at
$22,659,223 were on loan, secured by
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
U.S. government securities valued at $8,873,321 and by cash collateral of
$14,268,837 invested in short-term securities or in cash equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$24,978 earned from securities lending from Dec. 1, 2008 through April 30, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $105,298,465 and $108,122,821, respectively, for the six
months ended April 30, 2009. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
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48 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$6,492,562 at Oct. 31, 2008, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2010 2014 2016
$3,665,053 $498,771 $2,328,738
</Table>
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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual
- --------------------------------------------------------------------------------
50 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
adverse effect on the Funds or the ability of Ameriprise Financial or its
affiliates to perform under their contracts with the Funds. Ameriprise Financial
is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
52 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 53
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance met expectations.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio
- --------------------------------------------------------------------------------
54 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
of each fund (excluding the effect of a performance incentive adjustment, if
applicable), with few exceptions, is at or below the median expense ratio of
funds in the same comparison group). The Board took into account that the Fund's
total expense ratio (after considering proposed expense caps/waivers)
approximated the peer group's median expense ratio.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT 55
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
56 RIVERSOURCE GLOBAL BOND FUND -- 2009 SEMIANNUAL REPORT
RIVERSOURCE GLOBAL BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource is part
of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6339 Y (6/09)
</Table>
Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GLOBAL TECHNOLOGY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
RIVERSOURCE GLOBAL TECHNOLOGY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 7
Portfolio of Investments........... 9
Statement of Assets and
Liabilities...................... 12
Statement of Operations............ 13
Statements of Changes in Net
Assets........................... 14
Financial Highlights............... 15
Notes to Financial Statements...... 20
Approval of Investment Management
Services Agreement............... 34
Proxy Voting....................... 37
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Global Technology Fund (the Fund) Class A shares rose 6.59%
(excluding sales charge) for the six months ended April 30, 2009.
> The Fund outperformed its benchmark, the unmanaged Morgan Stanley Capital
International (MSCI) World Index, which declined 5.09% during the same six
month period.
> The Fund also outperformed the unmanaged Morgan Stanley Capital International
(MSCI) World Information Technology (IT) Index, which returned 5.01% for the
same period.
> The Fund underperformed the unmanaged S&P North American Technology Sector
Index(TM) (S&P NATS Index), which returned 7.36%, during the same six month
period.
> The Fund also underperformed its peer group, represented by the Lipper Global
Science and Technology Funds Index, which returned 12.04% during the same
period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
6 months* 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------
RiverSource Global
Technology Fund Class A
(excluding sales charge) +6.59% -30.20% -8.58% +0.57% -3.44%
- ------------------------------------------------------------------------------
MSCI World Index(1)
(unmanaged) -5.09% -38.91% -11.04% -0.49% -1.12%
- ------------------------------------------------------------------------------
MSCI World IT Index(2)
(unmanaged) +5.01% -31.01% -9.18% -2.55% -6.17%
- ------------------------------------------------------------------------------
S&P NATS Index(3) (unmanaged) +7.36% -26.23% -6.11% -0.66% -4.84%
- ------------------------------------------------------------------------------
Lipper Global Science and
Technology Funds Index(4) +12.04% -28.98% -9.30% -0.77% N/A
- ------------------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
- --------------------------------------------------------------------------------
2 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
(1) The Morgan Stanley Capital International (MSCI) World Index, an unmanaged
index, is a free float-adjusted market capitalization index that is designed
to measure global developed market equity performance. The index reflects
reinvestment of all distributions and changes in market prices.
(2) The Morgan Stanley Capital International (MSCI) World Information Technology
(IT) Index, an unmanaged index, is a free float-adjusted market
capitalization index designed to measure information technology stock
performance in the global developed equity market. The index reflects
reinvestment of all distributions and changes in market prices.
(3) The S&P North American Technology Sector Index(TM) (S&P NATS Index),
formerly known as the S&P GSTI Composite Index, an unmanaged index, is a
market capitalization-weighted index of approximately 200 stocks designed to
measure the performance of companies in the technology sector. The index
reflects reinvestment of all distributions and changes in market prices.
(4) The Lipper Global Science and Technology Funds Index includes the 10 largest
global science and technology funds tracked by Lipper Inc. The index's
returns include net reinvested dividends. The Fund's performance is
currently measured against this index for purposes of determining the
performance incentive adjustment.
The Fund's investment manager recommended to the Fund that the Fund change its
comparative index from the S&P North American Technology Sector Index(TM) (S&P
NATS Index) to the MSCI World Index. The investment manager made this
recommendation because the new index more closely aligns to the Fund's
investment strategy. Based on this recommendation, on Nov. 17, 2008, the S&P
NATS Index was replaced with the MSCI World Index, which will be used as the
Fund's primary benchmark going forward. Information on both indexes will be
included for a one year transition period. In the future, however, only the MSCI
World Index will be included.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
11/13/96) +6.59% -30.20% -8.58% +0.57% -3.44% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) +5.59% -30.73% -9.24% -0.26% -4.20% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) +6.29% -30.28% -9.19% -0.13% N/A -12.70%
- -------------------------------------------------------------------------------------
Class I (inception
7/15/04) +6.98% -29.50% -7.96% N/A N/A +1.67%
- -------------------------------------------------------------------------------------
Class R4 (inception
11/13/96) +7.06% -29.46% -8.04% +1.02% -3.23% N/A
- -------------------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) +0.57% -34.32% -10.35% -0.66% -3.93% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) +0.59% -34.20% -10.47% -0.66% -4.20% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) +5.29% -30.97% -9.19% -0.13% N/A -12.70%
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
11/13/96) -21.57% -32.49% -11.39% -3.17% -4.67% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) -21.84% -33.00% -12.06% -3.91% -5.40% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) -21.84% -33.00% -12.21% -4.02% N/A -13.91%
- -------------------------------------------------------------------------------------
Class I (inception
7/15/04) -20.95% -31.69% -10.69% N/A N/A -0.50%
- -------------------------------------------------------------------------------------
Class R4 (inception
11/13/96) -21.26% -32.08% -11.10% -2.92% -4.49% N/A
- -------------------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -25.93% -36.26% -13.12% -4.27% -5.15% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) -25.75% -36.35% -13.25% -4.30% -5.40% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) -22.62% -33.67% -12.21% -4.02% N/A -13.91%
- -------------------------------------------------------------------------------------
</Table>
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 and Class R4 shares. Class I and Class R4 shares are
available to institutional investors only.
*Not annualized.
**For classes with less than 10 years performance.
***For Class B shares purchased on or after June 13, 2009 the CDSC percentage
for the third year will be 3%.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
X MEDIUM SIZE
X SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund expenses
- ----------------------------------------
Class A 1.45%
- ----------------------------------------
Class B 2.22%
- ----------------------------------------
Class C 2.21%
- ----------------------------------------
Class I 0.81%
- ----------------------------------------
Class R4 1.12%
- ----------------------------------------
</Table>
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
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.
The RiverSource Global Technology 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
SECTOR DIVERSIFICATION(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Health Care 0.2%
- ------------------------------------------------
Information Technology 87.8%
- ------------------------------------------------
Telecommunication Services 1.0%
- ------------------------------------------------
Other(2) 11.0%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
TOP TEN HOLDINGS (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Check Point Software Technologies 4.2%
- ------------------------------------------------
Amdocs 4.1%
- ------------------------------------------------
McAfee 4.1%
- ------------------------------------------------
Symantec 4.0%
- ------------------------------------------------
QUALCOMM 3.9%
- ------------------------------------------------
Synopsys 3.8%
- ------------------------------------------------
Cisco Systems 3.7%
- ------------------------------------------------
Apple 3.6%
- ------------------------------------------------
Hewlett-Packard 3.5%
- ------------------------------------------------
NetApp 3.1%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the 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 April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 7
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,065.90 $10.09 1.97%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.03 $ 9.84 1.97%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,055.90 $14.02 2.75%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,011.16 $13.71 2.75%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,062.90 $13.96 2.73%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,011.26 $13.61 2.73%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,069.80 $ 5.49 1.07%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.49 $ 5.36 1.07%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,070.60 $ 7.03 1.37%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 6.85 1.37%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: +6.59%
for Class A, +5.59% for Class B, +6.29% for Class C, +6.98% for Class I and
+7.06% for Class R4.
- --------------------------------------------------------------------------------
8 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (91.2%)
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (13.3%)
Cisco Systems 242,002(b,e) $4,675,479
NICE Systems ADR 76,300(b,c,e) 1,954,043
QUALCOMM 116,273 4,920,673
Riverbed Technology 92,500(b,e) 1,694,600
Tandberg 60,600(c) 864,949
---------------
Total 14,109,744
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (20.5%)
Acer 25,000(c) 47,866
Apple 35,703(b,e) 4,492,509
Electronics for Imaging 78,600(b) 771,852
EMC 294,100(b,e) 3,685,073
Hewlett-Packard 123,141(e) 4,430,613
HTC 167,000(c) 2,262,969
IBM 15,641(e) 1,614,308
NetApp 209,300(b,e) 3,830,190
Toshiba 177,000(c) 603,170
---------------
Total 21,738,550
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
Koninklijke (Royal) KPN 64,437(c) 776,748
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (3.8%)
Hirose Electric 6,600(c) 684,774
Ibiden 16,100(c,e) 467,003
LG Display 32,890(c) 803,071
Murata Mfg 15,100(c) 607,988
Nidec 11,400(c) 625,503
Tripod Technology 194,000(c) 319,803
Unimicron Technology 827,000(c) 559,071
---------------
Total 4,067,213
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (6.7%)
GigaMedia 49,300(b,c) 327,845
Google Cl A 2,000(b,e) 791,940
Open Text 114,200(b,c) 3,749,186
SonicWALL 242,000(b) 1,314,060
Yahoo! 64,900(b) 927,421
---------------
Total 7,110,452
- -------------------------------------------------------------------------------------
IT SERVICES (0.8%)
Fiserv 22,400(b) 835,968
- -------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.2%)
PerkinElmer 17,500 254,975
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (5.1%)
Marvell Technology Group 229,624(b,c,e) 2,521,271
Maxim Integrated Products 145,000 1,964,750
Taiwan Semiconductor Mfg 522,000(c) 871,553
---------------
Total 5,357,574
- -------------------------------------------------------------------------------------
SOFTWARE (39.8%)
Activision Blizzard 200,600(b,e) 2,160,462
Amdocs 247,400(b,c,e) 5,178,082
Aspen Technology 148,800(b) 1,168,080
BMC Software 63,800(b) 2,211,946
Cadence Design Systems 235,200(b) 1,312,416
Check Point Software Technologies 226,100(b,c,e) 5,238,737
Magma Design Automation 134,600(b,e) 239,588
McAfee 135,517(b,e) 5,087,307
Mentor Graphics 195,900(b) 1,316,448
Micro Focus Intl 312,519(c) 1,474,947
Microsoft 127,254 2,578,166
Parametric Technology 200,800(b,e) 2,238,920
Perfect World ADR 24,100(b,c,e) 437,656
Symantec 290,226(b,e) 5,006,399
Synopsys 220,000(b,e) 4,791,600
Ubisoft Entertainment 41,653(b,c,e) 821,309
VanceInfo Technologies ADR 116,300(b,c) 925,748
---------------
Total 42,187,811
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
Vodafone Group 169,081(c) 311,940
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $84,920,002) $96,750,975
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
MONEY MARKET FUND (11.2%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 11,901,585(d) $11,901,585
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $11,901,585) $11,901,585
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (15.2%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 16,154,555 $16,154,555
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $16,154,555) $16,154,555
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $112,976,142)(f) $124,807,115
=====================================================================================
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At April 30, 2009, the
value of foreign securities represented 30.6% of net assets.
(d) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(e) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(f) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $112,976,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $13,748,000
Unrealized depreciation (1,917,000)
-----------------------------------------------------------
Net unrealized appreciation $11,831,000
-----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
---------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- -----------------------------------------------------------------------------------
Investments in
securities $124,807,115 $-- $-- $124,807,115
</Table>
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 11
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $84,920,002) $ 96,750,975
Affiliated money market fund (identified cost $11,901,585) 11,901,585
Investments of cash collateral received for securities on loan
(identified cost $16,154,555) 16,154,555
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $112,976,142) 124,807,115
Foreign currency holdings (identified cost $179,611) 179,611
Capital shares receivable 254,570
Dividends and accrued interest receivable 23,788
Receivable for investment securities sold 1,930,188
- --------------------------------------------------------------------------------
Total assets 127,195,272
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 68,343
Payable for investment securities purchased 4,821,703
Payable upon return of securities loaned 16,154,555
Accrued investment management services fees 2,068
Accrued distribution fees 956
Accrued transfer agency fees 1,328
Accrued administrative services fees 172
Accrued plan administration services fees 1
Other accrued expenses 57,745
- --------------------------------------------------------------------------------
Total liabilities 21,106,871
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 106,088,401
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 610,024
Additional paid-in capital 480,447,150
Excess of distributions over net investment income (553,481)
Accumulated net realized gain (loss) (386,245,260)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 11,829,968
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 106,088,401
- --------------------------------------------------------------------------------
*Including securities on loan, at value $ 15,811,848
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $70,450,436 39,563,703 $1.78(1)
Class B $15,472,499 10,237,138 $1.51
Class C $ 2,235,390 1,474,433 $1.52
Class I $17,750,532 9,628,407 $1.84
Class R4 $ 179,544 98,685 $1.82
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $1.89. 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.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends 217,848
Interest 24,033
Income distributions from affiliated money market fund 15,811
Fee income from securities lending 9,410
Less foreign taxes withheld (5,617)
- -------------------------------------------------------------------------------
Total income 261,485
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 307,430
Distribution fees
Class A 74,560
Class B 66,232
Class C 8,865
Transfer agency fees
Class A 193,911
Class B 45,047
Class C 5,893
Class R4 26
Administrative services fees 23,459
Plan administration services fees -- Class R4 130
Compensation of board members 1,419
Custodian fees 13,100
Printing and postage 25,485
Registration fees 27,210
Professional fees 17,895
Other 3,020
- -------------------------------------------------------------------------------
Total expenses 813,682
Expenses waived/reimbursed by the Investment Manager and its
affiliates (64)
- -------------------------------------------------------------------------------
Total net expenses 813,618
- -------------------------------------------------------------------------------
Investment income (loss) -- net (552,133)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (35,532,972)
Foreign currency transactions (101,891)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (35,634,863)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 42,308,179
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 6,673,316
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 6,121,183
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 13
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS
Investment income (loss) -- net $ (552,133) $ (720,428)
Net realized gain (loss) on investments (35,634,863) (18,357,358)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 42,308,179 (58,394,053)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 6,121,183 (77,471,839)
- --------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 6,617,647 21,369,521
Class B shares 1,109,362 2,136,740
Class C shares 408,498 522,248
Class I shares 16,156,087 --
Class R4 shares 141,396 122,848
Payments for redemptions
Class A shares (8,604,213) (31,405,834)
Class B shares (1,489,485) (13,779,456)
Class C shares (257,612) (833,165)
Class I shares (40,549) (7,015)
Class R4 shares (65,071) (115,949)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 13,976,060 (21,990,062)
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 20,097,243 (99,461,901)
Net assets at beginning of period 85,991,158 185,453,059
- --------------------------------------------------------------------------------------------------
Net assets at end of period $106,088,401 $ 85,991,158
- --------------------------------------------------------------------------------------------------
Excess of distributions over net investment income $ (553,481) $ (1,348)
- --------------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $1.67 $3.04 $2.42 $1.99 $1.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.01)(b) (.02)(b) (.02) (.02)
Net gains (losses) (both realized and
unrealized) .12 (1.36) .64 .45 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .11 (1.37) .62 .43 .16
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.78 $1.67 $3.04 $2.42 $1.99
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $70 $69 $139 $123 $120
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.97%(e) 1.45% 1.60% 1.69% 1.75%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.29%)(e) (.34%) (.80%) (.89%) (.92%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 81% 167% 196% 115%
- --------------------------------------------------------------------------------------------------------------
Total return(f) 6.59%(g) (45.07%) 25.62% 21.61% 8.74%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in periods in which they occurred
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 15
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $1.43 $2.61 $2.09 $1.74 $1.60
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.02)(b) (.04)(b) (.03) (.03)
Net gains (losses) (both realized and
unrealized) .09 (1.16) .56 .38 .17
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .08 (1.18) .52 .35 .14
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.51 $1.43 $2.61 $2.09 $1.74
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15 $15 $43 $42 $46
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.75%(e) 2.22% 2.38% 2.47% 2.53%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2.08%)(e) (1.09%) (1.58%) (1.66%) (1.71%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 81% 167% 196% 115%
- --------------------------------------------------------------------------------------------------------------
Total return(f) 5.59%(g) (45.21%) 24.88% 20.12% 8.75%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in periods in which they occurred
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $1.43 $2.62 $2.10 $1.74 $1.61
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.02)(b) (.04)(b) (.03) (.03)
Net gains (losses) (both realized and
unrealized) .10 (1.17) .56 .39 .16
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .09 (1.19) .52 .36 .13
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.52 $1.43 $2.62 $2.10 $1.74
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $2 $4 $3 $3
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.73%(e) 2.21% 2.36% 2.45% 2.52%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2.07%)(e) (1.10%) (1.56%) (1.66%) (1.69%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 81% 167% 196% 115%
- --------------------------------------------------------------------------------------------------------------
Total return(f) 6.29%(g) (45.42%) 24.76% 20.69% 8.07%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in periods in which they occurred
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 17
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $1.72 $3.11 $2.46 $2.01 $1.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .00(b),(c) .01(b) (.01)(b) (.01) (.01)
Net gains (losses) (both realized and
unrealized) .12 (1.40) .66 .46 .19
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .12 (1.39) .65 .45 .18
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.84 $1.72 $3.11 $2.46 $2.01
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $18 $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.07%(f) .81% .99% 1.01% 1.04%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.56%)(f) .31% (.19%) (.22%) (.21%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 81% 167% 196% 115%
- --------------------------------------------------------------------------------------------------------------
Total return 6.98%(g) (44.69%) 26.42% 22.39% 9.84%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in periods in which they occurred
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $1.70 $3.07 $2.43 $2.00 $1.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) .01(b) (.01)(b) (.02) (.02)
Net gains (losses) (both realized and
unrealized) .13 (1.38) .65 .45 .19
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .12 (1.37) .64 .43 .17
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.82 $1.70 $3.07 $2.43 $2.00
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $1 $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement()c,(d) 1.37%(e) 1.12% 1.34% 1.47% 1.54%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.25%(e) .87% 1.34% 1.47% 1.54%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.65%)(e) .22% (.52%) (.68%) (.73%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 81% 167% 196% 115%
- --------------------------------------------------------------------------------------------------------------
Total return 7.06%(h) (44.63%) 26.34% 21.50% 9.29%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they occured
were less than 0.01% of average net assets.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 19
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Global Technology Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Global 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 focuses on equity securities of companies in the
information technology industry throughout the world.
The Fund offers Class A, Class B, Class C, Class I and Class R4 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.
At April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource 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.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurement" (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
- --------------------------------------------------------------------------------
20 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 21
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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
obligations depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Options
contracts, including OTC contracts, with no readily available market value are
valued using quotations obtained from independent brokers as of the close of the
NYSE. The Fund will realize a gain or loss when the option transaction expires
or is exercised. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid. At April 30, 2009, and for the six months then ended, the Fund
had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by
- --------------------------------------------------------------------------------
22 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings were entirely
comprised of Taiwan dollars.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
counterparty will not complete its contract obligations. At April 30, 2009, the
Fund had no outstanding forward foreign currency contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 23
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally
the tax authorities can examine all the tax returns filed for the last three
years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of options contracts,
foreign currency transactions and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At April 30, 2009, the Fund did not own nor was it a party to
any credit derivative contracts within the scope of these amendments.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly"
- --------------------------------------------------------------------------------
24 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(FSP 157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within 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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.595% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Global Science and Technology Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment increased the management fee by
$25,922 for the six months ended April 30, 2009. The management fee for the six
months ended April 30, 2009 was 0.79% of the Fund's average daily net assets,
including the adjustment under the terms of the performance incentive
arrangement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 25
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.06% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $292.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R4 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 in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Funds average daily net assets
attributable to Class R4 shares for the provision of various administrative,
record keeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, Distributor) for distribution and shareholder
- --------------------------------------------------------------------------------
26 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the
Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net
assets attributable to Class A shares and a fee at an annual rate of up to 1.00%
of the Fund's average daily net assets attributable to Class B and Class C
shares. For Class B and Class C shares, up to 0.75% of the fee is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $467,000 and $28,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$64,805 for Class A, $4,881 for Class B and $334 for Class C for the six months
ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*), including the adjustment under
the terms of a performance incentive arrangement, were as follows:
<Table>
Class R4............................................ 1.25%
</Table>
The waived/reimbursed fees and expenses for the plan administration services fee
at the class level were as follows:
<Table>
Class R4............................................ $64
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed 1.41% for Class R4 of the class average daily net assets.
* 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Nov. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $4,225 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 $115,116,213 and $108,134,411 respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 4,183,590 -- (5,765,307) (1,581,717)
Class B 825,841 -- (1,164,300) (338,459)
Class C 300,688 -- (201,083) 99,605
Class I 9,648,311 -- (22,689) 9,625,622
Class R4 91,359 -- (39,856) 51,503
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 8,799,565 -- (13,224,262) (4,424,697)
Class B 993,451 -- (6,754,597) (5,761,146)
Class C 254,027 -- (411,849) (157,822)
Class I -- -- (3,097) (3,097)
Class R4 48,279 -- (56,646) (8,367)
- ----------------------------------------------------------------------------------
</Table>
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
- --------------------------------------------------------------------------------
28 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and uninvested cash
collateral balance, are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At April 30, 2009, securities valued at $15,811,848 were
on loan, secured by cash collateral of $16,154,555 invested in short-term
securities or in cash equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$9,410 earned from securities lending from Dec. 1, 2008 through April 30, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $53,115,365 and $44,062,632, respectively, for the six
months ended April 30, 2009. The income distributions received with respect
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
to the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes the Fund had a capital loss carry-over of
$348,953,680 at Oct. 31, 2008, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2009 2010 2016
$250,345,326 $81,299,277 $17,309,127
</Table>
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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
SECTOR RISK
The Fund invests a significant part of its total assets in securities of
companies primarily engaged in the technology, media and telecommunications
sectors. This may result in greater fluctuations in value than would be the case
for a fund
- --------------------------------------------------------------------------------
30 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
invested in a wider variety of unrelated industries. As these sectors increase
or decrease in favor with the investing public, the price of securities of
companies that rely heavily on those sectors could become increasingly sensitive
to downswings in the economy.
FOREIGN RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the District Count). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to retain an independent distribution consultant to assist in
developing a plan for distribution of all disgorgement and civil penalties
ordered by the SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially
- --------------------------------------------------------------------------------
32 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds. There have been no further developments with the SEC on
this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
11. SUBSEQUENT EVENT
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
the Fund into Seligman Global Technology Fund. The merger is anticipated to take
place as of the close of business on Sept. 11, 2009.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 33
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS
- --------------------------------------------------------------------------------
34 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Agreement. Further, the Board considered RiverSource Investments' ability to
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance met expectations.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 35
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
generally in line with the "pricing philosophy" (i.e., that the total expense
ratio of each fund (excluding the effect of a performance incentive adjustment,
if applicable), with few exceptions, is at or below the median expense ratio of
funds in the same comparison group). The Board took into account that the Fund's
total expense ratio (after considering proposed expense caps/waivers)
approximated the peer group's median expense ratio. The Board also considered
the Fund's performance incentive adjustment and noted its continued
appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
36 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2009 SEMIANNUAL REPORT 37
RIVERSOURCE GLOBAL TECHNOLOGY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource is part
of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6396 L (6/09)
</Table>
Semiannual Report
(THREADNEEDLE LOGO)
THREADNEEDLE
EMERGING MARKETS FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
THREADNEEDLE EMERGING MARKETS FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 7
Portfolio of Investments........... 9
Statement of Assets and
Liabilities...................... 16
Statement of Operations............ 18
Statements of Changes in Net
Assets........................... 19
Financial Highlights............... 21
Notes to Financial Statements...... 27
Approval of Investment Management
Services Agreement............... 42
Proxy Voting....................... 45
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," "Seligman" and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE --------------------------------
(UNAUDITED)
FUND SUMMARY
- ------------------------------------------------------
> Threadneedle Emerging Markets Fund (the Fund) Class A shares rose 11.29%
(excluding sales charge) for the six months ended April 30, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) Emerging Markets Index, which returned 17.52%.
> The Fund also underperformed its peer group, the Lipper Emerging Markets Funds
Index, which gained 11.51% for the period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
6 months* 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------
Threadneedle Emerging
Markets Fund Class A
(excluding sales
charge) +11.29% -46.67% -7.84% +8.82% +6.81%
- ------------------------------------------------------------------------
MSCI Emerging Markets
Index(1) (unmanaged) +17.52% -42.71% -5.23% +11.46% +8.54%
- ------------------------------------------------------------------------
Lipper Emerging Markets
Funds Index(2) +11.51% -46.10% -8.45% +8.94% +7.76%
- ------------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
(1) The Morgan Stanley Capital International (MSCI) Emerging Markets Index, an
unmanaged market capitalization-weighted index, is designed to measure
equity market performance in the global
- --------------------------------------------------------------------------------
2 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
emerging markets. The index reflects reinvestment of all distributions and
changes in market prices.
(2) The Lipper Emerging Markets Funds Index includes the 30 largest emerging
markets 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.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
11/13/96) +11.29% -46.67% -7.84% +8.82% +6.81% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) +11.06% -47.04% -8.54% +8.01% +5.99% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) +11.04% -47.05% -8.55% +8.00% N/A +4.48%
- -------------------------------------------------------------------------------------
Class I (inception
3/4/04) +11.72% -46.34% -7.39% +9.36% N/A +7.12%
- -------------------------------------------------------------------------------------
Class R4 (inception
11/13/96) +11.67% -46.36% -7.50% +9.14% +7.10% N/A
- -------------------------------------------------------------------------------------
Class R5 (inception
8/1/08) +11.89% N/A N/A N/A N/A -38.41%*
- -------------------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) +4.94% -49.73% -9.65% +7.54% +6.27% N/A
- -------------------------------------------------------------------------------------
Class B (inception
11/13/96) +6.06% -49.69% -9.28% +7.75% +5.99% N/A
- -------------------------------------------------------------------------------------
Class C (inception
6/26/00) +10.04% -47.58% -8.55% +8.00% N/A +4.48%
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
11/13/96) -29.84% -50.00% -9.93% +3.97% +6.97% N/A
- ------------------------------------------------------------------------------------
Class B (inception
11/13/96) -30.08% -50.40% -10.61% +3.19% +6.15% N/A
- ------------------------------------------------------------------------------------
Class C (inception
6/26/00) -30.03% -50.35% -10.58% +3.23% N/A +2.94%
- ------------------------------------------------------------------------------------
Class I (inception
3/4/04) -29.62% -49.75% -9.48% +4.49% N/A +4.39%
- ------------------------------------------------------------------------------------
Class R4 (inception
11/13/96) -29.64% -49.75% -9.61% +4.29% +7.26% N/A
- ------------------------------------------------------------------------------------
Class R5 (inception
8/1/08) -29.64% N/A N/A N/A N/A -46.24%*
- ------------------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -33.88% -52.88% -11.68% +2.76% +6.44% N/A
- ------------------------------------------------------------------------------------
Class B (inception
11/13/96) -33.58% -52.88% -11.33% +2.94% +6.15% N/A
- ------------------------------------------------------------------------------------
Class C (inception
6/26/00) -30.73% -50.84% -10.58% +3.23% N/A +2.94%
- ------------------------------------------------------------------------------------
</Table>
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 R5 shares. Class I, Class R4 and Class
R5 shares are available to institutional investors only.
*Not annualized.
**For classes with less than 10 years performance.
***For Class B shares purchased on or after June 13, 2009 the CDSC percentage
for the third year will be 3%.
- --------------------------------------------------------------------------------
4 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
-----------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund Net fund
expenses expenses
- ----------------------------------------
Class A 1.87% 1.87%
- ----------------------------------------
Class B 2.62% 2.62%
- ----------------------------------------
Class C 2.63% 2.63%
- ----------------------------------------
Class I 1.42% 1.42%
- ----------------------------------------
Class R4 1.73% 1.72%(a)
- ----------------------------------------
Class R5 1.47% 1.47%
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment (that increased the management fee by 0.08%
for the year ended Oct. 31, 2008), will not exceed 1.64% for Class R4.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
COUNTRY DIVERSIFICATION(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Brazil 16.1%
- ------------------------------------------------
Chile 0.1%
- ------------------------------------------------
China 13.7%
- ------------------------------------------------
Hong Kong 7.7%
- ------------------------------------------------
India 7.7%
- ------------------------------------------------
Indonesia 0.3%
- ------------------------------------------------
Israel 3.2%
- ------------------------------------------------
Malaysia 0.6%
- ------------------------------------------------
Mexico 4.7%
- ------------------------------------------------
Russia 10.1%
- ------------------------------------------------
South Africa 5.7%
- ------------------------------------------------
South Korea 12.5%
- ------------------------------------------------
Taiwan 11.4%
- ------------------------------------------------
Thailand 0.9%
- ------------------------------------------------
Turkey 1.8%
- ------------------------------------------------
United Kingdom 1.2%
- ------------------------------------------------
United States 0.7%
- ------------------------------------------------
Other(2) 1.6%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
TOP TEN HOLDINGS (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Petroleo Brasileiro ADR (Brazil) 3.8%
- ------------------------------------------------
Samsung Electronics (South Korea) 3.4%
- ------------------------------------------------
Industrial & Commercial Bank of China
(China) 3.0%
- ------------------------------------------------
Companhia Vale do Rio Doce ADR (Brazil) 2.9%
- ------------------------------------------------
China Life Insurance (China) 2.7%
- ------------------------------------------------
CNOOC ADR (Hong Kong) 2.6%
- ------------------------------------------------
Infosys Technologies (India) 2.5%
- ------------------------------------------------
Teva Pharmaceutical Inds ADR (Israel) 2.5%
- ------------------------------------------------
Taiwan Semiconductor Mfg (Taiwan) 2.3%
- ------------------------------------------------
Hon Hai Precision Industry (Taiwan) 2.3%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the 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 April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 7
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,112.90 $10.90 2.08%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.48 $10.39 2.08%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,110.60 $14.97 2.86%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,110.40 $14.80 2.86%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,107.90 $14.84 2.84%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,010.71 $14.16 2.84%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,117.20 $ 7.45 1.42%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.75 $ 7.10 1.42%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,116.70 $ 8.50 1.62%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.76 $ 8.10 1.62%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,118.90 $ 7.57 1.44%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.65 $ 7.20 1.44%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: +11.29%
for Class A, +11.06% for Class B, +11.04% for Class C, +11.72% for Class I,
+11.67% for Class R4 and +11.89% for Class R5.
- --------------------------------------------------------------------------------
8 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (97.5%)(c)
ISSUER SHARES VALUE(a)
BRAZIL (16.0%)
BM&F BOVESPA 402,200 $1,655,069
Companhia Siderurgica Nacional ADR 223,681 4,142,572
Companhia Vale do Rio Doce ADR 500,234 8,258,863
Itau Unibanco Banco Multiplo 355,300 4,938,561
Lojas Renner 273,800 2,486,247
Multiplan Empreendimentos Imobiliarios 358,200(b) 2,789,149
Natura Cosmeticos 61,000 725,162
OGX Petroleo e Gas Participacoes 3,000 1,260,560
PDG Realty 37,500 357,666
Petroleo Brasileiro ADR 318,127 10,679,524
Redecard 423,200 5,330,879
Vivo Participacoes ADR 150,916 2,408,619
---------------
Total 45,032,871
- -------------------------------------------------------------------------------------
CHILE (0.1%)
SQM ADR 9,868 310,941
- -------------------------------------------------------------------------------------
CHINA (13.6%)
Anhui Conch Cement Cl H 268,000(b) 1,796,488
Bank of China Series H 9,540,000 3,569,853
China Construction Bank Series H 6,978,000 4,069,802
China Life Insurance Series H 2,161,000 7,626,337
China Petroleum & Chemical Series H 3,622,000 2,841,554
China Shenhua Energy Series H 723,500 2,030,494
Industrial & Commercial Bank of China Series
H 14,699,000 8,459,147
Li Ning 1,324,000(f) 2,733,455
Ping An Insurance Group of China Series H 806,000 5,044,065
---------------
Total 38,171,195
- -------------------------------------------------------------------------------------
HONG KONG (7.6%)
Agile Property Holdings 3,440,000 2,596,679
China Mobile 652,000 5,661,957
China Overseas Land & Investment 2,529,280 4,464,645
China Resources Land 744,000 1,347,857
CNOOC ADR 65,599 7,304,449
---------------
Total 21,375,587
- -------------------------------------------------------------------------------------
INDIA (7.6%)
Bharat Heavy Electricals 81,217 2,705,517
Bharti Airtel 199,355(b) 3,019,838
Housing Development Finance 126,768 4,406,713
Infosys Technologies 235,342 7,156,911
Reliance Inds 114,040 4,154,288
---------------
Total 21,443,267
- -------------------------------------------------------------------------------------
INDONESIA (0.3%)
Bumi Resources 6,918,000(g) 965,909
- -------------------------------------------------------------------------------------
ISRAEL (3.2%)
Israel Chemicals 244,961 2,060,103
Teva Pharmaceutical Inds ADR 158,406 6,952,439
---------------
Total 9,012,542
- -------------------------------------------------------------------------------------
MALAYSIA (0.6%)
IOI 1,432,300 1,731,484
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MEXICO (4.7%)
America Movil ADR Series L 180,119 $5,916,909
Desarrolladora Homex ADR 126,936(b) 2,359,740
Grupo Televisa ADR 118,554 1,835,216
Wal-Mart de Mexico Series V 1,121,400(f) 3,051,750
---------------
Total 13,163,615
- -------------------------------------------------------------------------------------
RUSSIA (10.0%)
Eurasia Drilling GDR 236,717(d,e) 1,739,870
Gazprom ADR 233,481 4,126,777
LUKOIL ADR 91,917 4,099,498
NovaTek GDR 56,683(d,e) 2,012,247
Pharmstandard 72,811(b) 2,071,473
Rosneft Oil GDR 533,968(d) 2,867,408
Sberbank Cl S 3,566,194 3,004,518
Sibirskiy Cement 24,589 243,431
Vimpel-Communications ADR 299,604 2,822,270
Wimm-Bill-Dann Foods ADR 34,074(b) 1,522,086
X5 Retail Group GDR 267,918(b,d,e) 3,590,101
---------------
Total 28,099,679
- -------------------------------------------------------------------------------------
SOUTH AFRICA (5.7%)
AngloGold Ashanti 61,280 1,895,396
Aquarius Platinum 341,594 1,313,992
Gold Fields 248,082 2,589,484
MTN Group 335,511 4,399,884
Murray & Roberts Holdings 255,341 1,440,474
Sasol 138,260 4,214,322
Standard Bank Group 19,992 194,860
---------------
Total 16,048,412
- -------------------------------------------------------------------------------------
SOUTH KOREA (12.4%)
Hyundai Department Store 19,648 1,218,516
Hyundai Engineering & Construction 17,678 834,323
Hyundai Mobis 44,903 3,439,796
KT&G 25,832 1,422,684
LG Display 136,290 3,327,777
Samsung Electronics 25,312 9,709,481
Samsung Fire & Marine Insurance 29,126 3,976,168
Samsung Securities 54,922 2,823,434
Shinhan Financial Group 149,370(b) 3,693,758
SK Telecom 9,926 1,420,876
Yuhan 18,855 2,912,310
---------------
Total 34,779,123
- -------------------------------------------------------------------------------------
TAIWAN (11.3%)
Asia Cement 1,550,000 1,598,712
Asustek Computer 1,468,062 1,947,144
Cathay Financial Holding 1,615,000 1,809,860
Chunghwa Telecom 728,659(b) 1,388,510
Far Eastern Textile 899,000 838,878
Fubon Financial Holding 1,267,000 984,904
Hon Hai Precision Industry 2,204,250 6,373,865
HTC 56,000 758,840
MediaTek 382,000 3,980,492
Taiwan Semiconductor Mfg 3,868,000 6,458,173
Tripod Technology 1,227,155 2,022,926
U-Ming Marine Transport 1,204,000 2,177,769
Yuanta Financial Holding 2,599,000 1,525,078
---------------
Total 31,865,151
- -------------------------------------------------------------------------------------
THAILAND (0.8%)
Siam Commercial Bank 1,389,400 2,374,790
- -------------------------------------------------------------------------------------
TURKEY (1.7%)
BIM Birlesik Magazalar 49,488 1,361,941
Turkiye Garanti Bankasi 1,682,554(b) 3,536,015
---------------
Total 4,897,956
- -------------------------------------------------------------------------------------
UNITED KINGDOM (1.2%)
Standard Chartered 209,167 3,274,071
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
10 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED STATES (0.7%)
Southern Copper 107,494 $1,996,164
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $277,716,107) $274,542,757
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (1.6%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 4,590,322(h) $4,590,322
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $4,590,322) $4,590,322
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (1.3%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 3,549,611 $3,549,611
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $3,549,611) $3,549,611
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $285,856,040)(i) $282,682,690
=====================================================================================
</Table>
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at April 30, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- ------------------------------------------------------------------------
Auto Components 1.2% $3,439,796
Capital Markets 1.0 2,823,434
Chemicals 0.8 2,371,044
Commercial Banks 13.1 37,115,375
Computers & Peripherals 1.0 2,705,984
Construction & Engineering 0.8 2,274,797
Construction Materials 1.2 3,395,200
Diversified Financial Services 1.5 4,165,051
Diversified Telecommunication Services 1.5 4,210,780
Electrical Equipment 1.0 2,705,517
Electronic Equipment, Instruments &
Components 4.2 11,724,568
Energy Equipment & Services 0.6 1,739,870
Food & Staples Retailing 2.8 8,003,792
Food Products 1.2 3,253,570
Household Durables 1.0 2,717,406
Industrial Conglomerates 0.3 838,878
Insurance 6.6 18,456,430
IT Services 4.4 12,487,790
Leisure Equipment & Products 1.0 2,733,455
Marine 0.8 2,177,769
Media 0.7 1,835,216
Metals & Mining 7.2 20,196,471
Multiline Retail 1.3 3,704,763
Multi-Utilities 0.1 243,431
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- ------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 16.4% $46,557,030
Personal Products 0.3 725,162
Pharmaceuticals 4.2 11,936,222
Real Estate Management & Development 4.0 11,198,330
Semiconductors & Semiconductor Equipment 7.2 20,148,146
Thrifts & Mortgage Finance 1.6 4,406,713
Tobacco 0.5 1,422,684
Wireless Telecommunication Services 8.0 22,828,083
Other(1) 2.9 8,139,933
- ------------------------------------------------------------------------
Total $282,682,690
- ------------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------
May 5, 2009 11,500,000 1,297,149 $-- $(61,163)
South African Rand U.S. Dollar
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At April 30,
2009, the value of these securities amounted to $10,209,626 or 3.6% of net
assets.
- --------------------------------------------------------------------------------
12 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). The aggregate value of such securities
at April 30, 2009, was $7,342,218 representing 2.6% of net assets.
Information concerning such security holdings at April 30, 2009, is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
---------------------------------------------------------------------------
Eurasia Drilling GDR* 11-02-07 thru 04-15-08 $5,578,172
NovaTek GDR* 02-09-09 thru 04-22-09 1,608,185
X5 Retail Group GDR* 12-16-08 thru 01-28-09 2,444,987
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(f) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(g) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
(h) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(i) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $285,856,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $26,553,000
Unrealized depreciation (29,726,000)
-----------------------------------------------------------
Net unrealized depreciation $(3,173,000)
-----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level. 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 NYSE or require adjustment, as described in Note 1 to the
financial statements -- Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
---------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------
Investments in
securities $258,372,015 $24,310,675 $-- $282,682,690
Other financial
instruments* -- (61,163) -- (61,163)
- ----------------------------------------------------------------------------------
Total $258,372,015 $24,249,512 $-- $282,621,527
- ----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as forwards,
which are valued at the unrealized appreciation (depreciation) on the
instrument.
- --------------------------------------------------------------------------------
14 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 15
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $277,716,107) $ 274,542,757
Affiliated money market fund (identified cost $4,590,322) 4,590,322
Investments of cash collateral received for securities on loan
(identified cost $3,549,611) 3,549,611
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $285,856,040) 282,682,690
Foreign currency holdings (identified cost $2,046,665) 2,054,381
Capital shares receivable 311,306
Dividends and accrued interest receivable 580,750
Receivable for investment securities sold 8,733,833
- --------------------------------------------------------------------------------
Total assets 294,362,960
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 287,478
Payable for investment securities purchased 8,567,484
Payable upon return of securities loaned 3,549,611
Unrealized depreciation on forward foreign currency contracts 61,163
Accrued investment management services fees 8,330
Accrued distribution fees 2,536
Accrued transfer agency fees 2,761
Accrued administrative services fees 607
Accrued plan administration services fees 5
Other accrued expenses 344,997
- --------------------------------------------------------------------------------
Total liabilities 12,824,972
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 281,537,988
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 517,050
Additional paid-in capital 429,585,991
Undistributed net investment income 96,063
Accumulated net realized gain (loss) (145,484,099)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (3,177,017)
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 281,537,988
- --------------------------------------------------------------------------------
*Including securities on loan, at value $ 3,477,064
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
16 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $248,915,953 45,095,614 $5.52(1)
Class B $ 28,110,285 5,714,419 $4.92
Class C $ 3,803,531 771,575 $4.93
Class I $ 8,907 1,558 $5.72
Class R4 $ 696,243 121,347 $5.74
Class R5 $ 3,069 535 $5.74
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $5.86. 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.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 17
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 3,136,368
Interest 718
Income distributions from affiliated money market fund 18,768
Fee income from securities lending 50,847
Less foreign taxes withheld (388,401)
- --------------------------------------------------------------------------------
Total income 2,818,300
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 1,354,629
Distribution fees
Class A 276,898
Class B 125,296
Class C 15,745
Transfer agency fees
Class A 454,748
Class B 54,810
Class C 6,683
Class R4 163
Administrative services fees 100,155
Plan administration services fees -- Class R4 815
Compensation of board members 4,379
Custodian fees 208,000
Printing and postage 73,160
Registration fees 19,010
Professional fees 23,290
Other 51
- --------------------------------------------------------------------------------
Total expenses 2,717,832
Expenses waived/reimbursed by the Investment Manager and its
affiliates (765)
- --------------------------------------------------------------------------------
Total net expenses 2,717,067
- --------------------------------------------------------------------------------
Investment income (loss) -- net 101,233
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (123,986,283)
Foreign currency transactions (789,996)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (124,776,279)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 150,669,990
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 25,893,711
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 25,994,944
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
18 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 101,233 $ 4,436,377
Net realized gain (loss) on investments (124,776,279) (19,657,824)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 150,669,990 (421,981,869)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 25,994,944 (437,203,316)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A -- (7,733,781)
Class B -- (584,169)
Class C -- (60,487)
Class I -- (828,121)
Class R4 -- (23,143)
Net realized gain
Class A -- (117,775,823)
Class B -- (18,510,075)
Class C -- (1,520,014)
Class I -- (9,800,247)
Class R4 -- (416,434)
- --------------------------------------------------------------------------------------------------
Total distributions -- (157,252,294)
- --------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 18,571,536 $ 109,825,373
Class B shares 1,918,455 12,474,577
Class C shares 786,511 2,616,649
Class I shares -- 30,164,283
Class R4 shares 54,161 642,913
Class R5 shares -- 5,000
Reinvestment of distributions at net asset value
Class A shares -- 124,102,560
Class B shares -- 18,787,330
Class C shares -- 1,531,576
Class I shares -- 10,623,826
Class R4 shares -- 439,576
Payments for redemptions
Class A shares (42,791,848) (148,388,977)
Class B shares (4,485,899) (31,272,815)
Class C shares (529,465) (2,462,810)
Class I shares -- (72,065,208)
Class R4 shares (203,913) (921,454)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (26,680,462) 56,102,399
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (685,518) (538,353,211)
Net assets at beginning of period 282,223,506 820,576,717
- --------------------------------------------------------------------------------------------------
Net assets at end of period $ 281,537,988 $ 282,223,506
- --------------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ 96,063 $ (5,170)
- --------------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $4.96 $14.99 $11.32 $8.23 $6.27
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) --(b) .08(b) .04(b) .01 .04
Net gains (losses) (both realized and
unrealized) .56 (7.24) 6.27 3.10 1.95
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .56 (7.16) 6.31 3.11 1.99
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.18) -- (.02) (.03)
Distributions from realized gains -- (2.69) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions -- (2.87) (2.64) (.02) (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.52 $4.96 $14.99 $11.32 $8.23
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $249 $250 $661 $425 $295
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.08%(e) 1.87% 1.83% 1.81% 1.79%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .17%(e) .78% .31% .19% .54%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133% 125% 145% 124%
- --------------------------------------------------------------------------------------------------------------
Total return(f) 11.29%(g) (57.79%) 68.21% 37.85% 31.83%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 21
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $4.43 $13.73 $10.63 $7.77 $5.95
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) .00(b),(c) (.05)(b) (.05) (.01)
Net gains (losses) (both realized and
unrealized) .50 (6.53) 5.79 2.91 1.83
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .49 (6.53) 5.74 2.86 1.82
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.08) -- -- --
Distributions from realized gains -- (2.69) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions -- (2.77) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.92 $4.43 $13.73 $10.63 $7.77
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $28 $28 $94 $77 $74
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 2.86%(f) 2.62% 2.58% 2.57% 2.55%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.61%)(f) .02% (.48%) (.55%) (.24%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133% 125% 145% 124%
- --------------------------------------------------------------------------------------------------------------
Total return(g) 11.06%(h) (58.08%) 66.95% 36.81% 30.59%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $4.44 $13.78 $10.66 $7.79 $5.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) .00(b),(c) (.05)(b) (.06) --
Net gains (losses) (both realized and
unrealized) .50 (6.54) 5.81 2.93 1.82
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .49 (6.54) 5.76 2.87 1.82
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.11) -- -- --
Distributions from realized gains -- (2.69) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions -- (2.80) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.93 $4.44 $13.78 $10.66 $7.79
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $3 $8 $5 $3
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 2.84%(f) 2.63% 2.59% 2.58% 2.56%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.58%)(f) .03% (.48%) (.57%) (.19%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133% 125% 145% 124%
- --------------------------------------------------------------------------------------------------------------
Total return(g) 11.04%(h) (58.15%) 67.03% 36.84% 30.54%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(g) 2008 2007 2006 2005
Net asset value, beginning of period $5.12 $15.38 $11.50 $8.35 $6.36
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02(b) .11(b) .09(b) .03 .06
Net gains (losses) (both realized and
unrealized) .58 (7.45) 6.43 3.16 1.98
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .60 (7.34) 6.52 3.19 2.04
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.23) -- (.04) (.05)
Distributions from realized gains -- (2.69) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions -- (2.92) (2.64) (.04) (.05)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.72 $5.12 $15.38 $11.50 $8.35
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $56 $41 $19
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.42%(e) 1.42% 1.39% 1.35% 1.30%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .84%(e) .97% .75% .63% .97%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133% 125% 145% 124%
- --------------------------------------------------------------------------------------------------------------
Total return 11.72%(f) (57.63%) 69.07% 38.36% 32.32%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Not annualized.
(g) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $5.14 $15.32 $11.50 $8.33 $6.35
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02(b) .11(b) .05(b) .03 .05
Net gains (losses) (both realized and
unrealized) .58 (7.45) 6.41 3.14 1.97
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .60 (7.34) 6.46 3.17 2.02
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.15) -- -- (.04)
Distributions from realized gains -- (2.69) (2.64) -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions -- (2.84) (2.64) -- (.04)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.74 $5.14 $15.32 $11.50 $8.33
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $1 $2 $6 $2
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.73%(e) 1.73% 1.65% 1.63% 1.59%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.49%(e) 1.47% 1.65% 1.63% 1.59%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .77%(e) 1.12% .45% .41% .81%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133% 125% 145% 124%
- --------------------------------------------------------------------------------------------------------------
Total return 11.67%(h) (57.58%) 68.51% 38.06% 31.87%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $5.13 $9.32
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .02 .03
Net gains (losses) (both realized and
unrealized) .59 (4.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .61 (4.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.74 $5.13
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.44%(f) 1.47%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .81%(f) 1.57%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 95% 133%
- --------------------------------------------------------------------------------------------------------------
Total return 11.89%(g) (44.96%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Emerging Markets Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Global 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 emerging markets
companies.
The Fund offers Class A, Class B, Class C, Class I, 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 R4 and Class R5 shares are sold without a front-end sales
charge or CDSC and are offered to qualifying institutional investors.
At April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) owned 100% of Class I and Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
develop the measurements of fair value and the effect of certain measurements
reported in the Statement of Operations for a fiscal period. There was no impact
to the Fund's net assets or results of operations upon adoption. The fair
valuation measurements disclosure can be found following the Notes to Portfolio
of Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
- --------------------------------------------------------------------------------
28 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
At April 30, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at April 30, 2009 was
$7,342,218 representing 2.61% of net assets. Certain illiquid securities may be
valued by management at fair value according to procedures approved, in good
faith, by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Options
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option
or the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At April 30, 2009, and for the six months
then ended, the Fund had no outstanding option contracts.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires. At April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings consisted of
multiple denominations, primarily Indian rupees and South Korean wons.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations.
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
- --------------------------------------------------------------------------------
30 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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.
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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, and losses
deferred due to wash sales. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At April 30, 2009, the Fund did not own nor was it a party to
any credit derivative contracts within the scope of these amendments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within 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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 1.10%
to 0.90% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
- --------------------------------------------------------------------------------
32 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Emerging Markets Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$21,610 for the six months ended April 30, 2009. The management fee for the six
months ended April 30, 2009 was 1.08% of the Fund's average daily net assets,
including the adjustment under the terms of the performance incentive
arrangement.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines 0.08% to 0.05% annually as the Fund's
assets increase. The fee for the six months ended April 30, 2009 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $1,098.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average net assets attributable to 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 in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A shares and a fee at an annual
rate of up to 1.00% of the Fund's average daily net assets attributable to Class
B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is
reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $981,000 and $44,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$158,518 for Class A, $11,391 for Class B and $418 for Class C for the six
months ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
- --------------------------------------------------------------------------------
34 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(excluding fees and expenses of acquired funds*), including the adjustment under
the terms of a performance incentive arrangement, were as follows:
<Table>
Class R4............................................ 1.49%
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4........................................... $163
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4........................................... $602
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the class average daily net assets:
<Table>
Class R4............................................ 1.64%
</Table>
* 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.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Nov. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $3,133 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 $236,997,543 and $259,653,495, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 3,896,552 -- (9,254,316) (5,357,764)
Class B 445,121 -- (1,085,214) (640,093)
Class C 185,904 -- (126,176) 59,728
Class R4 11,054 -- (41,922) (30,868)
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2008*
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 11,082,775 11,944,431 (16,677,659) 6,349,547
Class B 1,336,871 2,007,193 (3,818,705) (474,641)
Class C 296,342 163,281 (305,438) 154,185
Class I 2,894,086 993,810 (7,495,922) (3,608,026)
Class R4 56,860 40,967 (95,990) 1,837
Class R5 535 -- -- 535
- ----------------------------------------------------------------------------------
</Table>
* Class R5 is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments, and any uninvested
cash collateral balance, are disclosed in the Statement of Assets and
Liabilities along with the related obligation to return the collateral upon the
return of the securities loaned. At April 30, 2009, securities valued at
$3,477,064 were on loan, secured by cash collateral of $3,549,611 invested in
short-term securities or in cash equivalents.
- --------------------------------------------------------------------------------
36 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$50,847 earned from securities lending from Dec. 1, 2008 through April 30, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $100,055,098 and $108,986,137, respectively, for the six
months ended April 30, 2009. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
8. CAPITAL LOSS CARRY-OVER
For federal tax purposes, the Fund had a capital loss carry-over of $8,838,403
at Oct. 31, 2008, that if not offset by capital gains will expire in 2016. 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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed
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38 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
to transfer this case to the United States District Court for the District of
Minnesota (the District Court). In response to defendants' motion to dismiss the
complaint, the District Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Defendants moved for summary judgment in
April 2007. Summary judgment was granted in the defendants' favor on July 9,
2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of
Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth
Circuit reversed summary judgment and remanded to the District Court for further
proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG).
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
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
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40 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 41
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds"). In addition, under the
subadvisory agreement (the "Subadvisory Agreement") between RiverSource
Investments and Threadneedle International Limited (the "Subadviser"), the
Subadviser performs portfolio management and related services for the Fund.
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
each of the IMS Agreement and the Subadvisory Agreement (together, the "Advisory
Agreements"). RiverSource Investments prepared detailed reports for the Board
and its Contracts Committee in March and April 2009, including reports based on
data provided by independent organizations to assist the Board in making these
determinations. In addition, throughout the year, the Board (or its committees)
reviews information prepared by RiverSource Investments addressing the services
RiverSource Investments provides and Fund performance. The Board accords
particular weight to the work, deliberations and conclusions of the Contracts,
Investment Review and Compliance Committees in determining whether to continue
the Advisory Agreements. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory and subadvisory agreements and the Board's legal responsibilities
related to such consideration. Following an analysis and discussion of the
factors identified below, the Board, including all of the Independent Directors,
approved renewal of the Advisory Agreements.
Nature, Extent and Quality of Services Provided by RiverSource Investments and
the Subadviser: The Board analyzed various reports and presentations it had
received detailing the services performed by RiverSource Investments and the
Subadviser, as well as their expertise, resources and capabilities. The Board
specifically considered many developments during the past year concerning the
services provided by RiverSource Investments, including, in particular, the
continued investment in, and resources dedicated to, the Fund's operations, most
notably, the large investment made in the acquisition of J. & W. Seligman & Co.
Incorporated, including its portfolio management operations, personnel and
infrastructure (including the addition of two new offices in New York City and
Palo Alto). Further, in connection with the Board's evaluation of the overall
- --------------------------------------------------------------------------------
42 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
package of services provided by RiverSource Investments, the Board considered
the quality of the administrative and transfer agency services provided by
RiverSource Investments' affiliates to the Fund. The Board also reviewed the
financial condition of RiverSource Investments (and its affiliates including the
Subadviser), and each entity's ability to carry out its responsibilities under
the Advisory Agreements. Further, the Board considered RiverSource Investments'
ability to retain key personnel and its expectations in this regard. The Board
also discussed the acceptability of the terms of the Advisory Agreements
(including the relatively broad scope of services required to be performed by
RiverSource Investments). The Board concluded that the services being performed
under the Advisory Agreements were of a reasonably high quality, particularly in
light of recent market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates including the Subadviser, were in a position to continue to
provide a high quality and level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the Advisory Agreements, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance met expectations.
Additionally, the Board reviewed the performance of the Subadviser and
RiverSource Investments' processes for monitoring the Subadviser. The Board
considered, in particular, management's rationale for recommending the continued
retention of the Subadviser.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the Advisory Agreements. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 43
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
funds in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts of the investment manager (or Subadviser) (with
similar investment strategies to those of the Fund).
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) was slightly below the peer group's median expense ratio shown in
the reports. The Board also considered the Fund's performance incentive
adjustment and noted its continued appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
- --------------------------------------------------------------------------------
44 THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services provided. In
reaching this conclusion, no single factor was determinative. On April 8, 2009,
the Board, including all of the Independent Directors, approved the renewal of
the Advisory Agreements for an additional annual period.
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 SEMIANNUAL REPORT 45
THREADNEEDLE EMERGING MARKETS FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource Investments employs
Threadneedle as a subadviser. Threadneedle(R) mutual funds
are distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource and
Threadneedle are part of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6344 P (6/09)
</Table>
Semiannual Report
(THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
THREADNEEDLE GLOBAL EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 10
Portfolio of Investments........... 13
Statement of Assets and
Liabilities...................... 20
Statement of Operations............ 22
Statements of Changes in Net
Assets........................... 24
Financial Highlights............... 25
Notes to Financial Statements...... 34
Approval of Investment Management
Services Agreement............... 49
Proxy Voting....................... 52
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," "Seligman" and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Equity Fund (the Fund) Class A shares declined 3.02%
(excluding sales charge) for the six months ended April 30, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index, which fell 3.00% for the six
month period.
> The Lipper Global Funds Index, representing the Fund's peer group, declined
3.98% over the same timeframe.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
6 months* 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------
Threadneedle Global
Equity Fund Class A
(excluding sales
charge) -3.02% -40.07% -11.66% +1.20% -2.53%
- ------------------------------------------------------------------------
MSCI All Country World
Index(1) (unmanaged) -3.00% -39.35% -10.51% +0.32% -0.56%
- ------------------------------------------------------------------------
Lipper Global Funds
Index(2) -3.98% -36.72% -10.52% -0.06% +0.40%
- ------------------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an
unmanaged index of equity securities, is designed to measure equity market
performance in the global developed and emerging markets. The index reflects
reinvestment of all distributions and changes in market prices.
(2) The Lipper Global Funds Index includes the 30 largest global 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
5/29/90) -3.02% -40.07% -11.66% +1.20% -2.53% N/A
- ---------------------------------------------------------------------------------
Class B (inception
3/20/95) -3.29% -40.46% -12.32% +0.44% -3.27% N/A
- ---------------------------------------------------------------------------------
Class C (inception
6/26/00) -3.31% -40.43% -12.30% +0.43% N/A -5.62%
- ---------------------------------------------------------------------------------
Class I (inception
8/1/08) -2.51% N/A N/A N/A N/A -31.48%*
- ---------------------------------------------------------------------------------
Class R2 (inception
12/11/06) -2.94% -40.00% N/A N/A N/A -16.37%
- ---------------------------------------------------------------------------------
Class R3 (inception
12/11/06) -2.83% -39.89% N/A N/A N/A -16.19%
- ---------------------------------------------------------------------------------
Class R4 (inception
3/20/95) -2.73% -39.81% -11.49% +1.40% -2.34% N/A
- ---------------------------------------------------------------------------------
Class R5 (inception
12/11/06) -2.58% -39.69% N/A N/A N/A -15.93%
- ---------------------------------------------------------------------------------
Class W (inception
12/1/06) -2.74% -39.95% N/A N/A N/A -15.81%
- ---------------------------------------------------------------------------------
With sales charge
Class A (inception
5/29/90) -8.64% -43.49% -13.38% 0.00% -3.03% N/A
- ---------------------------------------------------------------------------------
Class B (inception
3/20/95) -8.12% -43.43% -13.50% +0.04% -3.27% N/A
- ---------------------------------------------------------------------------------
Class C (inception
6/26/00) -4.28% -41.03% -12.30% +0.43% N/A -5.62%
- ---------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION**
Class A (inception
5/29/90) -27.31% -41.98% -13.15% -1.07% -3.01% N/A
- ---------------------------------------------------------------------------------
Class B (inception
3/20/95) -27.67% -42.44% -13.85% -1.86% -3.76% N/A
- ---------------------------------------------------------------------------------
Class C (inception
6/26/00) -27.61% -42.44% -13.80% -1.84% N/A -6.55%
- ---------------------------------------------------------------------------------
Class I (inception
8/1/08) -27.06% N/A N/A N/A N/A -36.92%*
- ---------------------------------------------------------------------------------
Class R2 (inception
12/11/06) -27.33% -42.03% N/A N/A N/A -19.84%
- ---------------------------------------------------------------------------------
Class R3 (inception
12/11/06) -27.18% -41.80% N/A N/A N/A -19.58%
- ---------------------------------------------------------------------------------
Class R4 (inception
3/20/95) -27.17% -41.83% -13.03% -0.90% -2.83% N/A
- ---------------------------------------------------------------------------------
Class R5 (inception
12/11/06) -27.11% -41.73% N/A N/A N/A -19.40%
- ---------------------------------------------------------------------------------
Class W (inception
12/1/06) -27.29% -41.90% N/A N/A N/A -19.24%
- ---------------------------------------------------------------------------------
With sales charge
Class A (inception
5/29/90) -31.48% -45.32% -14.85% -2.25% -3.51% N/A
- ---------------------------------------------------------------------------------
Class B (inception
3/20/95) -31.28% -45.32% -15.01% -2.26% -3.76% N/A
- ---------------------------------------------------------------------------------
Class C (inception
6/26/00) -28.33% -43.01% -13.80% -1.84% N/A -6.55%
- ---------------------------------------------------------------------------------
</Table>
*Not annualized.
**For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third* years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares.
Class I, Class R2, Class R3, Class R4 and Class R5 are available to
institutional investors only. Class W shares are offered through qualifying
discretionary accounts.
* For Class B shares purchased on or after June 13, 2009 the CDSC percentage
for the third year will be 3%.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund expenses
- ----------------------------------------
Class A 1.46%
- ----------------------------------------
Class B 2.23%
- ----------------------------------------
Class C 2.22%
- ----------------------------------------
Class I 0.85%
- ----------------------------------------
Class R2 1.79%
- ----------------------------------------
Class R3 1.54%
- ----------------------------------------
Class R4 1.29%(a)
- ----------------------------------------
Class R5 1.04%
- ----------------------------------------
Class W 1.43%
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment (that increased the management fee by 0.06%
for the year ended Oct. 31, 2008), will not exceed 1.27% for Class R4.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 7
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
COUNTRY DIVERSIFICATION(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Australia 1.5%
- ------------------------------------------------
Bermuda 1.9%
- ------------------------------------------------
Brazil 1.7%
- ------------------------------------------------
Canada 2.3%
- ------------------------------------------------
Denmark 1.1%
- ------------------------------------------------
Finland 1.1%
- ------------------------------------------------
France 0.9%
- ------------------------------------------------
Germany 6.5%
- ------------------------------------------------
Hong Kong 3.1%
- ------------------------------------------------
Japan 5.3%
- ------------------------------------------------
Luxembourg 0.8%
- ------------------------------------------------
Mexico 1.4%
- ------------------------------------------------
Netherlands 0.4%
- ------------------------------------------------
Portugal 0.7%
- ------------------------------------------------
Singapore 1.2%
- ------------------------------------------------
South Korea 1.0%
- ------------------------------------------------
Spain 1.5%
- ------------------------------------------------
Switzerland 7.4%
- ------------------------------------------------
United Kingdom 10.7%
- ------------------------------------------------
United States 48.7%
- ------------------------------------------------
Other(2) 0.8%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Nestle (Switzerland) 2.8%
- ------------------------------------------------
Microsoft (United States) 2.8%
- ------------------------------------------------
IBM (United States) 2.5%
- ------------------------------------------------
Johnson & Johnson ( United States) 2.3%
- ------------------------------------------------
Roche Holding (Switzerland) 2.0%
- ------------------------------------------------
Vodafone Group (United Kingdom) 2.0%
- ------------------------------------------------
Oracle (United States) 1.9%
- ------------------------------------------------
JPMorgan Chase & Co (United States) 1.9%
- ------------------------------------------------
Google Cl A (United States) 1.8%
- ------------------------------------------------
Travelers Companies (United States) 1.8%
- ------------------------------------------------
</Table>
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 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 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 April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 969.80 $ 7.08 1.45%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.60 $ 7.25 1.45%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 967.10 $10.83 2.22%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.79 $11.08 2.22%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 966.90 $10.78 2.21%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.84 $11.03 2.21%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 974.90 $ 3.57 .73%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.17 $ 3.66 .73%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 970.60 $ 7.92 1.62%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.76 $ 8.10 1.62%
- -------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 971.70 $ 6.36 1.30%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.35 $ 6.51 1.30%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 972.70 $ 5.48 1.12%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.24 $ 5.61 1.12%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 974.20 $ 3.96 .81%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.78 $ 4.06 .81%
- -------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 11
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class W
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 972.60 $ 6.11 1.25%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.60 $ 6.26 1.25%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: -3.02%
for Class A, -3.29% for Class B, -3.31% for Class C, -2.51% for Class I,
-2.94% for Class R2, -2.83% for Class R3, -2.73% for Class R4, -2.58% for
Class R5 and -2.74% for Class W.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (98.6%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.5%)
CSL 243,953 $6,100,402
- -------------------------------------------------------------------------------------
BERMUDA (1.9%)
Accenture Cl A 130,713 3,846,884
PartnerRe 59,008 4,023,756
---------------
Total 7,870,640
- -------------------------------------------------------------------------------------
BRAZIL (1.7%)
Petroleo Brasileiro ADR 173,209 5,814,626
Redecard 86,900 1,094,644
---------------
Total 6,909,270
- -------------------------------------------------------------------------------------
CANADA (2.3%)
Barrick Gold 161,158 4,689,698
First Uranium 533,200(b,d) 2,870,323
Research In Motion 25,776(b) 1,791,432
---------------
Total 9,351,453
- -------------------------------------------------------------------------------------
DENMARK (1.1%)
Vestas Wind Systems 66,464(b,d) 4,387,764
- -------------------------------------------------------------------------------------
FINLAND (1.1%)
Nokia 229,577(d) 3,320,647
Talvivaara Mining 457,779(b) 1,401,959
---------------
Total 4,722,606
- -------------------------------------------------------------------------------------
FRANCE (0.9%)
France Telecom 169,200 3,777,370
- -------------------------------------------------------------------------------------
GERMANY (6.4%)
Allianz 71,261(d) 6,576,699
E.ON 115,822(d) 3,929,916
K+S 36,976(d) 2,228,858
Linde 58,509(d) 4,671,219
MTU Aero Engines Holding 81,070 2,735,738
Siemens 95,049(d) 6,418,703
---------------
Total 26,561,133
- -------------------------------------------------------------------------------------
HONG KONG (3.0%)
Esprit Holdings 351,200 2,168,405
Great Eagle Holdings 2,234,607 3,108,306
Hongkong & Shanghai Hotels 2,828,000 2,156,606
Sun Hung Kai Properties 496,000 5,168,067
---------------
Total 12,601,384
- -------------------------------------------------------------------------------------
JAPAN (5.3%)
Canon 64,100(d) 1,917,819
GOLDCREST 31,350 716,987
Honda Motor 92,500(d) 2,669,018
KDDI 602 2,698,648
Mitsubishi Estate 315,000(d) 4,098,875
Nintendo 23,300 6,217,335
Sony Financial Holdings 1,160(d) 3,635,331
---------------
Total 21,954,013
- -------------------------------------------------------------------------------------
LUXEMBOURG (0.8%)
Millicom Intl Cellular 64,404 3,121,018
- -------------------------------------------------------------------------------------
MEXICO (1.4%)
America Movil ADR Series L 171,941 5,648,262
- -------------------------------------------------------------------------------------
NETHERLANDS (0.4%)
Fugro 46,713 1,688,547
- -------------------------------------------------------------------------------------
PORTUGAL (0.7%)
Galp Energia Series B 207,367 2,771,629
- -------------------------------------------------------------------------------------
SINGAPORE (1.2%)
DBS Group Holdings 803,000 5,156,134
- -------------------------------------------------------------------------------------
SOUTH KOREA (1.0%)
Samsung Electronics 8,905 4,112,458
- -------------------------------------------------------------------------------------
SPAIN (1.5%)
Inditex 51,726 2,217,144
Telefonica 200,618 3,825,675
---------------
Total 6,042,819
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SWITZERLAND (7.4%)
Nestle 351,870 $11,518,385
Novartis 167,733 6,378,385
Roche Holding 65,192(d) 8,254,002
Syngenta 20,202 4,336,735
---------------
Total 30,487,507
- -------------------------------------------------------------------------------------
UNITED KINGDOM (10.6%)
3i Group 373,060 1,771,711
Autonomy 220,077(b) 4,659,330
BG Group 396,370 6,409,588
Home Retail Group 491,937 1,832,265
HSBC Holdings 828,230 5,887,807
Intl Power 727,169 2,673,443
SOCO Intl 81,373(b) 1,490,425
Tesco 805,913 4,020,545
Tullow Oil 585,770 6,989,413
Vodafone Group 4,375,066 8,071,612
---------------
Total 43,806,139
- -------------------------------------------------------------------------------------
UNITED STATES (48.4%)
Adobe Systems 170,506(b) 4,663,339
American Tower Cl A 93,528(b) 2,970,449
Aon 84,147 3,551,003
Arch Coal 120,855 1,688,344
Bank of America 184,947 1,651,577
Cisco Systems 266,876(b) 5,156,043
Cliffs Natural Resources 66,884 1,542,345
Coca-Cola 138,464 5,960,875
Comcast Cl A 264,698 4,092,231
CVS Caremark 119,558 3,799,553
Devon Energy 69,380 3,597,353
Diamond Offshore Drilling 25,081 1,816,115
DIRECTV Group 87,581(b) 2,165,878
eBay 100,216(b) 1,650,558
ENSCO Intl 43,229 1,222,516
Genzyme 82,401(b) 4,394,446
Gilead Sciences 79,175(b) 3,626,215
Goldman Sachs Group 26,713 3,432,621
Google Cl A 18,415(b) 7,291,787
Humana 92,641(b) 2,666,208
IBM 97,457 10,058,537
Johnson & Johnson 179,460 9,396,525
JPMorgan Chase & Co 231,656 7,644,648
Juniper Networks 128,204(b) 2,775,617
KeyCorp 202,214 1,243,616
Laboratory Corp of America Holdings 79,579(b) 5,104,993
Lockheed Martin 41,173 3,233,316
Lowe's Companies 210,094 4,517,021
McAfee 108,181(b) 4,061,115
Merck & Co 71,477 1,732,602
Microsoft 564,155 11,429,779
Norfolk Southern 50,695 1,808,798
Oracle 413,632 7,999,643
PepsiCo 105,278 5,238,633
Philip Morris Intl 80,913 2,929,051
Plum Creek Timber 72,720 2,510,294
Procter & Gamble 129,703 6,412,516
QUALCOMM 83,080 3,515,946
Republic Services 146,266 3,071,586
Schering-Plough 147,736 3,400,883
St. Jude Medical 45,876(b) 1,537,764
Thermo Fisher Scientific 129,193(b) 4,532,090
Travelers Companies 177,118 7,286,635
Ultra Petroleum 56,477(b) 2,417,216
Valero Energy 176,145 3,494,717
Walgreen 97,392 3,061,031
Wal-Mart Stores 133,190 6,712,776
Walt Disney 145,340 3,182,946
WellPoint 67,228(b) 2,874,669
---------------
Total 200,124,419
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $506,104,391) $407,194,967
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (0.8%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 3,297,171(e) $3,297,171
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $3,297,171) $3,297,171
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (8.6%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 35,676,279 $35,676,279
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $35,676,279) $35,676,279
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $545,077,841)(f) $446,168,417
=====================================================================================
</Table>
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at April 30, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- ------------------------------------------------------------------------
Aerospace & Defense 1.4% $5,969,054
Automobiles 0.6 2,669,018
Beverages 2.7 11,199,508
Biotechnology 3.4 14,121,063
Capital Markets 1.3 5,204,332
Chemicals 2.7 11,236,812
Commercial Banks 3.0 12,287,557
Commercial Services & Supplies 0.7 3,071,586
Communications Equipment 4.0 16,559,685
Computers & Peripherals 2.4 10,058,537
Diversified Financial Services 2.3 9,296,225
Diversified Telecommunication 7,603,045
Services 1.8
Electric Utilities 1.0 3,929,916
Electrical Equipment 1.1 4,387,764
Energy Equipment & Services 1.1 4,727,178
Food & Staples Retailing 4.3 17,593,905
Food Products 2.8 11,518,385
Health Care Equipment & Supplies 0.4 1,537,764
Health Care Providers & Services 2.6 10,645,870
Hotels, Restaurants & Leisure 0.5 2,156,606
Household Durables 0.2 716,987
Household Products 1.6 6,412,516
Independent Power Producers & Energy 2,673,443
Traders 0.6
Industrial Conglomerates 1.6 6,418,703
Insurance 6.1 25,073,424
Internet & Catalog Retail 0.4 1,832,265
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- ------------------------------------------------------------------------
Internet Software & Services 2.2% $8,942,345
IT Services 1.2 4,941,528
Life Sciences Tools & Services 1.1 4,532,090
Media 2.3 9,441,055
Metals & Mining 2.5 10,504,325
Office Electronics 0.5 1,917,819
Oil, Gas & Consumable Fuels 8.4 34,673,311
Pharmaceuticals 7.1 29,162,397
Real Estate Investment Trusts (REITs) 0.6 2,510,294
Real Estate Management & Development 3.0 12,375,248
Road & Rail 0.4 1,808,798
Semiconductors & Semiconductor 4,112,458
Equipment 1.0
Software 9.4 39,030,541
Specialty Retail 2.2 8,902,570
Tobacco 0.7 2,929,051
Wireless Telecommunication Services 5.4 22,509,989
Other(1) 9.4 38,973,450
- ------------------------------------------------------------------------
Total $446,168,417
- ------------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- ----------------------------------------------------------------------------------------
May 1, 2009 45,000,000 468,799 $12,405 $--
Japanese Yen U.S. Dollar
- ----------------------------------------------------------------------------------------
May 5, 2009 110,000 74,506 156 --
Singapore Dollar U.S. Dollar
- ----------------------------------------------------------------------------------------
Total $12,561 $--
- ----------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(e) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(f) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $545,078,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $12,024,000
Unrealized depreciation (110,934,000)
-----------------------------------------------------------
Net unrealized depreciation $(98,910,000)
-----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level. 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 NYSE or require adjustment, as described in Note 1 to the
financial statements -- Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
---------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- -----------------------------------------------------------------------------------
Investments in
securities $446,168,417 $-- $-- $446,168,417
Other financial
instruments* -- 12,561 -- 12,561
- -----------------------------------------------------------------------------------
Total $446,168,417 $12,561 $-- $446,180,978
- -----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as forwards,
which are valued at the unrealized appreciation (depreciation) on the
instrument.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $506,104,391) $ 407,194,967
Affiliated money market fund (identified cost $3,297,171) 3,297,171
Investments of cash collateral received for securities on loan
(identified cost $35,676,279) 35,676,279
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $545,077,841) 446,168,417
Foreign currency holdings (identified cost $1,260,106) 1,271,705
Capital shares receivable 334,412
Dividends receivable 948,104
Receivable for investment securities sold 460,666
Reclaims receivable 524,453
Unrealized appreciation on forward foreign currency contracts 12,561
- --------------------------------------------------------------------------------
Total assets 449,720,318
- --------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 677,225
Capital shares payable 453,966
Payable upon return of securities loaned 35,676,279
Accrued investment management services fees 8,909
Accrued distribution fees 3,358
Accrued transfer agency fees 3,657
Accrued administrative services fees 902
Accrued plan administration services fees 33
Other accrued expenses 124,056
- --------------------------------------------------------------------------------
Total liabilities 36,948,385
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 412,771,933
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 828,098
Additional paid-in capital 995,825,635
Undistributed net investment income 1,949,580
Accumulated net realized gain (loss) (486,992,260)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (98,839,120)
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 412,771,933
- --------------------------------------------------------------------------------
*Including securities on loan, at value $ 44,828,873
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $330,077,673 65,834,505 $5.01(1)
Class B $ 36,028,030 7,647,765 $4.71
Class C $ 4,316,744 925,190 $4.67
Class I $ 37,389,063 7,421,355 $5.04
Class R2 $ 7,510 1,493 $5.03
Class R3 $ 3,190 634 $5.03
Class R4 $ 4,943,310 977,543 $5.06
Class R5 $ 3,195 634 $5.04
Class W $ 3,218 639 $5.04
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $5.32. 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 21
STATEMENT OF OPERATIONS -------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends 5,635,292
Interest 1,110
Income distributions from affiliated money market fund 9,561
Fee income from securities lending 79,339
Less foreign taxes withheld (374,202)
- -------------------------------------------------------------------------------
Total income 5,351,100
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 1,230,184
Distribution fees
Class A 412,371
Class B 181,306
Class C 20,943
Class R2 12
Class R3 4
Class W 4
Transfer agency fees
Class A 612,972
Class B 71,706
Class C 8,024
Class R2 1
Class R4 1,141
Class W 3
Administrative services fees 152,884
Plan administration services fees
Class R2 6
Class R3 4
Class R4 5,707
Compensation of board members 6,749
Custodian fees 58,680
Printing and postage 57,830
Registration fees 35,460
Professional fees 24,973
Other 7,448
- -------------------------------------------------------------------------------
Total expenses 2,888,412
Expenses waived/reimbursed by the Investment Manager and its
affiliates (155)
Earnings and bank fee credits on cash balances (80)
- -------------------------------------------------------------------------------
Total net expenses 2,888,177
- -------------------------------------------------------------------------------
Investment income (loss) -- net 2,462,923
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(78,575,591)
Foreign currency transactions (129,618)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (78,705,209)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 61,636,370
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (17,068,839)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(14,605,916)
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 2,462,923 $ 3,912,229
Net realized gain (loss) on investments (78,705,209) (64,341,389)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 61,636,370 (324,354,761)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (14,605,916) (384,783,921)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (2,998,257) (2,895,413)
Class I (51) --
Class R2 (30) (16)
Class R3 (39) (28)
Class R4 (51,643) (51,464)
Class R5 (46) (43)
Class W (29) (24)
- --------------------------------------------------------------------------------------------------
Total distributions (3,050,095) (2,946,988)
- --------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 25,058,763 122,218,532
Class B shares 2,190,599 19,744,662
Class C shares 748,360 2,778,659
Class I shares 35,603,782 5,000
Class R2 shares 3,873 --
Class R4 shares 706,630 2,142,353
Reinvestment of distributions at net asset value
Class A shares 2,935,531 2,842,402
Class R2 shares 1 --
Class R4 shares 51,643 51,464
Payments for redemptions
Class A shares (60,970,138) (144,969,040)
Class B shares (6,562,302) (38,846,306)
Class C shares (993,804) (2,137,746)
Class I shares (89,564) --
Class R4 shares (690,521) (2,469,638)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (2,007,147) (38,639,658)
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (19,663,158) (426,370,567)
Net assets at beginning of period 432,435,091 858,805,658
- --------------------------------------------------------------------------------------------------
Net assets at end of period $412,771,933 $ 432,435,091
- --------------------------------------------------------------------------------------------------
Undistributed net investment income $ 1,949,580 $ 2,536,752
- --------------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $5.21 $9.61 $7.52 $6.23 $5.16
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .05(b) .02(b) .01 .02
Net gains (losses) (both realized and
unrealized) (.19) (4.41) 2.13 1.30 1.08
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.16) (4.36) 2.15 1.31 1.10
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.04) (.06) (.02) (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.01 $5.21 $9.61 $7.52 $6.23
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $330 $380 $737 $608 $446
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.45%(e) 1.46% 1.39% 1.51% 1.57%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.32%(e) .65% .28% .23% .33%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100% 112% 93%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (3.02%)(g) (45.55%) 28.82% 21.01% 21.48%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $4.87 $9.02 $7.06 $5.88 $4.87
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(b) (.01)(b) (.04)(b) (.01) (.02)
Net gains (losses) (both realized and
unrealized) (.17) (4.14) 2.00 1.19 1.03
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.16) (4.15) 1.96 1.18 1.01
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- .00(c) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.71 $4.87 $9.02 $7.06 $5.88
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $36 $42 $104 $110 $102
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 2.22%(f) 2.23% 2.15% 2.28% 2.34%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .54%(f) (.11%) (.45%) (.54%) (.41%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100% 112% 93%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (3.29%)(h) (46.01%) 27.81% 20.07% 20.74%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007 2006 2005
Net asset value, beginning of period $4.83 $8.93 $7.02 $5.85 $4.85
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(b) (.01)(b) (.04)(b) (.01) (.02)
Net gains (losses) (both realized and
unrealized) (.17) (4.09) 1.98 1.18 1.03
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.16) (4.10) 1.94 1.17 1.01
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (.03) -- (.01)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.67 $4.83 $8.93 $7.02 $5.85
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $5 $8 $6 $2
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.21%(e) 2.22% 2.15% 2.27% 2.33%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .57%(e) (.09%) (.48%) (.50%) (.53%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100% 112% 93%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (3.31%)(g) (45.91%) 27.76% 20.03% 20.89%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $5.25 $7.47
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .03
Net gains (losses) (both realized and
unrealized) (.22) (2.25)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.13) (2.22)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.04 $5.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $37 $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .73%(f) .85%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.74%(f) 1.55%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97%
- --------------------------------------------------------------------------------------------------------------
Total return (2.51%)(g) (29.72%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007(b)
Net asset value, beginning of period $5.23 $9.62 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .03 .05 (.01)
Net gains (losses) (both realized and
unrealized) (.18) (4.42) 1.84
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.15) (4.37) 1.83
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.03 $5.23 $9.62
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.62%(f) 1.79% 1.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.54%(f) 1.54% 1.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.48%(f) .57% (.13%)(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (2.94%)(i) (45.48%) 23.41%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008 2007(b)
Net asset value, beginning of period $5.24 $9.65 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .04 .06 .01
Net gains (losses) (both realized and
unrealized) (.19) (4.43) 1.85
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.15) (4.37) 1.86
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.04) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.03 $5.24 $9.65
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.30%(f) 1.54% 1.49%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.17%(f) 1.29% 1.49%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.63%(f) .82% .12%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (2.83%)(i) (45.43%) 23.80%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of period $5.26 $9.70 $7.60 $6.29 $5.20
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(b) .07(b) .04(b) .02 .04
Net gains (losses) (both realized and
unrealized) (.18) (4.46) 2.13 1.31 1.09
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) (4.39) 2.17 1.33 1.13
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.05) (.07) (.02) (.04)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.06 $5.26 $9.70 $7.60 $6.29
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $5 $5 $10 $9 $6
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.12%(e) 1.29% 1.23% 1.32% 1.38%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.12%(e) 1.28% 1.23% 1.32% 1.38%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.68%(e) .83% .45% .44% .49%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100% 112% 93%
- --------------------------------------------------------------------------------------------------------------
Total return (2.73%)(h) (45.47%) 28.85% 21.26% 21.90%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive certain fees
and expenses (excluding fees and expenses of acquired funds), before giving
effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007(b)
Net asset value, beginning of period $5.25 $9.69 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .05 .08 .05
Net gains (losses) (both realized and
unrealized) (.19) (4.45) 1.85
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) (4.37) 1.90
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.07) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.04 $5.25 $9.69
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .81%(f) 1.04% .99%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.99%(f) 1.07% .62%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (2.58%)(g) (45.40%) 24.33%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008 2007(b)
Net asset value, beginning of period $5.23 $9.66 $7.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .04 .05 .02
Net gains (losses) (both realized and
unrealized) (.18) (4.44) 1.91
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) (4.39) 1.93
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.04) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.04 $5.23 $9.66
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.25%(f) 1.43% 1.39%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.54%(f) .68% .20%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 34% 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (2.74%)(g) (45.62%) 24.87%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits in the periods in which they
occurred were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Equity Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Global 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). Under normal market conditions, at least 80% of the Fund's net
assets will be invested in equity securities, including companies located in
developed and emerging countries.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At April 30, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares, and the Investment Manager owned 100% of Class R3, Class R5 and
Class W shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Nov. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
procedures take into account multiple factors, including movements in the U.S.
securities markets, to determine a good faith estimate that reasonably reflects
the current market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option
or the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At April 30, 2009, and for the six months
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these future contracts.
Risks of entering into futures contracts and related options include the
possibility of an
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
illiquid market and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires. At April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings consisted of
multiple denominations, primarily European monetary units.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, re-
characterization of REIT distributions and losses deferred due to wash sales.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At April 30, 2009, the Fund did not own nor was it party to any
credit derivative contracts within the scope of these amendments.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within 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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.80%
to 0.57% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Global 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
zero. The adjustment decreased the management fee by $281,841 for the six months
ended April 30, 2009. The management fee for the six months ended April 30, 2009
was 0.64% of the Fund's average daily net assets, including the adjustment under
the terms of the performance incentive arrangement.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, other expenses paid to this company were $1,731.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Class R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's
average daily net assets attributable to Class W shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A, Class R3 and Class W shares, a
fee at an annual rate of up to 0.50% of the Fund's average daily net assets
attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of
the Fund's average daily net assets attributable to Class B and Class C shares.
For Class B and Class C shares, up to 0.75% of the fee is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $1,532,000 and $63,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as April 30, 2009, and may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$178,569 for Class A, $16,662 for Class B and $840 for Class C for the six
months ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
(excluding fees and expenses of acquired funds*), including the adjustment under
the terms of a performance incentive arrangement, were as follows:
<Table>
Class R2............................................ 1.54%
Class R3............................................ 1.17
Class R4............................................ 1.12
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4............................................ $26
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2........................................... $ 2
Class R3........................................... 2
Class R4........................................... 125
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the class average daily net assets:
<Table>
Class R4............................................ 1.27%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the six months ended April 30, 2009, the Fund's transfer agency fees were
reduced by $80 as a result of bank fee credits from overnight cash balances.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Nov. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $4,966 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 $133,895,175 and $136,958,904, respectively, for the six
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 5,221,383 593,037 (13,020,305) (7,205,885)
Class B 489,826 -- (1,496,723) (1,006,897)
Class C 169,475 -- (229,736) (60,261)
Class I 7,438,916 -- (18,227) 7,420,689
Class R2 859 -- -- 859
Class R4 148,458 10,349 (144,838) 13,969
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2008*
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 15,480,435 328,601 (19,420,602) (3,611,566)
Class B 2,606,662 -- (5,461,285) (2,854,623)
Class C 381,563 -- (318,939) 62,624
Class I 666 -- -- 666
Class R4 264,404 5,909 (319,876) (49,563)
- ----------------------------------------------------------------------------------
</Table>
* Class I is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance, are disclosed in the Statement of Assets and Liabilities
along with the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
related obligation to return the collateral upon return of the securities
loaned. At April 30, 2009, securities valued at $44,828,873 were on loan,
secured by U.S. government securities valued at $10,444,975 and by cash
collateral of $35,676,279 invested in short-term securities or in cash
equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$79,339 earned from securities lending from Dec. 1, 2008 through April 30, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $88,572,187 and $91,898,575, respectively, for the six
months ended April 30, 2009. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Fund may borrow for the temporary funding of shareholder redemptions or for
other temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$404,243,287 at Oct. 31, 2008, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2009 2010 2011 2016
$170,490,067 $143,634,885 $30,509,951 $59,608,384
</Table>
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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
adverse effect on the Funds or the ability of Ameriprise Financial or its
affiliates to perform under their contracts with the Funds. Ameriprise Financial
is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds"). In addition, under the
subadvisory agreement (the "Subadvisory Agreement") between RiverSource
Investments and Threadneedle International Limited (the "Subadviser"), the
Subadviser performs portfolio management and related services for the Fund.
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
each of the IMS Agreement and the Subadvisory Agreement (together, the "Advisory
Agreements"). RiverSource Investments prepared detailed reports for the Board
and its Contracts Committee in March and April 2009, including reports based on
data provided by independent organizations to assist the Board in making these
determinations. In addition, throughout the year, the Board (or its committees)
reviews information prepared by RiverSource Investments addressing the services
RiverSource Investments provides and Fund performance. The Board accords
particular weight to the work, deliberations and conclusions of the Contracts,
Investment Review and Compliance Committees in determining whether to continue
the Advisory Agreements. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory and subadvisory agreements and the Board's legal responsibilities
related to such consideration. Following an analysis and discussion of the
factors identified below, the Board, including all of the Independent Directors,
approved renewal of the Advisory Agreements.
Nature, Extent and Quality of Services Provided by RiverSource Investments and
the Subadviser: The Board analyzed various reports and presentations it had
received detailing the services performed by RiverSource Investments and the
Subadviser, as well as their expertise, resources and capabilities. The Board
specifically considered many developments during the past year concerning the
services provided by RiverSource Investments, including, in particular, the
continued investment in, and resources dedicated to, the Fund's operations, most
notably, the large investment made in the acquisition of J. & W. Seligman & Co.
Incorporated, including its portfolio management operations, personnel and
infrastructure (including the addition of two new offices in New York City and
Palo Alto). Further, in connection with the Board's evaluation of the overall
package of services provided by RiverSource Investments, the Board considered
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 49
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
the quality of the administrative and transfer agency services provided by
RiverSource Investments' affiliates to the Fund. The Board also reviewed the
financial condition of RiverSource Investments (and its affiliates, including
the Subadviser), and each entity's ability to carry out its responsibilities
under the Advisory Agreements. Further, the Board considered RiverSource
Investments' ability to retain key personnel and its expectations in this
regard. The Board also discussed the acceptability of the terms of the Advisory
Agreements (including the relatively broad scope of services required to be
performed by RiverSource Investments). The Board concluded that the services
being performed under the Advisory Agreements were of a reasonably high quality,
particularly in light of recent market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates, including the Subadviser, were in a position to continue to
provide a high quality and level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the Advisory Agreements, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance was appropriate in light
of the particular management style and the exceptionally challenging market
conditions involved. Further, the Board noted that the portfolio management
team's long-term track record remains solid. Additionally, the Board reviewed
the performance of the Subadviser and RiverSource Investments' processes for
monitoring the Subadviser. The Board considered, in particular, management's
rationale for recommending the continued retention of the Subadviser.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the Advisory Agreements. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) approximated the peer group's median expense ratio. The Board also
considered the Fund's performance incentive adjustment and noted its continued
appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services provided.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT 51
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
In reaching this conclusion, no single factor was determinative. On April 8,
2009, the Board, including all of the Independent Directors, approved the
renewal of the Advisory Agreements for an additional annual period.
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 SEMIANNUAL REPORT
THREADNEEDLE GLOBAL EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource Investments employs
Threadneedle as a subadviser. Threadneedle(R) mutual funds
are distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource and
Threadneedle are part of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6451 X (6/09)
</Table>
Semiannual Report
(THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY INCOME FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
THREADNEEDLE GLOBAL EQUITY INCOME FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH A HIGH LEVEL OF CURRENT
INCOME AND SECONDARILY, GROWTH OF CAPITAL.
(SINGLE STRATEGY FUNDS ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 8
Portfolio of Investments........... 10
Statement of Assets and
Liabilities...................... 16
Statement of Operations............ 18
Statements of Changes in Net
Assets........................... 20
Financial Highlights............... 22
Notes to Financial Statements...... 30
Proxy Voting....................... 45
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," "Seligman" and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Equity Income Fund (the Fund) Class A shares declined
6.39% (excluding sales charge) for the six months ended April 30, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index, which fell 3.00% for the six
month period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
inception*
6 months* 8/1/08
- -----------------------------------------------------------------
Threadneedle Global Equity Income Fund
Class A (excluding sales charge) -6.39% -31.78%
- -----------------------------------------------------------------
MSCI All Country World Index(1)
(unmanaged) -3.00% -32.60%
- -----------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an
unmanaged index of equity securities, is designed to measure equity market
performance in the global developed and emerging markets. The index reflects
reinvestment of all distributions and changes in market prices. The Fund's
performance is currently measured against this index for purposes of
determining the performance incentive adjustment.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* INCEPTION*
Class A (inception 8/1/08) -6.39% -31.78%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -6.78% -32.09%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -6.76% -32.10%
- ------------------------------------------------------------------
Class I (inception 8/1/08) -6.24% -31.56%
- ------------------------------------------------------------------
Class R2 (inception 8/1/08) -6.51% -31.84%
- ------------------------------------------------------------------
Class R3 (inception 8/1/08) -6.38% -31.73%
- ------------------------------------------------------------------
Class R4 (inception 8/1/08) -6.31% -31.65%
- ------------------------------------------------------------------
Class R5 (inception 8/1/08) -6.27% -31.59%
- ------------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) -11.73% -35.72%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -11.42% -35.47%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -7.69% -32.78%
- ------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* INCEPTION*
Class A (inception 8/1/08) -28.81% -37.15%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -29.11% -37.45%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -29.10% -37.46%
- ------------------------------------------------------------------
Class I (inception 8/1/08) -28.71% -37.05%
- ------------------------------------------------------------------
Class R2 (inception 8/1/08) -28.90% -37.30%
- ------------------------------------------------------------------
Class R3 (inception 8/1/08) -28.81% -37.20%
- ------------------------------------------------------------------
Class R4 (inception 8/1/08) -28.76% -37.12%
- ------------------------------------------------------------------
Class R5 (inception 8/1/08) -28.73% -37.07%
- ------------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) -32.94% -40.78%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -32.64% -40.56%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -29.81% -38.08%
- ------------------------------------------------------------------
</Table>
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.
**For Class B shares purchased on or after June 13, 2009 the CDSC percentage for
the third year will be 3%.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund Net fund
expenses expenses
- ----------------------------------------
Class A 4.62% 1.45%
- ----------------------------------------
Class B 5.38% 2.21%
- ----------------------------------------
Class C 5.37% 2.20%
- ----------------------------------------
Class I 4.12% 1.05%
- ----------------------------------------
Class R2 4.92% 1.85%
- ----------------------------------------
Class R3 4.67% 1.60%
- ----------------------------------------
Class R4 4.44% 1.35%
- ----------------------------------------
Class R5 4.17% 1.10%
- ----------------------------------------
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment, will not exceed 1.45% for Class A, 2.21%
for Class B, 2.20% for Class C, 1.05% for Class I, 1.85% for Class R2, 1.60%
for Class R3, 1.35% for Class R4 and 1.10% for Class R5.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
COUNTRY DIVERSIFICATION(1) (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Australia 1.2%
- ------------------------------------------------
Brazil 4.0%
- ------------------------------------------------
Czech Republic 0.5%
- ------------------------------------------------
Denmark 0.4%
- ------------------------------------------------
Finland 5.2%
- ------------------------------------------------
France 4.2%
- ------------------------------------------------
Germany 6.7%
- ------------------------------------------------
Greece 1.1%
- ------------------------------------------------
Hong Kong 7.0%
- ------------------------------------------------
Italy 3.0%
- ------------------------------------------------
Japan 4.6%
- ------------------------------------------------
Jersey 1.4%
- ------------------------------------------------
Mexico 1.1%
- ------------------------------------------------
Netherlands 1.8%
- ------------------------------------------------
Norway 0.8%
- ------------------------------------------------
Singapore 2.0%
- ------------------------------------------------
Spain 2.8%
- ------------------------------------------------
Sweden 3.4%
- ------------------------------------------------
Taiwan 4.3%
- ------------------------------------------------
United Kingdom 17.1%
- ------------------------------------------------
United States 25.6%
- ------------------------------------------------
Other(2) 1.8%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Packaging Corp of America (United States) 2.4%
- ------------------------------------------------
BP (United Kingdom) 2.3%
- ------------------------------------------------
BP Prudhoe Bay Royalty Trust (United
States) 2.1%
- ------------------------------------------------
Ono Pharmaceutical (Japan) 2.0%
- ------------------------------------------------
DBS Group Holdings (Singapore) 1.8%
- ------------------------------------------------
Admiral Group (United Kingdom) 1.7%
- ------------------------------------------------
Bristol-Myers Squibb (United States) 1.7%
- ------------------------------------------------
Kinder Morgan Energy Partners LP (United
States) 1.7%
- ------------------------------------------------
Eni (Italy) 1.6%
- ------------------------------------------------
Pearson (United Kingdom) 1.6%
- ------------------------------------------------
</Table>
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 7
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 936.10 $ 7.10 1.48%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.46 $ 7.40 1.48%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 932.20 $10.73 2.24%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.69 $11.18 2.24%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 932.40 $10.68 2.23%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.74 $11.13 2.23%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 937.60 $ 5.14 1.07%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.49 $ 5.36 1.07%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 934.90 $ 8.97 1.87%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.52 $ 9.35 1.87%
- -------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 936.20 $ 7.78 1.62%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.76 $ 8.10 1.62%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 936.90 $ 6.58 1.37%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 6.85 1.37%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 937.30 $ 5.38 1.12%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.24 $ 5.61 1.12%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: -6.39%
for Class A, -6.78% for Class B, -6.76% for Class C, -6.24% for Class I,
-6.51% for Class R2, -6.38% for Class R3, -6.31% for Class R4 and -6.27% for
Class R5.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (93.1%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.2%)
Telstra 101,667 $245,961
- -------------------------------------------------------------------------------------
BRAZIL (4.0%)
Cia de Bebidas das Americas 6,600 371,328
Cia Vale do Rio Doce ADR 21,076 289,373
Petroleo Brasileiro 7,800 105,636
Redecard 6,400 80,618
---------------
Total 846,955
- -------------------------------------------------------------------------------------
CZECH REPUBLIC (0.5%)
Telefonica O2 Czech Republic GDR 4,722 101,776
- -------------------------------------------------------------------------------------
DENMARK (0.4%)
TrygVesta 1,687 93,234
- -------------------------------------------------------------------------------------
FINLAND (3.6%)
Nokia 13,647(e) 197,393
Sampo Series A 18,987 357,549
Wartsila 6,295 210,261
---------------
Total 765,203
- -------------------------------------------------------------------------------------
FRANCE (4.1%)
France Telecom 8,548 190,833
Total 5,979 303,397
Vivendi 13,959(e) 378,134
---------------
Total 872,364
- -------------------------------------------------------------------------------------
GERMANY (6.6%)
Allianz 3,294(e) 304,004
BASF 7,810(e) 295,281
Bayer 4,162(e) 207,147
Deutsche Telekom 13,917(e) 168,332
E.ON 7,177(e) 243,520
K+S 3,157(e) 190,299
---------------
Total 1,408,583
- -------------------------------------------------------------------------------------
GREECE (1.1%)
OPAP 7,508 232,893
- -------------------------------------------------------------------------------------
HONG KONG (6.9%)
Champion REIT 872,000(e) 201,406
CNOOC 264,000(e) 296,024
Esprit Holdings 59,200 365,517
Great Eagle Holdings 118,000 164,136
Hang Lung Properties 60,000 170,712
Sun Hung Kai Properties 26,000 270,907
---------------
Total 1,468,702
- -------------------------------------------------------------------------------------
ITALY (2.8%)
Eni 18,091 393,824
Snam Rete Gas 24,069 95,555
Telecom Italia 92,158 117,445
---------------
Total 606,824
- -------------------------------------------------------------------------------------
JAPAN (4.5%)
Nintendo 1,100 293,522
Ono Pharmaceutical 11,400(e) 483,291
Oracle Japan 5,500(e) 193,562
---------------
Total 970,375
- -------------------------------------------------------------------------------------
MEXICO (1.0%)
Grupo Continental 124,300 220,099
- -------------------------------------------------------------------------------------
NETHERLANDS (1.7%)
Aegon 33,314 171,935
Royal Dutch Shell Series B 8,731 201,123
---------------
Total 373,058
- -------------------------------------------------------------------------------------
NORWAY (0.8%)
StatoilHydro 9,100(e) 173,180
- -------------------------------------------------------------------------------------
SINGAPORE (2.0%)
DBS Group Holdings 66,500 427,003
- -------------------------------------------------------------------------------------
SPAIN (2.8%)
Inditex 5,589 239,563
Telefonica 18,330 349,543
---------------
Total 589,106
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SWEDEN (3.4%)
Holmen Series B 6,474(e) $144,563
Skanska Series B 20,313 221,738
SKF Group Series B 32,001(e) 355,297
---------------
Total 721,598
- -------------------------------------------------------------------------------------
TAIWAN (4.2%)
Chunghwa Telecom ADR 14,468 273,445
Delta Electronics 102,000 222,752
HTC 12,000 162,609
Hung Poo Real Estate Development 252,000 233,623
---------------
Total 892,429
- -------------------------------------------------------------------------------------
UNITED KINGDOM (16.8%)
Admiral Group 29,823 401,956
AstraZeneca 5,598 197,529
BP 76,969 549,443
British American Tobacco 12,648 306,697
Cable & Wireless 66,991 148,668
GlaxoSmithKline 15,683 243,396
Home Retail Group 48,141 179,306
Intl Power 63,895 234,911
Natl Grid 31,152 260,171
Pearson 36,581 382,364
RSA Insurance Group 58,508 113,569
Vodafone Group 172,017 317,356
Wincanton 106,124 251,213
---------------
Total 3,586,579
- -------------------------------------------------------------------------------------
UNITED STATES (24.7%)
AllianceBernstein Holding LP 3,383 59,270
Altria Group 20,371 332,659
AT&T 14,661 375,615
BP Prudhoe Bay Royalty Trust 7,827 504,843
Bristol-Myers Squibb 20,924 401,741
CenturyTel 10,401 282,387
Coca-Cola 5,601 241,123
Diamond Offshore Drilling 3,784 273,999
Jabil Circuit 28,530 231,093
KeyCorp 26,603 163,608
Kinder Morgan Energy Partners LP 8,329 397,793
Merck & Co 15,338 371,793
Packaging Corp of America 35,668 566,051
Parkway Properties 6,566 91,070
Pfizer 18,214 243,339
Philip Morris Intl 8,405 304,261
Plum Creek Timber 4,956 171,082
Reynolds American 6,741 256,023
---------------
Total 5,267,750
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $21,271,032) $19,863,672
- -------------------------------------------------------------------------------------
<Caption>
OTHER (0.1%)(c)
ISSUER SHARES VALUE(a)
BRAZIL (--%)
Cia de Bebidas das Americas
Rights 20(b) $257
- -------------------------------------------------------------------------------------
ITALY (0.1%)
Snam Rete Gas
Rights 22,055(b) 16,928
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $20,990) $17,185
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
BONDS (3.4%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
FINLAND (1.5%)
Talvivaara Mining
Sr Unsecured
(European Monetary Unit) Cv
05-20-13 5.25% 500,000 $322,567
- -------------------------------------------------------------------------------------
JERSEY (1.4%)
Intl Power Finance III
(European Monetary Unit) Cv
06-05-15 4.75 300,000 296,284
- -------------------------------------------------------------------------------------
UNITED STATES (0.5%)
Micron Technology
06-01-14 1.88 $200,000 114,000
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $614,294) $732,851
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
MONEY MARKET FUND (1.8%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 373,939(d) $373,939
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $373,939) $373,939
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (14.2%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 3,025,558 $3,025,558
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $3,025,558) $3,025,558
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $25,305,813)(f) $24,013,205
=====================================================================================
</Table>
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at April 30, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Air Freight & Logistics 1.2% $251,213
Beverages 3.9 832,807
Capital Markets 0.3 59,270
Chemicals 2.3 485,580
Commercial Banks 2.8 590,611
Communications Equipment 0.9 197,393
Computers & Peripherals 0.8 162,609
Construction & Engineering 1.0 221,738
Containers & Packaging 2.6 566,051
Diversified Telecommunication Services 10.6 2,254,005
Electric 1.4 296,284
Electric Utilities 1.1 243,520
Electronic Equipment, Instruments &
Components 2.1 453,845
Energy Equipment & Services 1.3 273,999
Gas Utilities 0.5 112,483
Hotels, Restaurants & Leisure 1.1 232,893
Independent Power Producers & Energy
Traders 1.1 234,911
Insurance 6.8 1,442,247
Internet & Catalog Retail 0.8 179,306
IT Services 0.4 80,618
Machinery 2.7 565,558
Media 3.6 760,498
Metals 1.5 322,567
Metals & Mining 1.4 289,373
Multi-Utilities 1.2 260,171
Oil, Gas & Consumable Fuels 13.7 2,925,263
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Paper & Forest Products 0.7% $144,563
Pharmaceuticals 10.1 2,148,236
Real Estate Investment Trusts (REITs) 2.2 463,558
Real Estate Management & Development 3.9 839,378
Software 2.3 487,084
Specialty Retail 2.8 605,080
Technology 0.5 114,000
Tobacco 5.6 1,199,640
Wireless Telecommunication Services 1.5 317,356
Other(1) 15.9 3,399,497
- -----------------------------------------------------------------------
Total $24,013,205
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2009
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------
May 5, 2009 14,193 10,356 $45 $--
Australian Dollar U.S. Dollar
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(e) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(f) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $25,306,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $789,000
Unrealized depreciation (2,082,000)
-----------------------------------------------------------
Net unrealized depreciation $(1,293,000)
-----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level. 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 NYSE or require adjustment, as described in Note 1 to the
financial statements -- Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
--------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- -----------------------------------------------------------------------------------
Investments in securities $23,178,578 $512,061 $322,566 $24,013,205
Other financial
instruments* -- 45 -- 45
- -----------------------------------------------------------------------------------
Total $23,178,578 $512,106 $322,566 $24,013,250
- -----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as forwards,
which are valued at the unrealized appreciation (depreciation) on the
instrument.
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
INVESTMENTS IN
SECURITIES
- ---------------------------------------------------------------
Balance as of Oct. 31, 2008 $--
Accrued discounts/premiums 14,532
Realized gain (loss) --
Change in unrealized appreciation
(depreciation) 55,707
Net purchases (sales) 252,327
Transfers in and/or out of Level 3 --
- ---------------------------------------------------------------
Balance as of April 30, 2009 $322,566
- ---------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 15
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $21,906,316) $20,613,708
Affiliated money market fund (identified cost $373,939) 373,939
Investments of cash collateral received for securities on loan
(identified cost $3,025,558) 3,025,558
- ------------------------------------------------------------------------------
Total investments in securities (identified cost $25,305,813) 24,013,205
Cash 53,503
Foreign currency holdings (identified cost $243,717) 247,233
Capital shares receivable 24,983
Dividends and accrued interest receivable 166,923
Unrealized appreciation on forward foreign currency contracts 45
- ------------------------------------------------------------------------------
Total assets 24,505,892
- ------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 8,823
Payable for investment securities purchased 52,085
Payable upon return of securities loaned 3,025,558
Accrued investment management services fees 462
Accrued distribution fees 167
Accrued transfer agency fees 110
Accrued administrative services fees 46
Other accrued expenses 84,593
- ------------------------------------------------------------------------------
Total liabilities 3,171,844
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $21,334,048
- ------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 31,681
Additional paid-in capital 24,447,059
Undistributed net investment income 209,675
Accumulated net realized gain (loss) (2,066,413)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (1,287,954)
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $21,334,048
- ------------------------------------------------------------------------------
*Including securities on loan, at value $ 2,936,066
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $15,768,644 2,341,589 $6.73(1)
Class B $ 1,951,989 290,472 $6.72
Class C $ 260,802 38,805 $6.72
Class I $ 3,324,298 493,000 $6.74
Class R2 $ 6,739 1,000 $6.74
Class R3 $ 6,740 1,000 $6.74
Class R4 $ 8,094 1,201 $6.74
Class R5 $ 6,742 1,000 $6.74
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $7.14. 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 17
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 424,725
Interest 44,634
Income distributions from affiliated money market fund 1,632
Fee income from securities lending 9,866
Less foreign taxes withheld (27,847)
- -------------------------------------------------------------------------
Total income 453,010
- -------------------------------------------------------------------------
Expenses:
Investment management services fees 68,268
Distribution fees
Class A 14,822
Class B 6,412
Class C 871
Class R2 16
Class R3 8
Transfer agency fees
Class A 13,678
Class B 1,589
Class C 208
Class R2 2
Class R3 2
Class R4 3
Class R5 2
Administrative services fees 6,610
Plan administration services fees
Class R2 8
Class R3 8
Class R4 13
Compensation of board members 305
Custodian fees 75,632
Printing and postage 26,640
Registration fees 20,158
Professional fees 19,706
Other 3,732
- -------------------------------------------------------------------------
Total expenses 258,693
Expenses waived/reimbursed by the Investment Manager and
its affiliates (137,486)
- -------------------------------------------------------------------------
Total net expenses 121,207
- -------------------------------------------------------------------------
Investment income (loss) -- net 331,803
- -------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(1,836,321)
Foreign currency transactions (16,248)
- -------------------------------------------------------------------------
Net realized gain (loss) on investments (1,852,569)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies 1,112,982
- -------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (739,587)
- -------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (407,784)
- -------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
FOR THE PERIOD FROM
SIX MONTHS ENDED AUG. 1, 2008* TO
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 331,803 $ 73,347
Net realized gain (loss) on investments (1,852,569) (267,462)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies 1,112,982 (2,378,855)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (407,784) (2,572,970)
- ---------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (86,761) (10,316)
Class B (5,338) (993)
Class C (805) (166)
Class I (28,086) (12,568)
Class R2 (39) (13)
Class R3 (47) (17)
Class R4 (63) (25)
Class R5 (55) (25)
Tax return of capital
Class A -- (506)
Class B -- (59)
Class C -- (12)
Class I -- (555)
Class R2 -- (1)
Class R3 -- (1)
Class R4 -- (1)
Class R5 -- (1)
- ---------------------------------------------------------------------------------------------------
Total distributions (121,194) (25,259)
- ---------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
FOR THE PERIOD FROM
SIX MONTHS ENDED AUG. 1, 2008* TO
APRIL 30, 2009 OCT. 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $12,336,902 $ 6,965,441
Class B shares 1,364,080 763,341
Class C shares 222,687 96,736
Class R4 shares 6,500 2,000
Reinvestment of distributions at net asset value
Class A shares 85,396 10,418
Class B shares 5,308 1,033
Class C shares 691 161
Class R4 shares 11 4
Payments for redemptions
Class A shares (1,801,422) (459,003)
Class B shares (70,316) --
Class C shares (20,168) (22,899)
Class R4 shares (5,717) --
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 12,123,952 7,357,232
- ---------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 11,594,974 4,759,003
Net assets at beginning of period 9,739,074 4,980,071**
- ---------------------------------------------------------------------------------------------------
Net assets at end of period $21,334,048 $ 9,739,074
- ---------------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ 209,675 $ (934)
- ---------------------------------------------------------------------------------------------------
</Table>
* When shares became publicly available.
** Initial capital of $5,000,000 was contributed on July 24, 2008. The Fund had
a decrease in net assets resulting from operations of $19,929 during the
period from July 24, 2008 to Aug. 1, 2008 (when shares became publicly
available).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 21
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008(b)
Net asset value, beginning of period $7.24 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .13 .07
Net gains (losses) (both realized and
unrealized) (.59) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.46) (2.70)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.73 $7.24
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $16 $5
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 3.19%(f) 4.71%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.48%(f) 1.45%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 4.01%(f) 3.78%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (6.39%)(i) (27.12%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008(b)
Net asset value, beginning of period $7.24 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .11 .06
Net gains (losses) (both realized and
unrealized) (.60) (2.76)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.49) (2.70)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.02)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.03) (.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.72 $7.24
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $1
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.07%(f) 5.48%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 2.24%(f) 2.21%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.53%(f) 3.11%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (6.78%)(i) (27.15%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008(b)
Net asset value, beginning of period $7.24 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .11 .07
Net gains (losses) (both realized and
unrealized) (.60) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.49) (2.70)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.02)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.03) (.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.72 $7.24
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.02%(f) 5.15%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 2.23%(f) 2.21%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.39%(f) 3.31%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (6.76%)(i) (27.18%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $7.25 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .14 .09
Net gains (losses) (both realized and
unrealized) (.59) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.45) (2.68)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.03)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.74 $7.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $4
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 2.49%(f) 4.12%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.07%(f) 1.07%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 4.25%(f) 3.95%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return (6.24%)(h) (27.00%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $7.25 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .12 .07
Net gains (losses) (both realized and
unrealized) (.59) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.47) (2.70)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.01)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.04) (.01)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.74 $7.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 3.29%(f) 4.92%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.73%(f) 1.72%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.59%(f) 3.36%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return (6.51%)(h) (27.10%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $7.25 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .12 .08
Net gains (losses) (both realized and
unrealized) (.58) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.46) (2.69)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.74 $7.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 3.04%(f) 4.68%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.48%(f) 1.47%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.84%(f) 3.61%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return (6.38%)(h) (27.07%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $7.25 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .12 .08
Net gains (losses) (both realized and
unrealized) (.58) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.46) (2.69)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.74 $7.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 2.64%(f) 4.42%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.27%(f) 1.24%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.70%(f) 3.89%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return (6.31%)(h) (27.04%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $7.25 $9.96
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .14 .09
Net gains (losses) (both realized and
unrealized) (.59) (2.77)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.45) (2.68)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.03)
Tax return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.74 $7.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 2.54%(f) 4.17%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.12%(f) 1.12%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 4.20%(f) 3.91%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 10%
- --------------------------------------------------------------------------------------------------------------
Total return (6.27%)(h) (27.00%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Equity Income Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company.
RiverSource Global 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). Under normal market conditions, at least 80% of the
Fund's net assets will be invested in equity securities. At least 40% of the
Fund's net assets will normally be invested in companies located in (non-U.S.)
developed and emerging countries. On July 24, 2008, RiverSource Investments, LLC
(RiverSource Investments or the Investment Manager) a subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial), invested $5,000,000 in the Fund (1,000
shares for Class A, 1,000 shares for Class B, 1,000 shares for Class C, 493,000
shares for Class I, 1,000 shares for Class R2, 1,000 shares for Class R3, 1,000
shares for Class R4 and 1,000 shares for Class R5), which represented the
initial capital for each class at $10 per share. Shares of the Fund were first
offered to the public on Aug. 1, 2008.
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 April 30, 2009, the Investment Manager owned 100% of Class I, Class R2, Class
R3 and Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the Fund may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of being unable to enter into a closing transaction
if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option
or the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At April 30, 2009, and for the six months
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
April 30, 2009, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings consisted of
multiple denominations, primarily Taiwan dollars.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, re-
characterization of REIT distributions, investments in partnerships, and losses
deferred due to wash sales. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are required to provide
enhanced disclosures about (a) how and why a fund uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At April 30, 2009, the Fund did not own nor was it a party to
any credit derivative contracts within the scope of these amendments.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with Statement of Financial Accounting Standards No. 157 "Fair Value
Measurements" (SFAS 157) when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within the Fund's financial statements.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared and paid each calendar quarter,
when available, are reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.80%
to 0.57% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the MSCI All Country World Index. In certain circumstances, the
Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The adjustment increased the management fee by $2,171 for the six months
ended April 30, 2009. The management fee for the six months ended April 30,
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
2009 was 0.83% of the Fund's average daily net assets, including the adjustment
under the terms of the performance incentive arrangement.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, there were no expenses incurred for these particular items.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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 in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class R3 shares, a fee at
an annual rate of up to 0.50% of the Fund's average daily net assets
attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of
the Fund's average daily net assets attributable to Class B and Class C shares.
For Class B and Class C shares, up to 0.75% of the fee is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $102,000 and $5,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$23,449 for Class A and $5 for Class B for the six months ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
(excluding fees and expenses of acquired funds*), including the adjustment under
the terms of a performance incentive arrangement, were as follows:
<Table>
Class A............................................. 1.48%
Class B............................................. 2.24
Class C............................................. 2.23
Class I............................................. 1.07
Class R2............................................ 1.73
Class R3............................................ 1.48
Class R4............................................ 1.27
Class R5............................................ 1.12
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $4,771
Class B........................................... 559
Class C........................................... 76
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2............................................. $4
Class R3............................................. 4
Class R4............................................. 5
</Table>
The management fees and other Fund level expenses waived/reimbursed were
$132,067.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the class average daily net assets:
<Table>
Class A............................................. 1.45%
Class B............................................. 2.21
Class C............................................. 2.20
Class I............................................. 1.05
Class R2............................................ 1.85
Class R3............................................ 1.60
Class R4............................................ 1.35
Class R5............................................ 1.10
</Table>
* 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
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
different proportions of acquired funds at different times, the amount of
fees and expenses incurred indirectly by the Fund will vary.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $16,241,613 and $4,026,076, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ------------------------------------------------------------------------------
Class A 1,866,854 12,603 (287,449) 1,592,008
Class B 211,393 773 (11,324) 200,842
Class C 33,866 100 (3,137) 30,829
Class R4 921 2 (921) 2
- ------------------------------------------------------------------------------
<Caption>
PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ------------------------------------------------------------------------------
Class A 806,221 1,124 (58,764) 748,581
Class B 88,519 111 -- 88,630
Class C 10,230 17 (3,271) 6,976
Class R4 199 -- -- 199
- ------------------------------------------------------------------------------
</Table>
* When shares became publicly available.
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
on behalf of the Fund into authorized investments pursuant to the Agreement. The
investments made with the cash collateral are listed in the Portfolio of
Investments. The values of such investments, and any uninvested cash collateral
balance, are disclosed in the Statement of Assets and Liabilities along with the
related obligation to return the collateral upon the return of the securities
loaned. At April 30, 2009, securities valued at $2,936,066 were on loan, secured
by cash collateral of $3,025,558 invested in short-term securities or in cash
equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$9,866 earned from securities lending from Dec. 1, 2008 through April 30, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $7,915,717 and $7,541,778, respectively, for the six months
ended April 30, 2009. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$182,867 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. 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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
January 2004, Seligman, on a voluntary basis, publicly disclosed these four
arrangements to its clients and to shareholders of the Seligman Funds. Seligman
also provided information concerning mutual fund trading practices to the SEC
and the Office of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 SEMIANNUAL REPORT 45
THREADNEEDLE GLOBAL EQUITY INCOME FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource Investments employs
Threadneedle as a subadviser. Threadneedle(R) mutual funds
are distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource and
Threadneedle are part of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6531 A (6/09)
</Table>
Semiannual Report
(THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EXTENDED ALPHA FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2009
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
(ADVANCED ALPHA STRATEGIES ICON)
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 9
Portfolio of Investments........... 11
Statement of Assets and
Liabilities...................... 18
Statement of Operations............ 20
Statements of Changes in Net
Assets........................... 22
Financial Highlights............... 23
Notes to Financial Statements...... 31
Proxy Voting....................... 47
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," "Seligman" and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Extended Alpha Fund (the Fund) Class A shares declined
1.15% (excluding sales charge) for the six months ended April 30, 2009.
> The Fund outperformed its benchmark, the Morgan Stanley Capital International
All Country World Index, which fell 3.00% for the six month period.
ANNUALIZED TOTAL RETURNS (for period ended April 30, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
inception*
6 months* 8/1/08
- -----------------------------------------------------------------
Threadneedle Global Extended Alpha Fund
Class A (excluding sales charge) -1.15% -30.95%
- -----------------------------------------------------------------
MSCI All Country World Index(1)
(unmanaged) -3.00% -32.60%
- -----------------------------------------------------------------
</Table>
* Not annualized.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary
or visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an
unmanaged index of equity securities, is designed to measure equity market
performance in the global developed and emerging markets. The index reflects
reinvestment of all distributions and changes in market prices. The Fund's
performance will be measured against this index for purposes of determining
the performance incentive adjustment.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT APRIL 30, 2009
SINCE
Without sales charge 6 MONTHS* INCEPTION
Class A (inception 8/1/08) -1.15% -30.95%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -1.58% -31.40%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -1.51% -31.35%
- ------------------------------------------------------------------
Class I (inception 8/1/08) -1.00% -30.80%
- ------------------------------------------------------------------
Class R2 (inception 8/1/08) -1.36% -31.15%
- ------------------------------------------------------------------
Class R3 (inception 8/1/08) -1.22% -31.00%
- ------------------------------------------------------------------
Class R4 (inception 8/1/08) -1.14% -30.90%
- ------------------------------------------------------------------
Class R5 (inception 8/1/08) -1.07% -30.85%
- ------------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) -6.82% -34.92%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -6.50% -34.83%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -2.49% -32.04%
- ------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
<Table>
<Caption>
AT MARCH 31, 2009
SINCE
Without sales charge 6 MONTHS* INCEPTION
Class A (inception 8/1/08) -26.00% -36.10%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -26.28% -36.45%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -26.28% -36.45%
- ------------------------------------------------------------------
Class I (inception 8/1/08) -25.88% -36.00%
- ------------------------------------------------------------------
Class R2 (inception 8/1/08) -26.09% -36.25%
- ------------------------------------------------------------------
Class R3 (inception 8/1/08) -25.97% -36.15%
- ------------------------------------------------------------------
Class R4 (inception 8/1/08) -25.90% -36.05%
- ------------------------------------------------------------------
Class R5 (inception 8/1/08) -25.88% -36.00%
- ------------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) -30.24% -39.77%
- ------------------------------------------------------------------
Class B (inception 8/1/08) -29.96% -39.63%
- ------------------------------------------------------------------
Class C (inception 8/1/08) -27.01% -37.09%
- ------------------------------------------------------------------
</Table>
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.
**For Class B shares purchased on or after June 13, 2009 the CDSC percentage for
the third year will be 3%.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO*
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total fund Net fund
expenses expenses(a)
- -----------------------------------------
Class A 5.55% 1.55%
- -----------------------------------------
Class B 6.33% 2.31%
- -----------------------------------------
Class C 6.22% 2.30%
- -----------------------------------------
Class I 4.94% 1.22%
- -----------------------------------------
Class R2 5.74% 2.02%
- -----------------------------------------
Class R3 5.49% 1.77%
- -----------------------------------------
Class R4 5.38% 1.52%
- -----------------------------------------
Class R5 4.99% 1.27%
- -----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment, will not exceed 1.55% for Class A, 2.31%
for Class B, 2.30% for Class C, 1.22% for Class I, 2.02% for Class R2, 1.77%
for Class R3, 1.52% for Class R4 and 1.27% for Class R5.
* Fund expense ratios are calculated based on the fund's average net assets
during the fund's most recently completed fiscal year, and have not been
adjusted for current asset levels, including any decrease or increase in
assets, which, if adjusted, would result in expense ratios that are higher
or lower, respectively, than those that are expressed herein. Any fee
waivers/expense caps would limit the impact that any decrease in assets will
have on net expense ratios in the current fiscal year.
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.
Threadneedle Global Extended Alpha Fund may make short sales, which involves
selling a security the Fund does not own in anticipation that the security's
price will decline. The Fund's potential losses could exceed those of other
mutual funds which hold only long security positions if the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
value of the securities held long decrease and the value of the securities sold
short increase. The Fund's use of short sales in effect "leverages" the Fund, as
the Fund intends to use the cash proceeds from the short sales to invest in
additional long securities. Leveraging potentially exposes the Fund to greater
risks due to unanticipated market movements, which may magnify losses and
increase volatility of returns. There is no assurance that a leveraging strategy
will be successful. Both long and short positions may be obtained through buying
or selling individual securities or creating similar long or short exposure
through the use of derivative instruments. See the Fund's prospectus for
information on these and other risks associated with the Fund.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PORTFOLIO BREAKDOWN BY COUNTRY(1)
(at April 30, 2009; % of portfolio and portfolio swap(2))
- --------------------------------------------------------------------------------
<Table>
<Caption>
LONG SHORT(3) NET
Australia 1.8% 0.0% 1.8%
- ------------------------------------------------------------------
Bermuda 4.6% 0.0% 4.6%
- ------------------------------------------------------------------
Brazil 2.8% 0.0% 2.8%
- ------------------------------------------------------------------
Canada 3.7% 0.0% 3.7%
- ------------------------------------------------------------------
Denmark 1.3% 0.0% 1.3%
- ------------------------------------------------------------------
Finland 0.8% 0.0% 0.8%
- ------------------------------------------------------------------
France 1.6% -1.4% 0.2%
- ------------------------------------------------------------------
Germany 4.2% 0.0% 4.2%
- ------------------------------------------------------------------
Hong Kong 4.1% 0.0% 4.1%
- ------------------------------------------------------------------
Japan 3.2% -1.1% 2.1%
- ------------------------------------------------------------------
Luxembourg 1.1% -0.4% 0.7%
- ------------------------------------------------------------------
Mexico 1.7% 0.0% 1.7%
- ------------------------------------------------------------------
Netherlands 0.6% -1.2% -0.6%
- ------------------------------------------------------------------
Portugal 0.4% 0.0% 0.4%
- ------------------------------------------------------------------
Russia 0.8% 0.0% 0.8%
- ------------------------------------------------------------------
Singapore 1.5% 0.0% 1.5%
- ------------------------------------------------------------------
South Korea 1.1% 0.0% 1.1%
- ------------------------------------------------------------------
Spain 2.3% 0.0% 2.3%
- ------------------------------------------------------------------
Switzerland 8.1% 0.0% 8.1%
- ------------------------------------------------------------------
United Kingdom 13.3% 0.0% 13.3%
- ------------------------------------------------------------------
United States 52.1% -7.2% 44.9%
- ------------------------------------------------------------------
Other(4) 0.2% 0.0% 0.2%
- ------------------------------------------------------------------
111.3% -11.3% 100.0%
- ------------------------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
investments of Cash Collateral for Securities on Loan) as of April 30, 2009.
The Fund's composition is subject to change.
(2) The Fund has entered into a portfolio swap agreement. A portfolio swap
allows the Fund to obtain exposure to a custom basket of securities and
foreign markets (both long and short exposures) without owning or taking
physical custody of such securities. The portfolio breakdown by country for
each underlying position in the custom basket has been estimated by
multiplying the notional amount of each security by its April 30, 2009
closing market price as obtained from an authorized pricing source. The
notional amounts and the market values of the positions in the custom basket
are not presented in the financial statements.
(3) At April 30, 2009, the Fund had no short positions. However, the Fund had
entered into a portfolio swap in order to gain short exposure to foreign
equity markets. See Portfolio Swap Outstanding at April 30, 2009 following
the Portfolio of Investments, and Note 1 to the financial statements.
(4) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 7
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
Top ten holdings do not include notional exposure to holdings the Fund has
through its use of a portfolio swap. For more information regarding the Fund's
portfolio swap, see "Portfolio of Investments" page 14.
TOP TEN HOLDINGS (at April 30, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Nestle (Switzerland) 3.7%
- ------------------------------------------------
Oracle (United States) 2.9%
- ------------------------------------------------
Linde (Germany) 2.7%
- ------------------------------------------------
BG Group (United Kingdom) 2.4%
- ------------------------------------------------
Vodafone Group (United Kingdom) 2.3%
- ------------------------------------------------
Johnson & Johnson (United States) 2.1%
- ------------------------------------------------
Travelers Companies (United States) 2.0%
- ------------------------------------------------
Tullow Oil (United Kingdom) 2.0%
- ------------------------------------------------
PepsiCo (United States) 1.9%
- ------------------------------------------------
IBM (United States) 1.9%
- ------------------------------------------------
</Table>
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.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the 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 April 30, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 9
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2008 APRIL 30, 2009 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 988.50 $ 7.64 1.55%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.11 $ 7.75 1.55%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 984.20 $11.36 2.31%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.34 $11.53 2.31%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 984.90 $11.32 2.30%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.39 $11.48 2.30%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 990.00 $ 6.02 1.22%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.74 $ 6.11 1.22%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 986.40 $ 9.95 2.02%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.78 $10.09 2.02%
- -------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 987.80 $ 8.72 1.77%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.02 $ 8.85 1.77%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 988.60 $ 7.49 1.52%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.26 $ 7.60 1.52%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 989.30 $ 6.26 1.27%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.50 $ 6.36 1.27%
- -------------------------------------------------------------------------------------------
</Table>
(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 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2009: -1.15%
for Class A, -1.58% for Class B, -1.51% for Class C, -1.00% for Class I,
-1.36% for Class R2, -1.22% for Class R3, -1.14% for Class R4 and -1.07% for
Class R5.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
APRIL 30, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.5%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.8%)
CSL 2,830 $70,768
InterOil 1,050(b) 33,905
---------------
Total 104,673
- -------------------------------------------------------------------------------------
BERMUDA (3.6%)
Accenture Cl A 2,646 77,872
Ingersoll-Rand Cl A 2,400 52,248
PartnerRe 1,075 73,304
---------------
Total 203,424
- -------------------------------------------------------------------------------------
BRAZIL (0.6%)
Redecard 2,800 35,270
- -------------------------------------------------------------------------------------
CANADA (2.5%)
Barrick Gold 3,300 95,602
First Uranium 8,000(b,f) 43,066
---------------
Total 138,668
- -------------------------------------------------------------------------------------
DENMARK (1.3%)
Vestas Wind Systems 1,150(b,f) 75,920
- -------------------------------------------------------------------------------------
FINLAND (0.9%)
Talvivaara Mining 15,830(b) 48,480
- -------------------------------------------------------------------------------------
FRANCE (1.6%)
France Telecom 4,185 93,430
- -------------------------------------------------------------------------------------
GERMANY (4.4%)
Linde 2,090 166,860
Siemens 1,217(f) 82,185
---------------
Total 249,045
- -------------------------------------------------------------------------------------
HONG KONG (4.2%)
Esprit Holdings 6,000 37,046
Great Eagle Holdings 50,000 69,549
Hongkong & Shanghai Hotels 80,000 61,007
Sun Hung Kai Properties 7,000(f) 72,937
---------------
Total 240,539
- -------------------------------------------------------------------------------------
JAPAN (3.3%)
Canon 1,000(f) 29,919
Honda Motor 1,800(f) 51,938
Nintendo 300 80,052
Sony Financial Holdings 8 25,071
---------------
Total 186,980
- -------------------------------------------------------------------------------------
LUXEMBOURG (1.1%)
Millicom Intl Cellular 1,310 63,483
- -------------------------------------------------------------------------------------
MEXICO (1.8%)
America Movil ADR Series L 3,125 102,656
- -------------------------------------------------------------------------------------
NETHERLANDS (0.6%)
Fugro 880 31,810
- -------------------------------------------------------------------------------------
RUSSIA (0.9%)
NovaTek GDR 1,400(d,e) 49,700
- -------------------------------------------------------------------------------------
SINGAPORE (1.6%)
DBS Group Holdings 14,000(f) 89,895
- -------------------------------------------------------------------------------------
SOUTH KOREA (1.1%)
Samsung Electronics 140 64,654
- -------------------------------------------------------------------------------------
SPAIN (1.4%)
Telefonica 4,226 80,587
- -------------------------------------------------------------------------------------
SWITZERLAND (8.4%)
Mettler Toledo Intl 600(b) 36,978
Nestle 6,950 227,507
Novartis 1,610 61,223
Roche Holding 700(f) 88,628
Syngenta 283(f) 60,751
---------------
Total 475,087
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED KINGDOM (11.2%)
3i Group 5,620 $26,690
Autonomy 5,350(b) 113,267
BG Group 9,000 145,536
Tesco 18,600 92,792
Tullow Oil 10,000 119,320
Vodafone Group 75,200 138,737
---------------
Total 636,342
- -------------------------------------------------------------------------------------
UNITED STATES (47.2%)
Adobe Systems 1,400(b) 38,290
Altria Group 2,500 40,825
American Tower Cl A 2,800(b) 88,928
Amphenol Cl A 1,400 47,376
Aon 1,500 63,300
Bank of America 3,500 31,255
Coca-Cola 2,050 88,253
Comcast Cl A 4,040 62,458
CommScope 2,400(b) 60,240
CVS Caremark 2,800 88,984
DIRECTV Group 2,000(b) 49,460
Genzyme 560(b) 29,865
Goldman Sachs Group 300 38,550
Google Cl A 250(b) 98,993
HCC Insurance Holdings 3,400 81,328
Humana 2,200(b) 63,316
IBM 1,100 113,531
Jabil Circuit 5,000 40,500
Johnson & Johnson 2,440 127,758
Juniper Networks 2,300(b) 49,795
KeyCorp 3,300 20,295
Laboratory Corp of America Holdings 1,510(b) 96,867
Lowe's Companies 5,000 107,500
Microsoft 3,390 68,681
Noble 1,900 51,927
Oracle 9,000 174,059
PepsiCo 2,290 113,950
Philip Morris Intl 1,965 71,133
Praxair 460 34,321
Republic Services 2,700 56,700
Thermo Fisher Scientific 2,590(b) 90,857
Tiffany & Co 1,800 52,092
Travelers Companies 3,030 124,655
Ultra Petroleum 2,300(b) 98,439
Union Pacific 700 34,398
Valero Energy 3,000 59,520
Walgreen 2,000 62,860
Western Union 2,700 45,225
---------------
Total 2,666,484
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $5,900,497) $5,637,127
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (0.2%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.28% 11,738(g) $11,738
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $11,738) $11,738
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (8.1%)
SHARES VALUE(a)
JPMorgan Prime Money Market Fund 457,913 $457,913
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR
SECURITIES ON LOAN
(Cost: $457,913) $457,913
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $6,370,148)(h) $6,106,778
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at April 30, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -------------------------------------------------------------------
Automobiles 0.9% $51,938
Beverages 3.6 202,203
Biotechnology 1.8 100,633
Capital Markets 1.2 65,240
Chemicals 4.6 261,932
Commercial Banks 1.9 110,190
Commercial Services & Supplies 1.0 56,700
Communications Equipment 1.9 110,035
Computers & Peripherals 2.0 113,531
Diversified Financial Services 0.6 31,255
Diversified Telecommunication
Services 3.1 174,017
Electrical Equipment 1.3 75,920
Electronic Equipment, Instruments &
Components 2.2 124,854
Energy Equipment & Services 1.5 83,737
Food & Staples Retailing 4.3 244,636
Food Products 4.0 227,507
Health Care Providers & Services 2.8 160,183
Hotels, Restaurants & Leisure 1.1 61,007
Industrial Conglomerates 1.5 82,185
Insurance 6.5 367,658
Internet Software & Services 1.7 98,993
IT Services 2.8 158,367
Life Sciences Tools & Services 1.6 90,857
Machinery 0.9 52,248
Media 2.0 111,918
Metals & Mining 3.3 187,148
Office Electronics 0.5 29,919
Oil, Gas & Consumable Fuels 8.9 506,420
Pharmaceuticals 4.9 277,609
Real Estate Management &
Development 2.5 142,486
Road & Rail 0.6 34,398
Semiconductors & Semiconductor
Equipment 1.1 64,654
Software 8.4 474,349
Specialty Retail 3.5 196,638
Tobacco 2.0 111,958
Wireless Telecommunication Services 7.0 393,804
Other(1) 8.3 469,651
- -------------------------------------------------------------------
Total $6,106,778
- -------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
PORTFOLIO SWAP(1) OUTSTANDING AT APRIL 30, 2009
<Table>
<Caption>
NEXT NET UNREALIZED
COUNTERPARTY DESCRIPTION RESET DATE APPRECIATION
- ------------------------------------------------------------------------------
UBS The Fund receives(pays) the total May 8, 2009 $(11,846)
return on a custom basket of
long(short) equity positions and
pays(receives) a floating rate
based on the 1-day LIBOR which is
denominated in various foreign
currencies based on the local
currencies of the securities
underlying the custom basket.
- ------------------------------------------------------------------------------
Total $(11,846)
- ------------------------------------------------------------------------------
</Table>
(1) The Fund has entered into a portfolio swap agreement. A portfolio swap
allows the Fund to obtain exposure to a custom basket of securities and
foreign markets (both long and short exposures) without owning or taking
physical custody of such securities. Under the terms of the agreement,
payments made by the Fund or the counterparty are based on the total return
of the reference assets within the basket. That is, one party agrees to pay
another party the return on the basket in return for a specified interest
rate. The agreement allows the Investment Manager of the Fund to alter the
composition of the custom basket by trading in and out of the notional
security positions at its discretion.
The notional amounts of the security positions held in the basket are not
recorded in the financial statements. The portfolio swap is valued daily,
and the change in value is recorded as unrealized appreciation
(depreciation). The swap resets monthly at which time the Fund settles in
cash with the counterparty. Payments received or made are recorded as
realized gains (losses).
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At April 30,
2009, the value of these securities amounted to $49,700 or 0.9% of net
assets.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). The aggregate value of such securities
at April 30, 2009, was $49,700 representing 0.9% of net assets. Information
concerning such security holdings at April 30, 2009, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
----------------------------------------------------------------
NovaTek GDR* 04-23-09 $44,995
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(f) At April 30, 2009, security was partially or fully on loan. See Note 5 to
the financial statements.
(g) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at April 30, 2009.
(h) At April 30, 2009, the cost of securities for federal income tax purposes
was approximately $6,370,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $369,000
Unrealized depreciation (632,000)
----------------------------------------------------------
Net unrealized depreciation $(263,000)
----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the Fund, and unobservable inputs reflect the Fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level. 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 NYSE or require adjustment, as described in Note 1 to the
financial statements -- Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of April 30, 2009:
<Table>
<Caption>
FAIR VALUE AT APRIL 30, 2009
-------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------
Investments in securities $6,106,778 $-- $-- $6,106,778
Other financial
instruments* -- (11,846) -- (11,846)
- ----------------------------------------------------------------------------------
Total $6,106,778 $(11,846) $-- $6,094,932
- ----------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as swap
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 17
STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------
APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $5,900,497) $ 5,637,127
Affiliated money market fund (identified cost $11,738) 11,738
Investments of cash collateral received for securities on loan
(identified cost $457,913) 457,913
- ------------------------------------------------------------------------------
Total investments in securities (identified cost $6,370,148) 6,106,778
Cash 22,714
Foreign currency holdings (identified cost $33,878) 34,430
Capital shares receivable 1,250
Dividends and accrued interest receivable 10,875
- ------------------------------------------------------------------------------
Total assets 6,176,047
- ------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 7,466
Payable upon return of securities loaned 457,913
Unrealized depreciation on swap contracts 11,846
Accrued investment management services fees 162
Accrued distribution fees 24
Accrued transfer agency fees 9
Accrued administrative services fees 12
Other accrued expenses 35,008
- ------------------------------------------------------------------------------
Total liabilities 512,440
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 5,663,607
- ------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 4,098
Additional paid-in capital 7,705,404
Undistributed net investment income 237,598
Accumulated net realized gain (loss) (2,008,851)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (274,642)
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 5,663,607
- ------------------------------------------------------------------------------
*Including securities on loan, at value $ 456,118
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $1,803,773 130,642 $13.81(1)
Class B $ 302,268 22,025 $13.72
Class C $ 103,112 7,512 $13.73
Class I $3,410,773 246,500 $13.84
Class R2 $ 6,885 500 $13.77
Class R3 $ 6,899 500 $13.80
Class R4 $ 22,981 1,663 $13.82
Class R5 $ 6,916 500 $13.83
- ---------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $14.65. 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENT OF OPERATIONS -------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends 74,485
Interest 1,501
Income distributions from affiliated money market fund 206
Fee income from securities lending 473
Less foreign taxes withheld (4,202)
- ------------------------------------------------------------------------------
Total income 72,463
- ------------------------------------------------------------------------------
Expenses:
Investment management services fees 29,195
Distribution fees
Class A 2,444
Class B 1,363
Class C 488
Class R2 16
Class R3 8
Transfer agency fees
Class A 1,394
Class B 207
Class C 72
Class R2 2
Class R3 2
Class R4 5
Class R5 2
Administrative services fees 2,224
Plan administration services fees
Class R2 8
Class R3 8
Class R4 27
Compensation of board members 97
Custodian fees 10,522
Printing and postage 16,255
Registration fees 15,909
Professional fees 19,755
Other 3,569
- ------------------------------------------------------------------------------
Total expenses 103,572
Expenses waived/reimbursed by the Investment Manager and its
affiliates (64,324)
- ------------------------------------------------------------------------------
Total net expenses 39,248
- ------------------------------------------------------------------------------
Investment income (loss) -- net 33,215
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(1,078,458)
Foreign currency transactions 3,854
Swap transactions (209,270)
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,283,874)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 1,131,024
- ------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (152,850)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (119,635)
- ------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 21
STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2009 FROM AUG. 1, 2008*
(UNAUDITED) TO OCT. 31, 2008
OPERATIONS
Investment income (loss) -- net $ 33,215 $ 5,911
Net realized gain (loss) on investments (1,283,874) (971,237)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 1,131,024 (1,410,405)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (119,635) (2,375,731)
- -------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 469,429 3,082,069
Class B shares 113,678 482,927
Class C shares 43,424 117,476
Class R4 shares 2,000 22,000
Payments for redemptions
Class A shares (793,218) (157,519)
Class B shares (48,312) (141,999)
Class C shares (31,625) --
Class R4 shares (1,985) --
- -------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (246,609) 3,404,954
- -------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (366,244) 1,029,223
Net assets at beginning of period 6,029,851 5,000,628**
- -------------------------------------------------------------------------------------------------------
Net assets at end of period $ 5,663,607 $ 6,029,851
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income $ 237,598 $ 204,383
- -------------------------------------------------------------------------------------------------------
</Table>
* When shares became publicly available.
** Initial capital of $5,000,000 was contributed on July 24, 2008. The Fund had
an increase in net assets resulting from operations of $628 during the
period from July 24, 2008 to Aug. 1, 2008 (when shares became publicly
available).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(j) 2008(b)
Net asset value, beginning of period $13.97 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .07 .00(d)
Net gains (losses) (both realized and
unrealized) (.23) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.16) (6.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.81 $13.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $2
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 3.80%(f) 5.55%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.55%(f) 1.55%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.03%(f) (.07%)(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (1.15%)(i) (30.15%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $13.94 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .02 (.02)
Net gains (losses) (both realized and
unrealized) (.24) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.22) (6.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.72 $13.94
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 4.75%(e) 6.33%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 2.31%(e) 2.31%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .33%(e) (.55%)(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (1.58%)(h) (30.30%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $13.94 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .02 (.03)
Net gains (losses) (both realized and
unrealized) (.23) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.21) (6.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.73 $13.94
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 4.68%(e) 6.22%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 2.30%(e) 2.30%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .25%(e) (.79%)(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (1.51%)(h) (30.30%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $13.98 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .03
Net gains (losses) (both realized and
unrealized) (.23) (6.05)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.84 $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $3
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 3.55%(e) 4.94%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.22%(e) 1.21%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.40%(e) .63%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.00%)(g) (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(i) 2008(b)
Net asset value, beginning of period $13.96 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .05 .00(d)
Net gains (losses) (both realized and
unrealized) (.24) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.19) (6.04)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.77 $13.96
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.35%(f) 5.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.89%(f) 1.81%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .73%(f) .03%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.36%)(h) (30.20%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
(i) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $13.97 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .06 .01
Net gains (losses) (both realized and
unrealized) (.23) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.17) (6.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.80 $13.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 4.11%(e) 5.49%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.64%(e) 1.56%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .98%(e) .28%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.22%)(g) (30.15%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $13.98 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .01
Net gains (losses) (both realized and
unrealized) (.24) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.16) (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.82 $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 3.85%(e) 5.38%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.39%(e) 1.36%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.24%(e) .30%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.14%)(g) (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2009(h) 2008(b)
Net asset value, beginning of period $13.98 $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .02
Net gains (losses) (both realized and
unrealized) (.24) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.15) (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.83 $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 3.60%(e) 4.99%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.27%(e) 1.26%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.35%(e) .58%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 36%
- --------------------------------------------------------------------------------------------------------------
Total return (1.07%)(g) (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
(h) Six months ended April 30, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
(UNAUDITED AS TO APRIL 30, 2009)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Extended Alpha Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company.
RiverSource Global 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,
including at least 40% of its net assets in companies located in (non-U.S.)
developed and emerging markets. The Fund holds both long and short positions.
Both long and short positions may be obtained through buying or selling
individual securities or creating similar long or short exposure through the use
of derivative instruments. On July 24, 2008, RiverSource Investments, LLC
(RiverSource Investments or the Investment Manager), a subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial), invested $5,000,000 in the Fund (500
shares for Class A, 500 shares for Class B, 500 shares for Class C, 246,500
shares for Class I, 500 shares for Class R2, 500 shares for Class R3, 500 shares
for Class R4 and 500 shares for Class R5), which represented the initial capital
for each class at $20 per share. Shares of the Fund were first offered to the
public on Aug. 1, 2008.
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 April 30, 2009, the Investment Manager owned 100% of Class I, Class R2, Class
R3 and Class R5 shares. At April 30, 2009, the Investment Manager owned
approximately 61% 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange (NYSE) and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the NYSE, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the NYSE.
Swap transactions are valued through an authorized pricing service, broker, or
an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
ILLIQUID SECURITIES
At April 30, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at April 30, 2009 was
$49,700 representing 0.88% of net assets. Certain illiquid securities may be
valued by management at fair value according to procedures approved, in good
faith, by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
SECURITIES SOLD SHORT
The Fund may enter into short sales of securities that it concurrently holds or
for which it holds no corresponding position. Short selling is the practice of
selling securities which have been borrowed from a third party in anticipation
of a decline in the market price of that security. Securities which have been
sold short represent a liability of the Fund to acquire specific securities at
prevailing market prices at a future date in order to satisfy the obligation to
deliver the securities sold. The Fund is required to return securities
equivalent to those borrowed for the short sale at the lender's demand. A gain,
limited to the price at which the Fund sold the security short, or a loss,
unlimited in size, will be recorded upon the termination of a short sale. Short
sales are collateralized with segregated securities or cash held at the
custodian as noted in the Portfolio of Investments. The collateral required is
determined daily based on the market value of the securities sold short. At
April 30, 2009, the Fund had no outstanding securities sold short.
The Fund is liable to pay the counterparty for any dividends accrued on a
security it has borrowed and sold short and to pay interest for any net
financing costs incurred during the time the short position is held by the Fund.
Such dividends (recognized on ex-date) and interest are recorded as an expense
and shown in the Statement of Operations. During the six months ended April 30,
2009, the Fund had no dividends and interest expense in the Statement of
Operations.
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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter (OTC options)
options trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Options
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the NYSE. The Fund will realize a gain or loss when the option
transaction expires or is exercised. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option
or the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At April 30, 2009, and for the six months
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires. At April 30, 2009, the Fund had no outstanding futures contracts.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2009, foreign currency holdings consisted of
multiple denominations.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations. At April 30, 2009, the Fund had no
outstanding forward foreign currency contracts.
PORTFOLIO SWAP TRANSACTIONS
The Fund has entered into a portfolio swap agreement. A portfolio swap allows
the Fund to obtain exposure to a custom basket of securities and foreign markets
(both long and short exposures) without owning or taking physical custody of
such securities. Under the terms of the agreement, payments made by the Fund or
the counterparty are based on the total return of the reference assets within
the basket. That is, one party agrees to pay another party the return on the
basket in return for a specified interest rate. The agreement allows the
Investment Manager of the Fund to alter the composition of the custom basket by
trading in and out of the notional security positions at its discretion.
The notional amounts of the security positions held in the basket are not
recorded in the financial statements. The portfolio swap is valued daily based
on closing prices obtained from an authorized pricing source, and the change in
value is recorded as unrealized appreciation (depreciation). The swap resets
monthly at which time the Fund settles in cash with the counterparty. Payments
received or made are recorded as realized gains (losses). See the Portfolio Swap
Outstanding table following the Portfolio of Investments for additional
information.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Portfolio swaps can involve greater risks than if a fund had invested in the
reference securities directly since, in addition to general market risks
(including foreign/emerging market risks and risks of securities sold short),
portfolio swaps are also subject to counterparty credit risk and liquidity risk.
Although the risks mentioned above are the largest risks associated with
portfolio swaps, other risks may also apply.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
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 foreign currency
transactions, recognition of unrealized appreciation (depreciation) for certain
derivative investments and losses deferred due to wash sales. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. Funds are
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
required to provide enhanced disclosures about (a) how and why a fund uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under SFAS 133 and its related interpretations, (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows and (d) the current status of
the payment/performance risk of the credit derivative. The amendments to FSP FAS
133-1 and FIN 45-4 also require additional disclosures about the current status
of the payment/performance risk of a guarantee. At April 30, 2009, the Fund did
not own nor was it party to any credit derivative contracts within the scope of
these amendments.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of April 30, 2009, management does not believe
the adoption of SFAS 161 will impact the financial statement amounts; however,
additional footnote disclosures may be required about the use of derivative
instruments and hedging items.
On April 9, 2009, the FASB issued Staff Position No. 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
157-4). FSP 157-4 provides additional guidance for estimating fair value in
accordance with Statement of Financial Accounting Standards No. 157 "Fair Value
Measurements" (SFAS 157) when the volume and level of activity for the asset or
liability have significantly decreased. FSP 157-4 also requires additional
disaggregation of the current SFAS 157 required disclosures. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Management is currently evaluating the
impact that the adoption of FSP 157-4 will have on the amounts and disclosures
within 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 or upon receipt of
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 1.05%
to 0.99% 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 36-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the MSCI All Country World Index. In certain circumstances, the
Board may approve a change in the index. The maximum adjustment is 0.50% per
year. If the performance difference is less than 1.00%, the adjustment will be
zero. The first adjustment will be made on Aug. 1, 2010 and cover the 24-month
period beginning Aug. 1, 2008. The management fee for the six months ended April
30, 2009 was 1.05% of the Fund's average daily net assets.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the six months ended April 30, 2009 was
0.08% of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended
April 30, 2009, there were no expenses incurred for these particular items.
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class R3 shares, a fee at
an annual rate of up to 0.50% of the Fund's average daily net assets
attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of
the Fund's average daily net assets attributable to Class B and Class C shares.
For Class B and Class C shares, up to 0.75% of the fee is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $27,000 and $1,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were $108
for Class A and $28 for Class C for the six months ended April 30, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended April 30, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*) were as follows:
<Table>
Class A............................................. 1.55%
Class B............................................. 2.31
Class C............................................. 2.30
Class I............................................. 1.22
Class R2............................................ 1.89
Class R3............................................ 1.64
Class R4............................................ 1.39
Class R5............................................ 1.27
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A............................................ $609
Class B............................................ 85
Class C............................................ 33
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2............................................ $ 4
Class R3............................................ 4
Class R4............................................ 15
</Table>
The management fees and other fund level expenses waived/reimbursed were
$63,574.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the class average daily net assets:
<Table>
Class A............................................. 1.55%
Class B............................................. 2.31
Class C............................................. 2.30
Class I............................................. 1.22
Class R2............................................ 2.02
Class R3............................................ 1.77
Class R4............................................ 1.52
Class R5............................................ 1.27
</Table>
* 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.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $3,641,560 and $3,490,827, respectively, for the six
months ended April 30, 2009. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- -----------------------------------------------------------------------------
Class A 35,325 -- (62,692) (27,367)
Class B 8,538 -- (3,629) 4,909
Class C 3,166 -- (2,378) 788
Class R4 154 -- (154) --
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
<Table>
<Caption>
PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- -----------------------------------------------------------------------------
Class A 166,961 -- (9,452) 157,509
Class B 26,996 -- (10,380) 16,616
Class C 6,224 -- -- 6,224
Class I 1,163 -- -- 1,163
- -----------------------------------------------------------------------------
</Table>
* When shares became publicly available.
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments, and any uninvested
cash collateral balance, are disclosed in the Statement of Assets and
Liabilities along with the related obligation to return the collateral upon the
return of the securities loaned. At April 30, 2009, securities valued at
$456,118 were on loan, secured by cash collateral of $457,913 invested in short-
term securities or in cash equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of $473
earned from securities lending from Dec. 1, 2008 through April 30, 2009 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
indemnification does not extend to losses associated with declines in the value
of cash collateral investments. Loans are subject to termination by the Fund or
the borrower at any time, and are, therefore, not considered to be illiquid
investments.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Nov. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $1,385,668 and $1,373,930, respectively, for the six months
ended April 30, 2009. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found in the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at April 30, 2009, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility agreement, which is a
collective agreement between the Fund and certain other RiverSource funds,
severally and not jointly, permits collective borrowings up to $475 million. The
borrowers shall have the right, upon written notice to the Administrative Agent
to request an increase of up to $175 million in the aggregate amount of the
credit facility from new or existing lenders, provided that the aggregate amount
of the credit facility shall at no time exceed $650 million. Participation in
such increase by any existing lender shall be at such lender's sole discretion.
Interest is charged to each Fund based on its borrowings at a rate equal to the
federal funds rate plus 0.75%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro
rata share of 0.02% of the amount of the credit facility. The Fund had no
borrowings during the six months ended April 30, 2009.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$577,229 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. 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.
9. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
SHORT SELLING RISK
The Fund may make short sales, which involves selling a security the Fund does
not own in anticipation that the security's price will decline. The Fund's
potential losses could exceed those of other mutual funds which hold only long
security positions if the value of the securities held long decreases and the
value of the securities sold short increases. The Fund's use of short sales in
effect "leverages" the Fund, as the Fund intends to use the cash proceeds from
the short sales to invest in additional long securities. Leveraging potentially
exposes the Fund to greater risks due to unanticipated market movements, which
may magnify losses and increase volatility of returns. There is no assurance
that a leveraging strategy will be successful.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the District Court). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
April 2007. Summary judgment was granted in the defendants' favor on July 9,
2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of
Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth
Circuit reversed summary judgment and remanded to the District Court for further
proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the Seligman Parties), alleging, in substance, that the Seligman
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 SEMIANNUAL REPORT 47
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource Investments employs
Threadneedle as a subadviser. Threadneedle(R) mutual funds
are distributed by RiverSource Distributors, Inc., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource and
Threadneedle are part of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6528 A (6/09)
</Table>
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 Global Series, Inc.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal
Executive Officer
Date July 2, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal
Executive Officer
Date July 2, 2009
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal
Financial Officer
Date July 2, 2009