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: 10/31
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
ABSOLUTE RETURN CURRENCY AND INCOME FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE
RETURN.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you (ADVANCED ALPHA(R) STRATEGIES
invest or send money. ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 4
The Fund's Long-term Performance... 8
Fund Expenses Example.............. 10
Portfolio of Investments........... 14
Statement of Assets and
Liabilities...................... 21
Statement of Operations............ 22
Statements of Changes in Net
Assets........................... 23
Financial Highlights............... 25
Notes to Financial Statements...... 32
Report of Independent Registered
Public Accounting Firm........... 47
Federal Income Tax Information..... 49
Board Members and Officers......... 50
Proxy Voting....................... 54
</Table>
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RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Absolute Return Currency and Income Fund (the Fund) Class A shares
gained 0.15% (excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund underperformed its benchmark, the Citigroup 3-month U.S. Treasury
Bill Index, which rose 0.28% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 06/15/06
- ------------------------------------------------------------------
RiverSource Absolute Return Currency
and Income Fund
Class A (excluding sales charge) +0.15% +3.07% +3.44%
- ------------------------------------------------------------------
Citigroup 3-month U.S. Treasury Bill
Index (unmanaged) +0.28% +2.49% +2.83%
- ------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
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
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS INCEPTION
Class A (inception 6/15/06) +0.15% +3.07% +3.44%
- -------------------------------------------------------------------
Class B (inception 6/15/06) -0.56% +2.38% +2.76%
- -------------------------------------------------------------------
Class C (inception 6/15/06) -0.56% +2.38% +2.76%
- -------------------------------------------------------------------
Class I (inception 6/15/06) +0.56% +3.49% +3.87%
- -------------------------------------------------------------------
Class R4 (inception 6/15/06) +0.25% +3.31% +3.66%
- -------------------------------------------------------------------
Class R5 (inception 10/18/07) +0.56% N/A +0.35%
- -------------------------------------------------------------------
Class W (inception 12/1/06) +0.04% N/A +2.85%
- -------------------------------------------------------------------
With sales charge
Class A (inception 6/15/06) -2.86% +2.03% +2.51%
- -------------------------------------------------------------------
Class B (inception 6/15/06) -5.51% +1.44% +1.93%
- -------------------------------------------------------------------
Class C (inception 6/15/06) -1.55% +2.38% +2.76%
- -------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 3.00%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R4, Class R5 and Class W shares. Class I,
Class R4 and Class R5 are available to qualifying institutional investors only.
Class W shares are offered through qualifying discretionary accounts.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 3
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholders,
RiverSource Absolute Return Currency and Income Fund (the Fund) Class A shares
gained 0.15% (excluding sales charge) for the 12 months ended Oct. 31, 2009. The
Fund underperformed its benchmark, the Citigroup 3-month U.S. Treasury Bill
Index (Citigroup Index), which rose 0.28% during the same period.
PORTFOLIO BREAKDOWN(1) (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Asset-Backed 3.8%
- ------------------------------------------------
Commercial Mortgage-Backed 1.3%
- ------------------------------------------------
Consumer Discretionary 1.4%
- ------------------------------------------------
FDIC-Insured Debt(2) 1.7%
- ------------------------------------------------
Financials 2.9%
- ------------------------------------------------
Foreign Government 0.8%
- ------------------------------------------------
Health Care 0.6%
- ------------------------------------------------
Industrials 2.7%
- ------------------------------------------------
Residential Mortgage-Backed 0.2%
- ------------------------------------------------
Other(3) 84.6%
- ------------------------------------------------
</Table>
(1) Portfolio holdings include industry sectors that can be comprised of
securities in several industries. Please refer to the section entitled
"Portfolio of Investments" for a complete listing. No single industry
exceeds 25% of portfolio assets.
(2) Debt guaranteed under the FDIC's Temporary Liquidity Guarantee Program
(TLGP).
(3) Cash & Cash Equivalents.
QUALITY BREAKDOWN (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
AAA bonds 8.7%
- ------------------------------------------------
AA bonds 1.4%
- ------------------------------------------------
A bonds 5.0%
- ------------------------------------------------
BBB bonds 0.3%
- ------------------------------------------------
Non-investment grade bonds --%
- ------------------------------------------------
A1/P1/F1 short-term securities 84.6%
- ------------------------------------------------
</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 Investment Manager), rates a security using
an internal rating system when Moody's doesn't provide a rating. Ratings for
0.3% 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 ratings scales, respectively.
- --------------------------------------------------------------------------------
4 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
We use a two-part investment process to seek to achieve the Fund's investment
objective. The first component consists of investments in primarily high
quality, short-term fixed income securities with minimal interest rate risk.
This component seeks to build a base of consistent income. These short-term
investments are also designated, as necessary, to cover obligations invested in
through the second component of our process, which is based on a proprietary
quantitative currency model. The model uses various fundamental and technical
factors, including current and historical data, to rank the anticipated value of
nine different currencies from developed countries, relative to the U.S. dollar.
Based on these rankings, we enter into long forward currency contracts for the
three most attractive currencies and enter into short forward currency contracts
for the three least attractive currencies, all relative to the U.S. dollar. The
Fund experiences profits or losses to the extent the values of the currencies
appreciate or depreciate relative to the U.S. dollar.
During the annual period, we were able to generate positive total return from
both the Fund's investment in short-term fixed income securities and our
proprietary quantitative currency model. While the Fund's returns were modest
during the period, we were pleased with the way the Fund's strategy held up
during a time of unprecedented market volatility. The Fund's positioning in the
Australian dollar, New Zealand dollar, Canadian dollar, Japanese yen and
Norwegian krone benefited its results for the 12 months ended Oct. 31, 2009. On
the other hand, positioning in the euro, Swiss franc, British pound and Swedish
krona detracted from Fund performance.
The Fund experiences profits or losses to the extent the values of the
currencies appreciate or depreciate relative to the U.S. dollar.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
OUR CURRENT INVESTMENT STRATEGY
We run our quantitative model weekly and reset currency positions as needed,
applying the output of this model on a systematic basis. We generally seek
neutral exposure to the U.S. dollar, the base currency. In our view, remaining
neutral to the U.S. dollar as part of our strategy helps control overall
volatility. We also use an externally developed but fully integrated, risk
management system to help us monitor and mitigate market risk. We believe the
Fund is designed to do well in either rising or falling U.S. dollar
environments.
OUR FUTURE STRATEGY
We intend to stay disciplined to our systematic investment strategy. Through the
use of our proprietary quantitative model, which determines the Fund's positions
in forward foreign currency contracts relative to the U.S. dollar, we will
continue to seek an absolute return that is unrelated to general movements in
the U.S. dollar and other types of financial assets. Overall, we will continue
to seek to generate positive total returns from the income produced by the
Fund's investments in short-term debt obligations, plus the gains, or minus the
losses, resulting from the fluctuations in the values of various foreign
currencies relative to the U.S. dollar.
The Fund does not actually take ownership of foreign currencies or sell actual
foreign currencies. Rather, forward currency contracts are used to gain
comparable currency exposure. Because the establishment of the Fund's forward
foreign currency contracts requires little cash outlay, the Fund's assets will
consist primarily of short-term investment grade U.S. dollar-denominated assets
(if unrated, securities will be of comparable quality, as determined by the
investment manager). Currently, the majority of the underlying portfolio is
invested in RiverSource Short-Term Cash Fund in an effort to reduce volatility.
- --------------------------------------------------------------------------------
6 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(PHOTO - NICOLAS PIFER, CFA(R))
Nicholas Pifer, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 7
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Absolute Return Currency and Income Fund Class A
shares (from 06/15/06 to 10/31/09) as compared to the performance of the
Citigroup 3-month U.S. Treasury Bill Index. In comparing the Fund's Class A
shares to this index, you should take into account the fact that the Fund's
performance reflects the maximum initial sales charge 3.00%, while such charges
are not reflected in the performance of the index. Returns for the Fund include
the reinvestment of any distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
SINCE
INCEPTION
1 YEAR 3 YEARS 6/15/06
RIVERSOURCE ABSOLUTE RETURN AND CURRENCY INCOME FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $9,714 $10,622 $10,872
- ---------------------------------------------------------------------------------
Average annual total return -2.86% +2.03% +2.51%
- ---------------------------------------------------------------------------------
CITIGROUP 3-MONTH U.S. TREASURY BILL INDEX(1)
Cumulative value of $10,000 $10,028 $10,766 $10,966
- ---------------------------------------------------------------------------------
Average annual total return +0.28% +2.49% +2.83%
- ---------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
8 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE ABSOLUTE RETURN
CURRENCY AND INCOME FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE ABSOLUTE
RETURN CURRENCY
AND INCOME CITIGROUP 3-MONTH
FUND CLASS U.S. TREASURY
A (INCLUDES BILL
SALES CHARGE) INDEX(1)
-------------------- ------------------
6/15/06 $ 9,700 $10,000
7/06 9,697 10,060
10/06 9,930 10,186
1/07 10,226 10,314
4/07 10,513 10,441
7/07 10,655 10,569
10/07 10,918 10,690
1/08 10,729 10,788
4/08 10,535 10,848
7/08 10,631 10,891
10/08 10,856 10,937
1/09 10,817 10,952
4/09 10,719 10,958
7/09 10,773 10,962
10/09 10,872 10,966
</Table>
(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.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL 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 ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Direct expenses paid during the period" to
estimate the expenses you paid on your account during this period. You can also
estimate the direct and indirect expenses you paid over the period by using the
number in the first line under the heading "Direct and indirect expenses paid
during the period."
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
- --------------------------------------------------------------------------------
10 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 ANNUAL REPORT 11
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
DIRECT AND
DIRECT INDIRECT
BEGINNING ENDING EXPENSES EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) THE PERIOD(b)
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,014.30 $ 7.07 $ 7.12
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.05 $ 7.08 $ 7.13
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,011.30 $10.89 $10.94
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.24 $10.91 $10.96
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,011.30 $10.89 $10.94
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.24 $10.91 $10.96
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,016.30 $ 5.05 $ 5.11
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.05 $ 5.06 $ 5.11
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,014.30 $ 6.61 $ 6.67
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.50 $ 6.63 $ 6.68
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,017.30 $ 5.36 $ 5.41
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.75 $ 5.37 $ 5.42
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,014.30 $ 7.37 $ 7.42
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.75 $ 7.38 $ 7.44
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
12 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
ANNUALIZED EXPENSE RATIOS
<Table>
<Caption>
FUND'S ACQUIRED FUND
ANNUALIZED FEES AND NET FUND
EXPENSE RATIO EXPENSES EXPENSES
- ----------------------------------------------------------------------
Class A 1.40% .01% 1.41%
- ----------------------------------------------------------------------
Class B 2.16% .01% 2.17%
- ----------------------------------------------------------------------
Class C 2.16% .01% 2.17%
- ----------------------------------------------------------------------
Class I 1.00% .01% 1.01%
- ----------------------------------------------------------------------
Class R4 1.31% .01% 1.32%
- ----------------------------------------------------------------------
Class R5 1.06% .01% 1.07%
- ----------------------------------------------------------------------
Class W 1.46% .01% 1.47%
- ----------------------------------------------------------------------
</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 183/365 (to reflect the one-half year period).
(b) Expenses are equal to the annualized expense ratio for each class plus the
acquired fund fees and expenses, multiplied by the average account value
over the period, multiplied by 183/365 (to reflect the one-half year
period).
(c) Based on the actual return for the six months ended Oct. 31, 2009: +1.43%
for Class A, +1.13% for Class B, +1.13% for Class C, +1.63% for Class I,
+1.43% for Class R4, +1.73% for Class R5 and +1.43% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (13.6%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
SUPRANATIONAL (0.8%)
Inter-American Development Bank
Sr Unsecured
03-16-11 0.50% $2,000,000(c,g) $1,998,670
- -------------------------------------------------------------------------------------
ASSET-BACKED (3.8%)
Citibank Credit Card Issuance Trust
Series 2007-A1 Cl A1
03-22-12 0.28 1,000,000(g) 998,602
Countrywide Home Equity Loan Trust
Series 2005-H Cl 2A (FGIC)
12-15-35 0.49 148,793(e,g) 56,457
Keycorp Student Loan Trust
Series 2003-A Cl 2A2 (MBIA)
10-25-25 0.59 272,990(e,g) 268,154
Northstar Education Finance
Series 2007-1 Cl A2
01-29-46 0.30 750,000(g) 748,008
SLM Student Loan Trust
Series 2005-5 Cl A2
10-25-21 0.36 927,177(g) 921,047
SLM Student Loan Trust
Series 2005-8 Cl A2
07-25-22 0.37 1,276,179(g) 1,267,898
SLM Student Loan Trust
Series 2005-B Cl A1
12-16-19 0.34 220,480(g) 216,152
SLM Student Loan Trust
Series 2006-5 Cl A2
07-25-17 0.27 99,401(g) 99,347
SLM Student Loan Trust
Series 2006-A Cl A1
03-16-20 0.32 564,676(g) 556,292
SLM Student Loan Trust
Series 2006-A Cl A2
12-15-20 0.38 2,000,000(g) 1,880,763
SLM Student Loan Trust
Series 2006-C Cl A2
09-15-20 0.35 1,000,000(g) 961,472
SLM Student Loan Trust
Series 2007-2 Cl A2
07-25-17 0.28 1,000,000(g) 988,268
---------------
Total 8,962,460
- -------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED (1.3%)(f)
GS Mtge Securities II
Series 2007-EOP Cl A2
03-06-20 0.37 1,200,000(d,g) 1,110,923
GS Mtge Securities II
Series 2007-EOP Cl A3
03-06-20 0.42 1,770,000(d,g) 1,609,025
Morgan Stanley Dean Witter Capital I
Series 2002-TOP7 Cl A1
01-15-39 5.38 421,864 428,016
---------------
Total 3,147,964
- -------------------------------------------------------------------------------------
RESIDENTIAL MORTGAGE-BACKED (0.2%)(f)
Deutsche Bank Alternate Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR6 Cl A3
02-25-37 0.33 118,289(g) 110,065
Downey Savings & Loan Assn Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR2 Cl 2AB1
11-19-37 0.34 203,689(g) 194,046
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-12 Cl 2A11
01-19-38 0.34 252,433(g) 240,279
---------------
Total 544,390
- -------------------------------------------------------------------------------------
AUTOMOTIVE (1.0%)
American Honda Finance
Sr Unsecured
02-05-10 0.87 2,500,000(d,g) 2,494,994
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
BANKING (2.6%)
Bank of New York Mellon
Sr Unsecured
02-05-10 0.87% $3,000,000(g) $3,003,198
Royal Bank of Scotland
Govt Guaranteed
05-11-12 1.16 2,000,000(c,d,g) 2,028,636
US Bancorp
Sr Unsecured
02-04-10 0.88 1,250,000(g) 1,251,245
---------------
Total 6,283,079
- -------------------------------------------------------------------------------------
BROKERAGE (--%)
Lehman Brothers Holdings
Sr Unsecured
10-22-09 0.00 640,000(b,g,i) 100,800
- -------------------------------------------------------------------------------------
CONSTRUCTION MACHINERY (2.8%)
Caterpillar Financial Services
Sr Unsecured
02-08-10 0.91 2,000,000(g) 2,002,396
John Deere Capital
Sr Unsecured
01-18-11 0.98 4,500,000(g) 4,510,966
---------------
Total 6,513,362
- -------------------------------------------------------------------------------------
HEALTH CARE INSURANCE (0.6%)
UnitedHealth Group
Sr Unsecured
06-21-10 0.47 1,500,000(g) 1,494,455
- -------------------------------------------------------------------------------------
LIFE INSURANCE (0.2%)
Pricoa Global Funding I
Sr Secured
12-15-09 0.35 400,000(d,g) 399,430
- -------------------------------------------------------------------------------------
RETAILERS (0.3%)
Home Depot
Sr Unsecured
12-16-09 0.42 750,000(g) 749,272
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $33,626,495) $32,688,876
- -------------------------------------------------------------------------------------
<Caption>
FDIC-INSURED DEBT (1.7%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
U.S. AGENCIES
Bank of America
FDIC Govt Guaranty
06-22-12 0.49% $2,000,000(g) $2,011,568
General Electric Capital
FDIC Govt Guaranty
03-11-11 0.38 2,000,000(g) 2,004,122
- -------------------------------------------------------------------------------------
TOTAL FDIC-INSURED DEBT
(Cost: $4,000,000) $4,015,690
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (84.1%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 201,761,763(h) $201,761,763
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $201,761,763) $201,761,763
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $239,388,258)(j) $238,466,329
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2009
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 38,463,000 57,469,134 $870,908 $--
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 234,727,000 33,745,168 638,654 --
Swedish Krona U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 23,280,000 22,968,547 275,964 --
Swiss Franc U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 56,586,789 62,471,000 -- (425,862)
U.S. Dollar Australian Dollar
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 23,035,496 14,085,000 78,828 --
U.S. Dollar British Pound
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 31,114,057 179,581,000 249,250 --
U.S. Dollar Norwegian Krone
- ---------------------------------------------------------------------------------------------
Nov. 12, 2009 2,303,408 12,862,000 -- (57,096)
U.S. Dollar Norwegian Krone
- ---------------------------------------------------------------------------------------------
Total $2,113,604 $(482,958)
- ---------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 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 Oct. 31, 2009, the value of foreign securities, excluding short-
term securities, represented 1.7% of net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At Oct. 31,
2009, the value of these securities amounted to $7,643,008 or 3.2% 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>
- --------------------------------------------------------------------------------
16 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(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 Oct. 31,
2009.
(h) Affiliated Money Market Fund -- See Note 7 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(i) This position is in bankruptcy.
(j) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $239,388,258 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $78,855
Unrealized depreciation (1,000,784)
-----------------------------------------------------------
Net unrealized depreciation $(921,929)
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as
- --------------------------------------------------------------------------------
18 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Level 3 investments due to lack of market transparency and corroboration to
support these quoted prices. Additionally, valuation models may be used as the
pricing source for any remaining investments classified as Level 3. These models
rely on one or more significant unobservable inputs and/or significant
assumptions by the Fund Administrator. Inputs used in a valuation model may
include, but are not limited to, financial statement analysis, discount rates
and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
---------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- --------------------------------------------------------------------------------------------
Bonds
Foreign Government
Obligations &
Agencies $-- $1,998,670 $-- $1,998,670
Asset-Backed Securities -- 8,962,460 -- 8,962,460
Commercial Mortgage-
Backed Securities -- 3,147,964 -- 3,147,964
Residential Mortgage-
Backed Securities -- 544,390 -- 544,390
Corporate Debt
Securities -- 18,035,392 -- 18,035,392
- --------------------------------------------------------------------------------------------
Total Bonds -- 32,688,876 -- 32,688,876
- --------------------------------------------------------------------------------------------
Other
FDIC-Insured Debt
Securities -- 4,015,690 -- 4,015,690
Affiliated Money Market
Fund 201,761,763 -- -- 201,761,763
- --------------------------------------------------------------------------------------------
Total Other 201,761,763 4,015,690 -- 205,777,453
- --------------------------------------------------------------------------------------------
Investments in Securities 201,761,763 36,704,566 -- 238,466,329
Other Financial
Instruments(a) -- 1,630,646 -- 1,630,646
- --------------------------------------------------------------------------------------------
Total $201,761,763 $38,335,212 $-- $240,096,975
- --------------------------------------------------------------------------------------------
</Table>
(a) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 19
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.
- --------------------------------------------------------------------------------
20 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $37,626,495) $ 36,704,566
Affiliated money market fund (identified cost $201,761,763) 201,761,763
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $239,388,258) 238,466,329
Cash 52
Capital shares receivable 383,794
Accrued interest receivable 80,933
Receivable for investment securities sold 2,350,288
Unrealized appreciation on forward foreign currency contracts 2,113,604
- -------------------------------------------------------------------------------
Total assets 243,395,000
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 1,072,358
Payable for investment securities purchased 1,925,087
Unrealized depreciation on forward foreign currency contracts 482,958
Accrued investment management services fees 5,884
Accrued distribution fees 1,654
Accrued transfer agency fees 983
Accrued administrative services fees 529
Other accrued expenses 87,753
- -------------------------------------------------------------------------------
Total liabilities 3,577,206
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $239,817,794
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 241,526
Additional paid-in capital 246,451,147
Excess of distributions over net investment income (7,797)
Accumulated net realized gain (loss) (7,575,799)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 708,717
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $239,817,794
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $114,237,775 11,504,415 $9.93(1)
Class B $ 2,026,053 205,708 $9.85
Class C $ 7,609,307 773,530 $9.84
Class I $ 28,925,560 2,899,043 $9.98
Class R4 $ 9,944 1,000 $9.94
Class R5 $ 9,397 942 $9.98
Class W $ 86,999,758 8,768,011 $9.92
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $10.24. 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 ANNUAL REPORT 21
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 1,071,471
Income distributions from affiliated money market fund 1,996,999
- -------------------------------------------------------------------------------
Total income 3,068,470
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 4,698,565
Distribution fees
Class A 416,349
Class B 35,353
Class C 98,315
Class W 530,074
Transfer agency fees
Class A 205,831
Class B 4,604
Class C 12,557
Class R4 10
Class R5 4
Class W 424,059
Administrative services fees 417,444
Plan administration services fees -- Class R4 52
Compensation of board members 16,224
Custodian fees 12,360
Printing and postage 66,830
Registration fees 50,490
Professional fees 50,899
Other 8,680
- -------------------------------------------------------------------------------
Total expenses 7,048,700
Expenses waived/reimbursed by the Investment Manager and its
affiliates (13)
Earnings and bank fee credits on cash balances (343)
- -------------------------------------------------------------------------------
Total net expenses 7,048,344
- -------------------------------------------------------------------------------
Investment income (loss) -- net (3,979,874)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (1,667,418)
Foreign currency transactions (10,155,842)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (11,823,260)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 9,397,281
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (2,425,979)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (6,405,853)
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ (3,979,874) $ 7,642,623
Net realized gain (loss) on investments (11,823,260) 8,195,721
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 9,397,281 (8,644,591)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (6,405,853) 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 ANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 77,249,711 $ 218,648,148
Class B shares 1,997,878 4,089,168
Class C shares 4,071,796 10,433,303
Class I shares 22,509,441 296,949,913
Class R4 shares 11,804 48,000
Class W shares 37,138,223 339,484,475
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
Conversions from Class B to Class A
Class A shares 613,986 269,954
Class B shares (613,986) (269,954)
Payments for redemptions
Class A shares (138,504,444) (53,765,268)
Class B shares (2,582,407) (607,820)
Class C shares (5,828,137) (1,255,226)
Class I shares (192,632,580) (219,491,271)
Class R4 shares (22,927) (64,521)
Class W shares (251,615,251) (38,075,600)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (444,420,925) 569,621,484
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (454,643,272) 563,354,953
Net assets at beginning of year 694,461,066 131,106,113
- -----------------------------------------------------------------------------------------------
Net assets at end of year $ 239,817,794 $ 694,461,066
- -----------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (7,797) $ 24,074
- -----------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A ------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $9.97 $10.58 $10.09 $9.98
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08) .15 .41 .12
Net gains (losses) (both realized and
unrealized) .09(b) (.22) .57 .11
- ---------------------------------------------------------------------------------------------
Total from investment operations .01 (.07) .98 .23
- ---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(c) (.18) (.39) (.12)
Distributions from realized gains (.05) (.36) (.10) --
- ---------------------------------------------------------------------------------------------
Total distributions (.05) (.54) (.49) (.12)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $9.93 $9.97 $10.58 $10.09
- ---------------------------------------------------------------------------------------------
TOTAL RETURN .15% (.57%) 9.96%(d) 2.37%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Gross expenses prior to expense
waiver/reimbursement 1.38% 1.39% 1.36% 1.59%(f)
- ---------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.38% 1.39% 1.36% 1.37%(f)
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.83%) 1.50% 3.98% 3.89%(f)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $114 $176 $9 $10
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36% 12%
- ---------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B -------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $9.96 $10.58 $10.09 $9.97
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.16) .04 .34 .09
Net gains (losses) (both realized and
unrealized) .10(b) (.18) .59 .12
- ----------------------------------------------------------------------------------------------
Total from investment operations (.06) (.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 $9.85 $9.96 $10.58 $10.09
- ----------------------------------------------------------------------------------------------
TOTAL RETURN (.56%) (1.35%) 9.38%(d) 2.16%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Gross expenses prior to expense
waiver/reimbursement 2.14% 2.16% 2.10% 2.38%(f)
- ----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 2.14% 2.16% 2.10% 2.16%(f)
- ----------------------------------------------------------------------------------------------
Net investment income (loss) (1.59%) .38% 3.26% 3.11%(f)
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $3 $-- $--
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36% 12%
- ----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
26 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C -------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $9.95 $10.57 $10.09 $9.97
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.16) .06 .34 .09
Net gains (losses) (both realized and
unrealized) .10(b) (.20) .58 .12
- ----------------------------------------------------------------------------------------------
Total from investment operations (.06) (.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 $9.84 $9.95 $10.57 $10.09
- ----------------------------------------------------------------------------------------------
TOTAL RETURN (.56%) (1.31%) 9.37%(d) 2.16%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Gross expenses prior to expense
waiver/reimbursement 2.14% 2.15% 2.12% 2.38%(f)
- ----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 2.14% 2.15% 2.12% 2.16%(f)
- ----------------------------------------------------------------------------------------------
Net investment income (loss) (1.60%) .66% 3.42% 3.11%(f)
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $8 $9 $-- $--
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36% 12%
- ----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I ------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $9.98 $10.59 $10.10 $9.98
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.04) .21 .44 .13
Net gains (losses) (both realized and
unrealized) .10(b) (.24) .59 .12
- ---------------------------------------------------------------------------------------------
Total from investment operations .06 (.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 $9.98 $9.98 $10.59 $10.10
- ---------------------------------------------------------------------------------------------
TOTAL RETURN .56% (.25%) 10.49%(d) 2.56%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Gross expenses prior to expense
waiver/reimbursement 1.01% 1.03% 1.07% 1.34%(f)
- ---------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.01% 1.03% 1.07% 1.12%(f)
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.40%) 2.10% 4.30% 4.37%(f)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $29 $202 $122 $68
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36% 12%
- ---------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
28 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 ------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $9.97 $10.58 $10.09 $9.98
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.07) .22 .42 .13
Net gains (losses) (both realized and
unrealized) .09(b) (.26) .59 .11
- ---------------------------------------------------------------------------------------------
Total from investment operations .02 (.04) 1.01 .24
- ---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(c) (.21) (.42) (.13)
Distributions from realized gains (.05) (.36) (.10) --
- ---------------------------------------------------------------------------------------------
Total distributions (.05) (.57) (.52) (.13)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $9.94 $9.97 $10.58 $10.09
- ---------------------------------------------------------------------------------------------
TOTAL RETURN .25% (.26%) 10.27%(d) 2.42%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Gross expenses prior to expense
waiver/reimbursement 1.31% 1.34% 1.36% 1.45%(f)
- ---------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.25% 1.09% 1.31% 1.23%(f)
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.69%) 2.27% 4.13% 4.04%(f)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36% 12%
- ---------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R5 ------------------------------
PER SHARE DATA 2009 2008 2007(h)
Net asset value, beginning of period $9.98 $10.59 $10.58
- ---------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.05) .22 .02
Net gains (losses) (both realized and
unrealized) .10(b) (.26) .03
- ---------------------------------------------------------------------------------
Total from investment operations .05 (.04) .05
- ---------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(c) (.21) (.04)
Distributions from realized gains (.05) (.36) --
- ---------------------------------------------------------------------------------
Total distributions (.05) (.57) (.04)
- ---------------------------------------------------------------------------------
Net asset value, end of period $9.98 $9.98 $10.59
- ---------------------------------------------------------------------------------
TOTAL RETURN .56% (.30%) .44%(d)
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Total expenses 1.06% 1.07% 1.06%(f)
- ---------------------------------------------------------------------------------
Net investment income (loss) (.54%) 2.23% 4.43%(f)
- ---------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ---------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36%
- ---------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS W ------------------------------
PER SHARE DATA 2009 2008 2007(i)
Net asset value, beginning of period $9.97 $10.58 $10.13
- ---------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08) .11 .36
Net gains (losses) (both realized and
unrealized) .08(b) (.19) .55
- ---------------------------------------------------------------------------------
Total from investment operations .00 (.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 $9.92 $9.97 $10.58
- ---------------------------------------------------------------------------------
TOTAL RETURN .04% (.66%) 9.21%(d)
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(e)
Total expenses 1.46% 1.50% 1.54%(f)
- ---------------------------------------------------------------------------------
Net investment income (loss) (.86%) 1.09% 3.88%(f)
- ---------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $87 $304 $--
- ---------------------------------------------------------------------------------
Portfolio turnover rate 16% 39% 36%
- ---------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(b) Calculation of the net gain per share (both realized and unrealized) does
not correlate to the aggregate realized and unrealized losses presented in
the Statement of Operations due to the timing of sales and repurchases of
Fund shares in relation to fluctuations in the market value of the
portfolio.
(c) Rounds to zero.
(d) 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, total return figures would have been lower by 0.05%.
(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
reported expense ratios.
(f) Annualized.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) For the period from Oct. 18, 2007 (when shares became publicly available) to
Oct. 31, 2007.
(i) For the period from Dec. 1, 2006 (when shares became publicly available) to
Oct. 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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 Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R4 and Class R5 shares are offered without a front-end sales
charge or CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares, and the Investment Manager owned 100% of
Class R4 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.
- --------------------------------------------------------------------------------
32 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF A NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM )(Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
foreign exchanges have closed. Accordingly, in those situations, Ameriprise
Financial, Inc. (Ameriprise Financial), parent company of the Investment
Manager, as administrator to the Fund, will fair value foreign securities
pursuant to procedures adopted by the Board, including utilizing a third party
pricing service to determine these fair values. These procedures take into
account multiple factors, including movements in the U.S. securities markets, to
determine a good faith estimate that reasonably reflects the current market
conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
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
- --------------------------------------------------------------------------------
34 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared 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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------- -------------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- -------------------------------------------------------------------------------------------
Foreign exchange Unrealized Unrealized
contracts appreciation on depreciation on
forward foreign forward foreign
currency contracts $2,113,604 currency contracts $482,958
- -------------------------------------------------------------------------------------------
Total $2,113,604 $482,958
- -------------------------------------------------------------------------------------------
</Table>
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- -------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS
- -------------------------------------------------------------------------
Foreign exchange contracts $(10,155,842)
- -------------------------------------------------------------------------
Total $(10,155,842)
- -------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
36 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- ----------------------------------------------------------------------
FORWARD FOREIGN
RISK EXPOSURE CATEGORY CURRENCY CONTRACTS
- ----------------------------------------------------------------------
Foreign exchange contracts $5,887,538
- ----------------------------------------------------------------------
TOTAL $5,887,538
- ----------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
The gross notional amount of contracts outstanding was $227.2 million at Oct.
31, 2009. The monthly average gross notional amount for these contracts was
$503.4 million for the year ended Oct. 31, 2009. The fair value of these
contracts on Oct. 31, 2009 is set forth in the table above.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.89% to 0.70% as the Fund's net assets increase. The
management fee for the year ended Oct. 31, 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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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 year ended Oct. 31,
2009, other expenses paid to this company were $4,939.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $20.50 for Class A, $21.50 for Class B and $21.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class 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 the 12 month period from the date the account
becomes inactive. These fees are included in the transfer agency fees in the
Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the
Fund's average daily net assets attributable to Class B and Class C shares. For
Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $158,000 and $36,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
- --------------------------------------------------------------------------------
38 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $107,406 for Class A, $1,406 for Class B and
$9,444 for Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), were as follows:
<Table>
Class R4............................................ 1.25%
</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>
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), would 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 year ended Oct. 31, 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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $8,000,000 and $42,460,480, respectively, for the year
ended Oct. 31, 2009. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- -------------------------------------------------------------------
CLASS A
Sold 7,828,875 21,929,377
Converted from Class B** 62,397 27,802
Reinvested distributions 103,312 315,740
Redeemed (14,115,766) (5,483,597)
- -------------------------------------------------------------------
Net increase (decrease) (6,121,182) 16,789,322
- -------------------------------------------------------------------
CLASS B
Sold 202,702 416,595
Reinvested distributions 2,280 671
Converted to Class A** (62,780) (27,830)
Redeemed (264,660) (62,270)
- -------------------------------------------------------------------
Net increase (decrease) (122,458) 327,166
- -------------------------------------------------------------------
CLASS C
Sold 414,719 1,050,240
Reinvested distributions 4,936 8,774
Redeemed (597,391) (128,574)
- -------------------------------------------------------------------
Net increase (decrease) (177,736) 930,440
- -------------------------------------------------------------------
CLASS I
Sold 2,280,706 30,071,137
Reinvested distributions 113,149 837,081
Redeemed (19,747,663) (22,170,858)
- -------------------------------------------------------------------
Net increase (decrease) (17,353,808) 8,737,360
- -------------------------------------------------------------------
CLASS R4
Sold 1,202 4,723
Reinvested distributions 6 256
Redeemed (2,336) (6,584)
- -------------------------------------------------------------------
Net increase (decrease) (1,128) (1,605)
- -------------------------------------------------------------------
CLASS W
Sold 3,773,483 34,206,023
Reinvested distributions 160,817 168,788
Redeemed (25,660,216) (3,881,378)
- -------------------------------------------------------------------
Net increase (decrease) (21,725,916) 30,493,433
- -------------------------------------------------------------------
</Table>
* Certain line items from the prior year have been renamed to conform to the
current year presentation.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
- --------------------------------------------------------------------------------
40 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
7. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $147,152,761 and $527,902,478,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
8. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to its pro rata share of 0.02% of the amount of
the credit facility. The Fund had no borrowings during the year ended Oct. 31,
2009.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
9. 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 year ended Oct. 31, 2009, the Fund closed its only
remaining SIV position which was in WhistleJacket Capital LLC (WJC). As of Oct.
31, 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.
10. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of foreign currency
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, excess of distributions over net investment income has been
decreased by $3,990,304 and accumulated net realized loss has been increased by
$8,758 resulting in a net reclassification adjustment to decrease paid-in
capital by $3,981,546.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
- ------------------------------------------------------------------
Ordinary income.......................... $1,060,104 $10,023,779
Long-term capital gain................... 2,756,390 3,436,505
</Table>
- --------------------------------------------------------------------------------
42 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................... $ --
Undistributed accumulated long-term gain......... $ --
Accumulated realized loss........................ $(5,945,153)
Unrealized appreciation (depreciation)........... $ (929,726)
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$5,945,153 at Oct. 31, 2009, that if not offset by capital gains will expire in
2017.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
11. RISKS RELATING TO CERTAIN INVESTMENTS
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 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
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
investment grade, or, if unrated, determined to be of comparable quality by the
Investment Manager.
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise 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
- --------------------------------------------------------------------------------
44 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four 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
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
action against Seligman and Seligman Advisors, Inc. relating to frequent trading
in the Seligman Funds. Seligman responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary, especially
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds. There have been no further developments with the SEC on
this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
46 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Absolute Return Currency and Income
Fund (the Fund) (one of the portfolios constituting the RiverSource Global
Series, Inc.) as of October 31, 2009, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of the Fund for the periods
presented through October 31, 2006, were audited by other auditors whose report
dated December 20, 2006, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 47
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Absolute Return Currency and Income Fund of the
RiverSource Global Series, Inc. at October 31, 2009, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
48 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 5.35%
CAPITAL GAIN DISTRIBUTION - the Fund designates $2,756,390 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 49
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
50 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 51
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
52 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT 53
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.
- --------------------------------------------------------------------------------
54 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2009 ANNUAL REPORT
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 Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6502 H (12/09)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
EMERGING MARKETS BOND FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
RIVERSOURCE EMERGING MARKETS BOND FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH
CURRENT INCOME AND, SECONDARILY, THROUGH CAPITAL
APPRECIATION.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
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
Report of Independent Registered
Public Accounting Firm........... 56
Federal Income Tax Information..... 58
Board Members and Officers......... 59
Proxy Voting....................... 63
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Emerging Markets Bond Fund (the Fund) Class A shares gained 54.87%
(excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund outperformed its benchmark, the J.P. Morgan Emerging Markets Bond
Index-Global (J.P. Morgan EMBI-Global), which rose 39.64% during the same
timeframe.
> The Fund also outperformed the Lipper Emerging Markets Debt Funds Index,
representing the Fund's peer group, which advanced 39.55% during the same
period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 2/16/06
- -------------------------------------------------------------------
RiverSource Emerging Markets Bond Fund
Class A (excluding sales charge) +54.87% +6.81% +6.95%
- -------------------------------------------------------------------
J.P. Morgan EMBI-Global (unmanaged) +39.64% +6.86% +7.01%
- -------------------------------------------------------------------
Lipper Emerging Markets Debt Funds
Index +39.55% +5.08% +5.65%
- -------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
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
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS INCEPTION
Class A (inception 2/16/06) +54.87% +6.81% +6.95%
- -------------------------------------------------------------------
Class B (inception 2/16/06) +53.60% +5.98% +6.15%
- -------------------------------------------------------------------
Class C (inception 2/16/06) +53.57% +5.96% +6.12%
- -------------------------------------------------------------------
Class I (inception 2/16/06) +55.44% +7.27% +7.37%
- -------------------------------------------------------------------
Class R4 (inception 2/16/06) +55.14% +7.10% +7.22%
- -------------------------------------------------------------------
Class W (inception 12/1/06) +54.69% N/A +6.55%
- -------------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) +47.51% +5.09% +5.55%
- -------------------------------------------------------------------
Class B (inception 2/16/06) +48.60% +5.08% +5.46%
- -------------------------------------------------------------------
Class C (inception 2/16/06) +52.57% +5.96% +6.12%
- -------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 4.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R4 and Class W shares. Class I and Class
R4 are available to qualifying institutional investors only. Class W shares are
offered through qualifying discretionary accounts.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
HIGH
MEDIUM QUALITY
X LOW
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
<Table>
Weighted average life(1) 11.2 years
- --------------------------------------
Effective duration(2) 6.5 years
- --------------------------------------
Weighted average bond
rating(3) BBB-
- --------------------------------------
</Table>
(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.
There are risks associated with an investment in a bond fund, 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
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.
- --------------------------------------------------------------------------------
4 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
At October 31, 2009, approximately 41% of the Fund's shares were owned in
aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible RiverSource Emerging Markets Bond Fund may experience relatively large
purchases or redemptions from affiliated funds-of-funds (see page 49, Class I
capital share transactions for related activity during the most recent fiscal
period). RiverSource seeks to minimize the impact of these transactions by
structuring them over a reasonable period of time. RiverSource Emerging Markets
Bond Fund may experience increased expenses as it buys and sells securities as a
result of purchases or redemptions by affiliated funds-of-funds. For more
information on the Fund's expenses, see the discussions beginning on pages 14
and 45.
Dear Shareholders,
RiverSource Emerging Markets Bond Fund (the Fund) Class A shares gained 54.87%
(excluding sales charge) for the 12 months ended Oct. 31, 2009. The Fund
outperformed its benchmark, the J.P. Morgan Emerging Markets Bond Index-Global
(J.P. Morgan EMBI-Global), which rose 39.64%. The Fund also outperformed the
Lipper Emerging Markets Debt Funds Index, representing the Fund's peer group,
which advanced 39.55%, during the same period.
<Table>
<Caption>
COUNTRY BREAKDOWN(1) (at Oct. 31, 2009; % of
portfolio assets)
- ------------------------------------------------
Argentina 2.4%
- ------------------------------------------------
Brazil 10.3%
- ------------------------------------------------
Cayman Islands 2.0%
- ------------------------------------------------
Chile 0.5%
- ------------------------------------------------
Colombia 6.1%
- ------------------------------------------------
Croatia 0.4%
- ------------------------------------------------
Dominican Republic 0.9%
- ------------------------------------------------
El Salvador 2.2%
- ------------------------------------------------
Gabon 0.4%
- ------------------------------------------------
Indonesia 7.8%
- ------------------------------------------------
Iraq 0.3%
- ------------------------------------------------
Kazakhstan 1.2%
- ------------------------------------------------
Luxembourg 4.6%
- ------------------------------------------------
Mexico 9.4%
- ------------------------------------------------
Netherlands 5.0%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
<Table>
<Caption>
COUNTRY BREAKDOWN(1) (at Oct. 31, 2009; % of
portfolio assets)
- ------------------------------------------------
Peru 2.6%
- ------------------------------------------------
Philippine Islands 3.2%
- ------------------------------------------------
Qatar 1.1%
- ------------------------------------------------
Russia 7.4%
- ------------------------------------------------
South Korea 1.1%
- ------------------------------------------------
Supra-National 2.3%
- ------------------------------------------------
Trinidad and Tobago 0.8%
- ------------------------------------------------
Turkey 7.4%
- ------------------------------------------------
Ukraine 0.3%
- ------------------------------------------------
United Arab Emirates 0.7%
- ------------------------------------------------
United Kingdom 0.6%
- ------------------------------------------------
Uruguay 2.7%
- ------------------------------------------------
Venezuela 7.1%
- ------------------------------------------------
Other(2) 9.2%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
QUALITY BREAKDOWN (at Oct. 31, 2009; % of portfolio assets excluding
cash equivalents and equities)
- ---------------------------------------------------------------------
<Table>
<Caption>
AA bonds 1.2%
- ------------------------------------------------
A bonds 8.2%
- ------------------------------------------------
BBB bonds 38.9%
- ------------------------------------------------
BB bonds 43.5%
- ------------------------------------------------
B bonds 7.1%
- ------------------------------------------------
Non-investment grade bonds 0.3%
- ------------------------------------------------
Non-rated bonds 0.8%
- ------------------------------------------------
</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 Investment Manager), rates a security using
an internal rating system when Moody's doesn't provide a rating.
- --------------------------------------------------------------------------------
6 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
Emerging market bonds rebounded robustly from late 2008 weakness during the
annual period ended Oct. 31, 2009. At the start of the period, emerging market
bonds were struggling, as the fallout from the global financial crisis peaked in
intensity in November 2008. Indeed, spreads on emerging market debt (the
differential in yields between emerging market bonds and those of comparable-
duration Treasuries) reached a high on November 20, 2008. For the next three
months, emerging market bond performance was rather range-bound, see-sawing with
economic news flow.
Then, in early March, investors began to believe that the worst of the financial
crisis was behind us and a modern-day Great Depression had been averted. There
was heightened confidence that massive and unprecedented government programs
designed to inject liquidity into the financial system and stimulate economic
activity were beginning to work. Especially key were extremely accommodative
monetary and fiscal policies by the European Union, the U.S., Japan and China.
Beginning in mid-2009, anticipation of a better economy transformed into real
improvement in economic indicators. Economic output data improved, retail sales
showed some life and corporate earnings results began to consistently come in
better than expected. The housing market showed some modest recovery and
manufacturing output stabilized.
While consumers continued to be burdened by a weak labor market, the combination
of improving financial conditions and stability in economic data stemmed the
flight to safety and led to a dramatic
Emerging market bonds rebounded robustly from late 2008 weakness during the
annual period ended Oct. 31, 2009.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
increase in investors' appetite for risk. Measures of volatility declined,
equity markets surged and demand for riskier fixed income assets soared,
investors moved their money to higher yielding assets. Emerging markets led the
way in the nascent economic recovery, with emerging Asia at the front edge of
economic growth and Latin America not far behind. This leadership role was a new
one for the emerging markets. The recovery in commodity prices from their bottom
in March 2009 also helped the resource-rich emerging market nations. Together,
these factors boosted the performance of emerging market bonds. By the end of
October 2009, spreads on emerging market debt had declined dramatically.
Exposure to local currencies contributed to the Fund's performance the most
during the annual period, as several emerging market currencies appreciated
against the U.S. dollar. Fund positions in bonds denominated in the Brazilian
real, Indonesian rupiah and Colombian peso particularly boosted Fund results.
Further contributing to the Fund's outperformance was the decline in interest
rates in these same three markets -- Brazil, Indonesia and Colombia -- which
caused local asset prices to rise. Also, the average yields on these markets'
local assets were higher than that of the J.P. Morgan EMBI-Global, thus boosting
the Fund's relative results.
Country selection overall helped the Fund's performance as well. Overweight
exposure to Indonesia, Colombia, Venezuela and Russia and an underweighted
allocation to Turkey was especially beneficial.
There were no major detractors from the Fund's performance during the annual
period. Only partially offsetting results was the detracting effect of
underweighted allocations to the bonds of Brazil, Mexico and Ecuador, which
outpaced the J.P. Morgan EMBI-Global during the annual period.
CHANGES TO THE FUND'S PORTFOLIO
We increased the portfolio's exposure to local emerging market currencies, as
these currencies overall strengthened relative to the U.S. dollar during the
annual period. We correspondingly reduced the portfolio's exposure to pure
corporate bonds, i.e. those not issued by a quasi-sovereign agency. We did not
believe that yields available were adequately compensating for the lack of
liquidity in emerging market corporate bonds. Within the portfolio's remaining
exposure to corporate
- --------------------------------------------------------------------------------
8 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
bonds, we sought to focus holdings on commodity-oriented issues, such as those
issued by oil and metals & mining companies.
At the end of October 2009, the Fund had its most significant allocations to the
bond markets of Colombia, Indonesia, Russia and Peru. Conversely, the Fund had
its most modest exposures in the bond markets of Panama, Mexico, the Philippines
and Brazil.
OUR FUTURE STRATEGY
Going forward, we believe there continues to be attractive upside potential in
emerging market debt, but more moderate than we saw during the most recent
annual period, given the strength of the rally and dramatic tightening in
spreads seen since March 2009. Increased issuance from emerging market
governments and corporations anticipated over the near term may also serve as a
brake to the asset class' performance and spread compression trends.
In the near term, we do not anticipate making any major changes in the Fund's
strategy or portfolio allocations. Rather, we intend to look for incidents of
emerging market local currency weakness as opportunities to add to the Fund's
exposure in those currencies.
As always, we continue to monitor several important factors. Among them are the
creditworthiness of each country, the strength of its economic policies and the
soundness of its fundamentals. Using our top-down investment approach, we intend
to continually re-evaluate these factors as we seek to identify individual
securities that present attractive value opportunities.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
<Table>
Nicholas Pifer, CFA(R) James Carlen, CFA(R)
Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Emerging Markets Bond Fund Class A shares (from
2/16/06 to 10/31/09) as compared to the performance of the J.P. Morgan Emerging
Markets Bond Index-Global and the Lipper Emerging Markets Debt Funds Index. In
comparing the Fund's Class A shares to these indices, you should take into
account the fact that the Fund's performance reflects the maximum initial sales
charge of 4.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distributions paid
during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
SINCE
INCEPTION
1 YEAR 3 YEARS 2/16/06
RIVERSOURCE EMERGING MARKETS BOND FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $14,751 $11,606 $12,214
- ---------------------------------------------------------------------------------
Average annual total return +47.51% +5.09% +5.55%
- ---------------------------------------------------------------------------------
J.P. MORGAN EMBI-GLOBAL(1)
Cumulative value of $10,000 $13,964 $12,204 $12,853
- ---------------------------------------------------------------------------------
Average annual total return +39.64% +6.86% +7.01%
- ---------------------------------------------------------------------------------
LIPPER EMERGING MARKETS DEBT FUNDS INDEX(2)
Cumulative value of $10,000 $13,955 $11,602 $12,256
- ---------------------------------------------------------------------------------
Average annual total return +39.55% +5.08% +5.65%
- ---------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE EMERGING MARKETS BOND
FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE EMERGING
MARKETS BOND
FUND CLASS LIPPER EMERGING
A (INCLUDES J.P. MORGAN MARKETS DEBT
SALES CHARGE) EMBI-GLOBAL INDEX(1) FUNDS INDEX(2)
-------------------- ------------------------ ---------------
2/16/06 $ 9,525 $10,000 $10,000
04/06 9,446 9,908 9,987
07/06 9,507 10,022 10,041
10/06 10,025 10,532 10,564
01/07 10,259 10,704 10,845
04/07 10,761 11,089 11,293
07/07 10,521 10,740 10,938
10/07 11,021 11,382 11,604
01/08 10,975 11,507 11,544
04/08 10,986 11,599 11,570
07/08 10,801 11,516 11,530
10/08 7,887 9,205 8,783
01/09 8,854 10,252 9,153
04/09 9,859 11,074 10,004
07/09 11,149 12,005 11,259
10/09 12,214 12,853 12,256
</Table>
(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 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,238.80 $ 7.13(c) 1.27%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.70 $ 6.43(c) 1.27%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,234.30 $ 11.43(c) 2.04%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.84 $ 10.30(c) 2.04%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,233.80 $ 11.37(c) 2.03%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.89 $ 10.25(c) 2.03%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,241.20 $ 4.78(c) .85%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.81 $ 4.31(c) .85%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,239.30 $ 6.46(c) 1.15%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.30 $ 5.82(c) 1.15%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,238.70 $7.30(c) 1.30%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.55 $6.58(c) 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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2009: +23.88%
for Class A, +23.43% for Class B, +23.38% for Class C, +24.12% for Class I,
+23.93% for Class R4 and +23.87% for Class W.
(c) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Dec. 31, 2010, unless
sooner terminated at the discretion of the Fund's Board, such that net
expenses (excluding fees and expenses of acquired funds), will not exceed
1.31% for Class A, 2.08% for Class B, 2.07% for Class C, 0.92% for Class I,
1.22% for Class R4 and 1.37% for Class W. Any amounts waived will not be
reimbursed by the Fund. This change was effective Nov. 1, 2009. Had this
change been in place for the entire six month period ended Oct. 31, 2009,
the actual expenses paid would have been $7.35 for Class A, $11.65 for Class
B, $11.59 for Class C, $4.94 for Class I, $6.62 for Class R4 and $7.46 for
Class W; the hypothetical expenses paid would have been $6.63 for Class A,
$10.50 for Class B, $10.45 for Class C, $4.46 for Class I, $5.97 for Class
R4 and $6.73 for Class W.
- --------------------------------------------------------------------------------
16 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (92.6%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (2.5%)
Banco Hipotecario
Sr Unsecured
04-27-16 9.75% $975,000(d) $788,580
Republic of Argentina
Sr Unsecured
09-12-13 7.00 5,700,000 4,674,000
12-15-35 0.00 12,950,000(g) 971,250
-----------
Total 6,433,830
- ------------------------------------------------------------------------------------------------
BRAZIL (10.5%)
Banco Nacional de Desenvolvimento Economico e Social
06-10-19 6.50 1,300,000(d) 1,373,296
Banco Nacional de Desenvolvimento Economico e Social
Sr Unsecured
06-16-18 6.37 3,650,000(d) 3,850,750
Bertin Ltda
Sr Unsecured
10-05-16 10.25 580,000(d) 576,375
Centrais Eletricas Brasileiras
Sr Unsecured
07-30-19 6.88 1,500,000(d) 1,601,570
CSN Islands XI
09-21-19 6.88 1,000,000(d) 978,020
Federative Republic of Brazil
01-20-34 8.25 600,000 771,000
Federative Republic of Brazil
(Brazilian Real)
01-05-16 12.50 350,000 224,652
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 1,500,000 1,603,500
01-15-19 5.88 1,800,000 1,903,500
10-14-19 8.88 1,358,000 1,728,055
01-07-41 5.63 1,000,000 952,518
Marfrig Overseas
11-16-16 9.63 1,130,000(d) 1,130,000
Morgan Stanley
(Brazilian Real) Sr Unsecured
05-03-17 10.09 4,600,000(d) 2,351,866
Nota do Tesouro Nacional
(Brazilian Real) Series F
01-01-12 10.00 489,500 2,801,007
01-01-13 10.00 706,100 3,923,772
Petrobras Intl Finance
01-20-20 5.75 1,500,000(e) 1,495,500
-----------
Total 27,265,381
- ------------------------------------------------------------------------------------------------
CAYMAN ISLANDS (2.0%)
Peru Enhanced Pass-Thru
Sr Secured Zero Coupon
05-31-18 4.27 6,887,497(b,d,j) 5,251,716
- ------------------------------------------------------------------------------------------------
CHILE (0.5%)
Empresa Nacional Del Petroleo
Sr Unsecured
07-08-19 6.25 1,200,000(d) 1,267,788
- ------------------------------------------------------------------------------------------------
COLOMBIA (6.2%)
Ecopetrol
Sr Unsecured
07-23-19 7.63 1,900,000(f) 2,071,000
Empresas Publicas de Medellin
Sr Unsecured
07-29-19 7.63 900,000(d) 972,266
Republic of Colombia
09-18-37 7.38 4,450,000(f) 4,928,374
01-18-41 6.13 2,600,000 2,395,352
Republic of Colombia
(Colombian Peso)
10-22-15 12.00 2,693,000,000 1,629,783
06-28-27 9.85 1,000,000,000 559,023
Republic of Colombia
Sr Unsecured
03-18-19 7.38 2,200,000 2,488,199
05-21-24 8.13 400,000(f) 474,000
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
COLOMBIA (CONT.)
Santa Fe de Bogota
(Colombian Peso) Sr Unsecured
07-26-28 9.75% 1,377,000,000(d) $639,890
-----------
Total 16,157,887
- ------------------------------------------------------------------------------------------------
CROATIA (0.4%)
Republic of Croatia
11-05-19 6.75% 1,000,000(d,e) 989,720
- ------------------------------------------------------------------------------------------------
DOMINICAN REPUBLIC (0.9%)
Aes Dominicana Energia Finance
12-13-15 11.00 1,050,000(d) 1,018,500
Cerveceria Nacional Dominicana
03-27-12 16.00 1,450,000(d) 1,316,020
-----------
Total 2,334,520
- ------------------------------------------------------------------------------------------------
EL SALVADOR (2.3%)
Republic of El Salvador
04-10-32 8.25 2,050,000(d) 2,091,000
06-15-35 7.65 2,310,000(d) 2,310,000
Republic of El Salvador
Sr Unsecured
01-24-23 7.75 1,460,000(d) 1,533,000
-----------
Total 5,934,000
- ------------------------------------------------------------------------------------------------
GABON (0.4%)
Republic of Gabonese
12-12-17 8.20 1,000,000(d) 1,031,250
- ------------------------------------------------------------------------------------------------
INDONESIA (7.9%)
Govt of Indonesia
(Indonesian Rupiah)
05-15-16 10.75 4,470,000,000 487,813
Govt of Indonesia
(Indonesian Rupiah) Series FR26
10-15-14 11.00 6,000,000,000 663,075
Govt of Indonesia
(Indonesian Rupiah) Series FR28
07-15-17 10.00 10,000,000,000 1,046,946
Govt of Indonesia
(Indonesian Rupiah) Series FR34
06-15-21 12.80 5,800,000,000 701,805
Govt of Indonesia
(Indonesian Rupiah) Series FR36
09-15-19 11.50 23,500,000,000 $ 2,645,744
Govt of Indonesia
(Indonesian Rupiah) Series FR43
07-15-22 10.25 29,000,000,000 2,974,497
Perusahaan Penerbit SBSN
04-23-14 8.80 1,900,000(d) 2,151,891
Republic of Indonesia
Sr Unsecured
01-17-18 6.88 1,820,000(d) 1,920,100
10-12-35 8.50 2,100,000(d) 2,488,500
02-17-37 6.63 1,950,000(d) 1,872,000
01-17-38 7.75 3,300,000(d) 3,564,000
-----------
Total 20,516,371
- ------------------------------------------------------------------------------------------------
IRAQ (0.3%)
Republic of Iraq
01-15-28 5.80 1,100,000(d) 844,250
- ------------------------------------------------------------------------------------------------
KAZAKHSTAN (1.3%)
KazMunaiGaz Finance
07-02-18 9.13 2,995,000(d) 3,301,618
- ------------------------------------------------------------------------------------------------
LUXEMBOURG (4.6%)
Gaz Capital
Secured
11-22-16 6.21 4,350,000(d) 4,154,251
08-16-37 7.29 2,950,000(d) 2,743,500
Gaz Capital
Sr Nts
07-31-14 8.13 1,000,000(d) 1,067,667
MHP
Sr Secured
11-30-11 10.25 1,250,000(d) 1,150,000
TNK-BP Finance
03-20-17 6.63 300,000(d) 286,500
03-13-18 7.88 2,625,000(d) 2,638,125
-----------
Total 12,040,043
- ------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
MEXICO (9.5%)
Mexican Fixed Rate Bonds
(Mexican Peso) Series M-10
12-17-15 8.00% 19,400,000 1,495,479
12-15-16 7.25 33,010,000 2,429,827
12-14-17 7.75 27,100,000 2,026,214
Mexican Fixed Rate Bonds
(Mexican Peso) Series MI-10
12-19-13 8.00 6,330,000 492,658
Pemex Project Funding Master Trust
03-01-18 5.75 7,450,000 7,375,501
06-15-35 6.63 5,304,000(f) 5,181,552
06-15-38 6.63 2,000,000(f) 1,940,260
Pemex Project Funding Master Trust
03-15-15 4.88 2,000,000(d) 1,988,411
Petroleos Mexicano
05-03-19 8.00 1,600,000 1,836,000
-----------
Total 24,765,902
- ------------------------------------------------------------------------------------------------
NETHERLANDS (5.1%)
Intergas Finance
05-14-17 6.38 300,000(d) 285,203
KazMunaiGaz Finance
01-23-15 11.75 1,800,000(d) 2,137,189
Lukoil Intl Finance
11-05-19 7.25 2,200,000(d,e) 2,180,794
Majapahit Holding
10-17-16 7.75 2,030,000(d) 2,108,764
06-28-17 7.25 1,150,000(d) 1,194,563
08-07-19 8.00 2,100,000(d) 2,142,000
01-20-20 7.75 2,900,000(d,e) 2,875,408
06-29-37 7.88 200,000(d) 206,000
-----------
Total 13,129,921
- ------------------------------------------------------------------------------------------------
PERU (2.6%)
Banco de Credito del Peru
10-15-22 7.17 4,000,000(d) 1,387,208
Republic of Peru
Sr Unsecured
03-30-19 7.13 1,600,000(f) 1,813,600
07-21-25 7.35 500,000 573,750
03-14-37 6.55 2,900,000(f) 3,016,000
-----------
Total 6,790,558
- ------------------------------------------------------------------------------------------------
PHILIPPINE ISLANDS (3.3%)
Natl Power
11-02-16 6.88 900,000(d) 952,180
Power Sector Assets & Liabilities
05-27-19 7.25 2,750,000(d) 2,949,375
Republic of Philippines
01-14-31 7.75 500,000 563,750
Republic of Philippines
Sr Unsecured
06-17-19 8.38 1,850,000 2,238,500
01-20-20 6.50 1,100,000 1,167,375
01-15-32 6.38 600,000 585,000
-----------
Total 8,456,180
- ------------------------------------------------------------------------------------------------
QATAR (1.1%)
Qtel Intl Finance
06-10-19 7.88 1,000,000(d) 1,127,921
Ras Laffan Liquefied Natural Gas
Sr Secured
09-30-14 5.50 800,000(d) 852,463
State of Qatar
Sr Nts
04-09-19 6.55 800,000(d) 897,222
-----------
Total 2,877,606
- ------------------------------------------------------------------------------------------------
RUSSIA (7.6%)
Gaz Capital
Sr Secured
04-11-18 8.15 550,000(d) 580,250
Gazstream
07-22-13 5.63 370,208(d,f) 376,686
Russian Federation
03-31-30 7.50 8,919,560(d) 9,972,068
TransCapitalInvest for Transneft
Secured
08-07-18 8.70 7,780,000(d) 8,713,600
-----------
Total 19,642,604
- ------------------------------------------------------------------------------------------------
SOUTH KOREA (1.1%)
Export-Import Bank of Korea
Sr Nts
01-21-14 8.13 700,000 808,340
Export-Import Bank of Korea
Sr Unsecured
01-14-15 5.88 1,650,000 1,733,518
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
SOUTH KOREA (CONT.)
POSCO
Sr Unsecured
03-26-14 8.75% 300,000(d) 350,318
-----------
Total 2,892,176
- ------------------------------------------------------------------------------------------------
SUPRA-NATIONAL (2.3%)
Central American Bank
Sr Nts
09-24-14 5.38 2,000,000(d) 2,050,525
Corp Andina de Fomento
Sr Unsecured
06-04-19 8.13 3,400,000 4,022,853
-----------
Total 6,073,378
- ------------------------------------------------------------------------------------------------
TRINIDAD AND TOBAGO (0.8%)
Petro Trinidad/Tabago
Sr Unsecured
08-14-19 9.75 1,800,000(d,f) 2,053,497
- ------------------------------------------------------------------------------------------------
TURKEY (7.5%)
Republic of Turkey
03-15-15 7.25 1,500,000 1,672,500
04-03-18 6.75 1,550,000 1,654,625
06-05-20 7.00 1,800,000 1,932,750
03-17-36 6.88 5,450,000 5,490,874
03-05-38 7.25 600,000 619,500
Republic of Turkey
Sr Unsecured
07-14-17 7.50 1,300,000 1,451,125
03-11-19 7.00 2,700,000 2,905,875
11-07-19 7.50 3,375,000 3,754,688
-----------
Total 19,481,937
- ------------------------------------------------------------------------------------------------
UKRAINE (0.3%)
Govt of Ukraine
06-26-12 6.39 850,000(d) 748,000
- ------------------------------------------------------------------------------------------------
UNITED ARAB EMIRATES (0.8%)
TDIC Finance
07-02-14 6.50 1,800,000(d) 1,953,093
- ------------------------------------------------------------------------------------------------
UNITED KINGDOM (0.7%)
Vedanta Resources
Sr Unsecured
07-18-18 9.50 1,700,000(d,f) 1,704,637
- ------------------------------------------------------------------------------------------------
URUGUAY (2.8%)
Republic of Uruguay
05-17-17 9.25 400,000(f) 495,000
Republic of Uruguay
Pay-in-kind
01-15-33 7.88 198,500(i) 215,869
Republica Orient Uruguay
(Uruguay Peso)
04-05-27 4.25 82,561,452(h) 3,868,822
06-26-37 3.70 16,851,015(h) 724,512
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 1,783,939 1,922,194
-----------
Total 7,226,397
- ------------------------------------------------------------------------------------------------
VENEZUELA (7.3%)
Petroleos de Venezuela
04-12-17 5.25 11,100,000 6,504,600
Republic of Venezuela
02-26-16 5.75 6,189,500 4,162,439
03-31-38 7.00 1,800,000 999,000
Republic of Venezuela
Sr Unsecured
10-08-14 8.50 1,594,000(f) 1,358,885
05-07-23 9.00 8,150,000(f) 5,846,810
-----------
Total 18,871,734
- ------------------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $226,570,795) $240,035,994
- ------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (9.4%)
ISSUER SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 24,305,531(k) $24,305,531
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $24,305,531) $24,305,531
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (2.8%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 7,255,355 $7,255,355
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $7,255,355) $7,255,355
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $258,131,681)(l) $271,596,880
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT OCT. 31, 2009 --
BUY PROTECTION
<Table>
<Caption>
UNAMORTIZED PERIODIC
PREMIUM PAYMENTS
REFERENCE EXPIRATION PAY FIXED NOTIONAL (PAID) RECEIVABLE UNREALIZED
COUNTERPARTY ENTITY DATE RATE AMOUNT VALUE RECEIVED (PAYABLE) DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase CDX Emerging Markets Index Dec. 20, 2013 2.65% $2,000,000 $43,702 $(307,391) $(19,581) $(283,270)
Bank
- ---------------------------------------------------------------------------------------------------------------------------------
Total $(283,270)
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT OCT. 31, 2009 --
SELL PROTECTION
<Table>
<Caption>
UNAMORTIZED PERIODIC
PREMIUM PAYMENTS
REFERENCE EXPIRATION RECEIVE FIXED NOTIONAL (PAID) RECEIVABLE
COUNTERPARTY ENTITY DATE RATE AMOUNT VALUE RECEIVED (PAYABLE)
- -----------------------------------------------------------------------------------------------------------------------
Merril Lynch CDX Emerging Markets Index June 20, 2013 2.65% $2,000,000 $(37,570) $-- $19,581
Intl
- -----------------------------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
UNREALIZED
COUNTERPARTY DEPRECIATION
- ----------------------------
Merril Lynch $(17,989)
Intl
- ----------------------------
Total $(17,989)
- ----------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 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 ANNUAL REPORT 21
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 Oct. 31,
2009, the value of these securities amounted to $111,041,384 or 42.8% of
net assets.
(e) At Oct. 31, 2009, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$7,523,736. See Note 2 to the financial statements.
(f) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 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 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(l) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $258,967,680 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $16,811,351
Unrealized depreciation (4,182,151)
-----------------------------------------------------------
Net unrealized appreciation $12,629,200
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
22 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
may include, but are not limited to, financial statement analysis, discount
rates and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
----------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Bonds
Foreign Government
Obligations &
Agencies $-- $178,219,599 $5,251,716 $183,471,315
Corporate Debt
Securities -- 53,861,451 2,703,228 56,564,679
- ---------------------------------------------------------------------------------------------
Total Bonds -- 232,081,050 7,954,944 240,035,994
- ---------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(a) 24,305,531 -- -- 24,305,531
Investments of Cash
Collateral Received
for Securities on
Loan 7,255,355 -- -- 7,255,355
- ---------------------------------------------------------------------------------------------
Total Other 31,560,886 -- -- 31,560,886
- ---------------------------------------------------------------------------------------------
Investments in Securities 31,560,886 232,081,050 7,954,944 271,596,880
Other Financial
Instruments(b) -- (301,259) -- (301,259)
- ---------------------------------------------------------------------------------------------
Total $31,560,886 $231,779,791 $7,954,944 $271,295,621
- ---------------------------------------------------------------------------------------------
</Table>
(a) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
(b) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
FOREIGN
GOVERNMENT
OBLIGATIONS CORPORATE DEBT OTHER FINANCIAL
& AGENCIES SECURITIES INSTRUMENTS TOTAL
- ------------------------------------------------------------------------------------------
Balance as of Oct. 31,
2008 $3,289,446 $1,065,605 $257,106 $4,612,157
Accrued
discounts/premiums 133,002 (3,353) -- 129,649
Realized gain (loss) 55,485 -- * 55,485
Change in unrealized
appreciation
(depreciation)** 937,363 250,947 (257,106) 931,204
Net purchases (sales) 2,361,820 1,390,029 -- 3,751,849
Transfers in and/or
out of Level 3 (1,525,400) -- -- (1,525,400)
- ------------------------------------------------------------------------------------------
Balance as of Oct. 31,
2009 $5,251,716 $2,703,228 $-- $7,954,944
- ------------------------------------------------------------------------------------------
</Table>
* The realized gain (loss) earned during the period from Nov. 1, 2008 to Oct.
31, 2009 for Other Financial Instruments was $1,196,000.
** Change in unrealized appreciation (depreciation) relating to securities
held at Oct. 31, 2009 was $1,957,103.
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 RiverSource Family
of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $226,570,795) $240,035,994
Affiliated money market fund (identified cost $24,305,531) 24,305,531
Investments of cash collateral received for securities on loan
(identified cost $7,255,355) 7,255,355
- --------------------------------------------------------------------------------------
Total investments in securities (identified cost $258,131,681) 271,596,880
Foreign currency holdings (identified cost $597) 615
Capital shares receivable 580,530
Premiums paid on outstanding credit default swap contracts 307,391
Dividends and accrued interest receivable 3,706,164
Receivable for investment securities sold 2,525,178
Cash deposits and collateral held at broker 90,000
- --------------------------------------------------------------------------------------
Total assets 278,806,758
- --------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 178,794
Capital shares payable 1,178,121
Payable for investment securities purchased 10,526,809
Payable upon return of securities loaned 7,255,355
Unrealized net depreciation on swap contracts 301,259
Accrued investment management services fees 5,095
Accrued distribution fees 1,109
Accrued transfer agency fees 811
Accrued administrative services fees 567
Other accrued expenses 71,312
- --------------------------------------------------------------------------------------
Total liabilities 19,519,232
- --------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $259,287,526
- --------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 250,609
Additional paid-in capital 263,063,391
Undistributed net investment income 781,377
Accumulated net realized gain (loss) (17,988,860)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 13,181,009
- --------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $259,287,526
- --------------------------------------------------------------------------------------
*Including securities on loan, at value $ 6,542,238
- --------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $ 32,726,471 3,161,305 $10.35(1)
Class B $ 2,419,853 234,037 $10.34
Class C $ 722,068 69,939 $10.32
Class I $106,358,547 10,273,954 $10.35
Class R4 $ 23,156 2,238 $10.35
Class W $117,037,431 11,319,382 $10.34
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $10.87. 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 EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 27
STATEMENT OF OPERATIONS -------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 13,685,994
Income distributions from affiliated money market fund 67,892
Income from securities lending -- net 8,194
Less foreign taxes withheld (121,733)
- -------------------------------------------------------------------------------
Total income 13,640,347
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 1,320,292
Distribution fees
Class A 35,486
Class B 15,974
Class C 3,265
Class W 254,174
Transfer agency fees
Class A 32,935
Class B 4,308
Class C 799
Class R4 9
Class W 203,339
Administrative services fees 146,703
Plan administration services fees -- Class R4 47
Compensation of board members 5,566
Custodian fees 23,020
Printing and postage 32,137
Registration fees 37,819
Professional fees 39,317
Other 11,608
- -------------------------------------------------------------------------------
Total expenses 2,166,798
Expenses waived/reimbursed by the Investment Manager and its
affiliates (67,266)
- -------------------------------------------------------------------------------
Total net expenses 2,099,532
- -------------------------------------------------------------------------------
Investment income (loss) -- net 11,540,815
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (16,816,251)
Foreign currency transactions (68,975)
Swap transactions (965,355)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (17,850,581)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 83,465,430
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 65,614,849
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 77,155,664
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 11,540,815 $ 10,826,078
Net realized gain (loss) on investments (17,850,581) (1,897,585)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 83,465,430 (75,049,499)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 77,155,664 (66,121,006)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (713,409) (513,077)
Class B (70,961) (77,784)
Class C (14,643) (12,305)
Class I (3,796,231) (6,894,152)
Class R4 (1,021) (1,280)
Class W (5,505,562) (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 (10,101,827) (11,742,841)
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS (continued) -------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 29,094,965 $ 11,751,345
Class B shares 1,423,379 1,305,864
Class C shares 476,438 219,661
Class I shares 50,883,356 30,579,666
Class R4 shares 454 7,982
Class W shares 37,492,530 146,655,956
Reinvestment of distributions at net asset value
Class A shares 683,747 534,907
Class B shares 67,114 77,569
Class C shares 12,821 11,620
Class I shares 3,795,741 8,214,784
Class R4 shares 553 692
Class W shares 5,505,342 2,862,056
Conversions from Class B to Class A
Class A shares 305,470 126,592
Class B shares (305,470) (126,592)
Payments for redemptions
Class A shares (11,853,498) (3,149,341)
Class B shares (536,960) (648,167)
Class C shares (74,221) (117,014)
Class I shares (37,808,587) (89,988,110)
Class R4 shares (33) (2,694)
Class W shares (67,652,580) (40,766,868)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 11,510,561 67,549,908
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 78,564,398 (10,313,939)
Net assets at beginning of year 180,723,128 191,037,067
- ---------------------------------------------------------------------------------------------
Net assets at end of year $259,287,526 $180,723,128
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 781,377 $ 2,028,313
- ---------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A --------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $7.05 $10.57 $10.16 $9.98
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .53 .61 .59 .33
Net gains (losses) (both realized and
unrealized) 3.22 (3.43) .39 .18
- -----------------------------------------------------------------------------------------------
Total from investment operations 3.75 (2.82) .98 .51
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.45) (.61) (.55) (.33)
Distributions from realized gains -- (.09) (.02) --
- -----------------------------------------------------------------------------------------------
Total distributions (.45) (.70) (.57) (.33)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $7.05 $10.57 $10.16
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 54.87% (28.44%) 9.94% 5.25%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement 1.37% 1.41% 1.33% 1.81%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.27% 1.40% 1.33% 1.39%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 5.85% 6.31% 5.61% 5.20%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33 $10 $5 $12
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41% 32%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B --------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $7.05 $10.55 $10.16 $9.97
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .46 .55 .52 .28
Net gains (losses) (both realized and
unrealized) 3.22 (3.42) .37 .19
- -----------------------------------------------------------------------------------------------
Total from investment operations 3.68 (2.87) .89 .47
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.39) (.54) (.48) (.28)
Distributions from realized gains -- (.09) (.02) --
- -----------------------------------------------------------------------------------------------
Total distributions (.39) (.63) (.50) (.28)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.34 $7.05 $10.55 $10.16
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 53.60% (28.85%) 8.94% 4.80%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement 2.15% 2.19% 2.13% 2.62%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 2.04% 2.17% 2.13% 2.20%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 5.28% 5.61% 4.90% 4.51%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $1 $1 $1
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41% 32%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C --------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $7.04 $10.54 $10.15 $9.97
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .45 .55 .53 .28
Net gains (losses) (both realized and
unrealized) 3.22 (3.42) .36 .18
- -----------------------------------------------------------------------------------------------
Total from investment operations 3.67 (2.87) .89 .46
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.39) (.54) (.48) (.28)
Distributions from realized gains -- (.09) (.02) --
- -----------------------------------------------------------------------------------------------
Total distributions (.39) (.63) (.50) (.28)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.32 $7.04 $10.54 $10.15
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 53.57% (28.88%) 8.94% 4.75%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement 2.13% 2.18% 2.13% 2.61%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 2.03% 2.16% 2.13% 2.19%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 5.06% 5.64% 5.00% 4.46%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $-- $-- $--
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41% 32%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I --------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $7.05 $10.57 $10.16 $9.98
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .57 .69 .65 .35
Net gains (losses) (both realized and
unrealized) 3.22 (3.46) .38 .17
- -----------------------------------------------------------------------------------------------
Total from investment operations 3.79 (2.77) 1.03 .52
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.49) (.66) (.60) (.34)
Distributions from realized gains -- (.09) (.02) --
- -----------------------------------------------------------------------------------------------
Total distributions (.49) (.75) (.62) (.34)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $7.05 $10.57 $10.16
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 55.52% (28.08%) 10.38% 5.44%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement .88% .91% .93% 1.52%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) .85% .91% .93% 1.10%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 6.59% 6.89% 6.14% 5.70%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $106 $65 $147 $47
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41% 32%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 --------------------------------------------
PER SHARE DATA 2009 2008 2007 2006(a)
Net asset value, beginning of period $7.05 $10.56 $10.16 $9.98
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .54 .67 .60 .34
Net gains (losses) (both realized and
unrealized) 3.23 (3.43) .39 .18
- -----------------------------------------------------------------------------------------------
Total from investment operations 3.77 (2.76) .99 .52
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.47) (.66) (.57) (.34)
Distributions from realized gains -- (.09) (.02) --
- -----------------------------------------------------------------------------------------------
Total distributions (.47) (.75) (.59) (.34)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $7.05 $10.56 $10.16
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 55.14% (27.98%) 9.97% 5.36%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement 1.18% 1.22% 1.24% 1.67%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.11% .97% 1.24% 1.25%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 6.31% 6.82% 5.75% 5.37%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41% 32%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS W --------------------------------
PER SHARE DATA 2009 2008 2007(e)
Net asset value, beginning of period $7.05 $10.55 $10.24
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .53 .56 .57
Net gains (losses) (both realized and
unrealized) 3.21 (3.36) .28
- -----------------------------------------------------------------------------------
Total from investment operations 3.74 (2.80) .85
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.45) (.61) (.52)
Distributions from realized gains -- (.09) (.02)
- -----------------------------------------------------------------------------------
Total distributions (.45) (.70) (.54)
- -----------------------------------------------------------------------------------
Net asset value, end of period $10.34 $7.05 $10.55
- -----------------------------------------------------------------------------------
TOTAL RETURN 54.69% (28.29%) 8.49%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(B)
Gross expenses prior to expense
waiver/reimbursement 1.33% 1.35% 1.33%(c)
- -----------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.30% 1.35% 1.33%(c)
- -----------------------------------------------------------------------------------
Net investment income (loss) 6.18% 6.08% 5.86%(c)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $117 $104 $38
- -----------------------------------------------------------------------------------
Portfolio turnover rate 62% 82% 41%
- -----------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(b) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
reported expense ratios.
(c) Annualized.
(d) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(e) For the period from Dec. 1, 2006 (when shares became publicly available) to
Oct. 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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 Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares are offered without a front-end sales charge or
CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares. At Oct. 31, 2009, the Investment Manager and
affiliated funds-of-funds in the RiverSource Family of Funds owned approximately
41% 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.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on
- --------------------------------------------------------------------------------
38 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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. 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. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
Brazilian real and Mexican pesos.
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-
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
commitments. At Oct. 31, 2009, the Fund had outstanding when-issued securities
of $7,523,736.
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 (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared 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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to
- --------------------------------------------------------------------------------
40 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
pursue higher investment returns. The Fund may also use derivative instruments
to mitigate certain investment risks, such as foreign currency exchange rate
risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities. At Oct. 31, 2009, the Fund had no
outstanding forward foreign currency contracts.
CREDIT DEFAULT SWAP TRANSACTIONS
The Fund may enter into credit default swap transactions to increase or decrease
its credit exposure to an issuer of debt securities, a specific debt security,
or an index of issuers or debt securities. Additionally, credit default swaps
may be used to hedge the Fund's exposure on a debt security that it owns or in
lieu of selling such debt security.
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 reference 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 or cash
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.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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
reference 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 or cash received and the notional amount paid will be recorded as
a realized gain (loss). The maximum potential amount of undiscounted future
payments the Fund could be required to make as the seller of protection under a
credit default swap contract is equal to the notional amount of the reference
obligation. Notional amounts of all credit default swap contracts outstanding
for which the Fund is the seller of protection are disclosed in the Credit
Default Swap Contracts Outstanding schedule following the Portfolio of
Investments. These potential amounts may be partially offset by any recovery
values of the respective reference obligations or premiums received upon
entering into the agreement.
As a protection seller, the Fund bears the risk of loss from the credit events
specified in the contract. Although specified events are contract specific,
credit events are generally defined as bankruptcy, failure to pay,
restructuring, obligation acceleration, obligation default, or
repudiation/moratorium. For credit default swap contracts on credit indices,
quoted market prices and resulting market values serve as an indicator of the
current status of the payment/performance risk. Increasing market values, in
absolute terms when compared to the notional amount of the swap, represent a
deterioration of the reference entity's credit soundness and a greater
likelihood or risk of default or other credit event occurring as defined under
the terms of the contract. Market values for credit default swap contracts in
which the Fund is the seller of protection are disclosed in the Credit Default
Swap Contracts Outstanding schedule following the Portfolio of Investments.
The notional amounts and market values 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) in 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 reference 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
- --------------------------------------------------------------------------------
42 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
transactions only with counterparties that meet certain standards of
creditworthiness.
INTEREST RATE SWAP TRANSACTIONS
The Fund may enter into interest rate swap transactions to produce incremental
earnings, or to gain exposure to or protect itself from market rate changes, or
to synthetically add or subtract principal exposure to a 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 interest rate swaps include a lack of correlation between
the swaps and the portfolio of bonds the swaps are designed to hedge or
replicate. A lack of correlation may cause the interest rate swaps 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 taken. The Fund's maximum risk of loss from counterparty credit risk
is the discounted net value of the cash flows to be received from/paid to the
counterparty over the contract's remaining life to the extent that such amount
is positive, plus the cost of entering into a similar transaction with another
counterparty. This risk is mitigated by having a master netting arrangement
between the Fund and the counterparty and by the posting of collateral by the
counterparty to the Fund to cover the Fund's exposure to the counterparty. At
Oct. 31, 2009, the Fund had no outstanding interest rate swap contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
unrealized gains or losses. The derivative schedules following the Portfolio of
Investments present additional information regarding derivative instruments
outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------- -------------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- -------------------------------------------------------------------------------------------
Credit contracts Premium paid on
outstanding credit
default swap
contracts $ 307,391
- -------------------------------------------------------------------------------------------
Unrealized net Unrealized net
depreciation on depreciation on
swap transactions (283,270) swap transactions $17,989
- -------------------------------------------------------------------------------------------
Total $ 24,121 $17,989
- -------------------------------------------------------------------------------------------
</Table>
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- -----------------------------------------------------------------------
FORWARD
FOREIGN
CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL
- -----------------------------------------------------------------------------
Credit contracts $ -- $(2,161,355) $(2,161,355)
- -----------------------------------------------------------------------------
Foreign exchange contracts 46,893 -- $ 46,893
- -----------------------------------------------------------------------------
Interest rate contracts -- 1,196,000 $ 1,196,000
- -----------------------------------------------------------------------------
Total $46,893 $ (965,355) $ (918,462)
- -----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- ----------------------------------------------------------------------
FORWARD
FOREIGN
CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL
- ----------------------------------------------------------------------------
Credit contracts $-- $1,701,297 $1,701,297
- ----------------------------------------------------------------------------
Foreign exchange contracts -- -- $ --
- ----------------------------------------------------------------------------
Interest rate contracts -- (257,106) $ (257,106)
- ----------------------------------------------------------------------------
Total $-- $1,444,191 $1,444,191
- ----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
44 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Oct. 31, 2009, the Fund had no outstanding forward foreign currency
contracts. The monthly average gross notional amount for these contracts was
$100,000 for the year ended Oct. 31, 2009.
SWAPS
The gross notional amount of contracts outstanding was $4.0 million at Oct. 31,
2009. The monthly average gross notional amount for these contracts was $12.4
million for the year ended Oct. 31, 2009. The fair value of such contracts on
Oct. 31, 2009 is set forth in the table above.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.72% to 0.52% as the Fund's net assets increase. The
management fee for the year ended Oct. 31, 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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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 year ended Oct. 31,
2009, other expenses paid to this company were $1,141.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $20.50 for Class A, $21.50 for Class B and $21.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R4 shares and an annual asset-based fee at a rate of 0.20%
of the Fund's average daily net assets attributable to Class W shares. The
Transfer Agent charges an annual fee of $5 per inactive account, charged on a
pro rata basis for the 12 month period from the date the account becomes
inactive. These fees are included in the transfer agency fees in the Statement
of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the
Fund's average daily net assets attributable to Class B and Class C shares. For
Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for
distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $81,000 and $44,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
- --------------------------------------------------------------------------------
46 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $69,829 for Class A and $941 for Class B for the
year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), were as follows:
<Table>
Class A............................................. 1.27%
Class B............................................. 2.04
Class C............................................. 2.03
Class I............................................. 0.85
Class R4............................................ 1.11
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........................................... $8,786
Class B........................................... 1,267
Class C........................................... 210
</Table>
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 $56,996.
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), would 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>
Effective Nov. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Dec. 31, 2010,
unless sooner terminated at the discretion of the Board, such that net expenses
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
(excluding fees and expenses of acquired funds*), will not exceed the following
percentage of the class' average daily net assets:
<Table>
Class A............................................. 1.31%
Class B............................................. 2.08
Class C............................................. 2.07
Class I............................................. 0.92
Class R4............................................ 1.22
Class W............................................. 1.37
</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 $2,446 to Ameriprise Trust Company, a subsidiary of Ameriprise
Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $131,951,002 and $103,069,180, respectively, for the
year ended Oct. 31, 2009. Realized gains and losses are determined on an
identified cost basis.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- ------------------------------------------------------------------
CLASS A
Sold 3,173,284 1,193,673
Converted from Class B** 31,953 13,064
Reinvested distributions 76,058 54,556
Redeemed (1,490,957) (332,734)
- ------------------------------------------------------------------
Net increase (decrease) 1,790,338 928,559
- ------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
48 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- ------------------------------------------------------------------
CLASS B
Sold 153,167 131,117
Reinvested distributions 7,818 7,815
Converted to Class A** (31,986) (13,091)
Redeemed (62,140) (67,333)
- ------------------------------------------------------------------
Net increase (decrease) 66,859 58,508
- ------------------------------------------------------------------
CLASS C
Sold 49,606 21,942
Reinvested distributions 1,458 1,173
Redeemed (8,248) (12,061)
- ------------------------------------------------------------------
Net increase (decrease) 42,816 11,054
- ------------------------------------------------------------------
CLASS I
Sold 5,204,021 3,444,578
Reinvested distributions 449,432 822,959
Redeemed (4,633,781) (8,936,995)
- ------------------------------------------------------------------
Net increase (decrease) 1,019,672 (4,669,458)
- ------------------------------------------------------------------
CLASS R4
Sold 55 781
Reinvested distributions 65 70
Redeemed (4) (264)
- ------------------------------------------------------------------
Net increase (decrease) 116 587
- ------------------------------------------------------------------
CLASS W
Sold 4,123,883 15,118,235
Reinvested distributions 659,389 298,553
Redeemed (8,276,964) (4,196,818)
- ------------------------------------------------------------------
Net increase (decrease) (3,493,692) 11,219,970
- ------------------------------------------------------------------
</Table>
* Certain line items from the prior year have been renamed to conform to the
current year presentation.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. 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
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 49
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 univested 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 collateral upon
the return of the securities loaned. At Oct. 31, 2009, securities valued at
$6,542,238 were on loan, secured by cash collateral of $7,255,355 invested in
short-term securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$8,194 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009,
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $127,416,168 and $137,122,895,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
- --------------------------------------------------------------------------------
50 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to its pro rata share of 0.02% of the amount of
the credit facility. The Fund had no borrowings during the year ended Oct. 31,
2009.
10. FEDERAL TAX INFORMATION
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, foreign tax credits 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.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by
$2,685,924 and accumulated net realized loss has been decreased by $2,685,924.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
- ------------------------------------------------------------------
Ordinary income......................... $10,101,827 $11,119,127
Long-term capital gain.................. -- 623,714
</Table>
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 488,651
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $(17,157,025)
Unrealized appreciation (depreciation)......... $ 12,641,900
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$17,157,025 at Oct. 31, 2009, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2016 2017
2,399,388 14,757,637
</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. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
11. 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.
- --------------------------------------------------------------------------------
52 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise 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
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four 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
- --------------------------------------------------------------------------------
54 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE EMERGING MARKETS BOND FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Emerging Markets Bond Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2009, and the related statement of operations for the year
then ended, and the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of the Fund for the periods
presented through October 31, 2006, were audited by other auditors whose report
dated December 20, 2006, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
56 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Emerging Markets Bond Fund of the RiverSource Global
Series, Inc. at October 31, 2009, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 57
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 0.00%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
58 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2009 ANNUAL 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 EMERGING MARKETS BOND FUND -- 2009 ANNUAL REPORT 63
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 Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6398 F (12/09)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GLOBAL BOND FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
RIVERSOURCE GLOBAL BOND FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH INCOME
AND GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 16
Statement of Assets and
Liabilities...................... 34
Statement of Operations............ 36
Statements of Changes in Net
Assets........................... 37
Financial Highlights............... 39
Notes to Financial Statements...... 45
Report of Independent Registered
Public Accounting Firm........... 62
Federal Income Tax Information..... 64
Board Members and Officers......... 65
Proxy Voting....................... 69
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Global Bond Fund (the Fund) Class A shares gained 22.12%
(excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund outperformed its benchmark, the Barclays Capital Global Aggregate
Index, which rose 18.41%.
> The Fund also outperformed the Lipper Global Income Funds Index, representing
the Fund's peer group, which increased 21.05% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------
RiverSource Global Bond Fund
Class A (excluding sales
charge) +22.12% +7.00% +4.95% +5.95%
- ---------------------------------------------------------------------
Barclays Capital Global
Aggregate Index (unmanaged) +18.41% +7.91% +5.70% +6.48%
- ---------------------------------------------------------------------
Lipper Global Income Funds Index +21.05% +5.65% +4.84% +5.98%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
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
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/20/89) +22.12% +7.00% +4.95% +5.95% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) +21.14% +6.16% +4.14% +5.14% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) +21.15% +6.19% +4.15% N/A +5.89%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) +22.83% +7.44% +5.41% N/A +5.86%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) +22.42% +7.34% +5.21% +6.19% N/A
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) +22.04% N/A N/A N/A +6.20%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/20/89) +16.32% +5.28% +3.93% +5.43% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) +16.14% +5.26% +3.80% +5.14% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) +20.15% +6.19% +4.15% N/A +5.89%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 4.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R4 and Class W shares. Class I and Class
R4 are available to qualifying institutional investors only. Class W shares are
offered through qualifying discretionary accounts.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
X HIGH
MEDIUM QUALITY
LOW
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
<Table>
Weighted average life(1) 7.0 years
- --------------------------------------
Effective duration(2) 5.3 years
- --------------------------------------
Weighted average bond
rating(3) AA-
- --------------------------------------
</Table>
(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.
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
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.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
At Oct. 31, 2009, approximately 33% of the Fund's shares were owned in aggregate
by affiliated funds-of-funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible RiverSource Global Bond Fund may experience relatively large purchases
or redemptions from affiliated funds-of-funds (see page 55, Class I capital
share transactions for related activity during the most recent fiscal period).
RiverSource seeks to minimize the impact of these transactions by structuring
them over a reasonable period of time. RiverSource Global Bond Fund may
experience increased expenses as it buys and sells securities as a result of
purchases or redemptions by affiliated funds-of-funds. For more information on
the Fund's expenses, see the discussions beginning on pages 14 and 51.
PORTFOLIO BREAKDOWN(1) (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Asset-Backed 3.7%
- ------------------------------------------------
Commercial Mortgage-Backed 2.5%
- ------------------------------------------------
Consumer Discretionary 1.2%
- ------------------------------------------------
Consumer Staples 1.0%
- ------------------------------------------------
Energy 0.9%
- ------------------------------------------------
Financials 7.3%
- ------------------------------------------------
Foreign Government 53.7%
- ------------------------------------------------
Health Care 0.3%
- ------------------------------------------------
Industrials 0.8%
- ------------------------------------------------
Materials 0.9%
- ------------------------------------------------
Residential Mortgage-Backed 6.4%
- ------------------------------------------------
Telecommunication 4.3%
- ------------------------------------------------
U.S. Government Obligations & Agencies 7.8%
- ------------------------------------------------
Utilities 6.8%
- ------------------------------------------------
Other(2) 2.4%
- ------------------------------------------------
</Table>
(1) Portfolio holdings include industry sectors that can be comprised of
securities in several industries. Please refer to the section entitled
"Portfolio of Investments" for a complete listing. No single industry
exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
Dear Shareholders,
RiverSource Global Bond Fund (the Fund) Class A shares gained 22.12% (excluding
sales charge) for the 12 months ended Oct. 31, 2009. The Fund outperformed its
benchmark, the Barclays Capital Global Aggregate Index (Barclays Global Index),
which rose 18.41%. The Fund also outperformed the Lipper Global Income Funds
Index, representing the Fund's peer group, which increased 21.05% during the
same period.
SIGNIFICANT PERFORMANCE FACTORS
On an absolute basis, the Fund benefited during the annual period from a decline
in government bond yields, a sharp recovery in non-government bond sectors and a
broad-based fall in the U.S. dollar. The U.S. dollar declined 10.4% on a trade-
weighted basis during the annual period. As the value of the U.S. dollar
decreases, the dollar value of foreign investments typically rises and vice
versa. The Fund had approximately 63% of its net assets exposed to foreign
currencies, on average, during the annual period, up from approximately 53%, on
average in the prior 12-month period.
Relative to the Barclays Global Index, the Fund was helped most during the
annual period by our active management. Strong issue selection, especially among
investment grade corporate bonds, had a particularly strong impact on the Fund.
For example, the Fund benefited from an overweight position in U.S. corporate
bonds vs. an underweight position in non-U.S. corporate bonds. During the first
half of the annual period, overweight positions in industrial and utility issues
vs. an underweight
TOP TEN COUNTRIES (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
United States 41.8%
- ------------------------------------------------
Japan 10.6%
- ------------------------------------------------
Germany 6.0%
- ------------------------------------------------
France 4.5%
- ------------------------------------------------
Italy 4.2%
- ------------------------------------------------
Netherlands 3.9%
- ------------------------------------------------
United Kingdom 3.2%
- ------------------------------------------------
Canada 2.6%
- ------------------------------------------------
Spain 2.3%
- ------------------------------------------------
Brazil 1.9%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
6 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
position in financial issues helped. Our allocation decisions also benefited the
Fund's results, notably the Fund's investments in high yield corporate bonds and
emerging market debt.
Currency positioning aided the Fund's performance as well, particularly the
Fund's overweight positions in commodity-related currencies, such as the
Australian dollar, New Zealand dollar and Norwegian krone, and cyclically-
sensitive currencies, such as the Swedish krona and Polish zloty. Exposure to
emerging market currencies, such as the Brazilian real and Indonesian rupiah
also helped. Finally, we added return vs. the Barclays Global Index through
local market decisions, including those regarding duration, yield curve and
country allocation.
The primary detractors from Fund performance came from allocation and issue
selection decisions within structured assets, such as commercial mortgage-backed
securities, especially at the beginning of the annual period when global
financial markets were under intense duress. Having an underweight position in
the euro also detracted from the Fund's results.
Relative to the Fund's peer group, the Fund saw its strongest performance during
the first half of the annual period, especially in months when financials
underperformed dramatically. This suggests that our issue selection within
corporate bonds was a major contributor to the Fund's results. It also appears
we added risk to the Fund earlier in the market recovery process than many of
the Fund's peers, further aiding relative performance during the first half of
the annual period. The Fund's peers, however, seemed to have turned up the dial
more aggressively once they did
On an absolute basis, the Fund benefited during the annual period from a
decline in government bond yields, a sharp recovery in non-government bond
sectors and a broad-based fall in the U.S. dollar.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
eventually start adding risk, enabling them to regain ground during the second
half of the annual period when risk assets of virtually all types experienced
sharp gains. Still, as mentioned above, the Fund outperformed the Lipper Global
Income Funds Index for the 12 months ended Oct. 31, 2009.
CHANGES TO THE FUND'S PORTFOLIO
We made several changes to portfolio positioning during the period. We added
some interest rate exposure during the first half of the annual period, after
global yields moved up from their crisis-related lows, leaving the Fund modestly
overweight interest rate exposure vs. the Barclays Global Index. We implemented
this strategy partly as a hedge against the Fund's sector and currency
exposures, which were structured to benefit from a recovery in the global
economy, and partly because we expected global yields to move broadly sideways
even with that recovery as major central banks were anticipated to keep their
accommodative monetary policies on hold for an extended period.
We had meaningfully increased the Fund's investment grade corporate bond
exposure in October 2008, with a strong bias toward industrial and utility
issuers. We maintained that positioning until March-April 2009, when we covered
the Fund's underweight position in financials and pared back its overweight in
industrials as an offset. During the second half of the annual period, we
gradually reduced the Fund's exposure to investment grade corporate bonds on the
view that the sharp tightening in yield spreads, back to pre-crisis levels in
many industries, had outpaced the actual improvement seen in corporate
fundamentals. We also trimmed the Fund's exposure to U.S. agency mortgage-backed
securities, as yield spreads in that sector moved to pre-crisis levels on the
back of substantial purchases by the Federal Reserve Board (the Fed). In
contrast, we added some exposure to below investment grade securities during the
second half of the annual period, especially in emerging markets, where we felt
that yield spreads better compensated the Fund for the risks involved. Yield
spreads are the differential between yields on securities within a given fixed
income sector and those of comparable-duration U.S. Treasuries.
On currencies, the Fund maintained its underweight in the U.S. dollar throughout
the annual period, but made changes in some other positions, especially during
the second half of the period. We increased the Fund's
- --------------------------------------------------------------------------------
8 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
exposure to several emerging market and peripheral European currencies,
including the Brazilian real, Mexican peso, Indonesian rupiah, Swedish krona and
Norwegian krone. Against this, we decreased the Fund's exposure to the British
pound, the euro and the yen. At the very end of the annual period, we also pared
back modestly the Fund's exposure to the Australian and New Zealand dollars.
OUR FUTURE STRATEGY
At the end of October 2009, we were positioning the Fund for continued recovery
in the global economy, but cautiously so given the dramatic rebound in risk
assets during the annual period. We expect the major central banks to keep
monetary policy at highly accommodative levels until the second half of 2010, if
not later. The ample supply of liquidity resulting from these policies should
support economic growth and further gains in risk assets, but risk premiums
across a range of markets looked rather skinny at the end of the annual period
relative to the actual improvement seen so far in economic and corporate
fundamentals. Put differently, we would argue that a lot of good news about the
economic recovery process is already priced in, and this warrants some caution
even if we think the trend may continue in the months ahead due to ample global
liquidity.
We intend to continue to hold less exposure to the U.S. dollar in the Fund than
the Barclays Global Index. From a long-term valuation perspective, the U.S.
dollar was beginning to look fairly undervalued toward the end of the annual
period, especially against other major developed currencies. This
undervaluation, we believe, creates a risk of corrective bounces in the U.S.
currency. At the same time, we believe the necessary components of a sustained
dollar rally are not yet in place and will not be in place for some time. We
think the Fed will need to be well into its tightening cycle before the U.S.
dollar can find a true bottom and then appreciate in sustained fashion,
especially if U.S. fiscal policy remains loose.
As always, we constantly monitor the market for changing conditions and
regularly review the Fund's duration, country, sector, yield curve, and currency
positioning in an effort to seek an attractive balance between risk and
potential return. Our sector teams remain focused on careful
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
individual security selection, as we continue to seek opportunities to
capitalize on attractively valued bonds.
(PHOTO - NICHOLAS PIFER, CFA(R))
Nicholas Pifer, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Global Bond Fund Class A shares (from 11/1/99 to
10/31/09) as compared to the performance of the Barclays Capital Global
Aggregate Index and the Lipper Global Income Funds Index. In comparing the
Fund's Class A shares to these indices, you should take into account the fact
that the Fund's performance reflects the maximum initial sales charge of 4.75%,
while such charges are not reflected in the performance of the indices. Returns
for the Fund include the reinvestment of any distributions paid during each
period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
1 YEAR 3 YEARS 5 YEARS 10 YEARS
RIVERSOURCE GLOBAL BOND FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,632 $11,668 $12,126 $16,985
- ------------------------------------------------------------------------------------------
Average annual total return +16.32% +5.28% +3.93% +5.43%
- ------------------------------------------------------------------------------------------
BARCLAYS CAPITAL GLOBAL AGGREGATE INDEX(1)
Cumulative value of $10,000 $11,841 $12,564 $13,196 $18,736
- ------------------------------------------------------------------------------------------
Average annual total return +18.41% +7.91% +5.70% +6.48%
- ------------------------------------------------------------------------------------------
LIPPER GLOBAL INCOME FUNDS INDEX(2)
Cumulative value of $10,000 $12,105 $11,791 $12,669 $17,867
- ------------------------------------------------------------------------------------------
Average annual total return +21.05% +5.65% +4.84% +5.98%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE GLOBAL BOND FUND LINE
GRAPH)
<Table>
<Caption>
RIVERSOURCE GLOBAL
BOND FUND
CLASS A BARCLAYS CAPITAL LIPPER GLOBAL
(INCLUDES SALES GLOBAL AGGREGATE INCOME FUNDS
CHARGE) INDEX(1) INDEX(2)
------------------ ------------------ ------------------
10/99 $ 9,525 $10,000 $10,000
1/00 9,249 9,688 9,832
4/00 9,099 9,623 9,842
7/00 9,281 9,814 10,022
10/00 9,037 9,718 9,903
1/01 9,669 10,219 10,519
4/01 9,436 10,014 10,333
7/01 9,592 10,191 10,507
10/01 10,016 10,674 10,903
1/02 9,697 10,237 10,652
4/02 9,901 10,548 10,852
7/02 10,359 11,261 11,158
10/02 10,642 11,538 11,436
1/03 11,335 12,172 12,070
4/03 11,681 12,519 12,525
7/03 11,626 12,450 12,520
10/03 12,053 12,946 12,948
1/04 12,676 13,593 13,560
4/04 12,419 13,310 13,322
7/04 12,511 13,411 13,409
10/04 13,341 14,199 14,104
1/05 13,743 14,643 14,537
4/05 13,730 14,682 14,566
7/05 13,360 14,305 14,412
10/05 13,183 14,096 14,267
1/06 13,364 14,313 14,572
4/06 13,451 14,388 14,716
7/06 13,610 14,602 14,854
10/06 13,865 14,912 15,153
1/07 13,976 14,925 15,300
4/07 14,410 15,441 15,723
7/07 14,394 15,440 15,743
10/07 15,062 16,241 16,307
1/08 15,449 16,961 16,820
4/08 15,656 17,260 16,831
7/08 15,493 17,107 16,539
10/08 13,908 15,823 14,761
1/09 14,569 16,727 15,041
4/09 14,952 16,880 15,356
7/09 16,291 17,943 16,829
10/09 16,985 18,736 17,867
</Table>
(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 ANNUAL REPORT 13
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 Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,136.00 $ 6.69 1.25%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.80 $ 6.33 1.25%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,131.50 $10.74(c) 2.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.99 $10.15(c) 2.01%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,131.00 $10.74 2.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.99 $10.15 2.01%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,139.40 $ 4.40 .82%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.96 $ 4.15 .82%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,137.60 $ 6.00 1.12%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.45 $ 5.67 1.12%
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,134.40 $ 6.80 1.27%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.70 $ 6.43 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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2009: +13.60%
for Class A, +13.15% for Class B, +13.10% for Class C, +13.94% for Class I,
+13.76% for Class R4 and +13.44% for Class W.
(c) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Dec. 31, 2010, unless
sooner terminated at the discretion of the Fund's Board, such that net
expenses (excluding fees and expenses of acquired funds), will not exceed
2.02% for Class B. Any amounts waived will not be reimbursed by the Fund.
This change was effective Nov. 1, 2009. Had this change been in place for
the entire six month period ended Oct. 31, 2009, the actual expenses paid
would have been $10.79 for Class B and the hypothetical expenses paid would
have been $10.20 for Class B.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (95.9%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (0.2%)
Republic of Argentina
Sr Unsecured
09-12-13 7.00% $1,033,000 $847,060
12-15-35 0.00 2,900,000(h) 217,500
---------------
Total 1,064,560
- -------------------------------------------------------------------------------------
AUSTRALIA (1.5%)
Australia & New Zealand Banking Group
(Australian Dollar)
11-08-11 6.50 420,000 382,485
Commonwealth Bank of Australia
(European Monetary Unit) Sr Unsub
11-12-09 3.38 745,000 1,096,984
New South Wales Treasury
(Australian Dollar)
05-01-12 6.00 5,750,000 5,249,413
Telstra
Sr Unsecured
04-01-12 6.38 500,000(n) 545,120
Westpac Banking
(Australian Dollar) Sr Unsub
09-24-12 7.25 600,000 554,131
---------------
Total 7,828,133
- -------------------------------------------------------------------------------------
AUSTRIA (1.6%)
Republic of Austria
(European Monetary Unit)
07-15-14 4.30 5,245,000 8,291,153
- -------------------------------------------------------------------------------------
BELGIUM (1.7%)
Fortis Bank
(European Monetary Unit) Sr Unsecured
05-30-14 4.50 420,000 639,139
Kingdom of Belgium
(European Monetary Unit)
03-28-10 3.00 3,965,000 5,888,755
09-28-12 5.00 1,385,000 2,216,395
---------------
Total 8,744,289
- -------------------------------------------------------------------------------------
BRAZIL (2.0%)
Banco Nacional de Desenvolvimento Economico e Social
06-10-19 6.50 $910,000(d) 961,307
Banco Nacional de Desenvolvimento Economico e Social
Sr Unsecured
06-16-18 6.37 535,000(d) 564,425
Centrais Eletricas Brasileiras
Sr Unsecured
07-30-19 6.88 375,000(d) 400,393
Federative Republic of Brazil
01-15-18 8.00 282,389 322,629
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 307,000 328,183
10-14-19 8.88 115,000 146,338
Nota do Tesouro Nacional
(Brazilian Real) Series F
01-01-12 10.00 640,500 3,665,056
01-01-13 10.00 700,000 3,889,874
---------------
Total 10,278,205
- -------------------------------------------------------------------------------------
CANADA (2.6%)
Canadian Pacific Railway
(Canadian Dollar) Sr Unsecured
06-15-10 4.90 380,000(d) 358,647
Govt of Canada
(Canadian Dollar)
06-01-18 4.25 1,730,000 1,713,226
Nexen
Sr Unsecured
05-15-37 6.40 200,000 197,800
Nova Chemicals
Sr Unsecured
11-01-16 8.38 225,000(d) 227,813
11-01-19 8.63 190,000(d,n) 192,375
Province of British Columbia
(Canadian Dollar)
06-18-14 5.30 1,790,000 1,824,762
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
CANADA (CONT.)
Province of Ontario
(Canadian Dollar)
03-08-14 5.00% 3,385,000 $3,401,692
Province of Quebec
(Canadian Dollar)
12-01-17 4.50 1,683,000 1,625,481
Royal Bank of Canada
(European Monetary Unit) Sr Unsecured
01-18-13 3.25 630,000 942,997
TELUS
Sr Unsecured
06-01-11 8.00 980,000 1,068,274
Thomson Reuters
10-01-14 5.70 1,080,000 1,191,951
Toronto-Dominion Bank
(European Monetary Unit) Sr Unsecured
05-14-15 5.38 600,000 960,985
---------------
Total 13,706,003
- -------------------------------------------------------------------------------------
COLOMBIA (0.3%)
Ecopetrol
Sr Unsecured
07-23-19 7.63 300,000 327,000
Republic of Colombia
01-27-17 7.38 230,000(n) 256,450
09-18-37 7.38 260,000(n) 287,950
01-18-41 6.13 235,000(n) 216,503
Republic of Colombia
Sr Unsecured
03-18-19 7.38 250,000(n) 282,750
---------------
Total 1,370,653
- -------------------------------------------------------------------------------------
CZECH REPUBLIC (0.1%)
Czech Republic
(Czech Koruna)
06-16-13 3.70 11,530,000 653,238
- -------------------------------------------------------------------------------------
DENMARK (0.8%)
Danske Bank
(European Monetary Unit)
03-16-10 0.82 750,000(i) 1,103,868
Nykredit Realkredit
(Danish Krone)
04-01-28 5.00 10,260,772 2,060,678
Nykredit Realkredit
(European Monetary Unit)
01-01-10 5.00 750,000 1,110,201
---------------
Total 4,274,747
- -------------------------------------------------------------------------------------
EL SALVADOR (--%)
Republic of El Salvador
Sr Unsecured
01-24-23 7.75 245,000(d) 257,250
- -------------------------------------------------------------------------------------
FRANCE (4.7%)
BNP Paribas
(European Monetary Unit) Sr Sub Nts
12-17-12 5.25 555,000 877,977
Caisse Refinance Hypothe
(European Monetary Unit)
10-11-10 4.38 700,000 1,059,855
Credit Agricole
(European Monetary Unit) Sr Unsecured
06-24-13 6.00 550,000 895,411
Electricite de France
(European Monetary Unit) Sr Unsecured
02-05-18 5.00 750,000 1,172,263
France Telecom
(European Monetary Unit) Sr Unsecured
02-21-17 4.75 1,180,000 1,825,219
Govt of France
(European Monetary Unit)
04-25-12 5.00 2,365,000 3,763,132
04-25-13 4.00 6,020,000 9,419,872
10-25-16 5.00 2,880,000 4,763,208
Veolia Environnement
(European Monetary Unit)
01-16-17 4.38 315,000 464,157
---------------
Total 24,241,094
- -------------------------------------------------------------------------------------
GERMANY (6.1%)
Bayerische Landesbank
(Japanese Yen)
04-22-13 1.40 170,000,000 1,900,891
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
GERMANY (CONT.)
Bundesrepublik Deutschland
(European Monetary Unit)
07-04-10 5.25% 2,165,000 $3,282,708
07-04-19 3.50 1,500,000 2,253,778
07-04-27 6.50 4,650,000 8,959,806
07-04-28 4.75 1,975,000 3,171,781
07-04-34 4.75 4,585,000 7,415,097
Deutsche Pfandbriefbank
(European Monetary Unit) Series G6
01-15-10 5.50 1,375,000 2,041,045
Landwirtschaftliche Rentenbank
(Australian Dollar)
06-15-11 5.75 1,250,000 1,130,349
Rheinische Hypothekenbank
(European Monetary Unit) Series 803
07-05-10 5.75 1,305,000(d) 1,976,931
---------------
Total 32,132,386
- -------------------------------------------------------------------------------------
GREECE (1.5%)
Hellenic Republic
(European Monetary Unit)
08-20-12 4.10 2,820,000 4,326,402
Hellenic Republic
(European Monetary Unit) Sr Unsub
10-22-22 5.90 2,010,000 3,266,321
---------------
Total 7,592,723
- -------------------------------------------------------------------------------------
INDONESIA (0.9%)
Govt of Indonesia
(Indonesian Rupiah)
05-15-16 10.75 9,320,000,000 1,017,095
Govt of Indonesia
(Indonesian Rupiah) Series FR43
07-15-22 10.25 21,944,000,000 2,250,771
Perusahaan Penerbit SBSN
04-23-14 8.80 160,000(d) 181,212
Republic of Indonesia
Sr Unsecured
01-17-18 6.88 500,000(d) 527,500
10-12-35 8.50 190,000(d) 225,150
02-17-37 6.63 205,000(d) 196,800
01-17-38 7.75 140,000(d) 151,200
---------------
Total 4,549,728
- -------------------------------------------------------------------------------------
IRELAND (0.1%)
GE Capital UK Funding
(British Pound)
04-26-10 5.88 275,000 457,731
- -------------------------------------------------------------------------------------
ITALY (4.3%)
Buoni Poliennali Del Tesoro
(European Monetary Unit)
01-15-10 3.00 2,290,000 3,385,436
04-15-12 4.00 1,970,000 3,045,796
02-01-19 4.25 2,620,000 4,009,734
11-01-26 7.25 3,486,283 6,700,325
11-01-27 6.50 1,025,000 1,833,805
Intesa Sanpaolo
(European Monetary Unit) Sr Unsecured
12-19-13 5.38 400,000 635,791
Italy Buoni Poliennali Del Tesoro
(European Monetary Unit)
07-01-12 2.50 1,850,000 2,750,136
Telecom Italia Capital
11-15-13 5.25 120,000(n) 126,266
---------------
Total 22,487,289
- -------------------------------------------------------------------------------------
JAPAN (10.9%)
Bayer Holding
(Japanese Yen)
06-28-12 1.96 40,000,000 440,466
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 417,000,000 4,737,734
Govt of Japan CPI Linked
(Japanese Yen)
03-10-18 1.40 463,264,000(m) 4,817,256
Govt of Japan
(Japanese Yen)
09-20-17 1.70 811,000,000 9,396,059
12-20-22 1.40 411,000,000 4,377,902
12-20-26 2.10 884,000,000 9,931,325
09-20-29 2.10 300,000,000 3,319,088
12-20-34 2.40 203,000,000 2,328,551
03-20-39 2.30 123,000,000 1,375,974
Govt of Japan
(Japanese Yen) Series 239
06-20-12 1.40 315,000,000 3,596,614
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
JAPAN (CONT.)
Govt of Japan
(Japanese Yen) Series 244
12-20-12 1.00% 913,000,000 $10,329,053
Govt of Japan
(Japanese Yen) Series 267
12-20-14 1.30 200,000,000 2,284,640
---------------
Total 56,934,662
- -------------------------------------------------------------------------------------
KAZAKHSTAN (0.1%)
KazMunaiGaz Finance
07-02-18 9.13 250,000(d) 275,594
- -------------------------------------------------------------------------------------
LUXEMBOURG (0.1%)
Gaz Capital
Secured
11-22-16 6.21 100,000(d) 95,500
08-16-37 7.29 230,000(d) 213,900
---------------
Total 309,400
- -------------------------------------------------------------------------------------
MALAYSIA (0.5%)
Petronas Capital
05-22-12 7.00 500,000(d,n) 551,313
08-12-19 5.25 1,980,000(d,n) 1,995,803
---------------
Total 2,547,116
- -------------------------------------------------------------------------------------
MEXICO (1.4%)
Mexican Fixed Rate Bonds
(Mexican Peso) Series M-10
12-17-15 8.00 60,280,000 4,646,777
Mexican Fixed Rate Bonds
(Mexican Peso) Series MI-10
12-19-13 8.00 24,940,000 1,941,058
Pemex Project Funding Master Trust
03-01-18 5.75 617,000 610,830
United Mexican States
Sr Unsecured
09-27-34 6.75 270,000 292,950
---------------
Total 7,491,615
- -------------------------------------------------------------------------------------
NETHERLANDS (4.1%)
Allianz Finance II
(European Monetary Unit)
11-23-16 4.00 400,000 596,129
BMW Finance
(European Monetary Unit)
09-19-13 8.88 650,000 1,133,270
Deutsche Telekom Intl Finance
(British Pound)
12-09-10 6.25 415,000 711,237
Deutsche Telekom Intl Finance
(European Monetary Unit)
01-19-15 4.00 1,335,000(n) 1,984,919
E.ON Intl Finance
(European Monetary Unit)
10-02-17 5.50 535,000 858,755
Govt of Netherlands
(European Monetary Unit)
07-15-12 5.00 2,880,000 4,595,768
07-15-13 4.25 2,545,000 4,016,176
07-15-16 4.00 1,900,000 2,959,965
ING Groep
(European Monetary Unit) Sr Unsecured
05-31-17 4.75 1,205,000 1,799,091
Nederlandse Waterschapsbank
(British Pound) Sr Unsub
06-07-10 5.38 850,000 1,429,327
Rabobank Nederland
(European Monetary Unit) Sr Unsub
04-04-12 4.13 600,000 926,170
---------------
Total 21,010,807
- -------------------------------------------------------------------------------------
NEW ZEALAND (0.5%)
Govt of New Zealand
(New Zealand Dollar)
04-15-13 6.50 3,700,000 2,767,802
- -------------------------------------------------------------------------------------
NORWAY (1.8%)
Eksportfinans
(British Pound) Sr Unsecured
09-06-10 6.00 930,000 1,572,774
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 31,150,000 5,726,211
Kommunalbanken
(British Pound) Sr Unsecured
01-28-10 4.75 1,300,000 2,153,779
---------------
Total 9,452,764
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
PHILIPPINE ISLANDS (0.3%)
Power Sector Assets & Liabilities
05-27-19 7.25% $790,000(d) $847,275
Republic of Philippines
01-15-16 8.00 100,000 115,750
01-14-31 7.75 405,000(n) 456,638
---------------
Total 1,419,663
- -------------------------------------------------------------------------------------
POLAND (1.2%)
Govt of Poland
(Polish Zloty)
04-25-13 5.25 6,400,000 2,207,345
Govt of Poland
(Polish Zloty) Series 1017
10-25-17 5.25 7,160,000 2,359,376
Govt of Poland
(Polish Zloty) Series 310
03-24-10 5.75 5,340,000 1,858,609
---------------
Total 6,425,330
- -------------------------------------------------------------------------------------
QATAR (0.2%)
Ras Laffan Liquefied Natural Gas
Sr Secured
09-30-14 5.50 310,000(d,n) 330,330
State of Qatar
Sr Nts
04-09-19 6.55 550,000(d) 616,840
---------------
Total 947,170
- -------------------------------------------------------------------------------------
RUSSIA (0.3%)
Russian Federation
03-31-30 7.50 1,217,300(d,n) 1,360,941
TransCapitalInvest for Transneft
Secured
03-05-14 5.67 200,000(d) 196,750
08-07-18 8.70 100,000(d,n) 112,000
---------------
Total 1,669,691
- -------------------------------------------------------------------------------------
SOUTH AFRICA (0.4%)
Republic of South Africa
(South African Rand) Sr Unsecured
12-21-14 8.75 14,625,000 1,884,878
- -------------------------------------------------------------------------------------
SOUTH KOREA (0.7%)
Export-Import Bank of Korea
Sr Nts
01-21-14 8.13 $810,000 935,366
Export-Import Bank of Korea
Sr Unsecured
01-14-15 5.88 450,000 472,777
Korea Development Bank
(Japanese Yen) Sr Unsecured
06-28-10 0.87 200,000,000 2,191,408
---------------
Total 3,599,551
- -------------------------------------------------------------------------------------
SPAIN (2.4%)
AyT Cedulas Cajas Global
(European Monetary Unit)
06-14-18 4.25 1,500,000 2,147,596
Caja de Ahorros y Monte de Piedad de Madrid
(European Monetary Unit)
03-25-11 3.50 1,800,000 2,703,905
Govt of Spain
(European Monetary Unit)
07-30-17 5.50 2,050,000 3,451,051
Instituto de Credito Oficial
(Australian Dollar)
03-08-11 5.50 1,360,000 1,223,581
Santander Intl Debt
(European Monetary Unit) Bank Guaranteed
04-11-11 5.13 1,200,000 1,838,015
Telefonica Emisiones SAU
(European Monetary Unit)
02-02-16 4.38 550,000 827,462
---------------
Total 12,191,610
- -------------------------------------------------------------------------------------
SUPRA-NATIONAL (0.7%)
Corp Andina de Fomento
Sr Unsecured
06-04-19 8.13 730,000 863,730
European Investment Bank
(British Pound) Sr Unsecured
12-07-11 5.50 1,695,000 2,992,586
---------------
Total 3,856,316
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
SWEDEN (1.7%)
Govt of Sweden
(Swedish Krona)
05-05-14 6.75% 37,570,000 $6,229,048
Govt of Sweden
(Swedish Krona) Series 1045
03-15-11 5.25 17,000,000 2,546,836
---------------
Total 8,775,884
- -------------------------------------------------------------------------------------
TUNISIA (0.4%)
Banque Centrale de Tunisie
(Japanese Yen)
08-02-10 3.30 190,000,000 2,102,047
- -------------------------------------------------------------------------------------
TURKEY (0.3%)
Republic of Turkey
04-03-18 6.75 204,000 217,770
06-05-20 7.00 235,000 252,331
03-17-36 6.88 540,000 544,050
Republic of Turkey
Sr Unsecured
07-14-17 7.50 350,000 390,688
---------------
Total 1,404,839
- -------------------------------------------------------------------------------------
UNITED KINGDOM (3.3%)
BT Group
Sr Unsecured
12-15-10 9.13 550,000 592,290
SABMiller
01-15-14 5.70 1,275,000(d) 1,378,881
United Kingdom Treasury
(British Pound)
03-07-19 4.50 2,600,000 4,560,393
03-07-25 5.00 660,000 1,199,891
12-07-27 4.25 1,750,000 2,932,936
03-07-36 4.25 1,480,000 2,461,238
12-07-38 4.75 1,690,000 3,057,859
12-07-49 4.25 485,000 818,414
---------------
Total 17,001,902
- -------------------------------------------------------------------------------------
UNITED STATES (35.6%)
Allied Waste North America
04-15-13 7.88 405,000 417,656
AmeriCredit Automobile Receivables Trust
Series 2007-DF Cl A3A (FSA)
07-06-12 5.49 $532,586(l) 538,981
Anadarko Petroleum
Sr Unsecured
09-15-16 5.95 970,000 1,040,322
Anheuser-Busch InBev Worldwide
01-15-14 7.20 1,370,000(d) 1,543,373
Ashland
06-01-17 9.13 180,000(d,n) 194,400
AT&T
Sr Unsecured
02-15-39 6.55 1,605,000 1,736,172
Ball
09-01-16 7.13 30,000(n) 30,675
09-01-19 7.38 35,000(n) 35,788
Bank of America
(British Pound) Sr Unsecured
02-02-11 0.97 950,000(i) 1,523,434
Bank of America
Sr Unsecured
05-01-18 5.65 2,190,000 2,215,890
Bear Stearns Commercial Mtge Securities
Series 2003-T10 Cl A1
03-13-40 4.00 235,061(f) 237,337
BMW Vehicle Lease Trust
Series 2009-1 Cl A2
04-15-11 2.04 1,500,000 1,511,110
CC Holdings GS V LLC/Crown Castle GS III
Sr Secured
05-01-17 7.75 820,000(d) 860,999
CenterPoint Energy Houston Electric LLC
Series U
03-01-14 7.00 605,000 689,347
CenterPoint Energy Resources
Sr Unsecured
02-15-11 7.75 1,230,000 1,312,412
Charter Communications Operating LLC/Capital
Secured
04-30-12 10.00 430,000(d) 436,450
Chesapeake Energy
01-15-16 6.63 250,000 240,313
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Citibank Credit Card Issuance Trust
(European Monetary Unit) Series 2001-A4 Cl A4
04-10-13 5.38% 1,160,000 $1,750,898
Citibank Omni Master Trust
Series 2007-A9A Cl A9
12-23-13 1.35 1,825,000(d,i) 1,824,185
CitiFinancial Auto Issuance Trust
Series 2009-1 Cl A2
11-15-12 1.83 5,050,000(d) 5,038,162
Citigroup Commercial Mtge Trust
Series 2006-C5 Cl A4
10-15-49 5.43 1,700,000(f) 1,581,548
Citigroup
(European Monetary Unit) Sr Unsecured
08-02-19 5.00 595,000 831,343
Citigroup
Sr Unsecured
05-15-18 6.13 170,000 172,049
Cleveland Electric Illuminating
1st Mtge
11-15-18 8.88 750,000 944,012
Colorado Interstate Gas
Sr Unsecured
11-15-15 6.80 3,170,000 3,509,168
Comcast
07-01-39 6.55 1,340,000(n) 1,396,407
Commercial Mtge Pass-Through Ctfs
Series 2006-CN2A Cl BFL
02-05-19 0.56 400,000(d,f,i) 292,100
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2006-22R Cl 1A2
05-25-36 6.00 1,028,997(f) 778,679
CPS Auto Trust
Series 2007-A Cl A3 (MBIA)
09-15-11 5.04 415,562(d,l) 419,263
CS First Boston Mtge Securities
Series 2004-C2 Cl A1
05-15-36 3.82 598,033(f) 595,440
Cricket Communications
Sr Secured
05-15-16 7.75 317,000(d,n) 316,208
CSC Holdings
Sr Unsecured
04-15-14 8.50 $285,000(d,n) 301,744
02-15-19 8.63 100,000(d,n) 107,000
DaVita
03-15-13 6.63 365,000 359,525
Del Monte
Sr Sub Nts
10-15-19 7.50 370,000(d) 375,550
Denbury Resources
03-01-16 9.75 310,000 332,475
DISH DBS
10-01-14 6.63 365,000 355,875
Dow Chemical
(European Monetary Unit) Sr Unsecured
05-27-11 4.63 520,000 777,240
Dow Chemical
Sr Unsecured
05-15-19 8.55 650,000 742,055
DTE Energy
Sr Unsecured
05-15-14 7.63 1,540,000 1,699,490
Duke Energy Indiana
1st Mtge
08-15-38 6.35 940,000 1,087,260
Dunkin Securitization
Series 2006-1 Cl A2 (AMBAC)
06-20-31 5.78 1,600,000(d,l) 1,491,440
El Paso
Sr Unsecured
12-12-13 12.00 555,000 635,475
Erac USA Finance
10-15-17 6.38 1,745,000(d) 1,797,582
Exelon
Sr Unsecured
06-15-10 4.45 1,000,000 1,019,496
Federal Home Loan Mtge Corp #A11799
08-01-33 6.50 133,697(f) 144,458
Federal Home Loan Mtge Corp #A15881
11-01-33 5.00 1,016,178(f) 1,063,232
Federal Home Loan Mtge Corp #E91486
09-01-17 6.50 107,013(f) 115,247
Federal Home Loan Mtge Corp #E99684
10-01-18 5.00 424,877(f) 455,917
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Federal Home Loan Mtge Corp #G01960
12-01-35 5.00% $4,228,141(f) $4,392,550
Federal Natl Mtge Assn
10-15-14 4.63 3,880,000(n) 4,242,958
11-15-30 6.63 2,300,000(n) 2,886,824
Federal Natl Mtge Assn #545874
08-01-32 6.50 161,584(f) 176,651
Federal Natl Mtge Assn #555528
04-01-33 6.00 722,411(f) 775,502
Federal Natl Mtge Assn #555734
07-01-23 5.00 684,533(f) 719,068
Federal Natl Mtge Assn #555740
08-01-18 4.50 921,543(f) 973,524
Federal Natl Mtge Assn #555851
01-01-33 6.50 851,159(f) 922,856
Federal Natl Mtge Assn #575487
04-01-17 6.50 393,769(f) 426,957
Federal Natl Mtge Assn #621581
12-01-31 6.50 208,678(f) 228,381
Federal Natl Mtge Assn #633966
03-01-17 6.00 87,679(f) 94,693
Federal Natl Mtge Assn #634749
03-01-17 5.50 442,992(f) 477,222
Federal Natl Mtge Assn #640996
05-01-32 7.50 388,234(f) 438,514
Federal Natl Mtge Assn #643381
06-01-17 6.00 191,807(f) 207,149
Federal Natl Mtge Assn #645053
05-01-32 7.00 633,059(f) 697,997
Federal Natl Mtge Assn #646147
06-01-32 7.00 290,234(f) 324,785
Federal Natl Mtge Assn #652284
08-01-32 6.50 311,276(f) 337,301
Federal Natl Mtge Assn #653145
07-01-17 6.00 152,286(f) 165,092
Federal Natl Mtge Assn #653730
09-01-32 6.50 142,431(f) 155,644
Federal Natl Mtge Assn #655589
08-01-32 6.50 1,123,099(f) 1,231,751
Federal Natl Mtge Assn #666424
08-01-32 6.50 191,881(f) 207,924
Federal Natl Mtge Assn #670461
11-01-32 7.50 144,624(f) 163,354
Federal Natl Mtge Assn #677333
01-01-33 6.00 $3,200,710(f) 3,435,935
Federal Natl Mtge Assn #688034
03-01-33 5.50 357,096(f) 381,698
Federal Natl Mtge Assn #688691
03-01-33 5.50 536,321(f) 567,419
Federal Natl Mtge Assn #711503
06-01-33 5.50 727,778(f) 773,735
Federal Natl Mtge Assn #720576
06-01-33 5.00 1,810,181(f) 1,883,963
Federal Natl Mtge Assn #735029
09-01-13 5.32 612,767(f) 655,856
Federal Natl Mtge Assn #741850
09-01-33 5.50 1,500,860(f) 1,587,888
Federal Natl Mtge Assn #753507
12-01-18 5.00 1,605,806(f) 1,719,684
Federal Natl Mtge Assn #755498
11-01-18 5.50 708,371(f) 762,135
Federal Natl Mtge Assn #756788
11-01-33 6.50 213,117(f) 230,696
Federal Natl Mtge Assn #928019
01-01-37 5.50 1,708,122(f,k) 1,801,296
FirstEnergy
Sr Unsecured Series B
11-15-11 6.45 38,000 41,064
Forest Oil
Sr Nts
02-15-14 8.50 320,000(d,n) 324,800
Frontier Communications
Sr Unsecured
05-01-14 8.25 400,000 410,000
10-01-18 8.13 245,000 245,919
General Electric Capital Assurance
Series 2003-1 Cl A4
05-12-35 5.25 438,601(d,f) 446,374
General Electric Capital
(New Zealand Dollar) Sr Unsecured
02-04-10 6.63 3,450,000 2,488,751
General Electric Capital
Sr Unsecured
01-10-39 6.88 615,000 662,736
Georgia-Pacific LLC
05-01-16 8.25 230,000(d) 243,800
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Goldman Sachs Group
(European Monetary Unit) Sr Unsecured
05-02-18 6.38% 350,000 $568,431
Goldman Sachs Group
Sr Unsecured
02-15-19 7.50 530,000 619,892
Govt Natl Mtge Assn #604708
10-15-33 5.50 785,869(f) 835,096
Govt Natl Mtge Assn
Collateralized Mtge Obligation
Interest Only
Series 2002-80 Cl CI
01-20-32 45.73 247,846(e,f) 6,300
Greenwich Capital Commercial Funding
Series 2003-C1 Cl A3
07-05-35 3.86 725,000(f) 733,635
Greenwich Capital Commercial Funding
Series 2004-GG1 Cl A5
06-10-36 4.88 500,000(f) 502,502
GS Mtge Securities II
Series 2007-EOP Cl J
03-06-20 1.09 1,250,000(d,f,i) 1,010,568
GS Mtge Securities II
Series 2007-GG10 Cl F
08-10-45 6.00 775,000(f,n) 91,758
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2004-1 Cl A4
04-19-34 4.78 1,935,858(f,i) 1,789,031
HCA
Secured
02-15-17 9.88 325,000(d,n) 349,375
Hertz Vehicle Financing LLC
Series 2009-2A Cl A1
03-25-14 4.26 1,350,000(d) 1,354,878
HJ Heinz Finance
08-01-39 7.13 470,000(d) 540,701
HSBC Finance
(British Pound) Sr Unsecured
01-22-10 6.13 210,000 347,510
Indiana Michigan Power
Sr Unsecured
03-15-19 7.00 1,915,000 2,168,735
03-15-37 6.05 85,000 86,877
INVISTA
Sr Unsecured
05-01-12 9.25 $465,000(d) 471,975
Jarden
05-01-16 8.00 300,000 309,000
JPMorgan Chase & Co
Sr Unsecured
01-15-18 6.00 720,000 770,873
JPMorgan Chase Commercial Mtge Securities
Series 2003-LN1 Cl A1
10-15-37 4.13 196,284(f) 200,096
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A1
03-12-39 3.97 137,450(f) 139,617
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A2
03-12-39 4.77 1,200,000(f) 1,178,204
JPMorgan Chase Commercial Mtge Securities
Series 2007-CB20 Cl E
02-12-51 6.20 675,000(d,f) 184,178
K Hovnanian Enterprises
Sr Secured
10-15-16 10.63 470,000(d) 467,650
Kraft Foods
Sr Unsecured
02-11-13 6.00 150,000 161,612
02-01-18 6.13 155,000 164,284
01-26-39 6.88 450,000 485,957
L-3 Communications
06-15-12 7.63 545,000 551,927
07-15-13 6.13 320,000 322,400
Lamar Media
04-01-14 9.75 255,000 280,500
08-15-15 6.63 270,000 257,850
LB-UBS Commercial Mtge Trust
Series 2004-C2 Cl A3
03-15-29 3.97 750,000(f) 728,965
LB-UBS Commercial Mtge Trust
Series 2006-C4 Cl AAB
06-15-32 5.86 750,000(f) 772,945
Lehman Brothers Holdings
Sr Unsecured
05-02-18 6.88 1,320,000(b,o) 212,850
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Liberty Media LLC
Sr Unsecured
05-15-13 5.70% $202,000 $189,880
Mellon Funding
(British Pound)
11-08-11 6.38 370,000 652,167
Merrill Lynch & Co
(British Pound) Sr Unsub
09-24-10 5.13 221,000 366,682
MGM MIRAGE
Sr Secured
11-15-17 11.13 290,000(d) 318,275
MGM MIRAGE
Sr Unsecured
03-01-18 11.38 470,000(d,n) 423,000
Morgan Stanley Capital I
Series 2003-T11 Cl A2
06-13-41 4.34 1,991(f) 1,990
Morgan Stanley Capital I
Series 2004-HQ4 Cl A5
04-14-40 4.59 750,000(f) 723,457
Morgan Stanley Capital I
Series 2006-T23 Cl AAB
08-12-41 5.80 575,000(f) 609,507
Morgan Stanley
(British Pound) Sr Unsecured
04-11-11 7.50 470,000 811,312
Morgan Stanley
(European Monetary Unit) Sr Unsecured
10-02-17 5.50 625,000 933,612
Morgan Stanley
Sr Unsecured
04-01-18 6.63 205,000 219,727
Nalco
Sr Nts
05-15-17 8.25 220,000(d) 232,650
Natl Collegiate Student Loan Trust
Collateralized Mtge Obligation
Interest Only
Series 2006-3 Cl AIO
01-25-12 5.88 2,400,000(e) 313,614
Nevada Power
Series L
01-15-15 5.88 1,000,000 1,085,230
NewPage
Sr Secured
12-31-14 11.38 $370,000(d) 369,075
News America
11-15-37 6.65 1,080,000 1,127,962
Nextel Communications
Series D
08-01-15 7.38 595,000 527,319
Nielsen Finance LLC
08-01-14 10.00 200,000(n) 206,000
NiSource Finance
09-15-17 5.25 250,000 240,260
01-15-19 6.80 700,000 738,955
Northern States Power
1st Mtge Series B
08-28-12 8.00 515,000 597,604
Northwest Pipeline
Sr Unsecured
04-15-17 5.95 1,085,000 1,155,757
NRG Energy
02-01-16 7.38 770,000 765,188
Omnicare
12-15-13 6.75 405,000 392,850
Petrohawk Energy
08-01-14 10.50 480,000 520,800
PPL Electric Utilities
1st Mtge
11-30-13 7.13 2,850,000 3,285,969
Quicksilver Resources
08-01-15 8.25 245,000(n) 239,181
Qwest
Sr Unsecured
10-01-14 7.50 175,000 176,750
Range Resources
05-15-19 8.00 515,000 534,313
Regal Cinemas
07-15-19 8.63 200,000(d,n) 207,000
Renaissance Home Equity Loan Trust
Series 2005-4 Cl A3
02-25-36 5.57 435,469 419,253
Reynolds Group DL Escrow/LLC
Sr Secured
10-15-16 7.75 460,000(d,g) 453,997
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 25
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
RR Donnelley & Sons
Sr Unsecured
01-15-17 6.13% $2,190,000 $2,146,767
SandRidge Energy
06-01-18 8.00 370,000(d) 367,225
Santander Drive Auto Receivables Trust
Series 2007-1 Cl A4 (FGIC)
09-15-14 0.30 1,364,785(i,l) 1,333,673
SBA Telecommunications
08-15-16 8.00 85,000(d) 87,975
08-15-19 8.25 85,000(d,n) 88,825
Select Medical
02-01-15 7.63 490,000 461,825
Sierra Pacific Power
Series M
05-15-16 6.00 2,935,000 3,148,744
Southern California Gas
1st Mtge
03-15-14 5.50 845,000 931,172
Southern Natural Gas
Sr Unsecured
04-01-17 5.90 2,131,000(d) 2,176,714
Speedway Motorsports
Sr Unsecured
06-01-16 8.75 435,000(d) 453,488
Sprint Nextel
Sr Unsecured
08-15-17 8.38 150,000 144,750
Structured Asset Securities
Collateralized Mtge Obligation
Series 2003-33H Cl 1A1
10-25-33 5.50 1,176,228(f) 1,194,239
Tampa Electric
Sr Unsecured
05-15-18 6.10 620,000 671,714
Toledo Edison
Sr Secured
05-15-37 6.15 450,000 456,834
Toyota Motor Credit
(European Monetary Unit)
02-12-10 4.00 150,000 222,143
Transcontinental Gas Pipe Line LLC
Sr Unsecured
04-15-16 6.40 3,590,000 3,955,925
TransDigm Group
07-15-14 7.75 $200,000(d) 202,000
U.S. Treasury
06-30-11 1.13 7,000,000(n) 7,051,135
09-30-11 1.00 670,000(n) 671,884
07-15-12 1.50 2,130,000 2,143,645
04-30-14 1.88 2,400,000(n) 2,374,313
05-31-14 2.25 510,000 512,191
06-30-14 2.63 1,190,000 1,212,778
07-31-14 2.63 935,000(n) 951,801
09-30-14 2.38 1,880,000 1,887,564
02-15-15 4.00 2,115,000(n) 2,283,208
06-30-16 3.25 800,000 818,250
08-15-19 3.63 885,000(n) 902,009
08-15-23 6.25 8,300,000 10,293,295
05-15-39 4.25 1,650,000 1,653,868
US Cellular
Sr Unsecured
12-15-33 6.70 165,000 159,518
Verizon New York
Sr Unsecured Series A
04-01-12 6.88 2,380,000 2,597,869
Verizon New York
Sr Unsecured Series B
04-01-32 7.38 855,000 922,849
Volkswagen Auto Lease Trust
Series 2009-A Cl A3
04-16-12 3.41 725,000 746,580
Wachovia Bank Commercial Mtge Trust
Series 2005-C20 Cl A5
07-15-42 5.09 800,000(f) 822,841
Wachovia Bank Commercial Mtge Trust
Series 2006-C24 Cl APB
03-15-45 5.58 500,000(f) 504,203
Wachovia Bank Commercial Mtge Trust
Series 2006-C27 Cl APB
07-15-45 5.73 900,000(f) 910,395
Wells Fargo & Co
(British Pound) Sr Unsecured
11-30-10 4.75 1,300,000 2,179,983
Wells Fargo & Co
(European Monetary Unit) Sr Unsecured
11-03-16 4.13 330,000 482,226
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
26 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Wells Fargo & Co
Sr Unsecured
12-11-17 5.63% $720,000 $748,873
Windstream
08-01-16 8.63 315,000 323,663
03-15-19 7.00 40,000(n) 37,950
---------------
Total 184,528,040
- -------------------------------------------------------------------------------------
URUGUAY (0.2%)
Republic of Uruguay
11-18-22 8.00 450,000(n) 508,500
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 275,000(n) 296,313
---------------
Total 804,813
- -------------------------------------------------------------------------------------
VENEZUELA (0.4%)
Petroleos de Venezuela
04-12-17 5.25 1,190,000 697,340
Republic of Venezuela
02-26-16 5.75 620,000 416,950
Republic of Venezuela
Sr Unsecured
10-08-14 8.50 160,000 136,400
05-07-23 9.00 931,000(n) 667,899
---------------
Total 1,918,589
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $464,995,621) $497,249,265
- -------------------------------------------------------------------------------------
<Caption>
SENIOR LOANS (0.1%)(j)
COUPON PRINCIPAL
BORROWER RATE AMOUNT VALUE(a)
UNITED STATES
Charter Communications Operating LLC
Term Loan
03-06-14 6.25% $104,419 $94,923
Fairpoint Communications
Tranche B Term Loan
03-31-15 5.00 558,658(b) 448,636
- -------------------------------------------------------------------------------------
TOTAL SENIOR LOANS
(Cost: $405,806) $543,559
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (2.4%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 12,266,930(p) $12,266,930
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $12,266,930) $12,266,930
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (5.3%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 27,373,804 $27,373,804
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $27,373,804) $27,373,804
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $505,042,161)(q) $537,433,558
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 27
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT OCT. 31, 2009
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- -------------------------------------------------------------------------------------
Euro-Bobl, 5-year 58 $9,867,815 Dec. 2009 $30,504
Euro-Bund, 10-year 23 4,125,643 Dec. 2009 8,934
Japanese Govt Bond, 10-
year 6 9,198,313 Dec. 2009 (66,776)
U.S. Treasury Note, 5-
year (27) (3,144,235) Jan. 2010 (21,134)
- -------------------------------------------------------------------------------------
Total $(48,472)
- -------------------------------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2009
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------
Nov. 16, 2009 229,621 400,000 $-- $(3,077)
U.S. Dollar Brazilian Real
- -----------------------------------------------------------------------------------------------
Nov. 17, 2009 89,000 131,666 702 --
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 19, 2009 2,935,869 3,025,000 -- (142,616)
U.S. Dollar Canadian Dollar
- -----------------------------------------------------------------------------------------------
Dec. 3, 2009 1,880,000 1,734,958 47,958 --
Australian Dollar U.S. Dollar
- -----------------------------------------------------------------------------------------------
Dec. 3, 2009 2,300,000 1,736,270 89,565 --
New Zealand Dollar U.S. Dollar
- -----------------------------------------------------------------------------------------------
Dec. 4, 2009 17,394,372 1,591,585,000 288,716 --
U.S. Dollar Japanese Yen
- -----------------------------------------------------------------------------------------------
Dec. 8, 2009 1,050,000 1,742,628 19,637 --
British Pound U.S. Dollar
- -----------------------------------------------------------------------------------------------
Dec. 8, 2009 1,742,628 1,175,154 -- (13,431)
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------------
Dec. 8, 2009 2,583,598 34,150,000 -- (8,886)
U.S. Dollar Mexican Peso
- -----------------------------------------------------------------------------------------------
Dec. 10, 2009 1,394,451 1,950,000 -- (3,584)
U.S. Dollar Singapore Dollar
- -----------------------------------------------------------------------------------------------
Total $446,578 $(171,594)
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
28 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 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 Oct. 31,
2009, the value of these securities amounted to $39,969,109 or 7.7% 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 security 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 Oct. 31, 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) At Oct. 31, 2009, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$453,997. See Note 2 to the financial statements.
(h) 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.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
2009.
(j) 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 29
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(k) At Oct. 31, 2009, investments in securities included securities valued at
$322,792 that were partially pledged as collateral to cover initial margin
deposits on open interest rate futures contracts.
(l) The following abbreviations are used in the portfolio security descriptions
to identify the insurer of the issue:
<Table>
AMBAC -- Ambac Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
MBIA -- MBIA Insurance Corporation
</Table>
(m) 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.
(n) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(o) This position is in bankruptcy.
(p) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(q) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $512,644,015 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $30,302,200
Unrealized depreciation (5,512,657)
-----------------------------------------------------------
Net unrealized appreciation $24,789,543
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
30 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 31
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
inputs and/or significant assumptions by the Fund Administrator. Inputs used in
a valuation model may include, but are not limited to, financial statement
analysis, discount rates and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
----------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Bonds
Foreign Government
Obligations &
Agencies $-- $268,239,653 $-- $268,239,653
U.S. Government
Obligations &
Agencies 32,755,940 7,129,783 -- 39,885,723
Asset-Backed Securities -- 16,742,037 2,060,678 18,802,715
Commercial Mortgage-
Backed Securities -- 12,923,516 -- 12,923,516
Residential Mortgage-
Backed Securities -- 38,554,919 -- 38,554,919
Corporate Debt
Securities -- 118,842,739 -- 118,842,739
- ---------------------------------------------------------------------------------------------
Total Bonds 32,755,940 462,432,647 2,060,678 497,249,265
- ---------------------------------------------------------------------------------------------
Other
Senior Loans -- 543,559 -- 543,559
Affiliated Money Market
Fund(a) 12,266,930 -- -- 12,266,930
Investments of Cash
Collateral Received
for Securities on
Loan 27,373,804 -- -- 27,373,804
- ---------------------------------------------------------------------------------------------
Total Other 39,640,734 543,559 -- 40,184,293
- ---------------------------------------------------------------------------------------------
Investments in Securities 72,396,674 462,976,206 2,060,678 537,433,558
Other Financial
Instruments(b) (48,472) 274,984 -- 226,512
- ---------------------------------------------------------------------------------------------
Total $72,348,202 $463,251,190 $2,060,678 $537,660,070
- ---------------------------------------------------------------------------------------------
</Table>
(a) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
(b) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
RESIDENTIAL OTHER
ASSET-BACKED MORTGAGE-BACKED FINANCIAL
SECURITIES SECURITIES INSTRUMENTS TOTAL
- ----------------------------------------------------------------------------------------
Balance as of Oct. 31,
2008 $2,673,757 $1,962,556 $28,672 $4,664,985
Accrued
discounts/premiums 698 (22,473) -- (21,775)
Realized gain (loss) 7,748 (63,026) * (55,278)
Change in unrealized
appreciation
(depreciation)** 508,423 130,832 (28,672) 610,583
Net purchases (sales) (1,129,948) (135,844) -- (1,265,792)
Transfers in and/or
out of Level 3 -- (1,872,045) -- (1,872,045)
- ----------------------------------------------------------------------------------------
Balance as of Oct. 31,
2009 $2,060,678 $-- $-- $2,060,678
- ----------------------------------------------------------------------------------------
</Table>
* The realized gain (loss) earned during the period from Nov. 1, 2008 to Oct.
31, 2009 for Other Financial Instruments was $159,716.
** Change in unrealized appreciation (depreciation) relating to securities held
at Oct. 31, 2009 was $449,829.
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 ANNUAL REPORT 33
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $465,401,427) $497,792,824
Affiliated money market fund (identified cost $12,266,930) 12,266,930
Investments of cash collateral received for securities on loan
(identified cost $27,373,804) 27,373,804
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $505,042,161) 537,433,558
Cash 23,043
Foreign currency holdings (identified cost $1,226,392) 1,209,646
Capital shares receivable 670,414
Dividends and accrued interest receivable 6,820,579
Receivable for investment securities sold 1,217,507
Variation margin receivable on futures contracts 39,518
Unrealized appreciation on forward foreign currency contracts 446,578
- -------------------------------------------------------------------------------
Total assets 547,860,843
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 576,437
Payable for investment securities purchased 1,132,258
Payable upon return of securities loaned 27,373,804
Unrealized depreciation on forward foreign currency contracts 171,594
Accrued investment management services fees 10,023
Accrued distribution fees 3,114
Accrued transfer agency fees 2,209
Accrued administrative services fees 1,133
Accrued plan administration services fees 1
Other accrued expenses 119,887
- -------------------------------------------------------------------------------
Total liabilities 29,390,460
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $518,470,383
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
34 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REPRESENTED BY
Capital stock -- $.01 par value $ 729,980
Additional paid-in capital 504,021,025
Excess of distributions over net investment income (1,411,247)
Accumulated net realized gain (loss) (17,619,182)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 32,749,807
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $518,470,383
- -------------------------------------------------------------------------------
*Including securities on loan, at value $ 37,354,966
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $252,772,959 35,605,039 $7.10(1)
Class B $ 29,976,819 4,198,213 $7.14
Class C $ 5,556,941 784,634 $7.08
Class I $169,716,515 23,886,385 $7.11
Class R4 $ 168,713 23,740 $7.11
Class W $ 60,278,436 8,500,017 $7.09
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $7.45. 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 ANNUAL REPORT 35
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 19,934,295
Income distributions from affiliated money market fund 28,837
Income from securities lending -- net 47,978
Less foreign taxes withheld (20,187)
- -------------------------------------------------------------------------------
Total income 19,990,923
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 3,551,274
Distribution fees
Class A 593,225
Class B 367,588
Class C 44,351
Class W 147,100
Transfer agency fees
Class A 605,574
Class B 99,898
Class C 11,587
Class R4 66
Class W 117,680
Administrative services fees 401,109
Plan administration services fees -- Class R4 332
Compensation of board members 15,416
Custodian fees 113,625
Printing and postage 84,000
Registration fees 55,597
Professional fees 47,065
Other 48,391
- -------------------------------------------------------------------------------
Total expenses 6,303,878
Expenses waived/reimbursed by the Investment Manager and its
affiliates (397,927)
Earnings and bank fee credits on cash balances (3)
- -------------------------------------------------------------------------------
Total net expenses 5,905,948
- -------------------------------------------------------------------------------
Investment income (loss) -- net 14,084,975
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (11,739,111)
Foreign currency transactions 4,219,323
Futures contracts 590,290
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (6,929,498)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 96,312,630
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 89,383,132
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $103,468,107
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 14,084,975 $ 24,285,681
Net realized gain (loss) on investments (6,929,498) 9,721,813
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 96,312,630 (100,650,487)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 103,468,107 (66,642,993)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (14,451,166) (8,771,172)
Class B (2,363,547) (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 (34,499,468) (22,448,956)
- -----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 37
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 34,656,103 $ 96,488,332
Class B shares 4,760,950 26,745,270
Class C shares 1,892,530 4,044,562
Class I shares 44,757,560 171,903,867
Class R4 shares 42,421 95,770
Class W shares 47,318,890 259,629,317
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
Conversions from Class B to Class A
Class A shares 6,603,705 7,205,956
Class B shares (6,603,705) (7,205,956)
Payments for redemptions
Class A shares (83,721,233) (90,849,153)
Class B shares (17,508,600) (19,987,187)
Class C shares (1,461,886) (1,808,860)
Class I shares (115,655,803) (106,857,080)
Class R4 shares (18,796) (79,105)
Class W shares (135,568,998) (155,446,712)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (187,014,159) 205,711,572
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (118,045,520) 116,619,623
Net assets at beginning of year 636,515,903 519,896,280
- -----------------------------------------------------------------------------------------------
Net assets at end of year $ 518,470,383 $ 636,515,903
- -----------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (1,411,247) $ 18,465,762
- -----------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
38 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A ----------------------------------------------------
PER SHARE DATA 2009 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) .17 .22 .20 .19 .16
Net gains (losses) (both realized and
unrealized) 1.15 (.73) .35 .14 (.23)
- -------------------------------------------------------------------------------------------------------
Total from investment operations 1.32 (.51) .55 .33 (.07)
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.22) (.26) (.32) (.36)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.10 $6.16 $6.89 $6.60 $6.59
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN 22.12% (7.66%) 8.63% 5.17% (1.18%)
- -------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement 1.36% 1.32% 1.37% 1.39% 1.37%
- -------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) 1.25% 1.25% 1.25% 1.25% 1.35%
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.72% 3.26% 3.08% 2.77% 2.42%
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $253 $249 $259 $276 $353
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77% 68% 73%
- -------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 39
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B ----------------------------------------------------
PER SHARE DATA 2009 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) .13 .17 .15 .13 .10
Net gains (losses) (both realized and
unrealized) 1.15 (.73) .35 .16 (.23)
- -------------------------------------------------------------------------------------------------------
Total from investment operations 1.28 (.56) .50 .29 (.13)
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.17) (.21) (.21) (.30)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.14 $6.23 $6.96 $6.67 $6.59
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.14% (8.28%) 7.68% 4.45% (1.98%)
- -------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement 2.13% 2.09% 2.13% 2.16% 2.13%
- -------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) 2.01% 2.01% 2.01% 2.02% 2.12%
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.00% 2.49% 2.30% 1.98% 1.65%
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $30 $42 $47 $63 $111
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77% 68% 73%
- -------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
40 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C ----------------------------------------------------
PER SHARE DATA 2009 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) .13 .17 .15 .14 .11
Net gains (losses) (both realized and
unrealized) 1.14 (.73) .35 .13 (.22)
- -------------------------------------------------------------------------------------------------------
Total from investment operations 1.27 (.56) .50 .27 (.11)
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.17) (.21) (.22) (.31)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.08 $6.18 $6.91 $6.62 $6.57
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.15% (8.27%) 7.75% 4.25% (1.83%)
- -------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement 2.12% 2.08% 2.13% 2.16% 2.14%
- -------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) 2.01% 2.01% 2.01% 2.02% 2.12%
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.94% 2.51% 2.32% 2.00% 1.65%
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $6 $4 $3 $3 $4
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77% 68% 73%
- -------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 41
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I ---------------------------------------------------
PER SHARE DATA 2009 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) .20 .25 .23 .21 .19
Net gains (losses) (both realized and
unrealized) 1.15 (.73) .34 .14 (.22)
- ------------------------------------------------------------------------------------------------------
Total from investment operations 1.35 (.48) .57 .35 (.03)
- ------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.25) (.29) (.37) (.39)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.11 $6.14 $6.87 $6.59 $6.61
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN 22.83% (7.30%) 8.91% 5.52% (.56%)
- ------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement .86% .85% .87% .88% .91%
- ------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) .82% .82% .87% .88% .91%
- ------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.16% 3.68% 3.47% 3.18% 2.87%
- ------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $170 $206 $157 $145 $89
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77% 68% 73%
- ------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
42 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 ----------------------------------------------------
PER SHARE DATA 2009 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) .18 .25 .22 .20 .16
Net gains (losses) (both realized and
unrealized) 1.15 (.72) .35 .13 (.22)
- -------------------------------------------------------------------------------------------------------
Total from investment operations 1.33 (.47) .57 .33 (.06)
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.38) (.26) (.28) (.34) (.37)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.11 $6.16 $6.89 $6.60 $6.61
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN 22.42% (7.19%) 8.84% 5.29% (1.00%)
- -------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement 1.16% 1.14% 1.17% 1.20% 1.20%
- -------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) 1.06% .87% 1.08% 1.08% 1.18%
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.86% 3.64% 3.27% 2.95% 2.60%
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77% 68% 73%
- -------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 43
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS W -------------------------------
PER SHARE DATA 2009 2008 2007(c)
Net asset value, beginning of period $6.15 $6.88 $6.79
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .17 .22 .20
Net gains (losses) (both realized and
unrealized) 1.14 (.73) .17
- ----------------------------------------------------------------------------------
Total from investment operations 1.31 (.51) .37
- ----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.37) (.22) (.28)
- ----------------------------------------------------------------------------------
Net asset value, end of period $7.09 $6.15 $6.88
- ----------------------------------------------------------------------------------
TOTAL RETURN 22.04% (7.62%) 5.71%
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(a)
Gross expenses prior to expense
waiver/reimbursement 1.30% 1.30% 1.35%(d)
- ----------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(b) 1.27% 1.27% 1.26%(d)
- ----------------------------------------------------------------------------------
Net investment income (loss) 2.70% 3.27% 3.34%(d)
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $60 $135 $54
- ----------------------------------------------------------------------------------
Portfolio turnover rate 69% 75% 77%
- ----------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
reported expense ratios.
(b) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(c) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(d) Annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
44 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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 Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares are offered without a front-end sales charge or
CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares and approximately 33% 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM )(Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before
- --------------------------------------------------------------------------------
46 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
the close of the NYSE, including significant movements in the U.S. market after
foreign exchanges have closed. Accordingly, in those situations, Ameriprise
Financial, Inc. (Ameriprise Financial), parent company of the Investment
Manager, as administrator to the Fund, will fair value foreign securities
pursuant to procedures adopted by the Board, including utilizing a third party
pricing service to determine these fair values. These procedures take into
account multiple factors, including movements in the U.S. securities markets, to
determine a good faith estimate that reasonably reflects the current market
conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
multiple denominations, primarily European monetary units.
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 Oct. 31, 2009, the Fund has outstanding when-issued securities
of $453,997.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 47
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 (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
- --------------------------------------------------------------------------------
48 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities.
FUTURES TRANSACTIONS
The Fund may buy and sell financial futures contracts traded on any U.S. or
foreign exchange to produce incremental earnings, hedge existing positions or
protect against market changes in the value of equities, interest rates or
foreign currencies. The Fund may also buy and write put and call options on
these futures contracts. A futures contract represents a commitment for the
future purchase or sale of an asset at a specified price on a specified date.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Upon entering into futures contracts, the Fund bears the risk of interest rates,
exchange rates or securities prices moving unexpectedly, in which case, the Fund
may not achieve the anticipated benefits of the futures contracts and may
realize a loss. Additional risks include counterparty credit risk, the
possibility of an illiquid market, and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------- -------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- -------------------------------------------------------------------------------------------
Foreign exchange Unrealized Unrealized
contracts appreciation on depreciation on
forward foreign forward foreign
currency contracts $446,578 currency contracts $171,594
- -------------------------------------------------------------------------------------------
Interest rate Net Net
contracts assets -- unrealiz- assets -- unrealiz-
ed appreciation N/A ed depreciation 48,472*
- -------------------------------------------------------------------------------------------
TOTAL $446,578 $220,066
- -------------------------------------------------------------------------------------------
</Table>
* Includes cumulative appreciation (depreciation) of futures contracts as
reported in the Futures Contracts Outstanding table following the Portfolio
of Investments. Only the current day's variation margin is reported in
receivables or payables in the Statement of Assets and Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE FORWARD CURRENCY
CATEGORY CONTRACTS FUTURES TOTAL
- ------------------------------------------------------------------------------
Foreign exchange contracts $6,108,962 $ -- $6,108,962
- ------------------------------------------------------------------------------
Interest rate contracts -- 590,290 $ 590,290
- ------------------------------------------------------------------------------
Total $6,108,962 $590,290 $6,699,252
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
50 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- -------------------------------------------------------------------------------
RISK EXPOSURE FORWARD CURRENCY
CATEGORY CONTRACTS FUTURES TOTAL
- -------------------------------------------------------------------------------
Foreign exchange contracts $(1,045,299) $ -- $(1,045,299)
- -------------------------------------------------------------------------------
Interest rate contracts -- (526,691) $ (526,691)
- -------------------------------------------------------------------------------
TOTAL $(1,045,299) $(526,691) $(1,571,990)
- -------------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
The gross notional amount of contracts outstanding was $31.6 million at Oct. 31,
2009. The monthly average gross notional amount for these contracts was $41.1
million for the year ended Oct. 31, 2009. The fair value of these contracts on
Oct. 31, 2009 is set forth in the table above.
FUTURES
The gross notional amount of long and short contracts outstanding was $23.2
million and $3.1 million, respectively, at Oct. 31, 2009. The monthly average
gross notional contract amounts for long and short contracts was $35.1 million
and $13.8 million, respectively, for the year ended Oct. 31, 2009. The fair
value of such contracts on Oct. 31, 2009 is set forth in the table above.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.72% to 0.52% as the Fund's net assets increase. The
management fee for the year ended Oct. 31, 2009 was 0.71% of the Fund's average
daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
administrative services to the Fund and the Board. For the year ended Oct. 31,
2009, other expenses paid to this company were $4,332.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $20.50 for Class A, $21.50 for Class B and $21.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R4 shares and an annual asset-based fee at a rate of 0.20%
of the Fund's average daily net assets attributable to Class W shares. The
Transfer Agent charges an annual fee of $5 per inactive account, charged on a
pro rata basis for the 12 month period from the date the account becomes
inactive. These fees are included in the transfer agency fees in the Statement
of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the
Fund's average daily net assets attributable to Class B and Class C shares. For
Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for
distribution expenses.
- --------------------------------------------------------------------------------
52 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $1,158,000 and $52,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $194,251 for Class A, $23,342 for Class B and $819
for Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*) were as follows:
<Table>
Class A............................................. 1.25%
Class B............................................. 2.01
Class C............................................. 2.01
Class I............................................. 0.82
Class R4............................................ 1.06
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.......................................... $177,967
Class B.......................................... 29,828
Class C.......................................... 3,326
</Table>
The waived/reimbursed fees and expenses for plan administration services fees at
the class level were as follows:
<Table>
Class R4............................................ $77
</Table>
The management fees waived/reimbursed at the Fund level were $186,729.
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
such that net expenses (excluding fees and expenses of acquired funds*), would
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>
Effective Nov. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Dec. 31, 2010,
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............................................. 2.02
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.
EARNINGS CREDITS AND CUSTODIAN FEES
During the year ended Oct. 31, 2009, the Fund's custodian fees were reduced by
$3 as a result of earnings 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 $13,048 to Ameriprise Trust Company, a subsidiary of Ameriprise
Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $340,069,492 and $544,906,565, respectively, for the
year ended Oct. 31, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
54 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
OCT. 31, 2009 OCT. 31, 2008*
- ---------------------------------------------------------------------
CLASS A
Sold 5,231,964 13,942,439
Converted from Class B shares** 969,818 1,036,828
Reinvested distributions 2,146,170 1,211,499
Redeemed (13,137,526) (13,367,693)
- ---------------------------------------------------------------------
Net increase (decrease) (4,789,574) 2,823,073
- ---------------------------------------------------------------------
CLASS B
Sold 725,964 3,822,733
Reinvested distributions 349,934 168,457
Converted to Class A shares** (962,748) (1,025,029)
Redeemed (2,725,361) (2,901,312)
- ---------------------------------------------------------------------
Net increase (decrease) (2,612,211) 64,849
- ---------------------------------------------------------------------
CLASS C
Sold 281,159 583,922
Reinvested distributions 35,905 11,530
Redeemed (227,718) (267,833)
- ---------------------------------------------------------------------
Net increase (decrease) 89,346 327,619
- ---------------------------------------------------------------------
CLASS I
Sold 6,812,712 25,302,709
Reinvested distributions 1,933,079 1,145,677
Redeemed (18,357,075) (15,862,285)
- ---------------------------------------------------------------------
Net increase (decrease) (9,611,284) 10,586,101
- ---------------------------------------------------------------------
CLASS R4
Sold 6,358 13,757
Reinvested distributions 1,165 706
Redeemed (3,012) (11,545)
- ---------------------------------------------------------------------
Net increase (decrease) 4,511 2,918
- ---------------------------------------------------------------------
CLASS W
Sold 7,283,695 37,609,351
Reinvested distributions 826,368 674,090
Redeemed (21,598,586) (24,172,875)
- ---------------------------------------------------------------------
Net increase (decrease) (13,488,523) 14,110,566
- ---------------------------------------------------------------------
</Table>
* Certain line items from the prior year have been renamed to conform to the
current year presentation.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
7. 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 Oct. 31, 2009, securities valued at $37,354,966 were
on loan, secured by U.S. government securities valued at $11,157,582 and by cash
collateral of $27,373,804 invested in short-term securities or in cash
equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$47,978 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
- --------------------------------------------------------------------------------
56 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $209,516,997 and $204,173,170,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to its pro rata share of 0.02% of the amount of
the credit facility. The Fund had no borrowings during the year ended Oct. 31,
2009.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 57
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
10. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures contracts,
foreign currency transactions, foreign tax credits 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.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, excess of distributions over net investment income has been
decreased by $537,484 and accumulated net realized loss has been increased by
$537,484.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
- ------------------------------------------------------------------
Ordinary income......................... $34,499,468 $22,448,956
Long-term capital gain.................. -- --
</Table>
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 3,905,407
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $(15,099,745)
Unrealized appreciation (depreciation)......... $ 24,913,716
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$15,099,745 at Oct. 31, 2009, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2010 2014 2016 2017
$3,665,049 $498,771 $2,328,738 $8,607,187
</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. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
- --------------------------------------------------------------------------------
58 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
11. 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.
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 59
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme
Court, asking the U.S. Supreme Court to stay the District Court proceedings
while the U.S. Supreme Court considers and rules in a case captioned Jones v.
Harris Associates, which involves issues of law similar to those presented in
the Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then
- --------------------------------------------------------------------------------
60 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
managed by Seligman was and had been misleading. The NYAG included other related
claims and also claimed that the fees charged by Seligman to the Seligman Funds
were excessive. On March 13, 2009, without admitting or denying any violations
of law or wrongdoing, the Seligman Parties entered into a stipulation of
settlement with the NYAG and settled the claims made by the NYAG. Under the
terms of the settlement, Seligman paid $11.3 million to four Seligman Funds.
This settlement resolved all outstanding matters between the Seligman Parties
and the NYAG. In addition to the foregoing matter, the New York staff of the SEC
indicated in September 2005 that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds.
Seligman responded to the staff in October 2005 that it believed that any action
would be both inappropriate and unnecessary, especially in light of the fact
that Seligman had previously resolved the underlying issue with the Independent
Directors of the Seligman Funds and made recompense to the affected Seligman
Funds. There have been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material 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 GLOBAL BOND FUND -- 2009 ANNUAL REPORT 61
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE GLOBAL BOND FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Global Bond Fund (the Fund) (one of
the portfolios constituting the RiverSource Global Series, Inc.) as of October
31, 2009, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
October 31, 2006, were audited by other auditors whose report dated December 20,
2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
62 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Global Fund of the RiverSource Global Series, Inc. at
October 31, 2009, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the three years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 63
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 3.82%
Foreign taxes paid........................................... $16,798
Foreign source income........................................ $2,247,727
</Table>
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
64 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 65
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
66 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL REPORT 67
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
68 RIVERSOURCE GLOBAL BOND FUND -- 2009 ANNUAL 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 BOND FUND -- 2009 ANNUAL REPORT 69
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 Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6309 AF (12/09)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
EMERGING MARKETS FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
THREADNEEDLE EMERGING MARKETS FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 25
Statement of Operations............ 27
Statements of Changes in Net
Assets........................... 29
Financial Highlights............... 31
Notes to Financial Statements...... 38
Report of Independent Registered
Public Accounting Firm........... 56
Federal Income Tax Information..... 58
Board Members and Officers......... 59
Proxy Voting....................... 63
</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 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Emerging Markets Fund (the Fund) Class A shares advanced 56.05%
(excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) Emerging Markets Index, (MSCI Emerging Markets Index),
which advanced 64.63%.
> The Fund's peer group, represented by the Lipper Emerging Markets Funds Index,
advanced 56.89% for the period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Threadneedle Emerging Markets
Fund
Class A (excluding sales
charge) +56.05% +3.48% +15.03% +9.85%
- -------------------------------------------------------------------
MSCI Emerging Markets Index
(unmanaged) +64.63% +6.66% +17.16% +11.48%
- -------------------------------------------------------------------
Lipper Emerging Markets Funds
Index +56.89% +3.10% +14.43% +10.93%
- -------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
11/13/96) +56.05% +3.48% +15.03% +9.85% N/A
- -------------------------------------------------------------------------
Class B (inception
11/13/96) +55.08% +2.67% +14.12% +9.02% N/A
- -------------------------------------------------------------------------
Class C (inception
6/26/00) +55.18% +2.73% +14.13% N/A +8.04%
- -------------------------------------------------------------------------
Class I (inception
3/4/04) +57.03% +3.98% +15.55% N/A +13.06%
- -------------------------------------------------------------------------
Class R2 (inception
8/3/09) N/A N/A N/A N/A +4.31%**
- -------------------------------------------------------------------------
Class R4 (inception
11/13/96) +56.62% +3.84% +15.31% +10.14% N/A
- -------------------------------------------------------------------------
Class R5 (inception
08/1/08) +57.12% N/A N/A N/A -10.98%
- -------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) +47.06% +1.46% +13.67% +9.20% N/A
- -------------------------------------------------------------------------
Class B (inception
11/13/96) +49.96% +2.05% +13.88% +9.02% N/A
- -------------------------------------------------------------------------
Class C (inception
6/26/00) +54.06% +2.73% +14.13% N/A +8.04%
- -------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R4 and Class R5 shares. Class
I, Class R2, Class R4 and Class R5 shares are available to qualifying
institutional investors only.
*For classes with less than 10 years performance.
**Not annualized.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
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.
- --------------------------------------------------------------------------------
4 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Threadneedle Emerging Markets Fund portfolio managers Julian Thompson and Jules
Mort of Threadneedle International Limited (Threadneedle) discuss the Fund's
results and positioning for the fiscal year ended Oct. 31, 2009. Threadneedle,
an indirect wholly-owned subsidiary of Ameriprise Financial, Inc., acts as the
subadviser to the Fund.
Dear Shareholders,
Threadneedle Emerging Markets Fund (the Fund) Class A shares advanced 56.05%
(excluding sales charge) for the 12 months ended Oct. 31, 2009. The Fund
underperformed its benchmark, the Morgan Stanley Capital International (MSCI)
Emerging Markets Index, (MSCI Emerging Markets Index), which advanced 64.63%.
The Fund's peer group, represented by the Lipper Emerging Markets Funds Index,
advanced 56.89% for the period.
SIGNIFICANT PERFORMANCE FACTORS
The investment environment from the middle of 2008 through March 2009 was very
difficult for emerging market equities. The financial crisis and economic
slowdown made investors reluctant to take any risk and money already invested in
emerging markets was rapidly moved back to the perceived safe haven of the U.S.
Emerging market equities fell sharply in price before bottoming in early March
2009.
COUNTRY DIVERSIFICATION(1) (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Brazil 19.7%
- ------------------------------------------------
China 10.7%
- ------------------------------------------------
Egypt 0.7%
- ------------------------------------------------
Hong Kong 7.6%
- ------------------------------------------------
Hungary 0.8%
- ------------------------------------------------
India 6.4%
- ------------------------------------------------
Indonesia 2.8%
- ------------------------------------------------
Israel 0.7%
- ------------------------------------------------
Luxembourg 0.7%
- ------------------------------------------------
Malaysia 1.4%
- ------------------------------------------------
Mexico 3.9%
- ------------------------------------------------
Panama 0.8%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
COUNTRY DIVERSIFICATION(1) (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Poland 0.4%
- ------------------------------------------------
Russia 10.2%
- ------------------------------------------------
Singapore 0.9%
- ------------------------------------------------
South Africa 5.6%
- ------------------------------------------------
South Korea 10.7%
- ------------------------------------------------
Taiwan 8.1%
- ------------------------------------------------
Thailand 1.7%
- ------------------------------------------------
Turkey 1.8%
- ------------------------------------------------
United Kingdom 1.4%
- ------------------------------------------------
United States 0.8%
- ------------------------------------------------
Other(2) 2.2%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
Several events contributed to an emerging markets recovery that has been even
stronger than the rebound in developed market equities. First, China passed a
very large fiscal and monetary stimulus package that successfully stimulated
domestic demand. Second, emerging market economies were better positioned than
in previous global crises. Because their financial systems were solvent,
emerging market economies could reduce interest rates aggressively without
weakening their currencies. Lower interest rates supported domestic demand,
helping the economies stave off global recessionary pressures. Finally, in
March, the G-20 (a group of finance ministers and central bank governors from
developed and emerging market countries) made clear that they were not going to
allow the financial collapse of Central and Eastern Europe -- a particularly
vulnerable emerging market region due to weaker banking systems.
Rising commodity prices (copper, nickel, iron ore, oil) in 2009 further
benefited commodity producing markets such as Brazil, Russia and South Africa.
The weaker U.S. dollar, relative strength of emerging market currencies, benign
domestic inflation and improved current account positioning all made emerging
markets more attractive to foreign investors in the latter part of the fiscal
year.
- --------------------------------------------------------------------------------
6 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund benefited from its exposure to emerging Europe, the Middle East and
Africa, due mainly to an overweight and good stock selection in Russia, the
region's best performer for the period. Also, the Fund was underweight in South
Africa, which did not perform well. In Latin America, the Fund benefited from
being overweight, relative to the MSCI Emerging Markets Index, but this was
offset by unfavorable stock selection. Stock selection in Asia also detracted
from relative return, though being underweight in Asia was advantageous.
In terms of sector contributions, positioning in the consumer discretionary
sector had the largest positive effect on return relative to the MSCI Emerging
Markets Index. Positioning in financials, consumer staples and telecommunication
services also added to relative return. The information technology position was
the primary detractor. Utilities was another area of weakness. Though the Fund
was well-positioned with a smaller utilities weighting than the MSCI Emerging
Markets Index, individual holdings performed poorly. Positioning in the health
care, materials, energy and industrials sectors also detracted.
At the beginning of the Fund's fiscal year and at the start of calendar year
2009, there was little indication that emerging markets would rebound as
TOP TEN HOLDINGS (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Vale ADR (Brazil) 3.9%
- ------------------------------------------------
Petroleo Brasileiro ADR (Brazil) 3.6%
- ------------------------------------------------
Samsung Electronics (South Korea) 3.3%
- ------------------------------------------------
China Mobile (Hong Kong) 2.2%
- ------------------------------------------------
China Life Insurance Series H (China) 2.1%
- ------------------------------------------------
Itau Unibanco Holding (Brazil) 2.0%
- ------------------------------------------------
Hon Hai Precision Industry (Taiwan) 2.0%
- ------------------------------------------------
China Construction Bank Series H (China) 1.8%
- ------------------------------------------------
Cyrela Brazil Realty (Brazil) 1.7%
- ------------------------------------------------
Lojas Renner (Brazil) 1.7%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
strongly as they did. In retrospect, the Fund would have benefited if we had
acted more quickly to position the portfolio for a strong recovery. In fact,
performance relative to the MSCI Emerging Markets Index improved as we shifted
the portfolio toward a more cyclical positioning. However, we were concerned
that stresses on the global financial system would spill into the emerging
markets and that some countries would not weather the difficulties as well as
they ultimately did.
We believe it was prudent to take a defensive approach to protect capital in an
unprecedented global crisis. The Fund delivered a strong absolute return,
similar to that of its peers during the period. The defensive positioning
explains why it lagged the MSCI Emerging Markets Index.
CHANGES TO THE FUND'S PORTFOLIO
We made no significant changes to the portfolio's regional composition. The
portfolio's weighting in Latin America was larger than that of the MSCI Emerging
Markets Index, while weightings in emerging Europe, Middle East and Africa and
in Asia were smaller. At the margin, we reduced exposure in Asia, relative to
the MSCI Emerging Markets Index, while increasing relative exposure to Latin
America and slightly reducing exposure to emerging Europe, the Middle East and
Africa. We also reduced the Fund's cash position as the global crisis subsided.
We made more notable changes to sector allocations. We increased the consumer
discretionary weighting significantly, moving from a neutral position to an
overweight, relative to the MSCI Emerging Markets Index. We also moved the
financials position to an overweight. We increased the materials weighting, but
it was still smaller than the MSCI Emerging Markets Index at fiscal year end. We
reduced the overweight in health care stocks, making the position smaller than
that of the MSCI Emerging Markets Index. We reduced the technology allocation to
an underweight as well.
The portfolio is now positioned for a cyclical recovery in domestic economic
activity within the emerging markets. Examples of stocks we believe can perform
well in this environment include developer CYRELA BRAZIL REALTY, department
store chain LOJAS RENNER and shopping mall developer MULTIPLAN, all in Brazil.
The portfolio also holds X5 RETAIL GROUP, a discount retailer in Russia and
ARCELIK, a white goods
- --------------------------------------------------------------------------------
8 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
manufacturer in Turkey. Arcelik makes products such as ovens, refrigerators and
televisions and is benefiting as European consumers trade down to lower priced
brands.
On a country basis, the Fund's allocations to Russia, Brazil and Turkey are
larger than those of the benchmark. Economic activity in Russia has increased in
the wake of higher oil prices, the devaluation of the ruble and lower interest
rates. Though the Russian equity market recovered strongly in the latter part of
the fiscal year, there are still a number of companies that we believe are
attractively valued. We think Brazil's economy will also grow strongly 2009-2010
given the commodity price recovery, lower interest rates and the Brazilian
currency remaining sound. Turkey offers excellent opportunities, in our view,
because the financial system is very well capitalized, interest rates are down
significantly and loan growth is high, which we believe should lead to increased
domestic economic activity.
In keeping with the overall underweight in Asia, the portfolio's weightings in
South Korea, China and Taiwan were smaller than those of the MSCI Emerging
Markets Index at fiscal year end. South Korea and Taiwan's markets are typically
dependent on U.S. and global consumers. We prefer companies and countries that
have exposure to emerging market consumers. In China, many of the companies we
look at seem relatively expensive. We think China's economic growth will be
strong, but we see better investment opportunities in the countries China must
import from in order to sustain its growth.
The Fund benefited from its exposure to emerging Europe, the Middle East and
Africa, due mainly to an overweight and good stock selection in Russia, the
region's best performer for the period.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
OUR FUTURE STRATEGY
Our outlook for the emerging market asset class is very favorable. Earnings
forecasts for 2010 are already strong and, compared to results following
previous crises, they actually appear conservative to us. We anticipate that
earnings forecasts across the emerging markets could rise.
We believe emerging markets are at the beginning of a multi-year cycle in loan
and consumer spending growth and that their economic growth will outpace growth
in the developed world. Despite recent sharp gains, price-to-earnings ratios on
emerging market equities are at significant discounts to their five-year
average, indicating there is room for further equity appreciation.
We are cognizant of the possibility that the very factors responsible for our
favorable outlook -- historically low interest rates, significant capital
inflows, stronger domestic economic activity and equity market
appreciation -- could put emerging markets at risk of higher inflation and a
"bubble" environment. We are watching closely to see if growth will be too
strong, but we think the emerging markets are a long way from that. In the near
term, we are focused on companies that can benefit from a cyclical recovery.
- --------------------------------------------------------------------------------
10 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
(PHOTO -Julian Thompson) (PHOTO - Jules Mort)
Julian Thompson, Ph.D. Jules Mort
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 11
THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Emerging Markets Fund Class A shares (from 11/1/99 to
10/31/09) as compared to the performance of the MSCI Emerging Markets Index and
the Lipper Emerging Markets Funds Index. In comparing the Fund's Class A shares
to these indices, you should take into account the fact that the Fund's
performance reflects the maximum initial sales charge of 5.75%, while such
charges are not reflected in the performance of the indices. Returns for the
Fund include the reinvestment of any distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
1 YEAR 3 YEARS 5 YEARS 10 YEARS
THREADNEEDLE EMERGING MARKETS FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $14,706 $10,443 $18,977 $24,111
- ------------------------------------------------------------------------------------------
Average annual total return +47.06% +1.46% +13.67% +9.20%
- ------------------------------------------------------------------------------------------
MSCI EMERGING MARKETS INDEX(1)
Cumulative value of $10,000 $16,463 $12,133 $22,073 $29,647
- ------------------------------------------------------------------------------------------
Average annual total return +64.63% +6.66% +17.16% +11.48%
- ------------------------------------------------------------------------------------------
LIPPER EMERGING MARKETS FUNDS INDEX(2)
Cumulative value of $10,000 $15,689 $10,960 $19,617 $28,224
- ------------------------------------------------------------------------------------------
Average annual total return +56.89% +3.10% +14.43% +10.93%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE EMERGING MARKETS
FUND LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE EMERGING
MARKETS FUND
CLASS A MSCI EMERGING LIPPER EMERGING
(INCLUDES SALES MARKETS MARKETS FUNDS
CHARGE) INDEX(1) INDEX(2)
--------------------- ---------------- ------------------
10/99 $ 9,425 $10,000 $10,000
1/00 12,184 12,359 12,902
4/00 11,391 11,408 11,876
7/00 10,559 10,719 11,320
10/00 9,086 9,112 9,572
1/01 9,275 9,688 10,066
4/01 7,972 8,450 8,829
7/01 7,575 7,846 8,360
10/01 6,970 6,974 7,445
1/02 8,406 8,595 9,048
4/02 8,917 9,322 9,877
7/02 7,632 7,840 8,393
10/02 7,556 7,562 7,976
1/03 7,745 7,780 8,254
4/03 7,575 8,011 8,551
7/03 8,708 9,644 10,068
10/03 10,314 11,249 11,834
1/04 11,572 12,646 13,403
4/04 11,266 12,304 13,074
7/04 10,713 11,902 12,695
10/04 11,973 13,431 14,388
1/05 13,655 15,430 16,436
4/05 13,483 15,261 16,190
7/05 15,325 17,501 18,435
10/05 15,785 18,043 19,132
1/06 20,509 23,019 24,227
4/06 21,969 24,859 26,141
7/06 19,779 22,545 23,649
10/06 21,759 24,434 25,752
1/07 24,442 27,154 28,556
4/07 25,881 29,386 30,758
7/07 28,762 34,030 34,758
10/07 36,600 41,129 41,283
1/08 30,121 33,578 34,778
4/08 32,239 36,941 37,222
7/08 28,283 32,638 32,819
10/08 15,451 18,007 17,990
1/09 13,863 16,804 16,161
4/09 17,195 21,162 20,061
7/09 22,366 27,229 26,124
10/09 24,111 29,647 28,224
</Table>
(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 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 ANNUAL REPORT 13
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 Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009(a) OCT. 31, 2009 THE PERIOD(b) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,402.20 $10.72 1.78%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.14 $ 9.00 1.78%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,396.30 $15.32 2.55%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,012.28 $12.86 2.55%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,397.60 $15.33 2.55%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,012.28 $12.86 2.55%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,405.60 $ 7.60 1.26%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.75 $ 6.38 1.26%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(d) $1,000 $1,043.10 $ 5.07 2.06%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,007.09 $ 4.98 2.06%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,402.40 $ 9.70 1.61%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.00 $ 8.14 1.61%
- -------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009(a) OCT. 31, 2009 THE PERIOD(b) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,404.20 $ 7.90 1.31%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.50 $ 6.63 1.31%
- -------------------------------------------------------------------------------------------
</Table>
(a) The beginning account values for Class R2 are as of Aug. 3, 2009 (when
shares of this class became publicly available) for actual expense
calculations, and as of May 1, 2009 for hypothetical expense calculations.
(b) Expenses for Classes A, B, C, I, R4 and R5 are equal to the Fund's
annualized expense ratio as indicated above, multiplied by the average
account value over the period, multiplied by 183/365 (to reflect the one-
half year period). Actual expenses for Class R2 are equal to the Fund's
annualized expense ratio as indicated above, multiplied by the average
account value over the period, multiplied by 88/365 (to reflect the period
from Aug. 3, 2009 to Oct. 31, 2009). Hypothetical expenses for Class R2 are
equal to the Fund's annualized expense ratio as indicated above, multiplied
by the average account value over the period, multiplied by 183/365 (to
reflect the one-half year period).
(c) Based on the actual return for the six months ended Oct. 31, 2009: +40.22%
for Class A, +39.63% for Class B, +39.76% for Class C, +40.56% for Class I,
+40.24% for Class R4 and +40.42% for Class R5.
(d) Based on the actual return for the period from Aug. 3, 2008 (when shares
became publicly available) to Oct. 31, 2009: +4.31% for Class R2.
- --------------------------------------------------------------------------------
16 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (97.0%)(c)
ISSUER SHARES VALUE(a)
BRAZIL (19.6%)
Banco Bradesco 303,600 $5,942,662
Companhia Siderurgica Nacional ADR 286,556 9,502,197
Cyrela Brazil Realty 803,300 10,198,100
Itau Unibanco Holding 622,160 11,842,420
Itau Unibanco Holding ADR 82,267 1,574,590
Lojas Renner 564,500 10,004,203
Multiplan Empreendimentos Imobiliarios 395,388 5,989,774
OGX Petroleo e Gas Participacoes 11,300 9,114,456
PDG Realty 391,200 3,266,481
Petroleo Brasileiro ADR 457,503 21,145,788
Vale ADR 910,420 23,206,606
---------------
Total 111,787,277
- -------------------------------------------------------------------------------------
CHINA (10.6%)
Bank of China Series H 13,447,000(f) 7,800,587
China Construction Bank Series H 12,086,000 10,419,857
China Life Insurance Series H 2,644,000 12,156,836
China Natl Building Material Series H 1,606,000(f) 3,448,203
China Petroleum & Chemical Series H 4,726,000(f) 4,008,040
China Shenhua Energy Series H 979,000 4,391,950
Industrial & Commercial Bank of China 10,906,000 8,677,089
Series H Tencent Holdings 158,700(f) 2,763,413
Tingyi (Cayman Islands) Holding 1,260,000 2,811,393
ZTE Series H 711,200 3,940,961
---------------
Total 60,418,329
- -------------------------------------------------------------------------------------
EGYPT (0.7%)
Orascom Construction Inds GDR 83,064(d,e) 3,973,807
- -------------------------------------------------------------------------------------
HONG KONG (7.5%)
China Mobile 1,360,500(f) 12,754,074
China Overseas Land & Investment 3,735,797(f) 8,054,142
China Resources Cement Holdings 2,290,000(b) 1,102,141
China Resources Land 1,794,000 4,330,696
CNOOC ADR 66,998 9,978,682
Hengan Intl Group 601,000 3,868,800
Li & Fung 690,000 2,869,718
---------------
Total 42,958,253
- -------------------------------------------------------------------------------------
HUNGARY (0.8%)
OTP Bank 164,161(b) 4,623,161
- -------------------------------------------------------------------------------------
INDIA (6.3%)
Bharat Heavy Electricals 120,394 5,629,955
Cairn India 531,574(b) 2,943,574
Housing Development Finance 111,628 6,245,648
Infosys Technologies 123,307 5,725,829
Larsen & Toubro 81,972 2,705,516
Reliance Inds 196,384 7,944,414
State Bank of India 107,604 4,964,393
---------------
Total 36,159,329
- -------------------------------------------------------------------------------------
INDONESIA (2.8%)
Bank Central Asia 5,920,000 2,781,913
Bank Rakyat Indonesia 5,300,500 3,849,098
Bumi Resources 6,358,500 1,527,531
PT Astra Intl 1,492,000 4,790,175
Telekomunikasi Indonesia 3,256,000 2,797,928
---------------
Total 15,746,645
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
ISRAEL (0.7%)
Israel Chemicals 341,335 $3,990,930
- -------------------------------------------------------------------------------------
LUXEMBOURG (0.6%)
Ternium ADR 147,045(b) 3,695,241
- -------------------------------------------------------------------------------------
MALAYSIA (1.4%)
CIMB Group Holdings 1,215,500 4,412,989
Genting Group 1,678,300 3,530,602
---------------
Total 7,943,591
- -------------------------------------------------------------------------------------
MEXICO (3.8%)
America Movil ADR Series L 205,753 9,079,880
Fresnillo 340,276 4,123,086
Grupo Financiero Banorte Series O 911,600 2,914,766
Wal-Mart de Mexico Series V 1,647,000(f) 5,747,837
---------------
Total 21,865,569
- -------------------------------------------------------------------------------------
PANAMA (0.8%)
Copa Holdings Cl A 113,085 4,775,580
- -------------------------------------------------------------------------------------
POLAND (0.4%)
Bank Pekao 39,835(b) 2,140,184
- -------------------------------------------------------------------------------------
RUSSIA (10.2%)
CTC Media 210,073(b) 3,377,974
Eurasia Drilling GDR 236,717(d,e) 3,905,831
Evraz Group GDR 214,038(d,e) 5,185,951
Gazprom ADR 206,493 4,898,014
LUKOIL ADR 103,988 6,032,516
Pharmstandard 49,844(b) 2,365,259
Rosneft Oil GDR 1,090,650(d) 8,398,005
Rosneft Oil GDR 164,010 1,247,104
Sberbank Cl S 3,335,116 7,390,130
Vimpel-Communications ADR 419,611(b) 7,523,626
Wimm-Bill-Dann Foods ADR 22,712(b) 1,534,877
X5 Retail Group GDR 256,529(b,d,e) 6,127,308
---------------
Total 57,986,595
- -------------------------------------------------------------------------------------
SINGAPORE (0.9%)
Wilmar Intl 1,198,000 5,283,067
- -------------------------------------------------------------------------------------
SOUTH AFRICA (5.6%)
AngloGold Ashanti 85,521 3,196,863
Impala Platinum Holdings 153,997 3,391,360
MTN Group 330,987 4,932,344
Murray & Roberts Holdings 589,576 4,211,877
Naspers Series N 122,386 4,421,711
Shoprite Holdings 369,891 3,016,785
Standard Bank Group 435,978 5,446,071
Truworths Intl 529,442 3,032,924
---------------
Total 31,649,935
- -------------------------------------------------------------------------------------
SOUTH KOREA (10.6%)
Doosan Infracore 117,610 1,674,312
Hyundai Development 75,370 2,231,717
Hyundai Engineering & Construction 51,219 2,829,060
Hyundai Mobis 38,396 5,122,234
Hyundai Motor 61,281 5,561,048
KB Financial Group 117,191(b) 5,639,499
LG Electronics 30,033 2,793,181
LG Household & Health Care 21,063 4,376,649
Samsung Electronics 37,374 19,627,004
Samsung Fire & Marine Insurance 10,836 1,973,873
Shinhan Financial Group 222,930(b) 8,462,113
---------------
Total 60,290,690
- -------------------------------------------------------------------------------------
TAIWAN (8.0%)
Asustek Computer 1,324,000 2,431,807
Chunghwa Telecom ADR 2,546 44,249
Far Eastern New Century 2,719,840 3,207,382
Hon Hai Precision Industry 2,980,283 11,673,619
MediaTek 495,990 6,942,087
Synnex Technology Intl 1,071,400 2,027,120
Taiwan Semiconductor Mfg 4,655,858 8,445,982
Tripod Technology 1,741,766 4,358,497
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
TAIWAN (CONT.)
U-Ming Marine Transport 1,770,000 $3,210,469
Yuanta Financial Holding 5,137,000 3,390,157
---------------
Total 45,731,369
- -------------------------------------------------------------------------------------
THAILAND (1.7%)
Bangkok Bank 1,521,875 5,061,374
Siam Commercial Bank 1,943,700 4,459,157
---------------
Total 9,520,531
- -------------------------------------------------------------------------------------
TURKEY (1.8%)
BIM Birlesik Magazalar 67,068 2,432,028
Tofas Turk Otomobil Fabrikasi 1,032,157 2,593,580
Turkiye Garanti Bankasi 1,414,599 5,138,034
---------------
Total 10,163,642
- -------------------------------------------------------------------------------------
UNITED KINGDOM (1.4%)
Standard Chartered 321,596 7,888,621
- -------------------------------------------------------------------------------------
UNITED STATES (0.8%)
Southern Copper 151,470 4,771,305
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $450,695,425) $553,363,651
- -------------------------------------------------------------------------------------
<Caption>
OTHER (0.1%)
ISSUER SHARES VALUE(a)
INDIA (0.1%)
Lanco Infratec
Warrants 31,761(b,e) $331,585
- -------------------------------------------------------------------------------------
SINGAPORE (--%)
Golden Agri-Resources
Warrants 1(b,e,g) --
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $264,646) $331,585
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (2.2%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 12,486,312(h) $12,486,312
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $12,486,312) $12,486,312
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (3.8%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 22,071,023 $22,071,023
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $22,071,023) $22,071,023
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $485,517,406)(i) $588,252,571
=====================================================================================
</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 net assets at Oct. 31, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Airlines 0.8% $4,775,580
Auto Components 0.9 5,122,234
Automobiles 2.3 12,944,803
Building Products 0.2 1,102,141
Capital Markets 0.6 3,390,157
Chemicals 0.7 3,990,930
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Commercial Banks 21.3% $121,428,708
Communications Equipment 0.7 3,940,961
Computers & Peripherals 0.4 2,431,807
Construction & Engineering 2.9 16,283,562
Construction Materials 0.6 3,448,203
Distributors 0.5 2,869,718
Diversified Telecommunication 10,365,803
Services 1.8
Electrical Equipment 1.0 5,629,955
Electronic Equipment, Instruments & 18,059,236
Components 3.2
Energy Equipment & Services 0.7 3,905,831
Food & Staples Retailing 3.0 17,323,958
Food Products 1.7 9,629,337
Hotels, Restaurants & Leisure 0.6 3,530,602
Household Durables 2.8 16,257,762
Household Products 0.8 4,376,649
Industrial Conglomerates 0.6 3,207,382
Insurance 2.5 14,130,709
Internet Software & Services 0.5 2,763,413
IT Services 1.0 5,725,829
Machinery 0.3 1,674,312
Marine 0.6 3,210,469
Media 1.4 7,799,685
Metals & Mining 10.0 57,072,609
Multiline Retail 1.7 10,004,203
Oil, Gas & Consumable Fuels 14.3 81,630,074
Personal Products 0.7 3,868,800
Pharmaceuticals 0.4 2,365,259
Real Estate Management & Development 3.2 18,374,612
Semiconductors & Semiconductor 35,015,073
Equipment 6.1
Specialty Retail 0.5 3,032,924
Thrifts & Mortgage Finance 1.1 6,245,648
Wireless Telecommunication Services 4.7 26,766,298
Other(1) 6.0 34,557,335
- -----------------------------------------------------------------------
Total $588,252,571
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(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 Oct. 31,
2009, the value of these securities amounted to $27,590,902 or 4.8% of net
assets.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 2 to the financial statements). The aggregate value of such securities
at Oct. 31, 2009 was $19,524,482, representing 3.4% of net assets.
Information concerning such security holdings at Oct. 31, 2009 is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
---------------------------------------------------------------------------
Eurasia Drilling GDR 11-02-07 thru 04-15-08 $5,578,172
Evraz Group GDR 05-06-09 thru 08-18-09 3,779,157
Orascom Construction Ind GDR 12-06-06 thru 07-13-09 2,944,005
X5 Retail Group GDR 12-18-08 thru 08-18-09 2,985,557
Golden Agri-Resources
Warrants 09-23-09 --
Lanco Infratec
Warrants 08-04-09 264,646
</Table>
(f) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(g) Negligible market value.
(h) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(i) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $511,989,504 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $86,945,265
Unrealized depreciation (10,682,198)
-----------------------------------------------------------
Net unrealized appreciation $76,263,067
-----------------------------------------------------------
</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 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
22 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
----------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Equity Securities
Common Stocks
Construction &
Engineering $11,978,170 $3,973,807 $-- $15,951,977
Oil, Gas & Consumable
Fuels 73,232,069 8,398,005 -- 81,630,074
All Other
Industries(a) 21,129,481 434,652,119(b) -- 455,781,600
Other
Construction &
Engineering -- 331,585 -- 331,585
- ---------------------------------------------------------------------------------------------
Total Equity Securities 106,339,720 447,355,516 -- 553,695,236
- ---------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(c) 12,486,312 -- -- 12,486,312
Investments of Cash
Collateral Received
for Securities on
Loan 22,071,023 -- -- 22,071,023
- ---------------------------------------------------------------------------------------------
Total Other 34,557,335 -- -- 34,557,335
- ---------------------------------------------------------------------------------------------
Total $140,897,055 $447,355,516 $-- $588,252,571
- ---------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Includes certain securities trading outside the U.S. whose values were
adjusted as a result of significant market movements following the close of
local trading. Therefore, these investment securities were classified as
Level 2 instead of Level 1.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 23
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.
- --------------------------------------------------------------------------------
24 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $450,960,071) $ 553,695,236
Affiliated money market fund (identified cost $12,486,312) 12,486,312
Investments of cash collateral received for securities on loan
(identified cost $22,071,023) 22,071,023
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $485,517,406) 588,252,571
Foreign currency holdings (identified cost $11,182,140) 11,120,599
Capital shares receivable 1,511,068
Dividends and accrued interest receivable 663,591
Receivable for investment securities sold 7,279,008
- --------------------------------------------------------------------------------
Total assets 608,826,837
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 1,175,836
Payable for investment securities purchased 14,643,177
Payable upon return of securities loaned 22,071,023
Accrued investment management services fees 17,519
Accrued distribution fees 5,138
Accrued transfer agency fees 3,844
Accrued administrative services fees 1,279
Accrued plan administration services fees 96
Other accrued expenses 427,594
- --------------------------------------------------------------------------------
Total liabilities 38,345,506
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 570,481,331
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 745,039
Additional paid-in capital 586,845,473
Undistributed net investment income 582,060
Accumulated net realized gain (loss) (120,272,925)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 102,581,684
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 570,481,331
- --------------------------------------------------------------------------------
*Including securities on loan, at value $ 21,096,355
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
OCT. 31, 2009
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $416,296,725 53,776,169 $7.74(1)
Class B $ 38,489,191 5,601,155 $6.87
Class C $ 32,757,231 4,756,330 $6.89
Class I $ 68,977,761 8,575,621 $8.04
Class R2 $ 12,235,711 1,580,451 $7.74
Class R4 $ 1,186,515 147,397 $8.05
Class R5 $ 538,197 66,743 $8.06
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $8.21. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 8,662,738
Interest 19,712
Income distributions from affiliated money market fund 30,324
Income from securities lending -- net 110,322
Less foreign taxes withheld (901,448)
- -------------------------------------------------------------------------------
Total income 7,921,648
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 3,791,476
Distribution fees
Class A 715,248
Class B 302,533
Class C 99,973
Class R2 13,518
Transfer agency fees
Class A 967,197
Class B 110,181
Class C 31,984
Class R2 1,352
Class R4 409
Class R5 57
Administrative services fees 280,656
Plan administration services fees
Class R2 6,759
Class R4 2,039
Compensation of board members 10,552
Custodian fees 211,200
Printing and postage 138,290
Registration fees 65,280
Professional fees 55,346
Other 44,085
- -------------------------------------------------------------------------------
Total expenses 6,848,135
Expenses waived/reimbursed by the Investment Manager and its
affiliates (426)
- -------------------------------------------------------------------------------
Total net expenses 6,847,709
- -------------------------------------------------------------------------------
Investment income (loss) -- net 1,073,939
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 27
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(78,295,149)
Foreign currency transactions (874,109)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (79,169,258)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 239,320,659
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 160,151,401
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $161,225,340
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 1,073,939 $ 4,436,377
Net realized gain (loss) on investments (79,169,258) (19,657,824)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 239,320,659 (421,981,869)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 161,225,340 (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 ANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 80,251,128 $ 97,862,568
Class B shares 9,019,008 12,474,577
Class C shares 4,625,001 2,616,649
Class I shares 63,017,867 30,164,283
Class R2 shares 765,806 --
Class R4 shares 436,563 642,913
Class R5 shares 668 5,000
Fund merger (Note 11)
Class A shares 45,280,067 --
Class B shares 2,387,255 --
Class C shares 25,077,963 --
Class R2 shares 12,517,198 --
Class R5 shares 496,500 --
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
Conversions from Class B to Class A
Class A shares 6,661,382 11,962,805
Class B shares (6,661,382) (11,962,805)
Payments for redemptions
Class A shares (95,511,753) (148,388,977)
Class B shares (8,184,934) (19,310,010)
Class C shares (4,011,594) (2,462,810)
Class I shares (7,237,209) (72,065,208)
Class R2 shares (1,958,447) --
Class R4 shares (397,068) (921,454)
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 126,574,019 56,102,399
- ----------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) 458,466 --
Total increase (decrease) in net assets 288,257,825 (538,353,211)
Net assets at beginning of year 282,223,506 820,576,717
- ----------------------------------------------------------------------------------------------
Net assets at end of year $570,481,331 $ 282,223,506
- ----------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ 582,060 $ (5,170)
- ----------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for periods shown. For periods ended 2007 and after, per share
net investment income (loss) amounts are calculated based on average shares
outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A -------------------------------------------------------
PER SHARE DATA 2009 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) .02 .08 .04 .01 .04
Net gains (losses) (both realized and
unrealized) 2.75 (7.24) 6.27 3.10 1.95
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.77 (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)
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) .01 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.74 $4.96 $14.99 $11.32 $8.23
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 56.05%(a) (57.79%) 68.21% 37.85% 31.83%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.90% 1.87% 1.83% 1.81% 1.79%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .38% .78% .31% .19% .54%
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $416 $250 $661 $425 $295
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 149% 133% 125% 145% 124%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B -------------------------------------------------------
PER SHARE DATA 2009 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) (.02) .00(c) (.05) (.05) (.01)
Net gains (losses) (both realized and
unrealized) 2.45 (6.53) 5.79 2.91 1.83
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.43 (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) -- --
Proceeds from regulatory settlement (Note 10) .01 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.87 $4.43 $13.73 $10.63 $7.77
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 55.08%(a) (58.08%) 66.95% 36.81% 30.59%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 2.68% 2.62% 2.58% 2.57% 2.55%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.36%) .02% (.48%) (.55%) (.24%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $38 $28 $94 $77 $74
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 149% 133% 125% 145% 124%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C -------------------------------------------------------
PER SHARE DATA 2009 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) (.04) .00(c) (.05) (.06) --
Net gains (losses) (both realized and
unrealized) 2.48 (6.54) 5.81 2.93 1.82
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.44 (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) -- --
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) .01 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.89 $4.44 $13.78 $10.66 $7.79
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 55.18%(a) (58.15%) 67.03% 36.84% 30.54%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 2.60% 2.63% 2.59% 2.58% 2.56%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.65%) .03% (.48%) (.57%) (.19%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33 $3 $8 $5 $3
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 149% 133% 125% 145% 124%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I -------------------------------------------------------
PER SHARE DATA 2009 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) .06 .11 .09 .03 .06
Net gains (losses) (both realized and
unrealized) 2.85 (7.45) 6.43 3.16 1.98
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.91 (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)
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) .01 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.04 $5.12 $15.38 $11.50 $8.35
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 57.03%(a) (57.63%) 69.07% 38.36% 32.32%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.26% 1.42% 1.39% 1.35% 1.30%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .77% .97% .75% .63% .97%
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $69 $-- $56 $41 $19
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 149% 133% 125% 145% 124%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
CLASS R2 YEAR ENDED OCT. 31,
PER SHARE DATA 2009(d)
Net asset value, beginning of period $7.42
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)
Net gains (losses) (both realized and
unrealized) .33
- ----------------------------------------------------------------------
Total from investment operations .32
- ----------------------------------------------------------------------
Net asset value, end of period $7.74
- ----------------------------------------------------------------------
TOTAL RETURN 4.31%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 2.06%(e)
- ----------------------------------------------------------------------
Net investment income (loss) (.36%)(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $12
- ----------------------------------------------------------------------
Portfolio turnover rate 149%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 -------------------------------------------------------
PER SHARE DATA 2009 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) .04 .11 .05 .03 .05
Net gains (losses) (both realized and
unrealized) 2.86 (7.45) 6.41 3.14 1.97
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.90 (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)
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) .01 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.05 $5.14 $15.32 $11.50 $8.33
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 56.62%(a) (57.58%) 68.51% 38.06% 31.87%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.62% 1.73% 1.65% 1.63% 1.59%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(f) 1.56% 1.47% 1.65% 1.63% 1.59%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .72% 1.12% .45% .41% .81%
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $1 $2 $6 $2
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 149% 133% 125% 145% 124%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
36 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R5 -------------------
PER SHARE DATA 2009 2008(g)
Net asset value, beginning of period $5.13 $9.32
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .03
Net gains (losses) (both realized and
unrealized) 2.87 (4.22)
- ----------------------------------------------------------------------
Total from investment operations 2.92 (4.19)
- ----------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) .01 --
- ----------------------------------------------------------------------
Net asset value, end of period $8.06 $5.13
- ----------------------------------------------------------------------
TOTAL RETURN 57.12%(a) (44.96%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.31% 1.47%(e)
- ----------------------------------------------------------------------
Net investment income (loss) .68% 1.57%(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $--
- ----------------------------------------------------------------------
Portfolio turnover rate 149% 133%
- ----------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) During the year ended Oct. 31, 2009 the fund received proceeds from
regulatory settlements (see Note 10 to the financial statements). Had the
fund not received these proceeds, the total returns would have been lower by
0.12%.
(b) Expense ratios include the impact of a performance incentive adjustment, if
any. In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above expense ratios.
(c) Rounds to zero.
(d) For the period from Aug. 3, 2009 (inception date) to Oct. 31, 2009.
(e) Annualized.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) For the period from Aug. 1, 2008 (inception date) to Oct. 31, 2008.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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
Fund's 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 R2, Class R4 and Class
R5 shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R4 and Class R5 shares are offered without a front-
end sales charge or CDSC to qualifying institutional investors. Class R2
became available effective Aug. 3, 2009.
At Oct. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
38 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
the close of the NYSE, including significant movements in the U.S. market after
foreign exchanges have closed. Accordingly, in those situations, Ameriprise
Financial, Inc. (Ameriprise Financial), parent company of the Investment
Manager, as administrator to the Fund, will fair value foreign securities
pursuant to procedures adopted by the Board, including utilizing a third party
pricing service to determine these fair values. These procedures take into
account multiple factors, including movements in the U.S. securities markets, to
determine a good faith estimate that reasonably reflects the current market
conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
multiple denominations, primarily Brazilian real.
ILLIQUID SECURITIES
At Oct. 31, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at Oct. 31, 2009 was
$19,524,482 representing 3.42% of net assets. Certain illiquid securities may be
valued, in good faith, by management at fair value according to procedures
approved 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
- --------------------------------------------------------------------------------
40 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
the ordinary course of business within seven days at approximately the value at
which the asset is valued by the Fund.
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 (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
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. On Aug. 12, 2009, an additional
dividend was paid by Seligman Emerging Markets Fund before the merger (see Note
11) to ensure that current shareholders of Threadneedle Emerging Markets Fund
would not experience a dilution in their share of the Fund's income or capital
gains.
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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities. At Oct. 31, 2009, the Fund had no
outstanding forward foreign currency contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
At Oct. 31, 2009, the Fund had no outstanding investments in derivatives.
- --------------------------------------------------------------------------------
42 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $294,797
- ------------------------------------------------------------------------------
Total $294,797
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $--
- ------------------------------------------------------------------------------
Total $--
- ------------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Oct. 31, 2009, the Fund had no forward foreign currency contracts
outstanding. The monthly average gross notional amount for these contracts was
$1.2 million for the year ended Oct. 31, 2009.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 1.10% to 0.90% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper 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
$54,050 for the year ended Oct. 31, 2009. The management fee for the year ended
Oct. 31, 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
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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 year ended Oct. 31,
2009, other expenses paid to this company were $298.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R4 and Class R5 shares. The Transfer Agent
charges an annual fee of $5 per inactive account, charged on a pro rata basis
for the 12 month period from the date the account becomes inactive. These fees
are included in the transfer agency fees in the Statement of Operations.
In connection with the acquisition of Seligman Emerging Markets Fund (see Note
11), the Fund assumed the obligations of Seligman Emerging Markets Fund, which,
together with certain other associated investment companies (together, the
Guarantors), has severally, but not jointly, guaranteed the
- --------------------------------------------------------------------------------
44 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
performance and observance of all terms and conditions of a lease entered into
by Seligman Data Corp. (SDC), the former transfer agent of Seligman Emerging
Markets Fund, including the payment of rent by SDC (the Guaranty). The lease and
the Guaranty expire in January 2019. As of Oct. 31, 2009, the Fund's total
potential future obligation over the life of the Guaranty is $126,788. Seligman
Emerging Markets Fund expensed $64,979 related to the Guaranty prior to
acquisition by the Fund. This amount is included within other accrued expenses
in the Fund's Statement of Assets and Liabilities.
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 and Class R4 shares for the provision of various
administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A, a fee at an annual rate of up to 0.50% of the Fund's average daily
net assets attributable to Class R2 shares and a fee at an annual rate of up to
1.00% of the Fund's average daily net assets attributable to Class B and Class C
shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is
reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $1,091,000 and $46,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $531,551 for Class A, $24,324 for Class B and
$2,630 for Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R4............................................. 1.56%
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 45
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............................................. $426
</Table>
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would 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.
5. SECURITIES TRANSACTIONS
Cost of purchases (other than short-term obligations) aggregated $668,627,958
for the year ended Oct. 31, 2009, including $56,669,863* from Seligman Emerging
Markets Fund that was acquired in the fund merger as described in Note 11 and
$45,962,428* of purchases done to realign the Fund's portfolio following the
merger. Proceeds from sales of securities (other than short-term obligations)
aggregated $563,731,080 for year ended Oct. 31, 2009, including $45,169,849* of
sales done to realign the Fund's portfolio following the merger. Realized gains
and losses are determined on an identified cost basis.
* Amounts are excluded for purposes of calculating the Fund's portfolio
turnover rate.
- --------------------------------------------------------------------------------
46 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009(a) 2008(b),(c)
- -------------------------------------------------------------------
CLASS A
Sold 12,649,748 9,782,470
Fund merger 6,283,578 --
Converted from Class B shares(d) 927,466 1,300,305
Reinvested distributions -- 11,944,431
Redeemed (16,538,001) (16,677,659)
- -------------------------------------------------------------------
Net increase (decrease) 3,322,791 6,349,547
- -------------------------------------------------------------------
CLASS B
Sold 1,590,019 1,336,871
Fund merger 372,602 --
Reinvested distributions -- 2,007,193
Converted to Class A shares(d) (1,042,154) (1,450,037)
Redeemed (1,673,824) (2,368,668)
- -------------------------------------------------------------------
Net increase (decrease) (753,357) (474,641)
- -------------------------------------------------------------------
CLASS C
Sold 779,191 296,342
Fund merger 3,905,413 --
Reinvested distributions -- 163,281
Redeemed (640,121) (305,438)
- -------------------------------------------------------------------
Net increase (decrease) 4,044,483 154,185
- -------------------------------------------------------------------
CLASS I
Sold 9,487,877 2,894,086
Reinvested distributions -- 993,810
Redeemed (913,814) (7,495,922)
- -------------------------------------------------------------------
Net increase (decrease) 8,574,063 (3,608,026)
- -------------------------------------------------------------------
CLASS R2
Sold 100,396 --
Fund merger 1,735,811 --
Reinvested distributions -- --
Redeemed (255,756) --
- -------------------------------------------------------------------
Net increase (decrease) 1,580,451 --
- -------------------------------------------------------------------
CLASS R4
Sold 63,248 56,860
Reinvested distributions -- 40,967
Redeemed (68,066) (95,990)
- -------------------------------------------------------------------
Net increase (decrease) (4,818) 1,837
- -------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009(a) 2008(b),(c)
- -------------------------------------------------------------------
CLASS R5
Sold -- 535
Fund merger 66,208 --
- -------------------------------------------------------------------
Net increase (decrease) 66,208 535
- -------------------------------------------------------------------
</Table>
(a) Class R2 is for the period from Aug. 3, 2009 (inception date) to Oct. 31,
2009.
(b) Class R5 is for the period from Aug. 1, 2008 (inception date) to Oct. 31,
2008.
(c) Certain line items from the prior year have been renamed to conform to the
current year presentation.
(d) Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. 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 Oct. 31, 2009, securities valued at $20,960,570 were
on loan, secured by cash collateral of $22,071,023 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
- --------------------------------------------------------------------------------
48 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
$110,322 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $275,293,526 and $276,328,575,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
funds in the RiverSource Family of Funds, severally and not jointly, permitted
collective borrowings up to $475 million. Interest was charged to each Fund
based on its borrowings at a rate equal to the federal funds rate plus 0.75%.
The Fund also paid a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.06% per annum, in addition to an upfront fee
equal to its pro rata share of 0.02% of the amount of the credit facility. The
Fund had no borrowings during the year ended Oct. 31, 2009.
10. PROCEEDS FROM REGULATORY SETTLEMENT
During the year ended Oct. 31, 2009, as a result of a settlement of an
administrative proceeding brought by the Securities and Exchange Commission
against an unaffiliated third party relating to market timing and/or late
trading of mutual funds, the Fund received $458,466, which represented the
Fund's portion of the proceeds from the settlement (the Fund was not a party to
the proceeding). The proceeds received by the Fund were recorded as an increase
to additional paid-in capital.
11. FUND MERGER
At the close of business on Aug. 14, 2009, Threadneedle Emerging Markets Fund
acquired the assets and assumed the identified liabilities of Seligman Emerging
Markets Fund. The reorganization was completed after shareholders approved the
plan on June 29, 2009.
The aggregate net assets of Threadneedle Emerging Markets Fund immediately
before the acquisition were $457,623,309 and the combined net assets immediately
after the acquisition were $543,382,292.
The merger was accomplished by a tax-free exchange of 9,437,758 shares of
Seligman Emerging Markets Fund valued at $85,758,983.
In exchange for the Seligman Emerging Markets Fund shares and net assets,
Threadneedle Emerging Markets Fund issued the following number of shares:
<Table>
<Caption>
SHARES
- -------------------------------------------------------------
Class A........................................... 6,283,578
Class B........................................... 372,602
Class C........................................... 3,905,413
Class R2.......................................... 1,735,811
Class R5.......................................... 66,208
</Table>
- --------------------------------------------------------------------------------
50 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The components of Seligman Emerging Markets Fund's net assets after adjustments
for any permanent book-to-tax differences at the merger date were as follows:
<Table>
<Caption>
EXCESS OF
ACCUMULATED DISTRIBUTIONS OVER
TOTAL CAPITAL UNREALIZED NET NET INVESTMENT
NET ASSETS STOCK APPRECIATION REALIZED LOSS INCOME
- -----------------------------------------------------------------------------------------
Seligman
Emerging
Markets Fund $85,758,983 $89,533,507 $17,108,032 $(20,882,556) $--
</Table>
12. FEDERAL TAX INFORMATION
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, foreign tax
credits 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.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $486,709
and accumulated net realized loss has been decreased by $486,709.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
- ---------------------------------------------------------------
Ordinary income............................. $-- $96,003,258
Long-term capital gain...................... -- 61,249,036
</Table>
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................... $ 5,464,830
Undistributed accumulated long-term gain........ $ --
Accumulated realized loss....................... $(98,672,638)
Unrealized appreciation (depreciation).......... $ 76,098,627
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
For federal income tax purposes, the Fund had a capital loss carry-over of
$98,672,638 at Oct. 31, 2009, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2016 2017
$28,498,591 $70,174,047
</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. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
13. 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.
14. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
15. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In
- --------------------------------------------------------------------------------
52 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the 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
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
trading practices to the SEC and the Office of the Attorney General of the State
of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG. In
addition to the foregoing matter, the New York staff of the SEC indicated in
September 2005 that it was considering recommending to the Commissioners of the
SEC the instituting of a formal action against Seligman and Seligman Advisors,
Inc. relating to frequent trading in the Seligman Funds. Seligman responded to
the staff in October 2005 that it believed that any action would be both
inappropriate and unnecessary, especially in light of the fact that Seligman had
previously resolved the underlying issue with the Independent Directors of the
Seligman Funds and made recompense to the affected Seligman Funds. There have
been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material 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.
- --------------------------------------------------------------------------------
54 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE EMERGING MARKETS FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Emerging Markets Fund (the Fund)
(one of the portfolios constituting the RiverSource Global Series, Inc.) as of
October 31, 2009, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
October 31, 2006, were audited by other auditors whose report dated December 20,
2006 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
56 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of Threadneedle Emerging Markets Fund of the RiverSource Global Series,
Inc. at October 31, 2009, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 57
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 81.67%
Dividends Received Deductions for corporations............... 0.27%
U.S. Government Obligations.................................. 0.00%
Foreign taxes Paid........................................... $897,576
Foreign Source Income........................................ $6,322,810
</Table>
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
58 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 THREADNEEDLE EMERGING MARKETS FUND -- 2009 ANNUAL 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 (for RiverSource and
Threadneedle funds) or seligman.com (for Seligman 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 ANNUAL REPORT 63
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(R) mutual funds are
distributed by RiverSource Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6354 W (12/09)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 24
Statement of Operations............ 26
Statements of Changes in Net
Assets........................... 28
Financial Highlights............... 30
Notes to Financial Statements...... 39
Report of Independent Registered
Public Accounting Firm........... 57
Federal Income Tax Information..... 59
Board Members and Officers......... 60
Proxy Voting....................... 65
</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 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Equity Fund (the Fund) Class A shares advanced 19.39%
(excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index, which advanced 23.42% for the
period.
> The Lipper Global Funds Index, representing the Fund's peer group, advanced
19.50% over the same time frame.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------
Threadneedle Global Equity Fund
Class A (excluding sales
charge) +19.39% -5.74% +4.24% -0.78%
- ---------------------------------------------------------------------
MSCI All Country World Index
(unmanaged) +23.42% -4.39% +4.27% +1.39%
- ---------------------------------------------------------------------
Lipper Global Funds Index +19.50% -4.75% +3.74% +2.10%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
5/29/90) +19.39% -5.74% +4.24% -0.78% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) +18.39% -6.49% +3.46% -1.55% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) +18.43% -6.44% +3.48% N/A -3.25%
- ---------------------------------------------------------------------------
Class I (inception
8/1/08) +20.21% N/A N/A N/A -12.63%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) +19.13% N/A N/A N/A -7.37%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) +19.63% N/A N/A N/A -7.11%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) +19.72% -5.57% +4.45% -0.61% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) +20.20% N/A N/A N/A -6.80%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) +19.70% N/A N/A N/A -6.87%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
5/29/90) +12.52% -7.59% +3.02% -1.37% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) +13.48% -7.44% +3.11% -1.55% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) +17.43% -6.44% +3.48% N/A -3.25%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4, Class R5 and
Class W shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available
to qualifying institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
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.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Threadneedle Global Equity Fund (the Fund) portfolio managers Stephen Thornber
and Andrew Holliman of Threadneedle International Limited (Threadneedle) discuss
the Fund's results and positioning for the fiscal year ended Oct. 31, 2009.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
is the subadviser to the Fund.
Dear Shareholders,
Threadneedle Global Equity Fund Class A shares advanced 19.39% (excluding sales
charge) for the 12 months ended Oct. 31, 2009. The Fund underperformed its
benchmark, the Morgan Stanley Capital International (MSCI) All Country World
Index (MSCI All Country World Index), which advanced 23.42% for the period. The
Lipper Global Funds Index, representing the Fund's peer group, advanced 19.50%
over the same time frame.
SIGNIFICANT PERFORMANCE FACTORS
At the start of the fiscal year, the credit crisis was reaching its peak and
stocks were falling on deteriorating economic conditions and fear of the credit
crisis. Weakness in the equity markets persisted through February before
reversing in March 2009. During the strong recovery, stocks that performed
poorly during the market crisis came roaring back and stocks that held up well
suffered from profit-taking.
<Table>
<Caption>
COUNTRY BREAKDOWN(1) (at Oct. 31, 2009; % of
portfolio assets)
- ------------------------------------------------
Australia 1.1%
- ------------------------------------------------
Belgium 1.2%
- ------------------------------------------------
Bermuda 0.5%
- ------------------------------------------------
Brazil 2.4%
- ------------------------------------------------
Canada 1.7%
- ------------------------------------------------
China 1.0%
- ------------------------------------------------
Denmark 0.8%
- ------------------------------------------------
Finland 0.5%
- ------------------------------------------------
France 2.4%
- ------------------------------------------------
Germany 3.8%
- ------------------------------------------------
Hong Kong 3.2%
- ------------------------------------------------
India 0.9%
- ------------------------------------------------
Indonesia 1.4%
- ------------------------------------------------
Ireland 0.9%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
<Table>
<Caption>
COUNTRY BREAKDOWN(1) (at Oct. 31, 2009; % of
portfolio assets)
- ------------------------------------------------
Japan 6.4%
- ------------------------------------------------
Luxembourg 0.7%
- ------------------------------------------------
Mexico 2.3%
- ------------------------------------------------
Netherlands 1.8%
- ------------------------------------------------
Portugal 0.8%
- ------------------------------------------------
Singapore 0.8%
- ------------------------------------------------
South Korea 2.9%
- ------------------------------------------------
Spain 1.7%
- ------------------------------------------------
Switzerland 6.2%
- ------------------------------------------------
Taiwan 1.1%
- ------------------------------------------------
United Kingdom 11.6%
- ------------------------------------------------
United States 41.4%
- ------------------------------------------------
Other(2) 0.5%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
TOP TEN HOLDINGS (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
JPMorgan Chase & Co (United States) 2.0%
- ------------------------------------------------
Nestle (Switzerland) 2.0%
- ------------------------------------------------
IBM (United States) 1.9%
- ------------------------------------------------
HSBC Holdings (United Kingdom) 1.8%
- ------------------------------------------------
Google Cl A (United States) 1.7%
- ------------------------------------------------
Tullow Oil (United Kingdom) 1.7%
- ------------------------------------------------
America Movil ADR Series L (Mexico) 1.6%
- ------------------------------------------------
Johnson & Johnson (United States) 1.6%
- ------------------------------------------------
Apple (United States) 1.6%
- ------------------------------------------------
BG Group (United Kingdom) 1.5%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our view, the rising market didn't reflect continuing economic weakness, and
stock prices were driven by hope and sentiment rather than fundamental value and
future prospects. This presented a challenge for us because the Fund's strategy
is to invest in companies we expect to do well over a two to three-year period.
By the start of the fiscal year, we had already positioned the Fund defensively.
Though we certainly didn't foresee the full magnitude of the crisis, we
anticipated problems related to the sub-prime credit market and had prepared the
portfolio for a difficult environment. We reduced exposure to Asian and emerging
market equities and focused on high quality companies with strong balance sheets
in areas such as consumer staples, health care and large-cap technology.
The defensive positioning, though highly effective early in the fiscal year,
prevented the Fund from fully participating in the subsequent recovery. Asian
and emerging market equities, where the portfolio was underweight, recovered
more quickly than expected. Also, the market shunned the high quality, less
cyclical companies held by the Fund in favor of lower quality companies whose
price gains were driven by their cyclicality or how beaten down they had been in
the downturn.
Though the Fund's defensive positioning was primarily responsible for its
underperformance, relative to the MSCI All Country World Index, we believe this
approach was prudent because we saw little evidence to justify the strong market
rally.
On the positive side, the Fund benefited from its energy positioning. The
portfolio was underweight in the sector, which fell sharply and then recovered
strongly, but stock selection was quite strong. Holdings such as Brazil's
PETROBRAS, the U.K.'s BG GROUP and TULLOW OIL benefited from discoveries during
the period.
Having a smaller utilities position than the MSCI All Country World Index was
advantageous as utilities were generally left behind in the market rally. The
Fund also benefited from effective stock selection among industrial stocks, even
though the sector itself made little headway during the period.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Regionally, the Fund benefited from its European allocation, which was larger
than that of the MSCI All Country World Index. Though the European market did
not perform particularly well, the Fund's advantage came from strong stock
selection.
SAMSUNG ELECTRONICS, a global leader in semiconductors and mobile headsets, was
an individual contributor to relative return. Samsung is a good example of a
company using its financial strength to take market share from weaker
competitors.
The largest detractor from relative performance was the Fund's weighting in the
materials sector, which was smaller than that of the MSCI All Country World
Index. Materials stocks benefited from strong Asian demand and the market's
preference for beaten down, cyclical stocks. Within the materials sector, the
Fund's holdings of BARRICK GOLD added to relative return as the price of gold
rose 40% during 12-month period. People flocked to gold for security during the
downturn, and when the market rallied, gold remained strong due to concerns
about high government spending.
The Fund's emphasis on health care and consumer staples stocks was
disadvantageous. These sectors performed poorly in the latter part of the fiscal
year when investors moved assets into more cyclical areas. In the health care
sector, SCHERING PLOUGH was a key contributor as Merck paid a premium price to
acquire it. However, other high quality health care holdings like ROCHE,
NOVARTIS and GILEAD SCIENCES suffered as investors sold safer, solid companies
in pursuit of more aggressive holdings. Uncertainty about possible U.S. health
care reform also affected these stocks.
Additional detractors from relative performance included LOCKHEED MARTIN and
LLOYD'S TSB. We consider Lockheed Martin a solid, long-term company with a
strong balance sheet, but the U.S. defense contractor suffered from the market's
move to cyclical opportunities and from concern about defense spending under the
Obama administration. We bought Lloyd's to gain financial sector exposure while
avoiding exposure to investment banking and riskier derivative assets.
Unfortunately, Lloyd's fell with the entire financial sector on fear of rising
bad debts. Under pressure from the U.K. government, Lloyd's
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
bought a troubled competitor that exposed them to investment banking and the
very type of assets we wanted to avoid. We sold the stock, but it was still a
key detractor for the fiscal period.
CHANGES TO THE FUND'S PORTFOLIO
We maintained the Fund's defensive positioning for most of the period and then,
in the final months of the year, we moved the portfolio to a more neutral
stance, relative to the MSCI All Country World Index. In addition to continued
emphasis on companies that we believe will be long-term industry winners, we
added opportunistic exposure to companies that we believe offer shorter term
potential based on their sensitivity to economic recovery.
Initially, the Fund's financials position was much smaller than that of the MSCI
All Country World Index. We added to financials through the year, with
particular emphasis on Asian property companies and banks in India, Taiwan and
China. Asian banks are generally not involved in investment banking and have
less exposure to the derivative assets that derailed banks in developed regions.
On the positive side, they are exposed to faster growing regions where expanding
personal wealth creates greater need for banking services. We also invested in
financial companies in the developed world, including HARTFORD FINANCIAL and
CITIGROUP in the U.S. and FORTIS and ING in Europe. These companies appeared
close to collapse, but now have government support, improved capital positions
and stronger balance sheets.
We added to the materials and industrials sectors, two areas poised to benefit
from economic recovery and reduced allocations to consumer
Asia and the emerging market economies continue on their growth trend and we
see small signs that the developed economies are bottoming out.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
staples and health care, promising long-term sectors that are not currently
being rewarded by the market.
Geographically, the Fund's weightings in the U.S., Asia and emerging markets
were about equal to those of the MSCI All Country World Index at fiscal year
end. The portfolio had a larger position in Europe and a smaller weighting in
Japan compared to the MSCI All Country World Index.
The Fund's positions in the technology and financials sectors were larger than
those of the MSCI All Country World Index, while positions in industrials,
utilities and consumer-related sectors were smaller.
OUR FUTURE STRATEGY
At the start of the Fund's fiscal year, the financial system was in disarray and
the world appeared to be headed toward a depression. Governments, however, acted
quickly and decisively, creating a floor for the markets and the global economy.
Now the deepest fears seem to be past and most companies appear to be on
improved footing.
Asia and the emerging market economies continue on their growth trend and we see
small signs that the developed economies are bottoming out. Still, our
expectations are more cautious than the general consensus. We anticipate subdued
economic activity and, despite strong performing equity markets, we still see
challenges to consumer confidence and corporate earnings. Governments will have
to pay for their high spending through taxes or program cuts and that, along
with unemployment and low interest on savings, is likely to affect consumer
spending and, by extension, corporate profits.
For the past six months or so, investors have bought recovery and cyclical
stocks at any price. In the next market phase, we think investors may settle
down, focus on valuations and look for companies that can be long-term winners,
rather than just survivors. We believe the Fund's focus on individual stock
fundamentals should add value in such an environment.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
(PHOTO - STEPHEN THORNBER) (PHOTO - ANDREW HOLLIMAN, CFA(R))
Stephen Thornber Andrew Holliman, CFA
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 11
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Global Equity Fund Class A shares (from 11/1/99 to
10/31/09) as compared to the performance of the Morgan Stanley Capital
International (MSCI) All Country World Index and the Lipper Global Funds Index.
In comparing the Fund's Class A shares to these indices, you should take into
account the fact that the Fund's performance reflects the maximum initial sales
charge of 5.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distributions paid
during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
1 YEAR 3 YEARS 5 YEARS 10 YEARS
THREADNEEDLE GLOBAL EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,252 $7,892 $11,602 $8,717
- ------------------------------------------------------------------------------------------
Average annual total return +12.52% -7.59% +3.02% -1.37%
- ------------------------------------------------------------------------------------------
MSCI ALL COUNTRY WORLD INDEX(1)
Cumulative value of $10,000 $12,342 $8,739 $12,323 $11,480
- ------------------------------------------------------------------------------------------
Average annual total return +23.42% -4.39% +4.27% +1.39%
- ------------------------------------------------------------------------------------------
LIPPER GLOBAL FUNDS INDEX(2)
Cumulative value of $10,000 $11,950 $8,642 $12,013 $12,315
- ------------------------------------------------------------------------------------------
Average annual total return +19.50% -4.75% +3.74% +2.10%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE GLOBAL EQUITY FUND
LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE GLOBAL
EQUITY FUND
CLASS A MSCI ALL
(INCLUDES SALES COUNTRY WORLD LIPPER GLOBAL
CHARGE) INDEX(1) FUNDS INDEX(2)
------------------- ------------------ --------------
10/99 $ 9,425 $10,000 $10,000
1/00 10,968 10,567 11,394
4/00 11,104 10,801 11,781
7/00 10,787 10,563 11,643
10/00 9,873 10,088 11,192
1/01 9,287 9,860 11,029
4/01 8,121 9,036 10,163
7/01 7,435 8,525 9,573
10/01 6,433 7,547 8,542
1/02 6,735 7,865 8,862
4/02 6,597 7,901 9,003
7/02 5,651 6,806 7,748
10/02 5,377 6,523 7,410
1/03 5,198 6,361 7,196
4/03 5,473 6,781 7,537
7/03 5,966 7,476 8,327
10/03 6,337 8,170 9,083
1/04 6,805 8,972 10,016
4/04 6,668 8,880 9,923
7/04 6,586 8,846 9,746
10/04 7,079 9,316 10,251
1/05 7,689 9,996 11,007
4/05 7,578 9,907 10,873
7/05 8,227 10,586 11,617
10/05 8,600 10,701 11,801
1/06 9,881 11,934 13,199
4/06 10,268 12,589 13,810
7/06 9,811 12,189 13,272
10/06 10,407 13,137 14,249
1/07 11,174 13,961 15,208
4/07 11,621 14,813 15,945
7/07 12,053 15,000 16,081
10/07 13,407 16,391 17,278
1/08 11,518 14,238 15,212
4/08 11,813 14,877 15,638
7/08 10,510 13,533 14,204
10/08 7,301 9,302 10,305
1/09 6,614 8,249 9,270
4/09 7,080 9,023 9,895
7/09 8,296 10,754 11,667
10/09 8,717 11,480 12,315
</Table>
(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 ANNUAL REPORT 13
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 Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,231.10 $ 8.00 1.43%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.90 $ 7.23 1.43%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,225.10 $12.27 2.20%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.04 $11.11 2.20%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,224.50 $12.27 2.20%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.04 $11.11 2.20%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,233.00 $ 4.81 .86%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.76 $ 4.36 .86%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,227.40 $ 9.49 1.70%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.55 $ 8.59 1.70%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,231.10 $ 8.11 1.45%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.80 $ 7.33 1.45%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,230.80 $ 6.54 1.17%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.20 $ 5.92 1.17%
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,233.80 $ 5.21 .93%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.41 $ 4.71 .93%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,230.80 $ 7.55 1.35%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.30 $ 6.83 1.35%
- ------------------------------------------------------------------------------------------
</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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2009: +23.11%
for Class A, +22.51% for Class B, +22.45% for Class C, +23.30% for Class I,
+22.74% for Class R2, +23.11% for Class R3, +23.08% for Class R4, +23.38%
for Class R5 and +23.08% for Class W.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (100.0%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.1%)
CSL 184,567 $5,179,630
- -------------------------------------------------------------------------------------
BELGIUM (1.2%)
Fortis 1,370,269(b) 5,923,792
- -------------------------------------------------------------------------------------
BERMUDA (0.5%)
PartnerRe 34,197 2,615,387
- -------------------------------------------------------------------------------------
BRAZIL (2.4%)
Companhia Brasileira de Meios de Pagamento 204,952 1,887,118
Multiplan Empreendimentos Imobiliarios 197,000 2,984,374
Natura Cosmeticos 165,400 2,974,475
Redecard 237,500 3,488,640
---------------
Total 11,334,607
- -------------------------------------------------------------------------------------
CANADA (1.7%)
Barrick Gold 121,544 4,367,076
Nexen 177,900 3,824,464
---------------
Total 8,191,540
- -------------------------------------------------------------------------------------
CHINA (1.0%)
Industrial & Commercial Bank of China Series
H 6,206,000 4,937,650
- -------------------------------------------------------------------------------------
DENMARK (0.8%)
Vestas Wind Systems 57,204(b,d) 4,012,685
- -------------------------------------------------------------------------------------
FINLAND (0.4%)
Talvivaara Mining 364,317(b) 2,140,899
- -------------------------------------------------------------------------------------
FRANCE (2.4%)
Euler Hermes 32,540 2,582,983
France Telecom 164,391 4,072,990
Renault 106,960(b) 4,786,054
---------------
Total 11,442,027
- -------------------------------------------------------------------------------------
GERMANY (3.8%)
E.ON 99,472 3,800,177
K+S 43,631(d) 2,362,208
Linde 65,664 6,825,537
MTU Aero Engines Holding 62,441 2,827,934
Siemens 25,790 2,321,985
---------------
Total 18,137,841
- -------------------------------------------------------------------------------------
HONG KONG (3.2%)
Champion REIT 3,714,770(d) 1,563,485
Great Eagle Holdings 1,903,377 5,020,951
Hongkong & Shanghai Hotels 2,025,500 2,883,269
Sun Hung Kai Properties 378,000 5,726,965
---------------
Total 15,194,670
- -------------------------------------------------------------------------------------
INDIA (0.9%)
State Bank of India GDR 45,078 4,117,183
- -------------------------------------------------------------------------------------
INDONESIA (1.4%)
Bank Rakyat Indonesia 5,150,000 3,739,809
Perusahaan Gas Negara 8,416,500 3,125,099
---------------
Total 6,864,908
- -------------------------------------------------------------------------------------
IRELAND (0.9%)
Accenture Cl A 111,403 4,130,823
- -------------------------------------------------------------------------------------
JAPAN (6.6%)
Asahi Breweries 192,900 3,410,404
Canon 101,100 3,811,970
Honda Motor 75,200 2,322,808
KDDI 585 3,105,051
Makita 81,100 2,687,807
Mitsubishi Estate 307,000(d) 4,637,467
Nintendo 13,400(d) 3,361,237
Osaka Securities Exchange 355 1,703,683
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
JAPAN (CONT.)
Shin-Etsu Chemical 41,749 $2,214,127
Sony Financial Holdings 1,242 3,564,272
---------------
Total 30,818,826
- -------------------------------------------------------------------------------------
LUXEMBOURG (0.7%)
Millicom Intl Cellular 56,485(b) 3,539,350
- -------------------------------------------------------------------------------------
MEXICO (2.3%)
America Movil ADR Series L 181,490 8,009,154
Grupo Mexico Series B 1,514,600(b) 3,041,100
---------------
Total 11,050,254
- -------------------------------------------------------------------------------------
NETHERLANDS (1.8%)
Fugro 45,386 2,527,677
ING Groep 459,565(b) 5,980,002
---------------
Total 8,507,679
- -------------------------------------------------------------------------------------
PORTUGAL (0.8%)
Galp Energia Series B 226,483(d) 3,814,285
- -------------------------------------------------------------------------------------
SINGAPORE (0.8%)
DBS Group Holdings 423,000 3,874,485
- -------------------------------------------------------------------------------------
SOUTH KOREA (2.9%)
KB Financial Group 76,652(b) 3,688,669
NHN 24,384(b) 3,598,069
Samsung Electronics 11,228 6,759,403
---------------
Total 14,046,141
- -------------------------------------------------------------------------------------
SPAIN (1.7%)
Banco Santander 331,232 5,329,728
Inditex 49,139(d) 2,884,126
---------------
Total 8,213,854
- -------------------------------------------------------------------------------------
SWITZERLAND (6.2%)
Credit Suisse Group 44,000 2,352,116
Nestle 209,948 9,762,912
Novartis 143,120 7,452,853
Roche Holding 36,865 5,904,407
Syngenta 17,824 4,220,389
---------------
Total 29,692,677
- -------------------------------------------------------------------------------------
TAIWAN (1.1%)
Hon Hai Precision Industry 629,000 2,463,761
Taiwan Semiconductor Mfg 1,426,000 2,586,843
Taiwan Semiconductor Mfg ADR 18,297 174,553
---------------
Total 5,225,157
- -------------------------------------------------------------------------------------
UNITED KINGDOM (11.7%)
3i Group 861,105 3,705,976
Aggreko 232,254 2,886,464
Autonomy 103,051(b) 2,265,526
BG Group 445,560 7,668,799
Chemring Group 67,331 2,915,389
HSBC Holdings 803,102 8,873,490
Intl Power 817,617 3,394,150
Rio Tinto 79,680 3,522,293
Standard Chartered 118 2,894
Tesco 684,185 4,561,489
Tullow Oil 429,334 8,316,221
Vodafone Group 2,137,657 4,710,570
Weir Group 225,684 2,586,104
---------------
Total 55,409,365
- -------------------------------------------------------------------------------------
UNITED STATES (41.7%)
Aetna 86,577 2,253,599
American Tower Cl A 85,055(b) 3,131,725
Apple 41,212(b) 7,768,462
Arch Coal 139,535 3,022,328
Bank of America 333,651 4,864,632
Cisco Systems 218,521(b) 4,993,205
Citigroup 1,643,433 6,721,641
Cliffs Natural Resources 88,454 3,146,309
Coca-Cola 89,436 4,767,834
CVS Caremark 66,817 2,358,640
Dell 510,593(b) 7,398,493
Devon Energy 33,289 2,154,131
DIRECTV Group 197,526(b) 5,194,934
eBay 180,767(b) 4,025,681
ENSCO Intl 108,600 4,972,794
Gilead Sciences 112,861(b) 4,802,236
Goldman Sachs Group 29,614 5,039,414
Google Cl A 16,000(b) 8,577,920
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED STATES (CONT.)
Hartford Financial Services Group 256,189 $6,281,753
Humana 85,771(b) 3,223,274
IBM 78,564 9,475,604
Johnson & Johnson 133,521 7,884,415
JPMorgan Chase & Co 237,616 9,925,220
Laboratory Corp of America Holdings 63,875(b) 4,400,349
Lockheed Martin 78,459 5,397,195
Lowe's Companies 184,695 3,614,482
Merck & Co 137,100 4,240,503
Microsoft 228,000 6,322,440
Norfolk Southern 142,964 6,664,982
Oracle 300,000 6,330,000
QUALCOMM 86,515 3,582,586
Republic Services 190,446 4,934,456
SL Green Realty 85,016 3,295,220
Thermo Fisher Scientific 87,181(b) 3,923,145
Travelers Companies 83,319 4,148,453
Ultra Petroleum 73,720(b) 3,579,106
Walgreen 188,736 7,139,883
Wal-Mart Stores 50,548 2,511,225
Walt Disney 141,209 3,864,890
WESCO Intl 92,118(b) 2,354,536
---------------
Total 198,287,695
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $453,762,471) $476,703,410
- -------------------------------------------------------------------------------------
<Caption>
OTHER (--%)
ISSUER SHARES VALUE(a)
SPAIN
Banco Santander Rights 32(b) $6
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $--) $6
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (0.5%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 2,414,933(e) $2,414,933
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $2,414,933) $2,414,933
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (3.5%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 16,554,594 $16,554,594
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $16,554,594) $16,554,594
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $472,731,998)(f) $495,672,943
=====================================================================================
</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 net assets at Oct. 31, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Aerospace & Defense 2.3% $11,140,518
Automobiles 1.5 7,108,862
Beverages 1.7 8,178,238
Biotechnology 2.1 9,981,866
Capital Markets 2.3 11,097,506
Chemicals 3.3 15,622,261
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Commercial Banks 7.3% $34,563,914
Commercial Services & Supplies 1.6 7,820,920
Communications Equipment 1.8 8,575,791
Computers & Peripherals 5.2 24,642,559
Diversified Financial Services 6.1 29,195,178
Diversified Telecommunication Services 0.9 4,072,990
Electric Utilities 0.8 3,800,177
Electrical Equipment 0.8 4,012,685
Electronic Equipment, Instruments &
Components 0.5 2,463,761
Energy Equipment & Services 1.6 7,500,471
Food & Staples Retailing 3.5 16,571,237
Food Products 2.0 9,762,912
Gas Utilities 0.7 3,125,099
Health Care Providers & Services 2.1 9,877,222
Hotels, Restaurants & Leisure 0.6 2,883,269
Household Durables 0.6 2,687,807
Independent Power Producers & Energy
Traders 0.7 3,394,150
Industrial Conglomerates 0.5 2,321,985
Insurance 5.3 25,116,640
Internet Software & Services 3.4 16,201,670
IT Services 2.0 9,506,581
Life Sciences Tools & Services 0.8 3,923,145
Machinery 0.5 2,586,104
Media 1.9 9,059,824
Metals & Mining 3.4 16,217,677
Office Electronics 0.8 3,811,970
Oil, Gas & Consumable Fuels 6.8 32,379,334
Personal Products 0.6 2,974,475
Pharmaceuticals 5.3 25,482,178
Real Estate Investment Trusts (REITs) 1.0 4,858,705
Real Estate Management & Development 3.9 18,369,757
Road & Rail 1.4 6,664,982
Semiconductors & Semiconductor
Equipment 2.0 9,520,799
Software 3.8 18,279,203
Specialty Retail 1.4 6,498,608
Trading Companies & Distributors 0.5 2,354,536
Wireless Telecommunication Services 4.7 22,495,850
Other(1) 4.0 18,969,527
- -----------------------------------------------------------------------
Total $495,672,943
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(f) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $485,348,443 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $33,193,694
Unrealized depreciation (22,869,194)
-----------------------------------------------------------
Net unrealized appreciation $10,324,500
-----------------------------------------------------------
</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 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
----------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $224,948,500 $251,754,910(b) $-- $476,703,410
Other(a) 6(b) -- 6
- ---------------------------------------------------------------------------------------------
Total Equity Securities 224,948,500 251,754,916 -- 476,703,416
- ---------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(c) 2,414,933 -- -- 2,414,933
Investments of Cash
Collateral Received
for Securities on
Loan 16,554,594 -- -- 16,554,594
- ---------------------------------------------------------------------------------------------
Total Other 18,969,527 -- -- 18,969,527
- ---------------------------------------------------------------------------------------------
Total $243,918,027 $251,754,916 $-- $495,672,943
- ---------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of Investments.
(b) Includes certain securities trading outside the U.S. whose values were
adjusted as a result of significant market movements following the close of
local trading. Therefore, these investment securities were classified as
Level 2 instead of Level 1.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
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 ANNUAL REPORT 23
STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $453,762,471) $ 476,703,416
Affiliated money market fund (identified cost $2,414,933) 2,414,933
Investments of cash collateral received for securities on loan
(identified cost $16,554,594) 16,554,594
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $472,731,998) 495,672,943
Foreign currency holdings (identified cost $487,150) 483,814
Capital shares receivable 332,150
Dividends and accrued interest receivable 404,718
Receivable for investment securities sold 9,907,463
Reclaims receivable 504,675
Other receivable 214,186
- --------------------------------------------------------------------------------
Total assets 507,519,949
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 702,666
Payable for investment securities purchased 13,249,432
Payable upon return of securities loaned 16,554,594
Accrued investment management services fees 10,598
Accrued distribution fees 4,014
Accrued transfer agency fees 3,659
Accrued administrative services fees 1,076
Accrued plan administration services fees 43
Other accrued expenses 177,775
- --------------------------------------------------------------------------------
Total liabilities 30,703,857
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 476,816,092
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 782,045
Additional paid-in capital 803,601,398
Undistributed net investment income 356,736
Accumulated net realized gain (loss) (350,983,586)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 23,059,499
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 476,816,092
- --------------------------------------------------------------------------------
* Including securities on loan, at value $ 15,343,376
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $394,510,625 64,353,725 $6.13(1)
Class B $ 33,008,877 5,717,899 $5.77
Class C $ 10,570,042 1,851,492 $5.71
Class I $ 32,596,470 5,289,556 $6.16
Class R2 $ 46,070 7,498 $6.14
Class R3 $ 3,897 634 $6.15
Class R4 $ 6,058,555 980,165 $6.18
Class R5 $ 17,622 2,861 $6.16
Class W $ 3,934 639 $6.16
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $6.50. 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 ANNUAL REPORT 25
STATEMENT OF OPERATIONS -------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 10,432,415
Interest 262
Income distributions from affiliated money market fund 14,769
Income from securities lending -- net 215,469
Less foreign taxes withheld (579,353)
- --------------------------------------------------------------------------------
Total income 10,083,562
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 2,918,784
Distribution fees
Class A 884,744
Class B 362,565
Class C 57,394
Class R2 192
Class R3 8
Class W 8
Transfer agency fees
Class A 1,206,293
Class B 132,762
Class C 19,641
Class R2 19
Class R3 1
Class R4 2,552
Class R5 2
Class W 7
Administrative services fees 340,869
Plan administration services fees
Class R2 96
Class R3 8
Class R4 12,740
Compensation of board members 13,079
Custodian fees 58,680
Printing and postage 126,520
Registration fees 66,570
Professional fees 60,961
Other 24,675
- --------------------------------------------------------------------------------
Total expenses 6,289,170
Expenses waived/reimbursed by the Investment Manager and its
affiliates (129)
Earnings and bank fee credits on cash balances (80)
- --------------------------------------------------------------------------------
Total net expenses 6,288,961
- --------------------------------------------------------------------------------
Investment income (loss) -- net 3,794,601
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(107,406,047)
Foreign currency transactions (92,764)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (107,498,811)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 183,214,646
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 75,715,835
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 79,510,436
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 27
STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 3,794,601 $ 3,912,229
Net realized gain (loss) on investments (107,498,811) (64,341,389)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 183,214,646 (324,354,761)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 79,510,436 (384,783,921)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (5,343,305) (2,895,413)
Class C (7,366) --
Class I (409,801) --
Class R2 (81) (16)
Class R3 (64) (28)
Class R4 (95,325) (51,464)
Class R5 (82) (43)
Class W (56) (24)
- -----------------------------------------------------------------------------------------------
Total distributions (5,856,080) (2,946,988)
- -----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 38,201,079 $ 104,990,779
Class B shares 3,574,996 19,744,662
Class C shares 1,451,876 2,778,659
Class I shares 39,064,193 5,000
Class R2 shares 9,763 --
Class R4 shares 1,403,150 2,142,353
Class R5 shares 1 --
Fund merger
Class A shares 11,920,114 N/A
Class B shares 968,653 N/A
Class C shares 5,405,143 N/A
Class R2 shares 143,426 N/A
Class R5 shares 13,250 N/A
Reinvestment of distributions at net asset value
Class A shares 5,231,241 2,842,402
Class C shares 7,156 --
Class I shares 409,715 --
Class R2 shares 31 --
Class R4 shares 95,325 51,464
Conversions from Class B to Class A
Class A shares 8,590,859 17,227,753
Class B shares (8,590,859) (17,227,753)
Payments for redemptions
Class A shares (105,412,307) (144,969,040)
Class B shares (10,894,724) (21,618,553)
Class C shares (1,994,833) (2,137,746)
Class I shares (17,447,359) --
Class R2 shares (121,102) --
Class R4 shares (1,395,358) (2,469,638)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (29,366,571) (38,639,658)
- -----------------------------------------------------------------------------------------------
Proceeds from regulatory settlement (Note 10) 93,216 N/A
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 44,381,001 (426,370,567)
Net assets at beginning of year 432,435,091 858,805,658
- -----------------------------------------------------------------------------------------------
Net assets at end of year $ 476,816,092 $ 432,435,091
- -----------------------------------------------------------------------------------------------
Undistributed net investment income $ 356,736 $ 2,536,752
- -----------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For the periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A -------------------------------------------------------
PER SHARE DATA 2009 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) .05 .05 .02 .01 .02
Net gains (losses) (both realized and
unrealized) .95 (4.41) 2.13 1.30 1.08
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 1.00 (4.36) 2.15 1.31 1.10
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.04) (.06) (.02) (.03)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.13 $5.21 $9.61 $7.52 $6.23
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.39%(a) (45.55%) 28.82% 21.01% 21.48%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.44% 1.46% 1.39% 1.51% 1.57%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .92% .65% .28% .23% .33%
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $395 $380 $737 $608 $446
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100% 112% 93%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B -------------------------------------------------------
PER SHARE DATA 2009 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 (.01) (.04) (.01) (.02)
Net gains (losses) (both realized and
unrealized) .89 (4.14) 2.00 1.19 1.03
- ----------------------------------------------------------------------------------------------------------
Total from investment operations .90 (4.15) 1.96 1.18 1.01
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- .00(c) -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.77 $4.87 $9.02 $7.06 $5.88
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.48%(a) (46.01%) 27.81% 20.07% 20.74%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 2.21% 2.23% 2.15% 2.28% 2.34%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .22% (.11%) (.45%) (.54%) (.41%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33 $42 $104 $110 $102
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100% 112% 93%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C -------------------------------------------------------
PER SHARE DATA 2009 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) .00(c) (.01) (.04) (.01) (.02)
Net gains (losses) (both realized and
unrealized) .89 (4.09) 1.98 1.18 1.03
- ----------------------------------------------------------------------------------------------------------
Total from investment operations .89 (4.10) 1.94 1.17 1.01
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) -- (.03) -- (.01)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.71 $4.83 $8.93 $7.02 $5.85
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.39%(a) (45.91%) 27.76% 20.03% 20.89%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 2.20% 2.22% 2.15% 2.27% 2.33%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.08%) (.09%) (.48%) (.50%) (.53%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $11 $5 $8 $6 $2
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100% 112% 93%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I -------------------
PER SHARE DATA 2009 2008(d)
Net asset value, beginning of period $5.25 $7.47
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09 .03
Net gains (losses) (both realized and
unrealized) .95 (2.25)
- ----------------------------------------------------------------------
Total from investment operations 1.04 (2.22)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.13) --
- ----------------------------------------------------------------------
Net asset value, end of period $6.16 $5.25
- ----------------------------------------------------------------------
TOTAL RETURN 20.21%(a) (29.72%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses .84% .85%(e)
- ----------------------------------------------------------------------
Net investment income (loss) 1.56% 1.55%(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33 $--
- ----------------------------------------------------------------------
Portfolio turnover rate 81% 97%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R2 --------------------------------
PER SHARE DATA 2009 2008 2007(f)
Net asset value, beginning of period $5.23 $9.62 $7.89
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01) .05 (.01)
Net gains (losses) (both realized and
unrealized) 1.00 (4.42) 1.84
- -----------------------------------------------------------------------------------
Total from investment operations .99 (4.37) 1.83
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.02) (.10)
- -----------------------------------------------------------------------------------
Net asset value, end of period $6.14 $5.23 $9.62
- -----------------------------------------------------------------------------------
TOTAL RETURN 19.13%(a) (45.48%) 23.41%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.69% 1.79% 1.74%(e)
- -----------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.69% 1.54% 1.74%(e)
- -----------------------------------------------------------------------------------
Net investment income (loss) (.16%) .57% (.13%)(e)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- -----------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100%
- -----------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R3 --------------------------------
PER SHARE DATA 2009 2008 2007(f)
Net asset value, beginning of period $5.24 $9.65 $7.89
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .06 .01
Net gains (losses) (both realized and
unrealized) .96 (4.43) 1.85
- -----------------------------------------------------------------------------------
Total from investment operations 1.01 (4.37) 1.86
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.04) (.10)
- -----------------------------------------------------------------------------------
Net asset value, end of period $6.15 $5.24 $9.65
- -----------------------------------------------------------------------------------
TOTAL RETURN 19.63%(a) (45.43%) 23.80%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.38% 1.54% 1.49%(e)
- -----------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.32% 1.29% 1.49%(e)
- -----------------------------------------------------------------------------------
Net investment income (loss) 1.03% .82% .12%(e)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- -----------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100%
- -----------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 -------------------------------------------------------
PER SHARE DATA 2009 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) .06 .07 .04 .02 .04
Net gains (losses) (both realized and
unrealized) .96 (4.46) 2.13 1.31 1.09
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 1.02 (4.39) 2.17 1.33 1.13
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.05) (.07) (.02) (.04)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.18 $5.26 $9.70 $7.60 $6.29
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.72%(a) (45.47%) 28.85% 21.26% 21.90%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.15% 1.29% 1.23% 1.32% 1.38%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(g) 1.15% 1.28% 1.23% 1.32% 1.38%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.22% .83% .45% .44% .49%
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $6 $5 $10 $9 $6
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100% 112% 93%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R5 --------------------------------
PER SHARE DATA 2009 2008 2007(f)
Net asset value, beginning of period $5.25 $9.69 $7.89
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08 .08 .05
Net gains (losses) (both realized and
unrealized) .96 (4.45) 1.85
- -----------------------------------------------------------------------------------
Total from investment operations 1.04 (4.37) 1.90
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.13) (.07) (.10)
- -----------------------------------------------------------------------------------
Net asset value, end of period $6.16 $5.25 $9.69
- -----------------------------------------------------------------------------------
TOTAL RETURN 20.20%(a) (45.40%) 24.33%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses .90% 1.04% .99%(e)
- -----------------------------------------------------------------------------------
Net investment income (loss) 1.39% 1.07% .62%(e)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- -----------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100%
- -----------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS W --------------------------------
PER SHARE DATA 2009 2008 2007(h)
Net asset value, beginning of period $5.23 $9.66 $7.83
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06 .05 .02
Net gains (losses) (both realized and
unrealized) .96 (4.44) 1.91
- -----------------------------------------------------------------------------------
Total from investment operations 1.02 (4.39) 1.93
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.09) (.04) (.10)
- -----------------------------------------------------------------------------------
Net asset value, end of period $6.16 $5.23 $9.66
- -----------------------------------------------------------------------------------
TOTAL RETURN 19.70%(a) (45.62%) 24.87%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.30% 1.43% 1.39%(e)
- -----------------------------------------------------------------------------------
Net investment income (loss) 1.05% .68% .20%(e)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- -----------------------------------------------------------------------------------
Portfolio turnover rate 81% 97% 100%
- -----------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) During the year ended Oct. 31, 2009, the Fund received proceeds from
regulatory settlement (see Note 10 to the Financial Statements). Had the
Fund not received these proceeds, the total return would have been lower by
0.02%
(b) Expense ratios include the impact of a performance incentive adjustment, if
any. In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the reported expense ratios.
(c) Rounds to zero.
(d) For the period from Aug. 1, 2008 (when shares became public available) to
Oct. 31, 2008.
(e) Annualized.
(f) For the period from Dec. 11, 2006 (when shares became public available) to
Oct. 31, 2007.
(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) For the period from Dec. 1, 2006 (when shares became public available) to
Oct. 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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
Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares, and the Investment Manager owned 100% of
Class R3 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
multiple denominations, primarily Taiwan dollars.
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 ANNUAL REPORT 41
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 (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
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. On Aug. 12, 2009, an additional
dividend was paid before the merger (see Note 11) to ensure that the current
shareholders of Threadneedle Global Equity Fund would not experience a dilution
in their shares of the Fund's income or capital gains.
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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
strategy. A forward foreign currency contract is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of a forward foreign currency contract fluctuates with changes in foreign
currency exchange rates. Forward foreign currency contracts are marked to market
daily based upon foreign currency exchange rates from an independent pricing
service and the change in value is recorded as unrealized appreciation or
depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount reflected, if any,
in the Statement of Assets and Liabilities. At Oct. 31, 2009, the Fund had no
outstanding forward foreign currency contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
At Oct. 31, 2009, the Fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $100,625
- ------------------------------------------------------------------------------
Total $100,625
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $--
- ------------------------------------------------------------------------------
Total $--
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Oct. 31, 2009, the Fund had no forward foreign currency contracts
outstanding. The monthly average gross notional amount for these contracts was
$300,000 for the year ended Oct. 31, 2009.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.80% to 0.57% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper 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 zero. The adjustment decreased the management fee by
$446,000 for the year ended Oct. 31, 2009. The management fee for the year ended
Oct. 31, 2009 was 0.68% 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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2009, other expenses paid to this company were $2,741.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares and an annual
asset-based fee at a rate of 0.20% of the Fund's average daily net assets
attributable to Class W shares. The Transfer Agent charges an annual fee of $5
per inactive account, charged on a pro rata basis for the 12 month period from
the date the account becomes inactive. These fees are included in the transfer
agency fees in the Statement of Operations.
In connection with the acquisition of Seligman Global Growth Fund (see Note 11),
the Fund assumed the obligations of Seligman Global Growth Fund, which, together
with certain other associated investment companies (together, the Guarantors),
has severally, but not jointly, guaranteed the performance and observance of all
terms and conditions of a lease entered into by Seligman Data Corp. (SDC), the
former transfer agent of Seligman Global Growth Fund, including the payment of
rent by SDC (the Guaranty). The lease and the Guaranty expire in January 2019.
At Oct. 31, 2009, the Fund's total potential future obligation under the
Guaranty over the life of the Guaranty is $26,342. Seligman Global Growth Fund
expensed $13,520 related to the Guaranty prior to acquisition by the Fund. This
amount is included within other accrued expenses in the Fund's Statement of
Assets and Liabilities.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A, 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, of
the 1.00% fee, up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $1,466,000 and $63,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as July 31, 2009, and may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $325,719 for Class A, $33,636 for Class B and
$1,652 for Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R2............................................ 1.69%
Class R3............................................ 1.32
Class R4............................................ 1.15
</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>
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would 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.
BANK FEE CREDITS
During the year ended Oct. 31, 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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $361,593,741 (including $17,582,246* from Seligman
Global Growth Fund that was acquired in the fund merger as described in Note 11)
and $388,084,094, respectively, for the year ended Oct. 31, 2009. Realized gains
and losses are determined on an identified cost basis.
* This purchase amount is excluded for purposes of calculating the Fund's
portfolio turnover rate.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- -------------------------------------------------------------------
CLASS A
Sold 7,500,867 13,186,460
Fund merger 2,011,033 --
Converted from Class B shares** 1,463,400 2,293,975
Reinvested distributions 983,464 328,601
Redeemed (20,645,429) (19,420,602)
- -------------------------------------------------------------------
Net increase (decrease) (8,686,665) (3,611,566)
- -------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- -------------------------------------------------------------------
CLASS B
Sold 745,833 2,606,662
Fund merger 173,293 --
Converted to Class A shares** (1,561,833) (2,447,124)
Redeemed (2,294,056) (3,014,161)
- -------------------------------------------------------------------
Net increase (decrease) (2,936,763) (2,854,623)
- -------------------------------------------------------------------
CLASS C
Sold 298,410 381,563
Fund merger 977,635 --
Reinvested distributions 1,304 --
Redeemed (411,308) (318,939)
- -------------------------------------------------------------------
Net increase (decrease) 866,041 62,624
- -------------------------------------------------------------------
CLASS I
Sold 8,069,029 666
Reinvested distributions 69,326 --
Redeemed (2,849,465) --
- -------------------------------------------------------------------
Net increase (decrease) 5,288,890 666
- -------------------------------------------------------------------
CLASS R2
Sold 1,844 --
Fund merger 24,131 --
Reinvested distributions 5 --
Redeemed (19,116) --
- -------------------------------------------------------------------
Net increase (decrease) 6,864 --
- -------------------------------------------------------------------
CLASS R4
Sold 265,435 264,404
Reinvested distributions 17,716 5,909
Redeemed (266,560) (319,876)
- -------------------------------------------------------------------
Net increase (decrease) 16,591 (49,563)
- -------------------------------------------------------------------
CLASS R5
Sold -- --
Fund merger 2,227 --
Reinvested distributions -- --
Redeemed -- --
- -------------------------------------------------------------------
Net increase (decrease) 2,227 --
- -------------------------------------------------------------------
</Table>
* Certain line items from the prior year have been renamed to conform to the
current year presentation.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
7. 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 Oct. 31, 2009, securities valued at $15,343,376 were
on loan, secured by cash collateral of $16,554,594 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$215,469 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $177,620,306 and $181,828,932,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
its pro rata share of 0.02% of the amount of the credit facility. The Fund had
no borrowings during the year ended Oct. 31, 2009.
10. PROCEEDS FROM REGULATORY SETTLEMENT
During the year ended Oct. 31, 2009, as a result of a settlement of an
administrative proceeding brought by the Securities and Exchange Commission
against an unaffiliated third party relating to market timing and/or late
trading of mutual funds, the Fund received $93,216, which represented the Fund's
portion of the proceeds from the settlement (the Fund was not a party to the
proceeding). The proceeds received by the Fund were recorded as an increase to
additional paid-in capital.
11. FUND MERGER
At the close of business on Aug. 14, 2009, Threadneedle Global Equity Fund
acquired the assets and assumed the identified liabilities of Seligman Global
Growth Fund. The reorganization was completed after shareholders approved the
plan on June 29, 2009.
The aggregate net assets of Threadneedle Global Equity Fund immediately before
the acquisition were $475,267,886 and the combined net assets immediately after
the acquisition were $493,718,472.
The merger was accomplished by a tax-free exchange of 3,038,152 shares of
Seligman Global Growth Fund valued at $18,450,586.
In exchange for the Seligman Global Growth Fund shares and net assets,
Threadneedle Global Equity Fund issued the following number of shares:
<Table>
<Caption>
SHARES
- ------------------------------------------------------------
Class A.......................................... 2,011,033
Class B.......................................... 173,293
Class C.......................................... 977,635
Class R2......................................... 24,131
Class R5......................................... 2,227
</Table>
The components of Seligman Global Growth Fund's net assets after adjustments for
any permanent book-to-tax differences at the merger date were as follows:
<Table>
<Caption>
EXCESS OF
ACCUMULATED DISTRIBUTIONS OVER
TOTAL CAPITAL UNREALIZED NET NET INVESTMENT
NET ASSETS STOCK APPRECIATION REALIZED LOSS INCOME
- -------------------------------------------------------------------------------------------
Seligman Global
Growth Fund $18,450,586 $52,704,193 $320,343 $(34,572,254) $(1,696)
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
12. FEDERAL TAX INFORMATION
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 real estate investment trust (REIT) distributions, foreign
tax credits 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.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $116,841
and accumulated net realized loss has been decreased by $199,374,530 resulting
in a net reclassification adjustment to decrease paid-in capital by
$199,257,689.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008
- ------------------------------------------------------------------
Ordinary income........................... $5,856,080 $2,946,988
Long-term capital gain.................... -- --
</Table>
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................... $1,519,019
Undistributed accumulated long-term gain........ $--
Accumulated realized loss....................... $(339,519,748)
Unrealized appreciation (depreciation).......... $10,433,378
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$339,519,748 at Oct. 31, 2009, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2010 2011 2015 2016 2017
$143,688,441 $30,509,951 $2,715,902 $62,625,028 $99,980,426
</Table>
Threadneedle Global Equity Fund acquired $5,786,102 of capital loss carry-overs
in connection with the Seligman Global Growth Fund merger (Note 11). The yearly
utilization of the acquired capital losses is limited by the Internal Revenue
Code. For the year ended Oct. 31, 2009, $199,257,689 of capital loss carry-over
expired unused. 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
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
13. 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.
14. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
15. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme
Court, asking the U.S. Supreme Court to stay the District Court proceedings
while the U.S. Supreme Court considers and rules in a case captioned Jones v.
Harris Associates, which involves issues of law similar to those presented in
the Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman
- --------------------------------------------------------------------------------
54 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Parties permitted various persons to engage in frequent trading and, as a
result, the prospectus disclosure used by the registered investment companies
then managed by Seligman was and had been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman paid $11.3 million to four Seligman
Funds. This settlement resolved all outstanding matters between the Seligman
Parties and the NYAG. In addition to the foregoing matter, the New York staff of
the SEC indicated in September 2005 that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds.
Seligman responded to the staff in October 2005 that it believed that any action
would be both inappropriate and unnecessary, especially in light of the fact
that Seligman had previously resolved the underlying issue with the Independent
Directors of the Seligman Funds and made recompense to the affected Seligman
Funds. There have been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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.
- --------------------------------------------------------------------------------
56 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Equity Fund (the Fund) (one
of the portfolios constituting the RiverSource Global Series, Inc.) as of
October 31, 2009, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
October 31, 2006, were audited by other auditors whose report dated December 20,
2006 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of Threadneedle Global Equity Fund of the RiverSource Global Series,
Inc. at October 31, 2009, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
58 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100.00%
Dividends Received Deduction for corporations................ 77.49%
U.S. Government Obligations.................................. 0.00%
Foreign Tax Credit........................................... $452,913
Foreign Source Income........................................ $3,931,631
</Table>
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure
- --------------------------------------------------------------------------------
62 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
of the Board. In addition to Mr. Truscott, who is Vice President, the Fund's
other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL REPORT 63
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
64 THREADNEEDLE GLOBAL EQUITY FUND -- 2009 ANNUAL 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 FUND -- 2009 ANNUAL REPORT 65
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 Fund Distributors, Inc.,
Member FINRA, and managed by RiverSource Investments, LLC.
RiverSource and Threadneedle are part of Ameriprise
Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6334 AH (12/09)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY INCOME FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EQUITY INCOME FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH A HIGH LEVEL OF CURRENT
INCOME AND SECONDARILY, GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 24
Statement of Operations............ 25
Statements of Changes in Net
Assets........................... 27
Financial Highlights............... 29
Notes to Financial Statements...... 37
Report of Independent Registered
Public Accounting Firm........... 53
Federal Income Tax Information..... 55
Board Members and Officers......... 56
Proxy Voting....................... 60
</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 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Equity Income Fund Class A shares advanced 20.16%
(excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index, which advanced 23.42% for the
period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 8/1/08
- ----------------------------------------------------------------
Threadneedle Global Equity Income Fund
Class A (excluding sales charge) +20.16% -10.06%
- ----------------------------------------------------------------
MSCI All Country World Index (unmanaged) +23.42% -11.58%
- ----------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index description)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 8/1/08) +20.16% -10.06%
- ----------------------------------------------------------------
Class B (inception 8/1/08) +19.14% -10.72%
- ----------------------------------------------------------------
Class C (inception 8/1/08) +19.21% -10.70%
- ----------------------------------------------------------------
Class I (inception 8/1/08) +20.53% -9.72%
- ----------------------------------------------------------------
Class R2 (inception 8/1/08) +19.63% -10.38%
- ----------------------------------------------------------------
Class R3 (inception 8/1/08) +20.04% -10.08%
- ----------------------------------------------------------------
Class R4 (inception 8/1/08) +20.26% -9.92%
- ----------------------------------------------------------------
Class R5 (inception 8/1/08) +20.47% -9.76%
- ----------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) +13.26% -14.23%
- ----------------------------------------------------------------
Class B (inception 8/1/08) +14.14% -13.53%
- ----------------------------------------------------------------
Class C (inception 8/1/08) +18.21% -10.70%
- ----------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5
shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to
qualifying institutional investors only.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
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.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Threadneedle Global Equity Income Fund portfolio managers Stephen Thornber and
Jeremy Podger of Threadneedle International Limited (Threadneedle) discuss the
Fund's results and positioning for the 12 months ended Oct. 31, 2009.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
is the subadviser to the Fund.
Dear Shareholders,
Threadneedle Global Equity Income Fund Class A shares advanced 20.16% (excluding
sales charge) for the 12 months ended Oct. 31, 2009. The Fund underperformed its
benchmark, the Morgan Stanley Capital International (MSCI) All Country World
Index (MSCI Index), which advanced 23.42% for the period.
THE FUND'S CURRENT INVESTMENT STRATEGY
At the start of the fiscal year, the credit crisis was reaching its peak and
stocks were falling on deteriorating economic conditions and fear of the credit
crisis. Weakness in the equity markets persisted through February before
reversing in March 2009. A robust rally followed.
The past year was particularly challenging for the Fund because its strategy is
to invest in larger, defensive companies that pay dividends. These stocks
performed well from a price perspective during the first part of the fiscal
year, but many companies reduced or eliminated dividends in response to the
difficult economic and credit environments. A record number of dividend cuts
made it harder to manage the Fund. When the market turned, cyclical companies
and beaten down, lower quality firms led the rebound. The Fund had little
exposure to these stocks because they generally don't pay much in the way of
dividends.
Areas that performed well for the Fund included consumer staples, where strong
stock selection added value, and emerging markets and Asia where we have still
been able to find companies paying good income. In the consumer staples sector,
the Fund's holdings of food stocks -- particularly emerging market cola bottlers
AMBEV and GRUPO CONTINENTAL -- performed well.
The Fund also benefited from its position in NATIONAL AUSTRALIA BANK. Australian
banks in general performed well. They had little exposure to the toxic assets
that plagued banks in other developed countries, while
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
having broad exposure to growth in the Asian region. An overweight in Asian
property stocks and stock selection in the industrials sector were also
advantageous.
We took advantage of the credit crisis to purchase three convertible bonds,
bonds that pay income and then convert to equities based on certain criteria. We
acquired these bonds at very attractive prices and, as credit markets improved,
they were revalued closer to their fair value.
COUNTRY BREAKDOWN(1) (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Australia 4.6%
- ------------------------------------------------
Brazil 3.1%
- ------------------------------------------------
Canada 1.2%
- ------------------------------------------------
China 0.9%
- ------------------------------------------------
Denmark 0.4%
- ------------------------------------------------
Finland 6.2%
- ------------------------------------------------
France 5.3%
- ------------------------------------------------
Germany 5.5%
- ------------------------------------------------
Greece 0.8%
- ------------------------------------------------
Hong Kong 5.6%
- ------------------------------------------------
Indonesia 0.7%
- ------------------------------------------------
Italy 2.8%
- ------------------------------------------------
Japan 4.1%
- ------------------------------------------------
Jersey 1.4%
- ------------------------------------------------
Mexico 1.1%
- ------------------------------------------------
Netherlands 0.9%
- ------------------------------------------------
Norway 0.8%
- ------------------------------------------------
Singapore 1.7%
- ------------------------------------------------
Spain 4.0%
- ------------------------------------------------
Sweden 1.7%
- ------------------------------------------------
Taiwan 3.9%
- ------------------------------------------------
United Kingdom 19.2%
- ------------------------------------------------
United States 22.9%
- ------------------------------------------------
Other(2) 1.2%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
BP (United Kingdom) 2.4%
- ------------------------------------------------
Talvivaara Mining 2013 5.25% (Finland) 2.0%
- ------------------------------------------------
Pearson (United Kingdom) 2.0%
- ------------------------------------------------
BP Prudhoe Bay Royalty Trust (United
States) 2.0%
- ------------------------------------------------
Ono Pharmaceutical (Japan) 1.8%
- ------------------------------------------------
Vivendi (France) 1.8%
- ------------------------------------------------
Banco Santander (Spain) 1.7%
- ------------------------------------------------
DBS Group Holdings (Singapore) 1.6%
- ------------------------------------------------
Champion REIT (Hong Kong) 1.5%
- ------------------------------------------------
Bristol-Myers Squibb (United States) 1.5%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
Having smaller positions in materials, technology and financials compared to the
MSCI Index was detrimental. These groups performed well in the
recovery -- materials and technology due to their cyclical attributes and
financials because they had been so beaten down in the bear market phase.
Materials and technology stocks don't usually pay attractive dividends, even
under favorable economic conditions. Financial stocks had historically been a
key source of dividend income, but due to widespread dividend cuts, many
financials no longer suited the Fund's strategy.
Individual detractors included OPAP, a Greek gambling company that was hurt by
the economic slowdown and threats of changes to gambling taxes. Japanese game
maker NINTENDO was also disappointing. The stock has a healthy dividend, which
is unusual in Japan, but the company has had a poor schedule of game releases.
Cell phone maker NOKIA underperformed on lost market share. We chose Nokia to
gain exposure to the cell phone market because unlike many other handset makers,
it pays a dividend. Unfortunately new Nokia products haven't been well-received.
The portfolio had a larger health care position than the MSCI Index. The health
care sector typically provides large and, generally, secure
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
dividends, making it attractive to us. In the latter part of the fiscal year,
health care stocks came under pressure from the shift toward cyclical sectors
and from concerns about possible U.S. health care reform.
CHANGES TO THE PORTFOLIO
The Fund's two-pronged investment goal is to provide a combination of a high
level of current income and, secondarily, growth potential. We made quite a few
changes to the Fund over the course of the year in response to the significant
shift in the dividend landscape. As financial stocks -- as well as many
industrials and other cyclical companies -- cut dividends, we sought new sources
of income. We sold the portfolio's bank holdings and reinvested in insurance and
real estate stocks, particularly Asian real estate. As mentioned above, we also
found opportunities among Australian banks. Overall, we reduced the Fund's
financial sector weighting.
We sold some cyclical stocks that cut or reduced dividends and we increased the
energy allocation, which was larger than that of the MSCI Index at fiscal year
end. We prefer energy stocks that have strong balance sheets and secure dividend
streams. We bought some consumer staples stocks, including the Australian
beverage company FOSTER'S. And, as cited above, we bought convertible bonds that
boosted the Fund's income potential.
With income so hard to come by, we had to reduce allocations to the lowest
yielding sectors. We initially held some materials stocks because we wanted
exposure to the sector despite the low income, but we sold those holdings early
in the year and didn't buy back in. We reduced the Fund's technology position as
well.
The portfolio's allocations to Europe and Asia were larger than those of the
MSCI Index, while allocations to the U.S. and Japan were smaller. This is
structural rather than tactical positioning because it is difficult to find
attractive stocks in the low-yielding U.S. and Japanese markets.
To summarize, the portfolio's weightings in the energy, telecommunications,
consumer staples and utilities sectors were larger than those of the MSCI Index
at fiscal year end, while weightings in information technology, industrials and
materials were smaller.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
OUR FUTURE STRATEGY
At the start of the Fund's fiscal year, the financial system was in disarray and
the world appeared to be headed toward a depression. Governments, however, acted
quickly and decisively, creating a floor for the markets and the global economy.
Now the deepest fears seem to be past and most companies appear to be on
improved footing.
Asia and the emerging market economies continue on their growth trend and we see
small signs that the developed economies are bottoming out. Still, our
expectations are more cautious than the general consensus. We anticipate subdued
economic activity and, despite rising equity markets, we see challenges to
consumer confidence and corporate earnings. Governments will have to pay for
their high spending through taxes or program cuts and that, along with
unemployment and low interest on savings, is likely to affect consumer spending
and, by extension, corporate profits.
We are focusing the portfolio on high quality companies with healthy balance
sheets and visible, stable earnings that underpin their dividend-paying
capacity. We're looking for companies with income that appears quite secure, but
that also have the potential to grow income over time.
The recent market hasn't favored the type of stocks in the Fund's portfolio, but
we believe a broadening of the equity recovery will shift attention to longer
term fundamentals and future growth prospects. Such an environment should favor
portfolio holdings that have been overlooked in the mad dash for a cyclical
recovery. We think quality stocks, delivering attractive dividends and solid,
visible growth are likely to be rewarded going forward.
We are focusing the portfolio on high quality companies with healthy balance
sheets and visible, stable earnings that underpin their dividend-paying
capacity.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
<Table>
(PHOTO - STEPHEN THORNBER) (PHOTO - JEREMY PODGER)
Stephen Thornber Jeremy Podger
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Global Equity Income Fund Class A shares (from 8/1/08
to 10/31/09) as compared to the performance of the Morgan Stanley Capital
International (MSCI) All Country World Index. In comparing the Fund's Class A
shares to this index, you should take into account the fact that the Fund's
performance reflects the maximum initial sales charge of 5.75%, while such
charges are not reflected in the performance of the index. Returns for the Fund
include the reinvestment of any distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
SINCE
INCEPTION
1 YEAR 8/1/08
THREADNEEDLE GLOBAL EQUITY INCOME FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,326 $8,256
- -----------------------------------------------------------------------
Average annual total return +13.26% -14.23%
- -----------------------------------------------------------------------
MSCI ALL COUNTRY WORLD INDEX(1)
Cumulative value of $10,000 $12,342 $8,576
- -----------------------------------------------------------------------
Average annual total return +23.42% -11.58%
- -----------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE GLOBAL EQUITY INCOME
FUND LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE GLOBAL
EQUITY INCOME
FUND CLASS MSCI ALL
A (INCLUDES COUNTRY WORLD
SALES CHARGE) INDEX(1)
------------------- -------------
8/1/08 $9,425 $10,000
10/08 6,878 6,949
1/09 6,062 6,162
4/09 6,430 6,740
7/09 7,711 8,034
10/09 8,256 8,576
</Table>
(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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Direct 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.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,284.00 $ 8.65 1.51%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.50 $ 7.64 1.51%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,278.10 $12.96 2.27%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.69 $11.46 2.27%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,278.60 $12.91(c) 2.26%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.74 $11.41(c) 2.26%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,285.90 $ 6.36(c) 1.11%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.50 $ 5.62(c) 1.11%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,279.60 $10.91(c) 1.91%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.49 $ 9.65(c) 1.91%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,282.60 $ 9.50(c) 1.66%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.75 $ 8.39(c) 1.66%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,284.10 $ 8.07(c) 1.41%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 7.13(c) 1.41%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,285.60 $ 6.65(c) 1.16%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.25 $ 5.87(c) 1.16%
- ------------------------------------------------------------------------------------------
</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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2009: +28.40%
for Class A, +27.81% for Class B, +27.86% for Class C, +28.59% for Class I,
+27.96% for Class R2, +28.26% for Class R3, +28.41% for Class R4 and +28.56%
for Class R5.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until Dec. 31, 2010, unless sooner terminated at the discretion of
the Fund's Board, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 2.21% for Class C, 1.06% for Class I, 1.86% for
Class R2, 1.61% for Class R3, 1.36% for Class R4 and 1.11% for Class R5. Any
amounts waived will not be reimbursed by the Fund. This change was effective
Nov. 1, 2009. Had this change been in place for the entire six month period
ended Oct. 31, 2009, the actual expenses paid would have been $12.97 for
Class C, $6.42 for Class I, $10.97 for Class R2, $9.56 for Class R3, $8.13
for Class R4 and $6.70 for Class R5; the hypothetical expenses paid would
have been $11.46 for Class C, $5.67 for Class I, $9.70 for Class R2, $8.44
for Class R3, $7.18 for Class R4 and $5.92 for Class R5.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (94.6%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (4.6%)
Coca-Cola Amatil 41,096 $390,518
Foster's Group 43,123 211,382
Natl Australia Bank 13,837 365,415
Telstra 101,667 301,966
---------------
Total 1,269,281
- -------------------------------------------------------------------------------------
BRAZIL (3.1%)
Cia de Bebidas das Americas 3,700 336,163
Companhia Brasileira de Meios de Pagamento 11,400 104,967
Natura Cosmeticos 13,400 240,979
Redecard 11,500 168,923
---------------
Total 851,032
- -------------------------------------------------------------------------------------
CANADA (1.2%)
Baytex Energy Trust Units 13,509 330,430
- -------------------------------------------------------------------------------------
CHINA (0.9%)
CNOOC 170,000 254,601
- -------------------------------------------------------------------------------------
DENMARK (0.4%)
TrygVesta 1,687(d) 121,575
- -------------------------------------------------------------------------------------
FINLAND (3.9%)
Fortum 9,826(d) 232,546
Nokia 13,647 172,361
Sampo Series A 18,987 454,412
Wartsila 6,295(d) 227,860
---------------
Total 1,087,179
- -------------------------------------------------------------------------------------
FRANCE (5.2%)
France Telecom 8,548 211,787
Sanofi-Aventis 3,614 264,887
Total 7,590 454,142
Vivendi 19,091 529,575
---------------
Total 1,460,391
- -------------------------------------------------------------------------------------
GERMANY (5.5%)
Allianz 1,327 151,993
BASF 7,810 420,317
Bayer 4,162(d) 287,631
Deutsche Telekom 13,917(d) 189,445
E.ON 7,177 274,187
K+S 3,643(d) 197,234
---------------
Total 1,520,807
- -------------------------------------------------------------------------------------
GREECE (0.8%)
OPAP 8,529 217,081
- -------------------------------------------------------------------------------------
HONG KONG (5.5%)
Champion REIT 1,092,000(d) 459,605
Great Eagle Holdings 121,209(d) 319,740
Hang Lung Properties 60,000(d) 226,753
Hang Seng Bank 18,300 258,530
Sun Hung Kai Properties 18,000 272,713
---------------
Total 1,537,341
- -------------------------------------------------------------------------------------
INDONESIA (0.7%)
Perusahaan Gas Negara 519,500 192,894
- -------------------------------------------------------------------------------------
ITALY (2.8%)
Eni 18,091 448,010
Snam Rete Gas 24,069(d) 116,728
Telecom Italia 136,667 217,092
---------------
Total 781,830
- -------------------------------------------------------------------------------------
JAPAN (4.1%)
Nintendo 1,400(d) 351,174
Ono Pharmaceutical 11,400 541,277
Oracle Japan 5,500(d) 242,376
---------------
Total 1,134,827
- -------------------------------------------------------------------------------------
MEXICO (1.0%)
Grupo Continental 124,300 291,016
- -------------------------------------------------------------------------------------
NETHERLANDS (0.9%)
Royal Dutch Shell Series B 8,731 251,319
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
NORWAY (0.8%)
Statoil 9,100 $214,543
- -------------------------------------------------------------------------------------
SINGAPORE (1.7%)
DBS Group Holdings 52,500 480,876
- -------------------------------------------------------------------------------------
SPAIN (4.0%)
Banco Santander 31,416 505,502
Inditex 4,901 287,656
Telefonica 11,115 310,371
---------------
Total 1,103,529
- -------------------------------------------------------------------------------------
SWEDEN (1.7%)
Holmen Series B 6,474 174,794
Skanska Series B 20,313(d) 298,215
---------------
Total 473,009
- -------------------------------------------------------------------------------------
TAIWAN (3.9%)
Chunghwa Telecom ADR 15,914 276,585
Delta Electronics 104,040 288,900
Hung Poo Real Estate Development 182,000 262,621
Taiwan Semiconductor Mfg 144,000 261,224
---------------
Total 1,089,330
- -------------------------------------------------------------------------------------
UNITED KINGDOM (19.1%)
Admiral Group 25,892 435,196
AstraZeneca 8,386 376,423
BAE Systems 56,710 291,578
BP 76,969 721,148
British American Tobacco 12,648 403,001
GlaxoSmithKline 19,626 402,543
Intl Power 63,895 265,245
Man Group 56,542 285,915
Natl Grid 31,152 308,557
Northern Foods 260,213 269,229
Pearson 44,473 604,452
RSA Insurance Group 58,508 115,930
Vodafone Group 203,975 449,482
Wincanton 106,124 384,105
---------------
Total 5,312,804
- -------------------------------------------------------------------------------------
UNITED STATES (22.8%)
AllianceBernstein Holding LP 12,957 349,580
Altria Group 20,371 368,919
AT&T 12,212 313,482
BP Prudhoe Bay Royalty Trust 7,827 600,722
Bristol-Myers Squibb 20,924 456,143
CenturyTel 12,462 404,518
Diamond Offshore Drilling 4,693 447,008
EI du Pont de Nemours & Co 4,467 142,140
Home Depot 9,946 249,545
Kinder Morgan Energy Partners LP 8,329 449,766
Merck & Co 11,002 340,292
Packaging Corp of America 22,531 411,867
Parkway Properties 6,566 115,890
Pfizer 18,214 310,184
Philip Morris Intl 8,405 398,061
Plum Creek Timber 8,501 265,996
Reynolds American 6,741 326,804
Southern 6,317 197,027
Verizon Communications 6,475 191,595
---------------
Total 6,339,539
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $23,042,813) $26,315,234
- -------------------------------------------------------------------------------------
<Caption>
OTHER (--%)(c)
ISSUER SHARES VALUE(a)
SPAIN
Banco Santander
Rights 44(b) $8
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $--) $8
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (3.6%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
FINLAND (2.2%)
Talvivaara Mining
Sr Unsecured
(European Monetary Unit) Cv
05-20-13 5.25% 500,000 $618,029
- -------------------------------------------------------------------------------------
JERSEY (1.4%)
Intl Power Finance III
(European Monetary Unit) Cv
06-05-15 4.75 300,000 392,670
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $553,426) $1,010,699
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (1.2%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 343,789(e) $343,789
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $343,789) $343,789
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (9.2%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 2,565,681 $2,565,681
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $2,565,681) $2,565,681
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $26,505,709)(f) $30,235,411
=====================================================================================
</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 net assets at Oct. 31, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Aerospace & Defense 1.0% $291,578
Air Freight & Logistics 1.4 384,105
Beverages 4.4 1,229,079
Capital Markets 2.3 635,495
Chemicals 2.7 759,691
Commercial Banks 5.8 1,610,331
Communications Equipment 0.6 172,361
Construction & Engineering 1.1 298,215
Containers & Packaging 1.5 411,867
Diversified Telecommunication Services 8.7 2,416,841
Electric 1.4 392,670
Electric Utilities 2.5 703,760
Electronic Equipment, Instruments &
Components 1.0 288,900
Energy Equipment & Services 1.6 447,008
Food Products 1.0 269,229
Gas Utilities 1.1 309,622
Hotels, Restaurants & Leisure 0.8 217,081
Independent Power Producers & Energy
Traders 1.0 265,245
Insurance 4.6 1,279,106
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
IT Services 1.0% $273,890
Machinery 0.8 227,860
Media 4.1 1,134,027
Metals 2.2 618,029
Multi-Utilities 1.1 308,557
Oil, Gas & Consumable Fuels 13.5 3,724,681
Paper & Forest Products 0.6 174,794
Personal Products 0.9 240,979
Pharmaceuticals 10.8 2,979,380
Real Estate Investment Trusts (REITs) 3.0 841,491
Real Estate Management & Development 3.9 1,081,827
Semiconductors & Semiconductor Equipment 0.9 261,224
Software 2.1 593,550
Specialty Retail 1.9 537,201
Tobacco 5.4 1,496,785
Wireless Telecommunication Services 1.6 449,482
Other(1) 10.4 2,909,470
- -----------------------------------------------------------------------
Total $30,235,411
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(f) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $26,631,575 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $4,151,642
Unrealized depreciation (547,806)
----------------------------------------------------------
Net unrealized appreciation $3,603,836
----------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
--------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- --------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $6,946,554 $19,368,680(b) $-- $26,315,234
Other(a) -- 8(b) -- 8
- --------------------------------------------------------------------------------------------
Total Equity Securities 6,946,554 19,368,688 -- 26,315,242
- --------------------------------------------------------------------------------------------
Bonds
Corporate Debt
Securities -- 392,670 618,029 1,010,699
- --------------------------------------------------------------------------------------------
Total Bonds -- 392,670 618,029 1,010,699
- --------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(c) 343,789 -- -- 343,789
Investments of Cash
Collateral Received
for Securities on Loan 2,565,681 -- -- 2,565,681
- --------------------------------------------------------------------------------------------
Total Other 2,909,470 -- -- 2,909,470
- --------------------------------------------------------------------------------------------
Total $9,856,024 $19,761,358 $618,029 $30,235,411
- --------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Includes certain securities trading outside the U.S. whose values were
adjusted as a result of significant market movements following the close of
local trading. Therefore, these investment securities were classified as
Level 2 instead of Level 1.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
CORPORATE DEBT
SECURITIES
-----------------------------------------------------------------
Balance as of Oct. 31, 2008 $--
Accrued discounts/premiums 42,934
Realized gain (loss) --
Change in unrealized appreciation
(depreciation)* 322,768
Net purchases (sales) 252,327
Transfers in and/or out of Level 3 --
-----------------------------------------------------------------
Balance as of Oct. 31, 2009 $618,029
-----------------------------------------------------------------
</Table>
* Change in unrealized appreciation (depreciation) relating to securities
held at Oct. 31, 2009 was $285,402.
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 ANNUAL REPORT 23
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $23,596,239) $27,325,941
Affiliated money market fund (identified cost $343,789) 343,789
Investments of cash collateral received for securities on loan
(identified cost $2,565,681) 2,565,681
- ------------------------------------------------------------------------------
Total investments in securities (identified cost $26,505,709) 30,235,411
Foreign currency holdings (identified cost $156,420) 159,611
Capital shares receivable 23,006
Dividends and accrued interest receivable 99,606
- ------------------------------------------------------------------------------
Total assets 30,517,634
- ------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 54,877
Payable upon return of securities loaned 2,565,681
Accrued investment management services fees 624
Accrued distribution fees 218
Accrued transfer agency fees 123
Accrued administrative services fees 62
Other accrued expenses 74,274
- ------------------------------------------------------------------------------
Total liabilities 2,695,859
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $27,821,775
- ------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 32,778
Additional paid-in capital 25,340,076
Undistributed net investment income 281,180
Accumulated net realized gain (loss) (1,566,223)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 3,733,964
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $27,821,775
- ------------------------------------------------------------------------------
*Including securities on loan, at value $ 2,403,907
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $21,078,520 2,483,415 $8.49(1)
Class B $ 2,067,434 244,105 $8.47
Class C $ 449,282 53,062 $8.47
Class I $ 4,190,596 493,000 $8.50
Class R2 $ 8,493 1,000 $8.49
Class R3 $ 8,495 1,000 $8.50
Class R4 $ 10,456 1,230 $8.50
Class R5 $ 8,499 1,000 $8.50
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $9.01. 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.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009
INVESTMENT INCOME
Income:
Dividends $ 1,148,786
Interest 117,722
Income distributions from affiliated money market fund 1,963
Income from securities lending -- net 27,324
Less foreign taxes withheld (102,054)
- ------------------------------------------------------------------------------
Total income 1,193,741
- ------------------------------------------------------------------------------
Expenses:
Investment management services fees 177,834
Distribution fees
Class A 38,589
Class B 17,080
Class C 2,551
Class R2 36
Class R3 18
Transfer agency fees
Class A 32,403
Class B 3,839
Class C 548
Class R2 4
Class R3 4
Class R4 4
Class R5 4
Administrative services fees 16,780
Plan administration services fees
Class R2 18
Class R3 18
Class R4 23
Compensation of board members 650
Custodian fees 54,677
Printing and postage 46,050
Registration fees 53,188
Professional fees 41,858
Other 5,484
- ------------------------------------------------------------------------------
Total expenses 491,660
Expenses waived/reimbursed by the Investment Manager and its
affiliates (176,707)
- ------------------------------------------------------------------------------
Total net expenses 314,953
- ------------------------------------------------------------------------------
Investment income (loss) -- net 878,788
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF OPERATIONS (continued) --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(1,375,982)
Foreign currency transactions (2,978)
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,378,960)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 6,134,900
- ------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 4,755,940
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 5,634,728
- ------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
FOR THE PERIOD FROM
YEAR ENDED AUG. 1, 2008*
OCT. 31, 2009 TO OCT. 31, 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 878,788 $ 73,347
Net realized gain (loss) on investments (1,378,960) (267,462)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 6,134,900 (2,378,855)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 5,634,728 (2,572,970)
- -----------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (424,203) (10,316)
Class B (34,776) (993)
Class C (5,653) (166)
Class I (104,698) (12,568)
Class R2 (165) (13)
Class R3 (182) (17)
Class R4 (207) (25)
Class R5 (209) (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 (570,093) (25,259)
- -----------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 27
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
FOR THE PERIOD FROM
YEAR ENDED AUG. 1, 2008*
OCT. 31, 2009 TO OCT. 31, 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $15,276,944 $ 6,965,441
Class B shares 1,551,236 763,341
Class C shares 352,555 96,736
Class R4 shares 8,500 2,000
Reinvestment of distributions at net asset value
Class A shares 416,219 10,418
Class B shares 34,203 1,033
Class C shares 5,149 161
Class R4 shares 11 4
Conversions from Class B to Class A
Class A shares 359,240 --
Class B shares (359,240) --
Payments for redemptions
Class A shares (4,280,739) (459,003)
Class B shares (303,100) --
Class C shares (35,779) (22,899)
Class R4 shares (7,133) --
- -----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 13,018,066 7,357,232
- -----------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 18,082,701 4,759,003
Net assets at beginning of year 9,739,074 4,980,071**
- -----------------------------------------------------------------------------------------------------
Net assets at end of year $27,821,775 $ 9,739,074
- -----------------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ 281,180 $ (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.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. Per share net investment income (loss)
amounts are calculated based on average shares outstanding during the period.
Total returns assume reinvestment of all dividends and distributions. Total
returns do not reflect payment of sales charges, if any, and are not annualized
for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.24 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .30 .07
Net gains (losses) (both realized and
unrealized) 1.14 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.44 (2.70)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.19) (.02)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.19) (.02)
- ----------------------------------------------------------------------
Net asset value, end of period $8.49 $7.24
- ----------------------------------------------------------------------
TOTAL RETURN 20.16% (27.12%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.35% 4.71%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.50% 1.45%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 4.19% 3.78%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $21 $5
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.24 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .26 .06
Net gains (losses) (both realized and
unrealized) 1.11 (2.76)
- ----------------------------------------------------------------------
Total from investment operations 1.37 (2.70)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.14) (.02)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.14) (.02)
- ----------------------------------------------------------------------
Net asset value, end of period $8.47 $7.24
- ----------------------------------------------------------------------
TOTAL RETURN 19.14% (27.15%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.18% 5.48%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.26% 2.21%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 3.64% 3.11%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $1
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.24 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .25 .07
Net gains (losses) (both realized and
unrealized) 1.13 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.38 (2.70)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.15) (.02)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.15) (.02)
- ----------------------------------------------------------------------
Net asset value, end of period $8.47 $7.24
- ----------------------------------------------------------------------
TOTAL RETURN 19.21% (27.18%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.05% 5.15%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.25% 2.21%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 3.44% 3.31%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.25 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .33 .09
Net gains (losses) (both realized and
unrealized) 1.13 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.46 (2.68)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.21) (.03)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.21) (.03)
- ----------------------------------------------------------------------
Net asset value, end of period $8.50 $7.25
- ----------------------------------------------------------------------
TOTAL RETURN 20.53% (27.00%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 1.88% 4.12%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.09% 1.07%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 4.52% 3.95%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $4
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R2 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.25 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .27 .07
Net gains (losses) (both realized and
unrealized) 1.13 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.40 (2.70)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.16) (.01)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.16) (.01)
- ----------------------------------------------------------------------
Net asset value, end of period $8.49 $7.25
- ----------------------------------------------------------------------
TOTAL RETURN 19.63% (27.10%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.68% 4.92%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.83% 1.72%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 3.78% 3.36%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R3 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.25 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .29 .08
Net gains (losses) (both realized and
unrealized) 1.14 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.43 (2.69)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.18) (.02)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.18) (.02)
- ----------------------------------------------------------------------
Net asset value, end of period $8.50 $7.25
- ----------------------------------------------------------------------
TOTAL RETURN 20.04% (27.07%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.43% 4.68%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.58% 1.47%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 4.03% 3.61%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.25 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .28 .08
Net gains (losses) (both realized and
unrealized) 1.17 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.45 (2.69)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.20) (.02)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.20) (.02)
- ----------------------------------------------------------------------
Net asset value, end of period $8.50 $7.25
- ----------------------------------------------------------------------
TOTAL RETURN 20.26% (27.04%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.20% 4.42%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.33% 1.24%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 4.02% 3.89%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R5 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $7.25 $9.96
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .32 .09
Net gains (losses) (both realized and
unrealized) 1.14 (2.77)
- ----------------------------------------------------------------------
Total from investment operations 1.46 (2.68)
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.21) (.03)
Tax return of capital -- (.00)(b)
- ----------------------------------------------------------------------
Total distributions (.21) (.03)
- ----------------------------------------------------------------------
Net asset value, end of period $8.50 $7.25
- ----------------------------------------------------------------------
TOTAL RETURN 20.47% (27.00%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 1.93% 4.17%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.14% 1.12%(d)
- ----------------------------------------------------------------------
Net investment income (loss) 4.47% 3.91%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 45% 10%
- ----------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(b) Rounds to zero.
(c) Expense ratios include the impact of a performance incentive adjustment, if
any. In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the reported expense ratios.
(d) Annualized.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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 Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
At Oct. 31, 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
other sources. A fair value price is a good faith estimate of the value of a
security at a given point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, parent company of the Investment Manager, as administrator
to the Fund, will fair value foreign securities pursuant to procedures adopted
by the Board, including utilizing a third party pricing service to determine
these fair values. These procedures take into account multiple factors,
including movements in the U.S. securities markets, to determine a good faith
estimate that reasonably reflects the current market conditions as of the close
of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
multiple denominations.
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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
value of a forward foreign currency contract fluctuates with changes in foreign
currency exchange rates. Forward foreign currency contracts are marked to market
daily based upon foreign currency exchange rates from an independent pricing
service and the change in value is recorded as unrealized appreciation or
depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
At Oct. 31, 2009, the Fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $974
- ------------------------------------------------------------------------------
Total $974
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- ------------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ------------------------------------------------------------------------------
Foreign exchange contracts $--
- ------------------------------------------------------------------------------
Total $--
- ------------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Oct. 31, 2009, the Fund had no outstanding forward foreign currency
contracts. The monthly average gross notional amount for these contracts was
$1,000 for the year ended Oct. 31, 2009.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.80% to 0.57% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the 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
$10,034 for the year ended Oct. 31, 2009. The management fee for the year ended
Oct. 31, 2009 was 0.85% 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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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 year ended Oct. 31,
2009, other expenses paid to this company were $32.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer
Agent charges an annual fee of $5 per inactive account, charged on a pro rata
basis for the 12 month period from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Class R2 shares and a fee at an
annual rate of up to 1.00% of the Fund's average daily net assets attributable
to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee,
up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $101,000 and $5,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $38,352 for Class A, $136 for Class B and $76 for
Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class A............................................. 1.50%
Class B............................................. 2.26
Class C............................................. 2.25
Class I............................................. 1.09
Class R2............................................ 1.83
Class R3............................................ 1.58
Class R4............................................ 1.33
Class R5............................................ 1.14
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $9,235
Class B........................................... 1,101
Class C........................................... 165
</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 waived/reimbursed at the Fund level were $166,193.
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
giving effect to any performance incentive adjustment, would 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>
Effective Nov. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Dec. 31, 2010,
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............................................. 2.21
Class I............................................. 1.06
Class R2............................................ 1.86
Class R3............................................ 1.61
Class R4............................................ 1.36
Class R5............................................ 1.11
</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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $22,517,916 and $9,114,218, respectively, for the year
ended Oct. 31, 2009. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- ----------------------------------------------------------------
CLASS A
Sold 2,236,131 806,221
Converted from Class B** 44,959 --
Reinvested distributions 54,237 1,124
Redeemed (601,493) (58,764)
- ----------------------------------------------------------------
Net increase (decrease) 1,733,834 748,581
- ----------------------------------------------------------------
CLASS B
Sold 235,158 88,519
Reinvested distributions 4,436 111
Converted to Class A** (45,070) --
Redeemed (40,049) --
- ----------------------------------------------------------------
Net increase (decrease) 154,475 88,630
- ----------------------------------------------------------------
CLASS C
Sold 49,579 10,230
Reinvested distributions 660 17
Redeemed (5,153) (3,271)
- ----------------------------------------------------------------
Net increase (decrease) 45,086 6,976
- ----------------------------------------------------------------
CLASS R4
Sold 1,151 199
Reinvested distributions 2 --
Redeemed (1,122) --
- ----------------------------------------------------------------
Net increase (decrease) 31 199
- ----------------------------------------------------------------
</Table>
* For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. 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
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 Oct. 31, 2009, securities valued at $2,403,907 were on loan, secured
by cash collateral of $2,565,681 invested in short-term securities or in cash
equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$27,324 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $11,507,728 and $11,163,939,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Fund may borrow for the temporary funding of shareholder redemptions or for
other temporary or emergency purposes. The credit facility became effective on
Oct. 15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to its pro rata share of 0.02% of the amount of
the credit facility. The Fund had no borrowings during the year ended Oct. 31,
2009.
10. FEDERAL TAX INFORMATION
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 real estate investment trust (REIT) distributions,
investments in partnerships, foreign tax credits 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.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $26,581
and accumulated net realized loss has been decreased by $26,581.
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- ---------------------------------------------------------------
Ordinary income............................. $570,093 $24,123
Long-term capital gain...................... -- --
Tax return of capital....................... -- 1,136
</Table>
* For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 318,623
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $(1,477,274)
Unrealized appreciation (depreciation)......... $ 3,607,572
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$1,477,274 at Oct. 31, 2009, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2016 2017
$182,867 $1,294,407
</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. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
11. 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.
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise 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.
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EQUITY INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Equity Income Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2009, and the related statement of operations for the year
then ended, the statements of changes in net assets and the financial highlights
for the year then ended and for the period from August 1, 2008 (when shares
became publicly available) to October 31, 2008. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Threadneedle Global Equity Income Fund of the RiverSource Global Series, Inc. at
October 31, 2009, the results of its operations for the year then ended, and
changes in its net assets and the financial highlights for the year then ended,
and for the period from August 1, 2008 (when shares became publicly available)
to October 31, 2008, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
54 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100%
Dividends Received Deduction for corporations................ 29.74%
U.S. Government Obligations.................................. 0.00%
Foreign Taxes Paid........................................... $ 77,463
Foreign Source Income........................................ $462,076
</Table>
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 55
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
56 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 57
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT 59
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.
- --------------------------------------------------------------------------------
60 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2009 ANNUAL REPORT
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 Fund Distributors, Inc.,
Member FINRA, and managed by RiverSource Investments, LLC.
RiverSource and Threadneedle are part of Ameriprise
Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6525 AH (12/09)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EXTENDED ALPHA FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2009
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (ADVANCED ALPHA STRATEGIES)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 25
Statement of Operations............ 27
Statements of Changes in Net
Assets........................... 29
Financial Highlights............... 30
Notes to Financial Statements...... 38
Report of Independent Registered
Public Accounting Firm........... 56
Federal Income Tax Information..... 58
Board Members and Officers......... 59
Proxy Voting....................... 63
</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 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Extended Alpha Fund (the Fund) Class A shares advanced
26.34% (excluding sales charge) for the 12 months ended Oct. 31, 2009.
> The Fund outperformed its benchmark, the Morgan Stanley Capital International
(MSCI) All Country World Index, which advanced 23.42% for the period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 8/1/08
- ----------------------------------------------------------------
Threadneedle Global Extended Alpha Fund
Class A (excluding sales charge) +26.34% -9.52%
- ----------------------------------------------------------------
MSCI All Country World Index (unmanaged) +23.42% -11.58%
- ----------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index description)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The index does not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2009
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 8/1/08) +26.34% -9.52%
- ----------------------------------------------------------------
Class B (inception 8/1/08) +25.32% -10.26%
- ----------------------------------------------------------------
Class C (inception 8/1/08) +25.39% -10.22%
- ----------------------------------------------------------------
Class I (inception 8/1/08) +26.75% -9.23%
- ----------------------------------------------------------------
Class R2 (inception 8/1/08) +25.79% -9.89%
- ----------------------------------------------------------------
Class R3 (inception 8/1/08) +26.13% -9.64%
- ----------------------------------------------------------------
Class R4 (inception 8/1/08) +26.40% -9.44%
- ----------------------------------------------------------------
Class R5 (inception 8/1/08) +26.61% -9.32%
- ----------------------------------------------------------------
With sales charge
Class A (inception 8/1/08) +19.08% -13.71%
- ----------------------------------------------------------------
Class B (inception 8/1/08) +20.32% -13.15%
- ----------------------------------------------------------------
Class C (inception 8/1/08) +24.39% -10.22%
- ----------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5
shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to
qualifying institutional investors only.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
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 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.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Threadneedle Global Extended Alpha Fund portfolio managers Andrew Holliman and
Jeremy Podger of Threadneedle International Limited (Threadneedle) discuss the
Fund's results and positioning for the 12 months ended Oct. 31, 2009.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
is the subadviser to the Fund.
Dear Shareholders,
Threadneedle Global Extended Alpha Fund (the Fund) Class A shares advanced
26.34% (excluding sales charge) for the 12 months ended Oct. 31, 2009. The Fund
outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All
Country World Index (MSCI Index), which advanced 23.42% for the period.
<Table>
<Caption>
PORTFOLIO BREAKDOWN BY COUNTRY(1)
(at Oct. 31, 2009; % of portfolio and portfolio
swap(2))
- -------------------------------------------------------
LONG SHORT(3) NET
- -------------------------------------------------------
Belgium 1.1% 0.0% 1.1%
- -------------------------------------------------------
Bermuda 2.9% 0.0% 2.9%
- -------------------------------------------------------
Brazil 2.5% 0.0% 2.5%
- -------------------------------------------------------
Canada 0.9% 0.0% 0.9%
- -------------------------------------------------------
France 3.8% -1.1% 2.7%
- -------------------------------------------------------
Germany 2.6% 0.0% 2.6%
- -------------------------------------------------------
Hong Kong 2.9% 0.0% 2.9%
- -------------------------------------------------------
India 1.2% 0.0% 1.2%
- -------------------------------------------------------
Indonesia 0.9% 0.0% 0.9%
- -------------------------------------------------------
Ireland 2.0% 0.0% 2.0%
- -------------------------------------------------------
Japan 1.7% -0.7% 1.0%
- -------------------------------------------------------
Luxembourg 0.7% 0.0% 0.7%
- -------------------------------------------------------
Mexico 2.1% 0.0% 2.1%
- -------------------------------------------------------
Netherlands 2.2% -1.6% 0.6%
- -------------------------------------------------------
Portugal 1.0% 0.0% 1.0%
- -------------------------------------------------------
Singapore 0.8% 0.0% 0.8%
- -------------------------------------------------------
South Korea 2.9% -0.5% 2.4%
- -------------------------------------------------------
Spain 2.0% 0.0% 2.0%
- -------------------------------------------------------
Switzerland 8.0% -0.9% 7.1%
- -------------------------------------------------------
Taiwan 1.1% 0.0% 1.1%
- -------------------------------------------------------
Turkey 0.8% 0.0% 0.8%
- -------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
<Table>
<Caption>
PORTFOLIO BREAKDOWN BY COUNTRY(1)
(at Oct. 31, 2009; % of portfolio and portfolio
swap(2))
- -------------------------------------------------------
LONG SHORT(3) NET
- -------------------------------------------------------
United Kingdom 12.9% 0.0% 12.9%
- -------------------------------------------------------
United States 59.3% -15.5% 43.8%
- -------------------------------------------------------
Other(4) 4.0% 0.0% 4.0%
- -------------------------------------------------------
120.3% -20.3% 100.0%
- -------------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of Oct.
31, 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 Oct. 31, 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 Oct. 31, 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 Oct. 31, 2009 following
the Portfolio of Investments, and Note 3 to the financial statements.
(4) Cash & Cash Equivalents.
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 20.
TOP TEN HOLDINGS (at Oct. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
IBM (United States) 3.3%
- ------------------------------------------------
Laboratory Corp of America Holdings
(United States) 2.4%
- ------------------------------------------------
Travelers Companies (United States) 2.3%
- ------------------------------------------------
Bank of America (United States) 2.1%
- ------------------------------------------------
Vodafone Group (United Kingdom) 2.1%
- ------------------------------------------------
Mettler Toledo Intl (Switzerland) 2.1%
- ------------------------------------------------
America Movil ADR Series L (Mexico) 2.0%
- ------------------------------------------------
Tullow Oil (United Kingdom) 2.0%
- ------------------------------------------------
BG Group (United Kingdom) 2.0%
- ------------------------------------------------
Nestle (Switzerland) 2.0%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
The past fiscal year can be split into two distinct periods. From the beginning
of the fiscal year through early March 2009, equities lost significant value as
credit markets were paralyzed, the global financial system was in crisis and a
deflationary depression seemed possible. However, coordinated fiscal and
monetary stimulus from governments and central banks around the world put the
financial system on more stable footing. With the crisis thwarted and equities
at well below average historical valuations, improved investor confidence led to
a robust equity rally that began in March.
During the downturn, unsurprisingly safer assets outperformed the broader market
with the reverse true during the recovery when cyclical sectors such as
materials, energy, industrials and financials led the rally. Emerging markets
also outperformed in the recovery, in part, because we believe the structure of
those stock markets are more biased towards cyclical businesses, but also
because the long-term economic growth prospects in emerging markets currently
look far healthier than those in the major developed markets where long-term
growth may be hampered by excessive debt.
We began the period with the portfolio defensively positioned. As we saw that
macroeconomic fundamentals were improving, and found attractive values in more
cyclical areas, we began to reposition the portfolio. The defensive positioning
was advantageous in the first half of the year and the repositioned portfolio
also performed well in the latter part of the period. The portfolio
For the fiscal year, both the long and the short portfolios added to return,
relative to the MSCI Index.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
underperformed at the market's turning point, however for the full period, the
Fund outpaced the MSCI Index.
The Fund's investment strategy combines a long portfolio of companies we think
have positive performance potential with a short portfolio where we take short
positions in equities that we view unfavorably. For the fiscal year, both the
long and the short portfolios added to return, relative to the MSCI Index. Stock
selection was primarily responsible for the Fund's outperformance of the MSCI
Index, while geographic and sector allocations had a near-neutral effect on
relative performance.
The portfolio started the year underweight in emerging markets and, though we
moved to an overweight, it was not soon enough to fully capture their sharp
rally. On the other hand, having a smaller weighting in Japan than the MSCI
Index was advantageous. These two regional positions offset each other,
resulting in a neutral geographic impact.
In terms of sector weightings, bottom-up stock selection led to an emphasis on
information technology, which added to relative return. This was offset by the
negative effects of underweights in materials and energy, two sectors that led
the market during the recovery as commodity prices significantly rebounded.
The Fund's stock selection was strongest in the energy, financials and consumer
discretionary sectors. In energy, TULLOW OIL in the U.K., GALP ENERGIA in
Portugal and PETROBRAS in Brazil all benefited from significant oil discoveries.
In the financials sector, contributors included Hong Kong property stocks SUN
HUNG KAI PROPERTIES and GREAT EAGLE HOLDINGS, U.K. listed bank STANDARD
CHARTERED PLC and BANK OF AMERICA in the U.S. In the consumer discretionary
sector, the Fund benefited from holdings such as HONG KONG AND SHANGHAI HOTELS,
U.S. auto parts retailer AUTOZONE and Spanish retailer INDITEX. We subsequently
sold both AutoZone and Inditex on valuation grounds.
Stock selection in the industrials sector was unfavorable, mainly due to
holdings of U.S. railroads such as UNION PACIFIC and NORFOLK SOUTHERN, which
suffered as their volumes declined at unprecedented rates. However, we have been
impressed by the way the companies have been managed in such a poor operating
environment and believe they are
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
very well placed to enjoy substantially high levels of profitability when
volumes recover.
CHANGES TO THE FUND'S PORTFOLIO
Our largest sector overweight position continues to be in the information
technology sector, where we find a number of good businesses with excellent free
cash flow characteristics, strong balance sheets and above average growth
characteristics, yet trading at very attractive valuations. Many of these
businesses are large blue-chip names such as IBM, Oracle and Accenture where we
believe technological specific risk is low.
Geographically, we have increased the portfolio's allocation to emerging
markets -- mainly Latin America where we have found better opportunities to
invest in strongly managed businesses at attractive valuations than in other
emerging markets such as the Far East. However, despite our somewhat dampened
view on economies, the Fund has larger positions in the U.S. and U.K., compared
to the MSCI Index. This is because our bottom-up stock analysis is finding many
attractive companies in these countries at attractive valuations, including many
international businesses that appear well placed to benefit from strong growth
in emerging markets.
Over the course of the year, we increased the Fund's short exposure. The
beginning of the period was not a favorable time to try to add value through
shorting; volatility was high, shorting bans were in effect and hedge funds were
under pressure to unwind their short positions. Therefore, the Fund's short
position was initially quite small. As markets stabilized, we increased it and,
as of fiscal year end, the Fund's short position was 19% and its long position
was 116%.
OUTLOOK
Clearly, the economic environment is in better shape at the end of the fiscal
year than it was at the beginning and we expect recovery to
continue -- unemployment should peak in the coming year, consumer and business
confidence should improve and emerging market economic growth should be robust.
In addition, significant cost-cutting by many corporations should have a strong
positive impact on profit growth next year.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
However, high government and consumer debt in many large developed economies
will likely have a longer term dampening impact on global economic growth.
Nevertheless, equity valuations are currently reasonable and we believe we are
finding plenty of attractive investment prospects that have the potential to
deliver attractive long term returns for shareholders.
<Table>
(PHOTO - ANDREW HOLLIMAN) (PHOTO - JEREMY POGER)
Andrew Holliman, CFA(R) Jeremy Podger
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Global Extended Alpha Fund Class A shares (from
8/1/08 to 10/31/09) as compared to the performance of the Morgan Stanley Capital
International (MSCI) All Country World Index. In comparing the Fund's Class A
shares to this index, you should take into account the fact that the Fund's
performance reflects the maximum initial sales charge of 5.75%, while such
charges are not reflected in the performance of the index. Returns for the Fund
include the reinvestment of any distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2009
SINCE
INCEPTION
1 YEAR 8/1/08
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,908 $8,318
- -----------------------------------------------------------------------
Average annual total return +19.08% -13.71%
- -----------------------------------------------------------------------
MSCI ALL COUNTRY WORLD INDEX(1)
Cumulative value of $10,000 $12,342 $8,576
- -----------------------------------------------------------------------
Average annual total return +23.42% -11.58%
- -----------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE GLOBAL EXTENDED
ALPHA FUND LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE GLOBAL
EXTENDED ALPHA
FUND CLASS MSCI ALL
A (INCLUDES COUNTRY WORLD
SALES CHARGE) INDEX(1)
------------------- -------------
8/1/08 $9,425 $10,000
10/08 6,583 6,949
1/09 6,070 6,162
4/09 6,508 6,740
7/09 7,724 8,034
10/09 8,318 8,576
</Table>
(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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Direct 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.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,278.10 $ 8.85 1.55%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.30 $ 7.84 1.55%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,273.30 $13.16 2.31%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.49 $11.66 2.31%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,273.10 $13.11 2.30%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.54 $11.61 2.30%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,280.30 $ 6.97(c) 1.22%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.95 $ 6.17(c) 1.22%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,275.20 $11.52(c) 2.02%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.94 $10.20(c) 2.02%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,276.80 $10.10(c) 1.77%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.19 $ 8.95(c) 1.77%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,278.60 $ 8.68(c) 1.52%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.45 $ 7.69(c) 1.52%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2009 OCT. 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,279.80 $ 7.26(c) 1.27%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.70 $ 6.43(c) 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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2009: +27.81%
for Class A, +27.33% for Class B, +27.31% for Class C, +28.03% for Class I,
+27.52% for Class R2, +27.68% for Class R3, +27.86% for Class R4 and +27.98%
for Class R5.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until Dec. 31, 2010, unless sooner terminated at the discretion of
the Fund's Board, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 1.21% for Class I, 2.01% for Class R2, 1.76% for
Class R3, 1.51% for Class R4 and 1.26% for Class R5. Any amounts waived will
not be reimbursed by the Fund. This change was effective Nov. 1, 2009. Had
this change been in place for the entire six month period ended Oct. 31,
2009, the actual expenses paid would have been $6.92 for Class I, $11.46 for
Class R2, $10.05 for Class R3, $8.63 for Class R4 and $7.20 for Class R5;
the hypothetical expenses paid would have been $6.12 for Class I, $10.15 for
Class R2, $8.90 for Class R3, $7.64 for Class R4 and $6.38 for Class R5.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (95.9%)(c)
ISSUER SHARES VALUE(a)
BELGIUM (1.0%)
Fortis 18,000(b) $77,816
- -------------------------------------------------------------------------------------
BERMUDA (1.1%)
PartnerRe 1,075 82,216
- -------------------------------------------------------------------------------------
BRAZIL (2.4%)
Companhia Brasileira de Meios de Pagamento 6,080 55,982
Natura Cosmeticos 4,400 79,128
Redecard 3,300 48,474
---------------
Total 183,584
- -------------------------------------------------------------------------------------
CANADA (0.9%)
Nexen 3,000 64,410
- -------------------------------------------------------------------------------------
FRANCE (3.7%)
Euler Hermes 800 63,503
France Telecom 4,185 103,689
Renault 2,400(b) 107,391
---------------
Total 274,583
- -------------------------------------------------------------------------------------
GERMANY (2.5%)
Linde 1,090 113,301
Siemens 817(d) 73,558
---------------
Total 186,859
- -------------------------------------------------------------------------------------
HONG KONG (2.8%)
Great Eagle Holdings 16,359(d) 43,154
Hongkong & Shanghai Hotels 55,000 78,292
KWG Property Holding 65,000 46,628
Sun Hung Kai Properties 3,000 45,452
---------------
Total 213,526
- -------------------------------------------------------------------------------------
INDIA (1.2%)
State Bank of India GDR 960 87,681
- -------------------------------------------------------------------------------------
INDONESIA (0.9%)
Bank Rakyat Indonesia 95,000 68,987
- -------------------------------------------------------------------------------------
IRELAND (2.0%)
Accenture Cl A 3,946 146,318
- -------------------------------------------------------------------------------------
JAPAN (1.7%)
Asahi Breweries 3,900 68,951
Osaka Securities Exchange 12 57,589
---------------
Total 126,540
- -------------------------------------------------------------------------------------
LUXEMBOURG (0.7%)
Millicom Intl Cellular 810(b) 50,755
- -------------------------------------------------------------------------------------
MEXICO (2.1%)
America Movil ADR Series L 3,525 155,558
- -------------------------------------------------------------------------------------
NETHERLANDS (1.4%)
Fugro 1,880 104,703
- -------------------------------------------------------------------------------------
SINGAPORE (0.7%)
DBS Group Holdings 6,000 54,957
- -------------------------------------------------------------------------------------
SOUTH KOREA (2.8%)
NHN 850(b) 125,425
Samsung Electronics 140 84,282
---------------
Total 209,707
- -------------------------------------------------------------------------------------
SPAIN (2.0%)
Banco Santander 9,098 146,392
- -------------------------------------------------------------------------------------
SWITZERLAND (7.8%)
Mettler Toledo Intl 1,600(b) 156,000
Nestle 3,250 151,130
Noble 1,100 44,814
Novartis 1,610 83,840
Roche Holding 500 80,081
Syngenta 283 67,009
---------------
Total 582,874
- -------------------------------------------------------------------------------------
TAIWAN (1.0%)
Hon Hai Precision Industry 20,000 78,339
- -------------------------------------------------------------------------------------
TURKEY (0.8%)
Turkiye Garanti Bankasi 17,000 61,747
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED KINGDOM (11.1%)
Aggreko 5,000 $62,140
Autonomy 3,850(b) 84,640
BG Group 9,000 154,904
Chemring Group 2,000 86,599
Tesco 9,600 64,004
Tullow Oil 8,000 154,960
Vodafone Group 71,200 156,896
Weir Group 5,800 66,462
---------------
Total 830,605
- -------------------------------------------------------------------------------------
UNITED STATES (45.3%)
Altria Group 4,500 81,495
American Tower Cl A 3,300(b) 121,506
Bank of America 10,800 157,465
CF Inds Holdings 650 54,113
Cisco Systems 4,500(b) 102,825
Citigroup 15,827 64,732
Cliffs Natural Resources 2,850 101,375
Coca-Cola 1,750 93,292
Colgate-Palmolive 1,230 96,715
CommScope 4,300(b) 116,186
Dell 5,255(b) 76,145
DIRECTV Group 4,200(b) 110,460
ENSCO Intl 2,050 93,869
Goldman Sachs Group 700 119,119
Hartford Financial Services Group 5,045 123,703
Humana 2,400(b) 90,192
IBM 2,050 247,250
Jones Lang LaSalle 2,201 103,117
Laboratory Corp of America Holdings 2,610(b) 179,803
Lowe's Companies 3,000 58,710
Merck & Co 3,300 102,069
Oracle 7,000 147,700
Republic Services 4,700 121,777
SL Green Realty 1,852 71,784
Thermo Fisher Scientific 2,990(b) 134,550
Travelers Companies 3,530 175,758
Ultra Petroleum 850(b) 41,268
Union Pacific 2,000 110,280
Walgreen 3,700 139,971
WESCO Intl 2,500(b) 63,900
Western Union 4,900 89,033
---------------
Total 3,390,162
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $6,342,444) $7,178,319
- -------------------------------------------------------------------------------------
<Caption>
OTHER (--%)(c)
ISSUER SHARES VALUE(a)
SPAIN
Banco Santander
Rights 82(b) $14
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $--) $14
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (3.9%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.25% 291,310(e) $291,310
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $291,310) $291,310
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (1.6%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 123,174 $123,174
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $123,174) $123,174
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $6,756,928)(f) $7,592,817
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL 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 net assets at Oct. 31, 2009:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Aerospace & Defense 1.2% $86,599
Automobiles 1.4 107,391
Beverages 2.2 162,243
Capital Markets 1.6 119,119
Chemicals 3.1 234,423
Commercial Banks 5.6 419,778
Commercial Services & Supplies 2.5 183,917
Communications Equipment 2.9 219,011
Computers & Peripherals 4.3 323,395
Diversified Financial Services 3.7 279,786
Diversified Telecommunication Services 1.4 103,689
Electronic Equipment, Instruments & 78,339
Components 1.0
Energy Equipment & Services 3.3 243,386
Floating Rate Notes 3.9 291,310
Food & Staples Retailing 2.7 203,975
Food Products 2.0 151,130
Health Care Providers & Services 3.6 269,995
Hotels, Restaurants & Leisure 1.0 78,292
Household Products 1.3 96,715
Industrial Conglomerates 1.0 73,558
Insurance 6.9 522,996
Internet Software & Services 1.7 125,425
IT Services 4.5 339,807
Life Sciences Tools & Services 3.9 290,550
Machinery 0.9 66,462
Media 1.5 110,460
Metals & Mining 1.4 101,375
Oil, Gas & Consumable Fuels 5.6 415,542
Personal Products 1.1 79,128
Pharmaceuticals 3.6 265,990
Real Estate Investment Trusts (REITs) 1.0 71,784
Real Estate Management & Development 3.2 238,351
Road & Rail 1.5 110,280
Semiconductors & Semiconductor 84,282
Equipment 1.1
Software 3.1 232,340
Specialty Retail 0.8 58,710
Tobacco 1.1 81,495
Trading Companies & Distributors 0.9 63,900
Wireless Telecommunication Services 6.4 484,715
Other(1) 1.6 123,174
- -----------------------------------------------------------------------
Total $7,592,817
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
INVESTMENTS IN DERIVATIVES
PORTFOLIO SWAP(1) OUTSTANDING AT OCT. 31, 2009
<Table>
<Caption>
NEXT NET UNREALIZED
COUNTERPARTY DESCRIPTION RESET DATE APPRECIATION
- -------------------------------------------------------------------------------
UBS The Fund receives (pays) the total Nov. 9, 2009 $3,972
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 $3,972
- -------------------------------------------------------------------------------
</Table>
SUMMARY OF PORTFOLIO SWAP EXPOSURE BY INDUSTRY
The following table represents the exposure of the custom basket of equity
securities underlying the portfolio swap by industry classifications as a
percentage of net assets at Oct. 31, 2009:
<Table>
<Caption>
VALUE
PERCENTAGE OF ----------------------------------------
NET ASSETS LONG SHORT NET
- -------------------------------------------------------------------------------------
Air Freight & Logistics (0.6)% $-- $(48,330) $(48,330)
Automobiles (0.7) -- (51,779) (51,779)
Capital Markets (1.3) -- (97,460) (97,460)
Chemicals (1.9) -- (143,190) (143,190)
Commercial Banks 0.5 110,383 (69,660) 40,723
Computers & Peripherals 3.7 273,325 -- 273,325
Construction & Engineering (1.6) -- (116,600) (116,600)
Diversified Financial 217,041 -- 217,041
Services 2.9
Electronic Equipment, -- (74,760) (74,760)
Instruments & Components (1.0)
Health Care Equipment & 80,730 (65,253) 15,477
Supplies 0.2
Health Care Providers & 95,094 -- 95,094
Services 1.3
Hotels, Restaurants & -- (133,560) (133,560)
Leisure (1.8)
Machinery 1.3 228,705 (129,692) 99,013
Oil, Gas & Consumable 73,428 (118,583) (45,155)
Fuels (0.6)
Real Estate Investment -- (59,620) (59,620)
Trusts (REITs) (0.8)
Road & Rail 1.9 203,241 (60,120) 143,121
Semiconductor & -- (128,037) (128,037)
Semiconductor Equipment (1.7)
Textiles, Apparel & Luxury -- (83,431) (83,431)
Goods (1.1)
Water Utilities (1.3) -- (97,335) (97,335)
Other(2) 2.7 200,662 (1,227) 199,435
- -------------------------------------------------------------------------------------
Total 0.1% $1,482,609 $(1,478,637) $3,972
- -------------------------------------------------------------------------------------
</Table>
(1) See Note 3 to the financial statements.
(2) Cash equivalents
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At Oct. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2009.
(f) At Oct. 31, 2009, the cost of securities for federal income tax purposes
was $6,865,777 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $809,869
Unrealized depreciation (82,829)
---------------------------------------------------------
Net unrealized appreciation $727,040
---------------------------------------------------------
</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 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Level 3 investments due to lack of market transparency and corroboration to
support these quoted prices. Additionally, valuation models may be used as the
pricing source for any remaining investments classified as Level 3. These models
rely on one or more significant unobservable inputs and/or significant
assumptions by the Fund Administrator. Inputs used in a valuation model may
include, but are not limited to, financial statement analysis, discount rates
and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 2009
-------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- --------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $4,090,232 $3,088,087(b) $-- $7,178,319
Other(a) -- 14(b) -- 14
- --------------------------------------------------------------------------------------------
Total Equity Securities 4,090,232 3,088,101 -- 7,178,333
- --------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(c) 291,310 -- -- 291,310
Investments of Cash
Collateral Received for
Securities on Loan 123,174 -- -- 123,174
- --------------------------------------------------------------------------------------------
Total Other 414,484 -- -- 414,484
- --------------------------------------------------------------------------------------------
Investments in Securities 4,504,716 3,088,101 -- 7,592,817
Other Financial
Instruments(d) -- 3,972 -- 3,972
- --------------------------------------------------------------------------------------------
Total $4,504,716 $3,092,073 $-- $7,596,789
- --------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Includes certain securities trading outside the U.S. whose values were
adjusted as a result of significant market movements following the close of
local trading. Therefore, these investment securities were classified as
Level 2 instead of Level 1.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at Oct. 31, 2009.
(d) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 23
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.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $6,342,444) $ 7,178,333
Affiliated money market fund (identified cost $291,310) 291,310
Investments of cash collateral received for securities on loan
(identified cost $123,174) 123,174
- ------------------------------------------------------------------------------
Total investments in securities (identified cost $6,756,928) 7,592,817
Foreign currency holdings (identified cost $24,869) 25,019
Capital shares receivable 37,679
Dividends and accrued interest receivable 5,433
Reclaims receivable 3,491
Unrealized appreciation on swap contracts 3,972
- ------------------------------------------------------------------------------
Total assets 7,668,411
- ------------------------------------------------------------------------------
LIABILITIES
Payable upon return of securities loaned 123,174
Accrued investment management services fees 220
Accrued distribution fees 29
Accrued transfer agency fees 10
Accrued administrative services fees 17
Accrued plan administration services fees 1
Other accrued expenses 61,490
- ------------------------------------------------------------------------------
Total liabilities 184,941
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 7,483,470
- ------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 4,233
Additional paid-in capital 7,953,157
Undistributed net investment income 202,524
Accumulated net realized gain (loss) (1,516,792)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 840,348
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 7,483,470
- ------------------------------------------------------------------------------
*Including securities on loan, at value $ 112,583
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
OCT. 31, 2009
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $2,647,582 150,018 $17.65(1)
Class B $ 258,403 14,788 $17.47
Class C $ 125,035 7,154 $17.48
Class I $4,366,888 246,500 $17.72
Class R2 $ 8,780 500 $17.56
Class R3 $ 8,808 500 $17.62
Class R4 $ 59,122 3,345 $17.67
Class R5 $ 8,852 500 $17.70
- ---------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $18.73. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 136,767
Interest 1,034
Income distributions from affiliated money market fund 513
Income from securities lending -- net 1,655
Less foreign taxes withheld (7,840)
- -----------------------------------------------------------------------------
Total income 132,129
- -----------------------------------------------------------------------------
Expenses:
Investment management services fees 64,424
Distribution fees
Class A 5,199
Class B 2,820
Class C 1,035
Class R2 36
Class R3 18
Transfer agency fees
Class A 2,757
Class B 399
Class C 142
Class R2 4
Class R3 4
Class R4 14
Class R5 4
Administrative services fees 4,908
Plan administration services fees
Class R2 18
Class R3 18
Class R4 72
Compensation of board members 188
Custodian fees 14,823
Printing and postage 29,490
Registration fees 46,770
Professional fees 43,745
Other 4,971
- -----------------------------------------------------------------------------
Total expenses 221,859
Expenses waived/reimbursed by the Investment Manager and its
affiliates (135,753)
- -----------------------------------------------------------------------------
Total net expenses 86,106
- -----------------------------------------------------------------------------
Investment income (loss) -- net 46,023
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 27
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED OCT. 31, 2009
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ (791,815)
Foreign currency transactions 4,294
Swap transactions (52,176)
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments (839,697)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 2,246,014
- -----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 1,406,317
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $1,452,340
- -----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
FOR THE PERIOD FROM
YEAR ENDED AUG. 1, 2008* TO
OCT. 31, 2009 OCT. 31, 2008
OPERATIONS
Investment income (loss) -- net $ 46,023 $ 5,911
Net realized gain (loss) on investments (839,697) (971,237)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 2,246,014 (1,410,405)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 1,452,340 (2,375,731)
- -----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 1,183,549 3,082,069
Class B shares 152,947 482,927
Class C shares 65,424 117,476
Class R4 shares 31,011 22,000
Conversions from Class B to Class A
Class A shares 49,083 --
Class B shares (49,083) --
Payments for redemptions
Class A shares (1,216,964) (157,519)
Class B shares (155,807) (141,999)
Class C shares (56,896) --
Class R4 shares (1,985) --
- -----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 1,279 3,404,954
- -----------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 1,453,619 1,029,223
Net assets at beginning of period 6,029,851 5,000,628**
- -----------------------------------------------------------------------------------------------------
Net assets at end of period $ 7,483,470 $ 6,029,851
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income $ 202,524 $ 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for periods shown. Per share net investment income (loss)
amounts are calculated based on average shares outstanding during the period.
Total returns assume reinvestment of all dividends and distributions. Total
returns do not reflect payment of sales charges, if any, and are not annualized
for periods of less than one year.
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS A -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.97 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09 .00(b)
Net gains (losses) (both realized and
unrealized) 3.59 (6.03)
- ----------------------------------------------------------------------
Total from investment operations 3.68 (6.03)
- ----------------------------------------------------------------------
Net asset value, end of period $17.65 $13.97
- ----------------------------------------------------------------------
TOTAL RETURN 26.34% (30.15%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.78% 5.55%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.55% 1.55%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .59% (.07%)(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $2
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS B -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.94 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01) (.02)
Net gains (losses) (both realized and
unrealized) 3.54 (6.04)
- ----------------------------------------------------------------------
Total from investment operations 3.53 (6.06)
- ----------------------------------------------------------------------
Net asset value, end of period $17.47 $13.94
- ----------------------------------------------------------------------
TOTAL RETURN 25.32% (30.30%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 4.52% 6.33%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.31% 2.31%(d)
- ----------------------------------------------------------------------
Net investment income (loss) (.05%) (.55%)(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS C -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.94 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.03)
Net gains (losses) (both realized and
unrealized) 3.56 (6.03)
- ----------------------------------------------------------------------
Total from investment operations 3.54 (6.06)
- ----------------------------------------------------------------------
Net asset value, end of period $17.48 $13.94
- ----------------------------------------------------------------------
TOTAL RETURN 25.39% (30.30%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 4.58% 6.22%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.30% 2.30%(d)
- ----------------------------------------------------------------------
Net investment income (loss) (.12%) (.79%)(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS I -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.98 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .14 .03
Net gains (losses) (both realized and
unrealized) 3.60 (6.05)
- ----------------------------------------------------------------------
Total from investment operations 3.74 (6.02)
- ----------------------------------------------------------------------
Net asset value, end of period $17.72 $13.98
- ----------------------------------------------------------------------
TOTAL RETURN 26.75% (30.10%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.42% 4.94%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.22% 1.21%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .94% .63%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $3
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R2 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.96 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .00(b)
Net gains (losses) (both realized and
unrealized) 3.57 (6.04)
- ----------------------------------------------------------------------
Total from investment operations 3.60 (6.04)
- ----------------------------------------------------------------------
Net asset value, end of period $17.56 $13.96
- ----------------------------------------------------------------------
TOTAL RETURN 25.79% (30.20%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 4.22% 5.74%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.96% 1.81%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .19% .03%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R3 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.97 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06 .01
Net gains (losses) (both realized and
unrealized) 3.59 (6.04)
- ----------------------------------------------------------------------
Total from investment operations 3.65 (6.03)
- ----------------------------------------------------------------------
Net asset value, end of period $17.62 $13.97
- ----------------------------------------------------------------------
TOTAL RETURN 26.13% (30.15%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.97% 5.49%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.71% 1.56%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .44% .28%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R4 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.98 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08 .01
Net gains (losses) (both realized and
unrealized) 3.61 (6.03)
- ----------------------------------------------------------------------
Total from investment operations 3.69 (6.02)
- ----------------------------------------------------------------------
Net asset value, end of period $17.67 $13.98
- ----------------------------------------------------------------------
TOTAL RETURN 26.40% (30.10%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.92% 5.38%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.47% 1.36%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .52% .30%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31,
CLASS R5 -------------------
PER SHARE DATA 2009 2008(a)
Net asset value, beginning of period $13.98 $20.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .13 .02
Net gains (losses) (both realized and
unrealized) 3.59 (6.04)
- ----------------------------------------------------------------------
Total from investment operations 3.72 (6.02)
- ----------------------------------------------------------------------
Net asset value, end of period $17.70 $13.98
- ----------------------------------------------------------------------
TOTAL RETURN 26.61% (30.10%)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 3.47% 4.99%(d)
- ----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.27% 1.26%(d)
- ----------------------------------------------------------------------
Net investment income (loss) .88% .58%(d)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- ----------------------------------------------------------------------
Portfolio turnover rate 133% 36%
- ----------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(b) Rounds to zero.
(c) Expense ratios include the impact of a performance incentive adjustment, if
any. In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the reported expense ratios.
(d) Annualized.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
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 (the 1940 Act) 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 Fund's 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 offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
At Oct. 31, 2009, the Investment Manager owned 100% of Class I, Class R2, Class
R3 and Class R5 shares and owned approximately 59% of the total outstanding Fund
shares.
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have a material effect on the Fund's
financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
sources are not reflective of market value and thus deemed unreliable, or a
significant event has occurred in relation to a security or class of securities
(such as foreign securities) that is not reflected in price quotations or
valuations from other sources. A fair value price is a good faith estimate of
the value of a security at a given point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
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. 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. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2009, foreign currency holdings consisted of
multiple denominations, primarily Taiwan dollar.
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 borrowed
for the short sale at the lender's demand. A realized gain, limited to the price
at which the Fund sold the security short, or a realized 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 Oct. 31, 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 year ended Oct. 31, 2009,
the Fund had no dividend or interest expense related to securities sold short in
the Statement of Operations.
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 (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities. At Oct. 31, 2009, the Fund had no
outstanding forward foreign currency contracts.
PORTFOLIO SWAP TRANSACTIONS
The Fund has entered into a portfolio swap transaction. 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 contract, payments made by the Fund or
the counterparty are based on the total return of the reference assets within
the basket in return for a specified interest rate. The contract allows the
Investment Manager of the Fund to alter the composition of the custom basket by
trading in and out of the notional reference security positions at its
discretion.
The notional amounts of the swap transactions 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) by the Fund are recorded as realized gains (losses). See the Portfolio
Swap Outstanding table following the Portfolio of Investments for additional
information.
Portfolio swap transactions 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. Portfolio swaps are
subject to the risk associated with the investment in the reference securities
within the basket. The risk in the case of short portfolio swap transactions is
unlimited based on the potential for unlimited increases in the market value of
the reference securities in the basket. This risk may be offset if the Fund
holds any of the reference securities. The risk in the case of long portfolio
swap transactions is limited to the current notional amount of the portfolio
swap. Portfolio swaps are also subject to the risk of the counterparty not
fulfilling its obligations under the contract. The counterparty risk may be
offset by any collateral held by the Fund related to the swap transactions.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Investments present additional information regarding derivative instruments
outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------- -------------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- -------------------------------------------------------------------------------------------
Equity contracts Unrealized Unrealized
appreciation on depreciation on
swap transactions $3,972 swap transactions N/A
- -------------------------------------------------------------------------------------------
Total $3,972 $ --
- -------------------------------------------------------------------------------------------
</Table>
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED OCT. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ----------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL
- ----------------------------------------------------------------------------------
Equity contracts $ -- $(52,176) $(52,176)
- ----------------------------------------------------------------------------------
Foreign exchange contracts (5,496) $ (5,496)
- ----------------------------------------------------------------------------------
Total $(5,496) $(52,176) $(57,672)
- ----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- ---------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL
- ---------------------------------------------------------------------------------
Equity contracts $ -- $205,925 $205,925
- ---------------------------------------------------------------------------------
Foreign exchange contracts 3,052 $ 3,052
- ---------------------------------------------------------------------------------
Total $3,052 $205,925 $208,977
- ---------------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Oct. 31, 2009, the Fund had no outstanding forward foreign currency
contracts. The monthly average gross notional amount for these contracts was
$100,000 for the year ended Oct. 31, 2009.
PORTFOLIO SWAP CONTRACT
At Oct. 31, 2009, the value of long and short securities underlying the
portfolio swap contract were $1,482,609 and 1,478,637 respectively. The monthly
average value of long and short securities underlying the portfolio swap
contract were $879,000 and $884,000, respectively for the year ended Oct. 31,
2009.
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 1.05% to 0.99% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 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
year ended Oct. 31, 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
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended Oct. 31, 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 year ended Oct. 31,
2009, other expenses paid to this company were $14.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer
Agent charges an annual fee of $5 per inactive account, charged on a pro rata
basis for the 12 month period from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Class R2 shares and a fee at an
annual rate of up to 1.00% of the Fund's average daily net assets attributable
to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee,
up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $24,000 and $1,000 for Class
B and Class C shares, respectively. These amounts are based on the most recent
information available as of July 31, 2009, and may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
expense has been fully recovered, the distribution fee is reduced.
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $7,875 for Class A, $698 for Class B and $101 for
Class C for the year ended Oct. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), were as follows:
<Table>
Class A.............................................. 1.55%
Class B.............................................. 2.31
Class C.............................................. 2.30
Class I.............................................. 1.22
Class R2............................................. 1.96
Class R3............................................. 1.71
Class R4............................................. 1.47
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............................................. $1,090
Class B............................................. 148
Class C............................................. 59
</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
$134,433.
Under an agreement which was effective until Oct. 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
giving effect to any performance incentive adjustment, would 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>
Effective Nov. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Dec. 31, 2010,
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.............................................. 1.55%
Class B.............................................. 2.31
Class C.............................................. 2.30
Class I.............................................. 1.21
Class R2............................................. 2.01
Class R3............................................. 1.76
Class R4............................................. 1.51
Class R5............................................. 1.26
</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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $8,228,291 and $7,922,254, respectively, for the year
ended Oct. 31, 2009. Realized gains and losses are determined on an identified
cost basis.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2009 2008*
- ---------------------------------------------------------------
Class A
Sold 77,358 166,961
Converted from Class B** 2,995 --
Redeemed (88,344) (9,452)
- ---------------------------------------------------------------
Net increase (decrease) (7,991) 157,509
- ---------------------------------------------------------------
Class B
Sold 10,919 26,996
Converted to Class A** (3,019) --
Redeemed (10,228) (10,380)
- ---------------------------------------------------------------
Net increase (decrease) (2,328) 16,616
- ---------------------------------------------------------------
Class C
Sold 4,412 6,224
Redeemed (3,982) --
- ---------------------------------------------------------------
Net increase (decrease) 430 6,224
- ---------------------------------------------------------------
Class R4
Sold 1,836 1,163
Redeemed (154) --
- ---------------------------------------------------------------
Net increase (decrease) 1,682 1,163
- ---------------------------------------------------------------
</Table>
* For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
** Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. 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 Oct. 31, 2009, securities valued at $112,583 were on
loan, secured by cash collateral of $123,174 invested in short-term securities
or in cash equivalents.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$1,655 earned from securities lending from Dec. 1, 2008 through Oct. 31, 2009 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
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.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $3,937,961 and $3,646,651,
respectively, for the year ended Oct. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Oct. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds in the RiverSource Family of Funds, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata
share of the amount of the credit facility at a rate of 0.06% per annum, in
addition to an upfront fee equal to its pro rata share of 0.02% of the amount of
the credit facility. The Fund had no borrowings during the year ended Oct. 31,
2009.
10. FEDERAL TAX INFORMATION
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.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $47,882
and accumulated net realized loss has been decreased by $47,882.
The tax character of distributions paid for the years indicated is as follows:
For the periods ended Oct. 31, 2009 and 2008, there were no distributions.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
At Oct. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................... $ 206,636
Undistributed accumulated long-term gain......... $ --
Accumulated realized loss........................ $(1,407,944)
Unrealized appreciation (depreciation)........... $ 727,388
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$1,407,944 at Oct. 31, 2009, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2016 2017
$577,229 $830,715
</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. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
11. 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.
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Dec. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four 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
- --------------------------------------------------------------------------------
54 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Extended Alpha Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2009, and the related statement of operations for the year
then ended, the statements of changes in net assets and the financial highlights
for the year then ended and for the period from August 1, 2008 (when shares
became publicly available) to October 31, 2008. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
56 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Threadneedle Global Extended Alpha Fund of the RiverSource Global Series, Inc.
at October 31, 2009, the results of its operations for the year then ended, the
changes in its net assets and the financial highlights for the year then ended
and for the period from August 1, 2008 (when shares became publicly available)
to October 31, 2008, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 21, 2009
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 57
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
Fiscal year ended Oct. 31, 2009
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
58 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2009 ANNUAL 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 ANNUAL REPORT 63
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 Fund Distributors, Inc.,
Member FINRA, and managed by RiverSource Investments, LLC.
RiverSource and Threadneedle are part of Ameriprise
Financial, Inc.
(THREADNEEDLE LOGO) (C)2009 RiverSource Investments, LLC. S-6527 AH (12/09)
</Table>
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P.
Jones, each qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees
(a) Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for
professional services rendered for the audit of the annual financial
statements for RiverSource Global Series, Inc. were as follows:
2009 - $224,347 2008 - $248,260
(b) Audit-Related Fees. The fees for the year ended Oct. 31, to Ernst & Young
LLP for additional audit-related services rendered for RiverSource Global
Series, Inc. were as follows:
2009 - $3,708 2008 - $6,000
(c) Tax Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for tax
compliance related services rendered for RiverSource Global Series, Inc.
were as follows:
2009 - $43,761 2008 - $68,090
(d) All Other Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Global
Series, Inc. were as follows:
2009 - $0 2008 - $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young
LLP for the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant must be
pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2009 and 2008 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant were as
follows:
2009 - $869,955 2008 - $680,790
(h) 100% of the services performed in item (g) above during 2009 and 2008 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Investments.
(a) The complete schedule of investments is included in Item 1 of this Form
N-CSR.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date
of this Form N-CSR, the registrant's Principal Financial Officer and
Principal Executive Officer have concluded that those disclosure
controls and procedures provide reasonable assurance that the material
information required to be disclosed by the registrant on this report
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(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 January 4, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
-----------------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date January 4, 2010
By /s/ Jeffrey P. Fox
-----------------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date January 4, 2010