Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE(R)
INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
APRIL 30, 2007
RIVERSOURCE INTERNATIONAL EQUITY
FUND SEEKS TO PROVIDE SHAREHOLDERS
WITH LONG-TERM GROWTH OF CAPITAL.
LETTER TO SHAREHOLDERS
In this report and going forward, Stephen Lewis, Chairman of the RiverSource
Funds' Boards (Boards), and Patrick Bannigan, President of RiverSource Funds,
are co-authors of this letter to shareholders. Information about them is
highlighted below:
- - Stephen Lewis, Chairman of the Boards, is President Emeritus and Professor of
Economics at Carleton College.
- - Patrick Bannigan, President of RiverSource Funds, is Senior Vice President --
Asset Management for RiverSource Investments, LLC. Before joining RiverSource
Investments in 2006, he was Managing Director and Global Head of Product at
Morgan Stanley Investment Management.
Dear Fellow RiverSource Funds Shareholder:
As newly appointed in our respective roles as Chairman of the Boards and
President of RiverSource Funds, we are committed to continuing the successful
leadership efforts of Ted Truscott, a member of the Boards and Chief Investment
Officer of RiverSource Investments, LLC; and Governor Arne Carlson, who served
as Chairman of the Boards for eight years and will continue to serve on the
Boards.
As RiverSource Funds shareholders, we want our investments to deliver
consistent, competitive investment performance that can help us achieve our
financial goals. We are sure you feel the same way. We are pleased to report
that the investment management teams at RiverSource Investments have delivered
on our expectations. As a result, many of our funds are receiving positive
recognition in the financial media.
When discussing your financial plans with your advisor, we encourage you to take
a long-term view. The economy is cyclical and markets are inherently volatile,
so there will be periods when economic or market conditions may appear to throw
a wrench into any portfolio. A diversified mutual fund portfolio and an
experienced financial advisor can help keep your plan on track and also keep
your expectations in line with current market realities.
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
Being an informed investor is a key component to your overall investing success.
The information contained in this report can help "connect the dots" so you can
see how your fund performed in the context of the broader market. While this
shareholder report looks back over a specific period of time, current
performance information is always available online at riversource.com/funds.
We value your connection with RiverSource Funds and strive to provide the
performance, service and information that can help move you closer to your
financial goals.
/s/ STEPHEN R. LEWIS, JR.
Stephen R. Lewis, Jr.
Chairman of the Boards
/s/ PATRICK T. BANNIGAN
Patrick T. Bannigan
President, RiverSource Funds
Past performance does not guarantee future results.
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
TABLE OF CONTENTS
<Table>
Fund Snapshot....................... 3
Performance Summary................. 5
Questions & Answers
with Portfolio Management........ 7
Fund Expenses Example............... 12
Investments in Securities........... 14
Financial Statements................ 21
Notes to Financial Statements....... 26
Approval of Investment Management
Services Agreement............... 43
Proxy Voting........................ 46
</Table>
(DALBAR LOGO)
The RiverSource mutual fund
shareholder reports
have been awarded the
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research firm. The Seal recognizes
communications
demonstrating a level of
excellence in the industry.
- --------------------------------------------------------------------------------
2 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
FUND SNAPSHOT AT APRIL 30, 2007
FUND OBJECTIVE
RiverSource International Equity Fund (the Fund) seeks to provide shareholders
with long-term growth of capital.
COUNTRY BREAKDOWN
Percentage of portfolio assets
(PIE CHART)
<Table>
<Caption>
OTHER(1) UNITED KINGDOM JAPAN SWITZERLAND
- -------------- -------------- ------- -----------
29.2% 18.8% 17.9% 11.5%
FRANCE GERMANY AUSTRALIA
- -------- ----------------- ----------------
10.8% 7.2% 4.6%
</Table>
(1) Includes Hong Kong 4.3%, Italy 3.9%, Mexico 3.1%, Netherlands 1.8%, Brazil
1.7%, Austria 1.6%, China 1.5%, Singapore 1.5%, South Korea 1.4%, Canada
1.1%, Finland 1.0%, United States 1.0%, Spain 0.7%, Sweden 0.6%, Belgium
0.5%, Greece 0.4%, India 0.4%, Israel 0.4%, South Africa 0.3%, Taiwan 0.3%,
Ireland 0.2% and Cash & Cash Equivalents 1.5%.
TOP TEN HOLDINGS
Percentage of portfolio assets
<Table>
Tesco (United Kingdom) 2.1%
Continental (Germany) 2.0%
UBS (Switzerland) 1.9%
Intesa Sanpaolo (Italy) 1.8%
Toyota Motor (Japan) 1.7%
Macquarie Bank (Australia) 1.6%
Erste Bank der Oesterreichischen
Sparkassen (Austria) 1.6%
Accor (France) 1.5%
China Mobile (Hong Kong) 1.5%
Nestle (Switzerland) 1.3%
</Table>
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
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.
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.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 3
FUND SNAPSHOT AT APRIL 30, 2007
STYLE MATRIX
(STYLE MATRIX GRAPHIC)
VALUE BLEND GROWTH
X LARGE
MEDIUM
SMALL
Shading within the style matrix indicates areas in which the Fund generally
invests.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and serves as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO MANAGERS
<Table>
<Caption>
YEARS IN INDUSTRY
THE BOSTON COMPANY ASSET
MANAGEMENT, LLC
D. Kirk Henry, CFA 26
Clifford Smith, CFA 21
</Table>
<Table>
<Caption>
YEARS IN INDUSTRY
MARSICO CAPITAL
MANAGEMENT, LLC
James Gendelman 20
</Table>
FUND FACTS
<Table>
<Caption>
TICKER SYMBOL INCEPTION DATE
Class A AAICX 10/03/02
Class B APCBX 10/03/02
Class C -- 10/03/02
Class I AILIX 03/04/04
Class R4(1) -- 10/03/02
</Table>
(1) Effective Dec. 11, 2006, Class Y was renamed
Class R4.
<Table>
Total net assets $215.5 million
Number of holdings 181
</Table>
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4 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2007
(BAR CHART)
<Table>
RiverSource International Equity Fund Class A
(excluding sales charge) +11.54
Morgan Stanley Capital International (MSCI) EAFE
Index(1)(unmanaged) +15.68
Lipper International Funds Index +15.14
</Table>
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
(1) The Morgan Stanley Capital International (MSCI) EAFE Index, an unmanaged
index, is compiled from a composite of securities markets of Europe,
Australia and the Far East. The index is widely recognized by investors in
foreign markets as the measurement index for portfolios of non-North
American securities. The index reflects reinvestment of all distributions
and changes in market prices.
(2) The Lipper International Funds Index includes the 30 largest international
funds (growth and value) tracked by Lipper Inc. The index's returns include
net reinvested dividends. The Fund's performance is currently measured
against this index for purposes of determining the performance incentive
adjustment.
ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
<Table>
<Caption>
TOTAL NET EXPENSES(A)
Class A 1.69% 1.60%
Class B 2.46% 2.37%
Class C 2.46% 2.37%
Class I 1.23% 1.23%
Class R4(b) 1.53% 1.43%
</Table>
(a) The investment manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until Oct. 31, 2007,
unless sooner terminated at the discretion of the Fund's Board. Any amounts
waived will not be reimbursed by the Fund. Under this agreement, net fund
expenses, before giving effect to any performance incentive adjustment
(that decreased the management fee by 0.002%) will not exceed 1.60% for
Class A, 2.37% for Class B, 2.37% for Class C, 1.25% for Class I and 1.43%
for Class R4.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 5
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
<Table>
<Caption>
AT APRIL 30, 2007
SINCE
WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 10/3/02) +11.54% +12.47% +19.34% +20.88%
Class B (inception 10/3/02) +11.18% +11.58% +18.42% +19.93%
Class C (inception 10/3/02) +11.16% +11.69% +18.38% +19.93%
Class I (inception 3/4/04) +11.70% +12.89% +19.81% +17.98%
Class R4** (inception 10/3/02) +11.63% +12.69% +19.55% +21.09%
WITH SALES CHARGE
Class A (inception 10/3/02) +5.12% +6.01% +17.00% +19.32%
Class B (inception 10/3/02) +6.49% +6.87% +17.46% +19.70%
Class C (inception 10/3/02) +10.22% +10.75% +18.38% +19.93%
</Table>
<Table>
<Caption>
AT MARCH 31, 2007
SINCE
WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 10/3/02) +10.89% +13.79% +17.10% +20.40%
Class B (inception 10/3/02) +10.54% +13.05% +16.22% +19.46%
Class C (inception 10/3/02) +10.51% +13.02% +16.18% +19.46%
Class I (inception 3/4/04) +11.18% +14.35% +17.63% +17.23%
Class R4** (inception 10/3/02) +11.11% +14.16% +17.31% +20.61%
WITH SALES CHARGE
Class A (inception 10/3/02) +4.51% +7.25% +14.81% +18.82%
Class B (inception 10/3/02) +5.88% +8.28% +15.23% +19.22%
Class C (inception 10/3/02) +9.58% +12.07% +16.18% +19.46%
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I and Class R4 shares. Class I and Class R4 shares are
available to institutional investors only.
* Not annualized.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
- --------------------------------------------------------------------------------
6 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT
RiverSource International Equity Fund increased 11.54% for the six-month period
ending April 30, 2007 (Class A shares, excluding sales charge), underperforming
its benchmark, the Morgan Stanley Capital International (MSCI) EAFE Index (MSCI
Index), which increased 15.68% during the same period. The Fund also
underperformed the Lipper International Funds Index, which increased 15.14%.
As of April 30, 2007, approximately 38% of the Fund's shares were owned in the
aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible that RiverSource International Equity Fund may experience relatively
large purchases or redemptions from affiliated funds-of-funds (see page 33,
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 International
Equity Fund may experience increased expenses as it buys and sells securities as
a result of purchases or redemptions by affiliated funds-of-funds. For more
information on the Fund's expenses, see the discussions beginning on pages 12
and 30.
RiverSource International Equity Fund's portfolio is managed by two independent
money management firms that each invest a portion of the Fund's assets in a
blend of growth and value stocks of foreign companies to seek long-term growth
of capital. The Boston Company Asset Management, LLC (The Boston Company) and
Marsico Capital Management, LLC (Marsico) each managed approximately 50% of the
Fund's assets as of April 30, 2007. Below, each subadvisor discusses results and
positioning for its portion of the Fund for the semiannual period.
Q: What factors affected performance most for your portion of the Fund for the
semiannual period ended April 30, 2007?
THE BOSTON COMPANY: International markets shrugged off signs of a weaker U.S.
economy and delivered robust performance over the past six months. Our
portion of the portfolio trailed the MSCI Index during the period despite
solid performance in the U.K., Netherlands and South Africa. Stock selection
in the telecommunications services and information technology sectors had a
significant positive impact on performance.
The portfolio's country allocations had a slightly negative impact during the
period, largely driven by an underweight in Sweden, relative to the MSCI
Index. Sweden is a relatively small country within the MSCI Index, but turned
in particularly strong performance late in the period. The Swedish market is
heavily weighted with industrials companies, which rallied during the period.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 7
QUESTIONS & ANSWERS
The portfolio's large position in Japan had a negative impact on relative
return. Japan failed to meet expectations for a sustainable domestic recovery
despite a solid foundation for increased consumption. The Japanese equity
market delivered only a modest return relative to Europe and Asia. In
addition, Japan's financial sector continued to weigh heavily on the
portfolio's performance.
INTERNATIONAL MARKETS SHRUGGED OFF SIGNS OF A WEAKER U.S. ECONOMY AND
DELIVERED ROBUST PERFORMANCE OVER THE PAST SIX MONTHS. -- THE BOSTON
COMPANY
In Europe, our strategy of selling top performing, more richly valued
companies in favor of underperformers with compelling business prospects has
remained out of favor longer than anticipated. Looking at the factors that
drove performance of European stocks over the period, we find that value, the
most important factor in our stock selection process, was moderately
positive. However, other factors such as quality earnings growth, long-term
price momentum and earnings momentum were much more significant drivers of
return.
The portfolio's sector allocations were a modest drag on performance, with an
underweight in the industrials sector being a notable detractor.
MARSICO: The portion of the Fund that we manage underperformed in comparison
to its primary benchmark, the MSCI Index, for the six-month period. Three
factors that detracted most significantly from performance were stock
selection in industrials, information technology and consumer discretionary
sectors. Individual detractors within the information technology sector
included German based enterprise application software company SAP,
telecommunications equipment company L.M. Ericsson Telephone and
semiconductor-related companies Samsung Electronics, based in South Korea,
and Advantest, based in Japan. French industrials position Vallourec, which
manufactures steel tubing, declined sharply before we sold the stock. Price
declines in consumer discretionary holdings such as hotel/casino operator
Melco PBL Entertainment (Macau) Ltd., as well as Japan-based electronics
retailer Yamada Denki and amusement game manufacturer Sega Sammy Holdings
also hampered results.
- --------------------------------------------------------------------------------
8 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS
Currency fluctuations may at times affect investment results because the
portfolio's foreign holdings are denominated in foreign currencies whose
value may rise or fall against the U.S. dollar. Especially in late-2006, the
dollar weakened relative to certain other major currencies, particularly the
Euro. Compared to the MSCI Index, our portion of the Fund was generally
underweight in securities priced in Euros and traded in countries that use
the euro, including France and Germany. As a result, a smaller portion of the
Fund benefited from the euro's valuation increase. This had a modestly
negative impact on performance compared to the MSCI Index.
Primary positive contributors to results included the following banking
positions: Australia's Macquarie Bank, Italy's Intesa Sanpaolo, Industrial &
Commercial Bank of China, Austria's Erste Bank der Oesterreichischen
Sparkassen and Brazil's UNIBANCO Uniao de Bancos Brasileiros. Other
financials-related companies that helped performance during the period
included Man Group, the world's largest publicly traded hedge fund company,
and CapitaLand, a Singapore-based real estate holding and development
company.
DURING THE REPORTING PERIOD, THE PORTFOLIO'S WEIGHTING IN THE CONSUMER
DISCRETIONARY SECTOR INCREASED AND EXPOSURE TO THE INFORMATION TECHNOLOGY
SECTOR DECREASED. -- MARSICO
Holdings of Australia-based pharmaceutical company CSL also contributed to
performance and Switzerland-based materials companies Lonza Group and
Syngenta posted strong returns as well. Other top performing individual
holdings included German auto components company Continental, Hong Kong
fashion company Esprit Holdings and France-based water and waste management
company Veolia Environnement.
Q: What changes did you make to your portion of the Fund?
THE BOSTON COMPANY: We have been examining the portfolio's Japanese holdings
with particular focus on stocks with consumer finance exposure. Given ongoing
weakness, we have identified more compelling opportunities in other areas and
began to sell Takefuji.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 9
QUESTIONS & ANSWERS
MARSICO: During the reporting period, the portfolio's weighting in the
consumer discretionary sector increased and exposure to the information
technology sector decreased. Sector allocations in our portion of the Fund
are typically the result of our "bottom-up" stock selection process.
Q: How are you positioning your portion of the Fund going forward?
THE BOSTON COMPANY: Long term we remain optimistic about international
markets. European companies have embraced restructuring, which has
dramatically improved business prospects. Japan is poised to recover
domestically and a broader overall market has already begun to materialize.
We also recognize that international equity markets face some near-term
risks, including potential for slower global economic growth,
higher-than-expected headline inflation, monetary policy missteps by the
central banks and pressure on consumers from higher taxes in Germany and
Italy.
That said, we believe the backdrop remains encouraging for equity price
performance. Employment is high, inflation benign, oil prices have eased and
business sentiment surveys remain positive. There is still a high level of
liquidity in the system and strong merger and acquisition activity.
Continental Europe should benefit from Germany's restructuring progress and
eventual consumption rebound. Growing consumption in the emerging markets
should aid developed markets in dealing with an aging demographic. Japanese
equities have persistently lagged the broader MSCI Index, but despite mixed
macro economic data, the Japanese market is forecast to deliver one of the
highest levels of earnings growth among developed markets.
The short, but sharp market decline at the end of February was a reminder
that there is risk in equities and that a trend change in the market could
drive a change in the stocks leading the market. We believe that our
portfolio positioning should benefit from such a trend change. After four
years of robust performance, certain valuations appear stretched. As a value
manager, we are always cognizant of price risk embedded in securities and
constantly look to add positions where the risk/reward opportunity is
favorable, combined with attractive valuation characteristics.
- --------------------------------------------------------------------------------
10 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS
MARSICO: The primary economic sector allocations in our portion of the Fund
as of the period end include financials, consumer discretionary, industrials,
materials and consumer staples. We favor these areas due to our view that
earnings growth prospects, valuations, and macroeconomic factors, including
interest rates, inflation, and money growth, are compelling. In terms of
country allocations, the most significant weightings at the end of the
six-month period were Switzerland, the U.K., Japan, France and Mexico.
Country-level weightings should generally be considered a residual of the
"bottom-up" stock selection process rather than a major, proactive facet of
the investment strategy.
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource Fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 11
FUND EXPENSES EXAMPLE
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the acquired funds expense ratio as of the most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2007.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
12 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO
Class A
Actual(b) $1,000 $1,115.40 $ 8.02 1.53%
Hypothetical
(5% return before
expenses) $1,000 $1,017.21 $ 7.65 1.53%
Class B
Actual(b) $1,000 $1,111.80 $12.04 2.30%
Hypothetical
(5% return before
expenses) $1,000 $1,013.39 $11.48 2.30%
Class C
Actual(b) $1,000 $1,111.60 $11.99 2.29%
Hypothetical
(5% return before
expenses) $1,000 $1,013.44 $11.43 2.29%
Class I
Actual(b) $1,000 $1,117.00 $ 5.93 1.13%
Hypothetical
(5% return before
expenses) $1,000 $1,019.19 $ 5.66 1.13%
Class R4
Actual(b) $1,000 $1,116.30 $ 7.19(c) 1.37%
Hypothetical
(5% return before
expenses) $1,000 $1,018.00 $ 6.85(c) 1.37%
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 181/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2007: +11.54%
for Class A, +11.18% for Class B, +11.16% for Class C, +11.70% for Class I
and +11.63% for Class R4.
(c) In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from an account-based fee to an
asset-based fee, and adopting a plan administration services agreement.
These changes were effective Dec. 11, 2006. In addition, the investment
manager and its affiliates have contractually agreed to waive certain fees
and to absorb certain expenses until Oct. 31, 2007, 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 1.43% for Class R4.
Any amounts waived will not be reimbursed by the Fund. If these changes had
been in place for the entire six-month period ended April 30, 2007, the
actual and hypothetical expenses paid for Class R4 would have been the same
as those expenses presented in the table above.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 13
INVESTMENTS IN SECURITIES
APRIL 30, 2007 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
<Table>
<Caption>
COMMON STOCKS (97.0%)(c)
ISSUER SHARES VALUE(A)
AUSTRALIA (4.6%)
BIOTECHNOLOGY (0.6%)
CSL 16,526 $1,190,326
- -----------------------------------------------------------------------------------
CAPITAL MARKETS (1.5%)
Macquarie Bank 48,799 3,496,607
- -----------------------------------------------------------------------------------
COMMERCIAL BANKS (0.5%)
Natl Australia Bank 28,265 1,003,978
- -----------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.4%)
Amcor 148,711 915,957
- -----------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.2%)
Telstra 99,600 384,750
- -----------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.5%)
Tabcorp Holdings 65,567 982,477
- -----------------------------------------------------------------------------------
INSURANCE (0.5%)
Insurance Australia Group 63,000 311,405
Suncorp-Metway 38,367 679,128
---------------
Total 990,533
- -----------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (0.4%)
Macquarie Infrastructure Group 275,569 863,555
- -----------------------------------------------------------------------------------
AUSTRIA (1.5%)
COMMERCIAL BANKS
Erste Bank der Oesterreichischen Sparkassen 41,411 3,315,410
- -----------------------------------------------------------------------------------
BELGIUM (0.4%)
DIVERSIFIED FINANCIAL SERVICES
Fortis 21,540 968,063
- -----------------------------------------------------------------------------------
BRAZIL (1.7%)
COMMERCIAL BANKS (0.8%)
UNIBANCO -- Uniao de Bancos Brasileiros GDR 17,595 1,707,771
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
BRAZIL (CONT.)
DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%)
Tele Norte Leste Participacoes ADR 33,630 $550,523
- -----------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.3%)
Gafisa 44,099 625,676
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (0.2%)
Petroleo Brasileiro ADR 4,010 405,932
- -----------------------------------------------------------------------------------
REAL ESTATE (0.1%)
JHSF Participacoes 73,600(b) 302,836
- -----------------------------------------------------------------------------------
CANADA (1.1%)
FOOD & STAPLES RETAILING (0.5%)
Shoppers Drug Mart 24,351 1,109,835
- -----------------------------------------------------------------------------------
ROAD & RAIL (0.6%)
Canadian Natl Railway 23,934 1,202,444
- -----------------------------------------------------------------------------------
CHINA (1.5%)
COMMERCIAL BANKS (0.5%)
Industrial & Commercial Bank of China Series
H 1,846,000(b) 1,003,124
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (0.5%)
CNOOC 1,355,300 1,164,131
- -----------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (0.5%)
China Merchants Holdings Intl 258,000 1,140,282
- -----------------------------------------------------------------------------------
FINLAND (0.9%)
COMMUNICATIONS EQUIPMENT (0.5%)
Nokia 29,180(b) 736,015
Nokia ADR 13,540(b) 341,885
---------------
Total 1,077,900
- -----------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.4%)
M-real Series B 8,680 59,227
UPM-Kymmene 35,934 885,509
---------------
Total 944,736
- -----------------------------------------------------------------------------------
</Table>
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
FRANCE (10.6%)
AUTOMOBILES (0.3%)
Peugeot 6,860 $556,537
- -----------------------------------------------------------------------------------
BUILDING PRODUCTS (0.7%)
Compagnie de
Saint-Gobain 13,330 1,423,219
- -----------------------------------------------------------------------------------
COMMERCIAL BANKS (1.1%)
BNP Paribas 10,020 1,162,300
Credit Agricole 28,820 1,213,458
---------------
Total 2,375,758
- -----------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
France Telecom 53,070 1,551,715
- -----------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.3%)
Electricite de France 7,325 636,540
- -----------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.4%)
Accor 34,780 3,275,651
- -----------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.4%)
Thomson 40,260 775,742
- -----------------------------------------------------------------------------------
INSURANCE (1.3%)
AXA 59,849 2,747,587
- -----------------------------------------------------------------------------------
MEDIA (1.1%)
JC Decaux 46,176 1,433,970
Lagardere 11,260 884,889
---------------
Total 2,318,859
- -----------------------------------------------------------------------------------
MULTI-UTILITIES (1.1%)
Veolia Environnement 29,867 2,464,725
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (1.0%)
Total 30,522 2,249,781
- -----------------------------------------------------------------------------------
PHARMACEUTICALS (1.2%)
Sanofi-Aventis 27,580 2,524,314
- -----------------------------------------------------------------------------------
GERMANY (7.0%)
AIR FREIGHT & LOGISTICS (0.8%)
Deutsche Post 49,810 1,712,564
- -----------------------------------------------------------------------------------
AUTO COMPONENTS (2.1%)
Continental 30,701 4,272,998
- -----------------------------------------------------------------------------------
AUTOMOBILES (0.4%)
BMW 12,850 792,773
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
GERMANY (CONT.)
CAPITAL MARKETS (0.1%)
Deutsche Bank 840 $128,948
- -----------------------------------------------------------------------------------
CHEMICALS (0.3%)
Linde 6,209 695,464
- -----------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.6%)
Deutsche Telekom 74,550 1,364,474
- -----------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.5%)
E.ON 7,350 1,104,380
- -----------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.7%)
Siemens 12,830 1,548,533
- -----------------------------------------------------------------------------------
INSURANCE (1.0%)
Allianz 3,590 816,589
Hannover Rueckversicherung 6,830(b) 346,514
Munich Re Group 5,540 989,517
---------------
Total 2,152,620
- -----------------------------------------------------------------------------------
MACHINERY (0.1%)
Heidelberger Druckmaschinen 5,890 277,808
- -----------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.4%)
Adidas 15,600 927,908
- -----------------------------------------------------------------------------------
GREECE (0.4%)
ELECTRIC UTILITIES
Public Power 36,700 961,769
- -----------------------------------------------------------------------------------
HONG KONG (4.3%)
COMMERCIAL BANKS (0.3%)
BOC Hong Kong Holdings 252,500 619,807
- -----------------------------------------------------------------------------------
ELECTRIC UTILITIES (--%)
HongKong Electric Holdings 12,500 62,541
- -----------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.1%)
Johnson Electric Holdings 495,000 299,322
- -----------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.3%)
Melco PBL Entertainment Macau ADR 93,693(b) 1,632,132
Shangri-La Asia 444,000 1,085,753
---------------
Total 2,717,885
- -----------------------------------------------------------------------------------
</Table>
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 15
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
HONG KONG (CONT.)
INDUSTRIAL CONGLOMERATES (0.3%)
Hutchison Whampoa 74,500 $717,389
- -----------------------------------------------------------------------------------
SPECIALTY RETAIL (0.8%)
Esprit Holdings 139,000 1,684,692
- -----------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (1.5%)
China Mobile 343,000 3,089,494
- -----------------------------------------------------------------------------------
INDIA (0.4%)
COMMERCIAL BANKS
ICICI Bank ADR 23,255 951,595
- -----------------------------------------------------------------------------------
IRELAND (0.2%)
COMMERCIAL BANKS
Bank of Ireland 16,378 351,336
- -----------------------------------------------------------------------------------
ISRAEL (0.3%)
PHARMACEUTICALS
Teva Pharmaceutical Inds ADR 19,420 743,980
- -----------------------------------------------------------------------------------
ITALY (3.9%)
COMMERCIAL BANKS (2.3%)
Intesa Sanpaolo 460,011(b) 3,854,037
UniCredito Italiano 106,800 1,097,179
---------------
Total 4,951,216
- -----------------------------------------------------------------------------------
INSURANCE (0.4%)
Unipol 196,500 781,175
- -----------------------------------------------------------------------------------
MEDIA (0.5%)
Mediaset 98,540 1,114,176
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (0.7%)
Eni 26,510 879,076
Saras 106,580(b) 663,962
---------------
Total 1,543,038
- -----------------------------------------------------------------------------------
JAPAN (17.6%)
AUTO COMPONENTS (0.4%)
NOK 42,500 790,634
- -----------------------------------------------------------------------------------
AUTOMOBILES (2.1%)
Nissan Motor 126,000 1,267,308
Toyota Motor 58,500 3,553,082
---------------
Total 4,820,390
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
JAPAN (CONT.)
BUILDING PRODUCTS (0.8%)
Daikin Inds 33,093 $1,118,370
JS Group 24,500 553,244
---------------
Total 1,671,614
- -----------------------------------------------------------------------------------
CAPITAL MARKETS (0.5%)
Nomura Holdings 55,200 1,054,894
- -----------------------------------------------------------------------------------
CHEMICALS (0.5%)
Kuraray 42,100 467,818
Sumitomo Chemical 13,000 85,858
Teijin 108,600 559,324
---------------
Total 1,113,000
- -----------------------------------------------------------------------------------
COMMERCIAL BANKS (3.1%)
77 Bank 84,400 553,306
Mitsubishi UFJ Financial Group 137 1,425,027
Mitsui Trust Holdings 178,400 1,611,679
Mizuho Financial Group 161 968,815
Shinsei Bank 117,900 508,371
Sumitomo Mitsui Financial Group 210 1,834,498
---------------
Total 6,901,696
- -----------------------------------------------------------------------------------
CONSUMER FINANCE (0.5%)
Credit Saison 23,600 670,962
SFCG 1,810 318,280
Takefuji 490 16,468
---------------
Total 1,005,710
- -----------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
Nippon Electric Glass 31,500 539,088
- -----------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.1%)
AEON 74,100 1,355,286
Lawson 12,800 472,008
Matsumotokiyoshi 22,531 529,398
---------------
Total 2,356,692
- -----------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.0%)
Funai Electric 2,500 198,244
Sekisui Chemical 108,900 844,913
Sekisui House 71,200 1,050,764
---------------
Total 2,093,921
- -----------------------------------------------------------------------------------
</Table>
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
16 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
JAPAN (CONT.)
HOUSEHOLD PRODUCTS (0.1%)
Kao 11,100 $304,678
- -----------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.3%)
FUJIFILM Holdings 12,200 502,526
Sankyo 2,000 87,657
---------------
Total 590,183
- -----------------------------------------------------------------------------------
MACHINERY (0.6%)
Hino Motors 153,700 846,350
THK 20,100 489,784
---------------
Total 1,336,134
- -----------------------------------------------------------------------------------
MEDIA (0.6%)
Dentsu 418 1,190,232
- -----------------------------------------------------------------------------------
OFFICE ELECTRONICS (0.6%)
Canon 11,006 617,458
Ricoh 34,400 754,988
---------------
Total 1,372,446
- -----------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.3%)
Nippon Paper Group 187 632,794
- -----------------------------------------------------------------------------------
PHARMACEUTICALS (1.3%)
Astellas Pharma 13,900 608,025
Chugai Pharmaceutical 90,800 2,315,236
---------------
Total 2,923,261
- -----------------------------------------------------------------------------------
ROAD & RAIL (0.6%)
Nippon Express 202,600 1,254,113
- -----------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.1%)
Advantest 17,900 792,223
Rohm 16,600 1,499,283
---------------
Total 2,291,506
- -----------------------------------------------------------------------------------
SPECIALTY RETAIL (0.7%)
Yamada Denki 15,300 1,413,649
- -----------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (1.1%)
Marubeni 270,000 1,621,183
Mitsubishi 35,000 746,040
---------------
Total 2,367,223
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
MEXICO (3.0%)
BEVERAGES (0.8%)
Coca-Cola Femsa ADR 12,450 $484,181
Fomento Economico Mexicano ADR 10,698 1,152,067
---------------
Total 1,636,248
- -----------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (0.5%)
CEMEX ADR 31,192(b) 1,013,740
- -----------------------------------------------------------------------------------
MEDIA (0.9%)
Grupo Televisa ADR 68,325 1,916,516
- -----------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
America Movil ADR Series L 37,011 1,944,188
- -----------------------------------------------------------------------------------
NETHERLANDS (1.8%)
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Vedior 18,650 495,308
- -----------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.3%)
Koninklijke Philips Electronics 14,140 580,613
- -----------------------------------------------------------------------------------
INSURANCE (0.4%)
Aegon 44,717 922,823
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (0.9%)
Royal Dutch Shell Series A 52,341 1,817,600
- -----------------------------------------------------------------------------------
SINGAPORE (1.5%)
COMMERCIAL BANKS (0.7%)
DBS Group Holdings 81,020 1,124,285
United Overseas Bank 32,700 457,203
---------------
Total 1,581,488
- -----------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.8%)
CapitaLand 293,000 1,620,919
- -----------------------------------------------------------------------------------
SOUTH AFRICA (0.3%)
COMMERCIAL BANKS
Nedbank Group 27,545 587,029
- -----------------------------------------------------------------------------------
SOUTH KOREA (1.4%)
DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%)
KT ADR 23,980 543,387
- -----------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.2%)
Korea Electric Power ADR 20,880 431,798
- -----------------------------------------------------------------------------------
</Table>
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 17
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
SOUTH KOREA (CONT.)
HOUSEHOLD DURABLES (0.2%)
LG Electronics 5,380 $359,168
- -----------------------------------------------------------------------------------
METALS & MINING (0.2%)
POSCO 1,260 528,915
- -----------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.3%)
Samsung Electronics 921 563,791
- -----------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
SK Telecom ADR 22,800 566,124
- -----------------------------------------------------------------------------------
SPAIN (0.7%)
COMMERCIAL BANKS (0.4%)
Banco Santander Central Hispano 42,690 768,324
- -----------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (0.3%)
Repsol YPF 23,690 780,397
- -----------------------------------------------------------------------------------
SWEDEN (0.6%)
COMMUNICATIONS EQUIPMENT (0.2%)
Telefonaktiebolaget LM Ericsson ADR 2,710 103,441
Telefonaktiebolaget LM Ericsson Series B 89,500 342,043
---------------
Total 445,484
- -----------------------------------------------------------------------------------
MACHINERY (0.3%)
Volvo Series B 34,240 672,124
Volvo Series B 6,848(b) 25,556
---------------
Total 697,680
- -----------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.1%)
Svenska Cellulosa Series B 2,440 125,511
- -----------------------------------------------------------------------------------
SWITZERLAND (11.3%)
BIOTECHNOLOGY (0.3%)
Actelion 2,447(b) 581,389
- -----------------------------------------------------------------------------------
CAPITAL MARKETS (1.9%)
UBS 61,906 4,023,371
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
SWITZERLAND (CONT.)
CHEMICALS (2.8%)
Ciba Specialty Chemicals 19,347 $1,278,297
Clariant 24,870(b) 411,230
Lonza Group 22,777 2,225,983
Syngenta 11,494(b) 2,283,389
---------------
Total 6,198,899
- -----------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (1.2%)
Holcim 24,691 2,645,018
- -----------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.6%)
ABB 61,814 1,235,263
- -----------------------------------------------------------------------------------
FOOD PRODUCTS (1.3%)
Nestle 7,033 2,784,258
- -----------------------------------------------------------------------------------
INSURANCE (1.0%)
Swiss Reinsurance 22,854 2,148,364
- -----------------------------------------------------------------------------------
PHARMACEUTICALS (2.2%)
Novartis 41,130 2,389,576
Roche Holding 12,992 2,446,587
---------------
Total 4,836,163
- -----------------------------------------------------------------------------------
TAIWAN (0.3%)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT
United Microelectronics ADR 183,525 601,962
- -----------------------------------------------------------------------------------
UNITED KINGDOM (18.6%)
AEROSPACE & DEFENSE (1.2%)
BAE Systems 286,341 2,595,559
- -----------------------------------------------------------------------------------
BEVERAGES (1.0%)
Diageo 51,550 1,086,626
SABMiller 46,890 1,108,350
---------------
Total 2,194,976
- -----------------------------------------------------------------------------------
CAPITAL MARKETS (1.0%)
Man Group 189,896 2,126,168
- -----------------------------------------------------------------------------------
COMMERCIAL BANKS (2.4%)
HBOS 38,606 828,437
HSBC Holdings 130,857 2,414,351
Royal Bank of Scotland Group 45,873 1,756,350
---------------
Total 4,999,138
- -----------------------------------------------------------------------------------
</Table>
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
18 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
UNITED KINGDOM (CONT.)
COMMERCIAL SERVICES & SUPPLIES (0.6%)
Rentokil Initial 378,110 $1,303,125
- -----------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.2%)
Rexam 45,800 479,410
- -----------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.2%)
British Energy Group 49,419(b) 508,918
- -----------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (2.0%)
Tesco 479,024 4,404,799
- -----------------------------------------------------------------------------------
FOOD PRODUCTS (1.1%)
Unilever 77,103 2,412,210
- -----------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (0.6%)
Reckitt Benckiser 23,524 1,286,863
- -----------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.3%)
Smiths Group 32,210 694,516
- -----------------------------------------------------------------------------------
INSURANCE (1.0%)
Friends Provident 268,490 1,010,842
Old Mutual 313,830 1,113,735
---------------
Total 2,124,577
- -----------------------------------------------------------------------------------
MEDIA (1.6%)
British Sky Broadcasting Group ADR 146,901 1,682,462
Reed Elsevier 84,470 1,069,598
Trinity Mirror 61,020 649,513
---------------
Total 3,401,573
- -----------------------------------------------------------------------------------
METALS & MINING (1.1%)
BHP Billiton 34,100 761,910
Rio Tinto 26,325 1,599,572
---------------
Total 2,361,482
- -----------------------------------------------------------------------------------
MULTILINE RETAIL (0.3%)
Debenhams 196,530 565,187
- -----------------------------------------------------------------------------------
MULTI-UTILITIES (0.3%)
Centrica 73,170 563,794
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
UNITED KINGDOM (CONT.)
OIL, GAS & CONSUMABLE FUELS (1.1%)
BP 207,927 $2,332,560
- -----------------------------------------------------------------------------------
PHARMACEUTICALS (1.1%)
GlaxoSmithKline 84,145 2,426,919
- -----------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.7%)
Northern Rock 70,320 1,503,637
- -----------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
Vodafone Group 584,840 1,663,778
- -----------------------------------------------------------------------------------
UNITED STATES (1.0%)
ENERGY EQUIPMENT & SERVICES
Schlumberger 28,803 2,126,525
- -----------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $177,794,410) $208,896,469
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
PREFERRED STOCKS (0.2%)(c)
ISSUER SHARES VALUE(A)
GERMANY
Henkel 2,420 $380,435
- -----------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost: $345,825) $380,435
- -----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (1.5%)
SHARES VALUE(A)
RiverSource Short-Term Cash Fund 3,243,442(d) $3,243,442
- -----------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $3,243,442) $3,243,442
- -----------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $181,383,677)(e) $212,520,346
===================================================================================
</Table>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Affiliated Money Market Fund -- See Note 6 to the financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 19
NOTES TO INVESTMENTS IN SECURITIES (CONTINUED)
(e) At April 30, 2007, the cost of securities for federal income tax purposes
was approximately $181,384,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $33,613,000
Unrealized depreciation (2,477,000)
- ------------------------------------------------------------------------------
Net unrealized appreciation $31,136,000
- ------------------------------------------------------------------------------
</Table>
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
20 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2007 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value (Note 1)
Unaffiliated issuers (identified cost $178,140,235) $209,276,904
Affiliated money market fund (identified cost $3,243,442)
(Note 6) 3,243,442
- ---------------------------------------------------------------------------------
Total investments in securities (identified cost
$181,383,677) 212,520,346
Foreign currency holdings (identified cost $1,283,850) (Note
1) 1,287,115
Capital shares receivable 29,110
Dividends and accrued interest receivable 844,006
Receivable for investment securities sold 1,966,692
Unrealized appreciation on foreign currency contracts held,
at value (Note 5) 838
- ---------------------------------------------------------------------------------
Total assets 216,648,107
- ---------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash on demand deposit 12,460
Capital shares payable 49,082
Payable for investment securities purchased 1,035,740
Unrealized depreciation on foreign currency contracts held,
at value (Note 5) 288
Accrued investment management services fee 17,318
Accrued distribution fee 4,514
Accrued transfer agency fee 1,482
Accrued administrative services fee 1,428
Accrued plan administration services fee 2
Other accrued expenses 74,717
- ---------------------------------------------------------------------------------
Total liabilities 1,197,031
- ---------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $215,451,076
=================================================================================
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 21
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
APRIL 30, 2007 (UNAUDITED)
<Table>
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 272,085
Additional paid-in capital 169,021,796
Excess of distributions over net investment income (5,396)
Accumulated net realized gain (loss) 15,011,800
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (Note 5) 31,150,791
- ---------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $215,451,076
=================================================================================
</Table>
<Table>
Net assets applicable to outstanding
shares: Class A $105,284,636
Class B $ 26,309,730
Class C $ 1,814,967
Class I $ 81,963,771
Class R4 $ 77,972
Net asset value per share of outstanding
capital stock: Class A shares 13,292,238 $ 7.92
Class B shares 3,368,851 $ 7.81
Class C shares 232,389 $ 7.81
Class I shares 10,305,183 $ 7.95
Class R4 shares 9,850 $ 7.92
- ------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
22 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
<Table>
INVESTMENT INCOME
Income:
Dividends $ 1,861,589
Interest 278,809
Income distributions from affiliated money market fund (Note
6) 92,713
Less foreign taxes withheld (220,876)
- ---------------------------------------------------------------------------
Total income 2,012,235
- ---------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 922,505
Distribution fee
Class A 128,114
Class B 130,011
Class C 8,915
Transfer agency fee
Class A 105,556
Class B 28,599
Class C 1,922
Class R4 79
Service fee -- Class R4 24
Administrative services fees and expenses 81,825
Plan administration services fee -- Class R4 175
Compensation of board members 1,929
Custodian fees 94,536
Printing and postage 24,142
Registration fees 13,639
Professional fees 11,613
Other 6,506
- ---------------------------------------------------------------------------
Total expenses 1,560,090
Expenses waived/reimbursed by the Investment Manager and
its affiliates (Note 2) (35,567)
- ---------------------------------------------------------------------------
1,524,523
Earnings and bank fee credits on cash balances (Note 2) (2,947)
- ---------------------------------------------------------------------------
Total net expenses 1,521,576
- ---------------------------------------------------------------------------
Investment income (loss) -- net 490,659
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) 15,799,850
Foreign currency transactions 55,207
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments 15,855,057
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 6,178,212
- ---------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 22,033,269
- ---------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $22,523,928
===========================================================================
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
APRIL 30, 2007 OCT. 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 490,659 $ 1,285,814
Net realized gain (loss) on investments 15,855,057 32,235,981
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 6,178,212 9,190,596
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 22,523,928 42,712,391
- -----------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (1,289,426) (753,806)
Class B (122,994) (25,488)
Class C (10,487) (721)
Class I (1,197,175) (647,101)
Class R4 (3,247) (1,400)
Net realized gain
Class A (15,558,512) (7,774,435)
Class B (4,024,862) (2,150,509)
Class C (281,205) (124,742)
Class I (10,948,558) (4,219,032)
Class R4 (34,255) (10,738)
- -----------------------------------------------------------------------------------------
Total distributions (33,470,721) (15,707,972)
- -----------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
24 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
APRIL 30, 2007 OCT. 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) $ 8,526,439 $ 22,068,658
Class B shares 1,960,044 5,442,646
Class C shares 143,482 391,948
Class I shares 7,005,290 21,631,905
Class R4 shares 24,670 102,976
Reinvestment of distributions at net asset value
Class A shares 16,628,150 7,613,975
Class B shares 4,103,215 2,153,921
Class C shares 281,745 121,098
Class I shares 12,143,628 4,865,078
Class R4 shares 34,585 10,687
Payments for redemptions
Class A shares (13,705,867) (35,580,645)
Class B shares (Note 2) (3,799,862) (9,742,706)
Class C shares (Note 2) (261,663) (447,625)
Class I shares (1,745,895) (12,368,616)
Class R4 shares (172,530) (23,501)
- -----------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 31,165,431 6,239,799
- -----------------------------------------------------------------------------------------
Total increase (decrease) in net assets 20,218,638 33,244,218
Net assets at beginning of period 195,232,438 161,988,220
- -----------------------------------------------------------------------------------------
Net assets at end of period $215,451,076 $195,232,438
=========================================================================================
Undistributed (excess of distributions over) net
investment income $ (5,396) $ 2,127,274
- -----------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 25
NOTES TO FINANCIAL STATEMENTS
(Unaudited as to April 30, 2007)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource International Managers Series, Inc. and is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. RiverSource International
Managers Series, Inc. has 10 billion authorized shares of capital stock that can
be allocated among the separate series as designated by the Board. The Fund
invests primarily in equity securities of foreign issuers.
The Fund offers Class A, Class B, Class C, Class I and Class R4 shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares have no sales charge and are offered only to
qualifying institutional investors.
Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from account-based to asset-based, and
adopting a plan administration services agreement.
At April 30, 2007, Ameriprise Financial, Inc. (Ameriprise Financial) and the
affiliated funds-of-funds owned 100% of Class I shares.
At April 30, 2007, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 38% 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 fees) differ among classes. Income, expenses (other
than class specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
- --------------------------------------------------------------------------------
26 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. The procedures adopted by the Board
of Directors of the funds 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 equities) that is not reflected
in price quotations or valuations from other sources. A fair value price is a
good faith estimate of the value of a security at a given point in time. Many
securities markets and exchanges outside the U.S. close prior to the close of
the New York Stock Exchange and therefore the closing prices for securities in
such markets or on such exchanges may not fully reflect events that occur after
such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial will fair value foreign
equity securities pursuant to procedures adopted by the Board of Directors of
the funds, including utilizing a third party pricing service to determine these
fair values. These procedures take into account multiple factors, including
movements in the U.S. securities markets, to determine a good faith estimate
that reasonably reflects the current market conditions as of the close of the
New York Stock Exchange. Short-term securities maturing in more than 60 days
from the valuation date are valued at the market price or approximate market
value based on current interest rates; those maturing in 60 days or less are
valued at amortized cost.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 27
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2007, foreign currency holdings consisted of
multiple denominations.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
- --------------------------------------------------------------------------------
28 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
RECENT ACCOUNTING PRONOUNCEMENTS
On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released
Statement of Financial Accounting Standards No. 157 "Fair Value Measurements"
(SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets
out a framework for measuring fair value, and requires additional disclosures
about fair-value measurements. The application of SFAS 157 is required for
fiscal years beginning after Nov. 15, 2007 and interim periods within those
fiscal years. The impact of SFAS 157 on the Fund's financial statements is being
evaluated.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 29
In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for
Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in accordance with FASB Statement 109, "Accounting for
Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a
tax position taken or expected to be taken in a tax return. The first step is to
determine whether a tax position has met the more-likely-than-not recognition
threshold and the second step is to measure a tax position that meets the
threshold to determine the amount of benefit to recognize. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to
determine the impact, if any, to the Fund. The adoption of FIN 48 is not
anticipated to have a material impact on the Fund.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
Under an Investment Management Services Agreement, RiverSource Investments, LLC
(the Investment Manager) determines which securities will be purchased, held or
sold. The management fee is a percentage of the Fund's average daily net assets
that declines from 0.97% to 0.845% annually as the Fund's assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
based on a comparison of the performance of Class A shares of the Fund to the
Lipper International Funds Index. In certain circumstances, the Board may
approve a change in the index. The maximum adjustment is 0.12% per year. If the
performance difference is less than 0.50%, the adjustment will be zero. The
adjustment decreased the fee by $69,625 for the six months ended April 30, 2007.
The Investment Manager has Subadvisory Agreements with The Boston Company Asset
Management, LLC and Marsico Capital Management, LLC. New investments in the
Fund, net of any redemptions, are allocated in accordance with the Investment
Manager's determination of the allocation that is in the best interests of the
Fund's shareholders. Each subadviser's proportionate share of investments in the
Fund will vary due to market fluctuations.
- --------------------------------------------------------------------------------
30 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase.
Other expenses in the amount of $1,300 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.
Compensation of Board members includes, for the former Board Chair, compensation
as well as retirement benefits. Certain other aspects of the former Board
Chair's compensation, including health benefits and payment of certain other
expenses, are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
Professional fees include fees paid by the Fund for legal services and
independent auditor services.
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual fee per shareholder account for this service as follows:
- - Class A $19.50
- - Class B $20.50
- - Class C $20.00
Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as
Class R4, the fee structure under the Transfer Agency Agreement was revised from
an account-based fee for Class Y to an asset-based fee for Class R4. The Fund
pays the Transfer Agent an annual asset-based fee of 0.05% of the Fund's average
daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the
Fund paid the Transfer Agent an annual account-based fee of $17.50 per
shareholder account.
Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per
shareholder account of $1. This amount is included in the transfer agency fee on
the statement of operations. Effective Dec. 11, 2006, this fee was eliminated.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 31
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with American Financial Services, Inc. and RiverSource
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A shares and a fee at an annual
rate of up to 1.00% of the Fund's average daily net assets attributable to Class
B and Class C shares.
Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was
adopted for the restructured Class R4. The fee is calculated at a rate of 0.25%
of the Fund's average daily net assets attributable to Class R4 shares.
Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the
Distributor a fee for service provided to shareholders by the Distributor and
other servicing agents with respect to Class Y shares. The fee was calculated at
a rate of 0.10% of the Fund's average daily net assets attributable to Class Y
shares. Effective Dec. 11, 2006, this agreement was terminated.
Sales charges received by the Distributor for distributing Fund shares were
$121,906 for Class A, $11,511 for Class B and $285 for Class C for the six
months ended April 30, 2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in which
it invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). Because the acquired funds have varied expense and fee levels and
the Fund may own different proportions of acquired funds at different times, the
amount of fees and expenses incurred indirectly by the Fund will vary.
For the six months ended April 30, 2007, the Investment Manager and its
affiliates waived certain fees and expenses (excluding fees and expenses of
acquired funds), such that net expenses were 1.53% for Class A, 2.30% for Class
B, 2.30% for Class C and 1.37% for Class R4. Of these waived fees and expenses,
the transfer agency fees waived for Class A, Class B, Class C and Class R4 were
$27,970, $7,062, $481 and $54, respectively. In addition, the Investment Manager
and its affiliates have agreed to waive certain fees and expenses until Oct. 31,
2007, unless sooner terminated at the discretion of the Board, such that net
expenses (excluding fees and expenses of acquired funds), before giving effect
to any performance incentive adjustment, will not exceed 1.60% for Class A,
2.37% for Class B, 2.37% for Class C, 1.25% for Class I and 1.43% for Class R4
of the Fund's average daily net assets.
- --------------------------------------------------------------------------------
32 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
During the six months ended April 30, 2007, the Fund's custodian and transfer
agency fees were reduced by $2,947 as a result of earnings and bank fee credits
from overnight cash balances. The Fund also pays custodian fees to Ameriprise
Trust Company, an affiliate of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $91,366,779 and $95,283,564, respectively, for the six
months ended April 30, 2007. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED APRIL 30, 2007
CLASS A CLASS B CLASS C CLASS I CLASS R4*
- -------------------------------------------------------------------------------------
Sold 1,078,933 250,550 18,115 883,090 3,195
Issued for reinvested
distributions 2,223,014 555,239 38,125 1,619,150 4,630
Redeemed (1,749,220) (489,625) (33,904) (227,681) (22,565)
- -------------------------------------------------------------------------------------
Net increase (decrease) 1,552,727 316,164 22,336 2,274,559 (14,740)
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED OCT. 31, 2006
CLASS A CLASS B CLASS C CLASS I CLASS R4*
- -------------------------------------------------------------------------------------
Sold 2,810,800 702,782 49,785 2,717,056 13,168
Issued for reinvested
distributions 1,040,171 297,084 16,703 663,721 1,462
Redeemed (4,532,570) (1,265,856) (57,499) (1,473,794) (2,848)
- -------------------------------------------------------------------------------------
Net increase (decrease) (681,599) (265,990) 8,989 1,906,983 11,782
- -------------------------------------------------------------------------------------
</Table>
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 33
5. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 2007, the Fund has forward foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts are included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------
May 1, 2007 60,524 30,405 $273 $ --
U.S. Dollar British Pound
May 2, 2007 25,102,890 210,568 485 --
Japanese Yen U.S. Dollar
May 2, 2007 29,000,000 242,455 -- 244
Japanese Yen U.S. Dollar
May 2, 2007 38,437 19,258 71 --
U.S. Dollar British Pound
May 2, 2007 2,149 1,580 8 --
U.S. Dollar European Monetary Unit
May 2, 2007 41,369 49,944 -- 14
U.S. Dollar Swiss Franc
May 2, 2007 88,467 106,805 -- 30
U.S. Dollar Swiss Franc
May 7, 2007 4,377,242 36,659 1 --
Japanese Yen U.S. Dollar
- -----------------------------------------------------------------------------------------------
Total $838 $288
- -----------------------------------------------------------------------------------------------
</Table>
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments.
- --------------------------------------------------------------------------------
34 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
7. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary
funding of shareholder redemptions or for other temporary or emergency purposes.
The Fund must maintain asset coverage for borrowings of at least 300%. The
agreement, which enables the Fund to participate with other RiverSource funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.06% per annum. The Fund had no borrowings under the
facility outstanding during the six months ended April 30, 2007.
8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota. In response to defendants' motion to dismiss the
complaint, the Court dismissed one of plaintiffs' four claims and granted
plaintiffs limited discovery. Defendants moved for summary judgment in April
2007.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 35
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), the parent company of RiverSource Investments, LLC
(RiverSource Investments), entered into settlement agreements with the
Securities and Exchange Commission (SEC) and Minnesota Department of Commerce
(MDOC) related to market timing activities. In connection with these matters,
the SEC and MDOC issued orders (the Orders) alleging that AEFC violated certain
provisions of the federal and Minnesota securities laws by failing to adequately
disclose market timing activities by allowing certain identified market timers
to continue to market time contrary to disclosures in mutual fund and variable
annuity product prospectuses. The Orders also alleged that AEFC failed to
implement procedures to detect and prevent market timing in 401(k) plans for
employees of AEFC and related companies and failed to adequately disclose that
there were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its employees.
As a result of the Orders, 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. Pursuant to the terms of the Orders, AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to make presentations at least annually to its board of directors and the
relevant mutual funds' board that include an overview of policies and procedures
to prevent market timing, material changes to these policies and procedures and
whether disclosures related to market timing are consistent with the SEC order
and federal securities laws. 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. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review of
its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
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.
- --------------------------------------------------------------------------------
36 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
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 INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 37
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003
Net asset value, beginning of period $8.47 $7.34 $7.03 $6.34 $5.20
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .05 .04 .05 .02
Net gains (losses) (both realized
and unrealized) .87 1.78 1.01 .90 1.13
- ----------------------------------------------------------------------------------------------------------
Total from investment operations .89 1.83 1.05 .95 1.15
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) (.06) (.09) (.09) (.01)
Distributions from realized gains (1.33) (.64) (.65) (.17) --
- ----------------------------------------------------------------------------------------------------------
Total distributions (1.44) (.70) (.74) (.26) (.01)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.92 $8.47 $7.34 $7.03 $6.34
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $105 $99 $91 $98 $63
- ----------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily
net assets(b),(c) 1.53%(d),(e) 1.65%(d) 1.63%(d) 1.73% 1.74%(d)
- ----------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets .43%(e) .68% .59% .51% .73%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 45% 89% 110% 111% 58%
- ----------------------------------------------------------------------------------------------------------
Total return(f) 11.54%(g) 26.50% 15.65% 15.39% 22.26%
- ----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits and bank fee credits on cash balances. Includes the impact
of a performance incentive adjustment fee, if any.
(c) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class A would have been 1.59% for the six months ended April 30, 2007 and
1.69%, 1.64% and 2.21% for the years ended Oct. 31, 2006, 2005 and 2003,
respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2007 (Unaudited).
- --------------------------------------------------------------------------------
38 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003
Net asset value, beginning of
period $8.33 $7.24 $6.94 $6.29 $5.20
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net gains (losses) (both realized
and unrealized) .85 1.74 .98 .89 1.10
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.04) (.01) (.03) (.07) (.01)
Distributions from realized gains (1.33) (.64) (.65) (.17) --
- ---------------------------------------------------------------------------------------------------------
Total distributions (1.37) (.65) (.68) (.24) (.01)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.81 $8.33 $7.24 $6.94 $6.29
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $26 $25 $24 $22 $13
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily
net assets(b),(c) 2.30%(d),(e) 2.43%(d) 2.41%(d) 2.51% 2.52%(d)
- ---------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets (.35%)(e) (.07%) (.18%) (.22%) .04%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 45% 89% 110% 111% 58%
- ---------------------------------------------------------------------------------------------------------
Total return(f) 11.18%(g) 25.37% 14.86% 14.41% 21.23%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits and bank fee credits on cash balances. Includes the impact
of a performance incentive adjustment fee, if any.
(c) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class B would have been 2.35% for the six months ended April 30, 2007 and
2.46%, 2.42% and 2.98% for the years ended Oct. 31, 2006, 2005 and 2003,
respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2007 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 39
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003
Net asset value, beginning of
period $8.34 $7.24 $6.95 $6.29 $5.20
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net gains (losses) (both realized
and unrealized) .85 1.75 .97 .89 1.10
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.05) (.01) (.03) (.06) (.01)
Distributions from realized gains (1.33) (.64) (.65) (.17) --
- ---------------------------------------------------------------------------------------------------------
Total distributions (1.38) (.65) (.68) (.23) (.01)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.81 $8.34 $7.24 $6.95 $6.29
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $2 $2 $1 $2 $1
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily
net assets(b),(c) 2.29%(d),(e) 2.43%(d) 2.41%(d) 2.51% 2.52%(d)
- ---------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets (.34%)(e) (.08%) (.21%) (.24%) (.01%)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 45% 89% 110% 111% 58%
- ---------------------------------------------------------------------------------------------------------
Total return(f) 11.16%(g) 25.46% 14.67% 14.54% 21.23%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits and bank fee credits on cash balances. Includes the impact
of a performance incentive adjustment fee, if any.
(c) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class C would have been 2.35% for the six months end April 30, 2007 and
2.46%, 2.42% and 2.98% the years ended Oct. 31, 2006, 2005 and 2003,
respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2007 (Unaudited).
- --------------------------------------------------------------------------------
40 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004(B)
Net asset value, beginning of
period $8.52 $7.38 $7.06 $6.91
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .07 .06 --
Net gains (losses) (both realized
and unrealized) .89 1.81 1.02 .15
- ---------------------------------------------------------------------------------------------------------
Total from investment operations .91 1.88 1.08 .15
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.15) (.10) (.11) --
Distributions from realized gains (1.33) (.64) (.65) --
- ---------------------------------------------------------------------------------------------------------
Total distributions (1.48) (.74) (.76) --
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.95 $8.52 $7.38 $7.06
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $82 $68 $45 $22
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily
net assets(c),(d) 1.13%(e) 1.23% 1.19% 1.29%(e)
- ---------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets .87%(e) 1.12% .96% .78%(e)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 45% 89% 110% 111%
- ---------------------------------------------------------------------------------------------------------
Total return(f) 11.70%(g) 27.11% 16.17% 2.17%(g)
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to Oct. 31, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits and bank fee credits on cash balances. Includes the impact
of a performance incentive adjustment fee, if any.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2007 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 41
CLASS R4*
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003
Net asset value, beginning of
period $8.48 $7.36 $7.05 $6.35 $5.20
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .07 .05 .06 .03
Net gains (losses) (both realized
and unrealized) .88 1.78 1.01 .91 1.13
- ---------------------------------------------------------------------------------------------------------
Total from investment operations .90 1.85 1.06 .97 1.16
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.13) (.09) (.10) (.10) (.01)
Distributions from realized gains (1.33) (.64) (.65) (.17) --
- ---------------------------------------------------------------------------------------------------------
Total distributions (1.46) (.73) (.75) (.27) (.01)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.92 $8.48 $7.36 $7.05 $6.35
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $-- $-- $-- $-- $--
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily
net assets(b),(c) 1.37%(d),(e) 1.48%(d) 1.46%(d) 1.57% 1.57%(d)
- ---------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets .29%(e) .96% .74% .37% .86%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 45% 89% 110% 111% 58%
- ---------------------------------------------------------------------------------------------------------
Total return(f) 11.63%(g) 26.66% 15.86% 15.63% 22.48%
- ---------------------------------------------------------------------------------------------------------
</Table>
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits and bank fee credits on cash balances. Includes the impact
of a performance incentive adjustment fee, if any.
(c) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class R4 would have been 1.42% for the six months ended April 30, 2007 and
1.51%, 1.47% and 2.04% for the years ended Oct. 31, 2006, 2005 and 2003,
respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended April 30, 2007 (Unaudited).
- --------------------------------------------------------------------------------
42 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of
Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment
manager to the Fund. Under an investment management services agreement (the "IMS
Agreement"), RiverSource provides investment advice and other services to the
Fund and all RiverSource funds (collectively, the "Funds"). In addition, under
the subadvisory agreements between RiverSource and each subadviser
(collectively, the "Subadvisers") (the "Subadvisory Agreements"), the
Subadvisers perform portfolio management and related services for the Fund. The
Fund's Board of Directors (the "Board") and the Board's Investment Review and
Contracts Committees monitor these services throughout the year.
On an annual basis, the Board, including the independent Board members (the
"Independent Directors"), considers renewal of the IMS Agreement and the
Subadvisory Agreements (together, the "Advisory Agreements"). RiverSource
prepares detailed reports for the Board and its Contracts Committee in March and
April, including reports based on data provided by independent organizations to
assist the Board in making this determination. In addition, throughout the year,
the Board (or its committees) reviews information prepared by RiverSource
addressing the services RiverSource provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts and Investment Review Committees in determining whether to continue
the Advisory Agreements. At the April 11-12, 2007 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the Advisory Agreements.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 43
Nature, Extent and Quality of Services Provided by RiverSource and the
Subadvisers: The Board analyzed various reports and presentations they had
received detailing the services performed by RiverSource and the Subadvisers, as
well as their expertise, resources and capabilities. The Board specifically
considered many developments during the past year concerning the services
provided by RiverSource, including, in particular, the growing strength and
capabilities of many RiverSource offices and the increased investment and
resources dedicated to the Fund's operations, particularly in the areas of
trading systems, legal and compliance. Further, in connection with the Board's
evaluation of the overall package of services provided by RiverSource, the Board
considered the quality of the administrative, custody and transfer agency
services provided by RiverSource affiliates to the Fund. The Board also reviewed
the financial condition of RiverSource and each Subadviser, and each entity's
ability to carry out its responsibilities under the Advisory Agreements. The
Board also discussed the acceptability of the terms of the Advisory Agreements
(including the relatively broad scope of services required to be performed by
RiverSource and each Subadviser). The Board concluded that the services being
performed under the Advisory Agreements were of a reasonably high quality.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board determined that RiverSource and each of the
Subadvisers were in a position to continue to provide a high quality and level
of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the Advisory Agreements, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods (including since inception), recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2006 to December 2005. The Board observed that the Fund's investment performance
was appropriate in light of the particular management style and market
conditions involved. Additionally, the Board reviewed the performance of the
Subadvisers and the overall "subadvised" strategy. They noted, in particular,
management's ongoing oversight and monitoring of each Subadviser's investment
process and performance.
- --------------------------------------------------------------------------------
44 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource and its Affiliates from their Relationships with the Fund: The
Board reviewed comparative fees and the costs of services to be provided under
the Advisory Agreements. The Board members considered detailed comparative
information set forth in an annual report on fees and expenses, including, among
other things, data (prepared by an independent organization) showing a
comparison of the Fund's expenses with median expenses paid by funds in its peer
group, as well as data showing the Fund's contribution to RiverSource's
profitability. The Board accorded particular weight to the notion that the level
of fees should reflect a rational pricing model applied consistently across the
various product lines in the Funds' family, while assuring that the overall fees
for each fund are generally in line with the "pricing philosophy" (i.e., that
the total expense ratio of each fund, with few exceptions, is at or below the
median expense ratio of funds in the same comparison group). Although the Fund's
expense ratio was higher than the median ratio, the Board was satisfied with the
consistent and rational fee schedule applicable to all Funds, including the
Fund. Based on its review, the Board concluded that the Fund's management fee
was fair and reasonable in light of the extent and quality of services that the
Fund receives.
The Board also considered the expected profitability of RiverSource and its
affiliates in connection with RiverSource providing investment management
services to the Fund. In this regard, they referred to a detailed profitability
report, discussing the profitability to RiverSource and Ameriprise Financial
from managing and operating the Fund, including data showing comparative
profitability over the last three years. The Board also considered the services
acquired by the investment manager through the use of commission dollars paid by
the Funds on portfolio transactions. The Board noted that the fees paid by the
Fund should permit the investment manager to offer competitive compensation to
its personnel, make necessary investments in its business and earn an
appropriate profit. The Board concluded that profitability levels were
reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource as the Fund grows and took note of
the extent to which Fund shareholders might also benefit from such growth. The
Board considered that the IMS Agreement provides for lower fees as assets
increase at pre-established breakpoints and concluded that the IMS Agreement
satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services provided. In
reaching this conclusion, no single factor was determinative. On April 12, 2007,
the Board, including all of the Independent Directors, approved the renewal of
the Advisory Agreements.
- --------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 45
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
RiverSource Funds at (888) 791-3380; contacting your financial institution;
visiting riversource.com/funds; or searching the website of the Securities and
Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the
Fund voted proxies relating to portfolio securities is filed with the SEC by
August 31 for the most recent 12-month period ending June 30 of that year, and
is available without charge by visiting riversource.com/funds; or searching the
website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
46 RIVERSOURCE INTERNATIONAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THIS PAGE LEFT BLANK INTENTIONALLY
THIS PAGE LEFT BLANK INTENTIONALLY
THIS PAGE LEFT BLANK INTENTIONALLY
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THROUGH THE RIVERSOURCE INVESTMENTS FAMILY OF FUNDS, YOU CAN BUILD A DIVERSIFIED
PORTFOLIO THAT IS DESIGNED TO HELP YOU REACH YOUR GOALS.
<Table>
GROWTH FUNDS
RiverSource Growth Fund
RiverSource Fundamental Growth Fund
RiverSource Disciplined Large Cap
Growth Fund
RiverSource Mid Cap Growth Fund
RiverSource Aggressive Growth Fund
RiverSource Small Cap Growth Fund
Sector: RiverSource Global
Technology Fund
BLEND FUNDS
RiverSource Disciplined Equity Fund
RiverSource Large Cap Equity Fund
RiverSource S&P 500 Index Fund
RiverSource Disciplined Small and
Mid Cap Equity Fund
RiverSource Small Cap Advantage
Fund
RiverSource Small Company Index
Fund
RiverSource Small Cap Equity Fund
Sector: RiverSource Precious Metals
and Mining Fund
VALUE FUNDS
RiverSource Dividend Opportunity
Fund
RiverSource Value Fund
RiverSource Fundamental Value Fund
RiverSource Equity Value Fund
RiverSource Large Cap Value Fund
RiverSource Diversified Equity
Income Fund
RiverSource Select Value Fund
RiverSource Mid Cap Value Fund
RiverSource Disciplined Small Cap
Value Fund
RiverSource Small Cap Value Fund
Sector: RiverSource Real Estate
Fund
ASSET ALLOCATION FUNDS
RiverSource Portfolio Builder
Conservative Fund
RiverSource Income Builder Basic
Income Fund
RiverSource Income Builder Moderate
Income Fund
RiverSource Income Builder Enhanced
Income Fund
RiverSource Portfolio Builder
Moderate Conservative Fund
RiverSource Portfolio Builder
Moderate Fund
RiverSource Retirement Plus(SM)
2010 Fund
RiverSource Balanced Fund
RiverSource Portfolio Builder
Moderate Aggressive Fund
RiverSource Retirement Plus(SM)
2015 Fund
RiverSource Strategic Allocation
Fund
RiverSource Retirement Plus(SM)
2020 Fund
RiverSource Portfolio Builder
Aggressive Fund
RiverSource Retirement Plus(SM)
2025 Fund
RiverSource Retirement Plus(SM)
2030 Fund
RiverSource Retirement Plus(SM)
2035 Fund
RiverSource Retirement Plus(SM)
2040 Fund
RiverSource Retirement Plus(SM)
2045 Fund
RiverSource Portfolio Builder Total
Equity Fund
</Table>
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
<Table>
TAXABLE INCOME FUNDS
RiverSource Cash Management Fund*
RiverSource Short Duration U.S.
Government Fund
RiverSource U.S. Government
Mortgage Fund
RiverSource Inflation Protected
Securities Fund
RiverSource Floating Rate Fund
RiverSource Limited Duration Bond
Fund
RiverSource Core Bond Fund
RiverSource Diversified Bond Fund
RiverSource Strategic Income
Allocation Fund
RiverSource Income Opportunities
Fund
RiverSource High Yield Bond Fund
RiverSource Global Bond Fund
RiverSource Emerging Markets Bond
Fund
TAX-EXEMPT FUNDS
RiverSource Tax-Exempt Money Market
Fund*
RiverSource Intermediate Tax-Exempt
Fund
RiverSource Tax-Exempt Bond Fund
RiverSource State Tax-Exempt Funds
RiverSource Tax-Exempt High Income
Fund
GLOBAL/INTERNATIONAL FUNDS
RiverSource Global Equity Fund
RiverSource International Select
Value Fund
RiverSource International Equity
Fund
RiverSource Disciplined
International Equity Fund
RiverSource International
Opportunity Fund
RiverSource International Small Cap
Fund
RiverSource International
Aggressive Growth Fund
RiverSource European Equity Fund
RiverSource Emerging Markets Fund
</Table>
You should consider the investment objectives, risks, charges and expenses of a
mutual fund carefully before investing. For a free prospectus of any of the
funds listed above, which contains this and other important information about
the funds, contact your financial institution or visit riversource.com/funds.
Read the prospectus carefully before investing.
Investment products, including shares of mutual funds, involve risks including
possible loss of principal and fluctuation in value. Investing in certain funds
involves special risks, such as those related to investments in foreign
securities, small- and mid-capitalization stocks, fixed income securities
(especially high-yield securities), and funds which focus their investments in a
particular sector, such as real estate, technology and precious metals. See each
fund's prospectus for specific risks associated with the fund.
* AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
A MONEY MARKET FUND SEEKS TO MAINTAIN THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN A MONEY MARKET FUND.
"Standard & Poors(R)," "S&P," "S&P 500(R)," and "Standard & Poor's 500(R)" are
trademarks of the McGraw-Hill Companies, Inc. These trademarks and service marks
have been licensed for use by Ameriprise Financial, Inc. The Funds are not
sponsored, endorsed, sold or promoted by Standard & Poor's or any of their
subsidiaries or affiliates (the "Licensors") and the Licensors make no
representation regarding the advisability of investing in the Funds.
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
RIVERSOURCE(R) INTERNATIONAL 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(R) mutual funds are distributed by RiverSource
Distributors, Inc.
and Ameriprise Financial Services, Inc., Members NASD, and
managed by
(RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of
LOGO) Ameriprise Financial, Inc. S-6270 F (6/07)
</Table>