Semiannual Report

                                                  (RIVERSOURCE INVESTMENTS LOGO)

RIVERSOURCE
SHORT DURATION U.S. GOVERNMENT FUND

SEMIANNUAL REPORT FOR
THE PERIOD ENDED
NOVEMBER 30, 2008


RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND SEEKS
TO PROVIDE SHAREHOLDERS WITH A HIGH LEVEL OF CURRENT
INCOME AND SAFETY OF PRINCIPAL CONSISTENT WITH
INVESTMENT IN U.S. GOVERNMENT AND GOVERNMENT AGENCY
SECURITIES.

                                                    (SINGLE STRATEGY FUNDS ICON)



TABLE OF CONTENTS --------------------------------------------------------------


<Table>
                                  
Your Fund at a Glance..............    4

Manager Commentary.................    9

Fund Expenses Example..............   14

Portfolio of Investments...........   16

Statement of Assets and
  Liabilities......................   26

Statement of Operations............   27

Statements of Changes in Net
  Assets...........................   28

Financial Highlights...............   29

Notes to Financial Statements......   35

Proxy Voting.......................   49
</Table>



                     (DALBAR LOGO)

The RiverSource mutual fund shareholder reports have
been awarded the Communications Seal from Dalbar Inc.,
an independent financial services research firm. The
Seal recognizes communications demonstrating a level
of excellence in the industry.


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    RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  3



YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)

FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Short Duration U.S. Government Fund (the Fund) Class A shares
  declined 2.30% (excluding sales charge) for the six months ended Nov. 30,
  2008.
> The Fund underperformed its benchmark, the Barclays Capital 1-3 Year
  Government Index (formerly known as Lehman Brothers 1-3 Year Government
  Index), which gained 3.62%.
> The Fund underperformed the Lipper Short U.S. Government Funds Index,
  representing the Fund's peer group, which advanced 0.93% during the same time
  frame.

ANNUALIZED TOTAL RETURNS (for period ended Nov. 30, 2008)
- --------------------------------------------------------------------------------


<Table>
<Caption>
                                6 months*  1 year  3 years  5 years  10 years
- -----------------------------------------------------------------------------
                                                      
RiverSource Short Duration
  U.S. Government Fund Class A
  (excluding sales charge)        -2.30%   -1.59%   +2.57%   +2.00%   +3.07%
- -----------------------------------------------------------------------------
Barclays Capital 1-3 Year
  Government Index
  (unmanaged)(1)                  +3.62%   +5.87%   +5.72%   +4.01%   +4.74%
- -----------------------------------------------------------------------------
Lipper Short U.S. Government
  Funds Index(2)                  +0.93%   +2.57%   +4.03%   +2.97%   +3.88%
- -----------------------------------------------------------------------------
</Table>


* Not annualized.

The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.

The 3.00% sales charge applicable to Class A shares of the Fund, which changed
from 4.75% effective March 3, 2008, is not reflected in the table above. If
reflected, returns would be lower than those shown. The performance of other
classes may vary from that shown because of differences in expenses. See the
Average Annual Total Returns table for performance of other share classes of the
Fund.

The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.

It is not possible to invest directly in an index.


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4  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------



(1) The Barclays Capital 1-3 Year Government Index (formerly known as Lehman
    Brothers 1-3 Year Government Index), an unmanaged index, is made up of all
    publicly issued, non-convertible domestic debt of the U.S. government, or
    agency thereof, or any quasi-federal corporation. The index also includes
    corporate debt guaranteed by the U.S. government. Only notes and bonds with
    a minimum maturity of one year up to a maximum maturity of 2.9 years are
    included. The index reflects reinvestment of all distributions and changes
    in market prices.
(2) The Lipper Short U.S. Government Funds Index includes the 30 largest short
    U.S. government funds tracked by Lipper Inc. The index's returns include net
    reinvested dividends.


- --------------------------------------------------------------------------------
    RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  5



YOUR FUND AT A GLANCE (continued) ----------------------------------------------

STYLE MATRIX
- --------------------------------------------------------------------------------



<Table>
<Caption>
        DURATION
SHORT    INT.     LONG
                       
   x                      HIGH
                          MEDIUM   QUALITY
                          LOW
</Table>



Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.

The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.

Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.

PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------

<Table>
                          
Weighted average life(1)     3.4 years
- --------------------------------------
Effective duration(2)        1.8 years
- --------------------------------------
Weighted average bond
  rating(3)                        AAA
- --------------------------------------
</Table>




ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------

<Table>
<Caption>
                     Total       Net
                     fund        fund
                   expenses  expenses(a)
- ----------------------------------------
                       
Class A              1.04%      0.89%
- ----------------------------------------
Class B              1.80%      1.65%
- ----------------------------------------
Class C              1.80%      1.65%
- ----------------------------------------
Class I              0.60%      0.51%
- ----------------------------------------
Class R4             0.90%      0.76%
- ----------------------------------------
Class W              1.06%      0.96%
- ----------------------------------------
</Table>



(a) The Investment Manager and its affiliates have contractually agreed to waive
    certain fees and to absorb certain expenses until May 31, 2009, unless
    sooner terminated at the discretion of the Fund's Board. Any amounts waived
    will not be reimbursed by the Fund. Under this agreement, net fund expenses
    (excluding fees and expenses of acquired funds) will not exceed 0.89% for
    Class A, 1.65% for Class B, 1.65% for Class C, 0.51% for Class I, 0.76% for
    Class R4 and 0.96% for Class W.



(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into
    consideration the possibility that the issuer may call the bond before its
    maturity date.
(2) EFFECTIVE DURATION measures the sensitivity of a security's price to
    parallel shifts in the yield curve (the graphical depiction of the levels of
    interest rates from two years out to 30 years).  Positive duration means
    that as rates rise, the price decreases, and negative duration means that as
    rates rise, the price increases.
(3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
    underlying bonds in the portfolio.

Shares of the RiverSource Short Duration U.S. Government Fund are not insured or
guaranteed by the U.S. government.

There are risks associated with an investment in a bond fund, including the
impact of interest rates and credit.  These and other risk considerations are
discussed in the fund's prospectus. In general, bond prices rise when interest
rates fall and vice versa. This effect is usually more pronounced for longer-
term securities.


- --------------------------------------------------------------------------------
6  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------

<Table>
<Caption>
AT NOV. 30, 2008
                                                                            SINCE
Without sales charge      6 MONTHS*  1 YEAR  3 YEARS  5 YEARS  10 YEARS  INCEPTION**
                                                       
Class A (inception
  8/19/85)                  -2.30%   -1.59%   +2.57%   +2.00%   +3.07%        N/A
- ------------------------------------------------------------------------------------
Class B (inception
  3/20/95)                  -2.67%   -2.33%   +1.81%   +1.24%   +2.30%        N/A
- ------------------------------------------------------------------------------------
Class C (inception
  6/26/00)                  -2.67%   -2.32%   +1.81%   +1.24%     N/A       +2.65%
- ------------------------------------------------------------------------------------
Class I (inception
  3/4/04)                   -2.12%   -1.22%   +2.88%     N/A      N/A       +2.19%
- ------------------------------------------------------------------------------------
Class R4 (inception
  3/20/95)                  -2.24%   -1.46%   +2.73%   +2.17%   +3.23%        N/A
- ------------------------------------------------------------------------------------
Class W (inception
  12/1/06)                  -2.55%   -1.86%     N/A      N/A      N/A       +1.49%
- ------------------------------------------------------------------------------------

With sales charge
Class A (inception
  8/19/85)                  -5.30%   -6.28%   +0.90%   +1.02%   +2.54%        N/A
- ------------------------------------------------------------------------------------
Class B (inception
  3/20/95)                  -7.47%   -7.08%   +0.55%   +0.88%   +2.30%        N/A
- ------------------------------------------------------------------------------------
Class C (inception
  6/26/00)                  -3.63%   -3.27%   +1.81%   +1.24%     N/A       +2.65%
- ------------------------------------------------------------------------------------
</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.


- --------------------------------------------------------------------------------
    RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  7



YOUR FUND AT A GLANCE (continued) ----------------------------------------------

<Table>
<Caption>
AT DEC. 31, 2008
                                                                            SINCE
Without sales charge      6 MONTHS*  1 YEAR  3 YEARS  5 YEARS  10 YEARS  INCEPTION**
                                                       
Class A (inception
  8/19/85)                  -1.95%   -1.53%   +2.52%   +1.94%   +3.03%        N/A
- ------------------------------------------------------------------------------------
Class B (inception
  3/20/95)                  -2.33%   -2.28%   +1.75%   +1.18%   +2.25%        N/A
- ------------------------------------------------------------------------------------
Class C (inception
  6/26/00)                  -2.32%   -2.27%   +1.76%   +1.18%     N/A       +2.64%
- ------------------------------------------------------------------------------------
Class I (inception
  3/4/04)                   -1.77%   -1.36%   +2.83%     N/A      N/A       +2.21%
- ------------------------------------------------------------------------------------
Class R4 (inception
  3/20/95)                  -1.89%   -1.40%   +2.68%   +2.11%   +3.19%        N/A
- ------------------------------------------------------------------------------------
Class W (inception
  12/1/06)                  -1.99%   -1.59%     N/A      N/A      N/A       +1.65%
- ------------------------------------------------------------------------------------


With sales charge
Class A (inception
  8/19/85)                  -4.97%   -6.24%   +0.85%   +0.97%   +2.50%        N/A
- ------------------------------------------------------------------------------------
Class B (inception
  3/20/95)                  -7.15%   -7.04%   +0.50%   +0.82%   +2.25%        N/A
- ------------------------------------------------------------------------------------
Class C (inception
  6/26/00)                  -3.29%   -3.22%   +1.76%   +1.18%     N/A       +2.64%
- ------------------------------------------------------------------------------------
</Table>



On March 3, 2008, the maximum sales charge for Class A shares changed from 4.75%
to 3.00%. Class A share performance for each period of one year, three years,
five years, ten years and since inception reflects the maximum sales charge of
4.75%, which was in effect at the beginning of each of those periods. Class A
share performance for each six-month period reflects the maximum sales charge of
3.00%, which was in effect at the beginning of each of those periods. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are
available to institutional investors only. Class W shares are offered through
qualifying discretionary accounts.

 *Not annualized.
**For classes with less than 10 years performance.


- --------------------------------------------------------------------------------
8  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



MANAGER COMMENTARY -------------------------------------------------------------
(UNAUDITED)

Dear Shareholders,

RiverSource Short Duration U.S. Government Fund (the Fund) Class A shares
declined 2.30% (excluding sales charge) for the six months ended Nov. 30, 2008.
The Fund underperformed its benchmark, the Barclays Capital 1-3 Year Government
Index (Barclays Index) (formerly known as Lehman Brothers 1-3 Year Government
Index), which gained 3.62%. The Fund also underperformed the Lipper Short U.S.
Government Funds Index, representing the Fund's peer group, which advanced 0.93%
during the same time frame.

SIGNIFICANT PERFORMANCE FACTORS
U.S. economic and financial market conditions deteriorated dramatically during
the semiannual period. The Federal Reserve (the Fed) left interest rates
unchanged through the summer, as prior rate cuts were given a chance to work
their way into the system. During these months, oil prices increased
dramatically, resulting in elevated readings for headline inflation. In
September 2008, conditions changed for the worse. Asset write-downs led to a
loss of confidence in banks and brokers as well as in government agencies. This
led to the abrupt collapse of Lehman Brothers and intervention from the Treasury
Department to maintain the viability of mortgage lenders Fannie Mae and Freddie
Mac. Oil, gas and other commodity prices dropped substantially, but fears of
inflation gave way to fears of deflation. These events, among others, affected
the broad credit markets and led to a loss of confidence and a material
worsening in the real economy.


SECTOR DIVERSIFICATION (at Nov. 30, 2008; % of portfolio assets)
- ---------------------------------------------------------------------

<Table>
                                        
Asset-Backed                                1.4%
- ------------------------------------------------
Commercial Mortgage-Backed                  1.2%
- ------------------------------------------------
Mortgage-Backed(1)                         51.5%
- ------------------------------------------------
U.S. Government Obligations & Agencies     43.2%
- ------------------------------------------------
Other(2)                                    2.7%
- ------------------------------------------------
</Table>


(1) Of the 51.5%, 4.8% is due to forward commitment mortgage-backed securities
    activity. Short-term are held as collateral for these commitments.
(2) Cash & Cash Equivalents.


- --------------------------------------------------------------------------------
    RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  9



MANAGER COMMENTARY (continued) -------------------------------------------------

As a result of these conditions, the flight to quality that began in the prior
fiscal year intensified during this semiannual period, with investor risk
aversion remaining high. The Fed and the Treasury waged an aggressive campaign
to stabilize credit markets and stimulate lending. As part of this campaign, the
Fed cut the targeted federal funds rate by a total of 100 basis points (1.00%)
during the six-month period, bringing it to 1.00%.

For the semiannual period overall, interest rates declined across the Treasury
yield curve, reflecting the flight to quality. Non-Treasury sectors of the fixed
income market underperformed their Treasury counterparts, as investors shed
credit risk. Overall, high-quality issues dramatically outperformed low-quality
issues.

The primary contributor to the Fund's performance was its exposure to U.S.
agency subordinated debt. U.S. agency subordinated debt prices had become
distressed based on the view that the federal government would not include the
securities in programs to support the agencies. However, subordinated debt
payments were explicitly supported along with senior debt obligations when the
U.S. government intervened. Subordinated debt is debt that ranks below other
securities with regard to claims on assets or earnings, but, which typically
offers a higher rate of return than senior debt due to the increased inherent
risk. Subordinated debt of U.S. agencies is widely considered to be
comparatively less risky and of greater quality than that of banks or other
issuers.


QUALITY BREAKDOWN (at Nov. 30, 2008; % of portfolio assets excluding
cash equivalents and equities)
- ---------------------------------------------------------------------

<Table>
                                          
AAA bonds                                    96.9%
- -------------------------------------------------
AA bonds                                      0.5%
- -------------------------------------------------
A bonds                                       2.6%
- -------------------------------------------------
</Table>


Bond ratings apply to the underlying holdings of the Fund and not the Fund
itself. Whenever possible, the Standard and Poor's rating is used to determine
the credit quality of a security. Standard and Poor's rates the creditworthiness
of corporate bonds, with 15 categories, ranging from AAA (highest) to D
(lowest). Ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
If Standard and Poor's doesn't rate a security, then Moody's rating is used.
RiverSource Investments, LLC, the Fund's investment manager, rates a security
using an internal rating system when Moody's doesn't provide a rating.


- --------------------------------------------------------------------------------
10  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

Detracting from the Fund's results was its exposure to mortgage-backed
securities, as non-Treasury sector of the fixed income market posted positive
returns but significantly underperformed Treasuries during the semiannual
period. Mortgage-backed securities with longer-dated maturities also suffered
from the fact that the yield curve steepened during the period, meaning that
yields moved lower more dramatically in the shorter segments than at the longer-
term end of the yield curve and thus shorter maturities outperformed longer
maturities. A portion of the mortgage-backed securities held by the Fund were
not issued by government agencies. These non-agency mortgage-backed securities
were hurt by a lack of liquidity and experienced more dramatic price
depreciation than those mortgage securities backed by the federal government.

Exposure to commercial mortgage-backed securities also detracted from the Fund's
results during the six-month period, as spreads, or the difference in yields
between these securities and Treasuries, widened. Finally, the Fund's position
in Treasury Inflation Protected Securities, or TIPS, hurt its performance. TIPS
underperformed nominal Treasury securities, or non-inflation protected Treasury
securities, as deflationary fears emerged in October and November.

CHANGES TO THE FUND'S PORTFOLIO
During the semiannual period, we reduced the Fund's exposure to non-agency
mortgage-backed securities. We then used the proceeds to increase the Fund's
position in U.S. agency subordinated debt, given what we consider to be
subordinated debt's characteristics as an attractive high quality investment. We
also believe that the effects of


  Given this view, we intend to maintain our bias toward securities that we
  believe to have been left with particularly attractive yield profiles due to
  the recent drying up of market liquidity.






- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  11



MANAGER COMMENTARY (continued) -------------------------------------------------

government intervention on select U.S. agencies have yet to be fully realized.
This shift in allocation helped the Fund's performance for the semiannual period
overall. The Fund's portfolio turnover rate for the six-month period was 118%.*

OUR FUTURE STRATEGY
In evaluating prices in the fixed income market at the end of November, we found
that investors are generally pricing securities with the expectation of a
depression-like economy. We believe this scenario is unlikely for two major
reasons. First, American financial institutions have already taken over $600
billion in losses and write-downs. This compares to previous periods of credit
stress, most recently in Japan, in which banks delayed the realization of losses
only to prolong the ensuing drag on economic growth. Second, U.S. and foreign
governments have taken bold action to stabilize their banking systems and inject
capital into markets. These moves stand in stark contrast to the Great
Depression, when government action was oft-criticized as too little, too late.
In light of these factors, Treasury bonds appear overpriced, while we find
valuations in non-Treasury sectors as quite attractive.

Given this view, we intend to maintain our bias toward securities that we
believe to have been left with particularly attractive yield profiles due to the
recent drying up of market liquidity. These securities include both agency and
non-agency mortgage-backed securities, high quality commercial mortgage-backed
securities, TIPS and U.S. agency subordinated debt. We believe these securities
may offer significant yield benefits over the near term. We further believe that
when conditions eventually improve, many of the securities in the Fund could
experience significant price appreciation.


- --------------------------------------------------------------------------------
12  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

As always, our strategy is to provide added portfolio value with a moderate
amount of risk. Quality issues and security selection remain a priority as we
continue to seek attractive buying opportunities.


<Table>
                                               

Jamie Jackson, CFA(R)                             Todd White
Portfolio Manager                                 Portfolio Manager
</Table>



 *A significant portion of the turnover was the result of rolling-maturity
  mortgage securities, processing of prepayments and opportunistic changes we
  made at the margin in response to valuations or market developments.

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 SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  13



FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)

As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.

The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Nov. 30, 2008.

ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.


- --------------------------------------------------------------------------------
14  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

<Table>
<Caption>
                                  BEGINNING        ENDING        EXPENSES
                                ACCOUNT VALUE  ACCOUNT VALUE   PAID DURING     ANNUALIZED
                                 JUNE 1, 2008  NOV. 30, 2008  THE PERIOD(A)  EXPENSE RATIO
- ------------------------------------------------------------------------------------------
                                                                 
Class A
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  977.00        $4.39           .89%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,020.49        $4.48           .89%
- ------------------------------------------------------------------------------------------

Class B
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  973.30        $8.12          1.65%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,016.70        $8.30          1.65%
- ------------------------------------------------------------------------------------------

Class C
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  973.30        $8.12          1.65%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,016.70        $8.30          1.65%
- ------------------------------------------------------------------------------------------

Class I
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  978.80        $2.52           .51%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,022.39        $2.57           .51%
- ------------------------------------------------------------------------------------------

Class R4
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  977.60        $3.75           .76%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,021.14        $3.83           .76%
- ------------------------------------------------------------------------------------------

Class W
- ------------------------------------------------------------------------------------------
  Actual(b)                         $1,000       $  974.50        $4.73           .96%
- ------------------------------------------------------------------------------------------
  Hypothetical
  (5% return before expenses)       $1,000       $1,020.14        $4.84           .96%
- ------------------------------------------------------------------------------------------
</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 182/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Nov. 30, 2008: -2.30%
    for Class A, -2.67% for Class B, -2.67% for Class C, -2.12% for Class I,
    -2.24% for Class R4 and -2.55% for Class W.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  15



PORTFOLIO OF INVESTMENTS -------------------------------------------------------

NOV. 30, 2008 (UNAUDITED)
(Percentages represent value of investments compared to net assets)

INVESTMENTS IN SECURITIES




<Table>
<Caption>
BONDS (82.2%)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
U.S. GOVERNMENT OBLIGATIONS & AGENCIES (25.7%)
Federal Home Loan Bank
 12-29-08                   5.13%        $24,390,000       $24,441,614
 04-09-09                   2.32             225,000           226,138
Federal Home Loan Mtge Corp
 06-13-18                   4.88           5,405,000         5,736,449
Federal Natl Mtge Assn
 04-09-13                   3.25          18,880,000        19,000,908
 01-02-14                   5.13          16,915,000        17,386,759
 11-15-30                   6.63           1,945,000         2,438,911
U.S. Treasury
 06-30-10                   2.88           5,730,000         5,910,850
 10-31-10                   1.50          57,750,000        58,336,509
 12-15-10                   4.38          10,550,000(i)     11,295,094
 11-15-18                   3.75          25,300,000        27,003,803
U.S. Treasury Inflation-Indexed Bond
 01-15-14                   2.00          17,769,221(j)     15,998,571
 01-15-15                   1.63          22,919,000(j)     20,085,473
                                                          ------------
Total                                                      207,861,079
- ----------------------------------------------------------------------

ASSET-BACKED (1.5%)
Capital Auto Receivables Asset Trust
 Series 2006-SN1A Cl A4B
 03-20-10                   1.56           3,250,000(d,h)    3,204,317
Countrywide Asset-backed Ctfs
 Series 2007-7 Cl 2A2
 10-25-37                   1.56           2,600,000(h)      2,036,939
Residential Asset Securities
 Series 2007-KS3 Cl AI2
 04-25-37                   1.58           4,050,000(h)      3,555,310
Soundview Home Equity Loan Trust
 Series 2006-EQ1 Cl A2
 10-25-36                   1.51           3,900,000(h)      3,177,283
                                                          ------------
Total                                                       11,973,849
- ----------------------------------------------------------------------

COMMERCIAL MORTGAGE-BACKED (1.2%)(f)
Federal Home Loan Mtge Corp
 Multifamily Structured Pass-Through Ctfs
 Series K001 Cl A2
 04-25-16                   5.65           5,879,459         5,718,829
Federal Natl Mtge Assn #381990
 10-01-09                   7.11           4,059,446         4,077,332
                                                          ------------
Total                                                        9,796,161
- ----------------------------------------------------------------------

MORTGAGE-BACKED (53.8%)(f,k)
Adjustable Rate Mtge Trust
 Collateralized Mtge Obligation
 Series 2007-1 Cl 3A21
 03-25-37                   6.18           1,782,292(g)        910,858
American Home Mtge Assets
 Collateralized Mtge Obligation
 Series 2007-2 Cl A2A
 03-25-47                   1.56           3,232,332(g)        707,095
American Home Mtge Investment Trust
 Collateralized Mtge Obligation
 Series 2007-1 Cl GA1C
 05-25-47                   1.59           4,168,407(g)      1,397,706
Banc of America Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2006-9 Cl 1CB1
 01-25-37                   6.00           3,236,559         1,565,559
Barclays Capital LLC Trust
 Collateralized Mtge Obligation
 Series 2007-AA4 Cl 11A1
 06-25-47                   6.20           1,288,492(g)        953,577
Bear Stearns Adjustable Rate Mtge Trust
 Collateralized Mtge Obligation
 Series 2007-5 Cl 3A1
 08-25-47                   5.98           2,050,079(g)      1,175,883
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2005-6CB Cl 1A1
 04-25-35                   7.50           1,407,266         1,167,355
</Table>


See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
16  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

<Table>
<Caption>
BONDS (CONTINUED)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
MORTGAGE-BACKED (CONT.)
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2006-2CB Cl A11
 03-25-36                   6.00%         $5,506,983        $2,765,541
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2006-OA11 Cl A3B1
 09-25-46                   1.58           3,491,021(h)      2,083,813
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2007-22 Cl 2A16
 09-25-37                   6.50           4,480,708         2,006,519
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2007-25 Cl 1A1
 11-25-37                   6.50           4,486,403         2,143,659
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2007-OA9 Cl A2
 06-25-47                   1.75           5,484,812(h)      1,381,370
Countrywide Alternative Loan Trust
 Collateralized Mtge Obligation
 Series 2007-OH3 Cl A3
 09-25-47                   1.90           3,706,134(h)        865,782
Countrywide Home Loans
 Collateralized Mtge Obligation
 Series 2005-HYB8 Cl 4A1
 12-20-35                   5.56           3,069,596(g)      1,404,402
Countrywide Home Loans
 Collateralized Mtge Obligation
 Series 2005-R2 Cl 2A1
 06-25-35                   7.00           4,093,993(d)      3,357,259
Federal Home Loan Mtge Corp
 12-01-38                   6.00           2,000,000(e)      2,043,124
 12-01-38                   6.50          12,000,000(e)     12,344,999
Federal Home Loan Mtge Corp #1G0847
 07-01-35                   4.71           7,007,898(g)      7,022,871
Federal Home Loan Mtge Corp #1G2264
 10-01-37                   6.01           5,943,966(g)      6,066,472
Federal Home Loan Mtge Corp #1G2598
 01-01-37                   6.10           2,234,343(g)      2,288,004
Federal Home Loan Mtge Corp #1J0614
 09-01-37                   5.70           3,110,668(g)      3,145,227
Federal Home Loan Mtge Corp #783049
 03-01-35                   4.85           5,637,612(g)      5,596,536
Federal Home Loan Mtge Corp #A18107
 01-01-34                   5.50           2,972,429         3,020,698
Federal Home Loan Mtge Corp #C00351
 07-01-24                   8.00             225,992           239,170
Federal Home Loan Mtge Corp #C00385
 01-01-25                   9.00             372,290           409,359
Federal Home Loan Mtge Corp #C80329
 08-01-25                   8.00              65,120            69,022
Federal Home Loan Mtge Corp #E00398
 10-01-10                   7.00             199,635           204,515
Federal Home Loan Mtge Corp #E81240
 06-01-15                   7.50           2,902,216         3,046,587
Federal Home Loan Mtge Corp #E90650
 07-01-12                   5.50             102,663           105,330
Federal Home Loan Mtge Corp #E92454
 11-01-17                   5.00           2,474,442         2,521,832
Federal Home Loan Mtge Corp #G00363
 06-01-25                   8.00             291,984           309,477
Federal Home Loan Mtge Corp #G00501
 05-01-26                   9.00             494,258           543,982
Federal Home Loan Mtge Corp #G10669
 03-01-12                   7.50           1,058,163         1,107,991
Federal Home Loan Mtge Corp #G11243
 04-01-17                   6.50          11,195,847        11,585,737
Federal Home Loan Mtge Corp #G12100
 11-01-13                   5.00           2,613,148         2,645,386
Federal Home Loan Mtge Corp #M30074
 09-01-09                   6.50              27,440            27,780
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Interest Only
 Series 11 Cl B
 01-01-20                  15.05               6,687(b)          1,622
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Interest Only
 Series 237 Cl IO
 05-15-36                  14.70           1,060,392(b)        171,982
</Table>


                             See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  17



PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------

<Table>
<Caption>
BONDS (CONTINUED)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
MORTGAGE-BACKED (CONT.)
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Interest Only
 Series 2471 Cl SI
 03-15-32                  44.63%         $1,268,415(b)       $148,654
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Interest Only
 Series 2783 Cl MI
 03-15-25                  78.62           2,222,458(b)         39,513
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Series 2617 Cl HD
 06-15-16                   7.00           5,515,532         5,781,864
Federal Home Loan Mtge Corp
 Collateralized Mtge Obligation
 Series 3346 Cl FA
 02-15-19                   1.65           8,677,977(h)      8,305,051
Federal Natl Mtge Assn
 12-01-38                   5.00           2,500,000(e)      2,516,405
 12-01-38                   5.50           8,000,000(e)      8,132,496
 12-01-38                   6.00          10,000,000(e)     10,221,880
Federal Natl Mtge Assn #125032
 11-01-21                   8.00             122,323           129,456
Federal Natl Mtge Assn #190129
 11-01-23                   6.00             890,053           916,033
Federal Natl Mtge Assn #190353
 08-01-34                   5.00           6,382,017         6,435,011
Federal Natl Mtge Assn #190785
 05-01-09                   7.50              32,237            32,668
Federal Natl Mtge Assn #190988
 06-01-24                   9.00             195,601           211,378
Federal Natl Mtge Assn #254384
 06-01-17                   7.00             279,842(i)        294,129
Federal Natl Mtge Assn #254454
 08-01-17                   7.00             496,026           521,351
Federal Natl Mtge Assn #254723
 05-01-23                   5.50           8,198,373         8,367,873
Federal Natl Mtge Assn #254748
 04-01-13                   5.50           4,473,645         4,588,283
Federal Natl Mtge Assn #254757
 05-01-13                   5.00           6,057,250         6,110,765
Federal Natl Mtge Assn #254774
 05-01-13                   5.50           1,389,294         1,416,125
Federal Natl Mtge Assn #255501
 09-01-14                   6.00             560,227           586,506
Federal Natl Mtge Assn #303885
 05-01-26                   7.50             427,007           451,048
Federal Natl Mtge Assn #313007
 07-01-11                   7.50             129,461           133,613
Federal Natl Mtge Assn #336512
 02-01-26                   6.00              62,122            64,005
Federal Natl Mtge Assn #357485
 02-01-34                   5.50          12,314,086        12,544,836
Federal Natl Mtge Assn #407327
 01-01-14                   5.50             355,442           364,978
Federal Natl Mtge Assn #456374
 12-01-13                   5.50             604,883           621,112
Federal Natl Mtge Assn #508402
 08-01-14                   6.50             242,175(i)        249,358
Federal Natl Mtge Assn #545818
 07-01-17                   6.00          11,673,144        11,978,221
Federal Natl Mtge Assn #545864
 08-01-17                   5.50           9,747,354         9,989,792
Federal Natl Mtge Assn #545910
 08-01-17                   6.00           1,804,974         1,852,049
Federal Natl Mtge Assn #555063
 11-01-17                   5.50           6,915,094         7,091,373
Federal Natl Mtge Assn #555367
 03-01-33                   6.00           8,978,406         9,205,572
Federal Natl Mtge Assn #579485
 04-01-31                   6.50           2,151,518(i)      2,235,226
Federal Natl Mtge Assn #593829
 12-01-28                   7.00           1,463,747         1,536,028
Federal Natl Mtge Assn #601416
 11-01-31                   6.50             757,578           787,062
Federal Natl Mtge Assn #630993
 09-01-31                   7.50           2,104,990         2,220,562
Federal Natl Mtge Assn #648040
 06-01-32                   6.50           2,067,362         2,138,773
Federal Natl Mtge Assn #648349
 06-01-17                   6.00           6,186,610         6,347,947
Federal Natl Mtge Assn #651284
 07-01-17                   6.00           1,212,490         1,244,295
</Table>


See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
18  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

<Table>
<Caption>
BONDS (CONTINUED)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
MORTGAGE-BACKED (CONT.)
Federal Natl Mtge Assn #662866
 11-01-17                   6.00%         $1,062,928        $1,094,739
Federal Natl Mtge Assn #665752
 09-01-32                   6.50           1,174,133         1,214,691
Federal Natl Mtge Assn #670782
 11-01-12                   5.00             237,174           238,999
Federal Natl Mtge Assn #670830
 12-01-12                   5.00             330,824           338,122
Federal Natl Mtge Assn #671415
 01-01-10                   5.00             351,675           351,902
Federal Natl Mtge Assn #678940
 02-01-18                   5.50           1,856,424         1,904,564
Federal Natl Mtge Assn #686227
 02-01-18                   5.50           2,528,653         2,594,469
Federal Natl Mtge Assn #696837
 04-01-18                   5.50           2,739,943         2,810,300
Federal Natl Mtge Assn #704610
 06-01-33                   5.50           9,936,371(i)     10,122,567
Federal Natl Mtge Assn #712602
 06-01-13                   5.00             714,348           721,090
Federal Natl Mtge Assn #722325
 07-01-33                   4.96           4,476,063(g)      4,500,854
Federal Natl Mtge Assn #725232
 03-01-34                   5.00           9,441,311(i)      9,525,608
Federal Natl Mtge Assn #725425
 04-01-34                   5.50           8,731,157         8,904,273
Federal Natl Mtge Assn #725431
 08-01-15                   5.50           6,492,835         6,667,040
Federal Natl Mtge Assn #725773
 09-01-34                   5.50           7,400,391         7,534,440
Federal Natl Mtge Assn #730632
 08-01-33                   4.02           1,532,183(g)      1,510,787
Federal Natl Mtge Assn #735212
 12-01-34                   5.00           5,669,459         5,716,536
Federal Natl Mtge Assn #735578
 06-01-35                   5.00           4,331,665         4,364,926
Federal Natl Mtge Assn #739243
 09-01-33                   6.00           2,706,417         2,782,363
Federal Natl Mtge Assn #739331
 09-01-33                   6.00           1,409,724         1,444,511
Federal Natl Mtge Assn #743524
 11-01-33                   5.00           2,841,728         2,867,101
Federal Natl Mtge Assn #745275
 02-01-36                   5.00             995,350         1,002,993
Federal Natl Mtge Assn #753508
 11-01-33                   5.00           2,866,414         2,892,007
Federal Natl Mtge Assn #791447
 10-01-34                   6.00           4,334,878(i)      4,439,138
Federal Natl Mtge Assn #797046
 07-01-34                   5.50           2,692,051         2,740,815
Federal Natl Mtge Assn #799769
 11-01-34                   5.05           3,566,443(g)      3,569,581
Federal Natl Mtge Assn #801344
 10-01-34                   5.03           3,843,481(g)      3,851,667
Federal Natl Mtge Assn #815463
 02-01-35                   5.50           1,750,823         1,782,537
Federal Natl Mtge Assn #832641
 09-01-35                   6.00           6,022,126         6,161,321
Federal Natl Mtge Assn #849082
 01-01-36                   5.82           2,559,620(g)      2,583,889
Federal Natl Mtge Assn #849170
 01-01-36                   5.95           3,017,448(g)      3,052,241
Federal Natl Mtge Assn #878661
 02-01-36                   5.50           7,268,229         7,348,861
Federal Natl Mtge Assn #883267
 07-01-36                   6.50           4,209,791         4,349,120
Federal Natl Mtge Assn #887403
 07-01-36                   7.00           2,515,995         2,635,569
Federal Natl Mtge Assn #888989
 06-01-37                   6.05           5,696,176(g)      5,851,509
Federal Natl Mtge Assn #902818
 11-01-36                   5.91           2,014,549(g)      2,044,223
Federal Natl Mtge Assn #919341
 05-01-37                   6.50           3,310,688         3,406,756
Federal Natl Mtge Assn #928771
 10-01-37                   8.00           5,776,833(i)      6,083,937
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 163 Cl 2
 07-25-22                  34.02             493,783(b)         72,472
</Table>


                             See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  19



PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------

<Table>
<Caption>
BONDS (CONTINUED)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
MORTGAGE-BACKED (CONT.)
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2002-18 Cl SE
 02-25-32                  46.58%         $2,642,309(b)       $287,233
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2003-26 Cl MI
 03-25-23                  13.70           1,529,182(b)        209,004
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2003-63 Cl IP
 07-25-33                  25.88           3,553,978(b)        408,092
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2003-71 Cl IM
 12-25-31                   9.86           1,835,688(b)        225,112
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2003-81 Cl LI
 11-25-13                  59.80           1,251,315(b)         11,045
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 36 Cl 2
 08-01-18                  15.66               3,987(b)            876
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 367 Cl 2
 01-01-36                  12.99           2,652,947(b)        434,371
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 379 Cl 2
 05-01-37                  13.46           5,139,714(b)        814,725
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 70 Cl 2
 01-15-20                  27.28             177,082(b)         32,598
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Principal Only
 Series G-15 Cl A
 06-25-21                   2.49              23,502(c)         21,765
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2002-52 Cl FG
 09-25-32                   1.90           7,459,317(h)      7,323,500
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2003-133 Cl GB
 12-25-26                   8.00           1,741,536         1,859,467
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2003-94 Cl QB
 07-25-23                   5.50           1,451,559         1,450,382
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2003-W11 Cl A1
 06-25-33                   6.29             107,620(g)        105,377
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2004-60 Cl PA
 04-25-34                   5.50           3,031,541         3,097,939
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2006-60 Cl JF
 10-25-35                   1.83           5,258,851(h)      5,092,865
Federal Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2006-90 Cl FE
 09-25-36                   1.85           6,697,825(h)      6,554,519
Govt Natl Mtge Assn
 12-01-38                   5.50           5,000,000(e)      5,068,750
Govt Natl Mtge Assn #615740
 08-15-13                   6.00             618,862           642,152
</Table>


See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
20  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

<Table>
<Caption>
BONDS (CONTINUED)
                          COUPON          PRINCIPAL
ISSUER                     RATE            AMOUNT             VALUE(a)
                                                
MORTGAGE-BACKED (CONT.)
Govt Natl Mtge Assn #781507
 09-15-14                   6.00%         $2,980,624        $3,070,300
Govt Natl Mtge Assn
 Collateralized Mtge Obligation
 Interest Only
 Series 2003-62 Cl IC
 03-20-29                  76.25             970,053(b)         13,505
Govt Natl Mtge Assn
 Collateralized Mtge Obligation
 Series 2006-32 Cl A
 01-16-30                   5.08           8,548,708         8,626,292
Harborview Mtge Loan Trust
 Collateralized Mtge Obligation
 Series 2004-4 Cl 3A
 06-19-34                   3.97             390,964(g)        176,121
Lehman XS Trust
 Series 2006-16N Cl A1B
 11-25-46                   1.52           1,998,462(h)      1,800,303
Merrill Lynch Alternative Note Asset
 Collateralized Mtge Obligation
 Series 2007-OAR1 Cl A1
 02-25-37                   1.57           5,139,861(h)      1,948,002
Morgan Stanley Mtge Loan Trust
 Series 2006-13AX Cl A1
 10-25-36                   1.49           2,770,542(h)      2,529,017
Washington Mutual Mtge Pass-Through Ctfs
 Collateralized Mtge Obligation
 Series 2006-AR3 Cl A1A
 02-25-46                   3.48           1,800,546(g)        758,151
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2005-10 Cl A1
 10-25-35                   5.00           5,316,554         4,719,754
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2005-14 Cl 2A1
 12-25-35                   5.50           2,849,488         2,019,909
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2005-5 Cl 2A1
 05-25-35                   5.50           3,819,619         3,500,922
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2006-AR6 Cl 5A1
 03-25-36                   5.11           3,408,850(g)      2,288,186
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2007-11 Cl A68
 08-25-37                   6.00           4,573,963         2,275,918
Wells Fargo Mtge Backed Securities Trust
 Collateralized Mtge Obligation
 Series 2007-15 Cl A1
 11-25-37                   6.00           3,136,295         1,956,141
                                                          ------------
Total                                                      434,616,183
- ----------------------------------------------------------------------
TOTAL BONDS
(Cost: $699,538,131)                                      $664,247,272
- ----------------------------------------------------------------------

</Table>





<Table>
<Caption>
MONEY MARKET FUND (2.9%)
                                                       SHARES                VALUE(a)
                                                                
RiverSource Short-Term Cash Fund, 0.69%              23,204,156(l)        $23,204,156
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $23,204,156)                                                       $23,204,156
- -------------------------------------------------------------------------------------

</Table>





<Table>
<Caption>
SHORT-TERM SECURITIES (19.5%)
                                                       AMOUNT
                                   EFFECTIVE         PAYABLE AT
ISSUER                               YIELD            MATURITY               VALUE(a)
                                                             
U.S. GOVERNMENT AGENCIES
Federal Home Loan Bank Disc Nts
 12-01-08                            0.10%           $23,100,000          $23,099,808
 12-04-08                            0.22             45,000,000           44,998,374
 12-05-08                            0.35             16,000,000           15,998,911
 12-09-08                            0.35             21,300,000           21,297,722
 12-12-08                            0.18             12,000,000           11,999,160
 12-15-08                            0.20             24,900,000           24,897,649
 12-23-08                            0.20             15,000,000           14,997,917
- -------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $157,290,520)                                                     $157,289,541
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $880,032,807)(m)                                                  $844,740,969
=====================================================================================

</Table>




                             See accompanying Notes to Portfolio of Investments.

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  21



PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------


INVESTMENTS IN DERIVATIVES


FUTURES CONTRACTS OUTSTANDING AT NOV. 30, 2008



<Table>
<Caption>
                             NUMBER OF                                  UNREALIZED
                             CONTRACTS      NOTIONAL     EXPIRATION    APPRECIATION
CONTRACT DESCRIPTION       LONG (SHORT)   MARKET VALUE      DATE      (DEPRECIATION)
- ------------------------------------------------------------------------------------
                                                          
U.S. Long Bond, 20-year          30         $3,824,531   March 2009         $70,963
U.S. Treasury Note, 2-
  year                          696        150,901,500   April 2009       1,150,951
U.S. Treasury Note, 5-
  year                         (806)       (94,069,017)  April 2009      (1,151,720)
U.S. Treasury Note, 10-
  year                         (585)       (70,766,719)  March 2009      (1,960,133)
- ------------------------------------------------------------------------------------
Total                                                                   $(1,889,939)
- ------------------------------------------------------------------------------------
</Table>



NOTES TO PORTFOLIO OF INVESTMENTS


(a)  Securities are valued by using procedures described in Note 1 to the
     financial statements.

(b)  Interest only represents securities that entitle holders to receive only
     interest payments on the underlying mortgages. The yield to maturity of an
     interest only is extremely sensitive to the rate of principal payments on
     the underlying mortgage assets. A rapid (slow) rate of principal repayments
     may have an adverse (positive) effect on yield to maturity. The principal
     amount shown is the notional amount of the underlying mortgages. The
     interest rate disclosed represents yield based upon the estimated timing
     and amount of future cash flows at Nov. 30, 2008.

(c)  Principal only represents securities that entitle holders to receive only
     principal payments on the underlying mortgages. The yield to maturity of a
     principal only is sensitive to the rate of principal payments on the
     underlying mortgage assets. A slow (rapid) rate of principal repayments may
     have an adverse (positive) effect on yield to maturity. Interest rate
     disclosed represents yield based upon the estimated timing of future cash
     flows at Nov. 30, 2008.

(d)  Represents a security sold under Rule 144A, which is exempt from
     registration under the Securities Act of 1933, as amended. This security
     may be determined to be liquid under guidelines established by the Fund's
     Board of Directors. These securities may be resold in transactions exempt
     from registration, normally to qualified institutional buyers. At Nov. 30,
     2008, the value of these securities amounted to $6,561,576 or 0.8% of net
     assets.

(e)  At Nov. 30, 2008, the cost of securities purchased, including interest
     purchased, on a when-issued and/or other forward-commitment basis was
     $39,811,910. See Note 1 to the financial statements.


- --------------------------------------------------------------------------------
22  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)




(f)  Mortgage-backed securities represent direct or indirect participations in,
     or are secured by and payable from, mortgage loans secured by real
     property, and include single- and multi-class pass-through securities and
     collateralized mortgage obligations. These securities may be issued or
     guaranteed by U.S. government agencies or instrumentalities, or by private
     issuers, generally originators and investors in mortgage loans, including
     savings associations, mortgage bankers, commercial banks, investment
     bankers and special purpose entities. The maturity dates shown represent
     the original maturity of the underlying obligation. Actual maturity may
     vary based upon prepayment activity on these obligations. Unless otherwise
     noted, the coupon rates presented are fixed rates.

(g)  Adjustable rate mortgage; interest rate varies to reflect current market
     conditions; rate shown is the effective rate on Nov. 30, 2008.

(h)  Interest rate varies either based on a predetermined schedule or to reflect
     current market conditions; rate shown is the effective rate on Nov. 30,
     2008.

(i)  At Nov. 30, 2008, investments in securities included securities valued at
     $3,974,282 that were partially pledged as collateral to cover initial
     margin deposits on open interest rate futures contracts.

(j)  Inflation-indexed bonds are securities in which the principal amount is
     adjusted for inflation and the semiannual interest payments equal a fixed
     percentage of the inflation-adjusted principal amount.

(k)  Represents comparable securities held to satisfy future delivery
     requirements of the following open forward sale commitments at Nov. 30,
     2008:

     <Table>
     <Caption>
                              PRINCIPAL   SETTLEMENT    PROCEEDS
     SECURITY                  AMOUNT        DATE      RECEIVABLE       VALUE
     --------------------------------------------------------------------------
                                                         
     Federal Natl Mtge Assn
     12-01-23 5.50%          $9,275,000    12-16-08    $9,347,823    $9,434,419
     </Table>


(l)  Affiliated Money Market Fund -- See Note 5 to the financial statements. The
     rate shown is the seven-day current annualized yield at Nov. 30, 2008.

(m)  At Nov. 30, 2008, the cost of securities for federal income tax purposes
     was approximately $880,033,000 and the approximate aggregate gross
     unrealized appreciation and depreciation based on that cost was:

     <Table>
                                                 
     Unrealized appreciation                         $10,781,000
     Unrealized depreciation                         (46,073,000)
     -----------------------------------------------------------
     Net unrealized depreciation                    $(35,292,000)
     -----------------------------------------------------------
     </Table>





- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  23



PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------

FAIR VALUE MEASUREMENTS


Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, industry
implementation has just begun and it is likely that there will be a range of
practices utilized and it will be some period of time before industry practices
become more uniform. For this reason care should be exercised in interpreting
this information and/or using it for comparison with other mutual funds.

Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:

     - Level 1 -- quoted prices in active markets for identical securities

     - Level 2 -- other significant observable inputs (including quoted prices
       for similar securities, interest rates, prepayment speeds, credit risks,
       etc.)

     - Level 3 -- significant unobservable inputs (including the Fund's own
       assumptions in determining the fair value of investments)

Observable inputs are those based on market data obtained from sources
independent of the fund, and unobservable inputs reflect the fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.

The following table is a summary of the inputs used to value the Fund's
investments as of Nov. 30, 2008:

<Table>
<Caption>
                                        FAIR VALUE AT NOV. 30, 2008
                        ----------------------------------------------------------
                             LEVEL 1         LEVEL 2
                          QUOTED PRICES       OTHER        LEVEL 3
                            IN ACTIVE      SIGNIFICANT   SIGNIFICANT
                           MARKETS FOR     OBSERVABLE   UNOBSERVABLE
DESCRIPTION             IDENTICAL ASSETS     INPUTS        INPUTS         TOTAL
- ----------------------------------------------------------------------------------
                                                          
Investments in
  securities              $283,039,953    $535,498,045   $26,202,971  $844,740,969
Other financial
  instruments*              (1,889,939)             --            --    (1,889,939)
- ----------------------------------------------------------------------------------
Total                     $281,150,014    $535,498,045   $26,202,971  $842,851,030
- ----------------------------------------------------------------------------------
</Table>


*   Other financial instruments are derivative instruments, such as futures,
    which are valued at the unrealized appreciation/depreciation on the
    instrument.

The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.

<Table>
<Caption>
                                                 INVESTMENTS IN
                                                   SECURITIES
- ---------------------------------------------------------------
                                              
Balance as of May 31, 2008                         $16,535,423
  Accrued discounts/premiums                            67,191
  Realized gain (loss)                                  57,803
  Change in unrealized appreciation
    (depreciation)                                 (18,039,725)
  Net purchases (sales)                             (4,057,608)
  Transfers in and/or out of Level 3                31,639,887
- ---------------------------------------------------------------
Balance as of Nov. 30, 2008                        $26,202,971
- ---------------------------------------------------------------
</Table>






- --------------------------------------------------------------------------------
24  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

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.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  25



STATEMENT OF ASSETS AND LIABILITIES  -------------------------------------------
NOV. 30, 2008 (UNAUDITED)


<Table>
<Caption>
                                                                
ASSETS
Investments in securities, at value
  Unaffiliated issuers (identified cost $856,828,651)              $  821,536,813
  Affiliated money market fund (identified cost $23,204,156)           23,204,156
- ---------------------------------------------------------------------------------
Total investments in securities (identified cost $880,032,807)        844,740,969
Capital shares receivable                                               1,158,621
Dividends and accrued interest receivable                               3,717,190
Receivable for investment securities sold                               9,632,333
- ---------------------------------------------------------------------------------
Total assets                                                          859,249,113
- ---------------------------------------------------------------------------------
LIABILITIES
Forward sale commitments, at value (proceeds receivable
  $9,347,823)                                                           9,434,419
Dividends payable to shareholders                                         211,503
Capital shares payable                                                    829,806
Payable for securities purchased on a forward-commitment basis         39,811,910
Variation margin payable on futures contracts                             271,205
Accrued investment management services fees                                21,210
Accrued distribution fees                                                 151,076
Accrued transfer agency fees                                                6,779
Accrued administrative services fees                                        3,009
Accrued plan administration services fees                                     901
Other accrued expenses                                                    536,061
- ---------------------------------------------------------------------------------
Total liabilities                                                      51,277,879
- ---------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock                 $  807,971,234
- ---------------------------------------------------------------------------------

REPRESENTED BY
Capital stock -- $.01 par value                                    $    1,776,823
Additional paid-in capital                                          1,040,002,565
Excess of distributions over net investment income                       (405,936)
Accumulated net realized gain (loss)                                 (196,133,845)
Unrealized appreciation (depreciation) on investments                 (37,268,373)
- ---------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
  capital stock                                                    $  807,971,234
- ---------------------------------------------------------------------------------
</Table>



<Table>
<Caption>
NET ASSET VALUE PER SHARE
                              NET ASSETS   SHARES OUTSTANDING   NET ASSET VALUE PER SHARE
                                                       
Class A                     $586,444,617          128,981,199                       $4.55(1)
Class B                     $129,748,319           28,536,267                       $4.55
Class C                     $ 11,782,382            2,591,394                       $4.55
Class I                     $ 75,499,402           16,585,126                       $4.55
Class R4                    $  4,491,730              987,307                       $4.55
Class W                     $      4,784                1,053                       $4.54
- -----------------------------------------------------------------------------------------
</Table>


(1) The maximum offering price per share for Class A is $4.69. The offering
    price is calculated by dividing the net asset value by 1.0 minus the maximum
    sales charge of 3.00%.

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
26  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



STATEMENT OF OPERATIONS  -------------------------------------------------------
SIX MONTHS ENDED NOV. 30, 2008 (UNAUDITED)


<Table>
<Caption>
                                                                
INVESTMENT INCOME
Income:
Interest                                                           $ 17,037,461
Income distributions from affiliated money market fund                   23,236
Fee income from securities lending                                       18,062
- -------------------------------------------------------------------------------
Total income                                                         17,078,759
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees                                   1,878,923
Distribution fees
  Class A                                                               693,019
  Class B                                                               677,700
  Class C                                                                50,390
  Class W                                                                     6
Transfer agency fees
  Class A                                                               485,661
  Class B                                                               126,244
  Class C                                                                 9,135
  Class R4                                                                1,113
  Class W                                                                     5
Administrative services fees                                            266,869
Plan administration services fees -- Class R4                             5,565
Compensation of board members                                            11,206
Custodian fees                                                           44,285
Printing and postage                                                     75,730
Registration fees                                                        42,884
Professional fees                                                        26,084
Other                                                                    14,422
- -------------------------------------------------------------------------------
Total expenses                                                        4,409,241
  Expenses waived/reimbursed by the Investment Manager and its
    affiliates                                                         (524,130)
  Earnings and bank fee credits on cash balances                         (7,837)
- -------------------------------------------------------------------------------
Total net expenses                                                    3,877,274
- -------------------------------------------------------------------------------
Investment income (loss) -- net                                      13,201,485
- -------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
  Security transactions                                                (182,563)
  Futures contracts                                                  (3,083,493)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments                              (3,266,056)
Net change in unrealized appreciation (depreciation) on
  investments                                                       (29,529,063)
- -------------------------------------------------------------------------------
Net gain (loss) on investments                                      (32,795,119)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations    $(19,593,634)
- -------------------------------------------------------------------------------
</Table>



The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  27



STATEMENTS OF CHANGES IN NET ASSETS  -------------------------------------------


<Table>
<Caption>
                                                                   SIX MONTHS ENDED     YEAR ENDED
                                                                      NOV. 30, 2008   MAY 31, 2008
                                                                        (UNAUDITED)
                                                                               
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net                                       $  13,201,485  $  29,999,961
Net realized gain (loss) on investments                                  (3,266,056)     1,099,985
Net change in unrealized appreciation (depreciation) on
  investments                                                           (29,529,063)      (800,569)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations         (19,593,634)    30,299,377
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
  Net investment income
    Class A                                                              (9,784,923)   (21,333,414)
    Class B                                                              (1,872,486)    (5,699,109)
    Class C                                                                (139,514)      (312,941)
    Class I                                                              (1,533,283)    (2,868,438)
    Class R4                                                                (81,464)      (183,760)
    Class W                                                                     (85)          (196)
- --------------------------------------------------------------------------------------------------
Total distributions                                                     (13,411,755)   (30,397,858)
- --------------------------------------------------------------------------------------------------

CAPITAL SHARE TRANSACTIONS
Proceeds from sales
  Class A shares                                                        182,560,078    206,496,511
  Class B shares                                                         23,689,161     42,734,598
  Class C shares                                                          4,097,991      2,621,382
  Class I shares                                                         10,485,286     69,048,377
  Class R4 shares                                                         1,153,076      2,801,130
Reinvestment of distributions at net asset value
  Class A shares                                                          8,862,362     19,605,781
  Class B shares                                                          1,752,952      5,406,615
  Class C shares                                                            127,929        299,079
  Class I shares                                                          1,530,476      2,844,139
  Class R4 shares                                                            81,164        185,296
Payments for redemptions
  Class A shares                                                       (120,593,889)  (200,741,788)
  Class B shares                                                        (48,699,121)  (105,920,795)
  Class C shares                                                         (1,632,259)    (3,568,542)
  Class I shares                                                        (25,970,322)   (33,540,963)
  Class R4 shares                                                        (1,308,523)    (2,086,457)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions        36,136,361      6,184,363
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets                                   3,130,972      6,085,882
Net assets at beginning of period                                       804,840,262    798,754,380
- --------------------------------------------------------------------------------------------------
Net assets at end of period                                           $ 807,971,234  $ 804,840,262
- --------------------------------------------------------------------------------------------------
Excess of distributions over net investment income                    $    (405,936) $    (195,666)
- --------------------------------------------------------------------------------------------------
</Table>



The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
28  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



FINANCIAL HIGHLIGHTS -----------------------------------------------------------

CLASS A


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(k)          2008         2007         2006         2005
                                                                                       
Net asset value, beginning of period                 $4.74        $4.73        $4.68        $4.79        $4.82
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .08(b)       .19(b)       .19          .15          .12
Net gains (losses) (both realized and
 unrealized)                                          (.19)         .01          .05         (.10)        (.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.11)         .20          .24          .05          .09
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.08)        (.19)        (.19)        (.16)        (.12)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.55        $4.74        $4.73        $4.68        $4.79
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)               $586         $539         $514         $641         $894
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(c),(d)                         1.03%(e)     1.04%        1.03%        1.06%        1.01%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(d),(f),(g)                      .89%(e)      .89%         .89%         .89%         .93%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         3.47%(e)     3.93%        3.99%        3.27%        2.49%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h)                            118%         209%         168%         194%         169%
- --------------------------------------------------------------------------------------------------------------
Total return(i)                                     (2.30%)(j)    4.27%        5.12%        1.00%        1.92%
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
    method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits for the six months ended Nov. 30,
    2008 were less than 0.01% of average net assets. The ratio of net expenses
    after expense waiver/reimbursement and after reduction for earnings and bank
    fee credits was 0.88% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  29



FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------

CLASS B


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(k)          2008         2007         2006         2005
                                                                                       
Net asset value, beginning of period                 $4.74        $4.73        $4.68        $4.79        $4.82
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .06(b)       .15(b)       .15          .12          .08
Net gains (losses) (both realized and
 unrealized)                                          (.19)         .01          .05         (.11)        (.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.13)         .16          .20          .01          .05
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.06)        (.15)        (.15)        (.12)        (.08)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.55        $4.74        $4.73        $4.68        $4.79
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)               $130         $159         $216         $338         $588
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(c),(d)                         1.79%(e)     1.80%        1.79%        1.82%        1.76%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(d),(f),(g)                     1.65%(e)     1.65%        1.64%        1.64%        1.68%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         2.72%(e)     3.18%        3.23%        2.50%        1.73%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h)                            118%         209%         168%         194%         169%
- --------------------------------------------------------------------------------------------------------------
Total return(i)                                     (2.67%)(j)    3.48%        4.34%         .26%        1.16%
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
    method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits for the six months ended Nov. 30,
    2008 were less than 0.01% of average net assets. The ratio of net expenses
    after expense waiver/reimbursement and after reduction for earnings and bank
    fee credits was 1.64% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
30  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

CLASS C


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(k)          2008         2007         2006         2005
                                                                                       
Net asset value, beginning of period                 $4.74        $4.73        $4.68        $4.79        $4.82
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .06(b)       .15(b)       .15          .12          .08
Net gains (losses) (both realized and
 unrealized)                                          (.19)         .02          .05         (.11)        (.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.13)         .17          .20          .01          .05
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.06)        (.16)        (.15)        (.12)        (.08)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.55        $4.74        $4.73        $4.68        $4.79
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                $12          $10          $10          $15          $24
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(c),(d)                         1.79%(e)     1.80%        1.80%        1.83%        1.77%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(d),(f),(g)                     1.65%(e)     1.65%        1.64%        1.64%        1.68%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         2.70%(e)     3.18%        3.24%        2.51%        1.73%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h)                            118%         209%         168%         194%         169%
- --------------------------------------------------------------------------------------------------------------
Total return(i)                                     (2.67%)(j)    3.49%        4.34%         .26%        1.16%
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
    method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits for the six months ended Nov. 30,
    2008 were less than 0.01% of average net assets. The ratio of net expenses
    after expense waiver/reimbursement and after reduction for earnings and bank
    fee credits was 1.64% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  31



FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------

CLASS I


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(j)          2008         2007         2006         2005
                                                                                       
Net asset value, beginning of period                 $4.74        $4.74        $4.69        $4.79        $4.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .09(b)       .20(b)       .20          .17          .14
Net gains (losses) (both realized and
 unrealized)                                          (.19)         .01          .05         (.10)        (.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.10)         .21          .25          .07          .10
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.09)        (.21)        (.20)        (.17)        (.14)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.55        $4.74        $4.74        $4.69        $4.79
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                $75          $93          $55          $62          $31
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(c),(d)                          .60%(e)      .60%         .59%         .62%         .57%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(d),(f),(g)                      .51%(e)      .51%         .54%         .58%         .57%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         3.87%(e)     4.23%        4.37%        3.66%        2.98%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h)                            118%         209%         168%         194%         169%
- --------------------------------------------------------------------------------------------------------------
Total return                                        (2.12%)(i)    4.45%        5.50%        1.56%        2.06%
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
    method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits for the six months ended Nov. 30,
    2008 were less than 0.01% of average net assets. The ratio of net expenses
    after expense waiver/reimbursement and after reduction for earnings and bank
    fee credits was 0.50% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(i) Not annualized.
(j) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
32  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------

CLASS R4


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(j)          2008         2007         2006         2005
                                                                                       
Net asset value, beginning of period                 $4.74        $4.73        $4.68        $4.79        $4.82
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .08(b)       .19(b)       .19          .16          .13
Net gains (losses) (both realized and
 unrealized)                                          (.19)         .02          .05         (.11)        (.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.11)         .21          .24          .05          .10
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.08)        (.20)        (.19)        (.16)        (.13)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.55        $4.74        $4.73        $4.68        $4.79
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                 $4           $5           $4          $19         $100
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(c),(d)                          .90%(e)      .90%         .86%         .88%         .84%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(d),(f),(g)                      .76%(e)      .76%         .72%         .72%         .76%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         3.61%(e)     4.06%        4.09%        3.27%        2.66%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h)                            118%         209%         168%         194%         169%
- --------------------------------------------------------------------------------------------------------------
Total return                                        (2.24%)(i)    4.41%        5.31%        1.19%        2.10%
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
    method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits for the six months ended Nov. 30,
    2008 were less than 0.01% of average net assets. The ratio of net expenses
    after expense waiver/reimbursement and after reduction for earnings and bank
    fee credits was 0.75% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(i) Not annualized.
(j) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  33



FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------

CLASS W


<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31,                       2008(k)          2008     2007(b)
                                                                                       
Net asset value, beginning of period                 $4.74        $4.73        $4.75
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                           .08(c)       .18(c)       .08
Net gains (losses) (both realized and
 unrealized)                                          (.20)         .02         (.02)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations                      (.12)         .20          .06
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income                  (.08)        (.19)        (.08)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $4.54        $4.74        $4.73
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                $--          $--          $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
 waiver/reimbursement(d),(e)                         1.05%(f)     1.06%        1.00%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
 waiver/reimbursement(e),(g),(h)                      .96%(f)      .95%         .95%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)                         3.42%(f)     3.87%        4.02%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(i)                            118%         209%         168%
- --------------------------------------------------------------------------------------------------------------
Total return                                        (2.55%)(j)    4.21%        1.42%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>


(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to May 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
    method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the acquired
    funds in which it invests. Such indirect expenses are not included in the
    above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
    certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
    balances. Earnings and bank fee credits were less than 0.01% of average net
    assets for the six months ended Nov. 30, 2008 and for the year ended May 31,
    2008.
(i) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
    excluded, the portfolio turnover would have been 42% for the six months
    ended Nov. 30, 2008.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).

The accompanying Notes to Financial Statements are an integral part of this
statement.


- --------------------------------------------------------------------------------
34  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
(UNAUDITED AS TO NOV. 30, 2008)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RiverSource Short Duration U.S. Government Fund (the Fund) is a series of
RiverSource Government Income Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. RiverSource Government Income Series, Inc. has 10
billion authorized shares of capital stock that can be allocated among the
separate series as designated by the Board of Directors (the Board). The Fund
invests in direct obligations of the U.S. government, such as Treasury bonds,
bills and notes, and of its agencies and instrumentalities.

The Fund offers Class A, Class B, Class C, Class I, Class R4 and Class W shares.

- -  Class A shares are sold with a front-end sales charge.

- -  Class B shares may be subject to a contingent deferred sales charge (CDSC)
   and automatically convert to Class A shares during the ninth year of
   ownership. However, Class B shares are closed to new investors and new
   purchases.

- -  Class C shares may be subject to a CDSC.

- -  Class I and Class R4 shares are sold without a front-end sales charge or CDSC
   and are offered to qualifying institutional investors.

- -  Class W shares are sold without a front-end sales charge or CDSC and are
   offered through qualifying discretionary accounts.

At Nov. 30, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares, and the Investment Manager owned 100% of Class W shares.

All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.

The Fund's significant accounting policies are summarized below:

USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  35



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------

liabilities and contingent assets and liabilities) that could differ from actual
results.

VALUATION OF SECURITIES
Effective June 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.

All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. The procedures adopted by the Board
generally contemplate the use of fair valuation in the event that price
quotations or valuations are not readily available, price quotations or
valuations from other sources are not reflective of market value and thus deemed
unreliable, or a significant event has occurred in relation to a security or
class of securities 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.

Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.

SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-

- --------------------------------------------------------------------------------
36  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------


commitments. At Nov. 30, 2008, the Fund has outstanding when-issued securities
of $39,811,910.

The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment. The Fund records
the incremental difference between the forward purchase and sale of each forward
roll as realized gain or loss. Losses may arise due to changes in the value of
the securities or if a counterparty does not perform under the terms of the
agreement. If a counterparty files for bankruptcy or becomes insolvent, the
Fund's right to repurchase or sell securities may be limited.

OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and sell put and call
options and write put and call options. This may include purchasing mortgage-
backed security (MBS) put spread options and writing covered MBS call spread
options. MBS spread options are based upon the changes in the price spread
between a specified mortgage-backed security and a like-duration Treasury
security. The Fund also may write over-the-counter options (OTC options) where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain OTC options
trades. Cash collateral held by the Fund for such option trades must be returned
to the counter party upon closure, exercise or expiration of the contract. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.

Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When options on debt securities or
futures are exercised, the Fund will realize a gain or loss. When other options
are exercised, the proceeds on sales for a written call option, the purchase
cost for a written put option or the cost of a security for a purchased put or
call option is adjusted by

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  37



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------


the amount of premium received or paid. At Nov. 30, 2008, and for the six months
then ended, the Fund had no outstanding option contracts.

FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts. Risks of entering into futures contracts and
related options include the possibility of an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.

Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.

FORWARD SALE COMMITMENTS
The Fund may enter into forward sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
arrangements. Proceeds of forward sale commitments are not received until the
contractual settlement date. During the time a forward sale commitment is
outstanding, equivalent deliverable securities, or an offsetting forward
purchase commitment deliverable on or before the sale commitment date, are used
to satisfy the commitment.

Unsettled forward sale commitments are valued at the current market value of the
underlying securities, generally according to the procedures described under
"Valuation of securities" above. The forward sale commitment is "marked-to-
market" daily and the change in market value is recorded by the Fund as an
unrealized gain or loss. If the forward sale commitment is closed through the
acquisition of an offsetting purchase commitment, the Fund realizes a gain or
loss. If the Fund delivers securities under the commitment, the Fund realizes a
gain or a loss from the sale of the securities based upon the market price
established at the date the commitment was entered into. Forward sale
commitments outstanding at period end are listed in the Notes to Portfolio of
Investments.

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

- --------------------------------------------------------------------------------
38  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------


duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.

FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.

Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. Management of the Fund has concluded that there are no
significant uncertain tax positions that would require recognition in the
financial statements. Generally, the tax authorities can examine all the tax
returns filed for the last three years.

Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures and options
contracts, recognition of unrealized appreciation (depreciation) for certain
derivative investments and losses deferred due to wash sales. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.

RECENT ACCOUNTING PRONOUNCEMENT
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for periods beginning after Nov. 15, 2008. As of
Nov. 30, 2008,

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  39



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------

management does not believe the adoption of SFAS 161 will impact the financial
statement amounts; however, additional footnote disclosures may be required
about the use of derivative instruments and hedging items.

DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, when
available, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.

OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income, if any, is recognized on the ex-dividend date and
interest income, including amortization of premium, market discount and original
issue discount using the effective interest method, is accrued daily.

2. EXPENSES AND SALES CHARGES

INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.48%
to 0.25% annually as the Fund's assets increase. The management fee for the six
months ended Nov. 30, 2008 was 0.48% of the Fund's average daily net assets.

ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial,
Inc. (Ameriprise Financial), parent company of the Investment Manager, a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets that declines from 0.07% to 0.04% annually as the Fund's assets
increase. The fee for the six months ended Nov. 30, 2008 was 0.07% of the Fund's
average daily net assets.

OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended Nov.
30, 2008, other expenses paid to this company were $773.

COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though

- --------------------------------------------------------------------------------
40  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------


equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.

TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $20.50 for Class A, $21.50
for Class B and $21.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R4 shares and an annual asset-
based fee at a rate of 0.20% of the Fund's average daily net assets attributable
to Class W shares.

The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.

PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.

DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A and Class W shares and a fee at
an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, up
to 0.75% of the fee is reimbursed for distribution expenses.

The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $4,413,000 and $93,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of Oct. 31, 2008, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  41



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------

SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$227,688 for Class A, $57,443 for Class B and $2,956 for Class C for the six
months ended Nov. 30, 2008.

EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended Nov. 30, 2008, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*) were as follows:

<Table>
                                                   
Class A.............................................  0.89%
Class B.............................................  1.65
Class C.............................................  1.65
Class I.............................................  0.51
Class R4............................................  0.76
Class W.............................................  0.96
</Table>


The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:

<Table>
                                                
Class A..........................................  $125,291
Class B..........................................    31,366
Class C..........................................     2,271
Class R4.........................................     1,113
</Table>


The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:

<Table>
                                                   
Class R4............................................  $41
</Table>


The management fees waived/reimbursed at the Fund level were $364,048.

The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until May 31, 2009, unless sooner terminate at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*) will not exceed the following percentage of the Fund's average
daily net assets:

<Table>
                                                   
Class A.............................................  0.89%
Class B.............................................  1.65
Class C.............................................  1.65
Class I.............................................  0.51
Class R4............................................  0.76
Class W.............................................  0.96
</Table>


*   In addition to the fees and expenses which the Fund bears directly, the Fund
    indirectly bears a pro rata share of the fees and expenses of the funds in
    which it invests (also referred to as "acquired funds"), including
    affiliated and non-affiliated pooled investment vehicles (including mutual
    funds and exchange traded funds). Because the acquired funds have varied
    expense and fee levels and the Fund may own different proportions of
    acquired funds at different times, the amount of fees and expenses incurred
    indirectly by the Fund will vary.


- --------------------------------------------------------------------------------
42  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------


EARNINGS AND BANK FEE CREDITS
During the six months ended Nov. 30, 2008, the Fund's transfer agency fees were
reduced by $7,837 as a result of bank fee credits from overnight cash balances.

CUSTODIAN FEES
The Fund pays custodian fees to Ameriprise Trust Company, a subsidiary of
Ameriprise Financial.

3. SECURITIES TRANSACTIONS

Cost of purchases and proceeds from sales of securities (other than short-term
obligations, but including mortgage dollar rolls) aggregated $815,780,340 and
$779,795,527, respectively, for the six months ended Nov. 30, 2008. Realized
gains and losses are determined on an identified cost basis.

Income from securities lending amounted to $18,062 for the six months ended Nov.
30, 2008. Expenses paid to the Investment Manager as securities lending agent
were $2,082 for the six months ended Nov. 30, 2008, which are included in other
expenses on the Statement of Operations. The risks to the Fund of securities
lending are that the borrower may not provide additional collateral when
required or return the securities when due. At Nov. 30, 2008, the Fund had no
securities out on loan.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  43



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------

4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of capital stock for the periods indicated are as
follows:

<Table>
<Caption>
                                     SIX MONTHS ENDED NOV. 30, 2008
                                    ISSUED FOR
                                    REINVESTED                        NET
                         SOLD     DISTRIBUTIONS    REDEEMED   INCREASE (DECREASE)
- ---------------------------------------------------------------------------------
                                                  
Class A               39,190,190    1,910,155    (25,947,081)      15,153,264
Class B                5,093,131      377,456    (10,396,940)      (4,926,353)
Class C                  883,133       27,573       (351,175)         559,531
Class I                2,239,651      328,995     (5,524,202)      (2,955,556)
Class R4                 247,071       17,462       (280,491)         (15,958)
- ---------------------------------------------------------------------------------
</Table>



<Table>
<Caption>
                                        YEAR ENDED MAY 31, 2008
                                    ISSUED FOR
                                    REINVESTED                        NET
                         SOLD     DISTRIBUTIONS    REDEEMED   INCREASE (DECREASE)
- ---------------------------------------------------------------------------------
                                                  
Class A               43,400,136    4,118,107    (42,186,985)       5,331,258
Class B                8,957,341    1,135,754    (22,307,379)     (12,214,284)
Class C                  549,369       62,833       (750,024)        (137,822)
Class I               14,458,872      596,542     (7,078,714)       7,976,700
Class R4                 587,072       38,907       (437,399)         188,580
- ---------------------------------------------------------------------------------
</Table>


5. AFFILIATED MONEY MARKET FUND

The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $230,939,099 and $220,636,917, respectively, for the six
months ended Nov. 30, 2008. The income distributions received with respect to
the Fund's investment in RiverSource Short-Term Cash Fund can be found on the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at Nov. 30, 2008, can be found in the Portfolio of Investments.

6. BANK BORROWINGS

The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on

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44  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------



Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other RiverSource
funds, severally and not jointly, permits collective borrowings up to $475
million. The borrowers shall have the right, upon written notice to the
Administrative Agent to request an increase of up to $175 million in the
aggregate amount of the credit facility from new or existing lenders, provided
that the aggregate amount of the credit facility shall at no time exceed $650
million. Participation in such increase by any existing lender shall be at such
lender's sole discretion. Interest is charged to each Fund based on its
borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing
under the credit facility matures no later than 60 days after the date of
borrowing. The Fund also pays a commitment fee equal to its pro rata share of
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the six months ended Nov. 30, 2008

Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. whereby the Fund was permitted to borrow for
the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.

7. CAPITAL LOSS CARRY-OVER

For federal income tax purposes, the Fund had a capital loss carry-over of
$183,673,285 at May 31, 2008, that if not offset by capital gains will expire as
follows:

<Table>
<Caption>
    2009            2013           2014          2015
                                     
$117,356,906    $36,267,962    $20,469,230    $9,579,187
</Table>


It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  45



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------

8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS

In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota. In response to defendants' motion to dismiss the
complaint, the Court dismissed one of plaintiffs' four claims and granted
plaintiffs limited discovery. Defendants moved for summary judgment in April
2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The
plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on
August 8, 2007.

In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.

On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds);

- --------------------------------------------------------------------------------
46  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



- --------------------------------------------------------------------------------



this arrangement was in the process of being closed down by Seligman before
September 2003. Seligman identified three other arrangements that permitted
frequent trading, all of which had been terminated by September 2002. In January
2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements
to its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG). In September 2005, the
New York staff of the SEC indicated that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
the distributor of the Seligman Funds, Seligman Advisors, Inc., relating to
frequent trading in the Seligman Funds. Seligman responded to the staff in
October 2005 that it believed that any action would be both inappropriate and
unnecessary, especially in light of the fact that Seligman had previously
resolved the underlying issue with the Independent Directors of the Seligman
Funds and made recompense to the affected Seligman Funds.

In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. (transfer
agent for the Seligman Funds) and Brian T. Zino (collectively, the Seligman
Parties), alleging, in substance, that, in addition to the four arrangements
noted above, the Seligman Parties permitted other persons to engage in frequent
trading and, as a result, the prospectus disclosure used by the registered
investment companies managed by Seligman is and has been misleading. The NYAG
included other related claims and also claimed that the fees charged by Seligman
to the Seligman Funds were excessive. The NYAG is seeking damages of at least
$80 million and restitution, disgorgement, penalties and costs and injunctive
relief. The Seligman Parties answered the complaint in December 2006 and believe
that the claims are without merit. Any resolution of these matters may include
the relief noted above or other sanctions or changes in procedures. Any damages
would be paid by Seligman and not by the Seligman Funds. If the NYAG obtains
injunctive relief, each of Seligman, RiverSource Investments and their
affiliates could, in the absence of the SEC in its discretion granting exemptive
relief, be enjoined from providing advisory and underwriting services to the
Seligman Funds and other registered investment companies including those funds
in the RiverSource complex of funds. Neither Seligman nor RiverSource
Investments believes that the foregoing legal action or other possible actions
will have a material adverse impact on Seligman, RiverSource Investments or
their current or former clients, including the Seligman Funds and other
investment companies managed by RiverSource Investments; however, there can be
no assurance of this or that these matters and any related publicity will

- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  47



NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------


not affect demand for shares of the Seligman Funds and such other investment
companies or have other adverse consequences.

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.

9. SUBSEQUENT EVENT

Effective Dec. 15, 2008, the Fund will pay custodian fees to JPMorgan Chase
Bank, N.A. and, in addition, JPMorgan Chase Bank, N.A. will serve as the
securities lending agent for the Fund.


- --------------------------------------------------------------------------------
48  RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT



PROXY VOTING -------------------------------------------------------------------

The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling RiverSource Funds at (888) 791-3380; contacting your financial
institution; visiting riversource.com/funds; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting riversource.com/funds; or
searching the website of the SEC at www.sec.gov.


- --------------------------------------------------------------------------------
   RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND -- 2008 SEMIANNUAL REPORT  49



RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474

RIVERSOURCE.COM/FUNDS


<Table>
                                                                                        
                                This report must be accompanied or preceded by the Fund's
                                current prospectus. RiverSource(R) mutual funds are
                                distributed by RiverSource Distributors, Inc., and
                                RiverSource Fund Distributors, Inc., Members FINRA, and
                                managed by RiverSource Investments, LLC. RiverSource is part
                                of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO)  (C) 2009 RiverSource Investments, LLC.                             S-6442 Z (1/09)
</Table>