UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-5696
RIVERSOURCE GLOBAL SERIES, INC.
(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
Date of fiscal year end: 10/31
Date of reporting period: 10/31
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
ABSOLUTE RETURN CURRENCY AND INCOME FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE
RETURN.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (ADVANCED ALPHA STRATEGIES)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 10
Fund Expenses Example.............. 12
Portfolio of Investments........... 14
Statement of Assets and
Liabilities...................... 20
Statement of Operations............ 21
Statements of Changes in Net
Assets........................... 22
Financial Highlights............... 24
Notes to Financial Statements...... 31
Report of Independent Registered
Public Accounting Firm........... 48
Federal Income Tax Information..... 50
Board Members and Officers......... 51
Proxy Voting....................... 56
</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.
- --------------------------------------------------------------------------------
2 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Absolute Return Currency and Income Fund (the Fund) Class A shares
declined 0.57% (excluding sales charge) for the 12 months ended Oct. 31, 2008.
> The Fund underperformed its benchmark, the Citigroup 3-month U.S. Treasury
Bill Index, which rose 2.31% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
1 year inception(a)
- -----------------------------------------------------------------
RiverSource Absolute Return Currency and
Income Fund
Class A (excluding sales charge) -0.57% +4.85%
- -----------------------------------------------------------------
Citigroup 3-month U.S. Treasury Bill Index
(unmanaged) +2.31% +3.83%
- -----------------------------------------------------------------
</Table>
(a) Fund data is from June 15, 2006. Citigroup 3-month U.S. Treasury Bill Index
is from July 1, 2006.
(See "The Fund's Long-term Performance" for Index description)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial 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 Oct. 18, 2007, is not reflected in the table above. If
reflected, returns would be lower than those shown. The performance of other
classes may vary from that shown because of differences in expenses. See the
Average Annual Total Returns table for performance of other share classes of the
Fund.
The index does not reflect the effects of sales charges, expenses and taxes.
It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total
- ---------------------------------
Class A 1.39%
- ---------------------------------
Class B 2.16%
- ---------------------------------
Class C 2.15%
- ---------------------------------
Class I 1.03%
- ---------------------------------
Class R4 1.34%
- ---------------------------------
Class R5 1.07%
- ---------------------------------
Class W 1.50%
- ---------------------------------
</Table>
The RiverSource Absolute Return Currency and Income Fund is designed for
investors with an above average risk tolerance. Risks associated with the fund
include, but are not limited to, derivatives risk, counterparty risk, interest
rate risk, credit risk, and tax risk. Derivative instruments are financial
instruments that have a value dependent on the value of something else, such as
one or more underlying securities. Gains or losses may be substantial, because a
relatively small price movement in an underlying security may result in a
substantial gain or loss for the Fund. A counterparty to a financial instrument
entered into by the Fund may become bankrupt or otherwise fail to perform its
obligations due to financial difficulties. In general, bond prices rise when
interest rates fall and vice versa. This effect is usually more pronounced for
longer-term securities. The issuer of a security could default or otherwise
become unable or unwilling to honor a financial obligation, and the Fund may be
unable to recover its investment or may only obtain a limited or delayed
recovery. Gains from some of the Fund's foreign currency-denominated positions
may not meet Treasury Department regulations for "qualifying income," in which
case, the Fund might not qualify as a regulated investment company for one or
more years, requiring the Fund's Board of Directors to authorize a significant
change in investment strategy or Fund liquidation. A significant portion of the
Fund is invested in forward currency contracts, which are subject to a number of
risks. Gains and losses may be substantial if prices do not move in the
direction anticipated. See the Fund's prospectus for information on these and
other risks associated with the Fund.
- --------------------------------------------------------------------------------
4 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 6/15/06) -0.57% +4.85%
- ---------------------------------------------------------------
Class B (inception 6/15/06) -1.35% +4.19%
- ---------------------------------------------------------------
Class C (inception 6/15/06) -1.31% +4.19%
- ---------------------------------------------------------------
Class I (inception 6/15/06) -0.25% +5.29%
- ---------------------------------------------------------------
Class R4 (inception 6/15/06) -0.26% +5.13%
- ---------------------------------------------------------------
Class R5 (inception 10/18/07) -0.30% +0.14%
- ---------------------------------------------------------------
Class W (inception 12/1/06) -0.66% +4.35%
- ---------------------------------------------------------------
With sales charge
Class A (inception 6/15/06) -3.58% +2.72%
- ---------------------------------------------------------------
Class B (inception 6/15/06) -6.06% +2.58%
- ---------------------------------------------------------------
Class C (inception 6/15/06) -2.25% +4.19%
- ---------------------------------------------------------------
</Table>
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 6/15/06) -1.84% +4.03%
- ----------------------------------------------------------------
Class B (inception 6/15/06) -2.65% +3.37%
- ----------------------------------------------------------------
Class C (inception 6/15/06) -2.62% +3.38%
- ----------------------------------------------------------------
Class I (inception 6/15/06) -1.55% +4.47%
- ----------------------------------------------------------------
Class R4 (inception 6/15/06) -1.52% +4.33%
- ----------------------------------------------------------------
Class R5 (inception 10/18/07) N/A -2.06%*
- ----------------------------------------------------------------
Class W (inception 12/1/06) -2.05% +3.31%
- ----------------------------------------------------------------
With sales charge
Class A (inception 6/15/06) -6.46% +1.84%
- ----------------------------------------------------------------
Class B (inception 6/15/06) -7.28% +1.72%
- ----------------------------------------------------------------
Class C (inception 6/15/06) -3.55% +3.38%
- ----------------------------------------------------------------
</Table>
On Oct. 18, 2007, the maximum sales charge for Class A shares changed from 4.75%
to 3.00%. Class A share performance for one year period reflects the maximum
sales charge of 3.00%, which was in effect on Nov. 1, 2007. Class A share
performance since inception reflects the maximum sales charge of 4.75%, which
was in effect on June 15, 2006, inception date. Class B share performance
reflects a contingent deferred sales charge (CDSC) applied as follows: first
year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year
1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if
shares are sold within one year after purchase. Sales charges do not apply to
Class I, Class R4, Class R5 and Class W shares. Class I, Class R4 and Class R5
are available to institutional investors only. Class W shares are offered
through qualifying discretionary accounts.
*Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
At Oct. 31, 2008, approximately 29% of the Fund's shares were owned in the
aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible that RiverSource Absolute Return Currency and Income Fund may
experience relatively large purchases or redemptions from affiliated funds-of-
funds (see page 41, Class I capital share transactions for related activity
during the most recent fiscal period). RiverSource seeks to minimize the impact
of these transactions by structuring them over a reasonable period of time.
RiverSource Absolute Return Currency and Income Fund may experience increased
expenses as it buys and sells securities as a result of purchases or redemptions
by affiliated funds-of-funds. For more information on the Fund's expenses, see
the discussions beginning on pages 12 and 37.
Dear Shareholders,
RiverSource Absolute Return Currency and Income Fund (the Fund) Class A shares
declined 0.57% (excluding sales charge) for the 12 months ended Oct. 31, 2008.
The Fund underperformed its benchmark, the Citigroup 3-month U.S. Treasury Bill
Index (Citigroup Index), which rose 2.31% during the same period.
SECTOR BREAKDOWN
(at Oct. 31, 2008; % of bond and cash & cash equivalents portfolio
assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Asset-Backed 3.5%
- ------------------------------------------------
Commercial Mortgage-Backed 0.9%
- ------------------------------------------------
Consumer Discretionary 0.9%
- ------------------------------------------------
Consumer Staples 0.2%
- ------------------------------------------------
Energy 0.4%
- ------------------------------------------------
Financials 1.9%
- ------------------------------------------------
Health Care 0.6%
- ------------------------------------------------
Industrials 1.0%
- ------------------------------------------------
Mortgage-Backed 0.2%
- ------------------------------------------------
Telecommunication 0.5%
- ------------------------------------------------
U.S. Government Obligations & Agencies 3.0%
- ------------------------------------------------
Utilities 0.4%
- ------------------------------------------------
Other(1) 86.5%
- ------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
6 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
Our investment process features two components. The first component consists of
investments in primarily high quality, short-term fixed income securities that
have minimal interest rate risk. This component seeks to build a base of
consistent income. These short-term investments are also designated, as
necessary, to cover obligations that result from the second component of our
strategy, which is based on a proprietary quantitative currency model. Our model
uses various fundamental and technical factors, including current and historical
data, to rank the anticipated value of nine different currencies from developed
countries relative to the U.S. dollar. Based on these rankings, we enter into
long forward currency contracts for the three most attractive currencies and
enter into short forward currency contracts for the three least attractive
currencies, all relative to the U.S. dollar. The Fund experiences profits or
losses to the extent the values of the currencies appreciate or depreciate
relative to the U.S. dollar.
While we were able to generate positive returns from the short-term fixed income
investments during the period, our proprietary quantitative model detracted from
performance for the same period. Our positioning in the New Zealand dollar,
euro, Swedish krona and Swiss franc benefited Fund results for the 12 months
ended Oct. 31, 2008. On the other hand, positioning for the same period in the
British pound, Australian dollar, Norwegian krone, Canadian dollar and Japanese
yen detracted from Fund performance.
The Fund experiences
profits or losses to the
extent the values of
the currencies
appreciate
or depreciate relative
to the U.S. dollar.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
QUALITY BREAKDOWN
(at Oct. 31, 2008; % of portfolio)
- ---------------------------------------------------------------------
<Table>
AAA bonds 4.3%
- ------------------------------------------------
AA bonds 1.5%
- ------------------------------------------------
A bonds 2.7%
- ------------------------------------------------
BBB bonds 1.8%
- ------------------------------------------------
Non-investment grade 0.3%
- ------------------------------------------------
A1/P1/F1 short-term securities 89.4%
- ------------------------------------------------
</Table>
Bond ratings apply to the underlying holdings of the Fund and not the Fund
itself. Whenever possible, the Standard and Poor's rating is used to determine
the credit quality of a security. Standard and Poor's rates the creditworthiness
of corporate bonds, with 15 categories, ranging from AAA (highest) to D
(lowest). Ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
If Standard and Poor's doesn't rate a security, then Moody's rating is used.
RiverSource Investments, LLC, the Fund's investment manager, rates a security
using an internal rating system when Moody's doesn't provide a rating. Ratings
for 0.1% of the bond portfolio assets were determined through internal analysis.
For short-term securities, A1/P1/F1 represent the rating designation with the
highest quality within the Standard and Poor's, Moody's, and Fitch short term
credit ratings scales, respectively.
OUR CURRENT INVESTMENT STRATEGY
We run our quantitative model weekly and reset currency positions as needed,
applying the output of this model on a systematic basis. We generally seek
neutral exposure to the U.S. dollar, the base currency. In our view, remaining
neutral to the U.S. dollar as part of our strategy helps control overall
volatility. We also use an externally developed but fully integrated risk
management system to help us monitor and seek to manage market risk. We believe
the Fund is designed to do well in either rising or falling U.S. dollar
environments.
OUR FUTURE STRATEGY
We intend to stay disciplined in our systematic investment strategy. Through the
use of our proprietary quantitative model, which determines the Fund's positions
in forward foreign currency contracts relative to the U.S. dollar, we will
continue to seek an absolute return that is unrelated to general movements in
the U.S. dollar and other types of financial assets. Overall, we will continue
to seek to generate positive total returns from the income produced by the
Fund's investments in short-term debt obligations, plus the gains or minus the
losses resulting from the fluctuations in the values of various foreign
currencies relative to the U.S. dollar.
- --------------------------------------------------------------------------------
8 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund does not actually take ownership of foreign currencies or sell actual
foreign currencies. Rather, forward currency contracts are used to gain
comparable currency exposure. Because the establishment of the Fund's forward
foreign currency contracts requires little cash outlay, the Fund's assets will
consist primarily of investment grade U.S. dollar denominated, nongovernment
corporate and structured debt securities (if unrated, securities will be of
comparable quality as determined by the investment manager) and shares of an
affiliated money market fund.
(PHOTO - NIC PIFER)
Nic Pifer, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a 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 ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 9
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Absolute Return Currency and Income Fund Class A
shares (from 07/01/06 to 10/31/08)* as compared to the performance of a widely
cited performance index, the Citigroup 3-month U.S. Treasury Bill Index. In
comparing the Fund's Class A shares to this index, you should take into account
the fact that the Fund's performance reflects the maximum sales charge of 4.75%,
which changed to 3.00% effective Oct. 18, 2007. Such charges are not reflected
in the performance of the index. Returns for the Fund include the reinvestment
of any distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
* Fund data is from June 15, 2006. Citigroup 3-month U.S. Treasury Bill Index is
from July 1, 2006.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
SINCE
1 YEAR INCEPTION(2)
RIVERSOURCE ABSOLUTE RETURN AND CURRENCY INCOME FUND (INCLUDES SALES
CHARGE)
Class A Cumulative value of $10,000 $9,642 $10,662
- --------------------------------------------------------------------------
Average annual total return -3.58% +2.72%
- --------------------------------------------------------------------------
CITIGROUP 3-MONTH U.S. TREASURY BILL INDEX(1)
Cumulative value of $10,000 $10,231 $10,916
- --------------------------------------------------------------------------
Average annual total return +2.31% +3.83%
- --------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
10 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE ABSOLUTE RETURN
CURRENCY AND INCOME FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE ABSOLUTE
RETURN CURRENCY
AND INCOME
FUND CLASS CITIGROUP 3-MONTH
A (INCLUDES U.S. TREASURY
SALES CHARGE) BILL INDEX(1)
-------------------- ----------------------
7/1/06 $ 9,525 $10,000
10/31/06 9,751 10,167
4/30/07 10,324 10,421
10/31/07 10,723 10,670
4/30/08 10,346 10,828
10/31/08 10,662 10,916
</Table>
(1) The Citigroup 3-month U.S. Treasury Bill Index, an unmanaged index,
represents the performance of three-month Treasury bills. The index reflects
reinvestment of all distributions and changes in market prices.
(2) Fund data is from June 15, 2006. Citigroup 3-month U.S. Treasury Bill Index
is from July 1, 2006.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 11
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 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.
- --------------------------------------------------------------------------------
12 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008 OCT. 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,030.50 $ 7.01 1.37%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.30 $ 6.97 1.37%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,025.90 $10.98 2.15%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.37 $10.92 2.15%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,025.80 $10.82 2.12%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.52 $10.76 2.12%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,032.20 $ 5.17 1.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.11 $ 5.14 1.01%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,032.40 $ 6.76 1.32%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.55 $ 6.72 1.32%
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,030.90 $ 5.37 1.05%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.91 $ 5.35 1.05%
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,030.00 $ 7.52 1.47%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.80 $ 7.48 1.47%
- ------------------------------------------------------------------------------------------
</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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2008: +3.05%
for Class A, +2.59% for Class B, +2.58% for Class C, +3.22% for Class I,
+3.24% for Class R4, +3.09% for Class R5 and +3.00% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (9.9%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ASSET-BACKED (3.1%)
Capital Auto Receivables Asset Trust
Series 2006-SN1A Cl A4B
03-20-10 4.39% $1,500,000(d,g) $1,477,434
Capital Auto Receivables Asset Trust
Series 2007-SN2 Cl A2
01-15-10 5.34 1,131,067(d,g) 1,109,507
Citibank Credit Card Issuance Trust
Series 2003-A9 Cl A9
11-22-10 2.89 455,000(g) 453,836
Citibank Credit Card Issuance Trust
Series 2007-A1 Cl A1
03-22-12 3.19 1,000,000(g) 938,594
College Loan Corp Trust
Series 2003-2 Cl A3
07-25-13 3.73 370,863(g) 367,966
College Loan Corp Trust
Series 2004-1 Cl A2
04-25-16 3.64 1,596,091(g) 1,583,136
Countrywide Asset-backed Ctfs
Series 2007-7 Cl 2A2
10-25-37 3.42 1,000,000(g) 784,063
Countrywide Home Equity Loan Trust
Series 2005-H Cl 2A (FGIC)
12-15-35 4.80 179,349(e,g) 73,421
Ford Credit Floorplan Master Owner Trust
Series 2006-3 Cl A
06-15-11 4.74 900,000(g) 868,738
Keycorp Student Loan Trust
Series 2003-A Cl 2A2 (MBIA)
10-25-25 3.85 561,206(e,g) 535,163
Northstar Education Finance
Series 2007-1 Cl A2
01-29-46 3.54 750,000(g) 708,516
Providian Master Note Trust
Series 2006-A1A Cl A
01-15-13 4.59 1,000,000(d,g) 971,094
SLC Student Loan Trust
Series 2006-A Cl A4
01-15-19 4.87 1,800,000(g) 1,712,530
SLM Student Loan Trust
Series 2003-10A Cl A2
12-16-19 3.57 1,000,000(d,g) 999,219
SLM Student Loan Trust
Series 2004-3 Cl A3
04-25-16 3.63 351,317(g) 350,632
SLM Student Loan Trust
Series 2005-5 Cl A1
01-25-18 3.54 33,077(g) 33,021
SLM Student Loan Trust
Series 2005-5 Cl A2
10-25-21 3.62 1,000,000(g) 933,281
SLM Student Loan Trust
Series 2005-8 Cl A2
07-25-22 3.63 1,500,000(g) 1,439,866
SLM Student Loan Trust
Series 2005-B Cl A1
12-16-19 2.86 430,007(g) 418,383
SLM Student Loan Trust
Series 2006-2 Cl A2
01-25-17 3.54 58,526(g) 58,342
SLM Student Loan Trust
Series 2006-5 Cl A2
07-25-17 3.53 480,366(g) 473,536
SLM Student Loan Trust
Series 2006-A Cl A1
03-16-20 2.84 1,463,516(g) 1,426,045
SLM Student Loan Trust
Series 2006-A Cl A2
12-15-20 2.90 2,000,000(g) 1,794,164
SLM Student Loan Trust
Series 2006-C Cl A2
09-15-20 2.87 1,000,000(g) 946,719
SLM Student Loan Trust
Series 2007-2 Cl A2
07-25-17 3.54 1,000,000(g) 900,469
---------------
Total 21,357,675
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
COMMERCIAL MORTGAGE-BACKED (0.8%)(F)
Commercial Mtge Acceptance
Series 1999-C1 Cl A2
06-15-31 7.03% $1,351,511 $1,345,789
GS Mtge Securities II
Series 2007-EOP Cl A2
03-06-20 4.18 1,200,000(d,g) 1,018,931
GS Mtge Securities II
Series 2007-EOP Cl A3
03-06-20 4.22 1,770,000(d,g) 1,502,196
JP Morgan Chase Commercial Mtge Securities
Series 2005-LDP1 Cl A1
03-15-46 4.12 859,115 849,854
Morgan Stanley Dean Witter Capital I
Series 2002-TOP7 Cl A1
01-15-39 5.38 1,189,450 1,167,921
---------------
Total 5,884,691
- -------------------------------------------------------------------------------------
MORTGAGE-BACKED (0.2%)(F)
Deutsche Bank Alternate Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR6 Cl A3
02-25-37 3.35 314,914(g) 307,890
Downey Savings & Loan Assn Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-AR2 Cl 2AB1
11-19-37 4.37 500,542(b) 369,406
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-12 Cl 2A11
01-19-38 4.37 518,075(b) 476,048
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2006-8 Cl 2A1B
08-21-36 4.43 948,226(b) 387,729
---------------
Total 1,541,073
- -------------------------------------------------------------------------------------
AUTOMOTIVE (0.4%)
American Honda Finance
02-05-10 3.19 2,500,000(d,g) 2,465,046
- -------------------------------------------------------------------------------------
BANKING (1.2%)
ANZ Natl Intl
Bank Guaranteed
08-07-09 2.84 750,000(c,d,g) 748,917
Bank of America
Sr Unsecured
02-17-09 2.96 640,000(g) 639,718
Bank of New York Mellon
Sr Unsecured
02-05-10 3.19 3,000,000(g) 2,941,197
Citigroup
Sr Unsecured
06-09-09 2.95 640,000(g) 619,416
Credit Suisse First Boston USA
12-09-08 2.94 640,000(g) 636,727
Rabobank Nederland
Sr Nts
01-15-09 4.77 600,000(c,d,g) 601,512
US Bancorp
Sr Unsecured
02-04-10 3.19 1,250,000(g) 1,240,048
Wachovia Mtge FSB
Sr Unsecured
03-02-09 2.94 400,000(g) 393,689
---------------
Total 7,821,224
- -------------------------------------------------------------------------------------
BROKERAGE (0.2%)
Bear Stearns Companies
Sr Unsecured
03-30-09 3.85 750,000(g) 745,926
Lehman Brothers Holdings
Sr Unsecured
10-22-09 0.00 640,000(k,l) 75,200
Morgan Stanley
Sr Unsecured
02-09-09 2.91 640,000(g) 633,832
---------------
Total 1,454,958
- -------------------------------------------------------------------------------------
CONSTRUCTION MACHINERY (0.9%)
Caterpillar Financial Services
Sr Unsecured
02-08-10 3.25 2,000,000(g) 1,883,486
John Deere Capital
Sr Unsecured
01-18-11 5.20 4,500,000(g) 4,143,259
---------------
Total 6,026,745
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ELECTRIC (0.4%)
Dominion Resources
Sr Unsecured Series B
11-14-08 2.98% $3,000,000(g) $2,999,292
- -------------------------------------------------------------------------------------
FOOD AND BEVERAGE (0.2%)
Diageo Capital
11-10-08 2.90 1,640,000(c,g) 1,639,970
- -------------------------------------------------------------------------------------
HEALTH CARE (0.3%)
Cardinal Health
Sr Unsecured
10-02-09 4.32 2,080,000(g) 2,050,999
- -------------------------------------------------------------------------------------
HEALTH CARE INSURANCE (0.3%)
UnitedHealth Group
Sr Unsecured
03-02-09 2.89 750,000(g) 745,169
06-21-10 3.38 1,500,000(g) 1,386,540
---------------
Total 2,131,709
- -------------------------------------------------------------------------------------
INDEPENDENT ENERGY (0.4%)
Anadarko Petroleum
Sr Unsecured
09-15-09 3.22 3,000,000(g) 2,833,893
- -------------------------------------------------------------------------------------
LIFE INSURANCE (0.4%)
Lincoln Natl
Sr Unsecured
04-06-09 4.32 2,275,000(g) 2,261,589
Pacific Life Global Funding
11-13-08 2.89 400,000(d,g) 400,001
Pricoa Global Funding I
12-15-09 2.87 400,000(d,g) 383,514
---------------
Total 3,045,104
- -------------------------------------------------------------------------------------
MEDIA CABLE (0.4%)
Comcast
07-14-09 5.12 2,920,000(g) 2,797,553
- -------------------------------------------------------------------------------------
NON CAPTIVE DIVERSIFIED (0.1%)
General Electric Capital
Sr Unsecured
12-01-08 2.96 640,000(g) 638,961
- -------------------------------------------------------------------------------------
RETAILERS (0.1%)
Home Depot
Sr Unsecured
12-16-09 2.94 750,000(g) 683,079
- -------------------------------------------------------------------------------------
TRANSPORTATION SERVICES (0.1%)
ERAC USA Finance
04-30-09 3.72 825,000(d,g) 763,271
- -------------------------------------------------------------------------------------
WIRELINES (0.4%)
Telefonica Emisiones
06-19-09 3.50 3,190,000(c,g) 3,071,948
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $73,242,396) $69,207,191
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (83.9%)
SHARES VALUE(a)
RiverSource Short-Term
Cash Fund, 1.60% 582,511,480(h) $582,511,480
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $582,511,480) $582,511,480
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
SHORT-TERM SECURITIES (3.2%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
U.S. GOVERNMENT AGENCIES (2.9%)
Federal Home Loan Bank Disc Nts
11-06-08 2.42% $10,000,000 $9,996,018
Federal Home Loan Mtge Corp Disc Nts
11-03-08 2.48 10,000,000 9,997,959
-----------
Total 19,993,977
- -------------------------------------------------------------------------------------
ASSET-BACKED (0.3%)
WhistleJacket Capital LLC
02-25-08 3.76 2,307,639(d,i,j,m) 1,913,033
- -------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $22,303,477) $21,907,010
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $678,057,353)(n) $673,625,681
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 245,650,000 148,806,282 $-- $(14,338,030)
Australian Dollar U.S. Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 46,495,000 65,783,783 6,547,312 --
European Monetary Unit U.S. Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 5,167,000 6,437,193 -- (145,770)
European Monetary Unit U.S. Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 659,589,000 105,119,450 7,145,563 --
Norwegian Krone U.S. Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 4,070,000 585,949 -- (18,600)
Norwegian Krone U.S. Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 8,233,066 5,319,000 325,752 --
U.S. Dollar British Pound
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 60,402,978 35,243,000 -- (3,693,368)
U.S. Dollar British Pound
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 82,322,956 106,141,000 5,761,230 --
U.S. Dollar Canadian Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 83,811,614 97,062,000 -- (3,261,898)
U.S. Dollar Canadian Dollar
- --------------------------------------------------------------------------------------------
Nov. 5, 2008 101,112,656 114,284,000 -- (2,579,083)
U.S. Dollar Swiss Franc
- --------------------------------------------------------------------------------------------
Total $19,779,857 $(24,036,749)
- --------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on Oct. 31, 2008.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted. At Oct. 31, 2008, the value of foreign securities represented 0.9%
of net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At Oct. 31,
2008, the value of these securities amounted to $14,353,675 or 2.1% of net
assets.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(e) The following abbreviations are used in the portfolio security descriptions
to identify the insurer of the issue:
<Table>
FGIC -- Financial Guaranty Insurance Company
MBIA -- MBIA Insurance Corporation
</Table>
(f) Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities and
collateralized mortgage obligations. These securities may be issued or
guaranteed by U.S. government agencies or instrumentalities, or by private
issuers, generally originators and investors in mortgage loans, including
savings associations, mortgage bankers, commercial banks, investment
bankers and special purpose entities. The maturity dates shown represent
the original maturity of the underlying obligation. Actual maturity may
vary based upon prepayment activity on these obligations. Unless otherwise
noted, the coupon rates presented are fixed rates.
(g) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
2008.
(h) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(i) Denotes investments in structured investment vehicles ("SIVS"). See Note 7
to the financial statements.
(j) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Oct. 31, 2008, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
- ----------------------------------------------------------------
WhistleJacket Capital LLC(*)
3.76% Commercial Paper 2008 03-23-07 $2,307,541
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(k) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(l) On Sept. 15, 2008, Lehman Brothers Holdings filed a Chapter 11 bankruptcy
petition.
(m) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
(n) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $678,057,353 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $1.886
Unrealized depreciation (4,433,558)
- -----------------------------------------------------------
Net unrealized depreciation $(4,431,672)
- -----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
18 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
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 ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 19
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $95,545,873) $ 91,114,201
Affiliated money market fund (identified cost $582,511,480) 582,511,480
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $678,057,353) 673,625,681
Capital shares receivable 4,908,176
Dividends and accrued interest receivable 384,869
Receivable for investment securities sold 47,800,603
Unrealized appreciation on forward foreign currency contracts 19,779,857
- -------------------------------------------------------------------------------
Total assets 746,499,186
- -------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 22,294
Capital shares payable 3,426,762
Payable for investment securities purchased 24,431,150
Unrealized depreciation on forward foreign currency contracts 24,036,749
Accrued investment management services fees 16,730
Accrued distribution fees 3,586
Accrued transfer agency fees 2,159
Accrued administrative services fees 1,478
Other accrued expenses 97,212
- -------------------------------------------------------------------------------
Total liabilities 52,038,120
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $694,461,066
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 696,549
Additional paid-in capital 694,398,595
Undistributed net investment income 24,074
Accumulated net realized gain (loss) 8,030,412
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (8,688,564)
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $694,461,066
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $175,659,037 17,625,597 $9.97(1)
Class B $ 3,268,605 328,166 $9.96
Class C $ 9,463,358 951,266 $9.95
Class I $202,106,353 20,252,851 $9.98
Class R4 $ 21,219 2,128 $9.97
Class R5 $ 9,399 942 $9.98
Class W $303,933,095 30,493,927 $9.97
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $10.28. 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.
- --------------------------------------------------------------------------------
20 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 5,327,568
Income distributions from affiliated money market fund 8,322,692
Less foreign taxes withheld (14,107)
- ------------------------------------------------------------------------------
Total income 13,636,153
- ------------------------------------------------------------------------------
Expenses:
Investment management services fees 4,188,137
Distribution fees
Class A 268,339
Class B 11,267
Class C 58,825
Class W 368,846
Transfer agency fees
Class A 108,179
Class B 1,247
Class C 6,122
Class R4 26
Class R5 4
Class W 295,077
Administrative services fees 373,454
Plan administration services fees -- Class R4 130
Compensation of board members 11,559
Custodian fees 15,235
Printing and postage 54,950
Registration fees 161,246
Professional fees 44,291
Other 27,474
- ------------------------------------------------------------------------------
Total expenses 5,994,408
Expenses waived/reimbursed by the Investment Manager and its
affiliates (130)
Earnings and bank fee credits on cash balances (748)
- ------------------------------------------------------------------------------
Total net expenses 5,993,530
- ------------------------------------------------------------------------------
Investment income (loss) -- net 7,642,623
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (2,060,002)
Foreign currency transactions 10,255,723
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments 8,195,721
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (8,644,591)
- ------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (448,870)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 7,193,753
- ------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 21
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 7,642,623 $ 4,270,377
Net realized gain (loss) on investments 8,195,721 5,699,827
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies (8,644,591) (119,494)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 7,193,753 9,850,710
- -----------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (1,692,140) (203,734)
Class B (6,719) (336)
Class C (44,738) (605)
Class I (4,161,402) (4,073,834)
Class R4 (1,188) (464)
Class R5 (203) (35)
Class W (1,798,725) (179)
Net realized gain
Class A (1,516,443) (98,464)
Class B (355) (99)
Class C (52,812) (99)
Class I (4,183,105) (704,931)
Class R4 (1,945) (99)
Class R5 (334) --
Class W (175) (49)
- -----------------------------------------------------------------------------------------
Total distributions (13,460,284) (5,082,928)
- -----------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
22 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 218,918,102 $ 8,607,654
Class B shares 4,089,168 --
Class C shares 10,433,303 209,110
Class I shares 296,949,913 46,377,881
Class R4 shares 48,000 28,800
Class R5 shares -- 10,000
Class W shares 339,484,475 5,000
Reinvestment of distributions at net asset value
Class A shares 3,137,018 20,454
Class B shares 6,562 --
Class C shares 87,221 261
Class I shares 8,343,932 4,778,225
Class R4 shares 2,560 44
Class W shares 1,650,890 --
Payments for redemptions
Class A shares (53,765,268) (10,093,640)
Class B shares (877,774) --
Class C shares (1,255,226) --
Class I shares (219,491,271) (1,818,898)
Class R4 shares (64,521) --
Class W shares (38,075,600) --
- -----------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 569,621,484 48,124,891
- -----------------------------------------------------------------------------------------
Total increase (decrease) in net assets 563,354,953 52,892,673
Net assets at beginning of year 131,106,113 78,213,440
- -----------------------------------------------------------------------------------------
Net assets at end of year $ 694,461,066 $131,106,113
- -----------------------------------------------------------------------------------------
Undistributed net investment income $ 24,074 $ 86,566
- -----------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 23
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.58 $10.09 $9.98
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .15(c) .41(c) .12
Net gains (losses) (both realized and
unrealized) (.22) .57 .11
- ------------------------------------------------------------------------------------
Total from investment operations (.07) .98 .23
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.18) (.39) (.12)
Distributions from realized gains (.36) (.10) --
- ------------------------------------------------------------------------------------
Total distributions (.54) (.49) (.12)
- ------------------------------------------------------------------------------------
Net asset value, end of period $9.97 $10.58 $10.09
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $176 $9 $10
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.39% 1.36% 1.59%(f)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.39% 1.36% 1.37%(f)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.50% 3.98% 3.89%(f)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 39% 36% 12%
- ------------------------------------------------------------------------------------
Total return(i) (.57%) 9.96%(j) 2.37%(k)
- ------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) 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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(k) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.58 $10.09 $9.97
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(c) .34(c) .09
Net gains (losses) (both realized and
unrealized) (.18) .59 .12
- ------------------------------------------------------------------------------------
Total from investment operations (.14) .93 .21
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.12) (.34) (.09)
Distributions from realized gains (.36) (.10) --
- ------------------------------------------------------------------------------------
Total distributions (.48) (.44) (.09)
- ------------------------------------------------------------------------------------
Net asset value, end of period $9.96 $10.58 $10.09
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.16% 2.10% 2.38%(f)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.16% 2.10% 2.16%(f)
- ------------------------------------------------------------------------------------
Net investment income (loss) .38% 3.26% 3.11%(f)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 39% 36% 12%
- ------------------------------------------------------------------------------------
Total return(i) (1.35%) 9.38%(j) 2.16%(k)
- ------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) 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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(k) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.57 $10.09 $9.97
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(c) .34(c) .09
Net gains (losses) (both realized and
unrealized) (.20) .58 .12
- ------------------------------------------------------------------------------------
Total from investment operations (.14) .92 .21
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.12) (.34) (.09)
Distributions from realized gains (.36) (.10) --
- ------------------------------------------------------------------------------------
Total distributions (.48) (.44) (.09)
- ------------------------------------------------------------------------------------
Net asset value, end of period $9.95 $10.57 $10.09
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $9 $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.15% 2.12% 2.38%(f)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.15% 2.12% 2.16%(f)
- ------------------------------------------------------------------------------------
Net investment income (loss) .66% 3.42% 3.11%(f)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 39% 36% 12%
- ------------------------------------------------------------------------------------
Total return(i) (1.31%) 9.37%(j) 2.16%(k)
- ------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) 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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(k) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.59 $10.10 $9.98
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .21(c) .44(c) .13
Net gains (losses) (both realized and
unrealized) (.24) .59 .12
- ------------------------------------------------------------------------------------
Total from investment operations (.03) 1.03 .25
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.44) (.13)
Distributions from realized gains (.36) (.10) --
- ------------------------------------------------------------------------------------
Total distributions (.58) (.54) (.13)
- ------------------------------------------------------------------------------------
Net asset value, end of period $9.98 $10.59 $10.10
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $202 $122 $68
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.03% 1.07% 1.34%(f)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.03% 1.07% 1.12%(f)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.10% 4.30% 4.37%(f)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 39% 36% 12%
- ------------------------------------------------------------------------------------
Total return (.25%) 10.49%(i) 2.56%(j)
- ------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.58 $10.09 $9.98
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(c) .42(c) .13
Net gains (losses) (both realized and
unrealized) (.26) .59 .11
- ------------------------------------------------------------------------------------
Total from investment operations (.04) 1.01 .24
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.21) (.42) (.13)
Distributions from realized gains (.36) (.10) --
- ------------------------------------------------------------------------------------
Total distributions (.57) (.52) (.13)
- ------------------------------------------------------------------------------------
Net asset value, end of period $9.97 $10.58 $10.09
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.34% 1.36% 1.45%(f)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.09% 1.31% 1.23%(f)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.27% 4.13% 4.04%(f)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 39% 36% 12%
- ------------------------------------------------------------------------------------
Total return (.26%) 10.27%(i) 2.42%(j)
- ------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from June 15, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) 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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct 31, 2008 2007(b)
Net asset value, beginning of period $10.59 $10.58
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .22 .02
Net gains (losses) (both realized and
unrealized) (.26) .03
- -----------------------------------------------------------------------
Total from investment operations (.04) .05
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.21) (.04)
Distributions from realized gains (.36) --
- -----------------------------------------------------------------------
Total distributions (.57) (.04)
- -----------------------------------------------------------------------
Net asset value, end of period $9.98 $10.59
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -----------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.07% 1.06%(f)
- -----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.07% 1.06%(f)
- -----------------------------------------------------------------------
Net investment income (loss) 2.23% 4.43%(f)
- -----------------------------------------------------------------------
Portfolio turnover rate 39% 36%
- -----------------------------------------------------------------------
Total return (.30%) .44%(i),(j)
- -----------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Oct. 18, 2007 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct 31, 2008 2007(b)
Net asset value, beginning of period $10.58 $10.13
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .11 .36
Net gains (losses) (both realized and
unrealized) (.19) .55
- -----------------------------------------------------------------------
Total from investment operations (.08) .91
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.36)
Distributions from realized gains (.36) (.10)
- -----------------------------------------------------------------------
Total distributions (.53) (.46)
- -----------------------------------------------------------------------
Net asset value, end of period $9.97 $10.58
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $304 $--
- -----------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.50% 1.54%(f)
- -----------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.50% 1.54%(f)
- -----------------------------------------------------------------------
Net investment income (loss) 1.09% 3.88%(f)
- -----------------------------------------------------------------------
Portfolio turnover rate 39% 36%
- -----------------------------------------------------------------------
Total return (.66%) 9.21%(i),(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 Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return figures would have been lower by 0.05%.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Absolute Return Currency and Income Fund (the Fund) is a series of
RiverSource Global Series, Inc. and is registered under the Investment Company
Act of 1940 (as amended) as a non-diversified, open-end management investment
company. RiverSource Global Series, Inc. has 10 billion authorized shares of
capital stock that can be allocated among the separate series as designated by
the Board of Directors (the Board). The Fund invests primarily in short-term
debt obligations and forward foreign currency contracts.
The Fund offers Class A, Class B, Class C, Class I, Class R4, Class R5 and Class
W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership. Class B shares are currently closed to investors for new
purchases.
- - Class I, Class R4 and Class R5 shares are sold without a front-end sales
charge or CDSC and are offered to qualifying institutional investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 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 R5 shares. At
Oct. 31, 2008, the Investment Manager and the RiverSource affiliated funds-of-
funds owned approximately 29% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
ILLIQUID SECURITIES
At Oct. 31, 2008, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of
- --------------------------------------------------------------------------------
32 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
purchase. The aggregate value of such securities at Oct. 31, 2008 was $1,913,033
representing 0.28% of net assets. According to Board guidelines, certain
unregistered securities are determined to be liquid and are not included within
the 15% limitation specified above. Assets are liquid if they can be sold or
disposed of in the ordinary course of business within seven days at
approximately the value at which the asset is valued by the Fund.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At Oct. 31, 2008, the Fund had no outstanding forward-commitments.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the Fund may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of being unable to enter into a closing transaction
if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
a security for a purchased put or call option is adjusted by the amount of
premium received or paid. At Oct. 31, 2008, and for the year then ended, the
Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
The Fund will enter into forward foreign currency exchange contracts to produce
incremental earnings. The net U.S. dollar value of foreign currency underlying
all contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the credit
risk that the counterparty will not complete its contract obligations.
- --------------------------------------------------------------------------------
34 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
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 recognition of
unrealized appreciation (depreciation) for certain derivative investments. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007(*)
- ----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income..................... $2,303,090 $ 243,304
Long-term capital gain.............. 905,493 58,894
CLASS B
Distributions paid from:
Ordinary income..................... 6,862 376
Long-term capital gain.............. 212 59
CLASS C
Distributions paid from:
Ordinary income..................... 66,015 645
Long-term capital gain.............. 31,535 59
CLASS I
Distributions paid from:
Ordinary income..................... 5,846,707 4,357,132
Long-term capital gain.............. 2,497,800 421,633
CLASS R4
Distributions paid from:
Ordinary income..................... 1,971 504
Long-term capital gain.............. 1,162 59
CLASS R5
Distributions paid from:
Ordinary income..................... 338 35
Long-term capital gain.............. 199 --
CLASS W
Distributions paid from:
Ordinary income..................... 1,798,796 199
Long-term capital gain.............. 104 29
</Table>
* Class R5 is for the period from Oct. 18, 2007 (inception date) to Oct. 31,
2007. Class W is for the period from Dec. 1, 2006 (inception date) to Oct.
31, 2007.
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 1,050,555
Undistributed accumulated long-term gain....... $ 2,756,390
Accumulated realized loss...................... $ --
Unrealized appreciation (depreciation)......... $(4,441,023)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
- --------------------------------------------------------------------------------
36 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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
Oct. 31, 2008, management does not believe the adoption of SFAS 161 will impact
the financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a 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. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Nov. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required 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.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, when
available, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.89%
to
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
0.70% annually as the Fund's assets increase. The management fee for the year
ended Oct. 31, 2008 was 0.89% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the year ended Oct. 31, 2008 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, there were no expenses incurred for these particular items.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $20.50 for Class A, $21.50
for Class B and $21.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R4 and Class R5 shares and an
annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets
attributable to Class W shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
- --------------------------------------------------------------------------------
38 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average
daily net assets attributable to Class B and Class C shares. For Class B and
Class C shares, 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 $134,000 and $45,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$281,486 for Class A, $314 for Class B and $6,247 for Class C for the year ended
Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 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 R4............................................ 1.09%
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4........................................... $130
</Table>
Under an agreement which was effective until Oct. 31, 2008, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
such that net expenses (excluding fees and expenses of acquired funds*), would
not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class A............................................. 1.47%
Class B............................................. 2.23
Class C............................................. 2.22
Class I............................................. 1.17
Class R4............................................ 1.35
Class R5............................................ 1.22
Class W............................................. 1.62
</Table>
Effective Nov. 1, 2008, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Oct. 31, 2009,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), will not exceed the following
percentage of the Fund's average daily net assets:
<Table>
Class R4............................................ 1.35%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $748 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $54,980,317 and $28,832,380, respectively, for the year
ended Oct. 31, 2008. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
40 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 21,957,179 315,740 (5,483,597) 16,789,322
Class B 416,595 671 (90,100) 327,166
Class C 1,050,240 8,774 (128,574) 930,440
Class I 30,071,137 837,081 (22,170,858) 8,737,360
Class R4 4,723 256 (6,584) (1,605)
Class W 34,206,023 168,788 (3,881,378) 30,493,433
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2007*
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 815,101 1,939 (976,765) (159,725)
Class C 19,801 25 -- 19,826
Class I 4,483,439 462,890 (173,987) 4,772,342
Class R 2,729 4 -- 2,733
Class R5 942 -- -- 942
Class W 494 -- -- 494
- ----------------------------------------------------------------------------------
</Table>
* Class R5 is for the period from Oct. 18, 2007 (inception date) to Oct. 31,
2007. Class W is for the period from Dec. 1, 2006 (inception date) to Oct.
31, 2007.
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 $1,033,652,214 and $511,047,214, respectively, for the year
ended Oct. 31, 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 Oct. 31, 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. (JPMCB), whereby the Fund may borrow for
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility became effective on 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 year ended Oct. 31, 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. (JPMCB), 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. INVESTMENTS IN STRUCTURED INVESTMENT VEHICLES
In 2007 structured investment vehicles ("SIVs") generally experienced a
significant decrease in liquidity as a result of the reduction in demand for
asset-backed commercial paper as well as the lack of liquidity and overall
volatility in the markets for the collateral underlying these investment
structures. As of Oct. 31, 2008, the Fund's only remaining SIV position was
WhistleJacket Capital LLC (WJC). As of Oct. 31, 2008, the Fund valued WJC at
$1.9 million, representing 0.3% of the Fund's net assets.
- --------------------------------------------------------------------------------
42 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
WJC breached a financial covenant on Feb. 11, 2008 relating to the market value
of its underlying collateral, resulting in the occurrence of an "enforcement
event." This resulted in the appointment of receivers on Feb. 12, 2008. On Feb.
15, 2008, the receivers declared WJC to be insolvent. The Fund's holding in WJC
defaulted as of its Feb. 25, 2008 maturity date ($3 million). On Oct. 27, 2008,
the Fund received a partial payment of $0.7 million from WJC, reducing the
remaining WJC outstanding principal amount to $2.3 million. The receivers
continue to develop a restructuring plan which will likely result in the Fund
receiving less than full payment on its investment. Accordingly, this holding
has been determined to be illiquid. As of Dec. 16, 2008 the remaining position
of WJC has been fair valued at $1.9 million.
With the exception of Cheyne Finance (Cheyne), all other SIVs held by the Fund
during the year ended Oct. 31, 2008 have matured and all interest and principal
payments were received on a timely basis as follows:
<Table>
<Caption>
MATURITY PRINCIPAL
DATE ($ IN MILLIONS)
- -------------------------------------------------------------------
Cullinan Finance 11/21/2007 $ 4
Sigma Finance 11/29/2007 3.5
</Table>
On Aug. 28, 2007, Cheyne breached a financial covenant relating to the market
value of its underlying collateral, resulting in the occurrence of an
"enforcement event." This led to the appointment of receivers on Sept. 4, 2007.
On Oct. 17, 2007, the receivers declared Cheyne to be insolvent. The Fund's
holdings in Cheyne defaulted as of their respective maturity dates, Nov. 20,
2007 ($2 million) and Dec. 11, 2007 ($2 million). On April 17, 2008, the Fund
received a partial payment from Cheyne of $0.7 million, reducing the Fund's
total remaining outstanding principal to $3.3 million. On July 24, 2008, the
Fund elected to receive cash in the amount of $1.8 million as one of the
available options in accordance with the plan of liquidation of the Cheyne
obligations. The resulting recognized loss of $1.5 million is reported in the
Fund's Statement of Operations.
8. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
FOREIGN CURRENCY RISK
The Fund's exposure to foreign currencies subjects the Fund to constantly
changing exchange rates and the risk that those currencies will decline in value
relative to the U.S. dollar, or, in the case of short positions, that the U.S.
dollar will decline in value relative to the currency being sold forward.
Currency rates in foreign countries may fluctuate significantly over short
periods of time for a number of reasons, including changes in interest rates and
economic or political developments in the U.S. or abroad.
GEOGRAPHIC CONCENTRATION RISK
The Fund may be particularly susceptible to economic, political or regulatory
events affecting companies and countries within the specific geographic region
in which the Fund focuses its investments. Currency devaluations could occur in
countries that have not yet experienced currency devaluation to date, or could
continue to occur in countries that have already experienced such devaluations.
As a result, the Fund may be more volatile than a more geographically
diversified fund.
COUNTERPARTY RISK
The risk that a counterparty to a financial instrument entered into by the Fund
or held by special purpose or structured vehicle becomes bankrupt or otherwise
fails to perform its obligations due to financial difficulties. The Fund may
experience significant delays in obtaining any recovery in a bankruptcy or other
reorganization proceeding. The Fund may obtain only limited recovery or may
obtain no recovery in such circumstances. The Fund will typically enter into
financial instrument transactions with counterparties whose credit rating is
investment grade, or, if unrated, determined to be of comparable quality by the
investment manager.
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of
- --------------------------------------------------------------------------------
44 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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); 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
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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, Seligman and its 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. Seligman does not believe that the foregoing legal action or other
possible actions will have a material adverse impact on Seligman or its clients,
including the Seligman Funds and other investment companies managed by it;
however, there can be no assurance of this or that these matters and any related
publicity will 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.
- --------------------------------------------------------------------------------
46 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
10. SUBSEQUENT EVENT
Effective Dec. 15, 2008, the Fund will pay custodian fees to JPMorgan Chase
Bank, N.A.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 47
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Absolute Return Currency and Income
Fund (the Fund) (one of the portfolios constituting the RiverSource Global
Series, Inc.) as of October 31, 2008, and the related statement of operations
for the year then ended, and the statements of changes in net assets and the
financial highlights for each of the two years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights of the Fund for the period presented through October 31, 2006, were
audited by other auditors whose report dated December 20, 2006, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
48 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Absolute Return Currency and Income Fund of the
RiverSource Global Series, Inc. at October 31, 2008, the results of its
operations for the year then ended, and changes in its net assets and the
financial highlights for each of the two years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 49
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 5.35%
<Caption>
CAPITAL GAIN DISTRIBUTION - the Fund designates $3,436,505 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
50 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 51
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
52 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 53
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
54 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT 55
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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.
- --------------------------------------------------------------------------------
56 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 ANNUAL REPORT
RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6502 G (12/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
EMERGING MARKETS BOND FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
RIVERSOURCE EMERGING MARKETS BOND FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH
CURRENT INCOME AND, SECONDARILY, THROUGH CAPITAL
APPRECIATION.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS LOGO)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 16
Statement of Assets and
Liabilities...................... 21
Statement of Operations............ 22
Statements of Changes in Net
Assets........................... 23
Financial Highlights............... 25
Notes to Financial Statements...... 31
Report of Independent Registered
Public Accounting Firm........... 49
Federal Income Tax Information..... 51
Board Members and Officers......... 52
Proxy Voting....................... 57
</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.
- --------------------------------------------------------------------------------
2 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Emerging Markets Bond Fund (the Fund) Class A shares declined
28.44% (excluding sales charge) for the 12 months ended Oct. 31, 2008.
> The Fund underperformed its benchmark, the J.P. Morgan Emerging Markets Bond
Index-Global (J.P. Morgan EMBI-Global), which fell 19.13%.
> The Fund also underperformed the Lipper Emerging Markets Debt Funds Index,
representing the Fund's peer group, which declined 24.31%, during the same
period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
1 year inception(a)
- ------------------------------------------------------------------
RiverSource Emerging Markets Bond Fund
Class A (excluding sales charge) -28.44% -6.74%
- ------------------------------------------------------------------
J.P. Morgan EMBI-Global (unmanaged) -19.13% -2.65%
- ------------------------------------------------------------------
Lipper Emerging Markets Debt Funds Index -24.31% -5.19%
- ------------------------------------------------------------------
</Table>
(a) Fund data is from Feb. 16, 2006. J.P. Morgan EMBI-Global and Lipper peer
group data is from Mar. 1, 2006.
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
HIGH
MEDIUM QUALITY
X LOW
</Table>
Shading within the style matrix 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) 11.5 years
- --------------------------------------
Effective duration(2) 5.7 years
- --------------------------------------
Weighted average bond
rating(3) BBB
- --------------------------------------
</Table>
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total Net Expenses(a)
- ----------------------------------------
Class A 1.41% 1.27%
- ----------------------------------------
Class B 2.19% 2.04%
- ----------------------------------------
Class C 2.18% 2.03%
- ----------------------------------------
Class I 0.91% 0.85%
- ----------------------------------------
Class R4 1.22% 1.15%
- ----------------------------------------
Class W 1.35% 1.30%
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds) will not exceed 1.27% for
Class A, 2.04% for Class B, 2.03% for Class C, 0.85% for Class I, 1.15% for
Class R4 and 1.30% for Class W.
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) EFFECTIVE DURATION measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels of
interest rates from two years out to 30 years). Positive duration means that
as rates rise, the price decreases, and negative duration means that as
rates rise, the price increases.
(3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
underlying bonds in the portfolio.
There are risks associated with an investment in a bond funds, including credit
risk, interest rate risk, and prepayment and extension risk. See the Fund's
prospectus for information on these and other risks associated with the Fund. In
general, bond prices rise when interest rates fall and vice versa. This effect
is usually more pronounced for longer-term securities. Non-investment grade
securities, commonly called "high-yield" or "junk" bonds, generally have more
volatile prices and carry more risk to principal and income than investment
grade securities.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
- --------------------------------------------------------------------------------
4 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 2/16/06) -28.44% -6.74%
- ----------------------------------------------------------------
Class B (inception 2/16/06) -28.85% -7.41%
- ----------------------------------------------------------------
Class C (inception 2/16/06) -28.88% -7.43%
- ----------------------------------------------------------------
Class I (inception 2/16/06) -28.08% -6.33%
- ----------------------------------------------------------------
Class R4 (inception 2/16/06) -27.98% -6.47%
- ----------------------------------------------------------------
Class W (inception 12/1/06) -28.29% -12.29%
- ----------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) -31.85% -8.41%
- ----------------------------------------------------------------
Class B (inception 2/16/06) -32.18% -8.61%
- ----------------------------------------------------------------
Class C (inception 2/16/06) -29.55% -7.43%
- ----------------------------------------------------------------
</Table>
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR INCEPTION
Class A (inception 2/16/06) -7.16% +1.89%
- ----------------------------------------------------------------
Class B (inception 2/16/06) -7.78% +1.17%
- ----------------------------------------------------------------
Class C (inception 2/16/06) -7.88% +1.11%
- ----------------------------------------------------------------
Class I (inception 2/16/06) -6.62% +2.32%
- ----------------------------------------------------------------
Class R4 (inception 2/16/06) -6.68% +2.17%
- ----------------------------------------------------------------
Class W (inception 12/1/06) -7.06% -0.74%
- ----------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) -11.59% +0.00%
- ----------------------------------------------------------------
Class B (inception 2/16/06) -12.09% -0.19%
- ----------------------------------------------------------------
Class C (inception 2/16/06) -8.74% +1.11%
- ----------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 4.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are
available to institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
At Oct. 31, 2008, approximately 36% of the Fund's shares were owned in aggregate
by affiliated funds of funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible RiverSource Emerging Markets Bond Fund may experience relatively large
purchases or redemptions from affiliated funds of funds (see page 43, Class I
capital share transactions for related activity during the most recent fiscal
period). RiverSource seeks to minimize the impact of these transactions by
structuring them over a reasonable period of time. RiverSource Emerging Markets
Bond Fund may experience increased expenses as it buys and sells securities as a
result of purchases or redemptions by affiliated funds of funds. For more
information on the Fund's expenses, see the discussions beginning on pages 14
and 39.
Dear Shareholders,
RiverSource Emerging Markets Bond Fund (the Fund) Class A shares declined 28.44%
(excluding sales charge) for the 12 months ended Oct. 31, 2008. The Fund
underperformed its benchmark, the J.P. Morgan Emerging Markets Bond Index-Global
(J.P. Morgan EMBI-Global), which fell 19.13%. The Fund also underperformed the
Lipper Emerging Markets Debt Funds Index, representing the Fund's peer group,
which declined 24.31%, during the same period.
COUNTRY BREAKDOWN (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Argentina 1.0%
- ------------------------------------------------
Brazil 14.2%
- ------------------------------------------------
Cayman Islands 1.7%
- ------------------------------------------------
Colombia 3.9%
- ------------------------------------------------
Dominican Republic 1.0%
- ------------------------------------------------
El Salvador 1.2%
- ------------------------------------------------
Gabon 0.4%
- ------------------------------------------------
Indonesia 6.4%
- ------------------------------------------------
Iraq 0.3%
- ------------------------------------------------
Kazakhstan 1.7%
- ------------------------------------------------
Luxembourg 3.7%
- ------------------------------------------------
Mexico 10.1%
- ------------------------------------------------
Netherlands 1.2%
- ------------------------------------------------
Panama 1.3%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
6 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
Peru 3.4%
- ------------------------------------------------
Philippine Islands 3.3%
- ------------------------------------------------
Russia 5.7%
- ------------------------------------------------
Turkey 9.1%
- ------------------------------------------------
Ukraine 0.3%
- ------------------------------------------------
United Kingdom 0.9%
- ------------------------------------------------
Uruguay 2.5%
- ------------------------------------------------
Venezuela 7.9%
- ------------------------------------------------
Other(1) 18.8%
- ------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
SIGNIFICANT PERFORMANCE FACTORS
The weak performance in emerging market bonds was driven by the larger global
financial crisis which grew during the second half of the annual period and
peaked in intensity in September and October.
The global financial crisis broke down important supports for emerging market
assets, including previously robust commodity prices, strong foreign capital
inflows and resilient export demand. This spreading contagion from the developed
countries eliminated any hope of the emerging market world remaining 'decoupled'
from the problems of the West.
QUALITY BREAKDOWN
(at Oct. 31, 2008; % of portfolio assets excluding cash equivalents
and equities)
- ---------------------------------------------------------------------
<Table>
A bonds 3.3%
- ------------------------------------------------
BBB bonds 41.1%
- ------------------------------------------------
BB bonds 44.1%
- ------------------------------------------------
B bonds 7.0%
- ------------------------------------------------
Non-investment grade bonds 0.6%
- ------------------------------------------------
Non-rated bonds 3.9%
- ------------------------------------------------
</Table>
Bond ratings apply to the underlying holdings of the Fund and not the Fund
itself. Whenever possible, the Standard and Poor's rating is used to determine
the credit quality of a security. Standard and Poor's rates the creditworthiness
of corporate bonds, with 15 categories, ranging from AAA (highest) to D
(lowest). Ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating categories.
If Standard and Poor's doesn't rate a security, then Moody's rating is used.
RiverSource rates a security using an internal rating system when Moody's
doesn't provide a rating.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Even previously resilient emerging market currencies weakened in the face of
heightened financial market volatility, slower economic growth in the developed
market nations and reduced capital inflows. The speed and intensity of the
collapse in commodity prices during the latter months of the annual period gave
several resource-rich emerging market nations a significant trade shock. The
strengthening U.S. dollar accelerated this commodity price correction. Emerging
market bonds suffered most near the end of the period, with October marking the
second worst monthly performance in the sector's history. Even so, it is
important to note that the emerging markets have suffered what can only be
considered collateral damage, as the epicenter of the financial crisis is in the
U.S. and Europe.
Emerging market corporate bonds and state-owned corporate bonds detracted from
the Fund's performance the most. Prices of these corporate bonds declined
dramatically, as investors' appetite for riskier less liquid assets evaporated.
Corporate bonds in energy-related sectors were hit particularly hard. Also,
positions in Mexican corporate bonds with large derivative positions detracted
from performance. (Derivative instruments are contracts that have values based
on the performance of an underlying investment.) These derivative positions
increased the bonds' liabilities when the Mexican peso depreciated in September
and October.
Exposure to local currencies also detracted from Fund performance, as several
emerging market currencies depreciated against the U.S. dollar, especially in
September and October. Fund holdings of bonds denominated in the Brazilian real
and the Mexican peso hurt performance the most.
Country selection produced mixed results. Exposure to oil exporters, such as
Venezuela and Russia, hurt, as the price of crude oil declined dramatically.
However, overweight exposure to select higher quality bonds of Latin American
nations, such as Peru and Colombia, boosted the Fund's results. The Fund's
holdings of assets with average yields higher than the J.P. Morgan EMBI-Global
also contributed to relative results.
CHANGES TO THE FUND'S PORTFOLIO
We significantly reduced the portfolio's exposure to corporate bonds during the
annual period. We also gradually reduced the portfolio's foreign currency
exposure, as these currencies weakened overall relative
- --------------------------------------------------------------------------------
8 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
to the U.S. dollar. We deployed the proceeds from these sales into cash and cash
equivalents.
The Fund had its most significant allocations in the bond markets of Colombia,
Peru and Indonesia. Conversely, the Fund had its most modest exposures in the
bond markets of Russia, the Philippines and Mexico.
OUR FUTURE STRATEGY
We believe that recent weakness in emerging market debt is likely to continue
while uncertainties about U.S. and global financial systems persist. Indeed, the
global financial crisis is evolving into a potentially deep global recession
that could continue to depress commodity prices and demand for emerging market
exports. Nonetheless, markets will begin to improve before economic statistics
demonstrate that the worst of the recession is behind us, and we believe the
market already has discounted a significant amount of bad news.
We do not expect to see a sovereign default crisis in the emerging markets, as
many of the vulnerabilities that triggered past crises are less of an issue
today. Most emerging market nations have lower debt loads, lower budget
deficits, healthier account balances and lower reliance on international capital
than in years past. There are some emerging market governments that are
vulnerable. But they are, we believe, relatively few in number and small in
size. Thus, we do not anticipate these governments igniting an emerging market-
focused crisis like those we have seen before. That said, there are some real
concerns regarding corporate debt exposure in some emerging market countries,
which led to our reduction of the Fund's holdings in corporate bonds during the
annual period.
In short, we are seeking to use the Fund's cash position to buy distressed
assets of those emerging market nations that went into the global financial
crisis with fundamentally sound economies.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
For the near term, we intend to look for opportunities to buy sovereign bonds at
attractive prices in those emerging markets that we believe have declined
unjustifiably during the current financial crisis. In general, these are
countries without large financing needs that maintain strong internal and
external balance sheets and have low budget deficits. In short, we are seeking
to use the Fund's cash position to buy distressed assets of those emerging
market nations that went into the global financial crisis with fundamentally
sound economies.
As always, we continue to monitor several important factors. Among them are the
creditworthiness of each country, the strength of a country's economic policies
and the soundness of its fundamentals. Using our top-down investment approach,
we intend to continually re-evaluate these factors as we seek to identify
individual securities that present attractive value opportunities.
(PHOTO - NICOLAS PIFER, CFA(R))
Nic Pifer, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
10 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Emerging Markets Bond Fund Class A shares (from
2/16/06 to 10/31/08)* as compared to the performance of two widely cited
performance indices, the J.P. Morgan Emerging Markets Bond Index-Global and the
Lipper Emerging Markets Debt Funds Index. In comparing the Fund's Class A shares
to these indices, you should take into account the fact that the Fund's
performance reflects the maximum sales charge of 4.75%, while such charges are
not reflected in the performance of the indices. Returns for the Fund include
the reinvestment of any distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
* Fund data is from Feb. 16, 2006. J.P. Morgan EMBI-Global and Lipper peer group
data is from March 1, 2006.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
SINCE
1 YEAR INCEPTION(3)
RIVERSOURCE EMERGING MARKETS BOND FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $6,815 $7,886
- --------------------------------------------------------------------------
Average annual total return -31.85% -8.41%
- --------------------------------------------------------------------------
J.P. MORGAN EMBI-GLOBAL(1)
Cumulative value of $10,000 $8,087 $9,106
- --------------------------------------------------------------------------
Average annual total return -19.13% -2.65%
- --------------------------------------------------------------------------
LIPPER EMERGING MARKETS DEBT FUNDS INDEX(2)
Cumulative value of $10,000 $7,569 $8,675
- --------------------------------------------------------------------------
Average annual total return -24.31% -5.19%
- --------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
12 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE EMERGING MARKETS BOND
FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE EMERGING
MARKETS BOND
FUND CLASS LIPPER EMERGING
A (INCLUDES J.P. MORGAN MARKETS DEBT
SALES CHARGE) EMBI_GLOBAL(1) FUNDS INDEX(2)
-------------------- -------------- ---------------
3/1/06 $ 9,525 $ 10,000 $ 10,000
4/30/06 9,446 9,802 9,864
10/31/06 10,025 10,420 10,434
4/30/07 10,762 10,971 11,154
10/31/07 11,021 11,260 11,461
4/30/08 10,987 11,474 11,428
10/31/08 7,886 9,106 8,675
</Table>
(1) The J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-
Global), an unmanaged index, is based on U.S. dollar-denominated debt
instruments issued by emerging market sovereign and quasi-sovereign
entities, such as Brady bonds, Eurobonds and loans. The index reflects
reinvestment of all distributions and changes in market prices.
(2) The Lipper Emerging Markets Debt Funds Index includes the 10 largest
emerging markets debt funds tracked by Lipper Inc. The index's returns
include reinvested dividends.
(3) Fund data is from Feb. 16, 2006. J.P. Morgan EMBI-Global and Lipper peer
group data is from March 1, 2006.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 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 EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008 OCT. 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 717.80 $ 6.06(c) 1.40%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.15 $ 7.12(c) 1.40%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 715.60 $ 9.38(c) 2.17%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.27 $11.02(c) 2.17%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 715.30 $ 9.34(c) 2.16%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.32 $10.97(c) 2.16%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 719.50 $ 3.90(c) .90%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.67 $ 4.58(c) .90%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 719.10 $ 5.20(c) 1.20%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.16 $ 6.11(c) 1.20%
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 718.60 $ 5.80(c) 1.34%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.45 $ 6.82(c) 1.34%
- ------------------------------------------------------------------------------------------
</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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2008: -28.22%
for Class A, -28.44% for Class B, -28.47% for Class C, -28.05% for Class I,
-28.09% for Class R4 and -28.14% for Class W.
(c) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board, such that net
expenses (excluding fees and expenses of acquired funds), will not exceed
1.27% for Class A, 2.04% for Class B, 2.03% for Class C, 0.85% for Class I,
1.15% for Class R4 and 1.30% for Class W. Any amounts waived will not be
reimbursed by the Fund. This change was effective Nov. 1, 2008. If this
change had been in place for the entire six month period ended Oct. 31,
2008, the actual expenses paid would have been $5.50 for Class A, $8.82 for
Class B, $8.78 for Class C, $3.68 for Class I, $4.98 for Class R4 and $5.63
for Class W; the hypothetical expenses paid would have been $6.46 for Class
A, $10.36 for Class B, $10.31 for Class C, $4.33 for Class I, $5.85 for
Class R4 and $6.61 for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (81.4%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (1.0%)
Banco Hipotecario
Sr Unsecured
04-27-16 9.75% 975,000(d) $292,500
Industrias Metalurgicas Pescarmona
Sr Unsecured
10-22-14 11.25 1,750,000(d) 735,000
Republic of Argentina
09-12-13 7.00 1,000,000 220,000
Republic of Argentina
Sr Unsecured
12-15-35 0.00 12,950,000(b) 518,000
----------
Total 1,765,500
- ------------------------------------------------------------------------------------------------
BRAZIL (14.3%)
Banco Nacional de Desenvolvimento Economico e Social
Sr Unsecured
06-16-18 6.37 6,350,000(d) 5,016,500
Bertin Ltda
Sr Unsecured
10-05-16 10.25 580,000(d) 261,000
Federative Republic of Brazil
01-20-34 8.25 1,200,000 1,164,000
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 10,300,000 9,295,749
10-14-19 8.88 4,938,000 5,007,132
Marfrig Overseas
11-16-16 9.63 1,130,000(d) 542,400
Morgan Stanley
(Brazilian Real) Sr Unsecured
05-03-17 10.09 4,850,000(d) 1,258,573
Nota do Tesouro Nacional
(Brazilian Real) Series F
07-01-10 10.00 419,600 1,874,703
01-01-12 10.00 320,000 1,329,388
----------
Total 25,749,445
- ------------------------------------------------------------------------------------------------
CAYMAN ISLANDS (1.7%)
EEB Intl
10-31-14 8.75 550,000(d) 550,000
Peru Enhanced Pass-Thru
Sr Secured Zero Coupon
05-31-18 5.20 3,528,090(d,g) 1,764,045
TGI Intl
10-03-17 9.50 900,000(d) 693,000
----------
Total 3,007,045
- ------------------------------------------------------------------------------------------------
COLOMBIA (3.9%)
Republic of Colombia
01-27-17 7.38 1,200,000 1,080,000
09-18-37 7.38 5,150,000 4,222,999
Republic of Colombia
(Colombian Peso)
10-22-15 12.00 2,918,000,000 1,130,739
06-28-27 9.85 966,000,000 299,529
Santa Fe de Bogota
(Colombian Peso) Sr Unsecured
07-26-28 9.75 1,377,000,000(d) 394,662
----------
Total 7,127,929
- ------------------------------------------------------------------------------------------------
DOMINICAN REPUBLIC (1.0%)
Aes Dominicana Energia Finance
12-13-15 11.00 1,050,000(d) 525,000
Cerveceria Nacional Dominicana
03-27-12 16.00 1,450,000(d) 1,065,605
EGE Haina Finance
04-26-17 9.50 450,000(d) 225,000
----------
Total 1,815,605
- ------------------------------------------------------------------------------------------------
EL SALVADOR (1.2%)
Republic of El Salvador
06-15-35 7.65 4,010,000(d) 2,125,300
- ------------------------------------------------------------------------------------------------
GABON (0.4%)
Republic of Gabonese
12-12-17 8.20 1,200,000(d) 780,000
- ------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
INDONESIA (6.5%)
Govt of Indonesia
(Indonesian Rupiah)
10-15-14 11.00% 6,000,000,000 $425,032
07-15-17 10.00 20,000,000,000 1,218,183
09-15-19 11.50 9,000,000,000 573,562
07-15-22 10.25 25,200,000,000 1,407,568
Republic of Indonesia
Sr Unsecured
01-17-18 6.88 2,350,000(d) 1,598,000
10-12-35 8.50 3,400,000(d) 2,278,000
02-17-37 6.63 1,950,000(d) 916,500
01-17-38 7.75 5,000,000(d) 3,250,000
----------
Total 11,666,845
- ------------------------------------------------------------------------------------------------
IRAQ (0.3%)
Republic of Iraq
01-15-28 5.80 1,200,000(d) 600,000
- ------------------------------------------------------------------------------------------------
KAZAKHSTAN (1.7%)
Kazkommerts Intl
11-03-15 8.00 450,000(d) 193,500
KazMunaiGaz Finance
07-02-18 9.13 3,395,000(d) 2,235,446
Temir Capital for JSC TemirBank
Bank Guaranteed
05-21-14 9.50 850,000(d) 665,396
----------
Total 3,094,342
- ------------------------------------------------------------------------------------------------
LUXEMBOURG (3.7%)
Gaz Capital
Secured
11-22-16 6.21 4,150,000(d) 2,573,000
08-16-37 7.29 3,450,000(d) 1,828,500
MHP
Sr Secured
11-30-11 10.25 1,250,000(d) 987,500
TNK-BP Finance
07-18-16 7.50 400,000(d) 204,500
03-20-17 6.63 800,000(d) 377,000
03-13-18 7.88 1,525,000(d) 686,250
----------
Total 6,656,750
- ------------------------------------------------------------------------------------------------
MEXICO (10.1%)
Controladora Comerical Mexicana
(Mexican Peso)
03-30-27 8.70 31,700,000(d,j) 871,525
Mexican Fixed Rate Bonds
(Mexican Peso)
12-20-12 9.00 11,600,000 920,978
12-18-14 9.50 29,500,000 2,375,213
Pemex Project Funding Master Trust
03-01-18 5.75 7,900,000(d) 6,162,000
06-15-35 6.63 6,104,000 4,547,425
06-15-38 6.63 1,500,000(d) 1,087,500
United Mexican States
12-30-19 8.13 1,000,000 1,015,000
Vitro
02-01-17 9.13 4,120,000 1,287,500
----------
Total 18,267,141
- ------------------------------------------------------------------------------------------------
NETHERLANDS (1.2%)
Intergas Finance
05-14-17 6.38 300,000(d) 210,578
Majapahit Holding
10-17-16 7.75 1,600,000(d) 1,040,000
06-28-17 7.25 1,450,000(d) 797,500
06-29-37 7.88 200,000(d) 90,000
----------
Total 2,138,078
- ------------------------------------------------------------------------------------------------
PANAMA (1.3%)
Republic of Panama
Sr Unsecured
09-30-27 8.88 500,000 465,000
01-26-36 6.70 2,500,000 1,950,000
----------
Total 2,415,000
- ------------------------------------------------------------------------------------------------
PERU (3.4%)
Banco de Credito del Peru
Sub Nts
11-07-21 6.95 800,000(d,f) 513,197
Republic of Peru
Sr Unsecured
02-06-15 9.88 1,800,000 1,881,000
03-14-37 6.55 5,500,000 3,795,000
----------
Total 6,189,197
- ------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
PHILIPPINE ISLANDS (3.3%)
Natl Power
11-02-16 6.88% 900,000(d) $697,188
Republic of Philippines
01-15-16 8.00 1,950,000 1,813,500
01-15-19 9.88 750,000 806,250
10-21-24 9.50 921,000 884,160
01-14-31 7.75 1,906,000 1,753,520
----------
Total 5,954,618
- ------------------------------------------------------------------------------------------------
RUSSIA (5.7%)
Alfa MTN Markets/ABH Financial
06-25-12 8.20 850,000(d) 399,500
Gazstream
07-22-13 5.63 602,066(d) 499,715
RSHB Capital for Russian Agricultural Bank
Secured
05-29-18 7.75 500,000(d) 315,000
Russian Federation
03-31-30 7.50 6,527,780(d) 5,548,613
Russian Standard Finance
Sr Secured
05-05-11 8.63 1,350,000(d) 445,500
TransCapitalInvest for Transneft
Secured
08-07-18 8.70 5,100,000(d) 3,009,000
----------
Total 10,217,328
- ------------------------------------------------------------------------------------------------
TURKEY (9.1%)
Republic of Turkey
03-15-15 7.25 2,000,000 1,640,000
04-03-18 6.75 5,000,000 3,700,000
03-11-19 7.00 3,100,000 2,201,000
06-05-20 7.00 3,000,000 2,280,000
02-05-25 7.38 400,000 312,000
02-14-34 8.00 720,000 568,800
03-17-36 6.88 7,900,000 5,372,000
03-05-38 7.25 600,000 414,000
----------
Total 16,487,800
- ------------------------------------------------------------------------------------------------
UKRAINE (0.3%)
Credit Suisse First Boston Intl for Ex-Im Bank of Ukraine
Secured
02-09-16 8.40 300,000 59,700
Govt of Ukraine
06-26-12 6.39 1,050,000(d) 525,000
----------
Total 584,700
- ------------------------------------------------------------------------------------------------
UNITED KINGDOM (0.9%)
UK SPV Credit Finance for JSC Commercial Bank Privatbank
Secured
02-06-12 8.00 700,000(d) 664,308
Vedanta Resources
Sr Unsecured
07-18-18 9.50 2,300,000(d) 1,035,000
----------
Total 1,699,308
- ------------------------------------------------------------------------------------------------
URUGUAY (2.5%)
Republic of Uruguay
05-17-17 9.25 2,000,000 1,680,000
Republic of Uruguay
Pay-in-kind
01-15-33 7.88 500(e) 310
Republica Orient Uruguay
(Uruguay Peso)
04-05-27 4.25 77,196,672(i) 1,717,134
06-26-37 3.70 15,756,049(i) 261,136
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 1,383,939 830,363
----------
Total 4,488,943
- ------------------------------------------------------------------------------------------------
VENEZUELA (7.9%)
Petroleos de Venezuela
04-12-17 5.25 9,000,000 3,420,000
04-12-27 5.38 1,000,000 355,000
Republic of Venezuela
02-26-16 5.75 5,730,000 2,635,800
12-09-20 6.00 200,000 83,000
05-07-23 9.00 9,750,000 4,655,625
05-07-28 9.25 800,000 368,000
03-31-38 7.00 2,000,000 820,000
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
VENEZUELA (CONT.)
Republic of Venezuela
Sr Unsecured
10-08-14 8.50% 3,294,000 $1,844,640
01-13-34 9.38 231,000 117,810
----------
Total 14,299,875
- ------------------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $215,582,469) $147,130,749
- ------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (18.8%)
ISSUER SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 1.60% 34,012,258(h) $34,012,258
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $34,012,258) $34,012,258
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $249,594,727)(k) $181,143,007
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT OCT. 31, 2008
<Table>
<Caption>
UNAMORTIZED
REFERENCED BUY/SELL PAY/RECEIVE EXPIRATION NOTIONAL PREMIUM UNREALIZED
COUNTERPARTY ENTITY PROTECTION FIXED RATE DATE AMOUNT (PAID) RECEIVED DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------------------
Merril Lynch CDX Emerging Sell 2.65% June 20, 2013 $12,000,000 $(59,919) $(1,602,045)
Intl Markets Index
- -----------------------------------------------------------------------------------------------------------------------------
Barclays CDX Emerging Sell 2.65 June 20, 2013 3,000,000 -- (400,511)
Markets Index
- -----------------------------------------------------------------------------------------------------------------------------
Total $(2,002,556)
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
INTEREST RATE SWAP CONTRACTS OUTSTANDING AT OCT. 31, 2008
<Table>
<Caption>
FUND
FLOATING PAY/RECEIVE FIXED EXPIRATION NOTIONAL UNREALIZED
COUNTERPARTY RATE INDEX FLOATING RATE RATE DATE AMOUNT APPRECIATION
- ---------------------------------------------------------------------------------------------------------
Credit Suisse Intl 3-month USD LIBOR Pay 4.1540% Aug. 4, 2013 $2,000,000 $38,117
- ---------------------------------------------------------------------------------------------------------
Merril Lynch Intl 3-month USD LIBOR Pay 4.1538 Aug. 12, 2013 10,000,000 185,405
- ---------------------------------------------------------------------------------------------------------
Merril Lynch Intl 3-month USD LIBOR Pay 4.0190 Sept. 2, 2013 3,000,000 33,584
- ---------------------------------------------------------------------------------------------------------
Total $257,106
- ---------------------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) This is a variable rate security that entitles holders to receive only
interest payments. Interest is paid annually. The interest payment is based
on the Gross Domestic Product (GDP) level of the previous year for the
respective country. To the extent that the previous year's GDP exceeds the
'base case GDP', an interest payment is made equal to 0.012225 of the
difference.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At Oct. 31,
2008, the value of these securities amounted to $58,533,301 or 32.4% of net
assets.
(e) Pay-in-kind securities are securities in which the issuer makes interest or
dividend payments in cash or in additional securities. The securities
usually have the same terms as the original holdings.
(f) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
2008.
(g) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(h) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(i) 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.
(j) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(k) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $250,025,094 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $--
Unrealized depreciation (68,882,087)
------------------------------------------------------------
Net unrealized depreciation $(68,882,087)
------------------------------------------------------------
</Table>
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
20 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $215,582,469) $147,130,749
Affiliated money market fund (identified cost $34,012,258) 34,012,258
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $249,594,727) 181,143,007
Foreign currency holdings (identified cost $70,507) 58,901
Capital shares receivable 617,194
Premiums paid on outstanding credit default swap contracts 59,919
Dividends and accrued interest receivable 3,667,009
Unrealized appreciation on swap contracts 257,106
Cash deposits and collateral held 3,520,000
- -------------------------------------------------------------------------------
Total assets 189,323,136
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 1,590,438
Payable for investment securities purchased 4,551,266
Unrealized depreciation on swap contracts 2,002,556
Accrued investment management services fees 3,368
Accrued distribution fees 809
Accrued transfer agency fees 602
Accrued administrative services fees 374
Other accrued expenses 70,595
Collateral and deposits payable 380,000
- -------------------------------------------------------------------------------
Total liabilities 8,600,008
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $180,723,128
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 256,347
Additional paid-in capital 251,547,092
Undistributed net investment income 2,028,313
Accumulated net realized gain (loss) (2,824,203)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (70,284,421)
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $180,723,128
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $ 9,670,545 1,370,967 $7.05(1)
Class B $ 1,178,353 167,178 $7.05
Class C $ 190,923 27,123 $7.04
Class I $ 65,282,310 9,254,282 $7.05
Class R4 $ 14,966 2,122 $7.05
Class W $104,386,031 14,813,074 $7.05
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $7.40. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 4.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 21
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 12,320,522
Income distributions from affiliated money market fund 330,537
Less foreign taxes withheld (50,269)
- -------------------------------------------------------------------------------
Total income 12,600,790
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 1,182,004
Distribution fees
Class A 21,289
Class B 14,432
Class C 2,267
Class W 125,465
Transfer agency fees
Class A 20,957
Class B 3,829
Class C 581
Class R4 10
Class W 100,372
Administrative services fees 131,334
Plan administration services fees -- Class R4 48
Compensation of board members 3,835
Custodian fees 35,370
Printing and postage 24,980
Registration fees 65,187
Professional fees 35,070
Other 9,369
- -------------------------------------------------------------------------------
Total expenses 1,776,399
Expenses waived/reimbursed by the Investment Manager and its
affiliates (1,437)
Earnings and bank fee credits on cash balances (250)
- -------------------------------------------------------------------------------
Total net expenses 1,774,712
- -------------------------------------------------------------------------------
Investment income (loss) -- net 10,826,078
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (1,784,409)
Foreign currency transactions (52,384)
Swap transactions (60,792)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,897,585)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (75,049,499)
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (76,947,084)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(66,121,006)
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 10,826,078 $ 6,058,237
Net realized gain (loss) on investments (1,897,585) 1,803,817
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (75,049,499) 2,593,776
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (66,121,006) 10,455,830
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (513,077) (501,538)
Class B (77,784) (32,727)
Class C (12,305) (4,490)
Class I (6,894,152) (4,198,103)
Class R4 (1,280) (838)
Class W (2,557,686) (1,049,016)
Net realized gain
Class A (47,559) (18,393)
Class B (11,052) (880)
Class C (1,687) (83)
Class I (1,321,379) (59,853)
Class R4 (167) (22)
Class W (304,713) (8)
- ---------------------------------------------------------------------------------------------
Total distributions (11,742,841) (5,865,951)
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 11,877,937 $ 3,695,695
Class B shares 1,305,864 934,159
Class C shares 219,661 131,955
Class I shares 30,579,666 105,338,850
Class R4 shares 7,982 6,989
Class W shares 146,655,956 73,570,698
Reinvestment of distributions at net asset value
Class A shares 534,907 167,200
Class B shares 77,569 28,622
Class C shares 11,620 3,686
Class I shares 8,214,784 4,257,340
Class R4 shares 692 273
Class W shares 2,862,056 1,048,760
Payments for redemptions
Class A shares (3,149,341) (11,436,832)
Class B shares (774,759) (358,088)
Class C shares (117,014) (7,430)
Class I shares (89,988,110) (13,150,244)
Class R4 shares (2,694) (6,001)
Class W shares (40,766,868) (37,405,273)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 67,549,908 126,820,359
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (10,313,939) 131,410,238
Net assets at beginning of year 191,037,067 59,626,829
- ---------------------------------------------------------------------------------------------
Net assets at end of year $180,723,128 $191,037,067
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 2,028,313 $ 402,006
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.57 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .61(c) .59(c) .33
Net gains (losses) (both realized and
unrealized) (3.43) .39 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.82) .98 .51
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.61) (.55) (.33)
Distributions from realized gains (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.70) (.57) (.33)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.05 $10.57 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $10 $5 $12
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.41% 1.33% 1.81%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.40% 1.33% 1.39%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.31% 5.61% 5.20%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (28.44%) 9.94% 5.25%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.55 $10.16 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .55(c) .52(c) .28
Net gains (losses) (both realized and
unrealized) (3.42) .37 .19
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.87) .89 .47
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.54) (.48) (.28)
Distributions from realized gains (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.63) (.50) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.05 $10.55 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $1 $1
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.19% 2.13% 2.62%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.17% 2.13% 2.20%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 5.61% 4.90% 4.51%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (28.85%) 8.94% 4.80%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.54 $10.15 $9.97
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .55(c) .53(c) .28
Net gains (losses) (both realized and
unrealized) (3.42) .36 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.87) .89 .46
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.54) (.48) (.28)
Distributions from realized gains (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.63) (.50) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.04 $10.54 $10.15
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.18% 2.13% 2.61%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 2.16% 2.13% 2.19%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 5.64% 5.00% 4.46%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (28.88%) 8.94% 4.75%(j)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.57 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .69(c) .65(c) .35
Net gains (losses) (both realized and
unrealized) (3.46) .38 .17
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.77) 1.03 .52
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.66) (.60) (.34)
Distributions from realized gains (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.75) (.62) (.34)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.05 $10.57 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $65 $147 $47
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .91% .93% 1.52%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .91% .93% 1.10%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.89% 6.14% 5.70%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return (28.08%) 10.38% 5.44%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006(b)
Net asset value, beginning of period $10.56 $10.16 $9.98
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .67(c) .60(c) .34
Net gains (losses) (both realized and
unrealized) (3.43) .39 .18
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.76) .99 .52
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.66) (.57) (.34)
Distributions from realized gains (.09) (.02) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.75) (.59) (.34)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.05 $10.56 $10.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.22% 1.24% 1.67%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .97% 1.24% 1.25%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.82% 5.75% 5.37%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41% 32%
- --------------------------------------------------------------------------------------------------------------
Total return (27.98%) 9.97% 5.36%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Feb. 16, 2006 (when shares became publicly available) to
Oct. 31, 2006.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $10.55 $10.24
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .56 .57
Net gains (losses) (both realized and
unrealized) (3.36) .28
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.80) .85
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.61) (.52)
Distributions from realized gains (.09) (.02)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.70) (.54)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.05 $10.55
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $104 $38
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.35% 1.33%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.35% 1.33%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6.08% 5.86%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 82% 41%
- --------------------------------------------------------------------------------------------------------------
Total return (28.29%) 8.49%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Emerging Markets Bond Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a non-diversified, open-end management investment company.
RiverSource Global Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the Board
of Directors (the Board). The Fund invests primarily in fixed income securities
of emerging market issuers.
The Fund offers Class A, Class B, Class C, Class I, Class R4 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares are sold without a front-end sales charge or CDSC
and are offered to qualifying institutional investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares. At Oct. 31, 2008, the Investment Manager and the RiverSource
affiliated funds-of-funds owned approximately 36% of the total outstanding Fund
shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange. Swap transactions are valued through an authorized pricing
service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
- --------------------------------------------------------------------------------
32 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At Oct. 31, 2008, the Fund had no outstanding forward-commitments.
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment. The Fund records
the incremental difference between the forward purchase and sale of each forward
roll as realized gain or loss. Losses may arise due to changes in the value of
the securities or if a counterparty does not perform under the terms of the
agreement. If a counterparty files for bankruptcy or becomes insolvent, the
Fund's right to repurchase or sell securities may be limited. The Fund did not
enter into any mortgage dollar roll transactions during the year ended Oct. 31,
2008.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the Fund may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of being unable to enter into a closing transaction
if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
transaction expires or closes. When an option is exercised, the proceeds on
sales for a written call option, the purchase cost for a written put option or
the cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid. At Oct. 31, 2008, and for the year then
ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings were entirely
comprised of Mexican pesos.
The Fund may enter into forward foreign currency contracts to produce
incremental earnings, for operational purposes, or to protect against adverse
exchange rate fluctuation. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined using foreign currency
- --------------------------------------------------------------------------------
34 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
exchange rates from an independent pricing service. The Fund is subject to the
credit risk that the counterparty will not complete its contract obligations. At
Oct. 31, 2008, the Fund had no outstanding forward foreign currency contracts.
CREDIT DEFAULT SWAP TRANSACTIONS
The Fund may enter into credit default swap contracts to increase or decrease
its credit exposure to an issuer, obligation, portfolio, or index of issuers or
obligations, to hedge its exposure on an obligation that it owns or in lieu of
selling such obligations. As the purchaser of a credit default swap contract,
the Fund purchases protection by paying a periodic interest rate on the notional
amount to the counterparty. The interest amount is accrued daily as a component
of unrealized appreciation (depreciation) and is recorded as a realized loss
upon payment. If the credit event specified in the contract occurs, the Fund
will be required to deliver either the referenced obligation or an equivalent
cash amount to the protection seller and in exchange the Fund will receive the
notional amount from the seller. The difference between the value of the
obligation delivered and the notional amount received will be recorded as a
realized gain (loss). As the seller of a credit default swap contract, the Fund
sells protection to a buyer and will generally receive a periodic interest rate
on the notional amount. The interest amount is accrued daily as a component of
unrealized appreciation (depreciation) and is recorded as a realized gain upon
receipt of the payment. If the credit event specified in the contract occurs,
the Fund will receive the referenced obligation or an equivalent cash amount in
exchange for the payment of the notional amount to the protection buyer. The
difference between the value of the obligation received and the notional amount
paid will be recorded as a realized gain (loss). As a protection seller, the
maximum amount of the payment that may be made by the Fund may equal the
notional amount (shown in the Credit Default Swap Contracts Outstanding table
following the Portfolio of Investments), at par, of the underlying index or
security as a result of the related credit event.
The notional amounts of credit default swap contracts are not recorded in the
financial statements. Any premium paid or received by the Fund upon entering
into a credit default swap contract is recorded as an asset or liability and
amortized daily as a component of realized gain (loss) on the Statement of
Operations. Credit default swap contracts are valued daily, and the change in
value is recorded as unrealized appreciation (depreciation) until the
termination of the swap, at which time a realized gain (loss) is recorded.
Credit default swap contracts can involve greater risks than if a fund had
invested in the reference obligation directly since, in addition to general
market risks, credit default swaps are subject to counterparty credit risk,
leverage risk, hedging risk, correlation risk and liquidity risk. The Fund will
enter into credit default
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
swap agreements only with counterparties that meet certain standards of
creditworthiness.
INTEREST RATE SWAP TRANSACTIONS
The Fund may enter into interest rate swap agreements to produce incremental
earnings or to gain exposure to or protect themselves from market changes.
Interest rate swaps are agreements between two parties that involve the exchange
of one type of interest rate for another type of interest rate cash flow on
specified dates in the future, based on a predetermined, specified notional
amount. Certain interest rate swaps are considered forward-starting; whereby the
accrual for the exchange of cash flows does not begin until a specified date in
the future (the "effective date"). The net cash flow for a standard interest
rate swap transaction is generally the difference between a floating market
interest rate versus a fixed interest rate. The Fund may employ interest rate
swaps to synthetically add or subtract principal exposure to the municipal
market.
Interest rate swaps are valued daily and unrealized appreciation (depreciation)
is recorded. Certain interest rate swaps may accrue periodic interest on a daily
basis as a component of unrealized appreciation (depreciation); the Fund will
realize a gain or loss upon the payment or receipt of accrued interest. The Fund
will realize a gain or a loss when the interest rate swap is terminated.
Risks of entering into an interest rate swap include a lack of correlation
between swaps and the portfolio of municipal bonds the swaps are designed to
hedge or replicate. A lack of correlation may cause the interest rate swap to
experience adverse changes in value relative to expectations. In addition,
interest rate swaps are subject to the risk of default of a counterparty, and
the risk of adverse movements in market interest rates relative to the interest
rate swap positions entered.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
- --------------------------------------------------------------------------------
36 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 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.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $856,513
and accumulated net realized loss has been increased by $856,513.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007*
- ----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income..................... $ 543,048 $ 519,931
Long-term capital gain.............. 17,588 --
CLASS B
Distributions paid from:
Ordinary income..................... 84,749 33,607
Long-term capital gain.............. 4,087 --
CLASS C
Distributions paid from:
Ordinary income..................... 13,368 4,573
Long-term capital gain.............. 624 --
CLASS I
Distributions paid from:
Ordinary income..................... 7,726,866 4,257,956
Long-term capital gain.............. 488,665 --
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007*
- ----------------------------------------------------------------
CLASS R4
Distributions paid from:
Ordinary income..................... $ 1,385 $ 860
Long-term capital gain.............. 62 --
CLASS W
Distributions paid from:
Ordinary income..................... 2,749,711 1,049,024
Long-term capital gain.............. 112,688 --
</Table>
* Class W is for the period from Dec. 1, 2006 (inception date) to Oct. 31,
2007.
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 291,177
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $ (2,399,388)
Unrealized appreciation (depreciation)......... $(68,972,100)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
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. In addition, FASB
Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS 133-1 and FIN 45-4) was
issued on Sept. 12, 2008 which amends SFAS 133 and FASB Interpretation No. 45
and provides additional clarification and disclosure related to the credit risk
of derivative instruments and guarantees. Funds are required to provide enhanced
disclosures about (a) how and why a fund uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations, (c) how derivative instruments and related
hedged items affect a fund's financial position, financial performance, and cash
flows and (d) the current status of the payment/ performance risk of the credit
derivative. SFAS 161 and FSP FAS 133-1 and FIN 45-4 are effective for financial
statements issued for periods beginning after Nov. 15, 2008. As of Oct. 31,
2008, management does not believe the adoption of SFAS 161 and FSP FAS 133-1 and
FIN 45-4 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for
- --------------------------------------------------------------------------------
38 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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. The application of
SFAS 157 will be effective for the Fund's fiscal year beginning Nov. 1, 2008.
The adoption of SFAS 157 is not anticipated to have a material impact on the
Fund's financial statements; however, additional disclosures will be required
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.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, when
available, are reinvested in additional shares of the Fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income, if any, is recognized on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income, including amortization of premium, market discount and original
issue discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.52% annually as the Fund's assets increase. The management fee for the year
ended Oct. 31, 2008 was 0.72% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the year ended Oct. 31 2008, was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, other expenses paid to this company were $344.
COMPENSATION OF BOARD MEMBERS
Compensation of Board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
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 an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average
daily net assets attributable to Class B and Class C shares. For Class B and
Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses.
- --------------------------------------------------------------------------------
40 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $62,000 and $20,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$40,288 for Class A, $1,348 for Class B and $270 for Class C for the year ended
Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 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............................................. 1.40%
Class B............................................. 2.17
Class C............................................. 2.16
Class R4............................................ 0.97
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $1,135
Class B........................................... 212
Class C........................................... 42
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4............................................ $48
</Table>
Under an agreement which was effective until Oct. 31, 2008, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired funds*)
would not exceed the following percentage of the Fund's average daily net
assets:
<Table>
Class A............................................. 1.40%
Class B............................................. 2.17
Class C............................................. 2.16
Class I............................................. 0.95
Class R4............................................ 1.25
Class W............................................. 1.40
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Effective Nov. 1, 2008, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Oct. 31, 2009,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*) will not exceed the following
percentage of the Fund's average daily net assets:
<Table>
Class A............................................. 1.27%
Class B............................................. 2.04
Class C............................................. 2.03
Class I............................................. 0.85
Class R4............................................ 1.15
Class W............................................. 1.30
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $250 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $165,850,302 and $124,015,185, respectively, for the
year ended Oct. 31, 2008. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
42 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 1,206,737 54,556 (332,734) 928,559
Class B 131,117 7,815 (80,424) 58,508
Class C 21,942 1,173 (12,061) 11,054
Class I 3,444,578 822,959 (8,936,995) (4,669,458)
Class R4 781 70 (264) 587
Class W 15,118,235 298,553 (4,196,818) 11,219,970
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 355,415 16,082 (1,076,628) (705,131)
Class B 90,068 2,759 (34,366) 58,461
Class C 12,620 355 (724) 12,251
Class I 10,129,478 409,766 (1,279,390) 9,259,854
Class R4 677 26 (583) 120
Class W* 7,065,923 101,109 (3,573,928) 3,593,104
- ----------------------------------------------------------------------------------
</Table>
* For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
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 $155,177,157 and $128,862,438, respectively, for the year
ended Oct. 31, 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 Oct. 31, 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. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
emergency purposes. The credit facility became effective on 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 year ended Oct. 31, 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. (JPMCB), 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
$2,399,388 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- --------------------------------------------------------------------------------
44 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
8. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
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
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
also agreed to retain an independent distribution consultant to assist in
developing a plan for distribution of all disgorgement and civil penalties
ordered by the SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG). In September 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
- --------------------------------------------------------------------------------
46 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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, Seligman and its 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. Seligman does not believe that the
foregoing legal action or other possible actions will have a material adverse
impact on Seligman or its clients, including the Seligman Funds and other
investment companies managed by it; however, there can be no assurance of this
or that these matters and any related publicity will 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.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
10. SUBSEQUENT EVENT
Effective Dec. 15, 2008, the Fund will pay custodian fees to JPMorgan Chase
Bank, N.A.
- --------------------------------------------------------------------------------
48 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE EMERGING MARKETS BOND FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Emerging Markets Bond Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2008, and the related statement of operations for the year
then ended, and the statements of changes in net assets and the financial
highlights for each of the two years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights of the Fund for the periods presented through October 31, 2006, were
audited by other auditors whose report dated December 20, 2006, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Emerging Markets Bond Fund of the RiverSource Global
Series, Inc. at October 31, 2008, the results of its operations for the year
then ended, and changes in its net assets and the financial highlights for each
of the two years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
50 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 0.00%
CAPITAL GAIN DISTRIBUTION -- the Fund designates $623,714 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 51
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
52 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 53
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
54 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 55
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
56 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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 EMERGING MARKETS BOND FUND -- 2008 ANNUAL REPORT 57
RIVERSOURCE EMERGING MARKETS BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6398 E (12/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GLOBAL BOND FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
RIVERSOURCE GLOBAL BOND FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH INCOME
AND GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 16
Statement of Assets and
Liabilities...................... 33
Statement of Operations............ 34
Statements of Changes in Net
Assets........................... 35
Financial Highlights............... 36
Notes to Financial Statements...... 42
Report of Independent Registered
Public Accounting Firm........... 59
Federal Income Tax Information..... 61
Board Members and Officers......... 62
Proxy Voting....................... 67
</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.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Global Bond Fund (the Fund) Class A shares declined 7.66%
(excluding sales charge) for the 12 months ended October 31, 2008.
> The Fund underperformed its benchmark, the Barclays Capital Global Aggregate
Index (formerly known as Lehman Brothers Global Aggregate Index), which fell
2.57%.
> The Fund outperformed its peer group, the Lipper Global Income Funds Index,
which decreased 9.48% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
RiverSource Global Bond Fund
Class A (excluding sales
charge) -7.66% 1.80% 2.90% 3.82%
- ---------------------------------------------------------------------
Barclays Capital Global Aggregate
Index (unmanaged) -2.57% 3.93% 4.10% 4.39%
- ---------------------------------------------------------------------
Lipper Global Income Funds Index -9.48% 1.14% 2.66% 3.90%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
DURATION
SHORT INT. LONG
X X HIGH
MEDIUM QUALITY
LOW
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
<Table>
Weighted average life(1) 7.1 years
- --------------------------------------
Effective duration(2) 5.3 years
- --------------------------------------
Weighted average bond
rating(3) AA
- --------------------------------------
</Table>
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total Net expenses(a)
- ----------------------------------------
Class A 1.32% 1.25%
- ----------------------------------------
Class B 2.09% 2.01%
- ----------------------------------------
Class C 2.08% 2.01%
- ----------------------------------------
Class I 0.85% 0.82%
- ----------------------------------------
Class R4 1.14% 1.12%
- ----------------------------------------
Class W 1.30% 1.27%
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds) will not exceed 1.25% for
Class A, 2.01% for Class B, 2.01% for Class C, 0.82% for Class I, 1.12% for
Class R4 and 1.27% for Class W.
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into
consideration the possibility that the issuer may call the bond before its
maturity date.
(2) EFFECTIVE DURATION measures the sensitivity of a security's price to
parallel shifts in the yield curve (the graphical depiction of the levels of
interest rates from two years out to 30 years). Positive duration means that
as rates rise, the price decreases, and negative duration means that as
rates rise, the price increases.
(3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
underlying bonds in the portfolio.
There are risks associated with an investment in a bond funds, including credit
risk, interest rate risk, and prepayment and extension risk. See the Fund's
prospectus for information on these and other risks associated with the Fund. In
general, bond prices rise when interest rates fall and vice versa. This effect
is usually more pronounced for longer-term securities. Non-investment grade
securities, commonly called "high-yield" or "junk" bonds, generally have more
volatile prices and carry more risk to principal and income than investment
grade securities.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/20/89) -7.66% +1.80% +2.90% +3.82% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -8.28% +1.04% +2.12% +3.03% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -8.27% +1.00% +2.11% N/A +4.20%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) -7.30% +2.13% N/A N/A +2.53%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -7.19% +2.08% +3.14% +4.04% N/A
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -7.62% N/A N/A N/A -1.24%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/20/89) -12.01% +0.15% +1.90% +3.28% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -12.76% -0.21% +1.77% +3.03% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -9.16% +1.00% +2.11% N/A +4.20%
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/20/89) -0.67% +3.43% +3.96% +4.47% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -1.41% +2.64% +3.18% +3.68% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -1.34% +2.67% +3.21% N/A +5.02%
- ---------------------------------------------------------------------------
Class I (inception 3/4/04) -0.25% +3.78% N/A N/A +3.94%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -0.16% +3.72% +4.23% +4.70% N/A
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -0.62% N/A N/A N/A +2.00%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/20/89) -5.40% +1.78% +2.95% +3.93% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -6.22% +1.37% +2.82% +3.68% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -2.30% +2.67% +3.21% N/A +5.02%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 4.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are
available to institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
At Oct. 31, 2008, approximately 32% of the Fund's shares were owned in aggregate
by affiliated funds-of-funds managed by RiverSource Investments, LLC
(RiverSource). As a result of asset allocation decisions by RiverSource, it is
possible RiverSource Global Bond Fund may experience relatively large purchases
or redemptions from affiliated funds-of-funds (see page 53, Class I capital
share transactions for related activity during the most recent fiscal period).
RiverSource seeks to minimize the impact of these transactions by structuring
them over a reasonable period of time. RiverSource Global Bond Fund may
experience increased expenses as it buys and sells securities as a result of
purchases or redemptions by affiliated funds of funds. For more information on
the Fund's expenses, see the discussions beginning on pages 14 and 49.
Dear Shareholders,
RiverSource Global Bond Fund (the Fund) Class A shares declined 7.66% (excluding
sales charge) for the 12 months ended Oct. 31, 2008. The Fund underperformed its
benchmark, the Barclays Capital Global Aggregate Index (Barclays Global Index),
which fell 2.57%. However, the
SECTOR BREAKDOWN (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Asset-Backed 1.5%
- ------------------------------------------------
Commercial Mortgage-Backed 4.7%
- ------------------------------------------------
Consumer Discretionary 1.5%
- ------------------------------------------------
Consumer Staples 1.2%
- ------------------------------------------------
Energy 2.1%
- ------------------------------------------------
Financials 6.3%
- ------------------------------------------------
Foreign Government 52.8%
- ------------------------------------------------
Health Care 0.4%
- ------------------------------------------------
Industrials 1.4%
- ------------------------------------------------
Materials 0.5%
- ------------------------------------------------
Mortgage-Backed 11.8%
- ------------------------------------------------
Telecommunication 6.2%
- ------------------------------------------------
U.S. Government Obligations & Agencies 5.1%
- ------------------------------------------------
Utilities 3.4%
- ------------------------------------------------
Other(1) 1.1%
- ------------------------------------------------
</Table>
(1) Cash & Cash Equivalents
- --------------------------------------------------------------------------------
6 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Fund outperformed its peer group, the Lipper Global Income Funds Index, which
decreased 9.48% during the same period.
SIGNIFICANT PERFORMANCE FACTORS
Fund performance suffered from the rise in the U.S. dollar, which gained 8.80%
on a trade-weighted basis during the annual period. (As the value of the U.S.
dollar increases, the dollar value of foreign investments typically declines and
vice versa.) On average, the Fund had about 53% of its net assets exposed to
foreign currencies during the period.
High quality government bonds generally performed well during the period,
benefiting from repeated bouts of market turmoil and a deteriorating global
economy. However, the performance of most nongovernment bond sectors was
extremely poor. The Fund had exposure to these poorly performing sectors due to
its broad market style that emphasizes both government and nongovernment
securities.
In hindsight, we underestimated the duration and severity of the market turmoil
and its impact on the global economy. As a result, some of the decisions we made
had a negative effect on the Funds's performance including an underweight in the
Japanese yen during the first months of 2008.
Our views on the direction of interest rates and how we invested the Fund across
the maturity spectrum also detracted from performance. The Fund's global below-
benchmark interest rate exposure and its position at the short-term end of the
U.S. yield curve hurt performance. Sector
TOP TEN COUNTRIES (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
United States 36.1%
- ------------------------------------------------
Japan 12.8%
- ------------------------------------------------
Germany 8.6%
- ------------------------------------------------
United Kingdom 6.2%
- ------------------------------------------------
Netherlands 5.1%
- ------------------------------------------------
Canada 4.8%
- ------------------------------------------------
France 4.3%
- ------------------------------------------------
Italy 3.5%
- ------------------------------------------------
Spain 2.2%
- ------------------------------------------------
Australia 1.7%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
allocation and bond selection strategies had a somewhat negative effect on
performance as well. Detracting most notably from performance were the Fund's
investments in U.S. structured assets, such as commercial mortgage-backed
securities, and its modest allocation to emerging market and high yield bonds,
which dramatically underperformed higher quality bonds. One bright spot was
investment grade corporate bonds, where we added value mainly through a below-
benchmark allocation to financial issuers.
On the positive side, we added value to the Fund's relative performance through
country selection. Our active positions relative to the Barclays Global Index
were not large over the period, especially in the latter half. However market
volatility was so intense that even small positions translated into large
performance variations at times.
Relative to the Fund's peer group, the Fund likely benefited from its generally
conservative approach toward riskier fixed income assets, such as emerging
market bonds and medium to lower quality corporate bonds. This conservative
stance may have insulated the Fund better than some of its peers when financial
market stress and forced selling roiled the markets for these riskier assets.
CHANGES TO THE FUND'S PORTFOLIO
We made several changes to portfolio positioning during the period. For example,
we added interest rate exposure during the fiscal year, moving the Fund from an
underweight position to a neutral position vs. the benchmark as the economic
environment deteriorated. We accomplished this by adding interest rate exposure
across a broad range of markets. Within the Fund's currency positioning, we
reduced exposure to the U.S. dollar, especially during the last few months of
the period. During these months, we added exposure to the Japanese yen. We also
decreased the Fund's exposure to European currencies, while modestly increasing
its allocation to several beaten-down emerging market and commodity-related
currencies.
- --------------------------------------------------------------------------------
8 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Among sectors, we increased the Fund's exposure to investment grade corporate
bonds in light of historically wide yield spreads (the difference in yields
between investment grade corporate bonds and U.S. Treasuries). We also modestly
increased the Fund's exposure to emerging market bonds, especially during the
second half of the annual period. We had cut the Fund's exposure to high yield
corporate bonds during the first half of the period, but started to add some of
that exposure back again during the second half with yield spreads at
historically wide levels. In contrast, we continued to trim the Fund's position
in structured assets during the period, especially U.S. commercial mortgage-
backed securities, given the much higher volatility in that sector.
OUR FUTURE STRATEGY
The global economic outlook deteriorated sharply in the last months of the
annual period. Developed countries faced their first synchronized recession in
several decades. Economic growth across emerging market economies slowed
noticeably as well. Adding to these economic challenges, 15 months of forced
deleveraging, declining liquidity and rising volatility left global capital
markets under intense stress. Global policymakers responded with a flurry of
monetary, fiscal and regulatory measures to counteract the credit crunch and
shore up economic activity. However, the near-term outlook remains highly
uncertain.
Forced asset sales and broad-based risk aversion have pushed most nongovernment
sectors of the bond market to distressed valuations, creating, in our view,
tremendous opportunity for longer-term investors. We are trying to address these
countervailing forces by keeping the Fund closer
Forced asset sales and broad-based risk aversion have pushed most
nongovernment sectors of the bond market to distressed valuations, creating,
in our view, tremendous opportunity for longer-term investors.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
to the Barclays Global Index in those areas where market direction has become
particularly hard to predict. At the same time, we are cautiously looking to add
quality assets that are trading at beaten-down levels, on the view that these
assets offer attractive long-term value.
As always, we constantly monitor the market for changing conditions and
regularly review the Fund's duration, country, sector, yield curve, and currency
positioning in an effort to seek an attractive balance between risk and
potential return. Our sector teams remain focused on careful individual security
selection, as we continue to seek opportunities to capitalize on attractively
valued bonds.
(PHOTO - NIC PIFER)
Nic Pifer, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Global Bond Fund Class A shares (from 11/1/98 to
10/31/08) as compared to the performance of two widely cited performance
indices, the Barclays Capital Global Aggregate Index and the Lipper Global
Income Funds Index. In comparing the Fund's Class A shares to these indices, you
should take into account the fact that the Fund's performance reflects the
maximum sales charge of 4.75%, while such charges are not reflected in the
performance of the indices. Returns for the Fund include the reinvestment of any
distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
1 YEAR 3 YEARS 5 YEARS 10 YEARS
RIVERSOURCE GLOBAL BOND FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $8,799 $10,045 $10,987 $13,853
- ------------------------------------------------------------------------------------------
Average annual total return -12.01% +0.15% +1.90% +3.28%
- ------------------------------------------------------------------------------------------
BARCLAYS CAPITAL GLOBAL AGGREGATE INDEX(1)
Cumulative value of $10,000 $9,743 $11,226 $12,225 $15,362
- ------------------------------------------------------------------------------------------
Average annual total return -2.57% +3.93% +4.10% +4.39%
- ------------------------------------------------------------------------------------------
LIPPER GLOBAL INCOME FUNDS INDEX(2)
Cumulative value of $10,000 $9,052 $10,346 $11,403 $14,670
- ------------------------------------------------------------------------------------------
Average annual total return -9.48% +1.14% +2.66% +3.90%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE GLOBAL BOND FUND LINE
GRAPH)
<Table>
<Caption>
RIVERSOURCE GLOBAL
BOND FUND
CLASS A BARCLAYS CAPITAL LIPPER GLOBAL
(INCLUDES SALES GLOBAL AGGREGATE INCOME
CHARGE) INDEX(1) FUNDS INDEX(2)
------------------ ---------------- --------------
'98 $ 9,525 $ 10,000 $ 10,000
'99 9,492 9,710 9,937
'00 9,002 9,434 9,841
'01 9,977 10,363 10,835
'02 10,599 11,201 11,365
'03 12,004 12,567 12,867
'04 13,288 13,784 14,016
'05 13,131 13,685 14,178
'06 13,810 14,477 15,059
'07 15,002 15,767 16,206
'08 13,853 15,362 14,670
</Table>
(1) The Barclays Capital Global Aggregate Index, an unmanaged market
capitalization weighted benchmark, tracks the performance of investment
grade fixed income securities denominated in 13 currencies. The index
reflects reinvestment of all distributions and changes in market prices.
(2) The Lipper Global Income Funds Index includes the 30 largest global income
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 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 GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008 OCT. 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 888.30 $ 5.95 1.25%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.90 $ 6.36 1.25%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 886.00 $ 9.56 2.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.07 $10.21 2.01%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 885.40 $ 9.55 2.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.70 $10.21 2.01%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 890.00 $ 3.91 .82%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.07 $ 4.18 .82%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 890.40 $ 5.34 1.12%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.56 $ 6.70 1.12%
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 888.20 $ 6.04 1.27%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.80 $ 6.46 1.27%
- ------------------------------------------------------------------------------------------
</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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2008: -11.17%
for Class A, -11.40% for Class B, -11.46% for Class C, -11.00% for Class I,
-10.96% for Class R4 and -11.18% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
RiverSource Global Bond Fund
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (97.0%)(c)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ARGENTINA (--%)
Republic of Argentina
09-12-13 7.00% $748,000 $164,560
Republic of Argentina
Sr Unsecured
12-15-35 0.00 2,900,000(e) 116,000
-------------
Total 280,560
- ---------------------------------------------------------------------------------------------------
AUSTRALIA (1.7%)
Commonwealth Bank of Australia
(European Monetary Unit)
Sr Unsub
11-12-09 3.38 745,000 923,391
New South Wales Treasury
(Australian Dollar)
05-01-12 6.00 8,145,000 5,498,132
Queensland Treasury
(Australian Dollar)
07-14-09 6.00 5,790,000 3,865,930
Telstra
Sr Unsecured
04-01-12 6.38 500,000 494,071
-------------
Total 10,781,524
- ---------------------------------------------------------------------------------------------------
AUSTRIA (1.5%)
Republic of Austria
(European Monetary Unit)
07-15-14 4.30 7,195,000 9,269,269
- ---------------------------------------------------------------------------------------------------
BELGIUM (1.6%)
Fortis Bank
(European Monetary Unit)
Sr Unsecured
05-30-14 4.50 420,000 495,601
Kingdom of Belgium
(European Monetary Unit)
03-28-10 3.00 4,090,000 5,217,894
09-28-12 5.00 3,235,000 4,319,719
-------------
Total 10,033,214
- ---------------------------------------------------------------------------------------------------
BRAZIL (0.8%)
Banco Nacional de Desenvolvimento
Economico e Social
Sr Unsecured
06-16-18 6.37 635,000(d) 501,650
Federative Republic of Brazil
01-15-18 8.00 699,000 699,000
Federative Republic of Brazil
(Brazilian Real)
01-05-16 12.50 1,750,000 705,514
Federative Republic of Brazil
Sr Unsecured
01-17-17 6.00 307,000 277,068
Nota do Tesouro Nacional
(Brazilian Real) Series F
07-01-10 10.00 629,000 2,810,268
-------------
Total 4,993,500
- ---------------------------------------------------------------------------------------------------
CANADA (4.7%)
Canadian Natl Railway
Sr Unsecured
05-15-18 5.55 390,000 339,277
Canadian Natural Resources
Sr Unsecured
02-01-39 6.75 310,000 234,888
Canadian Pacific Railway
(Canadian Dollar)
06-15-10 4.90 380,000(d) 312,209
EnCana
Sr Unsecured
11-01-11 6.30 1,940,000 1,893,360
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
CANADA (CONT.)
Govt of Canada
(Canadian Dollar)
06-01-18 4.25% 2,655,000 $2,290,005
Molson Coors Capital Finance
09-22-10 4.85 $1,000,000 1,001,674
Nexen
Sr Unsecured
05-15-37 6.40 1,970,000 1,343,698
Petro-Canada
Sr Unsecured
05-15-38 6.80 2,680,000 1,804,393
Province of British Columbia
(Canadian Dollar)
06-18-14 5.30 2,660,000 2,326,526
Province of Ontario
(Canadian Dollar)
03-08-14 5.00 6,410,000 5,528,682
Province of Quebec
(Canadian Dollar)
12-01-17 4.50 1,800,000 1,427,765
Rogers Communications
08-15-18 6.80 1,790,000 1,568,488
Royal Bank of Canada
(European Monetary Unit)
Sr Unsecured
01-18-13 3.25 300,000 340,886
TELUS
Sr Unsecured
06-01-11 8.00 6,480,000 6,368,337
Thomson Reuters
10-01-14 5.70 2,465,000 2,151,198
07-15-18 6.50 150,000 126,116
Toronto-Dominion Bank
(European Monetary Unit)
Sr Unsecured
05-14-15 5.38 600,000 731,618
Videotron
04-15-18 9.13 130,000(d) 117,000
-------------
Total 29,906,120
- ---------------------------------------------------------------------------------------------------
COLOMBIA (0.1%)
Republic of Colombia
01-27-17 7.38 380,000 342,000
09-18-37 7.38 460,000 377,200
-------------
Total 719,200
- ---------------------------------------------------------------------------------------------------
CZECH REPUBLIC (0.5%)
Czech Republic
(Czech Koruna)
10-18-10 2.55 25,260,000 1,299,876
06-16-13 3.70 36,500,000 1,860,917
-------------
Total 3,160,793
- ---------------------------------------------------------------------------------------------------
DENMARK (0.6%)
Danske Bank
(European Monetary Unit)
03-16-10 5.01 750,000(i) 937,822
Nykredit Realkredit
(Danish Krone)
04-01-28 5.00 16,698,193 2,673,757
-------------
Total 3,611,579
- ---------------------------------------------------------------------------------------------------
FRANCE (4.2%)
BNP Paribas
(European Monetary Unit)
Sr Sub Nts
12-17-12 5.25 555,000 698,731
Compagnie de Financement Foncier
(European Monetary Unit)
01-29-09 2.38 950,000 1,203,885
Credit Agricole
(European Monetary Unit)
Sr Unsecured
06-24-13 6.00 550,000 711,626
Electricite de France
(European Monetary Unit)
Sr Unsecured
02-05-18 5.00 750,000 872,272
France Telecom
(European Monetary Unit)
Sr Unsecured
02-21-17 4.75 1,680,000 1,854,968
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
FRANCE (CONT.)
Govt of France
(European Monetary Unit)
04-25-12 5.00% 4,390,000 $5,904,285
04-25-13 4.00 9,620,000 12,513,373
10-25-16 5.00 1,730,000 2,331,705
Societe Generale
(European Monetary Unit)
Sr Unsecured
11-28-08 4.99 750,000(i) 955,188
-------------
Total 27,046,033
- ---------------------------------------------------------------------------------------------------
GERMANY (8.5%)
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 300,000,000 3,079,031
Bundesobligation
(European Monetary Unit)
04-13-12 4.00 4,000,000 5,246,131
Bundesrepublik Deutschland
(European Monetary Unit)
07-04-10 5.25 5,590,000 7,415,510
07-04-27 6.50 7,750,000 12,153,748
07-04-28 4.75 3,200,000 4,134,198
07-04-34 4.75 7,035,000 9,238,553
Corealcredit Bank
(European Monetary Unit)
Series 501
09-02-09 5.00 1,800,000(d) 2,301,282
DEPFA Deutsche Pfandbriefbank
(European Monetary Unit)
Series G6
01-15-10 5.50 2,475,000 3,139,528
Deutsche Bank
(European Monetary Unit)
Sr Unsub
07-28-09 4.25 700,000 889,715
KfW
(British Pound)
12-07-15 5.50 2,370,000 3,953,910
Rheinische Hypothekenbank
(European Monetary Unit)
Series 803
07-05-10 5.75 2,055,000(d) 2,701,342
-------------
Total 54,252,948
- ---------------------------------------------------------------------------------------------------
GREECE (0.8%)
Hellenic Republic
(European Monetary Unit)
Sr Unsub
10-22-22 5.90 3,930,000 5,154,323
- ---------------------------------------------------------------------------------------------------
INDONESIA (0.4%)
Govt of Indonesia
(Indonesian Rupiah)
07-15-22 10.25 29,044,000,000 1,622,278
Republic of Indonesia
Sr Unsecured
01-17-18 6.88 750,000(d) 510,000
10-12-35 8.50 190,000(d) 127,300
01-17-38 7.75 153,000(d) 99,450
-------------
Total 2,359,028
- ---------------------------------------------------------------------------------------------------
ITALY (3.5%)
Buoni Poliennali Del Tesoro
(European Monetary Unit)
01-15-10 3.00 4,965,000 6,304,270
08-01-15 3.75 1,800,000 2,190,613
02-01-19 4.25 2,020,000 2,402,917
11-01-26 7.25 3,186,283 4,913,994
11-01-27 6.50 1,325,000 1,898,648
Telecom Italia Capital
11-15-13 5.25 5,960,000 4,523,855
-------------
Total 22,234,297
- ---------------------------------------------------------------------------------------------------
JAPAN (12.6%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40 662,000,000 6,807,571
Govt of Japan CPI Linked
(Japanese Yen)
12-10-17 1.20 673,498,000(l) 5,773,589
03-10-18 1.40 681,736,000(l) 5,952,062
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
JAPAN (CONT.)
Govt of Japan
(Japanese Yen)
09-20-10 0.80% 572,000,000 $5,838,521
06-20-12 1.40 720,000,000 7,484,491
12-20-12 1.00 1,308,000,000 13,390,018
12-20-14 1.30 336,000,000 3,469,835
09-20-17 1.70 950,000,000 9,945,277
12-20-22 1.40 580,000,000 5,524,707
12-20-26 2.10 1,246,000,000 12,637,938
12-20-34 2.40 325,000,000 3,386,858
-------------
Total 80,210,867
- ---------------------------------------------------------------------------------------------------
JERSEY (0.4%)
ASIF III Jersey
(European Monetary Unit)
Sr Secured
11-25-08 5.11 1,100,000(i) 1,273,280
ASIF III Jersey
(Japanese Yen) Sr Secured
07-15-09 0.95 130,000,000 1,191,858
-------------
Total 2,465,138
- ---------------------------------------------------------------------------------------------------
LUXEMBOURG (0.3%)
Gaz Capital
Secured
08-16-37 7.29 230,000(d) 121,900
Tyco Electronics Group
01-15-14 5.95 2,005,000 1,825,512
-------------
Total 1,947,412
- ---------------------------------------------------------------------------------------------------
MALAYSIA (0.2%)
Petronas Capital
05-22-12 7.00 1,500,000(d) 1,464,786
- ---------------------------------------------------------------------------------------------------
MEXICO (1.4%)
Mexican Fixed Rate Bonds
(Mexican Peso)
12-20-12 9.00 41,460,000 3,291,701
12-17-15 8.00 57,370,000 4,284,649
Pemex Project Funding Master Trust
03-01-18 5.75 917,000(d) 715,260
United Mexican States
Sr Unsecured
09-27-34 6.75 270,000 224,100
Vitro
02-01-17 9.13 550,000 171,875
-------------
Total 8,687,585
- ---------------------------------------------------------------------------------------------------
NETHERLANDS (4.9%)
Allianz Finance II
(European Monetary Unit)
11-23-16 4.00 400,000 435,216
BMW Finance
(European Monetary Unit)
01-22-14 4.25 1,175,000 1,231,790
Deutsche Telekom Intl Finance
(European Monetary Unit)
01-19-15 4.00 1,835,000 2,062,683
E.ON Intl Finance
(European Monetary Unit)
10-02-17 5.50 535,000 626,519
Govt of Netherlands
(European Monetary Unit)
07-15-12 5.00 5,675,000 7,597,102
07-15-13 4.25 8,520,000 11,164,815
07-15-16 4.00 3,050,000 3,847,532
ING Groep
(European Monetary Unit)
Sr Unsecured
05-31-17 4.75 1,205,000 1,302,830
Rabobank Nederland
(European Monetary Unit)
Sr Unsub
04-04-12 4.13 1,000,000 1,267,449
Telefonica Europe
09-15-10 7.75 2,010,000 1,945,861
-------------
Total 31,481,797
- ---------------------------------------------------------------------------------------------------
NEW ZEALAND (0.7%)
Govt of New Zealand
(New Zealand Dollar)
04-15-13 6.50 7,070,000 4,214,946
- ---------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
NORWAY (0.9%)
Govt of Norway
(Norwegian Krone)
05-16-11 6.00% 36,500,000 $5,701,429
- ---------------------------------------------------------------------------------------------------
PHILIPPINE ISLANDS (0.1%)
Republic of Philippines
01-15-16 8.00 100,000 93,000
01-15-19 9.88 150,000 161,250
01-14-31 7.75 440,000 404,800
-------------
Total 659,050
- ---------------------------------------------------------------------------------------------------
POLAND (1.6%)
Govt of Poland
(Polish Zloty)
03-24-10 5.75 27,730,000 9,910,266
- ---------------------------------------------------------------------------------------------------
RUSSIA (--%)
Russian Federation
03-31-30 7.50 142,100(d) 120,785
- ---------------------------------------------------------------------------------------------------
SOUTH AFRICA (0.2%)
Republic of South Africa
(South African Rand)
08-31-10 13.00 14,107,500 1,523,458
- ---------------------------------------------------------------------------------------------------
SOUTH KOREA (0.3%)
Korea Development Bank
(Japanese Yen)
06-28-10 0.87 200,000,000 1,948,216
- ---------------------------------------------------------------------------------------------------
SPAIN (2.2%)
AyT Cedulas Cajas Global
(European Monetary Unit)
06-14-18 4.25 1,500,000 1,634,159
Caja de Ahorros y Monte
de Piedad de Madrid
(European Monetary Unit)
03-25-11 3.50 2,900,000 3,636,182
Govt of Spain
(European Monetary Unit)
07-30-17 5.50 3,550,000 4,824,967
Instituto de Credito Oficial
(European Monetary Unit)
06-30-09 3.50 1,400,000 1,769,461
Santander Intl Debt
(European Monetary Unit)
Bank Guaranteed
04-11-11 5.13 1,200,000 1,507,128
Telefonica Emisiones SAU
(European Monetary Unit)
02-02-16 4.38 550,000 566,602
-------------
Total 13,938,499
- ---------------------------------------------------------------------------------------------------
SUPRA-NATIONAL (0.7%)
European Investment Bank
(British Pound)
Sr Unsecured
12-07-08 6.25 385,000 620,881
12-07-11 5.50 2,480,000 4,111,772
-------------
Total 4,732,653
- ---------------------------------------------------------------------------------------------------
SWEDEN (0.7%)
Govt of Sweden
(Swedish Krona)
01-28-09 5.00 14,050,000 1,817,923
03-15-11 5.25 21,660,000 2,949,758
-------------
Total 4,767,681
- ---------------------------------------------------------------------------------------------------
SWITZERLAND (0.1%)
UBS
(European Monetary Unit)
Sr Unsub
06-07-17 4.75 340,000 364,768
- ---------------------------------------------------------------------------------------------------
TUNISIA (0.3%)
Banque Centrale de Tunisie
(Japanese Yen)
08-02-10 3.30 190,000,000 1,981,996
- ---------------------------------------------------------------------------------------------------
TURKEY (0.1%)
Republic of Turkey
04-03-18 6.75 354,000 261,960
03-17-36 6.88 540,000 367,200
-------------
Total 629,160
- ---------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UKRAINE (--%)
Govt of Ukraine
Sr Unsecured
11-14-17 6.75% 480,000(d) $195,953
- ---------------------------------------------------------------------------------------------------
UNITED KINGDOM (6.1%)
Abbey Natl Treasury Services
(European Monetary Unit)
Bank Guaranteed
05-27-09 5.09 850,000(i) 1,078,531
Bank of Scotland
(European Monetary Unit)
02-12-09 3.50 1,900,000 2,398,404
British Sky Broadcasting Group
02-15-18 6.10 2,800,000(d) 2,360,968
BT Group
Sr Unsecured
12-15-10 8.63 550,000 543,417
SABMiller
01-15-14 5.70 1,275,000(d) 1,176,484
United Kingdom Treasury
(British Pound)
03-07-12 5.00 6,950,000 11,666,971
09-07-14 5.00 7,805,000 13,161,415
09-07-15 4.75 1,370,000 2,265,605
03-07-18 5.00 2,645,000 4,407,220
-------------
Total 39,059,015
- ---------------------------------------------------------------------------------------------------
UNITED STATES (34.1%)
Airgas
10-01-18 7.13 620,000(d) 502,200
Allied Waste North America
Series B
04-15-14 7.38 275,000 244,750
Allied Waste North America
Sr Secured
02-15-14 6.13 205,000 178,350
06-01-17 6.88 345,000 300,150
AmeriCredit Automobile Receivables Trust
Series 2007-DF Cl A3A (FSA)
07-06-12 5.49 1,025,000(k) 971,988
Anadarko Petroleum
Sr Unsecured
09-15-16 5.95 970,000 809,079
AT&T
Sr Unsecured
01-15-38 6.30 3,655,000 2,817,949
Banc of America Commercial Mtge
Series 2007-1 Cl A3
01-15-49 5.45 2,075,000(f) 1,642,504
Bear Stearns Commercial Mtge Securities
Series 2003-T10 Cl A1
03-13-40 4.00 319,615(f) 301,836
Bear Stearns Commercial Mtge Securities
Series 2007-T26 Cl A4
01-12-45 5.47 1,050,000(f) 804,358
Brandywine Operating Partnership LP
05-01-17 5.70 315,000 183,403
California State Teachers'
Retirement System Trust
Series 2002-C6 Cl A3
11-20-14 4.46 1,760,986(d,f) 1,779,965
CenterPoint Energy Resources
Sr Unsecured
02-15-11 7.75 1,230,000 1,156,434
Citigroup Commercial Mtge Trust
Series 2006-C5 Cl A4
10-15-49 5.43 1,700,000(f) 1,294,437
Citigroup Mtge Loan Trust
Collateralized Mtge Obligation
Series 2005-7 Cl 2A3A
09-25-35 5.16 3,833,361(f,j) 2,902,116
Citigroup
(European Monetary Unit) Sr Unsecured
05-21-10 3.88 590,000 709,276
Clorox
Sr Unsecured
10-15-12 5.45 1,180,000 1,099,770
03-01-13 5.00 980,000 890,169
Colorado Interstate Gas
Sr Unsecured
11-15-15 6.80 1,570,000 1,328,804
Comcast
03-15-11 5.50 1,945,000 1,866,042
03-15-37 6.45 2,460,000 1,889,205
05-15-38 6.40 695,000 525,110
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Commercial Mtge Pass-Through Ctfs
Series 2006-CN2A Cl BFL
02-05-19 4.36% $400,000(d,f,i) $360,155
Communications & Power Inds
02-01-12 8.00 15,000 12,600
Cott Beverages USA
12-15-11 8.00 280,000 182,000
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2005-6CB Cl 1A1
04-25-35 7.50 756,457(f) 697,129
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2006-22R Cl 1A2
05-25-36 6.00 1,362,030(f) 1,235,574
Coventry Health Care
Sr Unsecured
08-15-14 6.30 460,000 323,602
CPS Auto Trust
Series 2007-A Cl A3 (MBIA)
09-15-11 5.04 849,999(d,k) 797,436
Credit Suisse Mtge Capital Ctfs
Series 2007-C3 Cl A4
06-15-39 5.72 950,000(f) 715,932
Credit Suisse New York
Sub Nts
02-15-18 6.00 590,000 452,945
Crown Americas LLC/Capital
11-15-15 7.75 160,000 139,600
CS First Boston Mtge Securities
Series 2003-CPN1 Cl A2
03-15-35 4.60 600,000(f) 520,493
CS First Boston Mtge Securities
Series 2004-C2 Cl A1
05-15-36 3.82 962,298(f) 886,850
CSC Holdings
Sr Unsecured Series B
07-15-09 8.13 926,000 886,645
CSX
Sr Unsecured
03-15-13 5.75 2,295,000 2,067,136
04-01-15 6.25 1,000,000 855,018
Detroit Edison
10-01-13 6.40 1,220,000 1,211,426
DIRECTV Holdings LLC/Financing
05-15-16 7.63 765,000(d) 640,688
Dr Pepper Snapple Group
Sr Nts
05-01-18 6.82 590,000(d) 516,561
Duke Energy Carolinas LLC
1st Refunding Mtge
10-01-15 5.30 725,000 666,442
Duke Energy Indiana
1st Mtge
08-15-38 6.35 940,000 795,592
Dunkin Securitization
Series 2006-1 Cl A2 (AMBAC)
06-20-31 5.78 1,600,000(d,k) 1,344,673
EchoStar DBS
10-01-13 7.00 40,000 33,200
10-01-14 6.63 740,000 593,850
02-01-16 7.13 255,000 204,638
Edison Mission Energy
Sr Unsecured
06-15-13 7.50 175,000 147,438
Erac USA Finance
10-15-17 6.38 2,395,000(d) 1,671,234
ERP Operating LP
Sr Unsecured
06-15-17 5.75 485,000 330,559
Exelon
Sr Unsecured
06-15-10 4.45 1,000,000 947,200
Federal Home Loan Mtge Corp #A11799
08-01-33 6.50 197,473(f) 201,126
Federal Home Loan Mtge Corp #A15881
11-01-33 5.00 1,113,425(f) 1,055,602
Federal Home Loan Mtge Corp #E91486
09-01-17 6.50 175,921(f) 180,424
Federal Home Loan Mtge Corp #E99684
10-01-18 5.00 514,836(f) 507,545
Federal Home Loan Mtge Corp #G01535
04-01-33 6.00 1,311,193(f) 1,319,403
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Federal Natl Mtge Assn
10-15-14 4.63% $4,630,000 $4,665,582
11-15-30 6.63 2,950,000 3,334,013
Federal Natl Mtge Assn #254686
04-01-18 5.50 1,201,674(f) 1,204,963
Federal Natl Mtge Assn #254722
05-01-18 5.50 626,088(f) 627,802
Federal Natl Mtge Assn #357850
07-01-35 5.50 2,934,184(f,q) 2,869,846
Federal Natl Mtge Assn #360800
01-01-09 5.74 1,105,636(f) 1,105,721
Federal Natl Mtge Assn #545874
08-01-32 6.50 204,385(f) 209,948
Federal Natl Mtge Assn #555528
04-01-33 6.00 936,609(f) 939,780
Federal Natl Mtge Assn #555734
07-01-23 5.00 804,146(f) 772,895
Federal Natl Mtge Assn #555740
08-01-18 4.50 1,113,683(f) 1,071,528
Federal Natl Mtge Assn #555851
01-01-33 6.50 1,074,161(f) 1,097,725
Federal Natl Mtge Assn #575487
04-01-17 6.50 500,357(f) 522,394
Federal Natl Mtge Assn #621581
12-01-31 6.50 247,988(f) 254,014
Federal Natl Mtge Assn #633966
03-01-17 6.00 113,024(f) 114,323
Federal Natl Mtge Assn #634749
03-01-17 5.50 549,422(f) 552,890
Federal Natl Mtge Assn #640996
05-01-32 7.50 434,338(f) 459,958
Federal Natl Mtge Assn #643381
06-01-17 6.00 277,896(f) 281,088
Federal Natl Mtge Assn #645053
05-01-32 7.00 716,563(f) 741,773
Federal Natl Mtge Assn #646147
06-01-32 7.00 326,565(f) 340,126
Federal Natl Mtge Assn #652284
08-01-32 6.50 317,233(f) 323,697
Federal Natl Mtge Assn #653145
07-01-17 6.00 188,436(f) 191,277
Federal Natl Mtge Assn #653730
09-01-32 6.50 163,319(f) 167,584
Federal Natl Mtge Assn #655589
08-01-32 6.50 1,270,997(f) 1,305,709
Federal Natl Mtge Assn #666424
08-01-32 6.50 233,771(f) 238,534
Federal Natl Mtge Assn #670461
11-01-32 7.50 167,138(f) 176,997
Federal Natl Mtge Assn #677333
01-01-33 6.00 3,632,866(f) 3,645,165
Federal Natl Mtge Assn #688034
03-01-33 5.50 438,665(f) 430,433
Federal Natl Mtge Assn #688691
03-01-33 5.50 707,879(f) 693,242
Federal Natl Mtge Assn #711503
06-01-33 5.50 898,965(f) 883,737
Federal Natl Mtge Assn #725594
07-01-34 5.50 3,927,577(f,q) 3,843,911
Federal Natl Mtge Assn #735029
09-01-13 5.32 625,000(f) 624,681
Federal Natl Mtge Assn #741850
09-01-33 5.50 1,660,852(f) 1,626,510
Federal Natl Mtge Assn #753507
12-01-18 5.00 1,955,206(f) 1,929,132
Federal Natl Mtge Assn #755498
11-01-18 5.50 917,286(f) 920,652
Federal Natl Mtge Assn #756236
01-01-34 6.00 3,457,212(f,q) 3,477,063
Federal Natl Mtge Assn #756788
11-01-33 6.50 216,449(f) 220,700
Federal Natl Mtge Assn #759336
01-01-34 6.00 3,416,984(f) 3,436,631
Federal Natl Mtge Assn #765946
02-01-34 5.50 3,483,269(f) 3,411,245
Federal Natl Mtge Assn #845229
11-01-35 5.50 1,556,934(f) 1,522,795
Federal Natl Mtge Assn #869867
04-01-21 5.50 1,405,623(f) 1,402,882
Federal Natl Mtge Assn #886292
07-01-36 7.00 3,206,677(f) 3,314,413
Federal Natl Mtge Assn #897248
11-01-36 6.00 4,045,921(f) 4,046,343
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Federal Natl Mtge Assn #928019
01-01-37 5.50% $2,069,358(f) $2,023,013
FedEx
04-01-09 3.50 720,000 708,343
Frontier Communications
Sr Unsecured
01-15-13 6.25 405,000 335,138
General Electric Capital Assurance
Series 2003-1 Cl A4
05-12-35 5.25 450,000(d,f) 403,354
General Electric Capital
(British Pound) Sr Unsecured
12-15-08 4.50 380,000 609,044
General Electric Capital
(New Zealand Dollar) Sr Unsecured
02-04-10 6.63 3,450,000 1,858,115
Genworth Financial Assurance Holdings
(Japanese Yen) Sr Unsecured
06-20-11 1.60 198,000,000 1,218,725
Govt Natl Mtge Assn #604708
10-15-33 5.50 887,155(f) 872,254
Govt Natl Mtge Assn
Collateralized Mtge Obligation
Interest Only
Series 2002-80 Cl CI
01-20-32 82.03 466,524(f,m) 24,337
Greenwich Capital Commercial Funding
Series 2004-GG1 Cl A5
06-10-36 4.88 500,000(f) 467,476
GS Mtge Securities II
Series 2007-EOP Cl J
03-06-20 4.89 1,250,000(d,f,i) 971,050
GS Mtge Securities II
Series 2007-GG10 Cl F
08-10-45 5.80 775,000(f) 289,898
GSR Mtge Loan Trust
Collateralized Mtge Obligation
Series 2004-10F Cl 6A1
09-25-34 5.00 4,157,788(f) 3,523,726
Halliburton
Sr Unsecured
09-15-38 6.70 630,000 533,211
Harborview Mtge Loan Trust
Collateralized Mtge Obligation
Series 2004-1 Cl A4
04-19-34 4.79 2,248,243(f,j) 1,872,045
HJ Heinz
Sr Unsecured
12-01-08 6.43 605,000(d) 605,467
Indiana Michigan Power
Sr Unsecured
03-15-37 6.05 850,000 581,119
INVISTA
Sr Unsecured
05-01-12 9.25 950,000(d) 802,750
JPMorgan Chase Commercial Mtge Securities
Series 2003-LN1 Cl A1
10-15-37 4.13 225,005(f) 203,431
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A1
03-12-39 3.97 155,697(f) 141,302
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A2
03-12-39 4.77 1,200,000(f) 1,042,409
JPMorgan Chase Commercial Mtge Securities
Series 2005-LDP4 Cl AM
10-15-42 5.00 2,425,000(f) 1,731,207
JPMorgan Chase Commercial Mtge Securities
Series 2006-LDP6 Cl A4
04-15-43 5.48 825,000(f) 637,956
JPMorgan Chase Commercial Mtge Securities
Series 2007-CB20 Cl A4
02-12-51 5.79 3,037,000(f) 2,255,848
JPMorgan Chase Commercial Mtge Securities
Series 2007-CB20 Cl E
02-12-51 6.20 675,000(d,f) 263,295
Kohl's
Sr Unsecured
12-15-17 6.25 775,000 610,391
Kraft Foods
Sr Unsecured
01-26-39 6.88 1,440,000 1,127,136
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Lamar Media
Sr Unsecured
08-15-15 6.63% $145,000 $106,575
LB-UBS Commercial Mtge Trust
Series 2004-C2 Cl A3
03-15-29 3.97 750,000(f) 676,729
LB-UBS Commercial Mtge Trust
Series 2006-C4 Cl AAB
06-15-32 5.86 750,000(f) 621,787
LB-UBS Commercial Mtge Trust
Series 2006-C6 Cl A4
09-15-39 5.37 800,000(f) 613,566
LB-UBS Commercial Mtge Trust
Series 2007-C1 Cl A4
02-15-40 5.42 850,000(f) 635,357
LB-UBS Commercial Mtge Trust
Series 2007-C7 Cl A3
09-15-45 5.87 1,650,000(f) 1,251,070
LB-UBS Commercial Mtge Trust
Series 2008-C1 Cl A2
04-15-41 6.15 1,000,000(f) 733,203
Lehman Brothers Holdings
Sr Unsecured
05-02-18 6.88 1,320,000(b,s) 171,600
Liberty Media LLC
Sr Unsecured
05-15-13 5.70 170,000 118,223
Macys Retail Holdings
07-15-09 4.80 725,000 685,926
Manufacturers & Traders Trust
Sub Nts
12-01-21 5.63 1,500,000 1,068,481
Marathon Oil
Sr Unsecured
03-15-18 5.90 1,870,000 1,451,697
Merrill Lynch & Co
04-25-18 6.88 660,000 588,461
Metropolitan Life Global Funding I
Sr Secured
04-10-13 5.13 765,000(d) 703,698
Moog
Sr Sub Nts
06-15-18 7.25 210,000(d) 168,000
Morgan Guaranty Trust
(European Monetary Unit) Sr Unsecured
03-12-09 4.38 1,580,000 2,009,862
Morgan Stanley Capital I
Series 2003-T11 Cl A2
06-13-41 4.34 306,457(f) 297,913
Morgan Stanley Capital I
Series 2004-HQ4 Cl A5
04-14-40 4.59 750,000(f) 680,039
Morgan Stanley Capital I
Series 2006-T23 Cl AAB
08-12-41 5.80 575,000(f) 480,857
NALCO
11-15-11 7.75 255,000 232,050
Natl Collegiate Student Loan Trust
Collateralized Mtge Obligation
Interest Only
Series 2006-3 Cl AIO
01-25-12 5.88 2,400,000(m) 459,374
Natl Collegiate Student Loan Trust
Collateralized Mtge Obligation
Interest Only
Series 2007-2 Cl AIO
07-25-12 50.00 1,050,000(m) 90,510
Neiman Marcus Group
Pay-in-kind
10-15-15 9.00 75,000(h) 51,375
NewPage
Sr Secured
05-01-12 10.00 380,000 258,400
News America
12-15-35 6.40 535,000 404,960
11-15-37 6.65 895,000 708,892
Nextel Communications
Series D
08-01-15 7.38 1,135,000 624,250
Nextel Communications
Series E
10-31-13 6.88 70,000 39,900
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 25
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Norfolk Southern
Sr Unsecured
04-01-18 5.75% $180,000 $154,938
Northwest Pipeline
Sr Unsecured
04-15-17 5.95 1,070,000 873,244
NRG Energy
02-01-16 7.38 875,000 754,688
Omnicare
12-15-13 6.75 455,000 377,650
12-15-15 6.88 60,000 46,200
Owens-Brockway Glass Container
05-15-13 8.25 965,000 902,275
Pacific Gas & Electric
Sr Unsecured
10-15-18 8.25 855,000 871,301
PacifiCorp
1st Mtge
09-15-13 5.45 505,000 479,770
07-15-38 6.35 1,350,000 1,122,446
PPL Electric Utilities
1st Mtge
11-30-13 7.13 1,650,000 1,681,374
Pricoa Global Funding I
Sr Secured
10-18-12 5.40 1,310,000(d) 1,165,042
Principal Life Income Funding Trusts
Sr Secured
12-14-12 5.30 1,370,000 1,315,995
Quicksilver Resources
08-01-15 8.25 870,000 600,300
Qwest
Sr Unsecured
10-01-14 7.50 175,000 134,750
Renaissance Home Equity Loan Trust
Series 2005-4 Cl A3
02-25-36 5.57 605,430 587,671
RR Donnelley & Sons
Sr Unsecured
01-15-17 6.13 2,940,000 2,080,481
SandRidge Energy
Sr Unsecured
06-01-18 8.00 370,000(d) 251,600
Sierra Pacific Power
Series M
05-15-16 6.00 2,935,000 2,463,263
Smurfit-Stone Container Enterprises
Sr Unsecured
03-15-17 8.00 120,000 58,800
Southern California Edison
1st Mtge
03-15-14 5.75 415,000 408,977
Southern Natural Gas
Sr Unsecured
04-01-17 5.90 2,290,000(d) 1,766,130
Structured Asset Securities
Collateralized Mtge Obligation
Series 2003-33H Cl 1A1
10-25-33 5.50 2,807,525(f) 2,326,956
Transcontinental Gas Pipe Line
Sr Unsecured
04-15-16 6.40 3,590,000 3,094,149
U.S. Treasury
09-30-13 3.13 5,650,000 5,741,813
08-15-18 4.00 5,610,000 5,617,450
02-15-38 4.38 5,000 5,015
U.S. Treasury Inflation-Indexed Bond
01-15-14 2.00 10,500,702(l) 9,617,594
01-15-15 1.63 3,442,560(l) 3,012,946
UnitedHealth Group
Sr Unsecured
11-15-37 6.63 267,000 184,377
02-15-38 6.88 790,000 558,412
Verizon Communications
04-15-38 6.90 920,000 773,065
Verizon New York
Sr Unsecured Series A
04-01-12 6.88 2,380,000 2,249,520
Verizon Pennsylvania
Sr Unsecured Series A
11-15-11 5.65 970,000 912,907
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
26 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
UNITED STATES (CONT.)
Wachovia Bank Commercial Mtge Trust
Series 2003-C8 Cl A2
11-15-35 3.89% $833,634(f) $831,147
Wachovia Bank Commercial Mtge Trust
Series 2005-C20 Cl A5
07-15-42 5.09 800,000(f) 719,537
Wachovia Bank Commercial Mtge Trust
Series 2006-C24 Cl APB
03-15-45 5.58 500,000(f) 426,658
Wachovia Bank Commercial Mtge Trust
Series 2006-C27 Cl APB
07-15-45 5.73 900,000(f) 762,517
Wachovia Bank Commercial Mtge Trust
Series 2006-C29 Cl AM
11-15-48 5.34 3,860,000(f) 2,446,729
Wells Fargo Mtge Backed Securities Trust
Collateralized Mtge Obligation
Series 2005-14 Cl 2A1
12-25-35 5.50 4,319,399(f) 3,666,427
Wells Fargo Mtge Backed Securities Trust
Collateralized Mtge Obligation
Series 2007-15 Cl A1
11-25-37 6.00 3,616,839(f) 2,930,063
Windstream
08-01-16 8.63 365,000 275,575
03-15-19 7.00 40,000 24,400
Wisconsin Electric Power
Sr Unsecured
04-01-14 6.00 470,000 472,807
Wynn Las Vegas LLC/Capital
1st Mtge
12-01-14 6.63 185,000 136,438
XTO Energy
Sr Unsecured
02-01-14 4.90 2,225,000 1,868,998
01-31-15 5.00 720,000 588,217
06-30-15 5.30 1,880,000 1,538,592
-------------
Total 216,222,312
- ---------------------------------------------------------------------------------------------------
URUGUAY (0.1%)
Republic of Uruguay
Pay-in-kind
01-15-33 7.88 102,000(h) 63,240
Republica Orient Uruguay
Sr Unsecured
03-21-36 7.63 825,000 495,000
-------------
Total 558,240
- ---------------------------------------------------------------------------------------------------
VENEZUELA (0.1%)
Petroleos de Venezuela
04-12-17 5.25 770,000 292,600
Republic of Venezuela
02-26-16 5.75 290,000 133,400
05-07-23 9.00 596,000 284,590
Republic of Venezuela
Sr Unsecured
10-08-14 8.50 160,000 89,600
-------------
Total 800,190
- ---------------------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $679,903,490) $617,388,590
- ---------------------------------------------------------------------------------------------------
<Caption>
MUNICIPAL BONDS (0.1%)
NAME OF
ISSUER AND
TITLE OF COUPON PRINCIPAL
ISSUE RATE AMOUNT VALUE(a)
UNITED STATES
Tobacco Settlement Financing Corporation
Revenue Bonds
Series 2007A-1
06-01-46 6.71% $1,130,000 $863,614
- ---------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost: $1,129,887) $863,614
- ---------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 27
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
SENIOR LOANS (0.6%)(n)
COUPON PRINCIPAL
BORROWER RATE AMOUNT VALUE(a)
NETHERLANDS (0.1%)
Nielsen Finance
Term Loan
TBD TBD $135,000(c,g,p) $96,187
08-09-13 4.80% 723,880(c) 515,764
-------------
Total 611,951
- ---------------------------------------------------------------------------------------------------
UNITED STATES (0.5%)
Alltel Communications
Tranche B2 Term Loan
TBD TBD 340,000(g,p) 322,789
Charter Communications
Term Loan
09-06-14 4.80 1,230,405 908,790
Community Health Systems
Delayed Draw Term Loan
TBD TBD 21,702(g,o,p) 17,524
Community Health Systems
Term Loan
07-25-14 5.06-5.97 424,328 342,645
HCA
Tranche B Term Loan
11-17-13 6.01 651,053 537,001
Idearc
Tranche B Term Loan
11-17-14 5.12-5.77 404,809 167,996
Manitowoc
Tranche B Term Loan
TBD TBD 370,000(g,p) 289,525
West Corp
Tranche B2 Term Loan
TBD TBD 485,000(g,p) 308,581
10-24-13 5.38-5.65 235,809 150,034
-------------
Total 3,044,885
- ---------------------------------------------------------------------------------------------------
TOTAL SENIOR LOANS
(Cost: $4,671,929) $3,656,836
- ---------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (1.1%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 1.60% 6,923,103(r) $6,923,103
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $6,923,103) $6,923,103
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $692,628,409)(t) $628,832,143
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT OCT. 31, 2008
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION/
CONTRACT DESCRIPTION LONG/(SHORT) MARKET VALUE DATE (DEPRECIATION)
- -------------------------------------------------------------------------------------
Euro-Bobl, 5-year 10 $1,429,795 Dec. 2008 $41,565
Euro-Bund, 10-year 85 12,555,041 Dec. 2008 128,353
Japanese Govt Bond, 10-
year 10 14,010,610 Dec. 2008 (14,523)
United Kingdom Long GILT,
10-year 19 3,402,668 Dec. 2008 (18,310)
U.S. Long Bond, 20-year 12 1,357,500 Dec. 2008 (44,424)
U.S. Treasury Note, 5-
year (88) (9,966,687) Jan. 2009 (14,758)
U.S. Treasury Note, 10-
year (158) (17,866,345) Dec. 2008 400,316
- -------------------------------------------------------------------------------------
Total $478,219
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
28 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 1,883,807 1,282,873 $31,648 $--
Australian Dollar U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 3,389,935 5,580,172 125,090 --
British Pound U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 1,881,367 1,543,749 -- (17,616)
Canadian Dollar U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 7,856,693 414,383 -- (3,927)
Czech Koruna U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 2,021,513 350,835 4,828 --
Danish Krone U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 17,644,146 22,798,001 317,602 --
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 1,020,937,781 10,361,695 -- (4,998)
Japanese Yen U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 1,442,306 852,403 12,981 --
New Zealand Dollar U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 5,166,115 780,026 12,573 --
Norwegian Krone U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 3,763,085 1,349,260 -- (14,449)
Polish Zloty U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 4, 2008 5,104,645 671,266 13,082 --
Swedish Krona U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 7, 2008 2,566,210 1,450,000 -- (233,291)
U.S. Dollar British Pound
- ---------------------------------------------------------------------------------------------
Nov. 20, 2008 30,844,794 3,140,000,000 1,053,301 --
U.S. Dollar Japanese Yen
- ---------------------------------------------------------------------------------------------
Nov. 24, 2008 3,467,000 4,534,836 121,692 --
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------
Nov. 25, 2008 2,366,624 3,500,000 -- (4,982)
U.S. Dollar Singapore Dollar
- ---------------------------------------------------------------------------------------------
Dec. 4, 2008 672,830 1,220,000 34,892 --
U.S. Dollar New Zealand Dollar
- ---------------------------------------------------------------------------------------------
Dec. 8, 2008 62,165,000 3,273,565 -- (23,607)
Czech Koruna U.S. Dollar
- ---------------------------------------------------------------------------------------------
Dec. 9, 2008 20,230,000 7,174,013 -- (104,536)
Polish Zloty U.S. Dollar
- ---------------------------------------------------------------------------------------------
Total $1,727,689 $(407,406)
- ---------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 29
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008 (CONTINUED)
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At Oct. 31,
2008, the value of these securities amounted to $27,539,667 or 4.3% of net
assets.
(e) This is a variable rate security that entitles holders to receive only
interest payments. Interest is paid annually. The interest payment is based
on the Gross Domestic Product (GDP) level of the previous year for the
respective country. To the extent that the previous year's GDP exceeds the
'base case GDP', an interest payment is made equal to 0.012225 of the
difference.
(f) Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities and
collateralized mortgage obligations. These securities may be issued or
guaranteed by U.S. government agencies or instrumentalities, or by private
issuers, generally originators and investors in mortgage loans, including
savings associations, mortgage bankers, commercial banks, investment
bankers and special purpose entities. The maturity dates shown represent
the original maturity of the underlying obligation. Actual maturity may
vary based upon prepayment activity on these obligations. Unless otherwise
noted, the coupon rates presented are fixed rates.
(g) At Oct. 31, 2008, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$1,142,127. See Note 1 to the financial statements.
(h) Pay-in-kind securities are securities in which the issuer makes interest or
dividend payments in cash or in additional securities. The securities
usually have the same terms as the original holdings.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Oct. 31,
2008.
(j) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on Oct. 31, 2008.
(k) The following abbreviations are used in the portfolio security descriptions
to identify the insurer of the issue:
<Table>
AMBAC -- Ambac Assurance Corporation
FSA -- Financial Security Assurance
MBIA -- MBIA Insurance Corporation
</Table>
- --------------------------------------------------------------------------------
30 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(l) 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.
(m) 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 Oct. 31, 2008.
(n) Senior loans have rates of interest that float periodically based primarily
on the London Interbank Offered Rate ("LIBOR") and other short-term rates.
Remaining maturities of senior loans may be less than the stated maturities
shown as a result of contractual or optional prepayments by the borrower.
Such prepayments cannot be predicted with certainty.
(o) At Oct. 31, 2008, the Fund had unfunded senior loan commitments pursuant to
the terms of the loan agreement. The Fund receives a stated coupon rate
until the borrower draws on the loan commitment, at which time the rate
will become the stated rate in the loan agreement.
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENT
----------------------------------------------------------
Community Health Systems Delayed Draw $21,702
</Table>
(p) Represents a senior loan purchased on a when-issued or delayed-delivery
basis. Certain details associated with this purchase are not known prior to
the settlement date of the transaction. In addition, senior loans typically
trade without accrued interest and therefore a weighted average coupon rate
is not available prior to settlement. At settlement, if still unknown, the
borrower or counterparty will provide the Fund with the final weighted
average coupon rate and maturity date.
(q) At Oct. 31, 2008, investments in securities included securities valued at
$2,709,383 that were partially pledged as collateral to cover initial
margin deposits on open interest rate futures contracts.
(r) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(s) On Sept. 15, 2008, Lehman Brothers Holdings filed a Chapter 11 bankruptcy
petition.
(t) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $708,591,372 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $13,501,367
Unrealized depreciation (93,260,596)
- -----------------------------------------------------------
Net unrealized depreciation $(79,759,229)
- -----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 31
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
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.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $685,705,306) $621,909,040
Affiliated money market fund (identified cost $6,923,103) 6,923,103
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $692,628,409) 628,832,143
Cash 1,690,798
Foreign currency holdings (identified cost $2,558) 2,546
Capital shares receivable 620,859
Dividends and accrued interest receivable 8,817,664
Receivable for investment securities sold 71,372,415
Unrealized appreciation on forward foreign currency contracts 1,727,689
- -------------------------------------------------------------------------------
Total assets 713,064,114
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 74,826,092
Payable for investment securities purchased 1,143,110
Variation margin payable 25,635
Unrealized depreciation on forward foreign currency contracts 407,406
Accrued investment management services fees 13,782
Accrued distribution fees 4,446
Accrued transfer agency fees 2,957
Accrued administrative services fees 1,554
Accrued plan administration services fees 1
Other accrued expenses 123,228
- -------------------------------------------------------------------------------
Total liabilities 76,548,211
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $636,515,903
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 1,034,058
Additional paid-in capital 690,731,106
Undistributed net investment income 18,465,762
Accumulated net realized gain (loss) (10,152,200)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (63,562,823)
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $636,515,903
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $248,748,168 40,394,613 $6.16(1)
Class B $ 42,399,524 6,810,424 $6.23
Class C $ 4,294,941 695,288 $6.18
Class I $205,797,902 33,497,669 $6.14
Class R4 $ 118,425 19,229 $6.16
Class W $135,156,943 21,988,540 $6.15
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $6.47. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 4.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 33
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $ 32,385,882
Income distributions from affiliated money market fund 770,670
Less foreign taxes withheld (212,940)
- --------------------------------------------------------------------------------
Total income 32,943,612
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 5,074,934
Distribution fees
Class A 704,343
Class B 522,781
Class C 40,466
Class W 442,005
Transfer agency fees
Class A 644,572
Class B 126,615
Class C 9,522
Class R4 70
Class W 353,604
Administrative services fees 572,976
Plan administration services fees -- Class R4 349
Compensation of board members 16,436
Custodian fees 224,795
Printing and postage 101,610
Registration fees 102,075
Professional fees 42,673
Other 35,333
- --------------------------------------------------------------------------------
Total expenses 9,015,159
Expenses waived/reimbursed by the Investment Manager and its
affiliates (349,989)
Earnings and bank fee credits on cash balances (7,239)
- --------------------------------------------------------------------------------
Total net expenses 8,657,931
- --------------------------------------------------------------------------------
Investment income (loss) -- net 24,285,681
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions 12,051,441
Foreign currency transactions (49,315)
Futures contracts (1,228,537)
Swap transactions (1,051,776)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments 9,721,813
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (100,650,487)
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (90,928,674)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (66,642,993)
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
34 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 24,285,681 $ 15,158,284
Net realized gain (loss) on investments 9,721,813 1,812,931
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (100,650,487) 22,918,455
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (66,642,993) 39,889,670
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (8,771,172) (10,445,402)
Class B (1,230,738) (1,830,230)
Class C (86,601) (87,382)
Class I (7,773,703) (6,698,983)
Class R4 (4,806) (4,654)
Class W (4,581,936) (324,071)
- ----------------------------------------------------------------------------------------------
Total distributions (22,448,956) (19,390,722)
- ----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 103,694,288 41,925,593
Class B shares 26,745,270 8,520,931
Class C shares 4,044,562 420,509
Class I shares 171,903,867 35,313,664
Class R4 shares 95,770 71,093
Class W shares 259,629,317 57,650,812
Reinvestment of distributions at net asset value
Class A shares 8,236,440 9,776,138
Class B shares 1,157,449 1,714,958
Class C shares 78,743 79,537
Class I shares 7,773,342 6,698,564
Class R4 shares 4,806 4,654
Class W shares 4,581,771 323,864
Payments for redemptions
Class A shares (90,849,153) (79,932,025)
Class B shares (27,193,143) (28,554,355)
Class C shares (1,808,860) (1,185,971)
Class I shares (106,857,080) (35,536,448)
Class R4 shares (79,105) (48,411)
Class W shares (155,446,712) (5,063,418)
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 205,711,572 12,179,689
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 116,619,623 32,678,637
Net assets at beginning of year 519,896,280 487,217,643
- ----------------------------------------------------------------------------------------------
Net assets at end of year $ 636,515,903 $519,896,280
- ----------------------------------------------------------------------------------------------
Undistributed net investment income $ 18,465,762 $ 1,426,074
- ----------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.89 $6.60 $6.59 $7.02 $6.57
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(b) .20(b) .19 .16 .17
Net gains (losses) (both realized and
unrealized) (.73) .35 .14 (.23) .52
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.51) .55 .33 (.07) .69
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.26) (.32) (.36) (.24)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.16 $6.89 $6.60 $6.59 $7.02
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $249 $259 $276 $353 $389
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.32% 1.37% 1.39% 1.37% 1.34%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.25% 1.25% 1.25% 1.35% 1.34%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.26% 3.08% 2.77% 2.42% 2.66%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77% 68% 73% 92%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (7.66%) 8.63% 5.17% (1.18%) 10.70%
- --------------------------------------------------------------------------------------------------------------
</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) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(f) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.96 $6.67 $6.59 $7.02 $6.57
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .17(b) .15(b) .13 .10 .14
Net gains (losses) (both realized and
unrealized) (.73) .35 .16 (.23) .50
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.56) .50 .29 (.13) .64
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.21) (.21) (.30) (.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.23 $6.96 $6.67 $6.59 $7.02
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $42 $47 $63 $111 $142
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.09% 2.13% 2.16% 2.13% 2.10%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.01% 2.01% 2.02% 2.12% 2.10%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.49% 2.30% 1.98% 1.65% 1.90%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77% 68% 73% 92%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (8.28%) 7.68% 4.45% (1.98%) 9.83%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(f) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.91 $6.62 $6.57 $6.99 $6.55
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .17(b) .15(b) .14 .11 .14
Net gains (losses) (both realized and
unrealized) (.73) .35 .13 (.22) .49
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.56) .50 .27 (.11) .63
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.21) (.22) (.31) (.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.18 $6.91 $6.62 $6.57 $6.99
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $3 $3 $4 $5
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.08% 2.13% 2.16% 2.14% 2.09%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.01% 2.01% 2.02% 2.12% 2.09%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.51% 2.32% 2.00% 1.65% 1.91%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77% 68% 73% 92%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (8.27%) 7.75% 4.25% (1.83%) 9.72%
- --------------------------------------------------------------------------------------------------------------
</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) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(f) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
38 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004(b)
Net asset value, beginning of period $6.87 $6.59 $6.61 $7.03 $6.77
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .25(c) .23(c) .21 .19 .16
Net gains (losses) (both realized and
unrealized) (.73) .34 .14 (.22) .24
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.48) .57 .35 (.03) .40
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.25) (.29) (.37) (.39) (.14)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.14 $6.87 $6.59 $6.61 $7.03
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $206 $157 $145 $89 $24
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .85% .87% .88% .91% .89%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .82% .87% .88% .91% .89%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.68% 3.47% 3.18% 2.87% 3.07%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77% 68% 73% 92%
- --------------------------------------------------------------------------------------------------------------
Total return (7.30%) 8.91% 5.52% (.56%) 6.06%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to Oct. 31, 2004.
(c) 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 for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 39
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.89 $6.60 $6.61 $7.04 $6.59
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .25(b) .22(b) .20 .16 .18
Net gains (losses) (both realized and
unrealized) (.72) .35 .13 (.22) .52
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.47) .57 .33 (.06) .70
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.26) (.28) (.34) (.37) (.25)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.16 $6.89 $6.60 $6.61 $7.04
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.14% 1.17% 1.20% 1.20% 1.17%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .87% 1.08% 1.08% 1.18% 1.17%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.64% 3.27% 2.95% 2.60% 2.83%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77% 68% 73% 92%
- --------------------------------------------------------------------------------------------------------------
Total return (7.19%) 8.84% 5.29% (1.00%) 10.86%
- --------------------------------------------------------------------------------------------------------------
</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) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(f) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
40 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $6.88 $6.79
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .22 .20
Net gains (losses) (both realized and
unrealized) (.73) .17
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.51) .37
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.28)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.15 $6.88
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $135 $54
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.30% 1.35%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.27% 1.26%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.27% 3.34%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 77%
- --------------------------------------------------------------------------------------------------------------
Total return (7.62%) 5.71%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Global Bond Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a non-diversified, open-end management investment company.
RiverSource Global Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the Board
of Directors (the Board). The Fund invests primarily in debt obligations of U.S.
and foreign issuers.
The Fund offers Class A, Class B, Class C, Class I, Class R4 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares are sold without a front-end sales charge or CDSC
and are offered to qualifying institutional investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares. At Oct. 31, 2008, the Investment Manager and the RiverSource
affiliated funds-of-funds owned approximately 32% of the total outstanding Fund
shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
- --------------------------------------------------------------------------------
42 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange. Swap transactions are valued through an authorized pricing
service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS AND UNFUNDED LOAN COMMITMENTS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other forward-
commitments, can take place one month or more after the transaction date. During
this period, such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund designates
cash or liquid securities at least equal to the amount of its forward-
commitments. At Oct. 31, 2008, the Fund has outstanding when-issued securities
of $384,302 and other forward-commitments of $757,825.
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrower's discretion. These commitments are disclosed in the Portfolio of
Investments. At Oct. 31, 2008, the Fund has entered into unfunded loan
commitments of $21,702.
The Fund also enters into transactions to sell purchase commitments to third
parties at current market values and concurrently acquires other purchase
commitments for similar securities at later dates. As an inducement for the Fund
to "roll over" its purchase commitments, the Fund receives negotiated amounts in
the form of reductions of the purchase price of the commitment. The Fund records
the incremental difference between the forward purchase and sale of each forward
roll as realized gain or loss. Losses may arise due to changes in the value of
the securities or if a counterparty does not perform under the terms of the
agreement. If a counterparty files for bankruptcy or becomes insolvent, the
Fund's right to repurchase or sell securities may be limited. The Fund did not
enter into any mortgage dollar roll transactions during the year ended Oct. 31,
2008.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the
- --------------------------------------------------------------------------------
44 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Fund may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, and for the year
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings were comprised of
Japanese yen and South African rand.
The Fund may enter into forward foreign currency contracts to produce
incremental earnings, for operational purposes, or to protect against adverse
exchange rate fluctuation. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Fund is subject to the
credit risk that the counterparty will not complete its contract obligations.
CMBS TOTAL RETURN SWAP TRANSACTIONS
The Fund may enter into swap agreements to earn the total return on a specified
security or index of fixed income securities. CMBS total return swaps are
bilateral financial contracts designed to replicate synthetically the total
returns of commercial mortgage-backed securities. Under the terms of the swaps,
the Fund either receives or pays the total return on a reference security or
index applied to a notional principal amount. In return, the Fund agrees to pay
or receive from the counterparty a floating rate, which is reset periodically
based on short-term interest rates, applied to the same notional amount.
The notional amounts of swap contracts are not recorded in the financial
statements. Swaps are valued daily, and the change in value is recorded as
unrealized appreciation (depreciation) until the termination of the swap, at
which time realized gain (loss) is recorded. Payments received or made are
recorded as realized gains (losses).
Swap agreements may be subject to liquidity risk, which exists when a particular
swap is difficult to purchase or sell. It may not be possible for the Fund to
initiate a transaction or liquidate a position at an advantageous time or price,
which may result in significant losses. Total return swaps are subject to the
risk that the counterparty will default on its obligation to pay net amounts due
to the Fund. At Oct. 31, 2008, the Fund had no outstanding CMBS total return
swap contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
- --------------------------------------------------------------------------------
46 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
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, foreign currency transactions, recognition of unrealized appreciation
(depreciation) for certain derivative investments and losses deferred due to
wash sales. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$15,202,963 and accumulated net realized loss has been increased by $15,202,963.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007*
- ----------------------------------------------------------------
CLASS A DISTRIBUTIONS PAID FROM:
Ordinary income.................... $8,771,172 $10,445,402
Long-term capital gain............. -- --
CLASS B
Distributions paid from:
Ordinary income.................... 1,230,738 1,830,230
Long-term capital gain............. -- --
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007*
- ----------------------------------------------------------------
CLASS C
Distributions paid from:
Ordinary income.................... $ 86,601 $ 87,382
Long-term capital gain............. -- --
CLASS I
Distributions paid from:
Ordinary income.................... 7,773,703 6,698,983
Long-term capital gain............. -- --
CLASS R4
Distributions paid from:
Ordinary income.................... 4,806 4,654
Long-term capital gain............. -- --
CLASS W
Distributions paid from:
Ordinary income.................... 4,581,936 324,071
Long-term capital gain............. -- --
</Table>
* Class W is for the period from Dec. 1, 2006 (inception date) to Oct. 31,
2007.
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 31,631,393
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $ (6,492,562)
Unrealized appreciation (depreciation)......... $(80,388,092)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
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
Oct. 31, 2008, management does not believe the adoption of SFAS 161 will impact
the financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157
- --------------------------------------------------------------------------------
48 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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. The application of
SFAS 157 will be effective for the Fund's fiscal year beginning Nov. 1, 2008.
The adoption of SFAS 157 is not anticipated to have a material impact on the
Fund's financial statements; however, additional disclosures will be required
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.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared and paid each calendar quarter,
when available, are reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income, if any, is recognized on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income, including amortization of premium, market discount and original
issue discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.52% annually as the Fund's assets increase. The management fee for the year
ended Oct. 31, 2008 was 0.70% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the year ended Oct. 31, 2008 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, other expenses paid to this company were $1,440.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
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 an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average
- --------------------------------------------------------------------------------
50 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
daily net assets attributable to Class B and Class C shares. For Class B and
Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $1,404,000 and $36,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$353,672 for Class A, $35,408 for Class B and $2,497 for Class C for the year
ended Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 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............................................. 1.25%
Class B............................................. 2.01
Class C............................................. 2.01
Class I............................................. 0.82
Class R4............................................ 0.87
Class W............................................. 1.27
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A.......................................... $137,956
Class B.......................................... 27,549
Class C.......................................... 1,976
Class W.......................................... 125
</Table>
The waived/reimbursed fees and expenses for plan administration services fees at
the class level were as follows:
<Table>
Class R4........................................... $349
</Table>
The management fees waived/reimbursed at the Fund level were $182,034.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
acquired funds*) will not exceed the following percentage of the Fund's average
daily net assets:
<Table>
Class A............................................. 1.25%
Class B............................................. 2.01
Class C............................................. 2.01
Class I............................................. 0.82
Class R4............................................ 1.12
Class W............................................. 1.27
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $7,239 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $727,720,709 and $510,636,734, respectively, for the
year ended Oct. 31, 2008. Realized gains and losses are determined on an
identified cost basis.
Expenses paid to the Investment Manager as securities lending agent were $425
for the year ended Oct. 31, 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 Oct. 31, 2008, the Fund had no securities out on loan.
- --------------------------------------------------------------------------------
52 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 14,979,267 1,211,499 (13,367,693) 2,823,073
Class B 3,822,733 168,457 (3,926,341) 64,849
Class C 583,922 11,530 (267,833) 327,619
Class I 25,302,709 1,145,677 (15,862,285) 10,586,101
Class R4 13,757 706 (11,545) 2,918
Class W 37,609,351 674,090 (24,172,875) 14,110,566
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2007*
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 6,327,232 1,485,288 (12,063,782) (4,251,262)
Class B 1,270,247 258,114 (4,278,499) (2,750,138)
Class C 63,080 12,039 (177,897) (102,778)
Class I 5,334,334 1,019,550 (5,397,430) 956,454
Class R4 10,779 707 (7,379) 4,107
Class W 8,592,701 48,662 (763,389) 7,877,974
- ----------------------------------------------------------------------------------
</Table>
* Class W is for the period from Dec. 1, 2006 (inception date) to Oct. 31,
2007.
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 $349,815,503 and $357,516,044, respectively, for the year
ended Oct. 31, 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 Oct. 31, 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. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
emergency purposes. The credit facility became effective on 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 year ended Oct. 31, 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. (JPMCB), 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
$6,492,562 at Oct. 31, 2008, that if not offset by capital gains will expire as
follows:
<Table>
<Caption>
2010 2014 2016
$3,665,053 $498,771 $2,328,738
</Table>
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- --------------------------------------------------------------------------------
54 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
8. RISKS RELATING TO CERTAIN INVESTMENTS
DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
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
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to retain an independent distribution consultant to assist in
developing a plan for distribution of all disgorgement and civil penalties
ordered by the SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG). In September 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
- --------------------------------------------------------------------------------
56 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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, Seligman and its 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. Seligman does not believe that the
foregoing legal action or other possible actions will have a material adverse
impact on Seligman or its clients, including the Seligman Funds and other
investment companies managed by it; however, there can be no assurance of this
or that these matters and any related publicity will 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 57
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
10. 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.
- --------------------------------------------------------------------------------
58 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE GLOBAL BOND FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Global Bond Fund (the Fund) (one of
the portfolios constituting the RiverSource Global Series, Inc.) as of October
31, 2008, and the related statement of operations for the year then ended, and
the statements of changes in net assets and the financial highlights for each of
the two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of the Fund for the periods
presented through October 31, 2006, were audited by other auditors whose report
dated December 20, 2006, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Global Bond Fund of the RiverSource Global Series, Inc.
at October 31, 2008, the results of its operations for the year then ended, and
changes in its net assets and the financial highlights for each of the two years
in the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
60 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 3.78%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 63
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
64 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT 65
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
66 RIVERSOURCE GLOBAL BOND FUND -- 2008 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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 GLOBAL BOND FUND -- 2008 ANNUAL REPORT 67
RIVERSOURCE GLOBAL BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6309 AE (12/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GLOBAL TECHNOLOGY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
RIVERSOURCE GLOBAL TECHNOLOGY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 15
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 19
Statement of Operations............ 20
Statements of Changes in Net
Assets........................... 21
Financial Highlights............... 22
Notes to Financial Statements...... 27
Report of Independent Registered
Public Accounting Firm........... 41
Federal Income Tax Information..... 43
Board Members and Officers......... 44
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.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Global Technology Fund (the Fund) Class A shares declined 45.07%
(excluding sales charge) for the 12 months ended Oct. 31, 2008.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) World Index*, which fell 41.51%, and the MSCI World
Information Technology (IT) Index and the S&P North American Technology Sector
Index(TM) (S&P NATS Index), which fell 43.29% and 41.46%, respectively, during
the same 12-month period.
> The Fund outperformed its current peer group as represented by the Lipper
Global Science and Technology Funds Index declining 47.77% and underperformed
its previous peer group as represented by the Lipper Science and Technology
Funds Index, which declined 43.31% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
RiverSource Global Technology
Fund Class A (excluding sales
charge) -45.07% -5.68% -0.59% +0.97%
- ---------------------------------------------------------------------
MSCI World Index (unmanaged) -41.51% -4.81% +2.24% +1.21%
- ---------------------------------------------------------------------
MSCI World IT Index (unmanaged) -43.29% -6.45% -3.21% -2.85%
- ---------------------------------------------------------------------
S&P NATS Index (unmanaged) -41.46% -5.74% -2.77% -1.70%
- ---------------------------------------------------------------------
Lipper Global Science and
Technology Funds Index -47.77% -8.13% -3.93% N/A
- ---------------------------------------------------------------------
Lipper Science and Technology
Funds Index -43.31% -6.99% -3.18% -0.72%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
* Effective Nov. 17, 2008, the MSCI World Index replaced the S&P NATS Index as
the primary benchmark.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
X MEDIUM SIZE
X SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total expenses
- --------------------------------------
Class A 1.45%
- --------------------------------------
Class B 2.22%
- --------------------------------------
Class C 2.21%
- --------------------------------------
Class I 0.81%
- --------------------------------------
Class R4 1.12%
- --------------------------------------
</Table>
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the Annualized Total Returns table on page 3. 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.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
The RiverSource Global Technology Fund is a narrowly-focused sector fund and it
may exhibit higher volatility than funds with broader investment objectives. See
the Fund's prospectus for specific risks associated with the Fund.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
11/13/96) -45.07% -5.68% -0.59% +0.97% N/A
- ----------------------------------------------------------------------------
Class B (inception
11/13/96) -45.21% -6.33% -1.34% +0.24% N/A
- ----------------------------------------------------------------------------
Class C (inception
6/26/00) -45.42% -6.33% -1.34% N/A -14.03%
- ----------------------------------------------------------------------------
Class I (inception
7/15/04) -44.69% -5.06% N/A N/A +0.27%
- ----------------------------------------------------------------------------
Class R4 (inception
11/13/96) -44.63% -5.27% -0.23% +1.15% N/A
- ----------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -48.30% -7.50% -1.71% +0.46% N/A
- ----------------------------------------------------------------------------
Class B (inception
11/13/96) -47.95% -7.60% -1.74% +0.24% N/A
- ----------------------------------------------------------------------------
Class C (inception
6/26/00) -45.97% -6.33% -1.34% N/A -14.03%
- ----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
11/13/96) -29.17% +0.16% +5.65% +3.65% N/A
- ---------------------------------------------------------------------------
Class B (inception
11/13/96) -29.55% -0.57% +4.75% +2.85% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -29.84% -0.57% +4.75% N/A -12.10%
- ---------------------------------------------------------------------------
Class I (inception
7/15/04) -28.81% +0.81% N/A N/A +5.15%
- ---------------------------------------------------------------------------
Class R4 (inception
11/13/96) -28.87% +0.49% +5.96% +3.80% N/A
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -33.33% -1.74% +4.46% +3.12% N/A
- ---------------------------------------------------------------------------
Class B (inception
11/13/96) -33.08% -1.91% +4.41% +2.85% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -30.54% -0.57% +4.75% N/A -12.10%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I and Class R4 shares. Class I and Class R4 shares are
available to institutional investors only.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
Effective Nov. 17, 2008, Richard Parower and the Seligman Technology Team took
over management of the Fund previously managed by Bob Ewing and Nick Thakore.
Below, members of the RiverSource technology analyst team discuss the Fund's
results and positioning for the fiscal year ended Oct. 31, 2008. Following that
discussion, new lead portfolio manager Richard Parower and the Seligman
Technology Team discuss the Fund's current strategy and future outlook.
Dear Shareholder,
RiverSource Global Technology Fund's Class A shares (excluding sales charge)
declined 45.07% for the 12 months ended Oct. 31, 2008. The Fund underperformed
its benchmark, the Morgan Stanley Capital International (MSCI) World Index,
which fell 41.51%, and the MSCI World IT Index and the S&P North American
Technology Sector Index(TM) (S&P NATS Index), which fell 43.29% and 41.46%,
respectively. The Fund outperformed its peer group, represented by the Lipper
Global Science and Technology Funds Index, which declined 47.77% during the same
period.
SIGNIFICANT PERFORMANCE FACTORS
The following commentary provided by the RiverSource technology analyst team:
For most of the fiscal year, the technology sector remained in somewhat of a
trading range. However, in September and October of 2008, the sector declined
sharply as the credit crisis spread and the global economy slowed. Financial
services firms are a major customer for technology companies, so spending
constraints in the sector, combined with weaker consumer spending, threatened
future technology earnings. Security sales by mutual funds and hedge funds to
meet shareholder
SECTOR DIVERSIFICATION(1) (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Information Technology 92.2%
- ------------------------------------------------
Telecommunication Services 4.5%
- ------------------------------------------------
Other(2) 3.3%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
6 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
redemptions also contributed to the indiscriminate sell-off of technology
stocks.
Large-cap technology stocks held up better than small- and mid-cap stocks, an
advantage for the Fund since we had moved the portfolio to a larger average
market capitalization. Maintaining a higher cash level than normal over the
final months of the period also contributed to performance relative to the S&P
NATS Index. We periodically invested that cash as we identified opportunities.
Individual contributors to performance included MICRON TECHNOLOGY and BEA
SYSTEMS. MICRON TECHNOLOGY is a D-RAM memory chip maker that previously suffered
from over capacity in the D-RAM market and a resulting price war. MICRON was
trading below its historical trough levels and appeared undervalued based on its
cash flow. Since the stock had already declined due to industry-specific issues,
it held up somewhat better when the technology sector fell so sharply late in
the period.
BEA SYSTEMS provides application server software to build websites and internal
infrastructure. The company had good cash flow and was a leading provider in its
product segment. On top of that, we thought the company might be an acquisition
target. During the period, Oracle acquired the company. This is an example of
continued consolidation
TOP TEN HOLDINGS (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Microsoft 8.3%
- ------------------------------------------------
Hewlett-Packard 6.5%
- ------------------------------------------------
Oracle 6.0%
- ------------------------------------------------
Cicso Systems 5.6%
- ------------------------------------------------
Apple 5.6%
- ------------------------------------------------
Google Cl A 5.5%
- ------------------------------------------------
Intel 4.2%
- ------------------------------------------------
QUALCOMM 4.1%
- ------------------------------------------------
IBM 3.0%
- ------------------------------------------------
Micron Technology 2.9%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund Holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
among software companies, which has been beneficial to the segment's
performance.
Having a smaller position in APPLE than the S&P NATS Index was also
advantageous. The Fund was slightly underweight in APPLE, not because we had a
negative view of the company, but because it is such a large position in the S&P
NATS Index and we didn't think it was prudent to invest so much in an individual
holding. APPLE suffered from fear that consumer spending cutbacks would reduce
sales of its high-end, consumer-oriented product line of iPods, iPhones and
MACs.
When RESEARCH IN MOTION began to expand into consumer and European markets and
offer multiple Blackberry models, we concluded that analyst earnings forecasts
underestimated necessary spending increases and, consequently, were too
optimistic. Ultimately, earnings estimates came down and the stock price
corrected. SUN MICROSYSTEMS is a technology hardware company that was down over
75% during the period. The company's technology is dated and its largest
customer base is the struggling financial industry so we preferred to focus on
other opportunities.
Detractors from performance relative to the S&P NATS Index included INFINEON
TECHNOLOGIES, SEAGATE TECHNOLOGY, NOKIA, SPANSION and SANDISK. INFINEON
TECHNOLOGIES is a German company that we thought would benefit from divesting
businesses where it did not have an advantage. Unfortunately, during the time we
owned the stock, currency trends hampered its revenue and profit margins and
earnings estimates were reduced. SEAGATE TECHNOLOGY, a disk driver vendor,
missed one of its product cycles in the June quarter, so the stock started
selling off. Then late in the year, the stock was hit hard by the weakening
outlook for personal computer sales.
We bought cell phone handset maker NOKIA when a performance lull during a
product transition brought the stock's valuation down to an attractive level.
However, the company subsequently suffered from unfavorable currency trends and
difficulties executing its product launches. As earnings estimates for Nokia
came down, the stock underperformed its peers.
- --------------------------------------------------------------------------------
8 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SPANSION, a company that makes Flash memory for cell phones and other electronic
devices, has faced a series of challenges including a difficult pricing
environment that cut profit margins, increased competition among handset makers
and low sales volume that resulted from the slow economy and declining handset
sales. SANDISK suffered from overcapacity in its industry combined with
declining demand. Two key markets for SanDisk's memory products -- cell phone
handsets and consumer electronics -- are particularly vulnerable to a slowing
economy. There was talk of SanDisk being acquired, but when management rejected
the offer, the stock was especially hard hit in the overall equity market
decline.
OUR FUTURE STRATEGY
The following commentary provided by the Seligman Technology Team: No one can be
sure when the economy will turn around, but we think the start of 2009 will be
difficult, with some improvement possible by the second or third quarter. In the
meantime, we have focused on companies that we believe have the intellectual
property to drive revenue and the ability to grow earnings, revenue and cash
flow at double-digit rates.
Our outlook for the various technology buying groups -- consumers, corporations,
telecommunications companies and the government -- is not particularly
favorable. Consumers are reluctant to buy big ticket items and there are few
items compelling them to spend, with the possible exception of smart phones.
Corporate spending will be more cautious next year, with companies focusing on
lower cost
Large-cap technology
stocks held up better
than small- and
mid-cap stocks, an
advantage for the
Fund since we had
moved the portfolio to
a larger average
market capitalization.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
projects that have a demonstrable, high return on investment or on technology
tied to regulatory and compliance activities. By the second half of next year,
there could be some signs of recovery in corporate technology spending.
Telecommunications companies have also been very cautious, saving cash and
limiting capital expenditures and we expect that to continue. Government
spending may be the strongest of the four segments, but will likely still show
only modest growth.
In terms of industries within the technology sector, we are focusing on the
software industry because it fits the profile of where corporations are likely
to allocate money in the coming year. Security software is a must spend area.
Another is software for regulation and compliance. Finally, we see potential in
infrastructure software that helps run systems more efficiently or delays
hardware expenditures.
We believe the storage segment of the hardware industry may perform well. We see
increased storage of more data types including voice, video and music and also
more stringent storage requirements for compliance purposes. We think the server
industry will remain weak in 2008, while spending on software to enhance
computing capacity will likely be stronger. We anticipate flat sales of personal
computers, with one possible bright spot being netbooks which offer basic
functionality in a low cost notebook computer. Declining sales of cell phone
handsets are likely to hamper results in the communications equipment industry,
but this could be offset by substantial spending on third generation
infrastructure in China.
Technology companies are typically exporters and are generally less susceptible
to the local economy where they are domiciled. However, local economies do drive
a country's stock market, so we must be cognizant of them. We also consider how
currency trends affect particular technology companies, factoring that
information into our earnings and cash flow models at the individual stock
level. In a growing global economy, stock selection would typically lead us to
emerging markets such as China, Taiwan and Latin America. But given economic
conditions, our choice of stocks has skewed more to the U.S. where the
- --------------------------------------------------------------------------------
10 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
economic slowdown began earlier than in Europe and the emerging markets and
recovery may begin sooner.
<Table>
(RICHARD PAROWER PHOTO) (PAUL WICK PHOTO) (AJAY DIWAN PHOTO)
Richard Parower Paul Wick Ajay Diwan
Lead Portfolio Manager Portfolio Manager Portfolio Manager
</Table>
<Table>
(BENJAMIN LU PHOTO) (REEMA SHAH PHOTO)
Benjamin Lu Reema Shah
Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a 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 GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 11
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Global Technology Fund Class A shares (from 11/1/98 to
10/31/08) as compared to the performance of five widely cited performance
indices, the MSCI World Index, the MSCI World IT Index, the S&P NATS Index, the
Lipper Global Science and Technology Funds Index and the Lipper Science and
Technology Funds Index. In comparing the Fund's Class A shares to these indices,
you should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5.75%, while such charges are not reflected in the
performance of the indices. Returns for the Fund include the reinvestment of any
distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
1 YEAR 3 YEARS 5 YEARS 10 YEARS
RIVERSOURCE GLOBAL TECHNOLOGY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $5,170 $7,915 $9,174 $10,385
- ------------------------------------------------------------------------------------------
Average annual total return -48.30% -7.50% -1.71% +0.46%
- ------------------------------------------------------------------------------------------
MSCI WORLD INDEX(1)
Cumulative value of $10,000 $5,849 $8,625 $11,171 $11,278
- ------------------------------------------------------------------------------------------
Average annual total return -41.51% -4.81% +2.24% +1.21%
- ------------------------------------------------------------------------------------------
MSCI WORLD IT INDEX(2)
Cumulative value of $10,000 $5,671 $8,187 $8,495 $7,905
- ------------------------------------------------------------------------------------------
Average annual total return -43.29% -6.45% -3.21% -2.85%
- ------------------------------------------------------------------------------------------
S&P NATS INDEX(3)
Cumulative value of $10,000 $5,854 $8,375 $8,690 $8,425
- ------------------------------------------------------------------------------------------
Average annual total return -41.46% -5.74% -2.77% -1.70%
- ------------------------------------------------------------------------------------------
LIPPER GLOBAL SCIENCE AND TECHNOLOGY FUNDS INDEX(4)
Cumulative value of $10,000 $5,223 $7,754 $8,183 N/A
- ------------------------------------------------------------------------------------------
Average annual total return -47.77% -8.13% -3.93% N/A
- ------------------------------------------------------------------------------------------
LIPPER SCIENCE AND TECHNOLOGY FUNDS INDEX(5)
Cumulative value of $10,000 $5,669 $8,046 $8,508 $9,309
- ------------------------------------------------------------------------------------------
Average annual total return -43.31% -6.99% -3.18% -0.72%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE GLOBAL TECHNOLOGY
FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE GLOBAL
TECHNOLOGY FUND LIPPER GLOBAL
CLASS A LIPPER SCIENCE SCIENCE &
(INCLUDES SALES MSCI WORLD MSCI WORLD S&P NATS & TECHNOLOGY TECHNOLOGY FUNDS
CHARGE) INDEX(1) IT INDEX(2) COMPOSITE INDEX(3) FUNDS INDEX(4) INDEX(5)
------------------ ---------- ----------- ------------------ -------------- ----------------
10/98 $ 9,425 $10,000 $10,000 $10,000 $10,000
10/99 19,634 12,533 18,205 17,900 19,441
10/00 32,707 12,707 19,727 21,643 26,240
10/01 9,949 9,500 9,224 9,477 10,929 $10,556
10/02 6,405 8,122 6,486 6,484 7,322 7,271
10/03 10,696 10,098 9,304 9,695 10,940 11,162
10/04 11,381 11,487 9,113 9,474 10,603 10,777
10/05 12,376 13,075 9,653 10,062 11,568 11,781
10/06 15,050 15,939 10,971 11,151 12,659 13,038
10/07 18,906 19,282 13,940 14,392 16,420 17,487
10/08 10,385 11,278 7,905 8,425 9,309 9,134
</Table>
(1) The Morgan Stanley Capital International (MSCI) World Index, an unmanaged
index, is a free float-adjusted market capitalization index that is designed
to measure global developed market equity performance. The index reflects
reinvestment of all distributions and changes in market prices. Recently,
the Fund's Investment Manager recommended to the Fund that the Fund change
its comparative index from the S&P NATS Index to the MSCI World Index. The
Investment Manager made this recommendation because the new index more
closely aligns to the Fund's investment strategy. Information on both
indices will be included for a one year transition period. In the future,
however, only the MSCI World Index will be included.
(2) The Morgan Stanley Capital International (MSCI) World Information Technology
(IT) Index, an unmanaged index, is a free float-adjusted market
capitalization index designed to measure information technology stock
performance in the global developed equity market. The index reflects
reinvestment of all distributions and changes in market prices.
(3) The S&P North American Technology Sector Index(TM) (S&P NATS Index),
formerly known as the S&P GSTI Composite Index, an unmanaged index, is a
market capitalization-weighted index of approximately 200 stocks designed to
measure the performance of companies in the technology sector. The index
reflects reinvestment of all distributions and changes in market prices.
(4) The Lipper Global Science and Technology Funds Index includes the 10 largest
global science and technology funds tracked by Lipper Inc. The index's
returns include net reinvested dividends. The Fund's performance is
currently measured against this index for purposes of determining the
performance incentive adjustment. Index data is from Oct. 31, 2001.*
(5) The Lipper Science and Technology Funds Index includes the 30 largest
science and technology funds tracked by Lipper Inc. The index returns
include net reinvested dividends.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 13
THE FUND'S LONG-TERM PERFORMANCE (continued) -----------------------------------
* On July 1, 2008, the Lipper Global Science and Technology Funds Index
replaced the Lipper Science and Technology Funds Index for purposes of
determining the performance incentive adjustment. Lipper divided the Lipper
Science and Technology classification (which included both domestic and
global funds) and reclassified the Fund.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended Oct. 31, 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008 OCT. 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 654.90 $ 6.17 1.48%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.74 $ 7.53 1.48%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 656.00 $ 9.35 2.24%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.91 $11.37 2.24%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 656.00 $ 9.35 2.24%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.91 $11.37 2.24%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 659.00 $ 3.35 .80%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.17 $ 4.08 .80%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 658.90 $ 4.68 1.12%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.56 $ 5.70 1.12%
- ------------------------------------------------------------------------------------------
</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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Oct. 31, 2008: -34.51%
for Class A, -34.40% for Class B, -34.40% for Class C, -34.10% for Class I
and -34.11% for Class R4.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (96.7%)
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (17.0%)
Cisco Systems 269,902(b) $4,796,158
Corning 119,360 1,292,669
Juniper Networks 97,189(b) 1,821,322
Nokia ADR 140,946(c) 2,139,560
QUALCOMM 92,373 3,534,191
Tellabs 240,983(b) 1,021,768
-----------
Total 14,605,668
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (17.9%)
Apple 44,503(b) 4,788,078
Dell 110,034(b) 1,336,913
Hewlett-Packard 146,241 5,598,105
IBM 27,341 2,541,893
SanDisk 54,995(b) 488,906
Seagate Technology 91,678(c) 620,660
-----------
Total 15,374,555
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (3.3%)
Qwest Communications Intl 485,257 1,387,835
Verizon Communications 47,759 1,417,010
-----------
Total 2,804,845
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (1.4%)
Flextronics Intl 85,061(b,c) 355,555
Jabil Circuit 98,145 825,399
-----------
Total 1,180,954
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (7.6%)
eBay 63,308(b) 966,713
Google Cl A 13,146(b) 4,724,147
Yahoo! 69,138(b) 886,349
-----------
Total 6,577,209
- -------------------------------------------------------------------------------------
IT SERVICES (2.1%)
Automatic Data Processing 24,734 864,453
MasterCard Cl A 6,250 923,875
-----------
Total 1,788,328
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (22.9%)
Broadcom Cl A 108,186(b) 1,847,817
Fairchild Semiconductor Intl 192,026(b) 1,090,708
Infineon Technologies ADR 358,655(b,c) 1,122,590
Intel 227,977 3,647,632
Lam Research 93,192(b) 2,083,773
Micron Technology 523,533(b) 2,465,840
Monolithic Power Systems 67,803(b) 1,151,973
NVIDIA 62,278(b) 545,555
ON Semiconductor 281,078(b) 1,436,309
RF Micro Devices 673,609(b) 1,340,482
Samsung Electronics 2,056(c) 867,523
Skyworks Solutions 191,412(b) 1,364,768
Spansion Cl A 110,528(b) 68,527
Teradyne 122,900(b) 626,790
-----------
Total 19,660,287
- -------------------------------------------------------------------------------------
SOFTWARE (23.3%)
Adobe Systems 79,083(b) 2,106,771
Autodesk 95,842(b) 2,042,393
Citrix Systems 66,992(b) 1,726,384
Microsoft 321,254 7,173,602
Nintendo 3,800(c) 1,221,312
Oracle 280,475(b) 5,129,888
Symantec 56,226(b) 707,323
-----------
Total 20,107,673
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (1.2%)
Vodafone Group 542,387(c) 1,043,302
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $113,621,615) $83,142,821
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
MONEY MARKET FUND (3.3%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 1.60% 2,848,852(d) $2,848,852
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $2,848,852) $2,848,852
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $116,470,467)(e) $85,991,673
=====================================================================================
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At Oct. 31, 2008, the
value of foreign securities represented 8.6% of net assets.
(d) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(e) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $118,127,184 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $693,791
Unrealized depreciation (32,829,302)
- -----------------------------------------------------------
Net unrealized depreciation $(32,135,511)
- -----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
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.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $113,621,615) $ 83,142,821
Affiliated money market fund (identified cost $2,848,852) 2,848,852
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $116,470,467) 85,991,673
Capital shares receivable 49,324
Dividends receivable 51,936
Receivable for investment securities sold 66,738
- --------------------------------------------------------------------------------
Total assets 86,159,671
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 79,899
Accrued investment management services fees 1,691
Accrued distribution fees 936
Accrued transfer agency fees 1,211
Accrued administrative services fees 141
Accrued plan administration services fees 1
Other accrued expenses 84,634
- --------------------------------------------------------------------------------
Total liabilities 168,513
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 85,991,158
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 531,458
Additional paid-in capital 466,549,656
Excess of distributions over net investment income (1,348)
Accumulated net realized gain (loss) (350,610,397)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (30,478,211)
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 85,991,158
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $68,868,177 41,145,420 $1.67(1)
Class B $15,072,741 10,575,597 $1.43
Class C $ 1,965,181 1,374,828 $1.43
Class I $ 4,802 2,785 $1.72
Class R4 $ 80,257 47,182 $1.70
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $1.77. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 19
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 1,253,934
Interest 17,315
Income distributions from affiliated money market fund 283,377
Fee income from securities lending 42,841
Less foreign taxes withheld (46,095)
- -------------------------------------------------------------------------------
Total income 1,551,372
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 857,290
Distribution fees
Class A 266,728
Class B 297,356
Class C 31,112
Transfer agency fees
Class A 414,611
Class B 119,972
Class C 12,378
Class R4 74
Administrative services fees 83,820
Plan administration services fees -- Class R4 372
Compensation of board members 2,985
Custodian fees 16,845
Printing and postage 69,984
Registration fees 61,015
Professional fees 35,104
Other 6,880
- -------------------------------------------------------------------------------
Total expenses 2,276,526
Expenses waived/reimbursed by the Investment Manager and its
affiliates (372)
Earnings and bank fee credits on cash balances (4,354)
- -------------------------------------------------------------------------------
Total net expenses 2,271,800
- -------------------------------------------------------------------------------
Investment income (loss) -- net (720,428)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (18,394,450)
Foreign currency transactions 27,252
Options contracts written 9,840
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (18,357,358)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (58,394,053)
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (76,751,411)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(77,471,839)
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS
Investment income (loss) -- net $ (720,428) $ (1,731,686)
Net realized gain (loss) on investments (18,357,358) 32,284,685
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (58,394,053) 8,992,097
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (77,471,839) 39,545,096
- ---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 21,369,521 21,370,119
Class B shares 2,136,740 3,823,491
Class C shares 522,248 784,042
Class R4 shares 122,848 221,867
Payments for redemptions
Class A shares (31,405,834) (35,029,639)
Class B shares (13,779,456) (13,037,111)
Class C shares (833,165) (989,760)
Class I shares (7,015) --
Class R4 shares (115,949) (653,020)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (21,990,062) (23,510,011)
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (99,461,901) 16,035,085
Net assets at beginning of year 185,453,059 169,417,974
- ---------------------------------------------------------------------------------------------
Net assets at end of year $ 85,991,158 $185,453,059
- ---------------------------------------------------------------------------------------------
Excess of distributions over net investment income $ (1,348) $ (1,860)
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 21
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $3.04 $2.42 $1.99 $1.83 $1.72
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.02)(b) (.02) (.02) (.03)
Net gains (losses) (both realized and
unrealized) (1.36) .64 .45 .18 .14
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.37) .62 .43 .16 .11
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.67 $3.04 $2.42 $1.99 $1.83
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $69 $139 $123 $120 $146
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.45% 1.60% 1.69% 1.75% 1.74%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.34%) (.80%) (.89%) (.92%) (1.48%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 167% 196% 115% 349%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.07%) 25.62% 21.61% 8.74% 6.40%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $2.61 $2.09 $1.74 $1.60 $1.53
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02)(b) (.04)(b) (.03) (.03) (.04)
Net gains (losses) (both realized and
unrealized) (1.16) .56 .38 .17 .11
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.18) .52 .35 .14 .07
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.43 $2.61 $2.09 $1.74 $1.60
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15 $43 $42 $46 $59
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.22% 2.38% 2.47% 2.53% 2.52%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.09%) (1.58%) (1.66%) (1.71%) (2.26%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 167% 196% 115% 349%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.21%) 24.88% 20.12% 8.75% 4.58%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $2.62 $2.10 $1.74 $1.61 $1.53
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02)(b) (.04)(b) (.03) (.03) (.04)
Net gains (losses) (both realized and
unrealized) (1.17) .56 .39 .16 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.19) .52 .36 .13 .08
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.43 $2.62 $2.10 $1.74 $1.61
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $4 $3 $3 $4
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.21% 2.36% 2.45% 2.52% 2.49%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.10%) (1.56%) (1.66%) (1.69%) (2.23%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 167% 196% 115% 349%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.42%) 24.76% 20.69% 8.07% 5.23%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004(b)
Net asset value, beginning of period $3.11 $2.46 $2.01 $1.83 $1.70
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(c) (.01)(c) (.01) (.01) (.02)
Net gains (losses) (both realized and
unrealized) (1.40) .66 .46 .19 .15
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.39) .65 .45 .18 .13
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.72 $3.11 $2.46 $2.01 $1.83
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .81% .99% 1.01% 1.04% 1.03%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .31% (.19%) (.22%) (.21%) (.73%)(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 167% 196% 115% 349%
- --------------------------------------------------------------------------------------------------------------
Total return (44.69%) 26.42% 22.39% 9.84% 7.65%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from July 15, 2004 (inception date) to Oct. 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $3.07 $2.43 $2.00 $1.83 $1.72
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(b) (.01)(b) (.02) (.02) (.02)
Net gains (losses) (both realized and
unrealized) (1.38) .65 .45 .19 .13
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.37) .64 .43 .17 .11
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.70 $3.07 $2.43 $2.00 $1.83
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $1 $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.12% 1.34% 1.47% 1.54% 1.55%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .87% 1.34% 1.47% 1.54% 1.55%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .22% (.52%) (.68%) (.73%) (1.28%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 167% 196% 115% 349%
- --------------------------------------------------------------------------------------------------------------
Total return (44.63%) 26.34% 21.50% 9.29% 6.40%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Global Technology Fund (the Fund) is a series of RiverSource Global
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Global Series, Inc. has 10 billion authorized shares of capital stock that can
be allocated among the separate series as designated by the Board of Directors
(the Board). The Fund focuses on equity securities of companies in the
information technology industry throughout the world.
The Fund offers Class A, Class B, Class C, Class I and Class R4 shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 shares are sold without a front-end sales charge or CDSC
and are offered to qualifying institutional investors.
At Oct. 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) owned 100% of Class I shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
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,
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
and other yield and risk factors it deems relevant in determining valuations.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. The procedures adopted by the Board
generally contemplate the use of fair valuation in the event that price
quotations or valuations are not readily available, price quotations or
valuations from other sources are not reflective of market value and thus deemed
unreliable, or a significant event has occurred in relation to a security or
class of securities (such as foreign securities) that is not reflected in price
quotations or valuations from other sources. A fair value price is a good faith
estimate of the value of a security at a given point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligations depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option
- --------------------------------------------------------------------------------
28 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
is exercised. The risk in buying an option is that the Fund pays a premium
whether or not the option is exercised. The Fund also has the additional risk of
being unable to enter into a closing transaction if a liquid secondary market
does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Options
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, the Fund had no
outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
settlement date on securities transactions, and other translation gains or
losses on dividends, interest income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
counterparty will not complete its contract obligations. At Oct. 31, 2008, the
Fund had no outstanding forward foreign currency contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
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 options contracts,
foreign currency transactions and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in
- --------------------------------------------------------------------------------
30 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $720,940
and accumulated net realized loss has been increased by $27,252 resulting in a
net reclassification adjustment to decrease paid-in capital by $693,688.
The tax character of distributions paid for the years indicated is as follows:
For the years ended Oct. 31, 2008 and 2007, there were no distributions.
As of Oct. 31, 2008, the components of distributable earnings on a tax basis are
as follows:
<Table>
Undistributed ordinary income................. $ --
Undistributed accumulated long-term gain...... $ --
Accumulated realized loss..................... $(348,953,680)
Unrealized appreciation (depreciation)........ $ (32,136,276)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement on 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
Oct. 31, 2008, management does not believe the adoption of SFAS 161 will impact
the financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a 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. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Nov. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.72%
to 0.595% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Global Science and Technology Funds Index*. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$148,556 for the year ended Oct. 31, 2008. The management fee for the year ended
Oct. 31, 2008 was 0.61% of the Fund's average daily net assets, including the
adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as
* On July 1, 2008, the Lipper Global Science and Technology Funds Index replaced
the Lipper Science and Technology Funds Index for purposes of determining the
performance incentive adjustment.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
the Fund's assets increase. The fee for the year ended Oct. 31, 2008 was 0.06%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, other expenses paid to this company were $755.
COMPENSATION OF BOARD MEMBERS
Compensation of Board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R4 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees 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 Funds average daily net assets
attributable to Class R4 shares for the provision of various administrative
record keeping, communication and educational services.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A 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 $482,000 and $24,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$168,357 for Class A, $21,609 for Class B and $756 for Class C for the year
ended Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R4............................................ 0.87%
</Table>
The waived/reimbursed fees and expenses for the plan administration services fee
at the class level was $372 for Class R4.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed 1.41% for Class R4 of the Fund's average daily net assets.
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
- --------------------------------------------------------------------------------
34 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $4,354 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $107,012,733 and $119,951,469 respectively, for the year
ended Oct. 31, 2008. Realized gains and losses are determined on an identified
cost basis.
Income from securities lending amounted to $42,841 for the year ended Oct. 31,
2008. Expenses paid to the Investment Manager as securities lending agent were
$676 for the year ended Oct. 31, 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 Oct. 31, 2008, the Fund had no securities out on
loan.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 8,799,565 -- (13,224,262) (4,424,697)
Class B 993,451 -- (6,754,597) (5,761,146)
Class C 254,027 -- (411,849) (157,822)
Class I -- -- (3,097) (3,097)
Class R4 48,279 -- (56,646) (8,367)
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 8,002,124 -- (13,306,617) (5,304,493)
Class B 1,671,730 -- (5,677,043) (4,005,313)
Class C 339,430 -- (436,868) (97,438)
Class R4 88,006 -- (256,250) (168,244)
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
5. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as follows:
<Table>
<Caption>
CALLS PUTS
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- -------------------------------------------------------------------------
Balance Oct. 31, 2007 -- $ -- -- $--
Opened 43 9,840 -- --
Closed -- -- -- --
Expired (43) (9,840) -- --
- -------------------------------------------------------------------------
Balance Oct. 31, 2008 -- $ -- -- $--
- -------------------------------------------------------------------------
</Table>
See Note 1 "Summary of Significant Accounting Policies."
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $67,154,592 and $75,899,855, respectively, for the year
ended Oct. 31, 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 Oct. 31, 2008, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility became effective on Oct. 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
- --------------------------------------------------------------------------------
36 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
to its pro rata share of the amount of the credit facility at a rate of 0.06%
per annum, in addition to an upfront fee equal to its pro rata share of 0.02% of
the amount of the credit facility. The Fund had no borrowings during the year
ended Oct. 31, 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. (JPMCB), 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.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes the Fund had a capital loss carry-over of
$348,953,680 at Oct. 31, 2008, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2009 2010 2016
$250,345,326 $81,299,227 $17,309,127
</Table>
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
9. RISKS RELATING TO CERTAIN INVESTMENTS
SECTOR RISK
The Fund invests a significant part of its total assets in securities of
companies primarily engaged in the technology, media and telecommunications
sectors. This may result in greater fluctuations in value than would be the case
for a fund invested in a wider variety of unrelated industries. As these sectors
increase or decrease in favor with the investing public, the price of securities
of companies that rely heavily on those sectors could become increasingly
sensitive to downswings in the economy.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
FOREIGN RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services are excessive. The plaintiffs seek remedies including restitution and
rescission of investment advisory and distribution agreements. The plaintiffs
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota. 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.
- --------------------------------------------------------------------------------
38 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG). In September 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, Seligman and its 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. Seligman does not believe that the foregoing legal action or other
possible actions will have a material adverse
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
impact on Seligman or its clients, including the Seligman Funds and other
investment companies managed by it; however, there can be no assurance of this
or that these matters and any related publicity will 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.
11. 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.
- --------------------------------------------------------------------------------
40 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE GLOBAL TECHNOLOGY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Global Technology Fund (the Fund)
(one of the portfolios constituting the RiverSource Global Series, Inc.) as of
October 31, 2008, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for each of the two years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights of the Fund
for the periods presented through October 31, 2006, were audited by other
auditors whose report dated December 20, 2006, expressed an unqualified opinion
on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Global Technology Fund of the RiverSource Global Series,
Inc. at October 31, 2008, the results of its operations for the year then ended,
and changes in its net assets and the financial highlights for each of the two
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
42 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
Fiscal year ended Oct. 31, 2008
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 43
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
44 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 45
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
46 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 47
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
48 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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 GLOBAL TECHNOLOGY FUND -- 2008 ANNUAL REPORT 49
RIVERSOURCE GLOBAL TECHNOLOGY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6395 N (12/08)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
EMERGING MARKETS FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
THREADNEEDLE EMERGING MARKETS FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 16
Statement of Assets and
Liabilities...................... 20
Statement of Operations............ 21
Statements of Changes in Net
Assets........................... 22
Financial Highlights............... 23
Notes to Financial Statements...... 29
Report of Independent Registered
Public Accounting Firm........... 44
Federal Income Tax Information..... 46
Board Members and Officers......... 47
Proxy Voting....................... 52
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
Please see the pages that follow this report for a
list of mutual funds that are included in the
RiverSource family of funds.
(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.
- --------------------------------------------------------------------------------
2 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> The Threadneedle Emerging Markets Fund (the Fund) Class A shares declined
57.79% (excluding sales charge) for the 12 months ended Oct. 31, 2008.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) Emerging Markets Index, which fell 56.22%.
> The Fund's peer group, the Lipper Emerging Markets Funds Index, declined
56.42% for the period.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
Threadneedle Emerging Markets
Fund Class A (excluding sales
charge) -57.79% -0.71% +8.42% +9.06%
- ---------------------------------------------------------------------
MSCI Emerging Markets Index
(unmanaged) -56.22% -0.07% +9.87% +10.05%
- ---------------------------------------------------------------------
Lipper Emerging Markets Funds
Index -56.42% -2.03% +8.74% +9.39%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total Net
expenses expenses
- --------------------------------------
Class A 1.87% 1.87%
- --------------------------------------
Class B 2.62% 2.62%
- --------------------------------------
Class C 2.63% 2.63%
- --------------------------------------
Class I 1.42% 1.42%
- --------------------------------------
Class R4 1.73% 1.72%(a)
- --------------------------------------
Class R5 1.47% 1.47%
- --------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment (that increased the management fee by 0.08%
for the year ended Oct. 31, 2008), will not exceed 1.64% for Class R4.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
- --------------------------------------------------------------------------------
4 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
11/13/96) -57.79% -0.71% +8.42% +9.06% N/A
- ---------------------------------------------------------------------------
Class B (inception
11/13/96) -58.08% -1.43% +7.57% +8.22% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -58.15% -1.42% +7.61% N/A +3.48%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) -57.63% -0.28% N/A N/A +5.37%
- ---------------------------------------------------------------------------
Class R4 (inception
11/13/96) -57.58% -0.44% +8.68% +9.32% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
08/1/08) N/A N/A N/A N/A -44.96%**
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -60.20% -2.64% +7.15% +8.50% N/A
- ---------------------------------------------------------------------------
Class B (inception
11/13/96) -59.70% -2.22% +7.32% +8.22% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -58.41% -1.42% +7.61% N/A +3.48%
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
11/13/96) -33.20% +8.23% +17.68% +13.60% N/A
- -------------------------------------------------------------------------
Class B (inception
11/13/96) -33.74% +7.40% +16.77% +12.73% N/A
- -------------------------------------------------------------------------
Class C (inception
6/26/00) -33.75% +7.40% +16.74% N/A +7.67%
- -------------------------------------------------------------------------
Class I (inception
3/4/04) -32.91% +8.72% N/A N/A +13.25%
- -------------------------------------------------------------------------
Class R4 (inception
11/13/96) -32.86% +8.52% +17.94% +13.87% N/A
- -------------------------------------------------------------------------
Class R5 (inception
08/1/08) N/A N/A N/A N/A -23.61%**
- -------------------------------------------------------------------------
With sales charge
Class A (inception
11/13/96) -37.04% +6.11% +16.28% +13.01% N/A
- -------------------------------------------------------------------------
Class B (inception
11/13/96) -36.29% +6.54% +16.56% +12.73% N/A
- -------------------------------------------------------------------------
Class C (inception
6/26/00) -34.26% +7.40% +16.74% N/A +7.67%
- -------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R4 and Class R5 shares. Class I, Class R4 and Class
R5 shares are available to institutional investors only.
*For classes with less than 10 years performance.
**Not annualized.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
Below, Threadneedle Emerging Markets Fund portfolio managers Julian Thompson and
Jules Mort of Threadneedle International Limited (Threadneedle) discuss the
Fund's results and positioning for the fiscal year ended Oct. 31, 2008.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
acts as the subadvisor to the Fund.
Dear Shareholders,
The Threadneedle Emerging Markets Fund (the Fund) Class A shares declined 57.79%
(excluding sales charge) for the 12 months ended Oct. 31, 2008. The Fund
underperformed its benchmark, the Morgan Stanley Capital International (MSCI)
Emerging Markets Index, which fell 56.22%. The Fund's peer group, the Lipper
Emerging Markets Funds Index, declined 56.42% for the period.
COUNTRY DIVERSIFICATION (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Bermuda 1.0%
- ------------------------------------------------
Brazil 12.2%
- ------------------------------------------------
Canada 0.8%
- ------------------------------------------------
China 14.4%
- ------------------------------------------------
Czech Republic 1.1%
- ------------------------------------------------
Hong Kong 7.5%
- ------------------------------------------------
India 7.3%
- ------------------------------------------------
Indonesia 1.4%
- ------------------------------------------------
Israel 6.7%
- ------------------------------------------------
Malaysia 1.3%
- ------------------------------------------------
Mexico 6.7%
- ------------------------------------------------
Norway 0.1%
- ------------------------------------------------
Russia 7.6%
- ------------------------------------------------
South Africa 8.3%
- ------------------------------------------------
South Korea 9.1%
- ------------------------------------------------
Taiwan 7.4%
- ------------------------------------------------
Thailand 1.1%
- ------------------------------------------------
Turkey 1.2%
- ------------------------------------------------
Other(1) 4.8%
- ------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
6 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
This has been a very difficult period for emerging market equities. The bull
market cycle for the emerging market universe peaked last October, just before
the start of the Fund's fiscal period. Since then the U.S. credit crisis has
caused increased risk aversion and a shortage of liquidity in the global banking
system. Investors have sold securities perceived to be riskier and reinvested
the assets in dollar-denominated securities, pushing the value of the dollar
higher relative to most emerging market currencies. Rising risk aversion has
reduced the amount of money people are willing to invest in emerging markets and
falling demand for these securities has driven down equity prices.
Emerging market economies are quite sensitive to global economic trends because
they are typically large exporters of either commodities or manufactured goods.
Domestic consumption tends to be a smaller percentage of the gross national
product in emerging market countries. The economic slowdown in developed nations
has reduced demand for commodities and other emerging market exports. As a
result, economic growth rates in emerging market countries have also declined.
For the fiscal year, there was little difference in the performance of various
sectors or the results from different regions in the emerging market universe.
Asia underperformed, while Latin America and Eastern
TOP TEN HOLDINGS (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
China Mobile (Hong Kong) 6.5%
- -------------------------------------------------
Gazprom ADR (Russia) 4.4%
- -------------------------------------------------
Samsung Electronics (South Korea) 4.0%
- -------------------------------------------------
Redecard (Brazil) 3.7%
- -------------------------------------------------
Taiwan Semiconductor Mfg ADR (Taiwan) 3.3%
- -------------------------------------------------
Petroleo Brasileiro ADR (Brazil) 3.1%
- -------------------------------------------------
Industrial & Commercial Bank of China 3.0%
Series H (China)
- -------------------------------------------------
Teva Pharmaceutical Inds ADR (Israel) 2.9%
- -------------------------------------------------
Ping An Insurance Group of China Series H 2.7%
(China)
- -------------------------------------------------
America Movil ADR Series L (Mexico) 2.3%
- -------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Europe/the Mid East/Africa slightly outperformed the MSCI Emerging Markets
Index. The Fund's results suffered from a larger weighting in Russia than the
MSCI Emerging Markets Index, while being overweight in Brazil was advantageous.
Cyclical sectors such as industrials, materials, financials and energy were the
weaker performers within the MSCI Emerging Markets Index. Health care was the
only sector to hold up much better than the overall MSCI Emerging Markets Index.
The Fund entered the period with a larger materials weighting than the MSCI
Emerging Markets Index and, on average, maintained a larger energy weighting
throughout the period. Though these positions were helpful to performance early
in the fiscal year, they were detrimental in the latter months as it became
clear that the world economy, including China, was slowing. The portfolio
benefited from having a larger health care weighting and smaller industrials and
financials positions than the MSCI Emerging Markets Index.
Stock selection was mainly responsible for the Fund's underperformance of the
MSCI Emerging Markets Index. Three Russian holdings were key detractors. Coal
and steel company MECHEL came under political pressure and declined on concerns
that the Russian government might appropriate some of its assets. MMC NORILSK
NICKEL, a mining company that is the world's largest nickel producer, also
suffered from fear that it might ultimately pass into state ownership. Energy
company ROSNEFT OIL declined on concerns about its high level of short-term
debt. The Russian government is the company's majority shareholder so the credit
issues should not have been a problem. However, the whole Russian market
weakened during the period. We gradually sold the portfolio's holdings of Mechel
and Rosneft.
REDECARD in Brazil had a positive effect on relative performance. One of the
portfolio's larger holdings at the beginning of the fiscal year, Redecard has
the MasterCard franchise in Brazil and has produced very good results this year.
We added to the portfolio's holdings throughout the period. The company is a
transaction processor that does not take on credit risk, but benefits from
increased volume as people use credit cards more often in place of cash. We
think the outlook for the company remains favorable. It has a good dividend
yield and the Brazilian economy seems to be somewhat insulated from the global
slowdown.
- --------------------------------------------------------------------------------
8 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Exports are a lesser percentage of Brazil's GDP than in other emerging market
countries, and Brazilian consumers have less debt so they have not been reducing
spending as much as in other nations.
CHANGES TO THE FUND'S PORTFOLIO
We decreased the portfolio's Russian exposure very significantly. We also moved
Brazil from an overweight to a weighting about equal to the MSCI Emerging
Markets Index. Though we think Brazil is well positioned for the global
slowdown, the market has a large number of commodity companies and we reduced
our exposure in that sector, resulting in a reduction in the portfolio's Brazil
weighting. We maintained exposure to Brazil's domestic economy.
We increased the portfolio's holdings in China, which became the largest country
allocation in the Fund. Our strategy is to focus the portfolio on countries
whose economies are in the strongest position to withstand the global economic
slowdown. The Chinese government has a healthy fiscal surplus, has relatively
low external debt and has announced a massive infrastructure program to counter
the loss of export demand. The Chinese banking system is well funded, with a low
ratio of loans to deposits, so we believe it is in a position to increase
lending. In our view, China appears well positioned to prevail through the
global slowdown.
We kept the portfolio very underweight in South Korea and Taiwan due to their
dependence on the consumer electronics industry and their indirect exposure to
consumer and business spending in developed markets. The domestic banking
systems
We have focused on companies that we believe have solid franchises, stable
revenue generators and healthy balance sheets.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
in both countries are not well funded and consumers have high debt so domestic
spending may suffer as well.
Regarding the portfolio's sector weightings, we reduced exposure to the
materials sector, particularly steel and iron ore stocks. We also reduced the
energy weighting. We increased holdings of health care stocks and software
companies within the technology sector.
We moved from an underweight in the financials sector to an overweight. Though
financials stocks in emerging markets have suffered in sympathy with the
financials sell-off in developed markets, we believe most emerging market
financial stocks have better funding structures and higher asset quality than
their counterparts in the U.S. and Europe. We have added to what we consider the
most attractive banks from a quality and funding perspective. We have found
these mainly in China, Brazil and South Africa. We sold the portfolio's holdings
of SBERBANK in Russia because of concerns about the security of Russia's banking
sector.
OUR FUTURE STRATEGY
In summary, we have positioned the portfolio quite defensively for what is
clearly a downturn in the global economy. We have focused on companies that we
believe have solid franchises, stable revenue generators and healthy balance
sheets. We reduced the number of portfolio holdings, consolidating assets into
what we think are the companies best able to weather the downturn.
The portfolio's key regional overweights are China and Mexico. We consider the
quality of companies in Mexico to be very high. The portfolio has slightly more
cash than normal to enable us to take advantage of market volatility.
- --------------------------------------------------------------------------------
10 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
In general, we expect earnings to fall in 2009, but we think price/earnings
multiples for emerging markets will be attractive, both on an historical basis
and relative to developed markets. Though the environment is likely to remain
volatile, we do think emerging markets will be able to survive the downturn
without any major financial crisis.
<Table>
(PHOTO - JULIAN THOMPSON) (PHOTO - JULES MORT)
Julian Thompson, PhD Jules Mort
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 11
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Emerging Markets Fund Class A shares (from 11/1/98 to
10/31/08) as compared to the performance of two widely cited performance
indices, the Morgan Stanley Capital International (MSCI) Emerging Markets Index
and the Lipper Emerging Markets Funds Index. In comparing the Fund's Class A
shares to these indices, you should take into account the fact that the Fund's
performance reflects the maximum sales charge of 5.75%, while such charges are
not reflected in the performance of the indices. Returns for the Fund include
the reinvestment of any distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
1 YEAR 3 YEARS 5 YEARS 10 YEARS
THREADNEEDLE EMERGING MARKETS FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $3,980 $9,229 $14,124 $22,431
- ------------------------------------------------------------------------------------------
Average annual total return -60.20% -2.64% +7.15% +8.50%
- ------------------------------------------------------------------------------------------
MSCI EMERGING MARKETS INDEX(1)
Cumulative value of $10,000 $4,378 $9,979 $16,010 $26,064
- ------------------------------------------------------------------------------------------
Average annual total return -56.22% -0.07% +9.87% +10.05%
- ------------------------------------------------------------------------------------------
LIPPER EMERGING MARKETS FUNDS INDEX(2)
Cumulative value of $10,000 $4,358 $9,403 $15,204 $24,545
- ------------------------------------------------------------------------------------------
Average annual total return -56.42% -2.03% +8.74% +9.39%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 5.
- --------------------------------------------------------------------------------
12 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE EMERGING MARKETS
FUND LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE EMERGING
MARKETS FUND
CLASS A LIPPER EMERGING
(INCLUDES SALES MSCI EMERGING MARKETS FUNDS
CHARGE) MARKETS INDEX(1) INDEX(2)
--------------------- ---------------- ---------------
10/98 $ 9,425 $ 10,000 $ 10,000
10/99 13,684 14,463 13,641
10/00 13,192 13,189 13,057
10/01 10,121 10,095 10,157
10/02 10,971 10,947 10,881
10/03 14,975 16,282 16,145
10/04 17,384 19,441 19,629
10/05 22,918 26,117 26,100
10/06 31,592 35,367 35,134
10/07 53,141 59,534 56,323
10/08 22,431 26,064 24,545
</Table>
(1) The MSCI Emerging Markets Index, an unmanaged market capitalization-weighted
index, is designed to measure equity market performance in the global
emerging markets. The index reflects reinvestment of all distributions and
changes in market prices.
(2) The Lipper Emerging Markets Funds Index includes the 30 largest emerging
markets funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured against
this index for purposes of determining the performance incentive adjustment.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period indicated and held until Oct. 31, 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 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 479.20 $ 7.12 1.91%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.58 $ 9.70 1.91%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 476.80 $ 9.94 2.67%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,011.75 $13.54 2.67%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 476.90 $ 9.94 2.67%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,011.75 $13.54 2.67%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 480.30 $ 5.34 1.43%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 7.27 1.43%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 480.40 $ 6.49 1.74%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.43 $ 8.84 1.74%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 550.40 $ 2.84 1.47%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.80 $ 7.48 1.47%
- -------------------------------------------------------------------------------------------
</Table>
(a) The beginning account value for Class R5 is as of Aug. 1, 2008 (when shares
of the class became publicly available) for actual expense calculations, and
as of May 1, 2008 for hypothetical expense calculations.
(b) Expenses for Classes A, B, C, I and R4 are equal to the Fund's annualized
expense ratio as indicated above, multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the one-half year
period). Actual expenses for Class R5 are equal to the Fund's annualized
expense ratio as indicated above, multiplied by the average account value
over the period, multiplied by 91/365 (to reflect the period from Aug. 1,
2008 to Oct. 31, 2008). Hypothetical expenses for Class R5 are equal to the
Fund's annualized expense ratio as indicated above, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
(c) Based on the actual return for the six months ended Oct. 31, 2008: -52.08%
for Class A, -52.32% for Class B, -52.31% for Class C, -51.97% for Class I
and -51.96% for Class R4.
(d) Based on the actual return for the period from Aug. 1, 2008 (when shares
became publicly available) to Oct. 31, 2008: -44.96% for Class R5.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS ------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (95.8%)(c)
ISSUER SHARES VALUE(a)
BERMUDA (1.0%)
Credicorp $-
72,761 2,857,324
- -------------------------------------------------------------------------------------
BRAZIL (12.2%)
AmBev ADR 54,439 2,313,658
Banco Bradesco 255,100 2,937,551
Companhia Vale do Rio Doce ADR 211,011 2,768,464
MRV Engenharia e Participacoes 160,400 833,218
Multiplan Empreendimentos Imobiliarios 399,849(b) 2,017,774
PDG Realty 269,800 1,381,506
Petroleo Brasileiro ADR 327,760 8,813,466
Redecard 955,100 10,405,191
UNIBANCO -- Uniao de Bancos Brasileiros GDR 52,661 3,321,857
------------
Total 34,792,685
- -------------------------------------------------------------------------------------
CANADA (0.8%)
Yamana Gold 460,420 2,131,745
- -------------------------------------------------------------------------------------
CHINA (14.4%)
China Construction Bank Series H 9,620,000 4,772,560
China Life Insurance Series H 2,005,000 5,358,462
China Medical Technologies ADR 77,736 1,894,426
China Merchants Bank Series H 2,439,000 3,736,882
CNOOC ADR 71,752 5,861,421
Industrial & Commercial Bank of China Series
H 18,359,000 8,638,789
Li Ning 1,691,500 2,093,436
Minth Group 2,484,000 868,102
Ping An Insurance Group of China Series H 1,825,000 7,805,478
------------
Total 41,029,556
- -------------------------------------------------------------------------------------
CZECH REPUBLIC (1.1%)
CEZ 70,000 3,033,756
- -------------------------------------------------------------------------------------
HONG KONG (7.5%)
China Mobile 2,084,000 18,347,176
China Overseas Land & Investment 2,566,000 2,897,869
------------
Total 21,245,045
- -------------------------------------------------------------------------------------
INDIA (7.4%)
Bharat Heavy Electricals 91,662 2,435,150
Bharti Airtel 412,765(b) 5,573,659
Housing Development Finance 87,154 3,163,627
Infosys Technologies 191,779 5,574,974
Reliance Inds 145,110 4,113,500
------------
Total 20,860,910
- -------------------------------------------------------------------------------------
INDONESIA (1.4%)
Bank Rakyat Indonesia 8,962,000 2,729,545
Bumi Resources 7,288,500(g) 1,136,986
------------
Total 3,866,531
- -------------------------------------------------------------------------------------
ISRAEL (6.8%)
Check Point Software Technologies 297,210(b) 6,009,586
Israel Chemicals 491,565 4,979,313
Teva Pharmaceutical Inds ADR 190,786 8,180,903
------------
Total 19,169,802
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MALAYSIA (1.3%)
IOI $-
2,647,300 2,101,445
KNM Group 9,350,150 1,587,707
------------
Total 3,689,152
- -------------------------------------------------------------------------------------
MEXICO (6.8%)
America Movil ADR Series L 207,252 6,412,377
Grupo Financiero Banorte Series O 1,930,900 3,543,198
Grupo Televisa ADR 252,920 4,466,567
Wal-Mart de Mexico Series V 1,747,500 4,707,272
------------
Total 19,129,414
- -------------------------------------------------------------------------------------
NORWAY (0.1%)
Copeinca 110,800(b) 181,059
- -------------------------------------------------------------------------------------
RUSSIA (7.7%)
Eurasia Drilling GDR 243,662(b,d,e)1,339,747
Gazprom ADR 617,321 12,577,916
MMC Norilsk Nickel ADR 201,865 2,025,853
Pharmstandard 72,811(b) 1,830,430
Sibirskiy Cement 24,589 1,475,340
Vimpel-Communications ADR 163,588 2,372,026
------------
Total 21,621,312
- -------------------------------------------------------------------------------------
SOUTH AFRICA (8.4%)
ABSA Group 335,510 3,517,898
Aveng 720,771 3,571,281
Gold Fields 485,399 3,386,473
Gold Fields ADR 218,148 1,450,684
Impala Platinum Holdings 258,879 2,707,989
MTN Group 350,937 3,949,297
Murray & Roberts Holdings 272,391 1,848,111
Sasol 109,036 3,225,527
------------
Total 23,657,260
- -------------------------------------------------------------------------------------
SOUTH KOREA (9.2%)
Hyundai Motor 68,408 3,163,629
Infopia 65,450 488,514
KT 34,150 870,018
LG Electronics 45,653 3,411,257
NHN 33,539(b) 3,572,276
Samsung Electronics 27,090 11,430,540
Yuhan 20,363 2,964,512
------------
Total 25,900,746
- -------------------------------------------------------------------------------------
TAIWAN (7.4%)
Asustek Computer 2,037,062 2,919,344
Chunghwa Telecom 1,286,460 2,129,621
First Financial Holding 4,196,764 1,980,311
Hon Hai Precision Industry 1,098,250 2,652,248
Taiwan Semiconductor Mfg ADR 1,119,988 9,251,101
Tripod Technology 1,008,155 1,232,753
U-Ming Marine Transport 635,000 741,724
------------
Total 20,907,102
- -------------------------------------------------------------------------------------
THAILAND (1.1%)
Kasikornbank 2,094,800 3,066,297
- -------------------------------------------------------------------------------------
TURKEY (1.2%)
Turkiye Garanti Bankasi 2,008,865(b) 3,374,384
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $424,358,342) $270,514,080
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (4.8%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 1.60% $-
13,521,361(f) 13,521,361
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $13,521,361) $13,521,361
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $437,879,703)(h) $284,035,441
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Auto Components 0.3% $868,102
Automobiles 1.1 3,163,629
Beverages 0.8 2,313,658
Chemicals 1.8 4,979,313
Commercial Banks 15.8 44,476,596
Computers & Peripherals 1.0 2,919,344
Construction & Engineering 1.3 3,571,281
Diversified Telecommunication Services 1.9 5,371,665
Electric Utilities 1.1 3,033,756
Electrical Equipment 0.9 2,435,150
Electronic Equipment, Instruments &
Components 1.4 3,885,001
Energy Equipment & Services 1.0 2,927,454
Food & Staples Retailing 1.7 4,707,272
Food Products 0.8 2,282,504
Health Care Equipment & Supplies 0.8 2,382,940
Household Durables 2.0 5,625,981
Industrial Conglomerate 0.6 1,848,111
Insurance 4.7 13,163,940
Internet Software & Services 1.3 3,572,276
IT Services 5.7 15,980,165
Leisure Equipment & Products 0.7 2,093,436
Marine 0.3 741,724
Media 1.6 4,466,567
Metals & Mining 5.1 14,471,208
Multi-Utilities 0.5 1,475,340
Oil, Gas & Consumable Fuels 12.7 35,728,816
Pharmaceuticals 4.6 12,975,845
Real Estate Management & Development 1.7 4,915,643
Semiconductors & Semiconductor
Equipment 7.3 20,681,641
Software 2.1 6,009,586
Thrifts & Mortgage Finance 1.1 3,163,627
Wireless Telecommunication Services 12.1 34,282,509
Other(1) 4.8 13,521,361
- -----------------------------------------------------------------------
Total $284,035,441
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At Oct. 31,
2008, the value of these securities amounted to $1,339,747 or 0.5% of net
assets.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). These securities may be valued at fair
value according to procedures approved, in good faith, by the Fund's Board
of Directors. Information concerning such security holdings at Oct. 31,
2008, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
----------------------------------------------------------------------
Eurasia Drilling GDR* 11-02-07 thru 04-15-08 $5,741,380
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(f) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(g) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
(h) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $449,749,120 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $2,377,852
Unrealized depreciation (168,091,531)
------------------------------------------------------------
Net unrealized depreciation $(165,713,679)
------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 19
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $424,358,342) $ 270,514,080
Affiliated money market fund (identified cost $13,521,361) 13,521,361
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $437,879,703) 284,035,441
Cash 667,406
Foreign currency holdings (identified cost $1,911,096) 1,906,201
Capital shares receivable 202,353
Dividends and accrued interest receivable 435,788
Receivable for investment securities sold 12,802,608
- --------------------------------------------------------------------------------
Total assets 300,049,797
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 278,847
Payable for investment securities purchased 17,212,931
Accrued investment management services fees 8,332
Accrued distribution fees 2,524
Accrued transfer agency fees 2,573
Accrued administrative services fees 607
Accrued plan administration services fees 5
Other accrued expenses 320,472
- --------------------------------------------------------------------------------
Total liabilities 17,826,291
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 282,223,506
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 576,740
Additional paid-in capital 456,206,763
Excess of distributions over net investment income (5,170)
Accumulated net realized gain (loss) (20,707,820)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (153,847,007)
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 282,223,506
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $250,088,197 50,453,378 $4.96(1)
Class B $ 28,179,486 6,354,512 $4.43
Class C $ 3,162,935 711,847 $4.44
Class I $ 7,972 1,558 $5.12
Class R4 $ 782,170 152,215 $5.14
Class R5 $ 2,746 535 $5.13
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $5.26. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 17,185,342
Interest 64,517
Income distributions from affiliated money market fund 412,142
Less foreign taxes withheld (1,058,784)
- --------------------------------------------------------------------------------
Total income 16,603,217
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 7,352,591
Distribution fees
Class A 1,283,814
Class B 701,567
Class C 62,513
Transfer agency fees
Class A 972,852
Class B 139,042
Class C 12,334
Class R4 868
Class R5 1
Administrative services fees 498,019
Plan administration services fees -- Class R4 4,342
Compensation of board members 13,359
Custodian fees 693,125
Printing and postage 117,050
Registration fees 86,716
Professional fees 79,151
Other 168,800
- --------------------------------------------------------------------------------
Total expenses 12,186,144
Expenses waived/reimbursed by the Investment Manager and its
affiliates (4,460)
Earnings and bank fee credits on cash balances (14,844)
- --------------------------------------------------------------------------------
Total net expenses 12,166,840
- --------------------------------------------------------------------------------
Investment income (loss) -- net 4,436,377
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (18,203,439)
Foreign currency transactions (1,454,385)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (19,657,824)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (421,981,869)
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (441,639,693)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(437,203,316)
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 21
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 4,436,377 $ 1,517,079
Net realized gain (loss) on investments (19,657,824) 156,013,553
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (421,981,869) 189,936,461
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (437,203,316) 347,467,093
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (7,733,781) --
Class B (584,169) --
Class C (60,487) --
Class I (828,121) --
Class R4 (23,143) --
Net realized gain
Class A (117,775,823) (98,239,230)
Class B (18,510,075) (18,762,771)
Class C (1,520,014) (1,196,069)
Class I (9,800,247) (9,664,518)
Class R4 (416,434) (1,447,673)
- -----------------------------------------------------------------------------------------------
Total distributions (157,252,294) (129,310,261)
- -----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 109,825,373 91,841,700
Class B shares 12,474,577 12,086,529
Class C shares 2,616,649 1,969,066
Class I shares 30,164,283 5,204,952
Class R4 shares 642,913 3,407,128
Class R5 shares 5,000 N/A
Reinvestment of distributions at net asset value
Class A shares 124,102,560 97,170,044
Class B shares 18,787,330 18,551,177
Class C shares 1,531,576 1,147,176
Class I shares 10,623,826 9,658,984
Class R4 shares 439,576 1,447,453
Payments for redemptions
Class A shares (148,388,977) (127,473,312)
Class B shares (31,272,815) (38,310,114)
Class C shares (2,462,810) (2,015,974)
Class I shares (72,065,208) (16,607,477)
Class R4 shares (921,454) (9,169,513)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 56,102,399 48,907,819
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (538,353,211) 267,064,651
Net assets at beginning of year 820,576,717 553,512,066
- -----------------------------------------------------------------------------------------------
Net assets at end of year $ 282,223,506 $ 820,576,717
- -----------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (5,170) $ 22,906
- -----------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $14.99 $11.32 $8.23 $6.27 $5.46
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08(b) .04(b) .01 .04 .03
Net gains (losses) (both realized and
unrealized) (7.24) 6.27 3.10 1.95 .84
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (7.16) 6.31 3.11 1.99 .87
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.18) -- (.02) (.03) (.06)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.87) (2.64) (.02) (.03) (.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.96 $14.99 $11.32 $8.23 $6.27
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $250 $661 $425 $295 $191
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.87% 1.83% 1.81% 1.79% 1.83%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.87% 1.83% 1.81% 1.79% 1.83%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .78% .31% .19% .54% .41%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (57.79%) 68.21% 37.85% 31.83% 16.09%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $13.73 $10.63 $7.77 $5.95 $5.19
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .00(b),(c) (.05)(b) (.05) (.01) (.02)
Net gains (losses) (both realized and
unrealized) (6.53) 5.79 2.91 1.83 .81
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.53) 5.74 2.86 1.82 .79
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) -- -- -- (.03)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.77) (2.64) -- -- (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.43 $13.73 $10.63 $7.77 $5.95
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $28 $94 $77 $74 $73
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.62% 2.58% 2.57% 2.55% 2.59%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 2.62% 2.58% 2.57% 2.55% 2.59%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02% (.48%) (.55%) (.24%) (.32%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (58.08%) 66.95% 36.81% 30.59% 15.18%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(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) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $13.78 $10.66 $7.79 $5.97 $5.20
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .00(b),(c) (.05)(b) (.06) -- (.01)
Net gains (losses) (both realized and
unrealized) (6.54) 5.81 2.93 1.82 .81
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.54) 5.76 2.87 1.82 .80
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) -- -- -- (.03)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.80) (2.64) -- -- (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.44 $13.78 $10.66 $7.79 $5.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $8 $5 $3 $1
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.63% 2.59% 2.58% 2.56% 2.60%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 2.63% 2.59% 2.58% 2.56% 2.60%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .03% (.48%) (.57%) (.19%) (.34%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (58.15%) 67.03% 36.84% 30.54% 15.37%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(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) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004(b)
Net asset value, beginning of period $15.38 $11.50 $8.35 $6.36 $6.54
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(c) .09(c) .03 .06 .01
Net gains (losses) (both realized and
unrealized) (7.45) 6.43 3.16 1.98 (.19)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (7.34) 6.52 3.19 2.04 (.18)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.23) -- (.04) (.05) --
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.92) (2.64) (.04) (.05) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.12 $15.38 $11.50 $8.35 $6.36
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $56 $41 $19 $13
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.42% 1.39% 1.35% 1.30% 1.35%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.42% 1.39% 1.35% 1.30% 1.35%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .97% .75% .63% .97% .79%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return (57.63%) 69.07% 38.36% 32.32% (2.75%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to Oct. 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $15.32 $11.50 $8.33 $6.35 $5.52
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(b) .05(b) .03 .05 .04
Net gains (losses) (both realized and
unrealized) (7.45) 6.41 3.14 1.97 .86
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (7.34) 6.46 3.17 2.02 .90
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.15) -- -- (.04) (.07)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.84) (2.64) -- (.04) (.07)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.14 $15.32 $11.50 $8.33 $6.35
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $2 $6 $2 $18
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.73% 1.65% 1.63% 1.59% 1.65%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.47% 1.65% 1.63% 1.59% 1.65%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.12% .45% .41% .81% .61%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return (57.58%) 68.51% 38.06% 31.87% 16.50%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.32
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .03
Net gains (losses) (both realized and
unrealized) (4.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.13
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e),(f) 1.47%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.57%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133%
- --------------------------------------------------------------------------------------------------------------
Total return (44.96%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Adjusted to an annual basis.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Emerging Markets Fund (the Fund) (formerly RiverSource Emerging
Markets Fund) is a series of RiverSource Global Series, Inc. and is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. RiverSource Global Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the Board of Directors (the Board). The Fund invests
primarily in equity securities of emerging markets companies.
The Fund offers Class A, Class B, Class C, Class I, Class R4 and Class R5
shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R4 and Class R5 shares are sold without a front-end sales
charge or CDSC and are offered to qualifying institutional investors. Class
R5 shares became available effective Aug. 1, 2008.
At Oct. 31, 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 R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
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-
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
counter market and are valued at a price that reflects fair value as quoted by
dealers in these securities or by an independent pricing service. When market
quotes are not readily available, the pricing service, in determining fair
values of debt securities, takes into consideration such factors as current
quotations by broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
ILLIQUID SECURITIES
At Oct. 31, 2008, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at Oct. 31, 2008 was
$1,339,747 representing 0.47% of net assets. According to Board guidelines,
certain unregistered securities are determined to be liquid and are not included
within the 15% limitation specified above. Assets are liquid if they can be sold
or
- --------------------------------------------------------------------------------
30 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
disposed of in the ordinary course of business within seven days at
approximately the value at which the asset is valued by the Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. 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 an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, and for the year
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Futures and options on futures are valued daily based upon the last sale price
at the close of 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
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings consisted of
multiple denominations, primarily Indonesian rupiah.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations. At Oct. 31, 2008, the Fund had no outstanding
forward foreign currency contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all
- --------------------------------------------------------------------------------
32 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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," which 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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, and losses
deferred due to wash sales. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$4,765,248 accumulated net realized loss has been increased by $9,262,053
resulting in a net reclassification adjustment to increase paid-in capital by
4,496,805.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008* 2007
- -----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income.................. $76,776,161 $43,124,323
Long-term capital gain........... 48,733,443 55,114,907
CLASS B
Distributions paid from:
Ordinary income.................. 11,435,113 8,236,390
Long-term capital gain........... 7,659,131 10,526,381
CLASS C
Distributions paid from:
Ordinary income.................. 951,551 523,272
Long-term capital gain........... 628,950 672,797
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008* 2007
- -----------------------------------------------------------------
CLASS I
Distributions paid from:
Ordinary income.................. $6,573,170 $4,243,012
Long-term capital gain........... 4,055,198 5,421,506
CLASS R4
Distributions paid from:
Ordinary income.................. 267,263 635,576
Long-term capital gain........... 172,314 812,097
CLASS R5
Distributions paid from:
Ordinary income.................. -- N/A
Long-term capital gain........... -- N/A
</Table>
* Class R5 is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................. $ --
Undistributed accumulated long-term gain...... $ --
Accumulated realized loss..................... $ (8,838,403)
Unrealized appreciation (depreciation)........ $(165,721,594)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
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
Oct. 31, 2008, management does not believe the adoption of SFAS 161 will impact
the financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
On Sept. 30, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a 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
- --------------------------------------------------------------------------------
34 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
reported in the Statement of Operations for a fiscal period. The application of
SFAS 157 will be effective for the Fund's fiscal year beginning Nov. 1, 2008.
The adoption of SFAS 157 is not anticipated to have a material impact on the
Fund's financial statements; however, additional disclosures will be required
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.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 1.10%
to 0.90% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Emerging Markets Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment increased the management fee by
$507,378 for the year ended Oct. 31, 2008. The management fee for the year ended
Oct. 31, 2008 was 1.16% of the Fund's average daily net assets, including the
adjustment under the terms of the performance incentive arrangement.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines 0.08% to 0.05% annually as the Fund's
assets increase. The fee for the year ended Oct. 31, 2008 was 0.08% of the
Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, other expenses paid to this company were $3,707.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average net assets attributable to Class R4 and Class R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
- --------------------------------------------------------------------------------
36 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A shares
and a fee at an annual rate of up to 1.00% of the Fund's average daily net
assets attributable to Class B and Class C shares. For Class B and Class C
shares, up to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $1,077,000 and $38,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$739,218 for Class A, $40,279 for Class B and $1,375 for Class C for the year
ended Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R4............................................ 1.47%
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4........................................... $118
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R4.......................................... $4,342
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class R4............................................ 1.64%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $14,844 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $819,754,752 and $913,722,799, respectively, for the
year ended Oct. 31, 2008. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008**
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ---------------------------------------------------------------------------------
Class A 11,082,775 11,944,431 (16,677,659) 6,349,547
Class B 1,336,871 2,007,193 (3,818,705) (474,641)
Class C 296,342 163,281 (305,438) 154,185
Class I 2,894,086 993,810 (7,495,922) (3,608,026)
Class R4 56,860 40,967 (95,990) 1,837
Class R5 535 -- -- 535
- ---------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
38 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ---------------------------------------------------------------------------------
Class A 8,019,411 9,935,587 (11,422,639) 6,532,359
Class B 1,163,544 2,056,671 (3,595,546) (375,331)
Class C 179,156 126,760 (198,413) 107,503
Class I 463,963 966,865 (1,397,671) 33,157
Class R4 313,574 145,035 (806,884) (348,275)
- ---------------------------------------------------------------------------------
</Table>
** Class R5 is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
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 the shares of the RiverSource Short-
Term Cash Fund aggregated $449,546,557 and $443,696,285, respectively, for the
year ended Oct. 31, 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 Oct. 31, 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. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility became effective on Oct. 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
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the year ended Oct. 31, 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. (JPMCB), 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
$8,838,403 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
8. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid
to the defendants by the funds for investment advisory and administrative
services
- --------------------------------------------------------------------------------
40 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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); 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
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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, Seligman and its 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. Seligman does not believe that the foregoing legal action or other
possible actions will have a material adverse impact on Seligman or its clients,
including the Seligman Funds and other investment companies managed by it;
however, there can be no assurance of this or that these matters and any related
publicity will 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
- --------------------------------------------------------------------------------
42 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
10. SUBSEQUENT EVENTS
Effective Dec. 15, 2008, the Fund will pay custodian fees to JPMorgan Chase
Bank, N.A.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE EMERGING MARKETS FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Emerging Markets Fund (the Fund),
formerly RiverSource Emerging Markets Fund, (one of the portfolios constituting
the RiverSource Global Series, Inc.) as of October 31, 2008, and the related
statement of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for each of the two years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
October 31, 2006, were audited by other auditors whose report dated December 20,
2006 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
44 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of Threadneedle Emerging Markets Fund of the RiverSource Global Series,
Inc. at October 31, 2008, the results of its operations for the year then ended,
and changes in its net assets and the financial highlights for each of the two
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 45
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 0.00%
<Caption>
CAPITAL GAIN DISTRIBUTION - the Fund designates $61,249,036 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
46 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 47
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
48 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 49
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
50 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT 51
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.
- --------------------------------------------------------------------------------
52 THREADNEEDLE EMERGING MARKETS FUND -- 2008 ANNUAL REPORT
THREADNEEDLE EMERGING MARKETS FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus.
Threadneedle(R) mutual funds are distributed by RiverSource
Distributors, Inc., Member FINRA, managed by RiverSource
Investments, LLC, and subadvised by Threadneedle
International Limited. These companies are part of
Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C) 2008 RiverSource Distributors, Inc. S-6354 V (12/08)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 7
The Fund's Long-term Performance... 14
Fund Expenses Example.............. 16
Portfolio of Investments........... 19
Statement of Assets and
Liabilities...................... 23
Statement of Operations............ 24
Statements of Changes in Net
Assets........................... 26
Financial Highlights............... 27
Notes to Financial Statements...... 36
Report of Independent Registered
Public Accounting Firm........... 52
Federal Income Tax Information..... 53
Board Members and Officers......... 54
Proxy Voting....................... 59
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
Please see the pages that follow this report for a
list of mutual funds that are included in the
RiverSource family of funds.
(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.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> Threadneedle Global Equity Fund (the Fund) Class A shares declined 45.55%
(excluding sales charge) for the 12 months ended Oct. 31, 2008.
> The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index, which fell 43.25% for the 12-
month period.
> The Lipper Global Funds Index, representing the Fund's peer group, declined
40.36% over the same time frame.
ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
Threadneedle Global Equity Fund
Class A (excluding sales
charge) -45.55% -5.32% +2.87% -0.44%
- ---------------------------------------------------------------------
MSCI All Country World Index
(unmanaged) -43.25% -4.56% +2.63% +1.60%
- ---------------------------------------------------------------------
Lipper Global Funds Index -40.36% -4.42% +2.56% +2.47%
- ---------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total expenses
- --------------------------------------
Class A 1.46%
- --------------------------------------
Class B 2.23%
- --------------------------------------
Class C 2.22%
- --------------------------------------
Class I 0.85%
- --------------------------------------
Class R2 1.79%
- --------------------------------------
Class R3 1.54%
- --------------------------------------
Class R4 1.29%(a)
- --------------------------------------
Class R5 1.04%
- --------------------------------------
Class W 1.43%
- --------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment (that increased the management fee by 0.06%
for the year ended Oct. 31, 2008), will not exceed 1.27% for Class R4.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT OCT. 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
5/29/90) -45.55% -5.32% +2.87% -0.44% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -46.01% -6.08% +2.06% -1.21% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -45.91% -6.12% +2.07% N/A -5.58%
- ---------------------------------------------------------------------------
Class I (inception
8/1/08) N/A N/A N/A N/A -29.72%**
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -45.48% N/A N/A N/A -18.93%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -45.43% N/A N/A N/A -18.76%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -45.47% -5.21% +3.04% -0.27% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -45.40% N/A N/A N/A -18.55%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -45.62% N/A N/A N/A -18.30%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
5/29/90) -48.70% -7.17% +1.67% -0.95% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -48.71% -7.35% +1.69% -1.21% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -46.45% -6.12% +2.07% N/A -5.58%
- ---------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
<Table>
<Caption>
AT SEPT. 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
5/29/90) -29.10% +0.39% +8.32% +2.44% N/A
- --------------------------------------------------------------------------
Class B (inception
3/20/95) -29.66% -0.37% +7.51% +1.65% N/A
- --------------------------------------------------------------------------
Class C (inception
6/26/00) -29.62% -0.36% +7.47% N/A -3.22%
- --------------------------------------------------------------------------
Class I (inception
8/1/08) N/A N/A N/A N/A -13.52%**
- --------------------------------------------------------------------------
Class R2 (inception
12/11/06) -29.06% N/A N/A N/A -9.99%
- --------------------------------------------------------------------------
Class R3 (inception
12/11/06) -28.84% N/A N/A N/A -9.72%
- --------------------------------------------------------------------------
Class R4 (inception
3/20/95) -28.97% 0.51% +8.49% +2.61% N/A
- --------------------------------------------------------------------------
Class R5 (inception
12/11/06) -28.85% N/A N/A N/A -9.50%
- --------------------------------------------------------------------------
Class W (inception
12/1/06) -29.08 N/A N/A N/A -9.32%
- --------------------------------------------------------------------------
With sales charge
Class A (inception
5/29/90) -33.15% -1.56% +7.04% +1.91% N/A
- --------------------------------------------------------------------------
Class B (inception
3/20/95) -33.18% -1.72% +7.20% +1.65% N/A
- --------------------------------------------------------------------------
Class C (inception
6/26/00) -30.32% -0.36% +7.47% N/A -3.22%
- --------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares.
Class I, Class R2, Class R3, Class R4 and Class R5 shares are available to
institutional investors only. Class W shares are offered through qualifying
discretionary accounts.
*For classes with less than 10 years performance.
**Not annualized.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Below, Threadneedle Global Equity Fund (the Fund) portfolio managers Stephen
Thornber and Andrew Holliman of Threadneedle International Limited
(Threadneedle) discuss the Fund's results and positioning for the fiscal year
ended Oct. 31, 2008. Threadneedle, an indirect wholly-owned subsidiary of
Ameriprise Financial, Inc., acts as the subadvisor to the Fund.
Dear Shareholders,
Threadneedle Global Equity Fund Class A shares declined 45.55% (excluding sales
charge) for the 12 months ended Oct. 31, 2008. The Fund underperformed its
benchmark, the Morgan Stanley Capital International (MSCI) All Country World
Index, which fell 43.25% for the period. The Lipper Global Funds Index,
representing the Fund's peer group, declined 40.36% over the same time frame.
COUNTRY DIVERSIFICATION (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Australia 1.3%
- ------------------------------------------------
Bermuda 2.0%
- ------------------------------------------------
Brazil 0.7%
- ------------------------------------------------
Canada 1.5%
- ------------------------------------------------
Denmark 0.7%
- ------------------------------------------------
Finland 0.8%
- ------------------------------------------------
France 0.5%
- ------------------------------------------------
Germany 4.3%
- ------------------------------------------------
Hong Kong 1.5%
- ------------------------------------------------
Japan 6.9%
- ------------------------------------------------
Mexico 0.2%
- ------------------------------------------------
Netherlands 1.1%
- ------------------------------------------------
Portugal 0.4%
- ------------------------------------------------
Russia 0.3%
- ------------------------------------------------
Singapore 1.2%
- ------------------------------------------------
South Africa 0.2%
- ------------------------------------------------
Spain 1.5%
- ------------------------------------------------
Switzerland 9.7%
- ------------------------------------------------
Taiwan 0.4%
- ------------------------------------------------
United Kingdom 9.4%
- ------------------------------------------------
United States 53.9%
- ------------------------------------------------
Other(1) 1.5%
- ------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
Market activity during the past 12 months has been unprecedented. We entered the
fiscal year expecting a continuation of the economic growth phase, only to see
those expectations derailed by the global credit crisis and its contagion into
the real economy. Following the bankruptcy of Lehman Brothers, the AIG bailout
and government takeover of mortgage lenders Fannie Mae and Freddie Mac, analysts
sharply reduced economic and earnings forecasts in both developed and emerging
nations. Equity markets faced steep losses amid extreme volatility.
Stock selection in the Fund was primarily responsible for its underperformance
of the MSCI All Country World Index. Though our sector allocation decisions were
broadly correct, individual holdings underperformed. In the energy and mining
industries, we held stocks that were more sensitive to commodity prices, a
detriment late in the period when commodity prices fell. Detractors included
ARCH COAL in the U.S., XSTRATA in Switzerland, CIA VALE DO RIO DOCE in Brazil
and FIRST URANIUM in South Africa. In the consumer discretionary sector, retail
holdings lagged. Even though we held retailers we believed could weather the
economic slowing, stocks like Hong Kong retailer ESPRIT HOLDINGS and U.S.
retailer ABERCROMBIE & FITCH disappointed us in the tough environment.
TOP TEN HOLDINGS (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Nestle (Switzerland) 3.6%
- ------------------------------------------------
Wal-Mart Stores (United States) 3.2%
- ------------------------------------------------
Johnson & Johnson (United States) 3.0%
- ------------------------------------------------
Microsoft (United States) 3.0%
- ------------------------------------------------
IBM (United States) 2.4%
- ------------------------------------------------
Norfolk Southern (United States) 2.4%
- ------------------------------------------------
Roche Holding (Switzerland) 2.4%
- ------------------------------------------------
Novartis (Switzerland) 2.2%
- ------------------------------------------------
PepsiCo (United States) 2.0%
- ------------------------------------------------
Procter & Gamble (United States) 2.0%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Positioning in the financials sector had the largest positive effect on return
relative to the MSCI All Country World Index. We largely avoided the worst
companies in this sector, having no portfolio exposure to Fannie Mae, Freddie
Mac, AIG, Washington Mutual or Lehman Brothers. The Fund also held some better
performing financial stocks including JPMORGAN CHASE & CO. in the U.S. and SONY
FINANCIAL HOLDINGS in Japan. Conversely, a position in BEAR STEARNS, which we
sold before the company was liquidated, had a negative effect on relative
performance. Other holdings such as LLOYD'S TSB GROUP, a U.K. retail bank, and
AMERICAN EXPRESS suffered from the negative sentiment toward the sector.
The Fund's health care position was a positive contributor. The portfolio was
overweight health care relative to the MSCI All Country World Index as the
fiscal period began and we further increased the overweight during the year. The
sector was attractively valued, in our view, and when investors' risk attitudes
shifted, pharmaceutical companies with steady earnings growth came to the
forefront.
Stock selection was favorable in the technology sector, although the sector
itself declined in line with the MSCI All Country World Index. Examples of
technology contributors include IBM, MICROSOFT and CANON, all large-cap
defensive companies whose steady, though unspectacular, earnings growth was more
appealing under the harsher economic conditions.
Increasing the portfolio's U.S. emphasis had a positive impact on relative
performance as U.S. equities benefited from investors' flight to quality. During
the period, we moved from a substantial
We are particularly drawn toward companies with capital or cash flow that can
be used to build market share or acquire struggling competitors during the
economic weakness.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
U.S. underweight to an overweight relative to the MSCI All Country World Index.
We achieved this by shifting assets from other parts of the global market.
Japan's equity market also performed better than other countries, but the Fund
was underweight in Japan. Though we moved money from Asia to the U.S. during the
year, the shift was not enough to fully shield the Fund from Asia's
underperformance.
CHANGES TO THE FUND'S PORTFOLIO
We moved the portfolio to a more cautious stance, increasing our holdings of
large-cap companies that appear to have a stable earnings outlook and that we
believe can generate growth in the difficult market environment. Initially, the
Fund's allocation to large-cap stocks was less than that of the MSCI All Country
World Index, but was greater by fiscal year end. We reduced the Fund's holdings
of stocks that tend to be more volatile than the overall equity market,
including stocks in the emerging markets.
As noted above, we increased the Fund's U.S. holdings. We moved from overweights
in Asia and Latin America to underweight positions, compared to the MSCI All
Country World Index. The portfolio's weighting in Europe was about equal to that
of the MSCI All Country World Index, while the allocation to Japan was smaller
than that of the Index.
The portfolio initially had larger positions in the materials and consumer
discretionary sectors than the MSCI All Country World Index. In both sectors we
shifted to smaller positions relative to the Index. In the telecommunications
sector, we slightly increased the weighting relative to the MSCI All Country
World Index, moving from a modest underweight to a neutral weighting. We shifted
away from telecommunications companies focused on the emerging market wireless
business toward companies with fixed and wireless businesses in developed
nations. Thus, we sold CHINA MOBILE and AMERICA MOVIL and moved the money into
AT&T, FRANCE TELECOM and VODAFONE GROUP.
We increased the emphasis on health care stocks, the portfolio's largest single
sector position at fiscal year end. Health care is a sector where we are finding
companies that meet our requirements for this market -- large-cap, stable or
visible earnings, strong balance sheets and attractive
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
valuations. We kept the portfolio overweight in information technology, but are
being very selective in the sector. As in other sectors, we're focused on
companies with solid growth potential and strong balance sheets, but among
technology companies, we're also looking for innovators. Examples include
AUTONOMY in the U.K. and ADOBE SYSTEMS and MCAFEE in the U.S., companies we
believe can generate growth through product innovation.
We continued to emphasize consumer staples stocks in the portfolio. These are
perceived as very defensive and, therefore, appear well-equipped to withstand
the difficult economy. Though we're constantly looking for opportunities in the
banking segment and have purchased a few better quality regional U.S. banks, the
portfolio remained underweight in banks. Likewise, we kept the portfolio
underweight in commodity-related stocks, including energy and mining companies.
OUR FUTURE STRATEGY
The credit crisis has clearly dampened global economic activity and we believe
the impact could still be in its early stages. Whether or not markets are at or
near their lowest levels of this market cycle, we're not expecting a sharp
recovery. The credit crisis took a while to develop and solutions will take
time. Given the magnitude of the shock to consumer confidence, we think economic
recovery and any market rebound will be muted in the early stages.
We do think the U.S. may be further through this economic cycle than other
economies and may emerge from recession sooner. We see Asia and Latin America as
riskier in the short term. Though their economies are still growing, investor
sentiment has turned sharply against them and we think it could be some time
before they recover.
In light of our outlook, we are maintaining the Fund's cautious stance. We are
emphasizing defensive, large-cap companies where we anticipate growth or at
least stable earnings. We are striving to find companies that can survive the
downturn and also emerge in a stronger business position for the next phase of
the cycle. We are particularly drawn toward
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 11
MANAGER COMMENTARY (continued) -------------------------------------------------
companies with capital or cash flow that can be used to build market share or
acquire struggling competitors during the economic weakness.
<Table>
(PHOTO - STEPHEN THORNBER) (PHOTO - ANDREW HOLLIMAN)
Stephen Thor nber Andrew Holliman, CFA(R)
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Threadneedle Global Equity Fund Class A shares (from 11/1/98 to
10/31/08) as compared to the performance of two widely cited performance
indices, the Morgan Stanley Capital International (MSCI) All Country World Index
and the Lipper Global Funds Index. In comparing the Fund's Class A shares to
these indices, you should take into account the fact that the Fund's performance
reflects the maximum sales charge of 5.75%, while such charges are not reflected
in the performance of the indices. Returns for the Fund include the reinvestment
of any distribution paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Oct. 31, 2008
1 YEAR 3 YEARS 5 YEARS 10 YEARS
THREADNEEDLE GLOBAL EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $5,130 $8,000 $10,863 $9,023
- ------------------------------------------------------------------------------------------
Average annual total return -48.70% -7.17% +1.67% -0.95%
- ------------------------------------------------------------------------------------------
MSCI ALL COUNTRY WORLD INDEX(1)
Cumulative value of $10,000 $5,675 $8,693 $11,386 $11,720
- ------------------------------------------------------------------------------------------
Average annual total return -43.25% -4.56% +2.63% +1.60%
- ------------------------------------------------------------------------------------------
LIPPER GLOBAL FUNDS INDEX(2)
Cumulative value of $10,000 $5,964 $8,732 $11,347 $12,776
- ------------------------------------------------------------------------------------------
Average annual total return -40.36% -4.42% +2.56% +2.47%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on pages 5 and 6.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE GLOBAL EQUITY FUND
LINE GRAPH)
<Table>
<Caption>
THREADNEEDLE GLOBAL
EQUITY FUND
CLASS A MSCI ALL
( INCLUDES COUNTRY WORLD LIPPER GLOBAL
SALES CHARGE) INDEX(1) FUNDS INDEX(2)
------------------- ------------- --------------
'98 $ 9,425 $10,000 $10,000
'99 11,648 12,602 12,390
'00 12,200 12,703 13,867
'01 7,951 9,508 10,583
'02 6,645 8,218 9,181
'03 7,832 10,293 11,260
'04 8,750 11,737 12,709
'05 10,630 13,482 14,630
'06 12,863 16,552 17,667
'07 16,570 20,652 21,422
'08 9,023 11,720 12,776
</Table>
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an
unmanaged index of equity securities, is designed to measure equity market
performance in the global developed and emerging markets. The index reflects
reinvestment of all distributions and changes in market prices.
(2) The Lipper Global Funds Index includes the 30 largest global funds tracked
by Lipper Inc. The index's returns include net reinvested dividends. The
Fund's performance is currently measured against this index for purposes of
determining the performance incentive adjustment.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 15
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 indicated and held until Oct. 31, 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.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 618.00 $ 5.83 1.43%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.00 $ 7.27 1.43%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 615.70 $ 8.96 2.20%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.12 $11.17 2.20%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 616.10 $ 8.92 2.19%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.17 $11.12 2.19%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 702.80 $ 1.80 .85%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.92 $ 4.33 .85%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 618.20 $ 7.06 1.73%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.48 $ 8.79 1.73%
- -------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 618.70 $ 6.04 1.48%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.74 $ 7.53 1.48%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 618.80 $ 5.06 1.24%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.95 $ 6.31 1.24%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 619.10 $ 4.00 .98%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.27 $ 4.99 .98%
- -------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 17
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
MAY 1, 2008(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class W
- -------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 617.50 $ 5.63 1.38%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.25 $ 7.02 1.38%
- -------------------------------------------------------------------------------------------
</Table>
(a) The beginning account value for Class I is as of Aug. 1, 2008 (when shares
of the class became publicly available) for actual expense calculations, and
as of May 1, 2008 for hypothetical expense calculations.
(b) Expenses for Classes A, B, C, R2, R3, R4, R5 and W are equal to the Fund's
annualized expense ratio as indicated above, multiplied by the average
account value over the period, multiplied by 184/365 (to reflect the one-
half year period). Actual expenses for Class I are equal to the Fund's
annualized expense ratio as indicated above, multiplied by the average
account value over the period, multiplied by 91/365 (to reflect the period
from Aug. 1, 2008 to Oct. 31, 2008). Hypothetical expenses for Class I are
equal to the Fund's annualized expense ratio as indicated above, multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period).
(c) Based on the actual return for the six months ended Oct. 31, 2008: -38.20%
for Class A, -38.43% for Class B, -38.39% for Class C, -38.18% for Class R2,
-38.13% for Class R3, -38.12% for Class R4, -38.09% for Class R5 and -38.25%
for Class W.
(d) Based on the actual return for the period from Aug. 1, 2008 (when shares
became publicly available) to Oct. 31, 2008: -29.72% for Class I.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.0%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.3%)
CSL 229,557 $5,579,839
- -------------------------------------------------------------------------------------
BERMUDA (2.0%)
Accenture Cl A 90,000 2,974,500
PartnerRe 83,022 5,619,759
-----------
Total 8,594,259
- -------------------------------------------------------------------------------------
BRAZIL (0.7%)
Petroleo Brasileiro ADR 112,520 3,025,663
- -------------------------------------------------------------------------------------
CANADA (1.6%)
Barrick Gold 124,296 2,824,005
Research In Motion 28,926(b) 1,458,738
ShawCor Cl A 161,600 2,447,570
-----------
Total 6,730,313
- -------------------------------------------------------------------------------------
DENMARK (0.7%)
Vestas Wind Systems 70,000(b) 2,867,131
- -------------------------------------------------------------------------------------
FINLAND (0.8%)
Nokia 95,587 1,463,703
Talvivaara Mining 600,000(b) 1,957,691
-----------
Total 3,421,394
- -------------------------------------------------------------------------------------
FRANCE (0.5%)
France Telecom 87,761 2,212,162
- -------------------------------------------------------------------------------------
GERMANY (4.3%)
Allianz 43,511 3,273,019
E.ON 54,547 2,086,821
K+S 25,717 999,715
Linde 52,819 4,441,274
MTU Aero Engines Holding 110,000 2,166,895
RWE 36,846 3,062,946
Siemens 43,323 2,601,550
-----------
Total 18,632,220
- -------------------------------------------------------------------------------------
HONG KONG (1.5%)
Esprit Holdings 295,000 1,676,316
Great Eagle Holdings 1,714,607 1,968,499
Hongkong & Shanghai Hotels 2,828,000 2,671,302
-----------
Total 6,316,117
- -------------------------------------------------------------------------------------
JAPAN (6.9%)
AMADA 383,000 1,759,338
Canon 115,700 4,049,663
GOLDCREST 100,280 1,473,257
Honda Motor 103,800 2,581,749
Mitsubishi Estate 309,000 5,521,317
Mitsubishi UFJ Financial Group 434,100 2,728,721
Nintendo 18,300 5,881,584
Sony Financial Holdings 1,832 5,959,840
-----------
Total 29,955,469
- -------------------------------------------------------------------------------------
MEXICO (0.2%)
America Movil ADR Series L 32,000 990,080
- -------------------------------------------------------------------------------------
NETHERLANDS (1.1%)
ASML Holding 153,704 2,689,844
Fugro 60,000 2,143,298
-----------
Total 4,833,142
- -------------------------------------------------------------------------------------
PORTUGAL (0.4%)
Galp Energia Series B 187,199 1,701,236
- -------------------------------------------------------------------------------------
RUSSIA (0.3%)
Mobile Telesystems ADR 30,000 1,174,500
- -------------------------------------------------------------------------------------
SINGAPORE (1.3%)
DBS Group Holdings 708,000 5,407,067
- -------------------------------------------------------------------------------------
SOUTH AFRICA (0.2%)
First Uranium 843,700(b) 980,273
- -------------------------------------------------------------------------------------
SPAIN (1.6%)
Gamesa Tecnologica 85,016 1,393,325
Inditex 81,177 2,743,012
Telefonica 140,000 2,591,175
-----------
Total 6,727,512
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SWITZERLAND (9.7%)
Nestle 404,766 $15,738,097
Novartis 185,205 9,399,422
Roche Holding 67,141 10,266,334
Syngenta 21,598 4,036,863
Xstrata 159,226 2,723,199
-----------
Total 42,163,915
- -------------------------------------------------------------------------------------
TAIWAN (0.4%)
Asustek Computer 1,114,293 1,596,910
- -------------------------------------------------------------------------------------
UNITED KINGDOM (9.4%)
Anglo American 94,865 2,380,062
Autonomy 157,985(b) 2,504,725
BG Group 336,105 4,941,614
Home Retail Group 559,734 1,783,860
HSBC Holdings 587,350 6,956,056
Intl Power 656,446 2,348,219
Lloyds TSB Group 632,067 2,042,718
Prudential 552,011 2,772,681
SOCO Intl 73,459(b) 1,692,172
Tesco 630,217 3,452,709
Tullow Oil 436,396 3,705,782
Vodafone Group 3,199,094 6,153,577
-----------
Total 40,734,175
- -------------------------------------------------------------------------------------
UNITED STATES (54.1%)
Adobe Systems 107,541(b) 2,864,892
American Express 70,000 1,925,000
Aon 60,397 2,554,793
Arch Coal 80,000 1,712,800
AT&T 303,983 8,137,625
Cisco Systems 240,920(b) 4,281,148
Cliffs Natural Resources 35,580 960,304
Coca-Cola 129,628 5,711,410
Comcast Cl A 432,615 6,818,012
CVS Caremark 98,220 3,010,443
Devon Energy 77,055 6,230,667
Diamond Offshore Drilling 30,359 2,695,880
eBay 146,456(b) 2,236,383
ENSCO Intl 60,000 2,280,600
Genzyme 83,200(b) 6,063,616
Gilead Sciences 96,397(b) 4,419,802
Goldman Sachs Group 14,294 1,322,195
Google Cl A 12,175(b) 4,375,208
IBM 112,478 10,457,080
Johnson & Johnson 213,502 13,096,212
JPMorgan Chase & Co 195,667 8,071,264
KeyCorp 200,000 2,446,000
Laboratory Corp of America Holdings 83,120(b) 5,111,048
Lowe's Companies 120,000 2,604,000
McAfee 53,912(b) 1,754,836
Merck & Co 88,013 2,724,002
Microsoft 581,405 12,982,773
Norfolk Southern 172,379 10,332,397
Oracle 373,402(b) 6,829,522
PepsiCo 150,814 8,597,906
Pfizer 406,759 7,203,702
Philip Morris Intl 112,356 4,884,115
Plum Creek Timber 83,189 3,101,286
Procter & Gamble 132,051 8,522,572
QUALCOMM 75,000 2,869,500
Republic Services 201,992 4,787,210
Schering-Plough 201,953 2,926,299
St. Jude Medical 76,051(b) 2,892,220
Synovus Financial 432,084 4,463,428
Thermo Fisher Scientific 138,398(b) 5,618,959
Travelers Companies 184,253 7,839,966
Ultra Petroleum 50,984(b) 2,373,305
Valero Energy 118,660 2,442,023
Wal-Mart Stores 251,538 14,038,336
Walt Disney 146,355 3,790,595
WellPoint 98,572(b) 3,831,494
-----------
Total 234,192,828
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $588,312,259) $427,836,205
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (1.5%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 1.60% 6,623,559(d) $6,623,559
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $6,623,559) $6,623,559
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $594,935,818)(e) $434,459,764
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Aerospace & Defense 0.5% $2,166,895
Automobiles 0.6 2,581,749
Beverages 3.3 14,309,316
Biotechnology 3.7 16,063,257
Capital Markets 0.3 1,322,195
Chemicals 2.2 9,477,852
Commercial Banks 5.6 24,043,990
Commercial Services & Supplies 1.1 4,787,210
Communications Equipment 2.3 10,073,089
Computers & Peripherals 2.8 12,053,990
Consumer Finance 0.4 1,925,000
Diversified Financial Services 1.9 8,071,264
Diversified Telecommunication Services 3.0 12,940,962
Electric Utilities 0.5 2,086,821
Electrical Equipment 1.0 4,260,456
Energy Equipment & Services 2.2 9,567,348
Food & Staples Retailing 4.7 20,501,488
Food Products 3.6 15,738,097
Health Care Equipment & Supplies 0.7 2,892,220
Health Care Providers & Services 2.1 8,942,542
Hotels, Restaurants & Leisure 0.6 2,671,302
Household Durables 0.3 1,473,257
Household Products 2.0 8,522,572
Independent Power Producers & Energy
Traders 0.5 2,348,219
Industrial Conglomerates 0.6 2,601,550
Insurance 6.6 28,020,058
Internet & Catalog Retail 0.4 1,783,860
Internet Software & Services 1.5 6,611,591
IT Services 0.7 2,974,500
Life Sciences Tools & Services 1.3 5,618,959
Machinery 0.4 1,759,338
Media 2.5 10,608,607
Metals & Mining 2.7 11,825,534
Multi-Utilities 0.7 3,062,946
Office Electronics 0.9 4,049,663
Oil, Gas & Consumable Fuels 6.5 27,825,262
Pharmaceuticals 10.6 45,615,971
Real Estate Investment Trusts (REITs) 0.7 3,101,286
Real Estate Management & Development 1.7 7,489,816
Road & Rail 2.4 10,332,397
Semiconductors & Semiconductor
Equipment 0.6 2,689,844
Software 7.7 32,818,332
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Specialty Retail 1.6% $7,023,328
Tobacco 1.1 4,884,115
Wireless Telecommunication Services 1.9 8,318,157
Other(1) 1.5 6,623,559
- -----------------------------------------------------------------------
Total $434,459,764
- -----------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Affiliated Money Market Fund -- See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at Oct. 31, 2008.
(e) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $598,979,582 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $3,607,213
Unrealized depreciation (168,127,031)
- ------------------------------------------------------------
Net unrealized depreciation $(164,519,818)
- ------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
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.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $588,312,259) $ 427,836,205
Affiliated money market fund (identified cost $6,623,559) 6,623,559
- --------------------------------------------------------------------------------
Total investments in securities (identified cost $594,935,818) 434,459,764
Foreign currency holdings (identified cost $250,247) 252,785
Capital shares receivable 358,291
Dividends receivable 706,822
Receivable for investment securities sold 4,409,678
Reclaims receivable 394,816
- --------------------------------------------------------------------------------
Total assets 440,582,156
- --------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 468,262
Payable for investment securities purchased 7,517,275
Accrued investment management services fees 9,180
Accrued distribution fees 3,817
Accrued transfer agency fees 3,375
Accrued administrative services fees 930
Accrued plan administration services fees 34
Other accrued expenses 144,192
- --------------------------------------------------------------------------------
Total liabilities 8,147,065
- --------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 432,435,091
- --------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 836,473
Additional paid-in capital 997,824,407
Undistributed net investment income 2,536,752
Accumulated net realized gain (loss) (408,287,051)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (160,475,490)
- --------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 432,435,091
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $380,429,958 73,040,390 $5.21(1)
Class B $ 42,166,196 8,654,662 $4.87
Class C $ 4,754,813 985,451 $4.83
Class I $ 3,498 666 $5.25
Class R2 $ 3,314 634 $5.23
Class R3 $ 3,322 634 $5.24
Class R4 $ 5,067,319 963,574 $5.26
Class R5 $ 3,329 634 $5.25
Class W $ 3,342 639 $5.23
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $5.53. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 23
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 15,191,451
Interest 17,988
Income distributions from affiliated money market fund 267,987
Fee income from securities lending 101,233
Less foreign taxes withheld (798,509)
- --------------------------------------------------------------------------------
Total income 14,780,150
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 5,825,153
Distribution fees
Class A 1,507,084
Class B 814,247
Class C 73,244
Class R2 25
Class R3 13
Class W 13
Transfer agency fees
Class A 1,316,120
Class B 187,180
Class C 16,522
Class R2 3
Class R3 3
Class R4 4,089
Class R5 3
Class W 10
Administrative services fees 549,601
Plan administration services fees
Class R2 13
Class R3 13
Class R4 20,446
Compensation of board members 15,113
Custodian fees 240,610
Printing and postage 165,380
Registration fees 83,650
Professional fees 42,982
Other 26,395
- --------------------------------------------------------------------------------
Total expenses 10,887,912
Expenses waived/reimbursed by the Investment Manager and its
affiliates (1,360)
Earnings and bank fee credits on cash balances (18,631)
- --------------------------------------------------------------------------------
Total net expenses 10,867,921
- --------------------------------------------------------------------------------
Investment income (loss) -- net 3,912,229
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ (63,602,873)
Foreign currency transactions (738,516)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (64,341,389)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (324,354,761)
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (388,696,150)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(384,783,921)
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 25
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 3,912,229 $ 1,375,121
Net realized gain (loss) on investments (64,341,389) 130,447,745
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (324,354,761) 67,887,744
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (384,783,921) 199,710,610
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (2,895,413) (5,052,007)
Class B -- (46,137)
Class C -- (24,579)
Class R2 (16) (60)
Class R3 (28) (61)
Class R4 (51,464) (77,098)
Class R5 (43) (61)
Class W (24) (61)
- -----------------------------------------------------------------------------------------------
Total distributions (2,946,988) (5,200,064)
- -----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 122,218,532 103,394,162
Class B shares 19,744,662 16,189,120
Class C shares 2,778,659 2,137,681
Class I shares 5,000 N/A
Class R2 shares -- 5,000
Class R3 shares -- 5,000
Class R4 shares 2,142,353 2,445,834
Class R5 shares -- 5,000
Class W shares -- 5,000
Reinvestment of distributions at net asset value
Class A shares 2,842,402 4,972,629
Class B shares -- 45,360
Class C shares -- 23,936
Class R4 shares 51,464 77,098
Payments for redemptions
Class A shares (144,969,040) (141,986,972)
Class B shares (38,846,306) (50,692,015)
Class C shares (2,137,746) (1,286,730)
Class R4 shares (2,469,638) (4,449,426)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (38,639,658) (69,109,323)
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (426,370,567) 125,401,223
Net assets at beginning of year 858,805,658 733,404,435
- -----------------------------------------------------------------------------------------------
Net assets at end of year $ 432,435,091 $ 858,805,658
- -----------------------------------------------------------------------------------------------
Undistributed net investment income $ 2,536,752 $ 2,648,118
- -----------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $9.61 $7.52 $6.23 $5.16 $4.62
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05(b) .02(b) .01 .02 --
Net gains (losses) (both realized and
unrealized) (4.41) 2.13 1.30 1.08 .54
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.36) 2.15 1.31 1.10 .54
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.06) (.02) (.03) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.21 $9.61 $7.52 $6.23 $5.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $380 $737 $608 $446 $364
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.46% 1.39% 1.51% 1.57% 1.41%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .65% .28% .23% .33% .07%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.55%) 28.82% 21.01% 21.48% 11.72%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $9.02 $7.06 $5.88 $4.87 $4.40
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.03)
Net gains (losses) (both realized and
unrealized) (4.14) 2.00 1.19 1.03 .50
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.15) 1.96 1.18 1.01 .47
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- .00(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.87 $9.02 $7.06 $5.88 $4.87
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $42 $104 $110 $102 $104
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 2.23% 2.15% 2.28% 2.34% 2.18%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.11%) (.45%) (.54%) (.41%) (.66%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (46.01%) 27.81% 20.07% 20.74% 10.68%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $8.93 $7.02 $5.85 $4.85 $4.38
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.02)
Net gains (losses) (both realized and
unrealized) (4.09) 1.98 1.18 1.03 .49
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.10) 1.94 1.17 1.01 .47
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.03) -- (.01) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.83 $8.93 $7.02 $5.85 $4.85
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $5 $8 $6 $2 $1
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.22% 2.15% 2.27% 2.33% 2.19%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.09%) (.48%) (.50%) (.53%) (.69%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.91%) 27.76% 20.03% 20.89% 10.73%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $7.47
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .03
Net gains (losses) (both realized and
unrealized) (2.25)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.22)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .85%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.55%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97%
- --------------------------------------------------------------------------------------------------------------
Total return (29.72%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $9.62 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .05 (.01)
Net gains (losses) (both realized and
unrealized) (4.42) 1.84
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.37) 1.83
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.23 $9.62
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.79% 1.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.54% 1.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .57% (.13%)(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (45.48%) 23.41%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $9.65 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .06 .01
Net gains (losses) (both realized and
unrealized) (4.43) 1.85
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.37) 1.86
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.24 $9.65
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.54% 1.49%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.29% 1.49%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .82% .12%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (45.43%) 23.80%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $9.70 $7.60 $6.29 $5.20 $4.65
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .04(b) .02 .04 .01
Net gains (losses) (both realized and
unrealized) (4.46) 2.13 1.31 1.09 .54
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.39) 2.17 1.33 1.13 .55
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.07) (.02) (.04) .00
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.26 $9.70 $7.60 $6.29 $5.20
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $5 $10 $9 $6 $4
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.29% 1.23% 1.32% 1.38% 1.23%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.28% 1.23% 1.32% 1.38% 1.23%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .83% .45% .44% .49% .25%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return (45.47%) 28.85% 21.26% 21.90% 11.88%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) The Investment Manager and its affiliates have agreed to waive certain fees
and expenses (excluding fees and expenses of acquired funds), before giving
effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $9.69 $7.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .05
Net gains (losses) (both realized and
unrealized) (4.45) 1.85
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.37) 1.90
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.25 $9.69
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.04% .99%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.07% .62%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (45.40%) 24.33%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007(b)
Net asset value, beginning of period $9.66 $7.83
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .05 .02
Net gains (losses) (both realized and
unrealized) (4.44) 1.91
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.39) 1.93
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.23 $9.66
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.43% 1.39%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .68% .20%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- --------------------------------------------------------------------------------------------------------------
Total return (45.62%) 24.87%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Equity Fund (the Fund) (formerly RiverSource Global Equity
Fund) is a series of RiverSource Global Series, Inc. and is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. RiverSource Global Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the Board of Directors (the Board). Under normal market
conditions, at least 80% of the Fund's net assets will be invested in equity
securities, including companies located in developed and emerging countries.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors. Class I shares became effective Aug. 1, 2008.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At Oct. 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) owned 100% of Class I, Class R2, Class R3, Class R5 and
Class W shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, and for the year
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these future 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 market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings consisted of
multiple denominations.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations. At Oct. 31, 2008, the Fund had no outstanding
forward foreign currency contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, re-
characterization of REIT distributions, and losses deferred due to wash sales.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by
$1,076,607 and accumulated net realized loss has been decreased by $1,076,607.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008* 2007**
- ----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income.................... $2,895,413 $5,052,007
Long-term capital gain............. -- --
CLASS B
Distributions paid from:
Ordinary income.................... -- 46,137
Long-term capital gain............. -- --
CLASS C
Distributions paid from:
Ordinary income.................... -- 24,579
Long-term capital gain............. -- --
CLASS I
Distributions paid from:
Ordinary income.................... -- N/A
Long-term capital gain............. -- N/A
CLASS R2
Distributions paid from:
Ordinary income.................... 16 60
Long-term capital gain............. -- --
</Table>
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008* 2007**
- ----------------------------------------------------------------
CLASS R3
Distributions paid from:
Ordinary income.................... $28 $61
Long-term capital gain............. -- --
CLASS R4
Distributions paid from:
Ordinary income.................... 51,464 77,098
Long-term capital gain............. -- --
CLASS R5
Distributions paid from:
Ordinary income.................... 43 61
Long-term capital gain............. -- --
CLASS W
Distributions paid from:
Ordinary income.................... 24 61
Long-term capital gain............. -- --
</Table>
* Class I is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
** Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception date) to Oct. 31, 2007. Class W is for the period from Dec. 1,
2006 (inception date) to Oct. 31, 2007.
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................. $ 2,543,644
Undistributed accumulated long-term gain...... $ --
Accumulated realized loss..................... $(404,243,287)
Unrealized appreciation (depreciation)........ $(164,526,146)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
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
Oct. 31, 2008, 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a 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. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Nov. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required 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.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.80%
to 0.57% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Global Funds Index. In certain circumstances, the
Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The adjustment increased the management fee by $393,409 for the year ended
Oct. 31, 2008. The management fee for the year ended Oct. 31, 2008 was 0.83% of
the Fund's average daily net assets, including the adjustment under the terms of
the performance incentive arrangement.
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the year ended Oct. 31, 2008 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Oct. 31,
2008, other expenses paid to this company were $3,588.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A, Class
R3 and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's
average daily net assets attributable to Class R2 shares and a fee at an annual
rate of up to 1.00% of the Fund's average daily net assets attributable to Class
B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is
reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $1,733,000 and $58,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$749,778 for Class A, $49,352 for Class B and $1,644 for Class C for the year
ended Oct. 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Oct. 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R2............................................ 1.54%
Class R3............................................ 1.29
Class R4............................................ 1.28
</Table>
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2........................................... $13
Class R3........................................... 13
Class R4........................................... 1,334
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class R4............................................ 1.27%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended Oct. 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $18,631 as a result of earnings and bank fee credits from
overnight cash balances. 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) aggregated $670,217,944 and $698,227,533, respectively, for the
year ended Oct. 31, 2008. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $101,233 for the year ended Oct. 31,
2008. Expenses paid to the Investment Manager as securities lending agent were
$1,067 for the year ended Oct. 31, 2008, which are included in other expenses on
the Statement of Operations. The risk to the Fund of securities lending are that
the borrower may not provide additional collateral when required or return the
securities when due. At Oct. 31, 2008, the Fund had no securities out on loan.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008*
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 15,480,435 328,601 (19,420,602) (3,611,566)
Class B 2,606,662 -- (5,461,285) (2,854,623)
Class C 381,563 -- (318,939) 62,624
Class I 666 -- -- 666
Class R4 264,404 5,909 (319,876) (49,563)
- ----------------------------------------------------------------------------------
<Caption>
YEAR ENDED OCT. 31, 2007**
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 12,264,903 636,700 (17,108,766) (4,207,163)
Class B 2,095,921 6,146 (6,192,934) (4,090,867)
Class C 276,396 3,279 (164,135) 115,540
Class R2 634 -- -- 634
Class R3 634 -- -- 634
Class R4 288,576 9,796 (531,402) (233,030)
Class R5 634 -- -- 634
Class W 639 -- -- 639
- ----------------------------------------------------------------------------------
</Table>
* Class I is for the period from Aug. 1, 2008 (when shares became publicly
available) to Oct. 31, 2008.
** Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception date) to Oct. 31, 2007. Class W is for the period from Dec. 1,
2006 (inception date) to Oct. 31, 2007.
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 $302,567,723 and $308,596,766, respectively, for the year
ended Oct. 31, 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 Oct. 31, 2008, can be found in the Portfolio of Investments.
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
6. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility became effective on 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 year ended Oct. 31, 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. (JPMCB), 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
$404,243,287 at Oct. 31, 2008, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2009 2010 2011 2016
$170,490,067 $143,634,885 $30,509,951 $59,608,384
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
8. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action derivatively on behalf of those funds under the
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
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
ordered by the SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG). In September 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Funds. If the NYAG obtains injunctive relief, Seligman and its 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. Seligman does not believe that the
foregoing legal action or other possible actions will have a material adverse
impact on Seligman or its clients, including the Seligman Funds and other
investment companies managed by it; however, there can be no assurance of this
or that these matters and any related publicity will 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.
10. 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.
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Equity Fund (the Fund),
formerly the RiverSource Global Equity Fund, (one of the portfolios constituting
the RiverSource Global Series, Inc.) as of October 31, 2008, and the related
statement of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for each of the two years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
October 31, 2006, were audited by other auditors whose report dated December 20,
2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of Threadneedle Global Equity Fund of the RiverSource Global Series,
Inc. at October 31, 2008, the results of its operations for the year then ended,
and changes in its net assets and the financial highlights for each of the two
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100%
Dividends Received Deduction for corporations................ 100%
U.S. Government Obligations.................................. 0.00%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 53
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
54 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 55
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
56 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 57
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY FUND -- 2008 ANNUAL REPORT 59
THREADNEEDLE GLOBAL EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus.
Threadneedle(R) mutual funds are distributed by RiverSource
Distributors, Inc., Member FINRA, managed by RiverSource
Investments, LLC, and subadvised by Threadneedle
International Limited. These companies are part of
Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C) 2008 RiverSource Distributors, Inc. S-6334 AG (12/08)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EQUITY INCOME FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EQUITY INCOME FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH A HIGH LEVEL OF CURRENT
INCOME AND SECONDARILY, GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 4
Fund Expenses Example.............. 8
Portfolio of Investments........... 11
Statement of Assets and
Liabilities...................... 17
Statement of Operations............ 18
Statement of Changes in Net
Assets........................... 19
Financial Highlights............... 21
Notes to Financial Statements...... 29
Report of Independent Registered
Public Accounting Firm........... 44
Federal Income Tax Information..... 46
Board Members and Officers......... 47
Approval of Investment Management
Services Agreement............... 51
Proxy Voting....................... 53
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," and
"Threadneedle." These funds share the same Board of
Directors/Trustees and officers.
Please see the pages that follow this report for a
list of mutual funds that are included in the
RiverSource family of funds.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
stylematrix
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
x LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 3
MANAGER COMMENTARY -------------------------------------------------------------
Below, Threadneedle Global Equity Income Fund portfolio managers Stephen
Thornber and Jeremy Podger of Threadneedle International Limited (Threadneedle)
discuss the Fund's results and positioning for the period from its inception on
Aug. 1, 2008 through Oct. 31, 2008. Threadneedle, an indirect wholly-owned
subsidiary of Ameriprise Financial, Inc., acts as the subadviser to the Fund.
Dear Shareholders,
On Aug. 1, 2008, we launched Threadneedle Global Equity Income Fund, a
diversified mutual fund seeking to offer shareholders both income and growth
potential. The Fund was immediately tested by the inhospitable investment
environment. Market activity during the Fund's first three
COUNTRY DIVERSIFICATION (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Australia 2.3%
- ------------------------------------------------
Brazil 2.6%
- ------------------------------------------------
Canada 0.4%
- ------------------------------------------------
China 0.7%
- ------------------------------------------------
Czech Republic 0.6%
- ------------------------------------------------
Denmark 0.9%
- ------------------------------------------------
Finland 3.4%
- ------------------------------------------------
France 4.2%
- ------------------------------------------------
Germany 4.7%
- ------------------------------------------------
Greece 0.5%
- ------------------------------------------------
Hong Kong 2.8%
- ------------------------------------------------
Ireland 0.2%
- ------------------------------------------------
Italy 5.6%
- ------------------------------------------------
Japan 5.7%
- ------------------------------------------------
Jersey 0.6%
- ------------------------------------------------
Mexico 1.1%
- ------------------------------------------------
Netherlands 1.4%
- ------------------------------------------------
Norway 2.0%
- ------------------------------------------------
Singapore 1.5%
- ------------------------------------------------
Spain 2.3%
- ------------------------------------------------
Sweden 2.3%
- ------------------------------------------------
Taiwan 4.7%
- ------------------------------------------------
United Kingdom 14.5%
- ------------------------------------------------
United States 35.0%
- ------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
months has been unprecedented. Following government takeover of mortgage lenders
Fannie Mae and Freddie Mac, the AIG bailout and the Lehman Brothers' bankruptcy,
analysts sharply reduced economic and earnings forecasts in both developed and
emerging nations. Equity markets faced steep losses amid extreme volatility.
Though we would have preferred to launch a new fund under better circumstances,
we remain optimistic about Global Equity Income Fund's long-term potential
because the Fund's strategy is well-suited to difficult markets. Income-oriented
strategies tend to do better in periods of slower economic activity and lower
earnings than strategies with no income component.
THE FUND'S CURRENT INVESTMENT STRATEGY
The Fund's two-pronged investment goal is to provide a combination of income and
secondarily, growth potential. We strive to generate dividend distributions
primarily from the Fund's common and preferred stock holdings. At the same time,
we look for those holdings to increase in price over time, providing capital
appreciation.
Investing in dividend-paying stocks helps diversify the Global Equity Income
Fund. Additionally, any income provided may help mitigate risk and volatility,
particularly in difficult market environments such as we are now experiencing.
The portfolio is well-diversified globally and invests in
TOP TEN HOLDINGS (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
AT&T (United States) 3.2%
- ------------------------------------------------
Pfizer (United States) 3.1%
- ------------------------------------------------
BP Prudhoe Bay Royalty Trust (United
States) 2.8%
- ------------------------------------------------
Ono Pharmaceutical (Japan) 2.3%
- ------------------------------------------------
British American Tobacco (United Kingdom) 2.2%
- ------------------------------------------------
Eni (Italy) 2.2%
- ------------------------------------------------
US Bancorp (United States) 2.2%
- ------------------------------------------------
Merck & Co (United States) 2.0%
- ------------------------------------------------
Kinder Morgan Energy Partners LP (United
States) 1.9%
- ------------------------------------------------
Bristol-Myers Squibb (United States) 1.8%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
companies on the basis of their merit and dividend history, regardless of
location.
Given the difficult market conditions, we have positioned the portfolio very
defensively. We are focusing on what we believe to be high quality companies,
with relatively low debt levels, strong balance sheets, robust cash flows,
earnings growth potential and dividend paying capacity.
OUR FUTURE STRATEGY
The credit crisis has clearly dampened global economic activity and we believe
the impact could still be in its early stages. Whether or not markets are at or
near their lowest levels of this market cycle, we're not expecting a sharp
recovery. The credit crisis took a while to develop and solutions will take
time. Given the magnitude of the shock to consumer confidence, we think economic
recovery and any market rebound will be muted in the early stages.
In light of our outlook, we are maintaining the Fund's cautious stance. We are
emphasizing defensive, large-cap companies where we anticipate growth or at
least stable earnings. By nature, dividend paying companies tend to be skewed
toward the large end of the capitalization scale and they also tend to be
defensive, so we believe the Fund's strategy is well-suited to the current
market environment.
We are particularly drawn toward companies with capital or cash flow that can be
used to build market share or acquire struggling competitors during the economic
weakness. We believe these companies are more likely to survive the downturn and
also could emerge in a stronger business position for the next phase of the
cycle.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
(THORNBER PHOTO) (PHOTO - JEREMY PODGER)
Stephen Thornber Jeremy Podger
Portfolio Manager Deputy Portfolio
Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
The Fund's two-pronged investment goal is to provide a combination of income
and secondarily, growth potential.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 7
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period indicated and held until Oct. 31, 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
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
<Table>
<Caption>
ENDING EXPENSES
BEGINNING ACCOUNT VALUE PAID DURING ANNUALIZED
ACCOUNT VALUE(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- ---------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 728.80 $ 3.12(d) 1.45%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.90 $ 7.37(d) 1.45%
- ---------------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 728.50 $ 4.76(d) 2.21%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.06 $11.22(d) 2.21%
- ---------------------------------------------------------------------------------------------
Class C
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 728.20 $ 4.76(d) 2.21%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.06 $11.22(d) 2.21%
- ---------------------------------------------------------------------------------------------
Class I
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 730.00 $ 2.31(d) 1.07%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.81 $ 5.45(d) 1.07%
- ---------------------------------------------------------------------------------------------
Class R2
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 729.00 $ 4.03(d) 1.87%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.78 $ 9.50(d) 1.87%
- ---------------------------------------------------------------------------------------------
Class R3
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 729.30 $ 3.51(d) 1.63%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.99 $ 8.29(d) 1.63%
- ---------------------------------------------------------------------------------------------
Class R4
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 729.60 $ 2.95(d) 1.37%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.30 $ 6.97(d) 1.37%
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 9
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
ENDING EXPENSES
BEGINNING ACCOUNT VALUE PAID DURING ANNUALIZED
ACCOUNT VALUE(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- ---------------------------------------------------------------------------------------------
Class R5
- ---------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 730.00 $ 2.42(d) 1.12%
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.56 $ 5.70(d) 1.12%
- ---------------------------------------------------------------------------------------------
</Table>
(a) The beginning account values are as of Aug. 1, 2008 (when shares of the Fund
became publicly available) for actual expense calculations and as of May 1,
2008 for hypothetical expense calculations.
(b) Actual expenses paid during the period are equal to the Fund's annualized
expense ratio as indicated above, multiplied by the average account value
over the period, multiplied by 91/365 (to reflect the period from Aug. 1,
2008 to Oct. 31, 2008). Hypothetical expenses paid during the period are
equal to the Fund's annualized expense ratio as indicated above, multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period).
(c) Based on the actual return for the period from Aug. 1, 2008 (when shares
became publicly available) to Oct. 31, 2008: -27.12% for Class A, -27.15%
for Class B, -27.18% for Class C, -27.00% for Class I, -27.10% for Class R2,
-27.07% for Class R3, -27.04% for Class R4 and -27.00% for Class R5.
(d) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the Fund's Board, such that net
expenses (excluding fees and expenses of acquired funds), before giving
effect to any performance incentive adjustment, will not exceed 1.45% for
Class A, 2.21% for Class B, 2.20% for Class C, 1.05% for Class I, 1.85% for
Class R2, 1.60% for Class R3, 1.35% for Class R4 and 1.10% for Class R5. Any
amounts waived will not be reimbursed by the Fund. This change was effective
Nov. 1, 2008. If this change had been in place for the entire period from
Aug. 1, 2008 to Oct. 31, 2008, the actual expenses paid would have been
$3.13 for Class A, $4.76 for Class B, $4.74 for Class C, $2.26 for Class I,
$3.99 for Class R2, $3.45 for Class R3, $2.91 for Class R4 and $2.37 for
Class R5. If this change had been in place for the entire six month period
ended Oct. 31, 2008, the hypothetical expenses paid would have been $7.37
for Class A, $11.22 for Class B, $11.17 for Class C, $5.35 for Class I,
$9.40 for Class R2, $8.13 for Class R3, $6.87 for Class R4 and $5.60 for
Class R5.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (93.0%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (2.2%)
Australia & New Zealand Banking Group $91,2-
7,784 00
Lend Lease 12,006 55,526
Transurban Group 18,204 65,326
--------
Total 212,052
- -------------------------------------------------------------------------------------
BRAZIL (2.5%)
Cia de Bebidas das Americas 2,600 110,964
Cia Vale do Rio Doce ADR 8,160 95,554
Petroleo Brasileiro 3,000 32,447
--------
Total 238,965
- -------------------------------------------------------------------------------------
CANADA (0.3%)
Timberwest Forest Unit 5,600 31,742
- -------------------------------------------------------------------------------------
CHINA (0.7%)
CNOOC 80,000 65,036
- -------------------------------------------------------------------------------------
CZECH REPUBLIC (0.5%)
Telefonica O2 Czech Republic GDR 2,462 51,640
- -------------------------------------------------------------------------------------
DENMARK (0.8%)
TrygVesta 1,376 82,736
- -------------------------------------------------------------------------------------
FINLAND (3.2%)
Nokia 5,284 80,913
Sampo Series A 7,352 147,280
Talvivaara Mining 13,198(b) 43,063
Wartsila 1,634 41,385
--------
Total 312,641
- -------------------------------------------------------------------------------------
FRANCE (4.0%)
France Telecom 2,974 74,965
PagesJaunes Groupe 4,414 41,831
Total 2,315 127,311
Vivendi 5,405 141,232
--------
Total 385,339
- -------------------------------------------------------------------------------------
GERMANY (4.4%)
BASF 3,024 101,482
Bayer 1,683 94,103
Deutsche Telekom 5,389 79,990
K+S 807 31,371
RWE 1,443 119,954
--------
Total 426,900
- -------------------------------------------------------------------------------------
GREECE (0.5%)
OPAP 2,088 45,575
- -------------------------------------------------------------------------------------
HONG KONG (2.6%)
Champion REIT 163,000 39,138
Esprit Holdings 27,400 155,698
Hang Lung Properties 25,000 61,091
--------
Total 255,927
- -------------------------------------------------------------------------------------
IRELAND (0.2%)
Bank of Ireland 7,425 21,916
- -------------------------------------------------------------------------------------
ITALY (5.2%)
Enel 17,740 118,643
Eni 8,420 200,898
Snam Rete Gas 19,300 97,665
Telecom Italia 35,682 40,976
UniCredit 20,312 49,707
--------
Total 507,889
- -------------------------------------------------------------------------------------
JAPAN (5.3%)
Nintendo 500 160,699
Nissan Motor 15,400 76,504
Ono Pharmaceutical 4,600 205,110
Oracle Japan 1,800 78,275
--------
Total 520,588
- -------------------------------------------------------------------------------------
MEXICO (1.1%)
Grupo Continental 66,400 103,389
- -------------------------------------------------------------------------------------
NETHERLANDS (1.3%)
Aegon 7,632 31,701
Royal Dutch Shell Series B 3,381 91,656
--------
Total 123,357
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
NORWAY (1.9%)
DNB NOR $67,2-
11,600 64
StatoilHydro 3,550 71,444
Telenor 7,900 47,166
--------
Total 185,874
- -------------------------------------------------------------------------------------
SINGAPORE (1.4%)
DBS Group Holdings 18,000 137,468
- -------------------------------------------------------------------------------------
SPAIN (2.1%)
Inditex 2,164 73,123
Telefonica 7,097 131,354
--------
Total 204,477
- -------------------------------------------------------------------------------------
SWEDEN (2.1%)
Holmen Series B 2,507 70,704
Skanska Series B 7,865 69,117
SKF Group Series B 7,374 67,209
--------
Total 207,030
- -------------------------------------------------------------------------------------
TAIWAN (4.4%)
Chunghwa Telecom ADR 4,786 78,783
Delta Electronics 45,000 102,179
High Tech Computer 5,000 59,299
Hung Poo Real Estate Development 108,000 56,634
Taiwan Semiconductor Mfg 89,000 129,569
--------
Total 426,464
- -------------------------------------------------------------------------------------
UNITED KINGDOM (13.6%)
Admiral Group 10,097 149,667
Anglo American 3,491 87,585
BP 19,444 158,483
British American Tobacco 7,340 201,312
Drax Group 8,341 77,500
GlaxoSmithKline 6,072 116,717
Home Retail Group 17,530 55,868
Intl Power 24,739 88,495
Natl Grid 12,062 135,867
Pearson 8,591 85,561
Prudential 14,043 70,536
Vodafone Group 48,856 93,976
--------
Total 1,321,567
- -------------------------------------------------------------------------------------
UNITED STATES (32.6%)
AllianceBernstein Holding LP 1,311 30,730
AT&T 10,840 290,186
Bank of America 6,479 156,598
BP Prudhoe Bay Royalty Trust 3,130 258,193
Bristol-Myers Squibb 8,102 166,496
Coca-Cola 1,018 44,853
Diamond Offshore Drilling 1,692 150,250
JPMorgan Chase & Co 3,349 138,146
KeyCorp 10,300 125,969
Kinder Morgan Energy Partners LP 3,225 174,311
Kraft Foods Cl A 1,562 45,517
Merck & Co 5,939 183,812
Newell Rubbermaid 9,843 135,341
Packaging Corp of America 8,655 145,664
Parkway Properties 2,542 43,850
Pfizer 15,978 282,970
Philip Morris Intl 3,255 141,495
Plum Creek Timber 2,400 89,471
Regal Entertainment Group Cl A 7,729 99,240
Reynolds American 2,610 127,786
US Bancorp 6,700 199,727
UST 2,296 155,187
--------
Total 3,185,792
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $11,438,926) $9,054,364
=====================================================================================
</Table>
<Table>
<Caption>
BONDS (0.6%)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
JERSEY
Intl Power Finance III
(European Monetary Unit)
06-05-15 4.75% $100,000(c) $54,065
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $66,890) $54,065
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $11,505,816)(d) $9,108,429
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -----------------------------------------------------------------------
Automobiles 0.8% $76,504
Beverages 2.7 259,206
Capital Markets 0.3 30,730
Chemicals 1.4 132,853
Commercial Banks 7.1 693,251
Communications Equipment 0.8 80,913
Computers & Peripherals 0.6 59,299
Construction & Engineering 0.7 69,117
Containers & Packaging 1.5 145,664
Diversified Financial Services 3.0 294,744
Diversified Telecommunication Services 8.2 795,060
Electric 0.6 54,065
Electric Utilities 1.2 118,643
Electronic Equipment, Instruments & 102,179
Components 1.0
Energy Equipment & Services 1.5 150,250
Food Products 0.5 45,517
Gas Utilities 1.0 97,665
Hotels, Restaurants & Leisure 0.5 45,575
Household Durables 1.4 135,341
Independent Power Producers & Energy 165,995
Traders 1.7
Insurance 4.9 481,920
Internet & Catalog Retail 0.6 55,868
Machinery 1.1 108,594
Media 3.8 367,864
Metals & Mining 2.3 226,202
Multi-Utilities 2.6 255,821
Oil, Gas & Consumable Fuels 12.1 1,179,779
Paper & Forest Products 1.1 102,446
Pharmaceuticals 10.8 1,049,208
Real Estate Investment Trusts (REITs) 1.8 172,459
Real Estate Management & Development 1.8 173,251
Semiconductors & Semiconductor 129,569
Equipment 1.3
Software 2.5 238,974
Specialty Retail 2.3 228,821
Tobacco 6.4 625,780
Transportation Infrastructure 0.7 65,326
Wireless Telecommunication Services 1.0 93,976
- -----------------------------------------------------------------------
Total $9,108,429
- -----------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted.
(d) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $11,537,612 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $51,036
Unrealized depreciation (2,480,219)
- -----------------------------------------------------------
Net unrealized depreciation $(2,429,183)
- -----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, 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. Non-U.S. equity securities actively traded in foreign markets may
be reflected in Level 2 despite the availability of closing prices, because the
fund evaluates and determines whether those closing prices reflect fair value at
the close of the NYSE or require adjustment, as described in Note 1 to the
financial statements - Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2008:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 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 $3,391,872 $5,716,557 $-- $9,108,429
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
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.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value (identified cost $11,505,816) $ 9,108,429
Cash 753,746
Foreign currency holdings (identified cost $271,148) 265,604
Capital shares receivable 96,970
Dividends receivable 29,704
Receivable for investment securities sold 77,838
- ------------------------------------------------------------------------------
Total assets 10,332,291
- ------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities purchased 551,406
Accrued investment management services fees 208
Accrued distribution fees 55
Accrued transfer agency fees 40
Accrued administrative services fees 21
Other accrued expenses 41,487
- ------------------------------------------------------------------------------
Total liabilities 593,217
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 9,739,074
- ------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 13,444
Additional paid-in capital 12,341,344
Excess of distributions over net investment income (934)
Accumulated net realized gain (loss) (213,844)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (2,400,936)
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 9,739,074
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $5,428,904 749,581 $7.24(1)
Class B $ 648,517 89,630 $7.24
Class C $ 57,726 7,976 $7.24
Class I $3,573,485 493,000 $7.25
Class R2 $ 7,248 1,000 $7.25
Class R3 $ 7,250 1,000 $7.25
Class R4 $ 8,696 1,199 $7.25
Class R5 $ 7,248 1,000 $7.25
- ---------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $7.68. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 17
STATEMENT OF OPERATIONS --------------------------------------------------------
FOR THE PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 100,144
Interest 4,158
Less foreign taxes withheld (6,031)
- ------------------------------------------------------------------------------
Total income 98,271
- ------------------------------------------------------------------------------
Expenses:
Investment management services fees 15,723
Distribution fees
Class A 1,812
Class B 818
Class C 157
Class R2 11
Class R3 6
Transfer agency fees
Class A 1,624
Class B 198
Class C 35
Class R2 1
Class R3 1
Class R4 1
Class R5 1
Administrative services fees 1,528
Plan administration services fees
Class R2 6
Class R3 6
Class R4 7
Compensation of board members 66
Custodian fees 4,457
Printing and postage 7,123
Registration fees 9,536
Professional fees 38,918
Other 2,302
- ------------------------------------------------------------------------------
Total expenses 84,337
Expenses waived/reimbursed by the Investment Manager and its
affiliates (59,413)
- ------------------------------------------------------------------------------
Total net expenses 24,924
- ------------------------------------------------------------------------------
Investment income (loss) -- net 73,347
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (214,071)
Foreign currency transactions (53,391)
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments (267,462)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (2,378,855)
- ------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (2,646,317)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(2,572,970)
- ------------------------------------------------------------------------------
</Table>
* When shares became publicly available.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
STATEMENT OF CHANGES IN NET ASSETS ---------------------------------------------
FOR THE PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 73,347
Net realized gain (loss) on investments (267,462)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (2,378,855)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (2,572,970)
- ------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (10,316)
Class B (993)
Class C (166)
Class I (12,568)
Class R2 (13)
Class R3 (17)
Class R4 (25)
Class R5 (25)
Tax return of capital
Class A (506)
Class B (59)
Class C (12)
Class I (555)
Class R2 (1)
Class R3 (1)
Class R4 (1)
Class R5 (1)
- ------------------------------------------------------------------------------
Total distributions (25,259)
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 19
STATEMENT OF CHANGES IN NET ASSETS (continued) ---------------------------------
FOR THE PERIOD ENDED AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 6,965,441
Class B shares 763,341
Class C shares 96,736
Class R4 shares 2,000
Reinvestment of distributions at net asset value
Class A shares 10,418
Class B shares 1,033
Class C shares 161
Class R4 shares 4
Payments for redemptions
Class A shares (459,003)
Class C shares (22,899)
- ------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 7,357,232
- ------------------------------------------------------------------------------
Total increase (decrease) in net assets 4,759,003
Net assets at beginning of period 4,980,071**
- ------------------------------------------------------------------------------
Net assets at end of period $ 9,739,074
- ------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ (934)
- ------------------------------------------------------------------------------
</Table>
* When shares became publicly available.
** Initial capital of $5,000,000 was contributed on July 24, 2008. The Fund had
a decrease in net assets resulting from operations of $19,929 during the
period from July 24, 2008 to Aug. 1, 2008 (when shares became publicly
available).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .07
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.70)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.02)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.24
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $5
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.71%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.45%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.78%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return(h) (27.12%)(i)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 21
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .06
Net gains (losses) (both realized and
unrealized) (2.76)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.70)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.02)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.24
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 5.48%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 2.21%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.11%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return(h) (27.15%)(i)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .07
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.70)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.02)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.24
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 5.15%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 2.21%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.31%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return(h) (27.18%)(i)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.68)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.03)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.25
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.12%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.07%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.95%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return (27.00%)(h)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .07
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.70)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.01)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.25
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.92%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.72%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.36%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return (27.10%)(h)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.69)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.02)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.25
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.68%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.47%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.61%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return (27.07%)(h)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.69)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.02)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.25
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.42%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.24%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.89%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return (27.04%)(h)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.96
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09
Net gains (losses) (both realized and
unrealized) (2.77)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (2.68)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03)
Tax return of capital .00(d)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.03)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.25
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- -------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 4.17%(f)
- -------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.12%(f)
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.91%(f)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%
- -------------------------------------------------------------------------------------------------------------
Total return (27.00%)(h)
- -------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Equity Income Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company.
RiverSource Global Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the Board
of Directors (the Board). Under normal market conditions, at least 80% of the
Fund's net assets will be invested in equity securities, including companies
located in (non-U.S.) developed and emerging countries. On July 24, 2008,
RiverSource Investments, LLC (the Investment Manager) a subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial), invested $5,000,000 in the Fund (1,000
shares for Class A, 1,000 shares for Class B, 1,000 shares for Class C, 493,000
shares for Class I, 1,000 shares for Class R2, 1,000 shares for Class R3, 1,000
shares for Class R4 and 1,000 shares for Class R5), which represented the
initial capital for each class at $10 per share. Shares of the Fund were first
offered to the public on Aug. 1, 2008.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
At Oct. 31, 2008, the Investment Manager owned 100% of Class I, Class R2, Class
R3 and Class R5 shares and at Oct. 31, 2008, the Investment Manager owned
approximately 37% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Aug. 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 disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Accordingly, in those situations, Ameriprise Financial, as administrator to the
Fund, will fair value foreign equity securities pursuant to procedures adopted
by the Board, including utilizing a third party pricing service to determine
these fair values. These procedures take into account multiple factors,
including movements in the U.S. securities markets, to determine a good faith
estimate that reasonably reflects the current market conditions as of the close
of the New York Stock Exchange.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, and for the period
then ended, the Fund had no outstanding option contracts.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these future 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 market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings consisted of
multiple denominations.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations. At Oct. 31, 2008, the Fund had no outstanding
forward foreign currency contracts.
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the 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 foreign currency
transactions, passive foreign investment company (PFIC) holdings, re-
characterization of REIT distributions, investments in partnerships and losses
deferred due to wash sales. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $54,336
and accumulated net realized loss has been decreased by $55,644 resulting in a
net reclassification adjustment to decrease paid-in capital by $1,308.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
The tax character of distributions paid for the period indicated is as follows:
<Table>
<Caption>
YEAR ENDED OCT. 31, 2008*
- -----------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income.............................. $10,316
Long-term capital gain....................... --
Tax return of capital........................ 506
CLASS B
Distributions paid from:
Ordinary income.............................. 993
Long-term capital gain....................... --
Tax return of capital........................ 59
CLASS C
Distributions paid from:
Ordinary income.............................. 166
Long-term capital gain....................... --
Tax return of capital........................ 12
CLASS I
Distributions paid from:
Ordinary income.............................. 12,568
Long-term capital gain....................... --
Tax return of capital........................ 555
CLASS R2
Distributions paid from:
Ordinary income.............................. 13
Long-term capital gain....................... --
Tax return of capital........................ 1
CLASS R3
Distributions paid from:
Ordinary income.............................. 17
Long-term capital gain....................... --
Tax return of capital........................ 1
CLASS R4
Distributions paid from:
Ordinary income.............................. 25
Long-term capital gain....................... --
Tax return of capital........................ 1
CLASS R5
Distributions paid from:
Ordinary income.............................. 25
Long-term capital gain....................... --
Tax return of capital........................ 1
</Table>
* For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $--
Undistributed accumulated long-term gain....... $--
Accumulated realized loss...................... $(182,867)
Unrealized appreciation (depreciation)......... $(2,432,847)
</Table>
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
Oct. 31, 2008, 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 and paid each calendar quarter,
when available, are reinvested in additional shares of the Fund at net asset
value or payable in cash. Capital gains, when available, are distributed along
with the last income dividend of the calendar year.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.80%
to 0.57% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the MSCI All Country World Index. In certain circumstances, the
Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The first adjustment will be made on Feb. 1, 2009 and cover the six-month
period beginning Aug. 1, 2008. The management fee for the period ended Oct. 31,
2008 was 0.80% of the Fund's average daily net assets.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the period ended Oct. 31, 2008 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the period ended Oct. 31,
2008, there were no expenses incurred for these particular items.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A,
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
$20.50 for Class B and $20.00 for Class C for this service. The Fund also pays
the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees 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 R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average
daily net assets attributable to Class R2 shares and a fee at an annual rate of
up to 1.00% of the Fund's average daily net assets attributable to Class B and
Class C shares. For Class B and Class C shares, 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 $38,000 and $1,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares were
$18,329 for Class A and $229 for Class C for the period ended Oct. 31, 2008.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the period ended Oct. 31, 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............................................. 1.45%
Class B............................................. 2.21
Class C............................................. 2.21
Class I............................................. 1.07
Class R2............................................ 1.72
Class R3............................................ 1.47
Class R4............................................ 1.24
Class R5............................................ 1.12
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A............................................ $682
Class B............................................ 84
Class C............................................ 15
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2............................................. $4
Class R3............................................. 4
Class R4............................................. 5
</Table>
The management fees waived/reimbursed at the Fund level were $58,619.
Under an agreement which was effective until Oct. 31, 2008, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the Fund's average daily net assets:
<Table>
Class A............................................. 1.45%
Class B............................................. 2.21
Class C............................................. 2.21
Class I............................................. 1.07
Class R2............................................ 1.87
Class R3............................................ 1.62
Class R4............................................ 1.37
Class R5............................................ 1.12
</Table>
Effective Nov. 1, 2008, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Oct. 31, 2009,
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
performance incentive adjustment, will not exceed the following percentage of
the Fund's average daily net assets:
<Table>
Class A............................................. 1.45%
Class B............................................. 2.21
Class C............................................. 2.20
Class I............................................. 1.05
Class R2............................................ 1.85
Class R3............................................ 1.60
Class R4............................................ 1.35
Class R5............................................ 1.10
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $7,902,667 and $710,156, respectively, for the period
from Aug. 1, 2008 (when shares became publicly available) to Oct. 31, 2008.
Realized gains and losses are determined on an identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the period from Aug. 1, 2008 (when
shares became publicly available) to Oct. 31, 2008 are as follows:
<Table>
<Caption>
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- --------------------------------------------------------------------------------
Class A 806,221 1,124 (58,764) 748,581
Class B 88,519 111 -- 88,630
Class C 10,230 17 (3,271) 6,976
Class R4 199 -- -- 199
- --------------------------------------------------------------------------------
</Table>
5. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility became effective on 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 period ended Oct. 31, 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. (JPMCB), 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.
6. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$182,867 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
7. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted frequent trading,
all of which had been terminated by September 2002. In January 2004, Seligman,
on a voluntary basis, publicly disclosed these four arrangements to its clients
and to shareholders of the Seligman Funds. Seligman also provided information
concerning mutual fund trading practices to the SEC and the Office of the
Attorney General of the State of New York (NYAG). In September 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, Seligman and its affiliates could, in the absence of the SEC
in its discretion granting exemptive relief, be enjoined
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
from providing advisory and underwriting services to the Seligman Funds and
other registered investment companies. Seligman does not believe that the
foregoing legal action or other possible actions will have a material adverse
impact on Seligman or its clients, including the Seligman Funds and other
investment companies managed by it; however, there can be no assurance of this
or that these matters and any related publicity will 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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EQUITY INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Equity Income Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2008, and the related statement of operations, changes in net
assets, and financial highlights for the period from August 1, 2008 (when shares
became publicly available) to October 31, 2008. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audit provides a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Threadneedle Global Equity Income Fund of the RiverSource Global Series, Inc. at
October 31, 2008, the results of its operations, changes in its net assets and
the financial highlights for the period from August 1, 2008 (when shares became
publicly available) to October 31, 2008, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 45
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal period ended Oct. 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100.00%
Dividends Received Deduction for corporations................ 100.00%
U.S. Government Obligations.................................. 0.00%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 47
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 49
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds"). In addition, under the subadvisory agreement
(the "Subadvisory Agreement") between RiverSource Investments and the subadviser
(the "Subadviser"), the Subadviser performs portfolio management and related
services for the Fund. The Fund's Board of Directors (the "Board"), including
the independent Board members (the "Independent Directors"), and its Contracts,
Investment Review and Compliance Committees monitor these services throughout
the year. The Board accords particular weight to the work, deliberations and
conclusions of these committees in determining whether to approve the IMS
Agreement and the Subadvisory Agreement (together, the "Advisory Agreements").
At the June 11-12, 2008 in-person Board meeting, the Board, including the
Independent Directors, considered approval of the Advisory Agreements. At this
meeting, independent legal counsel to the Independent Directors reviewed with
the Independent Directors various factors relevant to the Board's consideration
of advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved the
Advisory Agreements.
Nature, Extent and Quality of Services Provided by RiverSource Investments and
the Subadviser: The Board analyzed various reports and presentations it had
received detailing the services to be performed by RiverSource Investments and
the Subadviser, as well as their expertise, resources and capabilities. The
Board specifically considered many developments during the past year concerning
the services provided by RiverSource Investments, including, in particular, the
investment in and resources dedicated to the Fund's operations, particularly in
the areas of trading systems, legal and compliance. Further, in connection with
the Board's evaluation of the overall package of services provided by
RiverSource Investments, the Board considered the quality of the administrative
and transfer agency services proposed to be provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and the Subadviser, and each
entity's ability to carry out its responsibilities under the Advisory
Agreements. The Board also discussed the acceptability of the terms of the
Advisory Agreements (including
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 51
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
the relatively broad scope of services required to be performed by RiverSource
Investments and the Subadviser). The Board concluded that the services to be
performed under the Advisory Agreements for the Fund should be of a reasonably
high quality.
Based on the foregoing, and based on other information received (both oral and
written) and other considerations, the Board concluded that RiverSource
Investments, its affiliates and the Subadviser were in a position to provide a
high quality and level of services to the Fund.
Investment Performance: Although the consideration of a fund's investment
performance is usually reviewed in connection with evaluating the nature, extent
and quality of services provided under advisory agreements, the Board did not
consider this factor because the Fund had no performance history.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the Advisory Agreements. The Board accorded particular weight to
the notion that the level of fees should reflect a rational pricing model
applied consistently across the various product lines in the RiverSource Funds'
family, while assuring that the overall fees for each fund are generally in line
with the "pricing philosophy" (i.e., that the total expense ratio of each fund,
with few exceptions, is at or below the median expense ratio of funds in an
appropriate comparison group). Based on its review, the Board concluded that the
Fund's management fee, including the performance incentive adjustment, was fair
and reasonable in light of the extent and quality of services that the Fund
would receive.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. The Board also considered the
services acquired by the investment manager through the use of commission
dollars paid by the Funds on portfolio transactions. The Board noted that the
fees to be paid by the Fund should permit the investment manager to offer
competitive compensation to its personnel, make necessary investments in its
business and earn an appropriate profit. The Board concluded that profitability
levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
such growth. The Board considered that the IMS Agreement provides for lower fees
as assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services expected to
be provided. In reaching this conclusion, no single factor was determinative. On
June 12, 2008, the Board, including all of the Independent Directors, approved
the Advisory Agreements.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2008 ANNUAL REPORT 53
THREADNEEDLE GLOBAL EQUITY INCOME FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus.
Threadneedle(R) mutual funds are distributed by RiverSource
Distributors, Inc., Member FINRA, managed by RiverSource
Investments, LLC, and subadvised by Threadneedle
International Limited. These companies are part of
Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C) 2008 RiverSource Distributors, Inc. S-6525 AG (12/08)
</Table>
Annual Report
and Prospectus (THREADNEEDLE LOGO)
THREADNEEDLE
GLOBAL EXTENDED ALPHA FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
OCTOBER 31, 2008
(Prospectus also enclosed)
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you (ADVANCED ALPHA(SM) STRATEGIES
invest or send money. ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 4
Fund Expenses Example.............. 8
Portfolio of Investments........... 11
Statement of Assets and
Liabilities...................... 17
Statement of Operations............ 18
Statement of Changes in Net
Assets........................... 20
Financial Highlights............... 21
Notes to Financial Statements...... 29
Report of Independent Registered
Public Accounting Firm........... 44
Federal Income Tax Information..... 46
Board Members and Officers......... 47
Approval of Investment Management
Services Agreement............... 51
Proxy Voting....................... 53
</Table>
RIVERSOURCE FAMILY OF FUNDS
Threadneedle Funds are a part of the RiverSource
family of funds that includes funds branded
"RiverSource," "RiverSource Partners," and
"Threadneedle," These funds share the same Board of
Directors/Trustees and officers.
Please see the pages that follow this report for a
list of mutual funds that are included in the
RiverSource family of funds.
- --------------------------------------------------------------------------------
2 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
International investing involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and differences in
financial reporting and accounting standards and oversight. Risks are
particularly significant in emerging markets.
The Threadneedle Global Extended Alpha Fund may make short sales, which involves
selling a security the Fund does not own in anticipation that the security's
price will decline. The Fund's potential losses could exceed those of other
mutual funds which hold only long security positions if the value of the
securities held long decrease and the value of the securities sold short
increase. The Fund's use of short sales in effect "leverages" the Fund, as the
Fund intends to use the cash proceeds from the short sales to invest in
additional long securities. Leveraging potentially exposes the Fund to greater
risks due to unanticipated market movements, which may magnify losses and
increase volatility of returns. There is no assurance that a leveraging strategy
will be successful. Both long and short positions may be obtained through buying
or selling individual securities or creating similar long or short exposure
through the use of derivative instruments. See the Fund's prospectus for
information on these and other risks associated with the Fund.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 3
MANAGER COMMENTARY -------------------------------------------------------------
Below, Threadneedle Global Extended Alpha Fund portfolio managers Andrew
Holliman and Jeremy Podger of Threadneedle International Limited (Threadneedle)
discuss the Fund's results and positioning for the period from its inception on
Aug. 1, 2008 through Oct. 31, 2008. Threadneedle, an indirect wholly-owned
subsidiary of Ameriprise Financial, Inc., acts as the subadviser to the Fund.
Dear Shareholders,
On Aug. 1, 2008, we introduced Threadneedle Global Extended Alpha Fund, an
equity portfolio that uses a long/short strategy to pursue its goal of
delivering alpha, a risk-adjusted measure of above market returns. The Fund
launched during an unprecedented period of investment volatility, an environment
that was very difficult for the Fund in the short term. Longer term, we have
confidence in our strategy of analyzing company fundamentals and relative stock
valuations to distinguish between companies that offer compelling return
opportunities and those that do not.
THE FUND'S CURRENT INVESTMENT STRATEGY
The Fund's investment strategy combines a long portfolio of companies we think
have positive performance potential and a short portfolio where we take short
positions in companies that we view unfavorably. We often use the proceeds from
the short sales to purchase more of the favorably viewed stocks, with a goal of
enhancing the Fund's return potential.
Our selection of stocks for the long and short portfolios depends primarily on a
bottom-up, qualitative analysis. We consider our conviction on the individual
stock, the risk characteristics of the stock and the correlation of those risk
characteristics to the existing portfolio. In the portfolio, we typically hold a
mix of value and growth stocks spanning a wide range of industries.
Geographically, we may invest in both developed and emerging market countries.
By paying attention to stock valuations, we strive to take advantage of value
anomalies across the globe. In the long portfolio, we seek to hold stocks whose
growth potential is not fully reflected in the stock price. We favor companies
that have high-quality management teams, solid business models and strong
balance sheets. In the short portfolio, we also want to capitalize on value
anomalies, but for that segment, we work to identify stocks that appear
expensive based on their company outlook. For example, companies likely to
experience earnings downgrades or declining return on capital. We then take
short positions in these stocks.
- --------------------------------------------------------------------------------
4 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The short or extended alpha portion of the strategy is not intended to increase
the portfolio's market risk. The goal is to deliver a higher return, while
keeping the portfolio's risk level similar to that of its benchmark, the Morgan
Stanley Capital International (MSCI) All Country World
PORTFOLIO BREAKDOWN BY COUNTRY (at Oct. 31, 2008; % of portfolio and portfolio
swap(1))
- --------------------------------------------------------------------------------
<Table>
<Caption>
LONG SHORT(2) NET
Australia 1.2% 0.0% 1.2%
- -------------------------------------------------------------------
Bermuda 1.8% 0.0% 1.8%
- -------------------------------------------------------------------
Brazil 0.9% 0.0% 0.9%
- -------------------------------------------------------------------
Canada 1.2% 0.0% 1.2%
- -------------------------------------------------------------------
Denmark 0.5% 0.0% 0.5%
- -------------------------------------------------------------------
Finland 0.8% 0.0% 0.8%
- -------------------------------------------------------------------
France 1.3% 0.0% 1.3%
- -------------------------------------------------------------------
Germany 4.3% 0.0% 4.3%
- -------------------------------------------------------------------
Hong Kong 1.0% 0.0% 1.0%
- -------------------------------------------------------------------
India 0.0% -0.6% -0.6%
- -------------------------------------------------------------------
Japan 4.3% -0.9% 3.4%
- -------------------------------------------------------------------
Luxembourg 0.0% -0.2% -0.2%
- -------------------------------------------------------------------
Mexico 0.4% 0.0% 0.4%
- -------------------------------------------------------------------
Netherlands 0.8% 0.0% 0.8%
- -------------------------------------------------------------------
Portugal 0.2% 0.0% 0.2%
- -------------------------------------------------------------------
Russia 0.5% 0.0% 0.5%
- -------------------------------------------------------------------
Singapore 2.1% 0.0% 2.1%
- -------------------------------------------------------------------
Spain 0.4% 0.0% 0.4%
- -------------------------------------------------------------------
Switzerland 10.7% 0.0% 10.7%
- -------------------------------------------------------------------
United Kingdom 9.6% 0.0% 9.6%
- -------------------------------------------------------------------
United States 64.8% -5.1% 59.7%
- -------------------------------------------------------------------
106.8% -6.8% 100.0%
- -------------------------------------------------------------------
</Table>
(1) The Fund has entered into a portfolio swap agreement. A portfolio swap
allows the Fund to obtain exposure to a custom basket of securities and
foreign markets (both long and short exposures) without owning or taking
physical custody of such securities. The portfolio breakdown by country for
each underlying position in the custom basket has been estimated by
multiplying the notional amount of each security by its Oct. 31, 2008
closing market price as obtained from an authorized pricing source. The
notional amounts and the market values of the positions in the custom basket
are not presented in the financial statements.
(2) At Oct. 31, 2008, the Fund had no short positions. However, the Fund had
entered into a portfolio swap in order to gain short exposure to foreign
equity markets. See Portfolio Swap Outstanding at Oct. 31, 2008 following
the Portfolio of Investments, and Note 1 to the financial statements.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
Index. We carefully monitor the Fund's sector and regional weightings relative
to those of the MSCI All Country World Index.
OUR FUTURE STRATEGY
Our outlook for global economic growth over the next 12 months is unfavorable
and we expect the slow economy to significantly reduce corporate profits. Though
aggressive fiscal and monetary policies should help stabilize liquidity in the
global system and promote a more stable economic environment, we don't think
there will be substantial pent-up demand coming out of this downturn.
Consequently, we will probably see steady rather than spectacular growth in the
next phase of the economic cycle.
We seek investment opportunities on a stock-by-stock basis -- attractively
valued companies with high recurring revenues, strong balance sheets and high
cash flows. In general, we are favoring less cyclical, larger cap companies that
we believe have strong business models, clear competitive advantages and free
cash flow that will finance opportunities to expand their profit margins in a
period of sharply lower profitability. We believe
Top ten holdings do not include notional exposure to holdings the
Fund has through its use of a portfolio swap. For more information
regarding the Fund's portfolio swap, see "Portfolio of Investments"
page 13.
TOP TEN HOLDINGS (at Oct. 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
Nestle (Switzerland) 5.2%
- ------------------------------------------------
Pfizer (United States) 3.8%
- ------------------------------------------------
Johnson & Johnson (United States) 3.4%
- ------------------------------------------------
PepsiCo (United States) 3.3%
- ------------------------------------------------
Microsoft (United States) 3.2%
- ------------------------------------------------
AT&T (United States) 2.9%
- ------------------------------------------------
IBM (United States) 2.9%
- ------------------------------------------------
Nintendo (Japan) 2.9%
- ------------------------------------------------
Wal-Mart Stores (United States) 2.8%
- ------------------------------------------------
Roche Holding (Switzerland) 2.4%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section
entitled "Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any
time, and are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
such companies can emerge from this recessionary period stronger as they gain
market share from weaker competitors.
We will continue to apply the Fund's long/short strategy to fully capitalize on
Threadneedle's global equity research, seeking out opportunities that best meet
our investment criteria, regardless of their location.
<Table>
(PHOTO - ANDREW HOLLIMAN) (PHOTO - JEREMY PODGER)
Andrew Holliman, CFA(R) Jeremy Podger
Portfolio Manager Deputy Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
Our selection of stocks for the long and short portfolios depends primarily on
a bottom-up, qualitative analysis.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 7
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the expenses of the funds in which it invests (also
referred to as "acquired funds"), including affiliated and non-affiliated pooled
investment vehicles (including mutual funds and exchange traded funds). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the acquired funds
using the expense ratio of each of the acquired funds as of the acquired fund's
most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period indicated and held until Oct. 31, 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.
- --------------------------------------------------------------------------------
8 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
ENDING EXPENSES
BEGINNING ACCOUNT VALUE PAID DURING ANNUALIZED
ACCOUNT VALUE(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- ---------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 698.50 $ 3.28 1.55%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,017.39 $ 7.88 1.55%
- ---------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 697.00 $ 4.89 2.31%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,013.56 $11.72 2.31%
- ---------------------------------------------------------------------------------------
Class C
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 697.00 $ 4.87 2.30%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,013.61 $11.67 2.30%
- ---------------------------------------------------------------------------------------
Class I
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 699.00 $ 2.56 1.21%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,019.11 $ 6.16 1.21%
- ---------------------------------------------------------------------------------------
Class R2
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 698.00 $ 4.28 2.02%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,015.02 $10.26 2.02%
- ---------------------------------------------------------------------------------------
Class R3
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 698.50 $ 3.75 1.77%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,016.28 $ 9.00 1.77%
- ---------------------------------------------------------------------------------------
Class R4
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 699.00 $ 3.22 1.52%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,017.54 $ 7.73 1.52%
- ---------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 9
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
ENDING EXPENSES
BEGINNING ACCOUNT VALUE PAID DURING ANNUALIZED
ACCOUNT VALUE(A) OCT. 31, 2008 THE PERIOD(B) EXPENSE RATIO
- ---------------------------------------------------------------------------------------
Class R5
- ---------------------------------------------------------------------------------------
Actual(c) $1,000 $ 699.00 $ 2.67 1.26%
- ---------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,018.85 $ 6.41 1.26%
- ---------------------------------------------------------------------------------------
</Table>
(a) The beginning account values are as of Aug. 1, 2008 (when shares of the Fund
became publicly available) for actual expense calculations and as of May 1,
2008 for hypothetical expense calculations.
(b) Actual expenses paid during the period are equal to the Fund's annualized
expense ratio as indicated above, multiplied by the average account value
over the period, multiplied by 91/365 (to reflect the period from Aug. 1,
2008 to Oct. 31, 2008). Hypothetical expenses paid during the period are
equal to the Fund's annualized expense ratio as indicated above, multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period).
(c) Based on the actual return for the period from Aug. 1, 2008 (when shares
became publicly available) to Oct. 31, 2008: -30.15% for Class A, -30.30%
for Class B, -30.30% for Class C, -30.10% for Class I, -30.20% for Class R2,
-30.15% for Class R3, -30.10% for Class R4 and -30.10% for Class R5.
- --------------------------------------------------------------------------------
10 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
OCT. 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (93.3%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (1.1%)
CSL 2,830 $68,789
- -------------------------------------------------------------------------------------
BERMUDA (1.7%)
Accenture Cl A 1,400 46,270
PartnerRe 875 59,229
--------
Total 105,499
- -------------------------------------------------------------------------------------
CANADA (0.4%)
ShawCor Cl A 1,400 21,204
- -------------------------------------------------------------------------------------
DENMARK (0.5%)
Vestas Wind Systems 720(b) 29,490
- -------------------------------------------------------------------------------------
FINLAND (0.2%)
Talvivaara Mining 3,330(b) 10,865
- -------------------------------------------------------------------------------------
FRANCE (1.3%)
France Telecom 3,085 77,763
- -------------------------------------------------------------------------------------
GERMANY (3.6%)
Allianz 570 42,877
Linde 1,490 125,287
RWE 560 46,552
--------
Total 214,716
- -------------------------------------------------------------------------------------
HONG KONG (0.9%)
Esprit Holdings 4,000 22,730
Great Eagle Holdings 30,000 34,442
--------
Total 57,172
- -------------------------------------------------------------------------------------
JAPAN (4.2%)
Nintendo 500 160,699
Sony Financial Holdings 29 94,342
--------
Total 255,041
- -------------------------------------------------------------------------------------
MEXICO (0.4%)
America Movil ADR Series L 825 25,526
- -------------------------------------------------------------------------------------
NETHERLANDS (0.8%)
Fugro 1,280 45,724
- -------------------------------------------------------------------------------------
RUSSIA (0.5%)
Mobile Telesystems ADR 800 31,320
- -------------------------------------------------------------------------------------
SINGAPORE (2.0%)
DBS Group Holdings 16,000 122,193
- -------------------------------------------------------------------------------------
SWITZERLAND (10.5%)
Nestle 7,550 293,559
Novartis 2,310 117,236
Roche Holding 900 137,616
Syngenta 248 46,353
Xstrata 2,370 40,534
--------
Total 635,298
- -------------------------------------------------------------------------------------
UNITED KINGDOM (7.7%)
Autonomy 3,650(b) 57,868
BG Group 8,080 118,797
Lloyds TSB Group 8,600 27,794
Prudential 9,850 49,475
Tesco 12,600 69,030
Tullow Oil 3,000 25,475
Vodafone Group 60,200 115,796
--------
Total 464,235
- -------------------------------------------------------------------------------------
UNITED STATES (57.5%)
American Express 1,920 52,800
Aon 2,400 101,520
AT&T 6,010 160,887
AutoZone 480(b) 61,099
Coca-Cola 2,500 110,150
Comcast Cl A 8,640 136,166
CVS Caremark 3,400 104,210
Devon Energy 800 64,688
Diamond Offshore Drilling 300 26,640
eBay 6,040(b) 92,231
Fiserv 1,500(b) 50,040
Genzyme 1,660(b) 120,981
Google Cl A 225(b) 80,856
IBM 1,730 160,838
Johnson & Johnson 3,140 192,608
KeyCorp 2,800 34,244
Laboratory Corp of America Holdings 1,510(b) 92,850
Lowe's Companies 3,200 69,440
Microsoft 7,990 178,416
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED STATES (CONT.)
Occidental Petroleum 1,800 $99,972
Oracle 6,620(b) 121,080
PepsiCo 3,240 184,712
Pfizer 12,000 212,521
Philip Morris Intl 3,065 133,236
Praxair 1,300 84,695
Republic Services 5,000 118,500
Synovus Financial 4,000 41,320
Thermo Fisher Scientific 1,590(b) 64,554
Travelers Companies 2,830 120,417
Ultra Petroleum 2,000(b) 93,100
Union Pacific 500 33,385
United States Steel 800 29,504
Valero Energy 1,700 34,986
Wal-Mart Stores 2,800 156,268
Wisconsin Energy 1,000 43,500
--------
Total 3,462,414
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $6,828,222) $5,627,249
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $6,828,222)(d) $5,627,249
=====================================================================================
</Table>
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -------------------------------------------------------------------
Beverages 4.9% $294,862
Biotechnology 3.1 189,770
Chemicals 4.3 256,335
Commercial Banks 3.7 225,551
Commercial Services & Supplies 2.0 118,500
Computers & Peripherals 2.7 160,838
Consumer Finance 0.9 52,800
Diversified Telecommunication
Services 4.0 238,650
Electrical Equipment 0.5 29,490
Energy Equipment & Services 1.6 93,568
Food & Staples Retailing 5.5 329,508
Food Products 4.9 293,559
Health Care Providers & Services 1.5 92,850
Insurance 7.7 467,860
Internet Software & Services 2.9 173,087
IT Services 1.6 96,310
Life Sciences Tools & Services 1.1 64,554
Media 2.3 136,166
Metals & Mining 1.3 80,903
Multi-Utilities 1.5 90,052
Oil, Gas & Consumable Fuels 7.2 437,018
Pharmaceuticals 10.8 659,981
Real Estate Management &
Development 0.6 34,442
Road & Rail 0.6 33,385
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE
- -------------------------------------------------------------------
Software 8.5% $518,063
Specialty Retail 2.5 153,269
Tobacco 2.2 133,236
Wireless Telecommunication Services 2.9 172,642
- -------------------------------------------------------------------
Total $5,627,249
- -------------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- -------------------------------------------------------------------------------
Nov. 4, 2008 3,380,370 34,576 $252 $--
Japanese Yen U.S. Dollar
- -------------------------------------------------------------------------------
Nov. 4, 2008 34,576 21,000 -- (783)
U.S. Dollar British Pound
- -------------------------------------------------------------------------------
Nov. 20, 2008 266,646 26,000,000 -- (2,521)
U.S. Dollar Japanese Yen
- -------------------------------------------------------------------------------
Total $252 $(3,304)
- -------------------------------------------------------------------------------
</Table>
PORTFOLIO SWAP(1) OUTSTANDING AT OCT. 31, 2008
<Table>
<Caption>
NET
COUNTER- NEXT UNREALIZED
PARTY DESCRIPTION RESET DATE DEPRECIATION
- ----------------------------------------------------------------------
UBS The Fund receives(pays) the Nov. 10, 2008 $(201,953)
total return on a custom
basket of long(short) equity
positions and pays(receives) a
floating rate based on the 1-
day LIBOR. The basket is
denominated in various foreign
currencies based on the local
currencies of the underlying
securities.
- ----------------------------------------------------------------------
Total $(201,953)
- ----------------------------------------------------------------------
</Table>
(1) The Fund has entered into a portfolio swap agreement. A portfolio swap
allows the Fund to obtain exposure to a custom basket of securities and
foreign markets (both long and short exposures) without owning or taking
physical custody of such securities. Under the terms of the agreement,
payments made by the Fund or the counterparty are based on the total return
of the reference assets within the basket. That is, one party agrees to pay
another party the return on the basket in return for a specified interest
rate. The agreement allows the Investment Manager of the Fund to alter the
composition of the custom basket by trading in and out of the notional
security positions at its discretion.
The notional amounts of the security positions held in the basket are not
recorded in the financial statements. The portfolio swap is valued daily based
on closing prices obtained from an authorized pricing source, and the change
in value is recorded as unrealized appreciation (depreciation). The swap
resets monthly at which time the Fund settles in cash with the counterparty.
Payments received or made are recorded as realized gains (losses).
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At Oct. 31, 2008, the cost of securities for federal income tax purposes
was $6,975,971 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $65,976
Unrealized depreciation (1,414,698)
- -----------------------------------------------------------
Net unrealized depreciation $(1,348,722)
- -----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
14 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO 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. Non-U.S. equity securities actively traded in foreign markets may
be reflected in Level 2 despite the availability of closing prices, because the
fund evaluates and determines whether those closing prices reflect fair value at
the close of the NYSE or require adjustment, as described in Note 1 to the
financial statements -- Valuation of securities.
The following table is a summary of the inputs used to value the Fund's
investments as of Oct. 31, 2008:
<Table>
<Caption>
FAIR VALUE AT OCT. 31, 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 $3,645,962 $1,981,287 $-- $5,627,249
Other financial
instruments* (3,052) (201,953) -- (205,005)
- ------------------------------------------------------------------------------
Total $3,642,910 $1,779,334 $-- $5,422,244
- ------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as forwards and
swap contracts, which are valued at the unrealized appreciation/depreciation
on the instrument.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
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.
- --------------------------------------------------------------------------------
16 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
OCT. 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value (identified cost $6,828,222) $ 5,627,249
Cash 650,676
Foreign currency holdings (identified cost $285,651) 284,608
Capital shares receivable 2,450
Dividends receivable 8,939
Receivable for investment securities sold 42,459
Unrealized appreciation on forward foreign currency contracts 252
- -------------------------------------------------------------------------------------
Total assets 6,616,633
- -------------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 250
Payable for investment securities purchased 339,053
Unrealized depreciation on forward foreign currency contracts 3,304
Unrealized depreciation on the portfolio swap contract 201,953
Accrued investment management services fees 168
Accrued distribution fees 24
Accrued transfer agency fees 9
Accrued administrative services fees 13
Other accrued expenses 42,008
- -------------------------------------------------------------------------------------
Total liabilities 586,782
- -------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 6,029,851
- -------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 4,315
Additional paid-in capital 7,951,796
Undistributed net investment income 204,383
Accumulated net realized gain (loss) (724,977)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (1,405,666)
- -------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $ 6,029,851
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $2,207,567 158,009 $13.97(1)
Class B $ 238,583 17,116 $13.94
Class C $ 93,733 6,724 $13.94
Class I $3,445,776 246,500 $13.98
Class R2 $ 6,979 500 $13.96
Class R3 $ 6,984 500 $13.97
Class R4 $ 23,241 1,663 $13.98
Class R5 $ 6,988 500 $13.98
- ---------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $14.82. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 17
STATEMENT OF OPERATIONS --------------------------------------------------------
FOR THE PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 26,504
Interest 1,774
Less foreign taxes withheld (1,070)
- -------------------------------------------------------------------------
Total income 27,208
- -------------------------------------------------------------------------
Expenses:
Investment management services fees 16,485
Distribution fees
Class A 1,067
Class B 508
Class C 207
Class R2 11
Class R3 5
Transfer agency fees
Class A 515
Class B 65
Class C 26
Class R2 1
Class R3 1
Class R4 3
Class R5 1
Administrative services fees 1,256
Plan administration services fees
Class R2 5
Class R3 5
Class R4 14
Compensation of board members 49
Custodian fees 4,457
Printing and postage 5,640
Registration fees 11,104
Professional fees 37,590
Other 2,147
- -------------------------------------------------------------------------
Total expenses 81,162
Expenses waived/reimbursed by the Investment Manager and
its affiliates (59,865)
- -------------------------------------------------------------------------
Total net expenses 21,297
- -------------------------------------------------------------------------
Investment income (loss) -- net 5,911
- -------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
18 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS (continued) --------------------------------------------
FOR THE PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ (722,673)
Foreign currency transactions (8,695)
Swap transactions (239,869)
- -------------------------------------------------------------------------
Net realized gain (loss) on investments (971,237)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (1,410,405)
- -------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (2,381,642)
- -------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(2,375,731)
- -------------------------------------------------------------------------
</Table>
* When shares became publicly available.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 19
STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------
FOR THE PERIOD FROM AUG. 1, 2008* TO OCT. 31, 2008
<Table>
<Caption>
OPERATIONS
Investment income (loss) -- net $ 5,911
Net realized gain (loss) on investments (971,237)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (1,410,405)
- -------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,375,731)
- -------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 3,082,069
Class B shares 482,927
Class C shares 117,476
Class R4 shares 22,000
Payments for redemptions
Class A shares (157,519)
Class B shares (141,999)
- -------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 3,404,954
- -------------------------------------------------------------------------
Total increase (decrease) in net assets 1,029,223
Net assets at beginning of period 5,000,628**
- -------------------------------------------------------------------------
Net assets at end of period $ 6,029,851
- -------------------------------------------------------------------------
Undistributed net investment income $ 204,383
- -------------------------------------------------------------------------
</Table>
* When shares became publicly available.
** Initial capital of $5,000,000 was contributed on July 24, 2008. The Fund had
an increase in net assets resulting from operations of $628 during the period
from July 24, 2008 to Aug. 1, 2008 (when shares became publicly available).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c),(d) .00
Net gains (losses) (both realized and
unrealized) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 5.55%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.55%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.07%)(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (30.15%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 21
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) (.02)
Net gains (losses) (both realized and
unrealized) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.94
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 6.33%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 2.31%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.55%)(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (30.30%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) (.03)
Net gains (losses) (both realized and
unrealized) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.94
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 6.22%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 2.30%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.79%)(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (30.30%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 23
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .03
Net gains (losses) (both realized and
unrealized) (6.05)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 4.94%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.21%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .63%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c),(d) .00
Net gains (losses) (both realized and
unrealized) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.04)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.96
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e) 5.74%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g) 1.81%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .03%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return (30.20%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .01
Net gains (losses) (both realized and
unrealized) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 5.49%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.56%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .28%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return (30.15%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .01
Net gains (losses) (both realized and
unrealized) (6.03)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 5.38%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.36%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .30%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $20.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .02
Net gains (losses) (both realized and
unrealized) (6.04)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.02)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d) 4.99%(e)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f) 1.26%(e)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .58%(e)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36%
- --------------------------------------------------------------------------------------------------------------
Total return (30.10%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratio.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Threadneedle Global Extended Alpha Fund (the Fund) is a series of RiverSource
Global Series, Inc. and is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company.
RiverSource Global Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the Board
of Directors (the Board). The Fund will invest primarily in equity securities,
including at least 40% of its net assets in companies located in (non-U.S.)
developed and emerging markets. The Fund will hold both long and short
positions. Both long and short positions may be obtained through buying or
selling individual securities or creating similar long or short exposure through
the use of derivative instruments. On July 24, 2008, RiverSource Investments,
LLC (the Investment Manager), a subsidiary of Ameriprise Financial, Inc.
(Ameriprise Financial), invested $5,000,000 in the Fund (500 shares for Class A,
500 shares for Class B, 500 shares for Class C, 246,500 shares for Class I, 500
shares for Class R2, 500 shares for Class R3, 500 shares for Class R4 and 500
shares for Class R5), which represented the initial capital for each class at
$20 per share. Shares of the Fund were first offered to the public on Aug. 1,
2008.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
At Oct. 31, 2008, the Investment Manager owned 100% of Class I, Class R2, Class
R3 and Class R5 shares. At Oct. 31, 2008, the Investment Manager owned
approximately 58% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Aug. 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the New York Stock Exchange and therefore the closing prices for securities
in such markets or on such exchanges may not fully reflect events that occur
after such close but before the close of the New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, as administrator to the
- --------------------------------------------------------------------------------
30 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Fund, will fair value foreign equity securities pursuant to procedures adopted
by the Board, including utilizing a third party pricing service to determine
these fair values. These procedures take into account multiple factors,
including movements in the U.S. securities markets, to determine a good faith
estimate that reasonably reflects the current market conditions as of the close
of the New York Stock Exchange. Swap transactions are valued through an
authorized pricing service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost, which
approximates fair value.
SECURITIES SOLD SHORT
The Fund may enter into short sales of securities that it concurrently holds or
for which it holds no corresponding position. Short selling is the practice of
selling securities which have been borrowed from a third party in anticipation
of a decline in the market price of that security. Securities which have been
sold short represent a liability of the Fund to acquire specific securities at
prevailing market prices at a future date in order to satisfy the obligation to
deliver the securities sold. The Fund is required to return securities
equivalent to those borrowed for the short sale at the lender's demand. A gain,
limited to the price at which the Fund sold the security short, or a loss,
unlimited in size, will be recorded upon the termination of a short sale. Short
sales are collateralized with segregated securities or cash held at the
custodian as noted on the Portfolio of Investments. The collateral required is
determined daily based on the market value of the securities sold short. At Oct.
31, 2008, the Fund had no outstanding securities sold short.
The Fund is liable to pay the counterparty for any dividends accrued on a
security it has borrowed and sold short and to pay interest for any net
financing costs incurred during the time the short position is held by the Fund.
Such dividends (recognized on ex-date) and interest are recorded as an expense
and shown on the Statement of Operations. During the period ended Oct. 31, 2008,
the Fund had no dividends and interest expense on the Statement of Operations.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options (OTC
options) trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. The Fund will realize a gain or loss when
the option transaction expires or closes. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid. At Oct. 31, 2008, and for the period
then ended, the Fund had no outstanding option contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these future contracts.
Risks of entering into futures contracts and related options include the
possibility of an 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 market on the principal exchange on which they are traded. Upon
entering into a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Fund each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. At
Oct. 31, 2008, the Fund had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
- --------------------------------------------------------------------------------
32 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Oct. 31, 2008, foreign currency holdings consisted of
multiple denominations.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the counterparty will not
complete its contract obligations.
PORTFOLIO SWAP TRANSACTIONS
The Fund has entered into a portfolio swap agreement. A portfolio swap allows
the Fund to obtain exposure to a custom basket of securities and foreign markets
(both long and short exposures) without owning or taking physical custody of
such securities. Under the terms of the agreement, payments made by the Fund or
the counterparty are based on the total return of the reference assets within
the basket. That is, one party agrees to pay another party the return on the
basket in return for a specified interest rate. The agreement allows the
Investment Manager of the Fund to alter the composition of the custom basket by
trading in and out of the notional security positions at its discretion.
The notional amounts of the security positions held in the basket are not
recorded in the financial statements. The portfolio swap is valued daily based
on closing prices obtained from an authorized pricing source, and the change in
value is recorded as unrealized appreciation (depreciation). The swap resets
monthly at which time the Fund settles in cash with the counterparty. Payments
received or made are recorded as realized gains (losses). See the Portfolio Swap
Outstanding table following the Portfolio of Investments for additional
information.
Portfolio swaps can involve greater risks than if a fund had invested in the
reference securities directly since, in addition to general market risks
(including foreign/emerging market risks and risks of securities sold short),
portfolio swaps are also subject to counterparty credit risk and liquidity risk.
Although the risks mentioned above are the largest risks associated with
portfolio swaps, other risks may also apply.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the 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 foreign currency
transactions, recognition of unrealized appreciation (depreciation) for certain
derivative investments and losses deferred due to wash sales. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $199,035
and accumulated net realized loss has been decreased by $249,808 resulting in a
net reclassification adjustment to decrease paid-in capital by $448,843.
The tax character of distributions paid for the period indicated is as follows:
For the period ended Oct. 31, 2008, there were no distributions.
- --------------------------------------------------------------------------------
34 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
At Oct. 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ --
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $ (577,229)
Unrealized appreciation (depreciation)......... $(1,349,031)
</Table>
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
Oct. 31, 2008, 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
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income, including amortization of premium, market discount and original issue
discount using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 1.05%
to 0.99% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 36-month period between the
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
annualized performance of one Class A share of the Fund and the annualized
performance of the MSCI All Country World Index. In certain circumstances, the
Board may approve a change in the index. The maximum adjustment is 0.50% per
year. If the performance difference is less than 1.00%, the adjustment will be
zero. The first adjustment will be made on Aug. 1, 2010 and cover the 24-month
period beginning Aug. 1, 2008. The management fee for the period ended Oct. 31,
2008 was 1.05% of the Fund's average daily net assets.
SUBADVISORY AGREEMENT
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited (Threadneedle), an affiliate of the Investment Manager and
an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the
assets of the Fund. The Investment Manager contracts with and compensates
Threadneedle to manage the investment of the Fund's assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.08% to 0.05% annually as the
Fund's assets increase. The fee for the period ended Oct. 31, 2008 was 0.08% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the period ended Oct. 31,
2008, there were no expenses incurred for these particular items.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
- --------------------------------------------------------------------------------
36 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees 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 R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average
daily net assets attributable to Class R2 shares and a fee at an annual rate of
up to 1.00% of the Fund's average daily net assets attributable to Class B and
Class C shares. For Class B and Class C shares, 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 $26,000 and $1,000 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.
SALES CHARGES
Sales charges received by the Distributor for distributing Fund shares was
$1,795 for Class A for the period ended Oct. 31, 2008.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the period ended Oct. 31, 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............................................. 1.55%
Class B............................................. 2.31
Class C............................................. 2.30
Class I............................................. 1.21
Class R2............................................ 1.81
Class R3............................................ 1.56
Class R4............................................ 1.36
Class R5............................................ 1.26
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A............................................ $173
Class B............................................ 20
Class C............................................ 10
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2............................................ $ 4
Class R3............................................ 4
Class R4............................................ 10
</Table>
The management fees waived/reimbursed at the Fund level were $59,644.
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until Oct. 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class A............................................. 1.55%
Class B............................................. 2.31
Class C............................................. 2.30
Class I............................................. 1.22
Class R2............................................ 2.02
Class R3............................................ 1.77
Class R4............................................ 1.52
Class R5............................................ 1.27
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
- --------------------------------------------------------------------------------
38 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $4,963,598 and $1,925,503, respectively, for the period
from Aug. 1, 2008 (when shares became publicly available) to Oct. 31, 2008.
Realized gains and losses are determined on an identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the period from Aug. 1, 2008 (when
shares became publicly available) to Oct. 31, 2008 are as follows:
<Table>
<Caption>
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- --------------------------------------------------------------------------------
Class A 166,961 -- (9,452) 157,509
Class B 26,996 -- (10,380) 16,616
Class C 6,224 -- -- 6,224
Class R4 1,163 -- -- 1,163
- --------------------------------------------------------------------------------
</Table>
5. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility became effective on 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 period ended Oct. 31, 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
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
JPMorgan Chase Bank, N.A. (JPMCB), 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.
6. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$577,229 at Oct. 31, 2008, that if not offset by capital gains will expire in
2016. It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
7. RISKS RELATING TO CERTAIN INVESTMENTS
FOREIGN/EMERGING MARKETS RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities. Investing in
emerging markets may accentuate these risks.
SHORT SELLING RISK
The Fund may make short sales, which involves selling a security the Fund does
not own in anticipation that the security's price will decline. The Fund's
potential losses could exceed those of other mutual funds which hold only long
security positions if the value of the securities held long decreases and the
value of the securities sold short increases. The Fund's use of short sales in
effect "leverages" the Fund, as the Fund intends to use the cash proceeds from
the short sales to invest in additional long securities. Leveraging potentially
exposes the Fund to greater risks due to unanticipated market movements, which
may magnify losses and increase volatility of returns. There is no assurance
that a leveraging strategy will be successful.
- --------------------------------------------------------------------------------
40 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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); this arrangement
was in the process of being closed down by Seligman before September 2003.
Seligman identified three other arrangements that permitted
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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, Seligman and its 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. Seligman does not believe that the foregoing legal action or other
possible actions will have a material adverse impact on Seligman or its clients,
including the Seligman Funds and other investment companies managed by it;
however, there can be no assurance of this or that these matters and any related
publicity will 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
- --------------------------------------------------------------------------------
42 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
believes that the Funds are not currently the subject of, and that neither
Ameriprise Financial nor any of its affiliates are the subject of, any pending
legal, arbitration or regulatory proceedings that are likely to have a material
adverse effect on the Funds or the ability of Ameriprise Financial or its
affiliates to perform under their contracts with the Funds. Ameriprise Financial
is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Threadneedle Global Extended Alpha Fund (the
Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.)
as of October 31, 2008, and the related statement of operations, changes in net
assets, and financial highlights for the period from August 1, 2008 (when shares
became publicly available) to October 31, 2008. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audit provides a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
44 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Threadneedle Global Extended Alpha Fund of the RiverSource Global Series, Inc.
at October 31, 2008, the results of its operations, changes in its net assets
and the financial highlights for the period from August 1, 2008 (when shares
became publicly available) to October 31, 2008, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 19, 2008
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 45
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
Fiscal period ended Oct. 31, 2008
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
46 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource complex of funds that each Board member oversees consists of 162
funds, which includes 104 RiverSource funds and 58 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board. Under the current Board
policy, members may serve until the end of the meeting following their 75th
birthday, or the fifteenth anniversary of the first Board meeting they attended
as members of the Board, whichever occurs first. This policy does not apply to
Ms. Jones who may retire after her 75th birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 69 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 47
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (bank holding company) and its principal subsidiary,
Age 64 Great Western Bank (federal savings bank)
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C.; Director, Vibration Lead Outside
901 S. Marquette Ave. 2008 Control Technologies, LLC (auto vibration technology); Director, Digital
Minneapolis, MN 55402 Director and Chairman, Highland Park Michigan Economic Ally, Inc. (digital
Age 66 Development Corp; and Chairman, Detroit Public Schools imaging); and
Foundation. Formerly, Chairman and Chief Executive Infinity, Inc. (oil
Officer, Q Standards Worldwide, Inc. (library of and gas exploration
technical standards); Director, Kerr-McGee Corporation and production);
(diversified energy and chemical company); Trustee, New Director, OGE Energy
York University Law Center Foundation; Vice Chairman, Corp. (energy and
Detroit Medical Center and Detroit Economic Growth energy services
Corp. provider offering
physical delivery
and related services
for both electricity
and natural gas)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
48 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 48 President and Chief Executive Officer, Ameriprise
Certificate Company and Chairman of the Board, Chief
Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 43 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 49
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 43 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 49 since 2006; Vice President, General Counsel and
Secretary, Ameriprise Certificate Company since 2005;
Vice President -- Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior Vice
President and Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 48 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
50 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds"). In addition, under the subadvisory agreement
(the "Subadvisory Agreement") between RiverSource Investments and the subadviser
(the "Subadviser"), the Subadviser performs portfolio management and related
services for the Fund. The Fund's Board of Directors (the "Board"), including
the independent Board members (the "Independent Directors"), and its Contracts,
Investment Review and Compliance Committees monitor these services throughout
the year. The Board accords particular weight to the work, deliberations and
conclusions of these committees in determining whether to approve the IMS
Agreement and the Subadvisory Agreement (together, the "Advisory Agreements").
At the June 11-12, 2008 in-person Board meeting, the Board, including the
Independent Directors, considered approval of the Advisory Agreements. At this
meeting, independent legal counsel to the Independent Directors reviewed with
the Independent Directors various factors relevant to the Board's consideration
of advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved the
Advisory Agreements.
Nature, Extent and Quality of Services Provided by RiverSource Investments and
the Subadviser: The Board analyzed various reports and presentations it had
received detailing the services to be performed by RiverSource Investments and
the Subadviser, as well as their expertise, resources and capabilities. The
Board specifically considered many developments during the past year concerning
the services provided by RiverSource Investments, including, in particular, the
investment in and resources dedicated to the Fund's operations, particularly in
the areas of trading systems, legal and compliance. Further, in connection with
the Board's evaluation of the overall package of services provided by
RiverSource Investments, the Board considered the quality of the administrative
and transfer agency services proposed to be provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and the Subadviser, and each
entity's ability to carry out its responsibilities under the Advisory
Agreements. The Board also discussed the acceptability of the terms of the
Advisory Agreements (including the relatively broad scope of services required
to be performed by RiverSource
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 51
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
Investments and the Subadviser). The Board concluded that the services to be
performed under the Advisory Agreements for the Fund should be of a reasonably
high quality.
Based on the foregoing, and based on other information received (both oral and
written) and other considerations, the Board concluded that RiverSource
Investments, its affiliates and the Subadviser were in a position to provide a
high quality and level of services to the Fund.
Investment Performance: Although the consideration of a fund's investment
performance is usually reviewed in connection with evaluating the nature, extent
and quality of services provided under advisory agreements, the Board did not
consider this factor because the Fund had no performance history.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the Advisory Agreements. The Board accorded particular weight to
the notion that the level of fees should reflect a rational pricing model
applied consistently across the various product lines in the RiverSource Funds'
family, while assuring that the overall fees for each fund are generally in line
with the "pricing philosophy" (i.e., that the total expense ratio of each fund,
with few exceptions, is at or below the median expense ratio of funds in an
appropriate comparison group). Based on its review, the Board concluded that the
Fund's management fee, including the performance incentive adjustment, was fair
and reasonable in light of the extent and quality of services that the Fund
would receive.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. The Board also considered the
services acquired by the investment manager through the use of commission
dollars paid by the Funds on portfolio transactions. The Board noted that the
fees to be paid by the Fund should permit the investment manager to offer
competitive compensation to its personnel, make necessary investments in its
business and earn an appropriate profit. The Board concluded that profitability
levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower
- --------------------------------------------------------------------------------
52 THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
fees as assets increase at pre-established breakpoints and concluded that the
IMS Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services expected to
be provided. In reaching this conclusion, no single factor was determinative. On
June 12, 2008, the Board, including all of the Independent Directors, approved
the Advisory Agreements.
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.
- --------------------------------------------------------------------------------
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND -- 2008 ANNUAL REPORT 53
THREADNEEDLE GLOBAL EXTENDED ALPHA FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. Threadneedle(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
managed by RiverSource Investments, LLC, and subadvised by
Threadneedle International Limited. These companies are part
of Ameriprise Financial, Inc.
(THREADNEEDLE LOGO) (C) 2008 RiverSource Distributors, Inc. S-6527 AG (12/08)
</Table>
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial officer. A
copy of the code of ethics is filed as an exhibit to this form N-CSR.
(b) During the period covered by this report, there were not any amendments
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any implicit
or explicit waivers to the provisions of the code of ethics adopted in
2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P.
Jones, each qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees
(a) Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for
professional services rendered for the audit of the annual financial
statements for RiverSource Global Series, Inc. were as follows:
2008 - $248,260 2007 - $168,900
(b) Audit - Related Fees. The fees for the year ended Oct. 31, to Ernst & Young
LLP for additional professional services rendered in connection with the
registrant's security count pursuant to Rule 17f-2 and the semiannual
financial statement review for RiverSource Global Series, Inc. were as
follows:
2008 - $6,000 2007 - $4,770
(c) Tax Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for tax
compliance related services for RiverSource Global Series, Inc. were as
follows:
2008 - $68,090 2007 - $19,800
(d) All Other Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Global
Series, Inc. were as follows:
2008 - $0 2007 - $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young
LLP for the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant must be
pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2008 and 2007 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant were as
follows:
2008 - $680,790 2007 - $608,150
(h) 100% of the services performed in item (g) above during 2008 and 2007 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this Form
N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not
applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's Principal Financial Officer and Principal Executive
Officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal executive
officer and principal financial officer, as required to be disclosed under
Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is
attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource Global Series, Inc.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date December 31, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date December 31, 2008
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial
Officer
Date December 31, 2008