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
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RIVERSOURCE GLOBAL SERIES, INC.
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(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 330-9283
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Date of fiscal year end: 10/31
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Date of reporting period: 4/30
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Semiannual Report
RIVERSOURCE [LOGO] SM
INVESTMENTS
RIVERSOURCE SM
EMERGING MARKETS FUND
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SEMIANNUAL REPORT FOR THE
PERIOD ENDED APRIL 30, 2006
> RIVERSOURCE EMERGING MARKETS FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH
LONG-TERM CAPITAL GROWTH.
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TABLE OF CONTENTS
Fund Snapshot..................................................................2
Performance Summary............................................................3
Questions & Answers with Portfolio Management..................................5
Investments in Securities.....................................................10
Financial Statements..........................................................14
Notes to Financial Statements.................................................17
Fund Expenses Example.........................................................31
Approval of Investment Management Services Agreement..........................33
Proxy Voting..................................................................33
Results of Meeting of Shareholders............................................34
DALBAR [LOGO] RATED
2006
FOR COMMUNICATION
RiverSource Funds' shareholder reports have been awarded the Communications Seal
from Dalbar Inc., an independent financial services research firm. The Seal
recognizes communications demonstrating a level of excellence in the industry.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 1
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FUND SNAPSHOT AT APRIL 30, 2006
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PORTFOLIO MANAGERS <
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PORTFOLIO MANAGERS SINCE YEARS IN INDUSTRY
Julian Thompson 1/00 13
Jules Mort 10/03 8
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FUND OBJECTIVE <
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For investors seeking long-term growth of capital.
Inception dates by class
A: 11/13/96 B: 11/13/96 C: 6/26/00 I: 3/4/04 Y: 11/13/96
Ticker symbols by class
A: IDEAX B: IEMBX C: -- I: -- Y: --
Total net assets $584.8 million
Number of holdings 85
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STYLE MATRIX <
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STYLE
VALUE BLEND GROWTH
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LARGE
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MEDIUM SIZE
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SMALL
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Shading within the style matrix indicates areas in which the Fund generally
invests.
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COUNTRY COMPOSITION <
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Percentage of portfolio assets
South Africa 18.9%
Brazil 18.1%
South Korea 13.8%
Russia 10.0%
Taiwan 10.0%
Mexico 8.1%
Hong Kong 3.9%
Turkey 3.7%
China 1.6%
Hungary 1.6%
Argentina 1.5%
India 1.4%
Canada 1.3%
Bermuda 1.2%
Singapore 1.1%
Cash & Short-Term Securities 0.2%
Other* 3.6%
* Includes Chile, Colombia, Indonesia, Luxembourg, Netherlands and United
Kingdom.
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TOP TEN HOLDINGS <
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Percentage of portfolio assets
Taiwan Semiconductor Mfg (Taiwan) 5.8%
Petroleo Brasileiro ADR (Brazil) 4.2
LUKOIL ADR (Russia) 3.1
Samsung Electronics (South Korea) 2.9
America Movil ADR Series L (Mexico) 2.8
Impala Platinum Holdings (South Africa) 2.8
ABSA Group (South Africa) 2.5
Akbank (Turkey) 2.5
Cia Vale do Rio Doce ADR (Brazil) 2.4
Gold Fields (South Africa) 2.3
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
Investment products involve risks including possible loss of principal and
fluctuation in value.
International investing involves increased risk and volatility, not typically
associated with domestic investing, due to potential political and economic
instability, limited liquidity, volatile prices, lack of accounting, auditing,
and financial reporting standards, changes in currency exchange rates, and
differences in how trades are cleared and settled. Risks are particularly
significant in emerging markets due to the dramatic pace of economic, social,
and political changes.
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.
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2 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
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PERFORMANCE SUMMARY
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PERFORMANCE COMPARISON
For the six-month period ended April 30, 2006
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
RiverSource Emerging Markets Fund
Class A (excluding sales charge) +39.19%
Morgan Stanley Capital International(R) (MSCI)
Emerging Markets Index(1) (unmanaged) +37.77%
Lipper Emerging Markets Funds Index(2) +36.64%
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 www.riversource.com/funds.
(1) The Morgan Stanley Capital International (MSCI) Emerging Markets Index, an
unmanaged market capitalization-weighted index, is designed to measure
equity market performance in the global emerging markets. The index
reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.
(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. See "Fund Management and Compensation" for more information.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 3
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PERFORMANCE SUMMARY
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AVERAGE ANNUAL TOTAL RETURNS <
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CLASS A CLASS B CLASS C CLASS I CLASS Y
(INCEPTION DATES) (11/13/96) (11/13/96) (6/26/00) (3/4/04) (11/13/96)
AFTER AFTER
NAV(1) POP(2) NAV(1) CDSC(3) NAV(1) CDSC(4) NAV(5) NAV(5)
AT APRIL 30, 2006
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6 months* +39.19% +31.18% +38.74% +33.74% +38.77% +37.77% +39.44% +39.38%
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1 year +62.94% +53.57% +61.62% +56.62% +61.58% +60.58% +63.76% +63.15%
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3 years +42.61% +39.82% +41.54% +40.87% +41.57% +41.57% N/A +42.86%
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5 years +22.48% +21.04% +21.50% +21.32% +21.59% +21.59% N/A +22.68%
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Since inception +9.68% +8.99% +8.83% +8.83% +11.88% +11.88% +31.15% +9.87%
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AT MARCH 31, 2006
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6 months* +21.74% +14.74% +21.27% +16.27% +21.22% +20.22% +21.97% +21.77%
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1 year +48.80% +40.25% +47.73% +42.73% +47.59% +46.59% +49.45% +49.04%
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3 years +41.86% +39.09% +40.69% +40.02% +40.69% +40.69% N/A +42.09%
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5 years +21.91% +20.47% +20.99% +20.80% +20.99% +20.99% N/A +22.16%
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Since inception +8.99% +8.30% +8.15% +8.15% +10.76% +10.76% +28.30% +9.18%
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(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies
as follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
* Not annualized.
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4 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
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QUESTIONS & ANSWERS
WITH PORTFOLIO MANAGEMENT
Below, RiverSource Emerging Markets Fund portfolio managers Julian Thompson and
Jules Mort of Threadneedle International Limited (Threadneedle) discuss the
Fund's results and positioning for the six months ended April 30, 2006.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
acts as the subadviser to the Fund.
Q: How did RiverSource Emerging Markets Fund perform for the first half of
the 2006 fiscal year?
A: The Fund returned 39.19% (Class A shares, excluding sales charge) for the
six-month period ended April 30, 2006. The Fund outperformed its
benchmark, the Morgan Stanley Capital International (MSCI) Emerging
Markets Index (MSCI Index), which returned 37.77%. The Fund also
outperformed its peer group, the Lipper Emerging Markets Funds Index,
which rose 36.64% for the six-month time frame.
Q: What factors most significantly affected performance?
A: Asset allocation, sector selection and stock selection contributed to the
Fund's performance over this semiannual period. Asset allocation, however,
was the key driver of performance. As of April 30, 2006, 32.5% of the Fund
was invested in Asia; 28.1% in Latin America; 19.5% in Europe and 17.3% in
Africa. Over the period, the Fund invested more heavily in Europe, Africa
and Latin America than did the Fund's benchmark, the MSCI Index. The Fund
allocated less to Asia than did the MSCI Index.
Our allocation strategy proved successful over the period, with Asia,
Latin America and Europe-Middle East-Africa (EMEA) demonstrating strong
performance. At the country level, several overweight positions, relative
to the MSCI Index helped boost performance. As the largest country
overweight, relative to the MSCI Index, Brazil was up nearly 44%. We also
had overweight positions, relative the MSCI Index, in Russia, South Korea,
Turkey, and South Africa, which rose 63%, 38%, 39% and 48%, respectively.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 5
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QUESTIONS & ANSWERS
> IN RUSSIA, THE OIL SECTOR HAS CONTRIBUTED SIGNIFICANTLY TO PERFORMANCE, AND WE
SEE THIS CONTINUING.
The Indian market has done well within an Asian context, but the Fund was very
underweight, relative to the MSCI Index, in the Indian market. China was another
big underweight for the Fund, relative to the MSCI Index, up 41% over the
period. We felt that the Fund's money could work harder elsewhere, as these
markets are becoming expensive.
Sector weighting also impacted performance. The best performing sector during
the period was materials, up nearly 35%. The Fund had nearly 17.0% of its assets
invested in that sector. Energy, the Fund's largest sector at 17.7%, performed
well over the period, as did financials, another large sector bet in the Fund at
14.9%. The worst performing sector over the reporting period was
telecommunications, which rose 20%. The Fund had about 8.9% of its assets in
that sector. Information technology was the second worst sector for the period.
Our position in that sector was approximately 14.4%, which was a slightly
overweight position relative to the MSCI Index. Another detraction from
performance was the Fund's small position in utilities. The utilities sector
benefited from rising energy prices, and the Fund's small allocation to this
sector missed the rise.
Stocks that contributed to performance over the period, included long-term
holdings Samsung Electronics (South Korea), LUKOIL (Russia), America Movil
(Mexico), UNIBANCO, CiaVale do Rio Doce and Lojas Renner (Brazil). Some stocks
that hindered performance over the six-month period included clothier Esprit
Holdings (Hong Kong), technology company Lipman Electronic Engineering (Israel)
and food retailer Pyaterochka (Russia).
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6 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
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QUESTIONS & ANSWERS
Q: What changes did you make to the Fund and how is it currently positioned?
A: We increased the Fund's holdings in EMEA. Russia and Turkey were the main
beneficiaries of this increase; South Africa benefited to a lesser extent.
In Russia, the oil sector has contributed significantly to performance,
and we see this continuing. In Turkey, we have focused on the banking
sector, which offers tremendous potential because banks are refocusing
their lending efforts on the consumer. This is a very undeveloped sector
in Turkey, and banks have significant opportunities to develop this part
of their business. In South Africa, we have added both to the Fund's
commodities exposure, through mining, and also to the Fund's domestic
exposure, particularly the retail sector, which we find reasonably priced
on a global basis.
We reduced the Fund's position in Asia, primarily through lessening the
Fund's exposure to India and Thailand. We believe India has become
overpriced and the interest rate cycle in Thailand is not favorable for
investments. We also have concerns with Thailand's political environment.
Moreover, the economies of both India and Thailand are very sensitive to
rises in oil prices, and we think that oil prices will continue to remain
relatively firm. Oil prices are a key reason for being underweight in Asia
as a whole. Generally, high oil prices have hindered economic growth in
the region, as the region imports most of its oil needs.
The Fund has a large allocation to Brazil at 18% as of April 30, 2006, and
the Brazilian market has begun to cut interest rates. Domestic stocks,
such as banks and real estate, have run up in anticipation of interest
rate cuts and become increasingly expensive. With that, their returns are
less likely to compensate for investment risks. So, in February 2006, we
took profits from several of domestic-focused stocks in banking and real
estate and put the proceeds into sectors that we felt offered more upside
potential. For example, we bought paper and pulp producer Aracruz
Celulose, which has extremely low production costs. Also, at that time, we
added GOL Linhas Aereas Inteligentes, a low cost, regional airline that
operates with little competition and contained costs, and has shown good
volume growth. Also, we increased the Fund's exposure to Brazilian
telecommunications with TIM Participacoes. Although historically the
telecommunications sector has not performed particularly well, we believe
the market is beginning to consolidate in Brazil and that TIM
Participacoes, the Brazilian subsidiary of Telecom Italia Mobile, will
benefit significantly from that consolidation.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 7
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QUESTIONS & ANSWERS
> WE THINK THAT THIS DOMESTIC, OR COUNTRY-SPECIFIC, CONSUMPTION IS GROWING AS A
RESULT OF HIGH COMMODITY PRICES AND LOW INTEREST RATES.
Another major change to the Fund was to increase the Fund's exposure to the
stock, Taiwan Semiconductor Manufacturing. This increased our overall exposure
to the Taiwanese market somewhat, as well. At the end of the semiannual period,
Taiwan Semiconductor Manufacturing was approximately 5.8% of the Fund. We
believe this is an extremely high quality stock, a clear leader within the
semiconductor industry, and significantly more profitable than its nearest
rival. Taiwan Semiconductor is the Fund's largest holding.
Q: How do you intend to manage the Fund in the coming months?
A: We believe the Fund is currently well positioned. Our asset allocation is
working well and we are particularly pleased with our positions in EMEA
and Latin America. We believe that these regions are where the growth in
emerging markets is concentrated.
Over the semiannual period, we have maintained a domestic focus in the
Fund. This means we concentrated on sectors in specific countries, such as
local construction, real estate and banking that provide benefit from
rising levels of income among consumers in those countries. In these
areas, demand is picking up quite strongly. We have added banks in Turkey,
South Africa, Russia, and most recently, Brazil.
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8 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
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QUESTIONS & ANSWERS
We think that this domestic, or country- specific, consumption is growing as a
result of high commodity prices and low interest rates. This is evidenced by
performance we have seen in countries such as Russia, South Africa and Mexico.
We think there is still much life in the Fund's strategy to remain largely
focused on these growth companies.
We believe that Latin America and EMEA will outperform Asia in the near term. In
South Korea, among the Fund's largest country positions, we have not made
significant changes, but we are focusing a little more on the export sector than
we had previously, and we also reduced the Fund's banking exposure in South
Korea.
Overall in the coming months, the shape of the portfolio is unlikely to change
much. We believe that emerging markets will continue to perform well within
periods of volatility, and with that in mind, the Fund is suitably positioned.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 9
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INVESTMENTS IN SECURITIES
RiverSource Emerging Markets Fund
APRIL 30, 2006 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
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COMMON STOCKS (96.7%)(C)
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ISSUER SHARES VALUE(A)
ARGENTINA (1.5%)
DIVERSIFIED TELECOMMUNICATION SERVICES (0.4%)
Telecom Argentina ADR 192,800(b) $ 2,496,760
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REAL ESTATE (1.1%)
IRSA Inversiones y
Representaciones GDR 480,067(b) 6,389,692
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BERMUDA (1.2%)
MEDIA
Central European Media
Enterprises Cl A 111,695(b) 7,194,275
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BRAZIL (16.8%)
AIRLINES (1.9%)
GOL Linhas Aereas
Inteligents ADR 193,793 7,183,907
Tam ADR 148,200(b) 3,727,230
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Total 10,911,137
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BEVERAGES (0.9%)
AmBev ADR 108,786 5,036,792
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COMMERCIAL BANKS (1.5%)
UNIBANCO - Uniao de
Bancos Brasileiros ADR 110,511 8,769,048
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COMMERCIAL SERVICES & SUPPLIES (0.5%)
American BankNote 372,458(b) 3,151,430
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CONSUMER FINANCE (0.2%)
CSU Cardsystem ADR 53,504(b,d) 1,367,027
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METALS & MINING (2.3%)
Cia Vale do Rio Doce ADR 308,028 13,701,085
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OIL, GAS & CONSUMABLE FUELS (4.2%)
Petroleo Brasileiro ADR 273,508 24,312,126
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PAPER & FOREST PRODUCTS (1.1%)
Aracruz Celulose ADR 114,623 6,313,435
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REAL ESTATE (0.9%)
Cyrela Brazil Realty 307,700 5,236,505
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COMMON STOCKS (CONTINUED)
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ISSUER SHARES VALUE(A)
BRAZIL (CONT.)
ROAD & RAIL (0.7%)
localiza Rent A Car 181,600 $ 3,830,489
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SPECIALTY RETAIL (1.2%)
Lojas Renner 125,262 7,175,843
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WIRELESS TELECOMMUNICATION SERVICES (1.4%)
TIM Participacoes ADR 213,332 8,202,615
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CANADA (1.3%)
METALS & MINING
Alamos Gold 800,200(b) 7,551,082
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CHILE (0.5%)
METALS & MINING
Antofagasta 74,038 3,178,095
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CHINA (1.5%)
OIL, GAS & CONSUMABLE FUELS
PetroChina Series H 8,154,000 8,992,338
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COLOMBIA (0.6%)
COMMERCIAL BANKS
Bancolombia ADR 94,358 3,264,787
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HONG KONG (3.9%)
PAPER & FOREST PRODUCTS (0.8%)
Nine Dragons
Paper Holdings 5,366,282(b) 4,672,110
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REAL ESTATE (0.6%)
China Overseas
Land & Investment 5,306,000 3,387,726
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SPECIALTY RETAIL (0.8%)
Esprit Holdings 612,500 4,890,267
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WIRELESS TELECOMMUNICATION SERVICES (1.7%)
China Mobile 1,650,500 9,601,252
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See accompanying notes to investments in securities.
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10 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
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COMMON STOCKS (CONTINUED)
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ISSUER SHARES VALUE(A)
HUNGARY (1.5%)
OIL, GAS & CONSUMABLE FUELS (1.0%)
MOL Magyar Olaj-es Gazipari 50,953 $ 6,069,032
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PHARMACEUTICALS (0.5%)
Gedeon Richter 13,327 2,874,539
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INDIA (1.4%)
FOOD PRODUCTS (0.6%)
Bajaj Hindusthan 310,129 3,569,664
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.8%)
Suzlon Energy 171,219 4,807,758
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INDONESIA (0.8%)
MACHINERY
United Tractors 7,561,635 4,699,078
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LUXEMBOURG (0.7%)
ENERGY EQUIPMENT & SERVICES
Tenaris ADR 89,295 4,098,641
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MEXICO (8.1%)
DIVERSIFIED TELECOMMUNICATION SERVICES (1.2%)
AXTEL Series CPO 3,030,266(b) 6,819,742
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FOOD & STAPLES RETAILING (1.0%)
Wal-Mart de Mexico Series V 1,980,459 5,647,459
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HOUSEHOLD DURABLES (0.8%)
Urbi Desarrollos Urbanos 558,300(b) 4,567,725
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MEDIA (1.7%)
Grupo Televisa ADR 475,874 10,088,529
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TRANSPORTATION INFRASTRUCTURE (0.6%)
Grupo Aeroportuario
del Pacifico ADR 106,164(b) 3,533,138
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WIRELESS TELECOMMUNICATION SERVICES (2.8%)
America Movil ADR Series L 445,227 16,433,330
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NETHERLANDS (0.7%)
BEVERAGES
Efes Breweries Intl GDR 112,049(b,d,e) 4,257,862
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COMMON STOCKS (CONTINUED)
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ISSUER SHARES VALUE(A)
RUSSIA (8.7%)
COMMERCIAL BANKS (0.7%)
Sberbank 2,239 $ 4,041,395
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DIVERSIFIED TELECOMMUNICATION SERVICES (0.4%)
VolgaTelecom 552,804 2,349,417
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ELECTRIC UTILITIES (0.5%)
Unified Energy System ADR 41,229 3,162,264
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OIL, GAS & CONSUMABLE FUELS (6.2%)
Gazprom ADR 260,141 11,805,198
LUKOIL ADR 201,719 18,255,569
Surgutneftegas ADR 66,268 5,765,316
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Total 35,826,083
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WIRELESS TELECOMMUNICATION SERVICES (0.9%)
Mobile Telesystems ADR 161,499 5,274,557
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SINGAPORE (1.1%)
INDUSTRIAL CONGLOMERATES
Keppel 644,000 6,233,835
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SOUTH AFRICA (18.8%)
COMMERCIAL BANKS (4.4%)
ABSA Group 729,396 14,445,533
FirstRand 1,686,281 5,570,762
Standard Bank Group 399,646 5,721,136
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Total 25,737,431
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FOOD & STAPLES RETAILING (0.9%)
Massmart Holdings 546,230 5,358,859
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MEDIA (1.0%)
Naspers Series N 274,371 6,042,708
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METALS & MINING (8.9%)
Anglo American 246,390 10,647,370
Anglo Platinum 60,551 5,869,815
AngloGold Ashanti 92,600 5,036,878
Gold Fields 535,680 13,519,139
Impala Platinum Holdings 85,855 16,330,140
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Total 51,403,342
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OIL, GAS & CONSUMABLE FUELS (1.7%)
Sasol 242,332 10,229,415
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SPECIALTY RETAIL (1.9%)
Foschini 649,724 6,601,851
Truworths Intl 950,997 4,601,470
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Total 11,203,321
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See accompanying notes to investments in securities.
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RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 11
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COMMON STOCKS (CONTINUED)
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ISSUER SHARES VALUE(A)
SOUTH KOREA (13.7%)
COMMERCIAL BANKS (2.1%)
Shinhan Financial Group 124,570 $ 6,209,344
Woori Finance Holdings 259,520 5,862,526
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Total 12,071,870
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CONSTRUCTION & ENGINEERING (0.9%)
Hyundai Development 89,270 5,178,777
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DISTRIBUTORS (1.1%)
Lotte Shopping GDR 315,994(b,d,e) 6,599,945
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ELECTRICAL EQUIPMENT (--%)
Kumho Electric 529 29,735
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HOUSEHOLD DURABLES (0.7%)
LG Electronics 51,770 4,288,087
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MACHINERY (1.6%)
Samsung Heavy Inds 405,100 9,580,793
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METALS & MINING (1.6%)
POSCO 33,769 9,419,076
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OIL, GAS & CONSUMABLE FUELS (0.8%)
SK 67,090 4,938,006
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.0%)
Hynix Semiconductor 163,519(b) 5,714,234
Samsung Electronics 24,863 16,981,410
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Total 22,695,644
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TOBACCO (0.9%)
KT&G 98,300 5,504,550
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TAIWAN (9.9%)
COMPUTERS & PERIPHERALS (0.6%)
Asustek Computer 1,356,280 3,754,218
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ELECTRONIC EQUIPMENT & INSTRUMENTS (1.4%)
Hon Hai Precision Industry 1,191,644 8,087,490
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HOUSEHOLD DURABLES (0.1%)
Chong Hong Construction 265,000 459,388
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REAL ESTATE (0.5%)
Huaku Construction 1,773,000 2,834,577
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COMMON STOCKS (CONTINUED)
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ISSUER SHARES VALUE(A)
TAIWAN (CONT.)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (7.3%)
MediaTek 274,000 $ 3,199,530
Sunplus Technology 2,208,000 2,720,201
Taiwan Semiconductor Mfg 15,807,089 33,744,914
Taiwan Semiconductor
Mfg ADR 320,742 3,361,376
-------------
Total 43,026,021
- -------------------------------------------------------------------------------
TURKEY (3.7%)
BEVERAGES (0.5%)
Anadolu Efes Biracilik
ve Malt Sanayil 85,437 2,868,645
- -------------------------------------------------------------------------------
COMMERCIAL BANKS (2.5%)
Akbank 1,742,612 14,544,909
- -------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.7%)
Arcelik 473,805 4,026,570
- -------------------------------------------------------------------------------
UNITED KINGDOM (0.3%)
METALS & MINING
Kazakhmys 72,273 1,500,427
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $436,977,864) $565,363,768
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PREFERRED STOCKS (2.4%)(C)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
BRAZIL (1.2%)
Banco Bradesco 177,100 $ 6,765,628
- -------------------------------------------------------------------------------
RUSSIA (1.2%)
Transneft 3,492 7,507,800
- -------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost: $13,023,723) $ 14,273,428
- -------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES (0.2%)
- --------------------------------------------------------------------------------
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(A)
COMMERCIAL PAPER
Barton Capital
05-01-06 4.83% $ 900,000(f) $ 899,638
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $899,759) $ 899,638
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $450,901,346)(G) $580,536,834
===============================================================================
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
(A) Securities are valued by procedures described in Note 1 to the financial
statements.
(B) Non-income producing.
(C) Foreign security values are stated in U.S. dollars.
(D) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
April 30, 2006, the value of these securities amounted to $12,224,834 or
2.1% 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 methods selected in good faith by the Fund's Board
of Directors. Information concerning such security holdings at April 30,
2006, is as follows:
SECURITY ACQUISITION DATES COST
-------------------------------------------------------------------------
Efes Breweries Intl GDR 10-15-04 thru 01-25-06 $3,030,355
Lotte Shopping GDR 01-27-06 thru 02-15-06 6,508,827
(F) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Fund's Board of Directors. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 2006, the value
of these securities amounted to $899,638 or 0.2% of net assets.
(G) At April 30, 2006, the cost of securities for federal income tax purposes
was approximately $450,901,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $132,467,000
Unrealized depreciation (2,831,000)
-------------------------------------------------------------------------
Net unrealized appreciation $129,636,000
-------------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(I) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(II) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(III) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(IV) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at www.riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 13
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
RiverSource Emerging Markets Fund
APRIL 30, 2006 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 1)
(identified cost $450,901,346) $580,536,834
Foreign currency holdings (identified cost $3,931,864) (Note 1) 3,963,137
Capital shares receivable 475,835
Dividends and accrued interest receivable 620,464
Receivable for investment securities sold 21,318,205
- ----------------------------------------------------------------------------------------------------------------
Total assets 606,914,475
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------
Disbursements in excess of cash on demand deposit 121,178
Capital shares payable 96,886
Payable for investment securities purchased 21,556,529
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 58,507
Accrued investment management services fee 17,304
Accrued distribution fee 6,052
Accrued service fee 17
Accrued transfer agency fee 1,599
Accrued administrative services fee 1,264
Other accrued expenses 259,632
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 22,118,968
- ----------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $584,795,507
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
REPRESENTED BY
- ----------------------------------------------------------------------------------------------------------------
Capital stock -- $.01 par value (Note 1) $ 517,049
Additional paid-in capital 368,940,760
Undistributed net investment income 251,259
Accumulated net realized gain (loss) (Note 7) 85,435,564
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 129,650,875
- ----------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $584,795,507
================================================================================================================
Net assets applicable to outstanding shares: Class A $440,120,544
Class B $107,203,645
Class C $ 4,830,795
Class I $ 26,485,599
Class Y $ 6,154,924
Net asset value per share of outstanding capital stock: Class A shares 38,501,269 $ 11.43
Class B shares 9,941,700 $ 10.78
Class C shares 446,927 $ 10.81
Class I shares 2,284,670 $ 11.59
Class Y shares 530,365 $ 11.61
- ----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
RiverSource Emerging Markets Fund
PERIOD FROM PERIOD FROM TOTAL
NOV. 1, 2005 TO NOV. 8, 2005 TO NOV. 1, 2005 TO
NOV. 7, 2005 APRIL 30, 2006 APRIL 30, 2006
(UNAUDITED) (NOTE 1) (UNAUDITED) (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------
Income:
Dividends $ 11,475 $ 5,376,122 $ 5,387,597
Interest 8,336 212,798 221,134
Fee income from securities lending (Note 3) -- 5,854 5,854
Less foreign taxes withheld (20,848) (333,530) (354,378)
- -------------------------------------------------------------------------------------------------------------
Total income (1,037) 5,261,244 5,260,207
- -------------------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 74,408 2,638,650 2,713,058
Distribution fee
Class A 14,552 439,957 454,509
Class B 14,591 440,122 454,713
Class C 527 17,606 18,133
Transfer agency fee 16,242 425,774 442,016
Incremental transfer agency fee
Class A 1,323 34,678 36,001
Class B 595 15,760 16,355
Class C 20 602 622
Service fee -- Class Y 49 2,024 2,073
Administrative services fees and expenses 6,351 193,114 199,465
Compensation of board members -- 5,292 5,292
Custodian fees 6,521 195,590 202,111
Printing and postage 2,730 57,797 60,527
Registration fees 441 20,946 21,387
Audit fees 791 16,709 17,500
Other 388 13,016 13,404
- -------------------------------------------------------------------------------------------------------------
Total expenses 139,529 4,517,637 4,657,166
Earnings credits on cash balances (Note 2) (228) (11,834) (12,062)
- -------------------------------------------------------------------------------------------------------------
Total net expenses 139,301 4,505,803 4,645,104
- -------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net (140,338) 755,441 615,103
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Security transactions (Note 3) 500,120 86,402,369 86,902,489
Foreign currency transactions (51,352) (391,453) (442,805)
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 448,768 86,010,916 86,459,684
Net change in unrealized appreciation (depreciation)
on investments and on translation of
assets and liabilities in foreign currencies 12,482,917 58,850,339 71,333,256
- -------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 12,931,685 144,861,255 157,792,940
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $12,791,347 $145,616,696 $158,408,043
=============================================================================================================
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 15
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
RiverSource Emerging Markets Fund
APRIL 30, 2006 OCT. 31, 2005
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
OPERATIONS AND DISTRIBUTIONS
- -------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ 615,103 $ 1,455,102
Net realized gain (loss) on investments 86,459,684 73,838,970
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 71,333,256 21,800,849
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 158,408,043 97,094,921
- -------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net Investment income
Class A (740,972) (923,069)
Class C -- (588)
Class I (108,672) (128,053)
Class Y -- (98,442)
- -------------------------------------------------------------------------------------------------------------
Total distributions (849,644) (1,150,152)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
- -------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 70,290,313 97,558,207
Class B shares 16,250,650 21,386,977
Class C shares 1,351,624 1,561,783
Class I shares 4,865,380 18,475,923
Class Y shares 2,820,493 3,414,988
Reinvestment of distributions at net asset value
Class A shares 733,023 913,364
Class C shares -- 561
Class I shares 108,604 127,968
Class Y shares -- 98,442
Payments for redemptions
Class A shares (43,551,002) (56,764,158)
Class B shares (Note 2) (12,300,364) (42,751,811)
Class C shares (Note 2) (335,603) (601,925)
Class I shares (5,770,472) (16,210,992)
Class Y shares (379,098) (25,688,414)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 34,083,548 1,520,913
- -------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 191,641,947 97,465,682
Net assets at beginning of period 393,153,560 295,687,878
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 584,795,507 $ 393,153,560
=============================================================================================================
Undistributed net investment income $ 251,259 $ 485,800
- -------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
RiverSource Emerging Markets Fund
(Unaudited as to April 30, 2006)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource Global Series, Inc. (formerly AXP 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. The Fund
invests primarily in equity securities of emerging markets companies.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At April 30, 2006, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares, which represents 4.53% of the Fund's net assets.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fees and service fee (class specific
expenses) 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.
Prior to Nov. 8, 2005, the Fund invested all of its assets in the Emerging
Markets Portfolio (the Portfolio). The Fund recorded its daily share of the
Portfolio's income, expenses and realized and unrealized gains and losses.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 17
- --------------------------------------------------------------------------------
Effective at the close of business on Nov. 7, 2005, the Portfolio was liquidated
and the Fund exchanged its interest in the Portfolio for its proportionate share
(99.96%) of the Portfolio's assets and liabilities. Within the statement of
operations for the period from Nov. 1, 2005 to Nov. 7, 2005, income and expense
amounts include allocations from the Portfolio in the following amounts:
Dividends $ 11,475
Interest income $ 8,336
Foreign taxes withheld $(20,848)
Investment management services fee $ 74,408
Custodian fees $ 6,508
Audit fees $ 350
Other $ 207
Earnings credits on cash balances $ (7)
All realized and unrealized gains (losses) presented for the period from Nov. 1,
2005 to Nov. 7, 2005 were as a result of allocations from the Portfolio. 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.
Foreign securities are valued based on quotations from the principal market in
which securities are normally traded. Pursuant to procedures adopted by the
Board of Directors of the funds, Ameriprise Financial utilizes Fair Value
Pricing (FVP). FVP determinations are made in good faith in accordance with
these procedures. If a development or event is so significant that there is a
reasonably high degree of certainty that the effect of the development or event
has actually caused the closing price to no longer reflect the actual value, the
closing prices, as determined at the closed of the applicable foreign market,
may be adjusted to reflect the fair value of the affected foreign securities as
of the close of the New York Stock Exchange. Significant events include material
movements in the U.S. securities markets prior to the opening of foreign markets
on the following trading day.
- --------------------------------------------------------------------------------
18 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FVP results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair net asset value. 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.
ILLIQUID SECURITIES
At April 30, 2006, investments in securities included issues that are illiquid
which the Fund currently limits to 10% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at April 30, 2006 was
$10,857,807 representing 1.86% of net assets. These securities are valued at
fair value according to methods selected in good faith by the Board. According
to board guidelines, certain unregistered securities are determined to be liquid
and are not included within the 10% limitation specified above. Assets are
liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. 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. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 19
- --------------------------------------------------------------------------------
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2006, foreign currency holdings consisted of
multiple denominations, primarily Taiwan dollars.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
- --------------------------------------------------------------------------------
20 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
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
Effective Nov. 8, 2005, the Fund entered into an Investment Management Services
Agreement with RiverSource Investments, LLC (the Investment Manager) to
determine which securities will be purchased, held or sold. Prior to the
withdrawal of the Fund's assets from the Portfolio, World Trust (the Trust), on
behalf of the Portfolio, had an Investment Management Services Agreement with
Ameriprise Financial. Prior to Nov. 8, 2005, the investment management fee was
assessed at the Portfolio level. 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. Prior to March 1, 2006, the management fee
percentage of the Fund's average daily net assets declined from 1.10% to 1.00%
annually as the Fund's assets increased. The fee may be adjusted upward or
downward by a performance incentive adjustment based on a comparison of the
performance of Class A shares of the Fund to the Lipper 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. For the period from Nov. 1, 2005 to
Nov. 7, 2005, the adjustment decreased the fee by $10,446 and for the period
from Nov. 8, 2005 to April 30, 2006, the adjustment increased the fee by
$71,499.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 21
- --------------------------------------------------------------------------------
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. A minor portion of additional administrative service
expenses paid by the Fund are consultants' fees and fund office expenses. Under
this agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate filing
fees and any other expenses properly payable by the Fund and approved by the
Board.
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.
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited, an indirect wholly-owned subsidiary of Ameriprise
Financial, to subadvise the assets of the Fund.
Under a separate Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with Ameriprise Financial Services, 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 up to 0.25% of the Fund's average daily net assets attributable to
Class A shares and up to 1.00% for Class B and Class C shares.
- --------------------------------------------------------------------------------
22 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$655,236 for Class A, $35,394 for Class B and $249 for Class C for the six
months ended April 30, 2006.
The Investment Manager and its affiliates have agreed to waive certain fees and
expenses until Oct. 31, 2006. Under this agreement, net expenses, before giving
effect to any performance incentive adjustment, will not exceed 1.99% for Class
A, 2.75% for Class B, 2.75% for Class C, 1.47% for Class I and 1.82% for Class Y
of the Fund's average daily net assets.
During the period from Nov. 1, 2005 to Nov. 7, 2005, the Fund's custodian and
transfer agency fees were reduced by $228 as a result of earnings credits from
overnight cash balances. During the period from Nov. 8, 2005 to April 30, 2006,
the Fund's custodian and transfer agency fees were reduced by $11,834 as a
result of earnings credits from overnight cash balances. The Fund also pays
custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise
Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $13,420,273 and $5,269,829, respectively, for the period
from Nov. 1, 2005 to Nov. 7, 2005 and $387,847,062 and $354,379,172,
respectively, for the period from Nov. 8, 2005 to April 30, 2006. Realized gains
and losses are determined on an identified cost basis.
Income from securities lending amounted to $5,854 for the six months ended April
30, 2006. 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.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED APRIL 30, 2006
CLASS A CLASS B CLASS C CLASS I CLASS Y
- ---------------------------------------------------------------------------------------------------------
Sold 6,932,574 1,711,265 141,303 482,760 271,755
Issued for reinvested distributions 78,315 -- -- 11,456 --
Redeemed (4,336,170) (1,270,798) (35,929) (531,865) (35,316)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 2,674,719 440,467 105,374 (37,649) 236,439
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2005
CLASS A CLASS B CLASS C CLASS I CLASS Y
- ---------------------------------------------------------------------------------------------------------
Sold 12,930,006 3,046,847 222,252 2,524,461 464,075
Issued for reinvested distributions 132,757 -- 85 18,413 14,164
Redeemed (7,595,815) (5,861,794) (83,855) (2,219,970) (3,022,821)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 5,466,948 (2,814,947) 138,482 322,904 (2,544,582)
- ---------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 23
- --------------------------------------------------------------------------------
5. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 2006, the Fund has forward foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------
May 2, 2006 279,000,000 1,308,937 $-- $28,358
Hungarian Furint U.S. Dollar
May 3, 2006 899,000,000 4,278,915 -- 30,149
Hungarian Furint U.S. Dollar
- -----------------------------------------------------------------------------------------
Total $-- $58,507
- -----------------------------------------------------------------------------------------
6. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary
funding of shareholder redemptions or for other temporary or emergency purposes.
The Fund must maintain asset coverage for borrowings of at least 300%. The
agreement, which enables the Fund to participate with other RiverSource funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.07% per annum. The Fund had no borrowings outstanding
during the six months ended April 30, 2006.
7. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$898,826 at Oct. 31, 2005, that if not offset by capital gains will expire in
2009. 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. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), the parent company of RiverSource Investments, LLC
(RiverSource Investments), entered into settlement agreements with the
Securities and Exchange Commission (SEC) and Minnesota Department of Commerce
(MDOC) related to market timing activities. In connection with these matters,
the SEC and MDOC issued orders (the Orders) alleging that AEFC violated certain
provisions of the federal and Minnesota securities laws by failing to adequately
disclose market timing activities by allowing certain identified market timers
to
- --------------------------------------------------------------------------------
24 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
continue to market time contrary to disclosures in mutual fund and variable
annuity product prospectuses. The Orders also alleged that AEFC failed to
implement procedures to detect and prevent market timing in 401(k) plans for
employees of AEFC and related companies and failed to adequately disclose that
there were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its employees.
As a result of the Orders, AEFC was censured and ordered to cease and desist
from committing or causing any violations of certain provisions of the
Investment Advisers Act of 1940, the Investment Company Act of 1940, and various
Minnesota laws. Pursuant to the terms of the Orders, AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to make presentations at least annually to its board of directors and the
relevant mutual funds' board that include an overview of policies and procedures
to prevent market timing, material changes to these policies and procedures and
whether disclosures related to market timing are consistent with the SEC order
and federal securities laws. AEFC also agreed to retain an independent
distribution consultant to assist in developing a plan for distribution of all
disgorgement and civil penalties ordered by the SEC in accordance with various
undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review of
its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal or arbitration 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 or arbitration 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.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 25
- --------------------------------------------------------------------------------
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ---------------------------------------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCT. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 8.23 $ 6.27 $ 5.46 $ 4.00 $ 3.69
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .04 .03 .02 (.01)
Net gains (losses) (both realized and unrealized) 3.20 1.95 .84 1.44 .32
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.22 1.99 .87 1.46 .31
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.03) (.06) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.43 $ 8.23 $ 6.27 $ 5.46 $ 4.00
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 440 $ 295 $ 191 $ 155 $ 132
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.79%(c) 1.79% 1.83% 2.02% 2.05%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .38%(c) .54% .41% .39% (.19%)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 74% 124% 128% 174% 226%
- ---------------------------------------------------------------------------------------------------------------------------------
Total return(d) 39.19%(e) 31.83% 16.09% 36.50% 8.40%
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
26 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ---------------------------------------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCT. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 7.77 $ 5.95 $ 5.19 $ 3.83 $ 3.56
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.01) (.02) (.02) (.04)
Net gains (losses) (both realized and unrealized) 3.03 1.83 .81 1.38 .31
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.01 1.82 .79 1.36 .27
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (.03) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.78 $ 7.77 $ 5.95 $ 5.19 $ 3.83
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 107 $ 74 $ 73 $ 72 $ 65
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.56%(c) 2.55% 2.59% 2.80% 2.83%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.40%)(c) (.24%) (.32%) (.39%) (.95%)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 74% 124% 128% 174% 226%
- ---------------------------------------------------------------------------------------------------------------------------------
Total return(d) 38.74%(e) 30.59% 15.18% 35.51% 7.58%
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 27
- --------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ---------------------------------------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCT. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 7.79 $ 5.97 $ 5.20 $ 3.84 $ 3.56
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) -- (.01) (.02) (.03)
Net gains (losses) (both realized and unrealized) 3.04 1.82 .81 1.38 .31
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.02 1.82 .80 1.36 .28
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (.03) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.81 $ 7.79 $ 5.97 $ 5.20 $ 3.84
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 5 $ 3 $ 1 $ 1 $ 1
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.56%(c) 2.56% 2.60% 2.80% 2.85%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.35%)(c) (.19%) (.34%) (.41%) (1.13%)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 74% 124% 128% 174% 226%
- ---------------------------------------------------------------------------------------------------------------------------------
Total return(d) 38.77%(e) 30.54% 15.37% 35.42% 7.87%
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
28 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
- ------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCT. 31, 2006(g) 2005 2004(b)
Net asset value, beginning of period $ 8.35 $ 6.36 $ 6.54
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .06 .01
Net gains (losses) (both realized and unrealized) 3.24 1.98 (.19)
- ------------------------------------------------------------------------------------------------------------
Total from investment operations 3.28 2.04 (.18)
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.05) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.59 $ 8.35 $ 6.36
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 26 $ 19 $ 13
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 1.33%(d) 1.30% 1.35%(d)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .85%(d) .97% .79%(d)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 74% 124% 128%
- ------------------------------------------------------------------------------------------------------------
Total return(e) 39.44%(f) 32.32% (2.75%)(f)
- ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 29
- --------------------------------------------------------------------------------
CLASS Y
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- --------------------------------------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCT. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 8.33 $ 6.35 $ 5.52 $ 4.04 $ 3.72
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .05 .04 .03 --
Net gains (losses) (both realized and unrealized) 3.25 1.97 .86 1.45 .32
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.28 2.02 .90 1.48 .32
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.04) (.07) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.61 $ 8.33 $ 6.35 $ 5.52 $ 4.04
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 6 $ 2 $ 18 $ 18 $ --
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.61%(c) 1.59% 1.65% 1.87% 1.59%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .69%(c) .81% .61% .54% .19%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 74% 124% 128% 174% 226%
- --------------------------------------------------------------------------------------------------------------------------------
Total return(d) 39.38%(e) 31.87% 16.50% 36.63% 8.60%
- --------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
30 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUND EXPENSES EXAMPLE
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, including management fees; distribution and service (12b-1) fees; and
other Fund 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.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2006.
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 EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 31
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2005 APRIL 30, 2006 THE PERIOD(a) EXPENSE RATIO
- ----------------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,391.90 $ 10.50 1.79%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.74 $ 8.85 1.79%
- ----------------------------------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,387.40 $ 14.99 2.56%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.97 $ 12.63 2.56%
- ----------------------------------------------------------------------------------------------------------------------
Class C
- ----------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,387.70 $ 14.99 2.56%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.97 $ 12.63 2.56%
- ----------------------------------------------------------------------------------------------------------------------
Class I
- ----------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,394.40 $ 7.81 1.33%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.00 $ 6.58 1.33%
- ----------------------------------------------------------------------------------------------------------------------
Class Y
- ----------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,393.80 $ 9.45 1.61%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.62 $ 7.96 1.61%
- ----------------------------------------------------------------------------------------------------------------------
(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 179/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2006:
+39.19% for Class A, +38.74% for Class B, +38.77% for Class C, +39.44% for
Class I and +39.38% for Class Y.
- --------------------------------------------------------------------------------
32 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
During the period covered by this report, RiverSource Investments, LLC
("RiverSource Investments" or the "investment manager"), a wholly-owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), served as the
investment manager to RiverSource funds under an Investment Management Services
Agreement ("IMS Agreement").
The Board of Directors/Trustees (the "Board") annually determines whether to
continue the IMS Agreement and subadvisory agreements, as applicable, by
evaluating the quality and level of services received and the costs associated
with those services. The Board did not make the specific determination this year
as each fund's IMS Agreement was approved by the vote of a majority of the
outstanding voting securities of the funds at a shareholder meeting held on Feb.
15, 2006. Also at this meeting, the subadvisory agreement between Threadneedle
International Limited and the investment manger, on behalf of the Fund, was
approved by the vote of a majority of the outstanding voting securities for the
Fund.
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
RiverSource Funds at (888) 791-3380; contacting your financial institution;
visiting www.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 during the most recent
12-month period ended June 30 is available without charge by visiting
www.riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 33
- --------------------------------------------------------------------------------
RESULTS OF MEETING OF SHAREHOLDERS
RIVERSOURCE EMERGING MARKETS FUND
REGULAR MEETING OF SHAREHOLDERS HELD ON FEB. 15, 2006
(UNAUDITED)
A brief description of each proposal voted upon at the meeting and the votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes as to each proposal is set forth below. A vote is based on total
dollar interest in a fund.
ELECTION OF BOARD MEMBERS
AFFIRMATIVE WITHHOLD
- --------------------------------------------------------------------------------
Kathleen Blatz 321,819,777.68 9,883,633.63
- --------------------------------------------------------------------------------
Arne H. Carlson 321,055,359.92 10,648,051.39
- --------------------------------------------------------------------------------
Patricia M. Flynn 322,155,429.72 9,547,981.59
- --------------------------------------------------------------------------------
Anne P. Jones 321,123,296.05 10,580,115.26
- --------------------------------------------------------------------------------
Jeffrey Laikind 321,394,586.05 10,308,825.26
- --------------------------------------------------------------------------------
Stephen R. Lewis, Jr. 322,429,867.82 9,273,543.49
- --------------------------------------------------------------------------------
Catherine James Paglia 321,838,069.51 9,865,341.80
- --------------------------------------------------------------------------------
Vikki L. Pryor 322,053,107.51 9,650,303.80
- --------------------------------------------------------------------------------
Alan K. Simpson 320,201,088.60 11,502,322.71
- --------------------------------------------------------------------------------
Alison Taunton-Rigby 322,379,022.01 9,324,389.30
- --------------------------------------------------------------------------------
William F. Truscott 321,715,710.07 9,987,701.24
- --------------------------------------------------------------------------------
AMEND THE ARTICLES OF INCORPORATION TO PERMIT THE BOARD TO ESTABLISH THE MINIMUM
ACCOUNT VALUE AND TO CHANGE THE NAME OF THE CORPORATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
314,948,435.81 11,437,413.01 5,229,189.57 88,372.92
- --------------------------------------------------------------------------------
APPROVE AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE
INVESTMENTS, LLC
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
317,458,545.75 8,793,981.26 5,362,511.38 88,372.92
- --------------------------------------------------------------------------------
APPROVE A SUBADVISORY AGREEMENT BETWEEN RIVERSOURCE INVESTMENTS AND THREADNEEDLE
INTERNATIONAL LIMITED
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
317,066,950.64 8,296,246.55 6,251,841.20 88,372.92
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34 o RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVE CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
DIVERSIFICATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
315,601,540.97 10,488,939.34 5,524,558.08 88,372.92
- --------------------------------------------------------------------------------
TEN PERCENT LIMITATION IN SINGLE ISSUER
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
314,667,943.59 11,141,675.79 5,805,419.01 88,372.92
- --------------------------------------------------------------------------------
LENDING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
313,088,394.53 12,928,307.10 5,598,336.76 88,372.92
- --------------------------------------------------------------------------------
BORROWING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
314,739,305.49 11,675,009.54 5,200,723.36 88,372.92
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE EMERGING MARKETS FUND o 2006 SEMIANNUAL REPORT o 35
- --------------------------------------------------------------------------------
RIVERSOURCE SM EMERGING MARKETS FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
This report must be accompanied or preceded by the
Fund's current prospectus. RiverSource Funds are managed
by RiverSource Investments, LLC and distributed by
Ameriprise Financial Services, Inc., Member NASD. Both
RIVERSOURCE [LOGO](SM) companies are part of Ameriprise Financial, Inc.
INVESTMENTS
S-6344 L (6/06)
Semiannual Report
[RiverSource Investments Logo]
RIVERSOURCE(SM)
EMERGING MARKETS BOND FUND
- ------------------------------------------------------------------------------
SEMIANNUAL REPORT FOR THE
PERIOD ENDED APRIL 30, 2006
> RIVERSOURCE EMERGING MARKETS BOND
FUND SEEKS TO PROVIDE SHAREHOLDERS
WITH HIGH TOTAL RETURN THROUGH
CURRENT INCOME AND CAPITAL
APPRECIATION.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Fund Snapshot 2
Performance Summary 3
Questions & Answers with Portfolio Management 4
Investments in Securities 8
Financial Statements 11
Notes to Financial Statements 14
Fund Expenses Example 26
Approval of Investment Management Services Agreement 28
Proxy Voting 29
- --------------------------------------------------------------------------------
1 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUND SNAPSHOT
AT APRIL 30, 2006
PORTFOLIO MANAGER <
PORTFOLIO MANAGER SINCE YEARS IN INDUSTRY
Nicholas Pifer, CFA* 2/06 15
* The Fund is managed by a team of portfolio managers led by Nicholas Pifer.
FUND OBJECTIVE <
For investors seeking high total return through current income and capital
appreciation.
Inception dates by class
A: 2/16/06 B: 2/16/06 C: 2/16/06 I: 2/16/06 Y: 2/16/06
Ticker symbols by class
A: -- B: -- C: -- I: -- Y: --
Total net assets $24.9 million
Number of holdings 64
Weighted average life* 11 years
Effective duration** 6.6 years
Weighted average bond rating*** BB
* 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.
** 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.
*** WEIGHTED AVERAGE BOND RATING represents the average credit quality of
the underlying bonds in the portfolio.
COUNTRY COMPOSITION <
Percentage of portfolio assets
[pie chart]
Cash & Short-Term Securities 17.4%
Brazil 15.1%
Mexico 13.4%
Russia 11.3%
Argentina 7.0%
Venezuela 5.9%
Philippine Islands 5.8%
Turkey 4.4%
Indonesia 2.9%
Peru 2.7%
Uruguay 2.4%
Dominican Republic 1.8%
Colombia 1.7%
El Salvador 1.6%
Kazakhstan 1.3%
Panama 1.3%
Costa Rica 1.2%
Ukraine 1.1%
Other* 1.7%
* Includes Malaysia, South Africa and United States.
CREDIT QUALITY SUMMARY <
Percentage of bond portfolio assets
AAA bonds 0.9%
A bonds 1.0
BBB bonds 27.2
BB bonds 50.8
B bonds 16.1
Non-rated bonds 4.0
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating
is determined through an internal analysis, if appropriate.
Investment products involve risks including possible loss of principal and
fluctuation in value.
There are risks associated with an investment in a bond fund, including
credit risk, interest rate risk, and prepayment and extension risk. See the
Fund's prospectus for information on these and other risks associated with
the Fund. In general, bond prices rise when interest rates fall and vice
versa. This effect is usually more pronounced for longer-term securities.
International investing involves increased risk and volatility, not
typically associated with domestic investing, due to potential political and
economic instability, limited liquidity, volatile prices, lack of
accounting, auditing, and financial reporting standards, changes in currency
exchange rates, and differences in how trades are cleared and settled. Risks
are particularly significant in emerging markets due to the dramatic pace of
economic, social, and political change.
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.
- --------------------------------------------------------------------------------
2 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
PERFORMANCE COMPARISON
[bar chart]
RiverSource Emerging Markets Bond Fund Class A
(excluding sales charge) -0.83%*
J.P. Morgan EMBI-Global(1) (unmanaged) -1.98%**
Lipper Emerging Markets Debt Funds Index(2) -1.36%**
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 www.riversource.com/funds.
(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, but
excludes brokerage commissions or other fees.
(2) The Lipper Emerging Markets Debt Funds Index includes the 10 largest
funds that have similar investment objectives to the fund tracked by
Lipper Inc., although some funds in the index may have somewhat
different investment policies or objectives. The index's returns include
net reinvested dividends.
The 4.75% sales charge applicable to Class A shares of the Fund is not
reflected in the bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
* Since 2/16/06
** Since 2/28/06
TOTAL RETURNS <
CLASS A CLASS B CLASS C CLASS I CLASS Y
(INCEPTION DATES) (2/16/06) (2/16/06) (2/16/06) (2/16/06) (2/16/06)
AFTER AFTER
NAV(1) POP(2) NAV(1) CDSC(3) NAV(1) CDSC(4) NAV(5) NAV(5)
AT APRIL 30, 2006
Since inception* -0.83% -5.54% -0.96% -5.89% -0.91% -1.89% -0.81% -0.80%
AT MARCH 31, 2006
Since inception* -0.85% -5.56% -0.84% -5.78% -0.90% -1.89% -0.85% -0.83%
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies
as follows: first year 5%; second and third year 4%; fourth year 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
* Not annualized.
- --------------------------------------------------------------------------------
3 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
WITH PORTFOLIO MANAGEMENT
Below, Nicholas Pifer discusses RiverSource Emerging Markets Bond Fund's
performance and positioning for the period from the Fund's inception on Feb.
16, 2006 through April 30, 2006.
At April 30, 2006, more than 50% of the Fund's shares were owned in
aggregate by RiverSource Portfolio Builder Funds, a group of six asset
allocation funds and RiverSource Income Builder Funds, a group of three
"funds-of-funds" managed by RiverSource Investments, LLC. 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 RiverSource Portfolio Builder Funds or RiverSource Income
Builder Funds (see page 19, 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 to manage transactions for RiverSource
Portfolio Builder Funds and RiverSource Income Builder Funds. For more
information on the Fund's expenses, see the discussions beginning on pages
17 and 26.
Q: How did RiverSource Emerging Markets Bond Fund perform since its
inception?
A: RiverSource Emerging Markets Bond Fund began operations on Feb. 16,
2006. The Fund's Class A shares fell 0.83% (excluding sales charge) from
the Fund's inception through April 30, 2006. The Fund outperformed its
benchmark, the J.P. Morgan Emerging Markets Bond Index-Global (J.P.
Morgan EMBI-Global), which declined 1.98%, and the Lipper Emerging
Markets Debt Funds Index, representing the Fund's peer group, which
decreased 1.36%. Index returns are from Feb. 28, 2006 through April 30,
2006.
SEC YIELDS <
At April 28, 2006* by class
A: 4.97% B: 4.43% C: 1.48% I: 5.42% Y: 5.63%
At March 31, 2006 by class
A: 4.20% B: 3.68% C: 5.23% I: 4.89% Y: 4.55%
* The last business day of the period.
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public
offering price (POP) per share on the last day of the period, and converting
the results to yearly figures. See Average Annual Total Returns on page 3
for additional performance information.
STYLE MATRIX <
[DURATION/QUALITY box]
Shading within the style matrix indicates areas in which the Fund generally
invests.
- --------------------------------------------------------------------------------
4 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> WE CONTINUE TO FAVOR THE LATIN AMERICAN REGION FOR THE
FUND DUE TO ITS IMPROVING FUNDAMENTALS, STATUS AS A
COMMODITY EXPORTER AND ATTRACTIVE VALUATIONS.
Q: What factors most significantly affected performance?
A: Returns across the board were weak during the reporting period, as the
emerging markets debt asset class overall faced the headwind of rising
interest rates in the U.S., core Europe and Japan. That said, emerging
markets debt markets generally outperformed U.S. Treasuries, as yield
spreads, or the difference in yields between emerging markets sovereign
debt and U.S. Treasuries, tightened.
Relative to the J.P. Morgan EMBI-Global, the Fund benefited most from
its significant exposure to debt markets in the Latin American region.
As of April 30, more than half of the Fund's total net assets were
invested in Latin American bonds. The Brazilian debt market, the largest
individual component of the J.P. Morgan EMBI-Global, performed
particularly well. Brazil benefited from being a major commodity
exporter during a period when many commodity prices reached record
highs.
We maintained the Fund's duration, a principal measure of interest rate
risk, shorter than that of the J.P. Morgan EMBI-Global through the
reporting period. This stance was based on our view that the global
economy as a whole and the U.S. economy in particular were growing at an
above-trend pace, and thus that the world's major central banks would
raise interest rates. The U.S. Federal Reserve Board (the Fed) did, in
fact, raise the targeted federal funds rate by an additional 25 basis
points (0.25%) during the period. The European Central Bank also raised
its interest rates by 25 basis points (0.25%) in March. As emerging
market bond yields generally moved up rather substantially over the
period, the Fund's short duration positioning helped results.
- --------------------------------------------------------------------------------
5 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
To a more modest degree, the Fund's significant exposures to the bond
markets of the Philippines and Russia benefited its returns as did its
more modest position in the bond market of Turkey.
Detracting somewhat from the Fund's results relative to the J.P. Morgan
EMBI-Global was its position in the Peruvian debt market. The first
round of national elections in Peru, held on April 9, 2006, did not
produce a clear presidential winner, leading not only to a June run-off
but also to greater price volatility in Peru's bond market than
anticipated.
Q: What changes did you make to the Fund and how is it currently positioned?
A: In the months since the Fund's inception, we gradually increased the
portfolio's foreign currency exposure. This strategy was based largely
on the weakening of the U.S. dollar vs. most of the world's currencies
during the period. As the value of the U.S. dollar decreases, the dollar
value of foreign investments typically increases and vice versa. Several
factors contributed to the weakening of the U.S. dollar including a
testimony from Fed chairman Ben Bernanke that appeared to signal a pause
in the interest rate tightening cycle and hawkish rhetoric from the
European Central Bank about inflation risks.
- ------------------------------------------------------------------------------
INVESTMENT TERM
HAWKISH: Possessing a negative view toward inflation and its effects on
society. Hawkish investors prefer higher interest rates in order to
maintain reduced inflation.
- ------------------------------------------------------------------------------
The first months of the Fund's operation were a portfolio-building
process, analyzing the creditworthiness of each country in the emerging
markets universe and developing judgments on the fundamental
attractiveness of each country's sovereign debt. We compared
opportunities between countries and evaluated each country's
capitalization in the J.P. Morgan EMBI-Global to help determine the size
of our investment positions. Finally, in choosing individual debt
securities, we analyzed the differences between each country's
short-term and long-term interest rates for relative value
opportunities. We also looked for local market opportunities to make
investments where we viewed the local interest rates as attractive,
believed the local currency was undervalued and liked a country's
fundamentals.
- --------------------------------------------------------------------------------
6 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
Q: How do you intend to manage the Fund in the coming months?
A: We continue to favor the Latin American region for the Fund due to its
improving fundamentals, status as a commodity exporter and attractive
valuations. With a few exceptions, the countries in the region have run
solid economic policies, maintained flexible exchange rates and have
used the recent period of high petroleum and commodity prices to reduce
their external indebtedness. We also see value in the currency assets of
emerging markets and in Eastern European corporate bonds and will look
for opportunities to increase the Fund's exposure to both in the coming
months.
Overall, emerging markets fundamentals are strong. Many developing
countries have low budget deficits, healthy current account balances and
their lowest debt load in ten years. With flexible exchange rates and
lower reliance on international capital, many of the vulnerabilities
that triggered past periods of volatility in the sector are less of an
issue today.
While fundamentals remain solid and continue to improve, three years of
double-digit annual returns likely suggest more modest returns for 2006,
as we have already seen since the Fund's inception. A modestly less
supportive external environment may likewise moderate near-term returns.
Nonetheless, emerging markets debt remains an attractive asset class for
diversified portfolios, and investment opportunities, we believe, will
continue to present themselves. More developing countries will continue
to move into the sector and seek access to capital markets, presenting
new investment opportunities. As existing emerging markets countries
continue to grow and rely less on debt denominated in U.S. dollars,
local corporations will begin to utilize the capital markets. We expect
that many existing emerging markets countries will continue to deepen
their local capital markets, which should present more liquid foreign
currency investment opportunities to investors as well. Given our view
of the emerging markets debt sector and of U.S. Treasury yields for the
coming months, we intend to lengthen the Fund's duration a bit, bringing
it to a more neutral position.
Using our top-down investment approach, we intend to continually
re-evaluate the creditworthiness of each country, the strength of its
economic policies and its fundamentals, and the attractiveness of its
local interest rates, as we seek to identify countries, individual
securities and local currency investments that present attractive
relative value opportunities.
- --------------------------------------------------------------------------------
7 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
RiverSource Emerging Markets Bond Fund
APRIL 30, 2006 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
BONDS (89.5%)(c)
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
ARGENTINA (7.6%)
Banco Hipotecario
Sr Unsecured
04-27-16 9.75% $200,000(d) $202,896
04-27-16 9.75 150,000(b,d) 152,172
Banco Hipotecario
Sr Unsub
11-16-10 9.75 100,000 103,940
City of Buenos Aires
Sr Unsub
04-11-11 7.88 250,000(d) 251,750
Republic of Argentina
03-28-11 7.00 725,000 694,333
08-03-12 4.89 300,000(e) 249,600
12-31-33 8.28 234,141 232,970
------------
Total 1,887,661
- ---------------------------------------------------------------------------
BRAZIL (16.4%)
Banco ABN AMRO Real
(Brazilian Real)
02-22-10 16.20 400,000 200,384
Centrais Eletricas Brasileiras
Sr Nts
11-30-15 7.75 486,000(d) 510,908
Federative Republic of Brazil
10-22-10 9.25 75,000 84,900
03-07-15 7.88 350,000 376,950
01-15-18 8.00 95,000 103,123
10-14-19 8.88 1,178,000 1,357,644
04-15-24 8.88 622,000 710,635
01-20-34 8.25 143,000 155,513
08-17-40 11.00 444,000 571,650
------------
Total 4,071,707
- ---------------------------------------------------------------------------
COLOMBIA (1.8%)
Republic of Colombia
12-22-14 8.25 45,000 50,490
05-21-24 8.13 177,000 196,913
Republic of Colombia
(Colombian Peso)
10-22-15 12.00 400,000,000 198,535
------------
Total 445,938
- ---------------------------------------------------------------------------
BONDS (CONTINUED)
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
COSTA RICA (1.3%)
Republic of Costa Rica
02-01-12 8.11% $220,000(d) $234,080
03-20-14 6.55 80,000(d) 78,720
------------
Total 312,800
- ---------------------------------------------------------------------------
DOMINICAN REPUBLIC (2.0%)
Dominican Republic
01-23-18 9.04 309,958(d) 340,179
04-20-27 8.63 150,000(d) 156,000
------------
Total 496,179
- ---------------------------------------------------------------------------
EL SALVADOR (1.7%)
Republic of El Salvador
06-15-35 7.65 420,000(d) 421,050
- ---------------------------------------------------------------------------
INDONESIA (3.2%)
Republic of Indonesia
04-20-15 7.25 460,000(d) 472,650
01-15-16 7.50 113,000(d) 116,955
03-09-17 6.88 200,000(d) 198,000
------------
Total 787,605
- ---------------------------------------------------------------------------
KAZAKHSTAN (1.4%)
Kazkommerts Intl
11-03-15 8.00 200,000(d) 200,000
Kazkommerts Intl
Bank Guaranty
04-07-14 7.88 50,000(d) 50,125
TuranAlem Finance
Bank Guaranty
04-25-13 7.75 100,000(d) 98,625
------------
Total 348,750
- ---------------------------------------------------------------------------
MALAYSIA (0.5%)
TNB Capital
05-05-15 5.25 117,000(d) 112,068
- ---------------------------------------------------------------------------
MEXICO (14.5%)
Mexican Fixed Rate
(Mexican Peso)
12-20-12 9.00 2,500,000 232,195
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
MEXICO (CONT.)
Pemex Project Funding Master Trust
11-15-11 8.00% $130,000 $140,790
12-15-15 5.75 1,123,000 1,064,604
02-01-22 8.63 1,538,000 1,781,004
06-15-35 6.63 309,000(d) 292,005
United Mexican States
03-03-15 6.63 100,000 103,550
------------
Total 3,614,148
- ---------------------------------------------------------------------------
PANAMA (1.4%)
Republic of Panama
03-15-15 7.25 293,000 307,943
01-29-26 7.13 48,000 48,480
------------
Total 356,423
- ---------------------------------------------------------------------------
PERU (2.9%)
Republic of Peru
05-03-16 8.38 410,000 446,490
07-21-25 7.35 289,000 285,821
------------
Total 732,311
- ---------------------------------------------------------------------------
PHILIPPINE ISLANDS (6.2%)
Republic of Philippines
03-17-15 8.88 177,000 200,010
01-15-19 9.88 125,000 150,313
10-21-24 9.50 681,000 802,728
01-14-31 7.75 396,000 398,970
------------
Total 1,552,021
- ---------------------------------------------------------------------------
RUSSIA (12.3%)
Aries Vermoegensverwaltungs
10-25-14 9.60 250,000(d) 311,250
Gazstream
07-22-13 5.63 290,940(d) 287,303
Russian Federation
03-31-10 8.25 293,335(d) 308,002
03-31-30 5.00 1,481,000(d,e) 1,606,885
Russian Ministry of Finance
05-14-11 3.00 220,000 193,886
Russian Standard Finance
Sr Unsub
05-05-11 8.63 350,000(b,d) 350,000
------------
Total 3,057,326
- ---------------------------------------------------------------------------
SOUTH AFRICA (0.6%)
Republic of South Africa
06-02-14 6.50 140,000 144,200
- ---------------------------------------------------------------------------
BONDS (CONTINUED)
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
TURKEY (4.7%)
Republic of Turkey
03-15-15 7.25% $990,000 $1,027,125
02-14-34 8.00 140,000 149,800
------------
Total 1,176,925
- ---------------------------------------------------------------------------
UKRAINE (1.2%)
Credit Suisse First Boston Intl for City of Kiev Ukraine
11-06-15 8.00 100,000(d) 100,000
Govt of Ukraine
06-11-13 7.65 200,000(d) 208,876
------------
Total 308,876
- ---------------------------------------------------------------------------
UNITED STATES (0.8%)
U.S. Treasury
02-15-16 4.50 200,000 191,281
- ---------------------------------------------------------------------------
URUGUAY (2.6%)
Republic of Uruguay
03-15-15 7.50 84,000 86,520
11-18-22 8.00 300,000 309,750
03-21-36 7.63 250,000 246,250
------------
Total 642,520
- ---------------------------------------------------------------------------
VENEZUELA (6.4%)
Republic of Venezuela
10-08-14 8.50 569,000 637,280
02-26-16 5.75 770,000 716,485
01-13-34 9.38 191,000 242,284
------------
Total 1,596,049
- ---------------------------------------------------------------------------
TOTAL BONDS
(Cost: $22,479,060) $22,255,838
- ---------------------------------------------------------------------------
SHORT-TERM SECURITIES (18.9%)
ISSUER EFFECTIVE AMOUNT VALUE(a)
YIELD PAYABLE AT
MATURITY
U.S. GOVERNMENT AGENCIES
Federal Natl Mtge Assn Disc Nts
05-01-06 4.70% $4,700,000 $4,698,159
- ---------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $4,698,773) $4,698,159
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $27,177,833)(f) $26,953,997
===========================================================================
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
9 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) At April 30, 2006, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$501,928.
(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
has been determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At April 30, 2006, the value of these securities
amounted to $7,060,499 or 28.4% of net assets.
(e) Interest rate varies either based on a predetermined schedule or to
reflect current market conditions; rate shown is the effective rate on
April 30, 2006.
(f) At April 30, 2006, the cost of securities for federal income tax
purposes was approximately $27,178,000 and the approximate aggregate
gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 43,000
Unrealized depreciation (267,000)
------------------------------------------------------------------------
Net unrealized depreciation $(224,000)
------------------------------------------------------------------------
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 www.riversource.com/funds.
- --------------------------------------------------------------------------------
10 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
RiverSource Emerging Markets Bond Fund
APRIL 30, 2006 (UNAUDITED)
ASSETS
Investments in securities, at value (Note 1)
(identified cost $27,177,833) $26,953,997
Capital shares receivable 20,247
Dividends and accrued interest receivable 329,258
Receivable for investment securities sold 469,189
- --------------------------------------------------------------------------------------------
Total assets 27,772,691
- --------------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash on demand deposit 234,833
Foreign currency exchange shortage 203,447
Payable for investment securities purchased 2,466,977
Accrued investment management services fee 477
Accrued distribution fee 81
Accrued transfer agency fee 12
Accrued administrative services fee 53
Other accrued expenses 8,126
- --------------------------------------------------------------------------------------------
Total liabilities 2,914,006
- --------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $24,858,685
============================================================================================
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 25,318
Additional paid-in capital 25,074,404
Undistributed net investment income 2,830
Accumulated net realized gain (loss) (20,284)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (223,583)
- --------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $24,858,685
============================================================================================
Net assets applicable to outstanding shares: Class A $10,535,468
Class B $ 297,521
Class C $ 45,157
Class I $13,966,754
Class Y $ 13,785
Net asset value per share of outstanding capital stock: Class A shares 1,072,895 $ 9.82
Class B shares 30,314 $ 9.81
Class C shares 4,605 $ 9.81
Class I shares 1,422,538 $ 9.82
Class Y shares 1,404 $ 9.82
- ---------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
11 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
RiverSource Emerging Markets Bond Fund
FOR THE PERIOD FROM FEB. 16, 2006* TO APRIL 30, 2006 (UNAUDITED)
INVESTMENT INCOME
Income:
Interest $ 190,452
Less foreign taxes withheld (8,588)
- --------------------------------------------------------------------------------------------
Total income 181,864
- --------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 21,344
Distribution fee
Class A 4,997
Class B 315
Class C 43
Transfer agency fee 433
Incremental transfer agency fee
Class A 31
Class B 20
Class C 2
Service fee -- Class Y 2
Administrative services fees and expenses 2,372
Custodian fees 9,585
Printing and postage 2,840
Registration fees 32,333
Audit fees 10,000
Other 281
- --------------------------------------------------------------------------------------------
Total expenses 84,598
Expenses waived/reimbursed by the Investment Manager and its affiliates
(Note 2) (46,147)
- --------------------------------------------------------------------------------------------
38,451
Earnings credits on cash balances (Note 2) (71)
- --------------------------------------------------------------------------------------------
Total net expenses 38,380
- --------------------------------------------------------------------------------------------
Investment income (loss) -- net 143,484
- --------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) (12,433)
Foreign currency transactions (7,851)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (20,284)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (194,568)
- --------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (214,852)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (71,368)
============================================================================================
* When shares became publicly available.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
RiverSource Emerging Markets Bond Fund
FOR THE PERIOD FROM FEB. 16, 2006* TO APRIL 30, 2006 (UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 143,484
Net realized gain (loss) on investments (20,284)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (194,568)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (71,368)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (81,636)
Class B (1,360)
Class C (213)
Class I (61,694)
Class Y (94)
- --------------------------------------------------------------------------------------------
Total distributions (144,997)
- --------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) 813,495
Class B shares 298,482
Class C shares 44,525
Class I shares 13,900,810
Class Y shares 3,950
Reinvestment of distributions at net asset value
Class A shares 4,073
Class B shares 1,218
Class C shares 107
Class I shares 61,614
Class Y shares 14
Payments for redemptions
Class A shares (54,106)
Class B shares (Note 2) (9,306)
Class C shares (Note 2) (9,073)
Class I shares (1,121)
- --------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 15,054,682
- --------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 14,838,317
Net assets at beginning of period (Note 1) 10,020,368**
- --------------------------------------------------------------------------------------------
Net assets at end of period $24,858,685
============================================================================================
Undistributed net investment income $ 2,830
- --------------------------------------------------------------------------------------------
* When shares became publicly available.
** Initial capital of $10,045,040 was contributed on Feb. 9, 2006. The Fund
had an decrease in net assets resulting from operations of $24,672 during
the period from Feb. 9, 2006 to Feb. 16, 2006 (when shares became publicly
available).
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
RiverSource Emerging Markets Bond Fund
(Unaudited as to April 30, 2006)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource Global Series, Inc. (formerly AXP 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. The Fund invests primarily in fixed income securities of emerging market
issuers. On Feb. 9, 2006, Ameriprise Financial, Inc. (Ameriprise Financial)
invested $10,045,040* in the Fund (996,000 shares for Class A, 1,000 shares for
Class B, 1,000 shares for Class C, 5,504** shares for Class I and 1,000 shares
for Class Y), which represented the initial capital for each class at $10 per
share. Shares of the Fund were first offered to the public on Feb. 16, 2006.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At April 30, 2006, Ameriprise Financial and
the affiliated funds-of-funds owned 100% of Class I shares, which represents
56.18% of the Fund's net assets.
At April 30, 2006, Ameriprise Financial and the affiliated funds-of-funds
owned approximately 96% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fees and service fee (class specific
expenses) 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.
* Includes $45,040 invested by the RiverSource Income Builder Funds.
** Includes 4,504 shares purchased by the RiverSource Income Builder Funds.
- --------------------------------------------------------------------------------
14 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on
assets, liabilities and contingent assets and liabilities) that could differ
from actual results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. Pursuant to procedures adopted by
the Board of Directors of the funds, Ameriprise Financial utilizes Fair Value
Pricing (FVP). FVP determinations are made in good faith in accordance with
these procedures. If a development or event is so significant that there is a
reasonably high degree of certainty that the effect of the development or event
has actually caused the closing price to no longer reflect the actual value,
the closing prices, as determined at the close of the applicable foreign
market, may be adjusted to reflect the fair value of the affected foreign
securities as of the close of the New York Stock Exchange. Significant events
include material movements in the U.S. securities markets prior to the opening
of foreign markets on the following trading day. FVP results in an estimated
price that reasonably reflects the current market conditions in order to value
the portfolio holdings such that shareholder transactions receive a fair net
asset value. 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.
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on
a forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market
fluctuations, and they may affect the Fund's net assets the same as owned
securities. The Fund designates cash or liquid securities at least equal to
the amount of its forward-commitments. At April 30, 2006, the Fund has
entered into outstanding when-issued securities of $501,928.
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.
- --------------------------------------------------------------------------------
15 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options
traded on any U.S. or foreign exchange or in the over-the-counter market
where completing the obligation depends upon the credit standing of the
other party. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured
put options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The
risk in writing a put option is that the Fund may incur a loss if the market
price of the security decreases and the option is exercised. The risk in
buying an option is that the Fund pays a premium whether or not the option
is exercised. The Fund also has the additional risk of being unable to enter
into a closing transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss when the option transaction expires or closes.
When an option is exercised, the proceeds on sales for a written call
option, the purchase cost for a written put option or the cost of a security
for a purchased put or call option is adjusted by the amount of premium
received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the
underlying securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars. Foreign currency amounts
related to the purchase or sale of securities and income and expenses are
translated at the exchange rate on the transaction date. The effect of
changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the
statement of operations, net realized gains or losses from foreign currency
transactions, if any, may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement date on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange 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
- --------------------------------------------------------------------------------
16 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other party will
not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition, certain of the Fund's contracts with
its service providers contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown since the amount of any
future claims that may be made against the Fund cannot be determined and the
Fund has no historical basis for predicting the likelihood of any such
claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue
Code that applies to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. No provision for
income or excise taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferred
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes and
losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
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
Under an Investment Management Services Agreement, RiverSource Investments,
LLC (the Investment Manager) determines which securities will be purchased,
held or sold. The management fee is a percentage of the Fund's average daily
net assets that declines from 0.72% to 0.52% annually as the Fund's assets
increase.
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. A minor portion of additional
administrative service expenses paid by the Fund are consultants' fees and
fund
- --------------------------------------------------------------------------------
17 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
office expenses. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees and any other expenses properly payable by
the Fund and approved by the Board.
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.
Under a separate Transfer Agency Agreement, RiverSource Service Corporation
(the Transfer Agent) maintains shareholder accounts and records. The Fund
pays the Transfer Agent an annual fee per shareholder account for this
service as follows:
o Class A $20.50
o Class B $21.50
o Class C $21.00
o Class Y $18.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
Class I pays a transfer agency fee at an annual rate per shareholder account
of $1. This amount is included in the transfer agency fee on the statement
of operations.
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with Ameriprise Financial Services, 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 up to 0.25% of the Fund's average daily net assets attributable
to Class A shares and up to 1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee
for service provided to shareholders by financial advisors and other
servicing agents. The fee is calculated at a rate of 0.10% of the Fund's
average daily net assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$4,006 for Class A for the period ended April 30, 2006.
For the period ended April 30, 2006, the Investment Manager and its
affiliates waived certain fees and expenses to 1.37% for Class A, 2.18% for
Class B, 2.15% for Class C, 1.10% for Class I and 1.22% for Class Y. Of
these waived fees and expenses, the management fees waived at the Fund level
were $46,147. In addition, the Investment Manager and its affiliates have
agreed to waive certain fees and expenses until Oct. 31, 2006. Under this
agreement, net expenses will not exceed 1.45% for Class A, 2.21% for Class
B, 2.21% for Class C, 1.10% for Class I and 1.29% for Class Y of the Fund's
average daily net assets.
During the period ended April 30, 2006, the Fund's custodian and transfer
agency fees were reduced by $71 as a result of earnings credits from
overnight cash balances. The Fund also pays custodian fees to Ameriprise
Trust Company, an affiliate of Ameriprise Financial.
- --------------------------------------------------------------------------------
18 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $15,763,123 and $1,641,203, respectively,
for the period from Feb. 16, 2006 (when shares became publicly available) to
April 30, 2006. 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 Feb. 16, 2006*
to April 30, 2006 are as follows:
CLASS A CLASS B CLASS C CLASS I CLASS Y
- -------------------------------------------------------------------------------------------------
Sold 81,977 30,139 4,505 1,410,868 403
Issued for reinvested distributions 414 124 11 6,279 1
Redeemed (5,496) (949) (911) (113) --
- -------------------------------------------------------------------------------------------------
Net increase (decrease) 76,895 29,314 3,605 1,417,034 404
- -------------------------------------------------------------------------------------------------
* When shares became publicly available.
5. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed
by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The Fund must maintain asset coverage for borrowings of
at least 300%. The agreement, which enables the Fund to participate with
other RiverSource funds, permits borrowings up to $500 million,
collectively. Interest is charged to each Fund based on its borrowings at a
rate equal to either the higher of the Federal Funds Effective Rate plus
0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable
within 60 days after such loan is executed. The Fund also pays a commitment
fee equal to its pro rata share of the amount of the credit facility at a
rate of 0.07% per annum. The Fund had no borrowings outstanding during the
period ended April 30, 2006.
6. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American
Express Financial Corporation (AEFC, which is now known as Ameriprise
Financial, Inc. (Ameriprise Financial)), the parent company of RiverSource
Investments, LLC (RiverSource Investments), entered into settlement
agreements with the Securities and Exchange Commission (SEC) and Minnesota
Department of Commerce (MDOC) related to market timing activities. In
connection with these matters, the SEC and MDOC issued orders (the Orders)
alleging that AEFC violated certain provisions of the federal and Minnesota
securities laws by failing to adequately disclose market timing activities
by allowing certain identified market timers to continue to market time
contrary to disclosures in mutual fund and variable annuity product
prospectuses. The Orders also alleged that AEFC failed to implement
procedures to detect and prevent market timing in 401(k) plans for employees
of AEFC and related companies and failed to adequately disclose that there
were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its
employees.
- --------------------------------------------------------------------------------
19 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
As a result of the Orders, AEFC was censured and ordered to cease and desist
from committing or causing any violations of certain provisions of the
Investment Advisers Act of 1940, the Investment Company Act of 1940, and
various Minnesota laws. Pursuant to the terms of the Orders, AEFC agreed to
pay disgorgement of $10 million and civil money penalties of $7 million.
AEFC also agreed to make presentations at least annually to its board of
directors and the relevant mutual funds' board that include an overview of
policies and procedures to prevent market timing, material changes to these
policies and procedures and whether disclosures related to market timing are
consistent with the SEC order and federal securities laws. AEFC also agreed
to retain an independent distribution consultant to assist in developing a
plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. In addition, AEFC agreed to
complete and submit to the MDOC a compliance review of its procedures
regarding market timing within one year of the MDOC Order, including a
summary of actions taken to ensure compliance with applicable laws and
regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal or arbitration 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 or arbitration 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.
- --------------------------------------------------------------------------------
20 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2006(b)
Net asset value, beginning of period $9.98
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07
Net gains (losses) (both realized and unrealized) (.15)
- --------------------------------------------------------------------------------------------------
Total from investment operations (.08)
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.82
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $11
- --------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 1.37%(d),(e)
- --------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 4.68%(d)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 11%
- --------------------------------------------------------------------------------------------------
Total return(f) (.83%)(g)
- --------------------------------------------------------------------------------------------------
(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 April 30, 2006 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class A would have been 2.76% for the period ended April 30, 2006.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
21 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2006(b)
Net asset value, beginning of period $9.97
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06
Net gains (losses) (both realized and unrealized) (.16)
- --------------------------------------------------------------------------------------------------
Total from investment operations (.10)
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 2.18%(d),(e)
- --------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 4.02%(d)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 11%
- --------------------------------------------------------------------------------------------------
Total return(f) (.96%)(g)
- --------------------------------------------------------------------------------------------------
(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 April 30, 2006 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class B would have been 3.76% for the period ended April 30, 2006.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
22 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2006(b)
Net asset value, beginning of period $9.97
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07
Net gains (losses) (both realized and unrealized) (.16)
- --------------------------------------------------------------------------------------------------
Total from investment operations (.09)
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 2.15%(d),(e)
- --------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 4.08%(d)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 11%
- --------------------------------------------------------------------------------------------------
Total return(f) (.91%)(g)
- --------------------------------------------------------------------------------------------------
(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 April 30, 2006 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class C would have been 3.90% for the period ended April 30, 2006.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
23 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2006(b)
Net asset value, beginning of period $9.98
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08
Net gains (losses) (both realized and unrealized) (.16)
- --------------------------------------------------------------------------------------------------
Total from investment operations (.08)
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.82
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $14
- --------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 1.10%(d),(e)
- --------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 5.22%(d)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 11%
- --------------------------------------------------------------------------------------------------
Total return(f) (.81%)(g)
- --------------------------------------------------------------------------------------------------
(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 April 30, 2006 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class I would have been 2.49% for the period ended April 30, 2006.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
24 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS Y
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2006(b)
Net asset value, beginning of period $9.98
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08
Net gains (losses) (both realized and unrealized) (.16)
- --------------------------------------------------------------------------------------------------
Total from investment operations (.08)
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.82
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) 1.22%(d),(e)
- --------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 4.85%(d)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 11%
- --------------------------------------------------------------------------------------------------
Total return(f) (.80%)(g)
- --------------------------------------------------------------------------------------------------
(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 April 30, 2006 (Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class Y would have been 2.67% for the period ended April 30, 2006.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
25 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUND EXPENSES EXAMPLE
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, including management fees; distribution and service (12b-1) fees; and
other Fund 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.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the six months ended April 30, 2006.
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.
- --------------------------------------------------------------------------------
26 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2005 APRIL 30, 2006 THE PERIOD(a) EXPENSE RATIO
Class A
Actual(b) N/A N/A N/A N/A
Hypothetical (5% return before expenses) $1,000 $1,017.80 $6.78 1.37%
Class B
Actual(b) N/A N/A N/A N/A
Hypothetical (5% return before expenses) $1,000 $1,013.83 $10.76 2.18%
Class C
Actual(b) N/A N/A N/A N/A
Hypothetical (5% return before expenses) $1,000 $1,013.98 $10.62 2.15%
Class I
Actual(b) N/A N/A N/A N/A
Hypothetical (5% return before expenses) $1,000 $1,019.13 $5.45 1.10%
Class Y
Actual(b) N/A N/A N/A N/A
Hypothetical (5% return before expenses) $1,000 $1,018.54 $6.04 1.22%
(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 179/365 (to reflect the one-half year period).
(b) The actual values and expenses paid are not presented because the Fund does
not have a full six months of history. The inception date of the Fund is
Feb. 16, 2006.
- --------------------------------------------------------------------------------
27 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
RiverSource Investments, LLC ("RiverSource Investments"), 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"), the investment manager provides investment
advice and other services to the Fund. The Fund's Board of Directors (the
"Board") and the Board's Investment Review and Contracts Committees monitor
these services.
The independent Board members determined to approve the IMS Agreement based
on the following factors:
In addition to portfolio management and investment research, RiverSource
Investments and its affiliates provide portfolio trading, daily net asset
value calculation, management of cash flows, product development,
administration of its compliance and legal departments, access to
distribution, accounting and recordkeeping, and reporting to the Board and
shareholders. The Board also noted RiverSource Investments commitment to a
culture that adheres to ethical business practice, assigns accountability to
senior management and seeks to identify conflicts and propose appropriate
action to minimize the risks posed by the conflicts. The Board concluded
that the services to be provided are consistent with services provided by
investment managers to comparable mutual funds (as compiled by Lipper
Analytical Services).
The Board also evaluated the price for the services to be provided by
RiverSource Investments, noting the existence of a pricing philosophy,
established by the Board and RiverSource Investments, that seeks to maintain
total Fund expenses within a range of the median expenses charged to
comparable funds sold through financial advisers. It also noted that
RiverSource Investments has agreed to voluntarily impose expense caps to
achieve this pricing objective.
The Board 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 also might benefit from such growth. The Board
considered that the IMS Agreement provides for lower fees as assets increase
at pre-established breakpoints and concluded that the IMS Agreement
satisfactorily provided for sharing these economies of scale.
The Board took into account the Contracts Committee's discussion comparing
the fees RiverSource Investments will charge to the Fund with those it
charges to institutional clients, noting that the relatively higher fees to
be paid by the Fund are principally attributable to the additional services
required to manage a regulated mutual fund such as the Fund, and the
operation of a large mutual fund family. The Board also considered the
profitability of RiverSource Investments and its affiliates. The Board
concluded that RiverSource Investments' overall costs and profitability were
appropriate.
The Board considered that the fees paid by the Fund should help permit
RiverSource Investments to offer competitive compensation to its personnel,
make necessary investments in its business and earn an appropriate profit.
Based on the foregoing, the Board concluded that the fees paid to
RiverSource Investments under the IMS Agreement were fair and reasonable and
determined to approve the IMS Agreement.
- --------------------------------------------------------------------------------
28 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of
Additional Information (SAI). You may obtain a copy of the SAI without
charge by calling RiverSource Funds at (888) 791-3380; contacting your
financial institution; visiting www.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 during the most recent 12-month period
ended June 30 is available without charge by visiting
www.riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
- --------------------------------------------------------------------------------
29 -- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
RIVERSOURCE(SM) EMERGING MARKETS BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
riversource.com/funds
[RiverSource Investments Logo]
This report must be accompanied or preceded by the Fund's current prospectus.
RiverSource Funds are managed by RiverSource Investments, LLC and
distributed by Ameriprise Financial Services, Inc., Member NASD.
Both companies are part of Ameriprise Financial, Inc.
S-6511 A (6/06)
- --------------------------------------------------------------------------------
Semiannual Report
RIVERSOURCE [LOGO](SM)
INVESTMENTS
- --------------------------------------------------------------------------------
RIVERSOURCE(SM)
GLOBAL BOND FUND
SEMIANNUAL REPORT FOR THE
PERIOD ENDED APRIL 30, 2006
> RIVERSOURCE GLOBAL BOND FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH HIGH
TOTAL RETURN THROUGH INCOME
AND GROWTH OF CAPITAL.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Fund Snapshot ............................................................. 2
Performance Summary ....................................................... 4
Questions & Answers with Portfolio Management ............................ 6
Investments in Securities ................................................. 11
Financial Statements ...................................................... 21
Notes to Financial Statements ............................................. 24
Fund Expenses Example ..................................................... 40
Approval of Investment Management Services Agreement ..................... 42
Proxy Voting .............................................................. 43
Results of Meeting of Shareholders ........................................ 44
[DALBAR LOGO]
RiverSource Funds' 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 1
- --------------------------------------------------------------------------------
FUND SNAPSHOT AT APRIL 30, 2006
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER <
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER SINCE YEARS IN INDUSTRY
Nicholas Pifer, CFA* 5/00 15
* The Fund is managed by a team of portfolio managers led by Nicholas Pifer.
- --------------------------------------------------------------------------------
FUND OBJECTIVE <
- --------------------------------------------------------------------------------
For investors seeking high total return through income and growth of capital.
Inception dates by class
A: 3/20/89 B: 3/20/95 C: 6/26/00 I: 3/4/04 Y: 3/20/95
Ticker symbols by class
A: IGBFX B: IGLOX C: AGBCX I: AGBIX Y: --
Total net assets $518.8 million
Number of holdings 255
Weighted average life* 6 years
Effective duration** 4.8 years
Weighted average bond rating*** AA+
* 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.
** 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.
*** WEIGHTED AVERAGE BOND RATING represents the average credit quality of the
underlying bonds in the portfolio.
- --------------------------------------------------------------------------------
STYLE MATRIX <
- --------------------------------------------------------------------------------
DURATION
- -------------------------------------------
VALUE BLEND GROWTH
- -------------------------------------------
LARGE
- -------------------------------------------
MEDIUM QUALITY
- -------------------------------------------
SMALL
- -------------------------------------------
Shading within the style matrix indicates areas in which the Fund generally
invests.
- --------------------------------------------------------------------------------
CREDIT QUALITY SUMMARY <
- --------------------------------------------------------------------------------
Percentage of bond portfolio assets
AAA bonds 66.0%
- --------------------------------------------------------------------------------
AA bonds 19.3
- --------------------------------------------------------------------------------
A bonds 8.9
- --------------------------------------------------------------------------------
BBB bonds 2.9
- --------------------------------------------------------------------------------
Non-investment grade bonds 1.5
- --------------------------------------------------------------------------------
Non-rated bonds 1.4
- --------------------------------------------------------------------------------
Individual security ratings are based on information from Standard & Poor's
Corp. and Moody's Investors Service. If a rating is unavailable, the rating is
determined through an internal analysis, if appropriate.
Investment products involve risks including possible loss of principal and
fluctuation in value.
There are risks associated with an investment in a bond fund, including credit
risk, interest rate risk, and prepayment and extension risk. See the Fund's
prospectus for information on these and other risks associated with the Fund. In
general, bond prices rise when interest rates fall and vice versa. This effect
is usually more pronounced for longer-term securities. Non-investment grade
securities, commonly called "high-yield" or "junk" bonds, generally have more
volatile prices and carry more risk to principal and income than investment
grade securities.
International investing involves increased risk and volatility, not typically
associated with domestic investing, due to potential political and economic
instability, limited liquidity, volatile prices, lack of accounting, auditing,
and financial reporting standards, changes in currency exchange rates, and
differences in how trades are cleared and settled. Risks are particularly
significant in emerging markets due to the dramatic pace of economic, social,
and political change.
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.
- --------------------------------------------------------------------------------
2 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUND SNAPSHOT
- --------------------------------------------------------------------------------
COUNTRY COMPOSITION <
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Percentage of portfolio assets at April 30, 2006
United States 35.2%
Japan 9.8%
Germany 9.0%
France 6.0%
United Kingdom 4.8%
Italy 4.6%
Greece 4.1%
Netherlands 3.1%
Spain 3.1%
Belgium 3.0%
Canada 2.5%
Ireland 2.5%
Australia 1.9%
Poland 1.4%
Norway 1.3%
Cash & Short-Term Securities 1.1%
New Zealand 1.1%
Supra-National 1.1%
Austria 1.0%
Other* 3.4%
* Includes Brazil, Czechoslovakia Federated Republic, Denmark, Luxembourg,
Malaysia, Mexico, South Africa, South Korea and Sweden.
- --------------------------------------------------------------------------------
SEC YIELDS <
- --------------------------------------------------------------------------------
At April 28, 2006* by class
A: 2.74% B: 2.12% C: 2.12% I: 3.27% Y: 3.04%
At March 31, 2006 by class
A: 2.69% B: 2.04% C: 2.05% I: 3.20% Y: 3.00%
The Securities and Exchange Commission (SEC) yield is calculated by dividing
anticipated net investment income during a 31-day period by the public offering
price (POP) per share on the last day of the period, and converting the results
to yearly figures. See Average Annual Total Returns on page 5 for additional
performance information.
* The last business day of the period.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 3
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2006
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Global Bond Fund Class A (excluding sales charge) +2.03%
Lehman Brothers Global Aggregate Index(1) (unmanaged) +2.07%
Lipper Global Income Funds Index(2) +3.14%
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 www.riversource.com/funds.
(1) The Lehman Brothers 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,
but excludes brokerage commissions or other fees.
(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.
The 4.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
4 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I CLASS Y
(INCEPTION DATES) 3/20/89 3/20/95 6/26/00 3/4/04 3/20/95
AFTER AFTER
NAV(1) POP(2) NAV(1) CDSC(3) NAV(1) CDSC(4) NAV(5) NAV(5)
AT APRIL 30, 2006
- --------------------------------------------------------------------------------------------------------------
6 months* +2.03% -2.82% +1.63% -3.34% +1.55% +0.56% +2.16% +2.06%
- --------------------------------------------------------------------------------------------------------------
1 year -2.04% -6.69% -2.83% -7.54% -2.89% -3.83% -1.65% -1.91%
- --------------------------------------------------------------------------------------------------------------
3 years +4.82% +3.13% +3.99% +2.74% +4.00% +4.00% N/A +4.97%
- --------------------------------------------------------------------------------------------------------------
5 years +7.35% +6.31% +6.48% +6.17% +6.49% +6.49% N/A +7.54%
- --------------------------------------------------------------------------------------------------------------
10 years +5.21% +4.70% +4.40% +4.40% N/A N/A N/A +5.40%
- --------------------------------------------------------------------------------------------------------------
Since inception +7.44% +7.14% +5.16% +5.16% +5.79% +5.79% +3.52% +5.99%
- --------------------------------------------------------------------------------------------------------------
AT MARCH 31, 2006
- --------------------------------------------------------------------------------------------------------------
6 months* -1.37% -6.06% -1.88% -6.68% -1.82% -2.78% -1.39% -1.34%
- --------------------------------------------------------------------------------------------------------------
1 year -3.17% -7.77% -4.08% -8.73% -4.01% -4.94% -2.96% -3.05%
- --------------------------------------------------------------------------------------------------------------
3 years +4.60% +2.91% +3.78% +2.53% +3.79% +3.79% N/A +4.81%
- --------------------------------------------------------------------------------------------------------------
5 years +6.77% +5.74% +5.94% +5.62% +5.94% +5.94% N/A +7.01%
- --------------------------------------------------------------------------------------------------------------
10 years +5.00% +4.49% +4.20% +4.20% N/A N/A N/A +5.19%
- --------------------------------------------------------------------------------------------------------------
Since inception +7.34% +7.04% +5.00% +5.00% +5.48% +5.48% +2.50% +5.83%
- --------------------------------------------------------------------------------------------------------------
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 4.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies
as follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
* Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 5
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
WITH PORTFOLIO MANAGEMENT
Below, Nicholas Pifer discusses RiverSource Global Bond Fund's performance
and positioning for the six months ended April 30, 2006.
At April 30, 2006, more than 25% of the Fund's shares were owned in
aggregate by RiverSource Portfolio Builder Funds, a group of six asset
allocation funds and RiverSource Income Builder Funds, a group of three
"funds-of-funds" managed by RiverSource Investments, LLC. As a result of
asset allocation decisions by RiverSource, it is possible RiverSource
Global Bond Fund may experience relatively large purchases or redemptions
from RiverSource Portfolio Builder Funds or RiverSource Income Builder
Funds (see page 31, 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 to manage transactions
for RiverSource Portfolio Builder Funds and RiverSource Income Builder
Funds. For more information on the Fund's expenses, see the discussions
beginning on pages 29 and 40.
Q: How did RiverSource Global Bond Fund perform for the first half of the
fiscal year?
A: RiverSource Global Bond Fund's Class A shares gained 2.03% (excluding
sales charge) for the six months ended April 30, 2006. The Fund
underperformed its benchmark, the Lehman Brothers Global Aggregate Index
(Lehman Global Index), which rose 2.07%. The Fund underperformed the
Lipper Global Income Funds Index, representing the Fund's peer group,
which increased 3.14% during the same period.
Q: What factors most significantly affected performance?
A: Currency and bond market trends had a mixed impact on Fund performance
during the semiannual period. On the one hand, the U.S. dollar fell 3.73%
on a trade-weighted basis for the six months ended April 30, 2006. As the
value of the U.S. dollar decreases, the dollar value of foreign
investments typically increases and vice versa. Most of the dollar's
decline came in the last few weeks of the period, with the U.S. currency
hurt by testimony from U.S. Federal Reserve Board (the Fed) chairman Ben
Bernanke.
- --------------------------------------------------------------------------------
6 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> THE FUND BENEFITED MOST FROM ITS WEIGHTINGS IN THE U.S. DOLLAR, THE EURO
AND OTHER EUROPEAN CURRENCIES, AS THE U.S. DOLLAR WEAKENED VS. THE EURO
AND THE BRITISH POUND.
The Fed's testimony appeared to signal a pause in the interest rate
tightening cycle. In addition, the statement released by the G7 group of
countries following their late-April meeting, which called for greater
currency flexibility to address current account imbalances, also hurt the
U.S. currency. While the G7 statement focused on the need for appreciation
of the Chinese currency vs. the U.S. dollar, the currency markets
interpreted the statement as a tacit approval of a weaker dollar in
general. Offsetting the positive impact on Fund performance from a falling
dollar, global bonds performed poorly over the semiannual period, as
increasingly synchronous global economic growth and monetary tightening
pushed bond yields higher in all the major markets.
Relative to the Lehman Global Index, the Fund benefited most from
effective currency positioning and duration management. The Fund
maintained its significant exposure to the euro and several other European
currencies as well as to the "dollar bloc" currencies of Canada, Australia
and New Zealand during the semiannual period. The Fund also maintained its
modest exposure to the U.S. dollar and the yen. The Fund benefited most
from its weightings in the U.S. dollar, the euro and other European
currencies, as the U.S. dollar weakened vs. the euro and the British
pound.
We maintained the Fund's duration, a principal measure of interest rate
risk, shorter than that of the Lehman Global Index through the semiannual
period.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 7
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
This stance was based on our view that the global economy as a whole and
the U.S. economy in particular were growing at an above-trend pace, and
thus that the world's major central banks would raise interest rates. The
Fed did, in fact, raise the targeted federal funds rate by an additional
100 basis points (1%) during the period. The European Central Bank also
raised its interest rates in early December 2005 for the first time in
more than two years and then did so again in March, for a total of 50
basis points (0.50%). As global bond yields generally moved up rather
substantially over the semiannual period, the Fund's short duration
positioning helped results.
The Fund's country allocation helped the Fund's results, too. The "dollar
bloc" government bond markets performed better than each of the major bond
markets in local currency terms, especially Australia and New Zealand, as
did what are known as the "peripheral" European markets of Poland and
Norway. Thus, the Fund's overweight in core European bonds detracted from
results, but this was more than outweighed by the positive effects of the
Fund's underweight in Japanese bonds and its overweight in the
"peripheral" European markets and to the "dollar bloc" countries.
The Fund underperformed its Lipper group due primarily to the Fund's more
conservative risk profile during the period than many of its peers. The
Fund had only moderate exposure to non-government bond sectors, which
overall outperformed government bonds during the semiannual period. The
Fund also had just a small exposure to emerging market bonds, which
performed quite well over the period.
Q: What changes did you make to the Fund and how is it currently positioned?
A: We lengthened the Fund's duration a bit toward the end of the period,
moving the Fund's duration from just under three-fourths of a year shorter
than the Lehman Global Index at the start of the period to about half a
year shorter than the Lehman Global Index by the end of April 2006. Within
that, we scaled back the core European portion of the portfolio to a
rather neutral position and brought the U.S. portion of the portfolio up
to a neutral position.
- --------------------------------------------------------------------------------
8 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> WE ANTICIPATE A STEADIER PERIOD AHEAD FOR THE GLOBAL BOND MARKETS AND
REMAIN COMFORTABLE WITH THE FUND'S CURRENT POSITIONING.
Also toward the end of the period, we pared back the Fund's position in
the euro and other European currencies, though still maintaining a
significant exposure, and added to the Fund's position in the yen, while
still maintaining a limited allocation. We also added to the Fund's
exposure to the U.S. dollar. Within sectors, we reduced the Fund's
position in U.S. and European investment grade corporate bonds and
modestly increased the Fund's position in AAA-rated commercial
mortgage-backed securities (CMBS) and pass-through mortgages. We view CMBS
as high-quality substitutes for corporate bonds. Pass-through mortgage
securities consist of a pool of residential mortgage loans, where
homeowners' monthly payments of principal, interest and prepayments pass
from the original bank through a government agency or investment bank to
investors. This added exposure to mortgages proved well-timed, having
implemented the strategy just before a strong run in the sector.
Q: How do you intend to manage the Fund in the coming months?
A: We believe that U.S. bonds are now fairly valued and that core European
bonds are close to fair value. In contrast, we remain cautious on Japanese
bonds for the medium-term, as the process of normalizing Japanese monetary
policy to a post-deflation environment should result in higher bond yields
over time. Certainly, many questions remain regarding the direction of
various central banks' monetary policy and the risks to inflation given
persistently high oil prices. These questions may keep the global bond
markets on edge over the coming months. Still, we anticipate a steadier
period ahead for the global bond markets and remain comfortable with the
Fund's current positioning. From a duration perspective, we intend to stay
rather neutral in the U.S. and core Europe portions of the portfolio and
remain defensively positioned within the Japanese portion of the
portfolio.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 9
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
From a country perspective, we continue to favor European bonds, though
less assertively than six months ago. As for currency positioning, we
intend to maintain the Fund's modest exposure to the U.S. dollar and the
yen in favor of the euro. We are seeking to maintain some fluidity in the
Fund's positioning, especially given the sharp run in most of the world's
major currencies vs. the U.S. dollar toward the end of April.
As always, we constantly re-evaluate the Fund's duration, sector, country,
yield curve, and currency positioning in an effort to seek an attractive
trade-off 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.
- --------------------------------------------------------------------------------
10 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
RiverSource Global Bond Fund
APRIL 30, 2006 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
- --------------------------------------------------------------------------------
BONDS (97.3%)(c)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
AUSTRALIA (1.9%)
Commonwealth Bank of Australia
(European Monetary Unit)
Sr Unsub
11-12-09 3.38% 570,000 $ 710,241
New South Wales Treasury
(Australian Dollar)
03-01-08 8.00 8,020,000 6,315,790
Telstra
04-01-12 6.38 500,000 508,959
Western Australia Treasury
(Australian Dollar)
10-16-06 5.50 3,050,000 2,317,057
-----------
Total 9,852,047
- --------------------------------------------------------------------------------
AUSTRIA (1.0%)
Republic of Austria
(European Monetary Unit)
01-15-10 5.50 3,900,000 5,225,465
- --------------------------------------------------------------------------------
BELGIUM (2.9%)
Kingdom of Belgium
(European Monetary Unit)
03-28-10 3.00 12,230,000 15,067,242
- --------------------------------------------------------------------------------
BRAZIL (0.2%)
Federative Republic of Brazil
01-15-18 8.00 1,129,000 1,225,530
- --------------------------------------------------------------------------------
CANADA (2.5%)
Aquila Canada Finance
06-15-11 7.75 70,000 72,450
Canada Housing Trust #1
(Canadian Dollar)
06-15-06 5.53 3,030,000 2,715,486
Canadian Pacific Railway
(Canadian Dollar)
06-15-10 4.90 380,000(d) 342,520
Govt of Canada
(Canadian Dollar)
09-01-06 5.75 3,560,000 3,200,529
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
CANADA (CONT.)
Province of British Columbia
(Canadian Dollar)
08-23-10 6.38% 6,665,000 $ 6,412,649
Sun Media
02-15-13 7.63 100,000 102,250
Videotron Ltee
01-15-14 6.88 45,000 44,550
-----------
Total 12,890,434
- --------------------------------------------------------------------------------
CZECHOSLOVAKIA FEDERATED REPUBLIC (0.2%)
Republic of Czechoslovakia
(Czech Crown)
06-16-13 3.70 28,500,000 1,256,468
- --------------------------------------------------------------------------------
DENMARK (0.5%)
Realkredit Danmark
(Danish Krone)
01-01-08 4.00 14,860,000 2,528,964
- --------------------------------------------------------------------------------
FRANCE (5.9%)
Dexia Municipal Agency
(European Monetary Unit)
09-03-07 4.25 510,000 650,679
Govt of France
(European Monetary Unit)
04-25-12 5.00 8,120,000 10,900,253
04-25-13 4.00 8,065,000 10,271,311
10-25-16 5.00 6,525,000 8,922,180
-----------
Total 30,744,423
- --------------------------------------------------------------------------------
GERMANY (8.8%)
Allgemeine Hypothekenbank Rheinboden
(European Monetary Unit)
09-02-09 5.00 1,800,000(d) 2,351,609
Bayerische Landesbank
(Japanese Yen) Sr Nts
04-22-13 1.40 301,000,000 2,573,586
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
GERMANY (CONT.)
Bundesrepublik Deutschland
(European Monetary Unit)
01-04-10 5.38% 530,000 $ 707,801
07-04-13 3.75 10,360,000 12,953,352
07-04-27 6.50 6,620,000 11,035,870
07-04-28 4.75 1,745,000 2,372,693
07-04-34 4.75 4,425,000 6,082,484
DEPFA Deutsche Pfandbriefbank
(European Monetary Unit)
01-15-10 5.50 1,800,000 2,404,617
Deutsche Bank
(European Monetary Unit)
Sr Unsub
07-28-09 4.25 500,000 641,011
Landesbank Berlin Girozentrale
(European Monetary Unit)
04-30-07 5.00 1,780,000 2,281,892
Rheinische Hypothekenbank
(European Monetary Unit)
07-05-10 5.75 1,825,000 2,470,584
-----------
Total 45,875,499
- --------------------------------------------------------------------------------
GREECE (4.0%)
Hellenic Republic
(European Monetary Unit)
06-21-06 2.75 6,840,000 8,627,861
04-19-07 4.65 5,345,000 6,832,757
10-22-22 5.90 3,540,000 5,217,478
-----------
Total 20,678,096
- --------------------------------------------------------------------------------
IRELAND (2.5%)
Irish Govt
(European Monetary Unit)
10-18-07 4.25 9,985,000 12,762,920
- --------------------------------------------------------------------------------
ITALY (4.6%)
Buoni Poliennali Del Tesoro
(European Monetary Unit)
11-01-07 6.00 11,735,000 15,368,029
11-01-26 7.25 3,101,283 5,364,672
Telecom Italia Capital
10-01-15 5.25 1,420,000 1,312,507
11-15-33 6.38 1,675,000 1,568,158
-----------
Total 23,613,366
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
JAPAN (9.7%)
Development Bank of Japan
(Japanese Yen)
06-20-12 1.40% 585,000,000 $ 5,067,337
Govt of Japan
(Japanese Yen)
12-21-09 1.70 2,071,000,000 18,596,561
09-20-10 .80 862,000,000 7,424,542
06-20-12 1.40 700,000,000 6,090,277
12-20-12 1.00 1,227,000,000 10,346,514
12-20-14 1.30 247,000,000 2,071,930
12-20-34 2.40 61,000,000 529,952
-----------
Total 50,127,113
- --------------------------------------------------------------------------------
LUXEMBOURG (0.2%)
Tyco Intl Group
02-15-11 6.75 900,000 936,308
- --------------------------------------------------------------------------------
MALAYSIA (0.3%)
Petronas Capital
05-22-12 7.00 1,500,000(d) 1,600,001
- --------------------------------------------------------------------------------
MEXICO (0.8%)
Govt of Mexico
(Mexican Peso)
12-24-09 9.00 16,000,000 1,492,697
Mexican Fixed Rate
(Mexican Peso)
12-20-12 9.00 20,810,000 1,932,787
United Mexican States
09-27-34 6.75 270,000 274,320
United Mexican States
(Japanese Yen)
06-06-06 6.75 62,000,000 547,988
-----------
Total 4,247,792
- --------------------------------------------------------------------------------
NETHERLANDS (3.1%)
Bank Nederlandse Gemeenten
(British Pound) Sr Unsub
08-06-07 7.38 1,160,000 2,178,237
Govt of Netherlands
(European Monetary Unit)
01-15-08 2.50 8,475,000 10,548,877
07-15-12 5.00 2,365,000 3,173,751
-----------
Total 15,900,865
- --------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
12 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
NEW ZEALAND (1.0%)
Govt of New Zealand
(New Zealand Dollar)
11-15-06 8.00% 8,425,000 $ 5,408,331
- --------------------------------------------------------------------------------
NORWAY (1.3%)
Govt of Norway
(Norwegian Krone)
05-16-11 6.00 36,800,000 6,550,100
- --------------------------------------------------------------------------------
POLAND (1.4%)
Republic of Poland
(Polish Zloty)
03-24-10 5.75 21,190,000 7,151,455
- --------------------------------------------------------------------------------
SOUTH AFRICA (0.4%)
Republic of South Africa
(South African Rand)
08-31-10 13.00 10,357,500 2,102,088
- --------------------------------------------------------------------------------
SOUTH KOREA (0.1%)
Korea Development Bank
(Japanese Yen)
06-25-08 0.98 70,000,000 614,328
- --------------------------------------------------------------------------------
SPAIN (3.1%)
Caja de Ahorros y Monte de Piedad de Madrid
(European Monetary Unit)
03-25-11 3.50 2,400,000 2,971,332
Govt of Spain
(European Monetary Unit)
07-30-09 5.15 9,915,000 13,103,191
-----------
Total 16,074,523
- --------------------------------------------------------------------------------
SUPRA-NATIONAL (1.1%)
European Investment Bank
(British Pound)
12-07-11 5.50 2,910,000 5,456,332
- --------------------------------------------------------------------------------
SWEDEN (0.5%)
Govt of Sweden
(Swedish Krona)
03-15-11 5.25 18,620,000 2,721,353
- --------------------------------------------------------------------------------
UNITED KINGDOM (4.8%)
BT Group
12-15-10 8.38 550,000 611,001
HBOS Treasury Services
(European Monetary Unit)
02-12-09 3.50 1,600,000 2,010,930
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED KINGDOM (CONT.)
United Kingdom Treasury
(British Pound)
03-07-12 5.00% 6,350,000 $11,778,386
09-07-14 5.00 5,390,000 10,058,655
Vodafone Group
06-15-11 5.50 185,000 182,946
-----------
Total 24,641,918
- --------------------------------------------------------------------------------
UNITED STATES (34.5%)
Aesop Funding II LLC
Series 2004-2A Cl A1 (FGIC)
04-20-08 2.76 500,000(d,j) 490,433
Airgas
10-01-11 9.13 195,000 205,238
Allied Waste North America
Series B
04-01-08 8.88 50,000 52,500
AmeriCredit Automobile Receivables Trust
Series 2005-DA Cl A3
12-06-10 4.87 525,000 520,652
ANR Pipeline
03-15-10 8.88 45,000 47,768
ARG Funding
Series 2005-1A Cl A3 (MBIA)
04-20-11 4.29 1,250,000(d,j) 1,195,842
AutoNation
04-15-14 7.00 90,000(d) 90,450
Avis Budget Car Rental LLC/Finance
Sr Nts
05-15-14 7.63 25,000(d) 25,438
05-15-16 7.75 30,000(d) 30,600
Banc of America Commercial Mtge
Series 2005-1 Cl A4
11-10-42 4.89 750,000(f) 732,019
Banc of America Commercial Mtge
Series 2005-6 Cl A4
09-10-47 5.35 1,400,000(f) 1,351,903
Banc of America Large Loan
Series 2005-BOCA Cl A1
12-15-16 5.02 657,480(d,e,f) 657,580
Banc of America Large Loan
Series 2005-BOCA Cl A2
12-15-16 5.07 1,950,000(d,e,f) 1,950,910
Banc of America Large Loan
Series 2006-LAQ Cl E
02-09-21 5.30 575,000(d,e,f) 574,978
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Banc of America Large Loan
Series 2006-LAQ Cl F
02-09-21 5.36% $ 625,000(d,e,f) $ 624,976
Banc of America Large Loan
Series 2006-LAQ Cl G
02-09-21 5.45 450,000(d,e,f) 449,982
Bear Stearns Commercial Mtge Securities
Series 2003-T10 Cl A1
03-13-40 4.00 583,640(f) 556,851
Bear Stearns Commercial Mtge Securities
Series 2004-T16 Cl A3
02-13-46 4.03 600,000(f) 573,324
Bear Stearns Commercial Mtge Securities
Series 2005-PW10 Cl A4
12-11-40 5.41 900,000(f) 878,359
Bear Stearns Commercial Mtge Securities
Series 2005-PWR8 Cl A1
06-11-41 4.21 1,428,479(f) 1,390,867
Bear Stearns Commercial Mtge Securities
Series 2005-T20 Cl E
10-12-42 5.30 500,000(f) 470,470
Cadbury Schweppes US Finance LLC
10-01-08 3.88 1,090,000(d) 1,049,721
California State Teachers' Retirement System Trust
Series 2002-C6 Cl A3
11-20-14 4.46 1,871,469(d,f) 1,820,261
Capital Auto Receivables Asset Trust
Series 2004-1
09-15-10 2.84 700,000 679,933
Capital One Auto Finance Trust
Series 2005-BSS Cl A3
11-15-09 4.08 1,000,000 981,320
Cardinal Health
06-15-15 4.00 1,450,000 1,253,161
Carmax Auto Owner Trust
Series 2005-1 Cl A4
03-15-10 4.35 500,000 490,514
CDC Commercial Mtge Trust
Series 2002-FX1 Cl A2
11-15-30 5.68 1,100,000(f) 1,108,750
Chemtura
06-01-16 6.88 50,000 49,856
Chesapeake Energy
08-15-17 6.50 15,000 14,325
Citigroup
(European Monetary Unit) Sr Nts
05-21-10 3.88 2,600,000 3,277,029
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Citigroup Commercial Mtge Trust
Series 2005-EMG Cl A1
09-20-51 4.15% $1,456,113(d,f) $1,423,333
Citigroup/Deutsche Bank Commercial Mtge Trust
Series 2005-CD1 Cl A4
07-15-44 5.40 1,000,000(f) 970,214
Citigroup/Deutsche Bank Commercial Mtge Trust
Series 2006-CD2 Cl A2
01-15-46 5.41 500,000(f) 497,551
CMS Energy
Sr Nts
01-15-09 7.50 140,000 143,325
Colorado Interstate Gas
Sr Nts
03-15-15 5.95 35,000 33,109
11-15-15 6.80 200,000(d) 202,250
Comcast Cable Communications Holdings
03-15-13 8.38 106,000 118,665
Commercial Mtge Pass-Through Ctfs
Series 2006-CN2A Cl BFL
02-05-19 5.14 400,000(d,e,f) 399,979
Cott Beverages USA
12-15-11 8.00 205,000 208,588
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2005-64CB Cl 1A1
12-25-35 5.50 2,141,462(f) 2,114,883
Countrywide Alternative Loan Trust
Collateralized Mtge Obligation
Series 2005-6CB Cl 1A1
04-25-35 7.50 1,183,692(f) 1,212,749
Credit Suisse Mtge Capital Ctfs
Series 2006-C1 Cl A2
02-15-39 5.51 2,650,000(f) 2,651,141
CS First Boston Mtge Securities
Series 2002-CKS4 Cl A1
11-15-36 4.49 1,094,669(f) 1,064,333
CS First Boston Mtge Securities
Series 2005-C5 Cl A2
08-15-38 5.10 525,000(f) 517,068
DaimlerChrysler NA Holding
(European Monetary Unit)
01-16-07 5.63 670,000 858,525
Denbury Resources
Sr Sub Nts
12-15-15 7.50 20,000 20,500
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
14 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Dex Media West LLC/Finance
Sr Nts Series B
08-15-10 8.50% $ 85,000 $ 89,675
DRS Technologies
02-01-16 6.63 190,000 188,100
Dynegy Holdings
05-15-18 7.13 20,000 18,100
Dynegy Holdings
Sr Unsecured
05-01-16 8.38 70,000(d) 69,650
Emmis Operating
Sr Sub Nts
05-15-12 6.88 55,000 53,556
Encore Acquisition
Sr Sub Nts
04-15-14 6.25 50,000 47,500
Erac USA Finance
11-01-16 6.20 1,245,000(d,g) 1,233,151
Federal Home Loan Mtge Corp
07-12-10 4.13 6,816,000 6,531,950
Federal Home Loan Mtge Corp #A11799
08-01-33 6.50 237,609(f) 242,023
Federal Home Loan Mtge Corp #A15881
11-01-33 5.00 1,409,838(f) 1,338,495
Federal Home Loan Mtge Corp #E91486
09-01-17 6.50 413,330(f) 422,023
Federal Home Loan Mtge Corp #E99684
10-01-18 5.00 763,494(f) 744,045
Federal Home Loan Mtge Corp #G01535
04-01-33 6.00 1,850,709(f) 1,855,077
Federal Home Loan Mtge Corp
(European Monetary Unit)
02-15-07 4.63 3,200,000 4,081,321
Federal Natl Mtge Assn #254632
02-01-18 5.50 1,733,240(f) 1,722,164
Federal Natl Mtge Assn #254686
04-01-18 5.50 1,965,904(f) 1,953,196
Federal Natl Mtge Assn #254722
05-01-18 5.50 1,021,289(f) 1,014,687
Federal Natl Mtge Assn #360800
01-01-09 5.74 1,167,481(f) 1,169,665
Federal Natl Mtge Assn #545874
08-01-32 6.50 298,085(f) 305,151
Federal Natl Mtge Assn #555528
04-01-33 6.00 1,405,619(f) 1,402,661
Federal Natl Mtge Assn #555734
07-01-23 5.00 1,081,971(f) 1,037,761
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Federal Natl Mtge Assn #555740
08-01-18 4.50% $1,708,956(f) $1,630,451
Federal Natl Mtge Assn #555851
01-01-33 6.50 1,721,708(f) 1,757,442
Federal Natl Mtge Assn #575487
04-01-17 6.50 891,432(f) 915,170
Federal Natl Mtge Assn #621581
12-01-31 6.50 343,561(f) 352,674
Federal Natl Mtge Assn #633966
03-01-17 6.00 232,124(f) 235,194
Federal Natl Mtge Assn #634749
03-01-17 5.50 927,539(f) 922,283
Federal Natl Mtge Assn #640996
05-01-32 7.50 594,547(f) 618,761
Federal Natl Mtge Assn #643381
06-01-17 6.00 560,151(f) 567,559
Federal Natl Mtge Assn #645053
05-01-32 7.00 1,180,736(f) 1,215,214
Federal Natl Mtge Assn #646147
06-01-32 7.00 467,865(f) 485,129
Federal Natl Mtge Assn #652284
08-01-32 6.50 484,337(f) 493,885
Federal Natl Mtge Assn #653145
07-01-17 6.00 325,635(f) 330,551
Federal Natl Mtge Assn #653730
09-01-32 6.50 261,478(f) 266,714
Federal Natl Mtge Assn #655589
08-01-32 6.50 1,820,007(f) 1,867,725
Federal Natl Mtge Assn #666424
08-01-32 6.50 287,546(f) 293,214
Federal Natl Mtge Assn #670461
11-01-32 7.50 406,545(f) 423,102
Federal Natl Mtge Assn #684595
03-01-33 6.00 2,111,102(f) 2,106,659
Federal Natl Mtge Assn #688034
03-01-33 5.50 622,966(f) 607,711
Federal Natl Mtge Assn #688691
03-01-33 5.50 1,120,709(f) 1,091,429
Federal Natl Mtge Assn #703818
05-01-33 6.00 523,957(f) 523,688
Federal Natl Mtge Assn #711503
06-01-33 5.50 1,395,508(f) 1,364,416
Federal Natl Mtge Assn #735029
09-01-13 5.28 861,236(f) 847,881
Federal Natl Mtge Assn #741850
09-01-33 5.50 2,315,379(f) 2,254,887
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Federal Natl Mtge Assn #753507
12-01-18 5.00% $ 3,102,078(f) $3,027,027
Federal Natl Mtge Assn #755498
11-01-18 5.50 1,512,561(f) 1,503,682
Federal Natl Mtge Assn #756788
11-01-33 6.50 457,766(f) 467,054
Federal Natl Mtge Assn #757299
09-01-19 4.50 2,971,710(f) 2,833,856
GE Capital Commercial Mtge
Series 2005-C3 Cl A1
07-10-45 4.59 1,021,037(f) 1,001,111
General Electric Capital Assurance
Series 2003-1 Cl A3
05-12-35 4.77 1,800,000(d,f) 1,745,149
General Electric Capital
(European Monetary Unit) Sr Unsub
06-20-07 5.13 500,000 642,315
General Electric Capital
(New Zealand Dollar)
02-04-10 6.63 3,530,000 2,245,887
Genworth Financial
(Japanese Yen)
06-20-11 1.60 130,000,000 1,117,808
GMAC
08-28-07 6.13 480,000 466,576
09-15-11 6.88 135,000 126,468
GMAC Commercial Mtge Securities
Series 2004-C3 Cl A4
12-10-41 4.55 1,050,000(f) 1,000,355
GMAC Commercial Mtge Securities
Series 2005-C1 Cl A1
05-10-43 4.21 768,124(f) 748,602
Govt Natl Mtge Assn #604708
10-15-33 5.50 1,276,434(f) 1,253,574
Govt Natl Mtge Assn
Collateralized Mtge Obligation
Interest Only
Series 2002-80 Cl CI
01-20-32 13.94 1,166,619(f,h) 142,158
Greenwich Capital Commercial Funding
Series 2004-GG1 Cl A4
06-10-36 4.76 1,100,000(f) 1,070,634
Greenwich Capital Commercial Funding
Series 2004-GG1 Cl A5
06-10-36 4.88 500,000(f) 487,061
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
GS Mtge Securities II
Series 2004-GG2 Cl A4
08-10-38 4.96% $ 950,000(f) $ 928,024
GS Mtge Securities II
Series 2005-GG4 Cl A1
07-10-39 4.37 1,286,224(f) 1,256,214
GS Mtge Securities II
Series 2006-GG6 Cl A2
04-10-38 5.51 2,225,000(f) 2,225,061
HCA
Sr Nts
03-15-14 5.75 50,000 46,409
Intl Paper
(European Monetary Unit)
08-11-06 5.38 505,000 640,686
IPALCO Enterprises
Secured
11-14-08 8.38 250,000 260,000
JPMorgan Chase Commercial Mtge Securities
Series 2002-CIB5 Cl A1
10-12-37 4.37 1,103,350(f) 1,075,982
JPMorgan Chase Commercial Mtge Securities
Series 2003-CB6 Cl A2
07-12-37 5.26 900,000(f) 878,559
JPMorgan Chase Commercial Mtge Securities
Series 2003-LN1 Cl A1
10-15-37 4.13 436,924(f) 417,730
JPMorgan Chase Commercial Mtge Securities
Series 2003-ML1A Cl A1
03-12-39 3.97 400,820(f) 385,637
JPMorgan Chase Commercial Mtge Securities
Series 2006-CB14 Cl A2
12-12-44 5.44 1,500,000(f) 1,497,428
JPMorgan Chase Commercial Mtge Securities
Series 2006-CB14 Cl A4
12-12-44 5.48 750,000(f) 732,983
JPMorgan Chase Commercial Mtge Securities
Series 2006-LDP6 Cl ASB
04-15-43 5.49 1,150,000(f) 1,136,088
K Hovnanian Enterprises
05-15-16 7.50 145,000 143,300
Kraft Foods
06-01-12 6.25 445,000 456,416
Kraft Foods
Sr Unsecured
11-01-11 5.63 2,765,000 2,755,323
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
16 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
L-3 Communications
06-15-12 7.63% $ 80,000 $ 82,800
Lamar Media
01-01-13 7.25 50,000 50,125
08-15-15 6.63 115,000 111,838
LB-UBS Commercial Mtge Trust
Series 2004-C2 Cl A3
03-15-29 3.97 750,000(f) 691,613
LB-UBS Commercial Mtge Trust
Series 2004-C4 Cl A3
06-15-29 5.15 700,000(f) 691,033
LB-UBS Commercial Mtge Trust
Series 2004-C6 Cl A4
08-15-29 4.58 975,000(f) 936,792
LB-UBS Commercial Mtge Trust
Series 2004-C7 Cl A2
10-15-29 3.99 1,000,000(f) 952,620
LB-UBS Commercial Mtge Trust
Series 2004-C8 Cl A2
12-15-29 4.20 1,300,000(f) 1,247,285
LB-UBS Commercial Mtge Trust
Series 2005-C3 Cl A1
07-15-30 4.39 547,864(f) 538,961
LB-UBS Commercial Mtge Trust
Series 2005-C3 Cl A2
07-15-30 4.55 2,025,000(f) 1,961,581
LB-UBS Commercial Mtge Trust
Series 2005-C5 Cl A2
09-15-30 4.89 1,075,000(f) 1,048,587
Long Beach Auto Receivables Trust
Series 2004-C Cl A3 (FSA)
09-15-09 3.40 750,000(j) 743,198
MacDermid
07-15-11 9.13 35,000 36,750
Merrill Lynch Mtge Trust
Series 2005-MCP1 Cl A1
06-12-43 4.22 1,007,352(f) 983,949
MGM MIRAGE
10-01-09 6.00 45,000 44,325
MGM MIRAGE
Sr Nts
02-27-14 5.88 50,000 46,500
Midwest Generation LLC
Series B
01-02-16 8.56 75,648 81,747
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Mohegan Tribal Gaming Authority
Sr Nts
02-15-13 6.13% $ 45,000 $ 43,706
Mohegan Tribal Gaming Authority
Sr Sub Nts
04-01-12 8.00 75,000 78,000
Morgan Stanley Capital I
Series 2003-T11 Cl A2
06-13-41 4.34 775,000(f) 750,211
Morgan Stanley Capital I
Series 2004-HQ4 Cl A5
04-14-40 4.59 750,000(f) 712,793
Morgan Stanley Capital I
Series 2005-IQ10 Cl A4A
09-15-42 5.23 1,075,000(f) 1,036,596
Morgan Stanley, Dean Witter Capital I
Series 2002-TOP7 Cl A2
01-15-39 5.98 1,400,000(f) 1,425,548
Newfield Exploration
Sr Sub Nts
08-15-12 8.38 190,000 204,013
News America
12-15-35 6.40 1,550,000(d) 1,464,945
NRG Energy
02-01-14 7.25 165,000 165,825
Omnicare
Sr Sub Nts
12-15-13 6.75 155,000 153,256
Overseas Private Investment
U.S. Govt Guaranty Series 1996A
09-15-08 6.99 2,083,333 2,138,937
Pacific Energy Partners LP/Finance
09-15-15 6.25 60,000 57,600
Peabody Energy
Series B
03-15-13 6.88 90,000 90,675
Pioneer Natural Resources
05-01-18 6.88 460,000(g) 460,874
Pioneer Natural Resources
Sr Nts
07-15-16 5.88 270,000 254,286
Popular ABS Mtge Pass-Through Trust
Series 2005-A Cl AF2
06-25-35 4.49 615,000 601,863
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Pride Intl
Sr Nts
07-15-14 7.38% $ 30,000 $ 31,125
Prudential Commercial Mtge Trust
Series 2003-PWR1 Cl A1
02-11-36 3.67 835,092(f) 794,807
Qwest
03-15-12 8.88 100,000 109,500
Qwest
Sr Nts
06-15-15 7.63 145,000 150,800
Renaissance Home Equity Loan Trust
Series 2005-4 Cl A3
02-25-36 5.57 800,000 796,440
Residential Capital
Sr Unsecured
06-30-10 6.38 2,275,000 2,265,347
Southern Star Central
03-01-16 6.75 205,000(d) 204,487
Standard-Pacific
Sr Nts
08-15-15 7.00 200,000 186,000
Station Casinos
Sr Sub Nts
03-01-16 6.88 355,000 348,788
Toyota Motor Credit
(Japanese Yen) Sr Unsub
06-09-08 0.75 297,000,000 2,606,987
Transcontinental Gas Pipe Line
Sr Nts
04-15-16 6.40 265,000(d) 263,343
Triad Hospitals
Sr Nts
05-15-12 7.00 205,000 203,463
U.S. Treasury
06-30-07 3.63 1,700,000 1,675,030
11-30-07 4.25 2,000,000 1,980,468
02-15-08 3.38 775,000 755,080
03-31-11 4.75 460,000 456,370
02-15-16 4.50 995,000 951,624
08-15-23 6.25 4,985,000(i) 5,509,203
02-15-26 6.00 8,915,000(i) 9,656,755
Verizon Pennsylvania
Series A
11-15-11 5.65 7,560,000(i) 7,433,295
- --------------------------------------------------------------------------------
BONDS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER COUPON PRINCIPAL VALUE(a)
RATE AMOUNT
UNITED STATES (CONT.)
Wachovia Bank Commercial Mtge Trust
Series 2003-C8 Cl A2
11-15-35 3.89% $ 1,250,000(f) $ 1,205,530
Wachovia Bank Commercial Mtge Trust
Series 2005-C18 Cl A4
04-15-42 4.94 750,000(f) 708,889
Wachovia Bank Commercial Mtge Trust
Series 2005-C20 Cl A5
07-15-42 5.09 800,000(f) 781,641
Wachovia Bank Commercial Mtge Trust
Series 2005-C21 Cl A4
10-15-44 5.20 1,100,000(f) 1,064,123
Wachovia Bank Commercial Mtge Trust
Series 2006-C24 Cl APB
03-15-45 5.58 725,000(f) 719,253
Washington Mutual
Collateralized Mtge Obligation
Series 2005-AR17 Cl A1C1
12-25-45 5.15 1,005,952(f,k) 1,006,626
Williams Companies
Sr Nts
07-15-19 7.63 125,000 131,250
------------
Total 179,324,126
------------
TOTAL BONDS
(Cost: $494,392,762) $504,577,087
- -----------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES (1.1%)
- --------------------------------------------------------------------------------
ISSUER EFFECTIVE AMOUNT VALUE(a)
YIELD PAYABLE AT
MATURITY
COMMERCIAL PAPER
Barton Capital
05-01-06 4.83% $ 800,000(b) $ 799,678
Chesham Finance LLC
05-02-06 4.79 5,000,000 4,997,339
- -----------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $5,797,790) $ 5,797,017
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $500,190,552)(l) $510,374,104
=========================================================================================
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
18 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Fund's Board of Directors. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 2006, the value
of these securities amounted to $799,678 or 0.2% of net assets.
(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
has been determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
April 30, 2006, the value of these securities amounted to $20,261,588 or
3.9% of net assets.
(e) Interest rate varies either based on a predetermined schedule or to
reflect current market conditions; rate shown is the effective rate on
April 30, 2006.
(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 April 30, 2006, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$1,702,764.
(h) 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.
Interest rate disclosed represents yield based upon the estimated timing
and amount of future cash flows at April 30, 2006.
(i) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 6 to the financial statements):
TYPE OF SECURITY NOTIONAL AMOUNT
--------------------------------------------------------------------------
PURCHASE CONTRACTS
Euro-Bund, June 2006, 10-year $ 2,100,000
U.S. Treasury Note, June 2006, 2-year 18,600,000
U.S. Treasury Note, June 2006, 10-year 8,500,000
U.S. Long Bond, June 2006, 20-year 4,900,000
(j) The following abbreviations are used in the portfolio security
description(s) to identify the insurer of the issue:
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
MBIA -- MBIA Insurance Corporation
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES (CONTINUED)
- --------------------------------------------------------------------------------
(k) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on April 30, 2006.
(l) At April 30, 2006, the cost of securities for federal income tax purposes
was approximately $500,191,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 21,062,000
Unrealized depreciation (10,879,000)
--------------------------------------------------------------------------
Net unrealized appreciation $ 10,183,000
--------------------------------------------------------------------------
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 www.riversource.com/funds.
- --------------------------------------------------------------------------------
20 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
RiverSource Global Bond Fund
APRIL 30, 2006 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 1)
(identified cost $500,190,552) $510,374,104
Foreign currency holdings (identified cost $1,677,680) 1,720,080
Capital shares receivable 248,213
Dividends and accrued interest receivable 7,148,914
Receivable for investment securities sold 4,345,578
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 229,938
- ---------------------------------------------------------------------------------------------------------
Total assets 524,066,827
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------
Disbursements in excess of cash on demand deposit 38,578
Capital shares payable 147,217
Payable for investment securities purchased 4,677,381
Unrealized depreciation on foreign currency contract held, at value (Note 5) 273,976
Unrealized depreciation on swap transactions, at value (Note 7) 29,322
Accrued investment management services fee 9,991
Accrued distribution fee 4,477
Accrued transfer agency fee 815
Accrued administrative services fee 1,129
Other accrued expenses 117,554
- ---------------------------------------------------------------------------------------------------------
Total liabilities 5,300,440
- ---------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $518,766,387
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
REPRESENTED BY
- ---------------------------------------------------------------------------------------------------------
Capital stock -- $.01 par value (Note 1) $ 798,492
Additional paid-in capital 512,875,072
Undistributed net investment income 627,775
Accumulated net realized gain (loss) (Note 9) (5,525,427)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Notes 5, 6 and 7) 9,990,475
- ---------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $518,766,387
=========================================================================================================
Net assets applicable to outstanding shares: Class A $300,457,312
Class B $ 85,339,665
Class C $ 3,536,881
Class I $129,341,138
Class Y $ 91,391
Net asset value per share of outstanding capital stock: Class A shares 46,298,595 $ 6.49
Class B shares 13,022,074 $ 6.55
Class C shares 543,226 $ 6.51
Class I shares 19,971,256 $ 6.48
Class Y shares 14,081 $ 6.49
- ---------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 21
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
RiverSource Global Bond Fund
PERIOD FROM PERIOD FROM TOTAL
NOV. 1, 2005 TO NOV. 8, 2005 TO NOV. 1, 2005 TO
NOV. 7, 2005 APRIL 30, 2006 APRIL 30, 2006
(UNAUDITED) (NOTE 1) (UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------------------
Income:
Interest $ 429,116 $ 9,706,328 $ 10,135,444
Fee income from securities lending (Note 3) -- 5,741 5,741
Less foreign taxes withheld (1,305) (5,935) (7,240)
- --------------------------------------------------------------------------------------------------------------------------------
Total income 427,811 9,706,134 10,133,945
- --------------------------------------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 79,875 1,836,608 1,916,483
Distribution fee
Class A 16,787 381,123 397,910
Class B 21,011 460,361 481,372
Class C 807 18,086 18,893
Transfer agency fee 19,890 458,844 478,734
Incremental transfer agency fee
Class A 1,428 32,613 34,041
Class B 817 18,407 19,224
Class C 33 746 779
Service fee -- Class Y 2 44 46
Administrative services fees and expenses 9,059 194,336 203,395
Custodian fees 3,538 86,925 90,463
Compensation of board members -- 5,425 5,425
Printing and postage 2,310 72,040 74,350
Registration fees 1,120 27,520 28,640
Audit fees 875 18,125 19,000
Other 1,334 10,646 11,980
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses 158,886 3,621,849 3,780,735
Expenses waived/reimbursed by the Investment Manager
and its affiliates (Note 2) (15,149) (312,764) (327,913)
- --------------------------------------------------------------------------------------------------------------------------------
143,737 3,309,085 3,452,822
Earnings credits on cash balances (Note 2) (376) (12,604) (12,980)
- --------------------------------------------------------------------------------------------------------------------------------
Total net expenses 143,361 3,296,481 3,439,842
- --------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net 284,450 6,409,653 6,694,103
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
- --------------------------------------------------------------------------------------------------------------------------------
Security transactions (Note 3) (140,417) 387,099 246,682
Foreign currency transactions (35,569) (594,546) (630,115)
Futures contracts 556,228 774,622 1,330,850
Swap transactions (42,226) 7,302 (34,924)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 338,016 574,477 912,493
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (8,190,369) 10,443,667 2,253,298
- --------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (7,852,353) 11,018,144 3,165,791
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(7,567,903) $ 17,427,797 $ 9,859,894
================================================================================================================================
See accompanying notes to pro forma financial statements.
- --------------------------------------------------------------------------------
22 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
RiverSource Global Bond Fund
APRIL 30, 2006 OCT. 31, 2005
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
OPERATIONS AND DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ 6,694,103 $ 13,170,793
Net realized gain (loss) on investments 912,493 17,596,445
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 2,253,298 (38,272,090)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 9,859,894 (7,504,852)
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (11,404,945) (19,756,566)
Class B (2,199,553) (6,142,688)
Class C (95,411) (200,996)
Class I (3,939,655) (2,313,524)
Class Y (3,553) (3,814)
- -----------------------------------------------------------------------------------------------------------
Total distributions (17,643,117) (28,417,588)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
- -----------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 20,514,968 88,281,344
Class B shares 5,088,495 31,813,617
Class C shares 372,173 1,377,503
Class I shares 38,343,423 68,619,250
Class Y shares 10,800 62,732
Reinvestment of distributions at net asset value
Class A shares 10,771,238 18,374,858
Class B shares 2,075,855 5,728,791
Class C shares 85,277 176,818
Class I shares 3,973,165 2,312,955
Class Y shares 3,585 3,814
Payments for redemptions
Class A shares (78,562,776) (118,593,333)
Class B shares (Note 2) (31,592,316) (60,508,139)
Class C shares (Note 2) (1,143,748) (1,728,928)
Class I shares (223,866) (2,478,963)
Class Y shares (5,526) (56,092)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (30,289,253) 33,386,227
- -----------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (38,072,476) (2,536,213)
Net assets at beginning of period 556,838,863 559,375,076
Net assets at end of period $ 518,766,387 $ 556,838,863
===========================================================================================================
Undistributed net investment income $ 627,775 $ 11,782,029
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 23
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
RiverSource Global Bond Fund
(Unaudited as to April 30, 2006)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource Global Series, Inc. (formerly AXP 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. The Fund invests primarily in debt obligations of U.S. and foreign
issuers.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to
qualifying institutional investors.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At April 30, 2006, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares, which represents 24.93% of the Fund's net assets.
At April 30, 2006, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 25% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fees and service fee (class specific
expenses) 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.
Prior to Nov. 8, 2005, the Fund invested all of its assets in World Income
Portfolio (the Portfolio). The Fund recorded its daily share of the Portfolio's
income, expenses and realized and unrealized gains and losses.
- --------------------------------------------------------------------------------
24 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Effective at the close of business on Nov. 7, 2005, the Portfolio was liquidated
and the Fund exchanged its interest in the Portfolio for its proportionate share
(99.99%) of the Portfolio's assets and liabilities. Within the statement of
operations for the period from Nov. 1, 2005 to Nov. 7, 2005, income and expense
amounts include allocations from the Portfolio in the following amounts:
- -------------------------------------------------------------------------------
Interest Income $429,119
- -------------------------------------------------------------------------------
Foreign taxes withheld $ (1,305)
- -------------------------------------------------------------------------------
Investment management services fee $ 79,875
- -------------------------------------------------------------------------------
Custodian fees $ 3,499
- -------------------------------------------------------------------------------
Audit fees $ 630
- -------------------------------------------------------------------------------
Other $ 1,234
- -------------------------------------------------------------------------------
Earnings credits on cash balances $ (4)
- -------------------------------------------------------------------------------
All realized and unrealized gains (losses) presented for the period from Nov. 1,
2005 to Nov. 7, 2005 were as a result of allocations from the Portfolio.
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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. Pursuant to procedures adopted by the
Board of Directors of the funds, Ameriprise Financial utilizes Fair Value
Pricing (FVP). FVP determinations are made in good faith in accordance with
these procedures. If a development or event is so significant that there is a
reasonably high degree of certainty that the effect of the development or event
has actually caused the closing price to no longer reflect the actual value, the
closing prices, as determined at the closed of the applicable foreign market,
may be adjusted to reflect the fair value of the affected foreign securities as
of the close of the New York Stock Exchange. Significant events include material
movements in the U.S. securities markets prior to the opening of foreign markets
on the following trading day. FVP results in an estimated price that reasonably
reflects the current market conditions in order to value the portfolio holdings
such that shareholder transactions receive a fair net asset value. 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 25
- --------------------------------------------------------------------------------
SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment basis, including when-issued securities and other
forward-commitments, can take place one month or more after the transaction
date. During this period, such securities are subject to market fluctuations,
and they may affect the Fund's net assets the same as owned securities. The Fund
designates cash or liquid securities at least equal to the amount of its
forward-commitments. At April 30, 2006, the Fund has entered into outstanding
when-issued securities of $1,702,764.
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.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
- --------------------------------------------------------------------------------
26 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2006, foreign currency holdings consisted of
multiple denominations, primarily European monetary units.
The Fund may enter into forward foreign currency exchange 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 other party will not complete its contract obligations.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 27
- --------------------------------------------------------------------------------
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. 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).
Total return swaps are subject to the risk that the counterparty will default on
its obligation to pay net amounts due to the Fund.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purpose and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
- --------------------------------------------------------------------------------
28 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily 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
Effective Nov. 8, 2005, the Fund entered into an Investment Management Services
Agreement with RiverSource Investments, LLC (the Investment Manager) to
determine which securities will be purchased, held or sold. Prior to the
withdrawal of the Fund's assets from the Portfolio, World Trust (the Trust), on
behalf of the Portfolio, had an Investment Management Services Agreement with
Ameriprise Financial. Prior to Nov. 8, 2005, the investment management fee was
assessed at the Portfolio level. 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. Prior to March 1, 2006, the management fee
percentage of the Fund's average daily net assets declined from 0.77% to 0.67%
annually as the Fund's assets increased.
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. A minor portion of additional administrative service
expenses paid by the Fund are consultants' fees and fund office expenses. Under
this agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate filing
fees and any other expenses properly payable by the Fund and approved by the
Board.
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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 29
- --------------------------------------------------------------------------------
Under a separate Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $20.50
o Class B $21.50
o Class C $21.00
o Class Y $18.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with Ameriprise Financial Services, 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 up to 0.25% of the Fund's average daily net assets attributable to
Class A shares and up to 1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$160,146 for Class A, $114,743 for Class B and $285 for Class C for the six
months ended April 30, 2006.
For the six months ended April 30, 2006, the Investment Manager and its
affiliates waived certain fees and expenses to 1.25% for Class A, 2.02% for
Class B, 2.02% for Class C and 1.08% for Class Y. Of these waived fees and
expenses, the transfer agency fees waived for Class A, Class B, Class C and
Class Y were $249,924, $74,964, $2,963 and $62, respectively. Under this
agreement which was effective until Feb. 28, 2006, net expenses would not exceed
1.25% for Class A, 2.02% for Class B, 2.02% for Class C, 0.95% for Class I and
1.08% for Class Y of the Fund's average daily net assets. Effective March 1,
2006, the Investment Manager and its affiliates have agreed to waive certain
fees and expenses until Oct. 31, 2006, unless sooner terminated at the
discretion of the Board, such that net expenses will not exceed 1.25% for Class
A, 2.02% for Class B, 2.02% for Class C, 0.90% for Class I and 1.08% for Class Y
of the Fund's average daily net assets.
During the period from Nov. 1, 2005 to Nov. 7, 2005, the Fund's custodian and
transfer agency fees were reduced by $376 as a result of earnings credits from
overnight cash balances. During the period from Nov. 8, 2005 to April 30, 2006,
the Fund's custodian and transfer agency fees were reduced by $12,604 as a
result of earnings credits from overnight cash balances. The Fund also pays
custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise
Financial.
- --------------------------------------------------------------------------------
30 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $5,156,591 and $7,648,747, respectively, for the period
from Nov. 1, 2005 to Nov. 7, 2005 and $152,334,237 and $190,555,869,
respectively, for the period from Nov. 8, 2005 to April 30, 2006. Realized gains
and losses are determined on an identified cost basis.
Income from securities lending amounted to $5,741 for the six months ended April
30, 2006. 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.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED APRIL 30, 2006
CLASS A CLASS B CLASS C CLASS I CLASS Y
- ----------------------------------------------------------------------------------------------------------------
Sold 3,171,006 782,102 57,533 5,976,376 1,649
Issued for reinvested distributions 1,686,187 321,491 13,306 623,374 561
Redeemed (12,162,647) (4,858,699) (176,735) (34,888) (866)
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) (7,305,454) (3,755,106) (105,896) 6,564,862 1,344
- ----------------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2005
CLASS A CLASS B CLASS C CLASS I CLASS Y
- ----------------------------------------------------------------------------------------------------------------
Sold 12,792,108 4,572,740 200,644 10,013,472 9,106
Issued for reinvested distributions 2,648,124 822,515 25,507 336,240 549
Redeemed (17,214,211) (8,827,651) (251,580) (357,832) (8,067)
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,773,979) (3,432,396) (25,429) 9,991,880 1,588
- ----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 31
- --------------------------------------------------------------------------------
5. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 2006, the Fund has forward foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
EXCHANGE DATE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -------------------------------------------------------------------------------------------------------
May 5, 2006 29,520,000 1,263,580 $ -- $ 45,171
Czech Koruna U.S. Dollar
May 8, 2006 11,050,000 13,716,697 -- 228,805
European Monetary Unit U.S. Dollar
May 10, 2006 5,969,517 705,000,000 229,938 --
U.S. Dollar Japanese Yen
- -------------------------------------------------------------------------------------------------------
Total $229,938 $273,976
- -------------------------------------------------------------------------------------------------------
6. INTEREST RATE FUTURES CONTRACTS
At April 30, 2006, investments in securities included securities valued at
$481,790 that were pledged as collateral to cover initial margin deposits on 21
open purchase contracts denominated in Euros and 227 open purchase contracts.
The notional market value of the open purchase contracts denominated in Euros at
April 30, 2006 was $3,061,645 with a net unrealized loss of $79,201. The
notional market value of the open purchase contracts denominated in U.S. dollars
at April 30, 2006 was $33,156,782 with a net unrealized loss of $338,439. See
"Summary of significant accounting policies" and "Notes to investments in
securities."
7. SWAP CONTRACTS
At April 30, 2006, the Fund had the following open total return swap contract:
TERMINATION NOTIONAL UNREALIZED
DATE PRINCIPAL (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
Receive total return on Lehman Brothers Aaa 8.5+
Commercial Mortgage-Backed Securities Index and
pay a floating rate based on 1-month LIBOR less 0.30%.
Counterparty: Citigroup 5/01/06 $3,200,000 $(29,322)
- ---------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
32 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
8. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary
funding of shareholder redemptions or for other temporary or emergency purposes.
The Fund must maintain asset coverage for borrowings of at least 300%. The
agreement, which enables the Fund to participate with other RiverSource funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.07% per annum. The Fund had no borrowings outstanding
during the six months ended April 30, 2006.
9. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$6,100,374 at Oct. 31, 2005, that if not offset by capital gains will expire in
2010. 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.
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), the parent company of RiverSource Investments, LLC
(RiverSource Investments), entered into settlement agreements with the
Securities and Exchange Commission (SEC) and Minnesota Department of Commerce
(MDOC) related to market timing activities. In connection with these matters,
the SEC and MDOC issued orders (the Orders) alleging that AEFC violated certain
provisions of the federal and Minnesota securities laws by failing to adequately
disclose market timing activities by allowing certain identified market timers
to continue to market time contrary to disclosures in mutual fund and variable
annuity product prospectuses. The Orders also alleged that AEFC failed to
implement procedures to detect and prevent market timing in 401(k) plans for
employees of AEFC and related companies and failed to adequately disclose that
there were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its employees.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 33
- --------------------------------------------------------------------------------
As a result of the Orders, AEFC was censured and ordered to cease and desist
from committing or causing any violations of certain provisions of the
Investment Advisers Act of 1940, the Investment Company Act of 1940, and various
Minnesota laws. Pursuant to the terms of the Orders, AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to make presentations at least annually to its board of directors and the
relevant mutual funds' board that include an overview of policies and procedures
to prevent market timing, material changes to these policies and procedures and
whether disclosures related to market timing are consistent with the SEC order
and federal securities laws. AEFC also agreed to retain an independent
distribution consultant to assist in developing a plan for distribution of all
disgorgement and civil penalties ordered by the SEC in accordance with various
undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review of
its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal or arbitration 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 or arbitration 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.
- --------------------------------------------------------------------------------
34 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
11. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004 2003 2002
Net asset value, beginning of period $6.59 $ 7.02 $ 6.57 $ 6.00 $5.81
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09 .16 .17 .18 .19
Net gains (losses) (both realized and unrealized) .04 (.23) .52 .60 .17
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .13 (.07) .69 .78 .36
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.23) (.36) (.24) (.21) (.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.49 $ 6.59 $ 7.02 $ 6.57 $6.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 300 $ 353 $ 389 $ 380 $ 348
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.25%(c),(d) 1.35%(c) 1.34% 1.36% 1.34%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 2.66%(d) 2.42% 2.66% 2.73% 3.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 31% 73% 92% 117% 51%
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(e) 2.03%(f) (1.18%) 10.70% 13.25% 6.24%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class A would have been 1.41% for the six months ended April 30, 2006 and
1.37% for the year ended Oct. 31, 2005.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 35
- --------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004 2003 2002
Net asset value, beginning of period $6.59 $ 7.02 $6.57 $ 5.99 $5.79
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06 .10 .14 .12 .13
Net gains (losses) (both realized and unrealized) .05 (.23) .50 .62 .19
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .11 (.13) .64 .74 .32
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.15) (.30) (.19) (.16) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.55 $ 6.59 $7.02 $ 6.57 $5.99
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 85 $ 111 $ 142 $ 158 $ 152
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.02%(c),(d) 2.12%(c) 2.10% 2.12% 2.10%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 1.89%(d) 1.65% 1.90% 1.97% 2.36%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 31% 73% 92% 117% 51%
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(e) 1.63%(f) (1.98%) 9.83% 12.39% 5.59%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Then Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class B would have been 2.18% for the six months ended April 30, 2006 and
2.13% for the year ended Oct. 31, 2005.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
36 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004 2003 2002
Net asset value, beginning of period $6.57 $ 6.99 $6.55 $ 5.98 $ 5.79
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07 .11 .14 .13 .14
Net gains (losses) (both realized and unrealized) .03 (.22) .49 .60 .18
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .10 (.11) .63 .73 .32
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.16) (.31) (.19) (.16) (.13)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.51 $ 6.57 $6.99 $ 6.55 $ 5.98
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 4 $ 4 $ 5 $ 5 $ 3
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.02%(c),(d) 2.12%(c) 2.09% 2.14% 2.10%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 1.89%(d) 1.65% 1.91% 1.89% 2.29%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 31% 73% 92% 117% 51%
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(e) 1.55%(f) (1.83%) 9.72% 12.41% 5.51%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class C would have been 2.18% for the six months ended April 30, 2006 and
2.14% for the year ended Oct. 31, 2005.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 37
- --------------------------------------------------------------------------------
CLASS I
- ------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004(B)
Net asset value, beginning of period $6.61 $ 7.03 $ 6.77
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10 .19 .16
Net gains (losses) (both realized and unrealized) .04 (.22) .24
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .14 (.03) .40
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.27) (.39) (.14)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.48 $ 6.61 $ 7.03
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 129 $ 89 $ 24
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) .91%(d) .91% .89%(d)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 3.03%(d) 2.87% 3.07%(d)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 31% 73% 92%
- ------------------------------------------------------------------------------------------------------------
Total return(e) 2.16%(f) (.56%) 6.06%(f)
- ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
38 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004 2003 2002
Net asset value, beginning of period $ 6.61 $ 7.04 $ 6.59 $ 6.01 $ 5.80
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10 .16 .18 .19 .20
Net gains (losses) (both realized and unrealized) .03 (.22) .52 .61 .19
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .13 (.06) .70 .80 .39
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.25) (.37) (.25) (.22) (.18)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.49 $ 6.61 $ 7.04 $ 6.59 $ 6.01
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.08%(c),(d) 1.18%(c) 1.17% 1.18% 1.17%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 2.84%(d) 2.60% 2.83% 2.69% 3.29%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 31% 73% 92% 117% 51%
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(e) 2.06%(f) (1.00%) 10.86% 13.54% 6.72%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses for
Class Y would have been 1.22% for the six months ended April 30, 2006 and
1.20% for the year ended Oct. 31, 2005.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 39
- --------------------------------------------------------------------------------
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, including management fees; distribution and service (12b-1) fees; and
other Fund 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.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2006.
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.
- --------------------------------------------------------------------------------
40 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2005 APRIL 30, 2006 THE PERIOD(a) EXPENSE RATIO
- ---------------------------------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,020.30 $6.19(c) 1.25%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.39 $6.19(c) 1.25%
- ---------------------------------------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,016.30 $9.99(c) 2.02%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.61 $9.98(c) 2.02%
- ---------------------------------------------------------------------------------------------------------------------
Class C
- ---------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,015.50 $9.98(c) 2.02%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.61 $9.98(c) 2.02%
- ---------------------------------------------------------------------------------------------------------------------
Class I
- ---------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,021.60 $4.51(c) .91%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.06 $4.51(c) .91%
- ---------------------------------------------------------------------------------------------------------------------
Class Y
- ---------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,020.60 $5.35(c) 1.08%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.22 $5.35(c) 1.08%
- ---------------------------------------------------------------------------------------------------------------------
(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 179/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2006: +2.03%
for Class A, +1.63% for Class B, +1.55% for Class C, +2.16% for Class I
and +2.06% for Class Y.
(c) Effective as of March 1, 2006, the Investment Manager and its affiliates
have contractually agreed to waive certain fees and expenses until Oct.
31, 2006, unless sooner terminated at the discretion of the Board, such
that net expenses will not exceed 1.25% for Class A; 2.02% for Class B;
2.02% for Class C; 0.90% for Class I and 1.08% for Class Y of the Fund's
average daily net assets. In addition, on Feb. 15, 2006, shareholders
approved a change to the Investment Management Services Agreement. If
these changes had been in place for the entire six-month period ended
April 30, 2006, the actual expenses paid would have been $6.19 for Class
A, $9.99 for Class B, $9.98 for Class C, $4.36 for Class I and $5.35 for
Class Y; the hypothetical expenses paid would have been $6.19 for Class A,
$9.98 for Class B, $9.98 for Class C, $4.36 for Class I and $5.35 for
Class Y.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 41
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
During the period covered by this report, RiverSource Investments, LLC
("RiverSource Investments" or the "investment manager"), a wholly-owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), served as the
investment manager to RiverSource funds under an Investment Management Services
Agreement ("IMS Agreement").
The Board of Directors/Trustees (the "Board") annually determines whether to
continue the IMS Agreement and subadvisory agreements, as applicable, by
evaluating the quality and level of services received and the costs associated
with those services. The Board did not make the specific determination this year
as each fund's IMS Agreement was approved by the vote of a majority of the
outstanding voting securities of the funds at a shareholder meeting held on Feb.
15, 2006.
- --------------------------------------------------------------------------------
42 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
RiverSource Funds at (888) 791-3380; contacting your financial institution;
visiting www.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 during the most recent
12-month period ended June 30 is available without charge by visiting
www.riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 43
- --------------------------------------------------------------------------------
RESULTS OF MEETING OF SHAREHOLDERS
RIVERSOURCE GLOBAL BOND FUND
REGULAR MEETING OF SHAREHOLDERS HELD ON FEB. 15, 2006
(UNAUDITED)
A brief description of each proposal voted upon at the meeting and the votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes as to each proposal is set forth below. A vote is based on total
dollar interest in a fund.
ELECTION OF BOARD MEMBERS
AFFIRMATIVE WITHHOLD
- --------------------------------------------------------------------------------
Kathleen Blatz 438,823,691.59 10,815,213.14
- --------------------------------------------------------------------------------
Arne H. Carlson 437,585,032.07 12,053,872.66
- --------------------------------------------------------------------------------
Patricia M. Flynn 439,172,288.09 10,466,616.64
- --------------------------------------------------------------------------------
Anne P. Jones 437,934,038.27 11,704,866.46
- --------------------------------------------------------------------------------
Jeffrey Laikind 438,148,818.62 11,490,086.11
- --------------------------------------------------------------------------------
Stephen R. Lewis, Jr. 439,054,967.34 10,583,937.39
- --------------------------------------------------------------------------------
Catherine James Paglia 439,010,923.36 10,627,981.37
- --------------------------------------------------------------------------------
Vikki L. Pryor 439,044,318.14 10,594,586.59
- --------------------------------------------------------------------------------
Alan K. Simpson 437,309,081.45 12,329,823.28
- --------------------------------------------------------------------------------
Alison Taunton-Rigby 439,188,909.88 10,449,994.85
- --------------------------------------------------------------------------------
William F. Truscott 438,857,333.57 10,781,571.16
- --------------------------------------------------------------------------------
AMEND THE ARTICLES OF INCORPORATION TO PERMIT THE BOARD TO ESTABLISH THE MINIMUM
ACCOUNT VALUE AND TO CHANGE THE NAME OF THE CORPORATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
430,020,947.94 11,498,654.09 7,971,170.94 148,131.76
- --------------------------------------------------------------------------------
APPROVE AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE
INVESTMENTS, LLC
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
431,614,747.42 9,018,314.53 8,857,711.02 148,131.76
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
44 o RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVE CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
TEN PERCENT LIMITATION IN SINGLE ISSUER
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
430,833,604.32 10,478,494.76 8,178,673.89 148,131.76
- --------------------------------------------------------------------------------
LENDING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
427,762,090.30 13,343,673.08 8,385,009.59 148,131.76
- --------------------------------------------------------------------------------
BORROWING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
429,274,922.03 12,229,760.84 7,986,090.10 148,131.76
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL BOND FUND o 2006 SEMIANNUAL REPORT o 45
- --------------------------------------------------------------------------------
RIVERSOURCE(SM) GLOBAL BOND FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
This report must be accompanied or preceded by the
Fund's current prospectus. RiverSource Funds are
RIVERSOURCE [LOGO](SM) managed by RiverSource Investments, LLC and distributed
INVESTMENTS by Ameriprise Financial Services, Inc., Member NASD.
Both companies are part of Ameriprise Financial, Inc.
S-6339-V (6/06)
- --------------------------------------------------------------------------------
Semiannual Report
RIVERSOURCE [LOGO] SM
Investments
RIVERSOURCE SM
GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
SEMIANNUAL REPORT FOR THE
PERIOD ENDED APRIL 30, 2006
> RIVERSOURCE GLOBAL EQUITY FUND
SEEKS TO PROVIDE SHAREHOLDERS
WITH LONG-TERM CAPITAL GROWTH.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Fund Snapshot..................................................................2
Performance Summary............................................................3
Questions & Answers with Portfolio Management..................................5
Investments in Securities......................................................8
Financial Statements..........................................................13
Notes to Financial Statements.................................................16
Fund Expenses Example.........................................................27
Approval of Investment Management Services Agreement..........................29
Proxy Voting..................................................................29
Results of Meeting of Shareholders............................................30
DALBAR [LOGO] RATED
2006
FOR COMMUNICATION
RiverSource Funds' 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 1
- --------------------------------------------------------------------------------
FUND SNAPSHOT AT APRIL 30, 2006
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS <
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS SINCE YEARS IN INDUSTRY
Dominic Rossi 10/03 19
Stephen Thornber 10/03 18
- --------------------------------------------------------------------------------
FUND OBJECTIVE <
- --------------------------------------------------------------------------------
For investors seeking long-term capital growth.
Inception dates by class
A: 5/29/90 B: 3/20/95 C: 6/26/00 Y: 3/20/95
Ticker symbols by class
A: IGLGX B: IDGBX C: -- Y: IDGYX
Total net assets $733.2 million
Number of holdings 127
- --------------------------------------------------------------------------------
STYLE MATRIX <
- --------------------------------------------------------------------------------
STYLE
- --------------------------------------
VALUE BLEND GROWTH
- --------------------------------------
LARGE
- --------------------------------------
MEDIUM SIZE
- --------------------------------------
SMALL
- --------------------------------------
Shading within the style matrix indicates areas in which the Fund generally
invests.
- --------------------------------------------------------------------------------
COUNTRY COMPOSITION <
- --------------------------------------------------------------------------------
Percentage of portfolio assets
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
United States 38.1%
Japan 16.6%
United Kingdom 5.6%
Switzerland 5.1%
Cash & Short-Term Securities* 4.5%
France 4.1%
Germany 3.9%
South Korea 3.7%
South Africa 3.0%
Hong Kong 2.8%
Netherlands 2.1%
Australia 2.0%
Norway 1.6%
Bermuda 1.4%
Taiwan 1.3%
Greece 1.1%
Other** 3.1%
* Of the 4.5%, 3.8% is due to security lending activity and 0.7% is the
Fund's cash equivalent position.
** Includes Brazil, Canada, Mexico, Spain and Sweden.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS <
- --------------------------------------------------------------------------------
Percentage of portfolio assets
Mitsubishi UFJ Financial Group (Japan) 1.9%
- --------------------------------------------------------------------------------
T&D Holdings (Japan) 1.8
- --------------------------------------------------------------------------------
UBS (Switzerland) 1.6
- --------------------------------------------------------------------------------
Valero Energy (United States) 1.5
- --------------------------------------------------------------------------------
Caterpillar (United States) 1.5
- --------------------------------------------------------------------------------
Mizuho Financial Group (Japan) 1.5
- --------------------------------------------------------------------------------
WellPoint (United States) 1.4
- --------------------------------------------------------------------------------
E*TRADE Financial (United States) 1.4
- --------------------------------------------------------------------------------
Mirant (United States) 1.3
- --------------------------------------------------------------------------------
DR Horton (United States) 1.3
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
Investment products involve risks including possible loss of principal and
fluctuation in value.
International investing involves increased risk and volatility, not typically
associated with domestic investing, due to potential political and economic
instability, limited liquidity, volatile prices, lack of accounting, auditing,
and financial reporting standards, changes in currency exchange rates, and
differences in how trades are cleared and settled. Risks are particularly
significant in emerging markets due to the dramatic pace of economic, social,
and political changes.
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.
- --------------------------------------------------------------------------------
2 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2006
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Global Equity Fund
Class A (excluding sales charge) +19.40%
Morgan Stanley Capital International (MSCI)
All Country World Index(1) (unmanaged) +17.64%
Lipper Global Funds Index(2) +17.02%
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 www.riversource.com/funds.
(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,
but excludes brokerage commissions or other fees.
(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. See "Fund Management
and Compensation" for more information.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 3
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS <
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Y
(INCEPTION DATES) (5/29/90) (3/20/95) (6/26/00) (3/20/95)
NAV(1) POP(2) NAV(1) AFTER CDSC(3) NAV(1) AFTER CDSC(4) NAV(5)
AT APRIL 30, 2006
- --------------------------------------------------------------------------------------------------------
6 months* +19.40% +12.54% +18.88% +13.88% +18.84% +17.84% +19.50%
- --------------------------------------------------------------------------------------------------------
1 year +35.49% +27.70% +34.42% +29.42% +34.47% +33.47% +35.68%
- --------------------------------------------------------------------------------------------------------
3 years +23.34% +20.93% +22.42% +21.52% +22.40% +22.40% +23.63%
- -------------------------------------------------------------------------------------------------------
5 years +4.81% +3.57% +3.98% +3.64% +3.99% +3.99% +4.99%
- --------------------------------------------------------------------------------------------------------
10 years +4.98% +4.36% +4.18% +4.18% N/A N/A +5.16%
- --------------------------------------------------------------------------------------------------------
Since inception +6.23% +5.84% +6.08% +6.08% -1.99% -1.99% +7.08%
- --------------------------------------------------------------------------------------------------------
AT MARCH 31, 2006
- --------------------------------------------------------------------------------------------------------
6 months* +12.26% +5.81% +11.86% +6.86% +11.81% +10.81% +12.42%
- --------------------------------------------------------------------------------------------------------
1 year +27.98% +20.62% +27.15% +22.15% +26.97% +25.97% +28.45%
- --------------------------------------------------------------------------------------------------------
3 years +24.99% +22.55% +24.13% +23.26% +24.05% +24.05% +25.29%
- --------------------------------------------------------------------------------------------------------
5 years +6.03% +4.78% +5.20% +4.87% +5.18% +5.18% +6.26%
- --------------------------------------------------------------------------------------------------------
10 years +5.22% +4.60% +4.42% +4.42% N/A N/A +5.41%
- --------------------------------------------------------------------------------------------------------
Since inception +6.07% +5.67% +5.85% +5.85% -2.54% -2.54% +6.85%
- --------------------------------------------------------------------------------------------------------
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies
as follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
* Not annualized.
- --------------------------------------------------------------------------------
4 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
WITH PORTFOLIO MANAGEMENT
Below, RiverSource Global Equity Fund portfolio managers Dominic Rossi and
Stephen Thornber of Threadneedle International Limited (Threadneedle) discuss
the Fund's results and positioning for the six months ended April 30, 2006.
Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc.,
acts as the subadviser to the Fund.
Q: How did RiverSource Global Equity Fund perform for the six months ended
April 30, 2006?
A: The Fund gained 19.40% (Class A shares excluding sales charge) for the
six-month period ended April 30, 2006. The Fund outperformed its
benchmark, the Morgan Stanley Capital International (MSCI) All Country
World Index (MSCI Index), which advanced 17.64% for the period. The Lipper
Global Funds Index, representing the Fund's peer group, rose 17.02% over
the same time frame.
Q: What factors most significantly affected performance?
A: Strong stock selection was the driving force behind the Fund's
outperformance over the six-month period. While favorable asset and sector
allocation also typically play key roles in the performance mix, they took
a distant second and third to stock selection during this reporting
period.
Commodities were a strong theme that we followed throughout the period. We
believe that we are in a long-term bull market in commodities. We remain
positive on the energy sector's fundamentals and believe that high oil
prices will continue. Many of our energy-related holdings are in higher
beta (i.e., higher volatility) companies such as refiner Valero Energy,
oil services company Weatherford Intl and natural gas companies Ultra
Petroleum and EOG Resources, all U.S. companies. Also in the U.S., Arch
Coal, the country's second-largest coal producer, benefited from high
prices. We have some exposure to some major, well-known companies, such as
BP (U.K.) and Occidental Petroleum (U.S.), but we feel that the higher
beta companies in which we invest give the desired exposure to the energy
sector. At the end of April, approximately 8.2% of the Fund was invested
in the energy sector.
Strong commodity prices were also evident in mining stocks, such as Cia
Vale do Rio Doce (Brazil), BHP Billiton (U.K.) and Zinifex (Australia) all
helped boost performance over the period.
Stocks from various sectors have done well over the period. Some notable
mentions go to U.S. commercial real estate manager CB Richard Ellis;
Standard Chartered, a U.K. listed bank that generates a significant
proportion of its earnings in emerging markets in Asia;
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 5
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> WE EXPECT THE CONSTRUCTION-RELATED STOCKS TO
OUTPERFORM WHEN THE COMMODITY-RELATED STOCKS DON'T.
Kookmin Bank and Shinhan Financial Group, both commercial banks in South
Korea, benefited from the strength of the consumer, a theme that we
believe will continue in the months to come. Also in South Korea, Posco,
one of the world's largest steelmakers, continued to benefit from surging
global demand for steel. Japanese brokers Nomura Holdings and Tokai Tokyo
Securities were among the noteworthy companies that helped boost
performance for the period.
We had some detractors from performance, as well. The health care sector
suffered over the period, largely because many companies simply did not
achieve the level of growth that the market had expected. Medical
technology company St. Jude Medical is one example. We have owned the
stock for long time, and it hurt the Fund's performance when it
disappointed with less than expected earnings. In other sectors,
Australia's Newcrest Mining detracted value after missing its profit
target and being downgraded by the market. U.S. homebuilders DR Horton and
Centex had difficulty early in 2006 due to a rotational market. We see
these residential construction stocks as "hedges" to our commodity
exposure. We expect the construction-related stocks to outperform when the
commodity-related stocks don't. Despite less than distinguished
performance, we believe that these stocks hold value and kept them in the
Fund.
Q: What changes did you make to the Fund during the six-month period?
A: In January 2006, markets were close to an all-time high. The next month,
however, markets sold off, and we took the opportunity to restructure the
Fund to make it less vulnerable to some negative forces that periodically
affect the markets. We reduced our exposure to commodities and reinvested
the proceeds in stocks with more stable performance. In particular, we
added various large-cap U.S. stocks that were attractively valued, several
of which are discussed in the question above.
Over the period, we have increased our exposure to industrials and added
stocks such as U.S. heavy equipment companies Caterpillar, Ingersoll-Rand
and Schneider Electric. These companies complement our belief that there
is a bull market in commodities. We bought back French car maker Renault,
which we sold in December.
- --------------------------------------------------------------------------------
6 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> HIGH ENERGY PRICES HAVE TO YET TO SLOW THE GLOBAL
ECONOMY, WHICH CONTINUES TO PERFORM ROBUSTLY WHILE
EARNINGS ARE ALSO GROWING AT A VERY HEALTHY PACE.
On the flip side, we reduced our position in information technology. We
took profits on (i.e., sold) internet engine Google, computer chip
manufacturer Intel and computer manufacturer Dell and fortunately avoided
losses that these stocks experienced later in the period. We also reduced
our stake in Microsoft. We also sold our positions in U.S. pharmaceutical
firm, ViroPharma, which fell sharply after news emerged of a generic
competitive threat.
Q: How is the Fund currently positioned and how do you intend to manage the
Fund in the months ahead?
A: We believe the Fund's current positioning has worked well over the past
six months. As needed we made changes to the allocation, sectors and
stocks. We shall continue to do so, but at this time, see no need for a
major restructuring.
Supply and demand will continue to influence markets. With commodities,
such as oil and iron ore in strong demand -- and showing no signs of
slowing down -- we intend to continue the Fund's large positions in the
energy and mining sectors. Also, companies benefiting from the strength of
the consumer will continue to be important to the Fund.
Japan's recovery continues to be another important theme within the Fund.
The rebound that took place in Japan's market during March 2006 had a very
positive impact on the Fund. Japanese stocks hit five-year highs during
the month as a result of economic data indicating that the recovery was
strengthening and the era of deflation is coming to an end. We think the
Japanese market will experience upgrades through the year and that the
market, although frustrating at times, will -- in the end -- deliver solid
sustainable performance.
Looking forward, we believe the outlook for global equities remains
positive. We believe equities are cheap both in historical terms and in
comparison to bonds but recognize there are some concerns over the
direction of interest rates. High energy prices have to yet to slow the
global economy, which continues to perform robustly while earnings are
also growing at a very healthy pace.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 7
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
RiverSource Global Equity Fund
APRIL 30, 2006 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
- --------------------------------------------------------------------------------
COMMON STOCKS (98.4%)(C)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
AUSTRALIA (2.1%)
BIOTECHNOLOGY (0.6%)
CSL 94,422 $ 4,138,959
- --------------------------------------------------------------------------------
METALS & MINING (1.5%)
Newcrest Mining 290,309 5,028,489
Zinifex 778,892 6,124,347
--------------
Total 11,152,836
- --------------------------------------------------------------------------------
BERMUDA (1.4%)
INSURANCE (0.7%)
PartnerRe 79,870 4,995,869
- --------------------------------------------------------------------------------
MACHINERY (0.7%)
Ingersoll-Rand Cl A 121,651 5,322,231
- --------------------------------------------------------------------------------
BRAZIL (0.8%)
METALS & MINING
Cia Vale do Rio Doce ADR 125,948 5,602,167
- --------------------------------------------------------------------------------
CANADA (0.9%)
ELECTRICAL EQUIPMENT (0.5%)
Harbin Power Equipment Cl H 3,790,000 3,446,388
- --------------------------------------------------------------------------------
ROAD & RAIL (0.4%)
Canadian Pacific Railway 56,927 3,025,101
- --------------------------------------------------------------------------------
FRANCE (4.2%)
AUTOMOBILES (1.1%)
Renault 68,605 7,961,527
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (1.1%)
BNP Paribas 76,644 7,241,237
BNP Paribas-New 7,664(b) 699,434
--------------
Total 7,940,671
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (2.0%)
ALSTOM 79,306(b) 7,182,626
Legrand 9,623(b) 281,612
Schneider Electric 64,922(e) 7,349,862
--------------
Total 14,814,100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
GERMANY (4.0%)
ELECTRIC UTILITIES (0.5%)
E.ON 31,946(e) $ 3,889,839
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.3%)
Fresenius Medical Care & Co 76,289 9,152,524
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (0.5%)
RWE 43,265 3,750,357
- --------------------------------------------------------------------------------
SOFTWARE (1.0%)
SAP 32,752 7,155,476
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.7%)
Hypo Real Estate Holding 72,670 5,080,126
- --------------------------------------------------------------------------------
GREECE (1.1%)
CONSTRUCTION MATERIALS
TITAN Cement 163,240 8,302,328
- --------------------------------------------------------------------------------
HONG KONG (2.9%)
REAL ESTATE (1.9%)
China Overseas Land & Investment 5,294,000 3,380,064
Hang Lung Properties 2,776,000 5,585,730
New World Development 2,934,600 5,261,378
--------------
Total 14,227,172
- --------------------------------------------------------------------------------
SPECIALTY RETAIL (1.0%)
Esprit Holdings 872,500 6,966,135
- --------------------------------------------------------------------------------
JAPAN (17.1%)
AUTOMOBILES (1.1%)
Honda Motor 110,700 7,866,166
- --------------------------------------------------------------------------------
CAPITAL MARKETS (2.4%)
Nomura Holdings 410,900 9,293,522
Tokai Tokyo Securities 1,140,000 7,960,474
--------------
Total 17,253,996
- --------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
8 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
JAPAN (CONT.)
COMMERCIAL BANKS (3.9%)
Chiba Bank 453,000 $ 4,102,266
Mitsubishi UFJ Financial Group 899 14,134,476
Mizuho Financial Group 1,295 11,044,752
--------------
Total 29,281,494
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.7%)
Hoya 119,100 4,822,582
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (0.6%)
Seven-I Holdings 112,900 4,373,202
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES (2.8%)
Daito Trust Construction 136,300 7,087,361
Daiwa House Industry 312,000 5,319,209
GOLDCREST 81,340 4,043,780
Sharp 293,000 5,144,550
--------------
Total 21,594,900
- --------------------------------------------------------------------------------
INSURANCE (2.3%)
Nisshin Fire & Marine Insurance 653,000 3,171,796
T&D Holdings 174,450 13,376,799
--------------
Total 16,548,595
- --------------------------------------------------------------------------------
MACHINERY (1.1%)
AMADA 713,000 7,803,232
- --------------------------------------------------------------------------------
REAL ESTATE (1.7%)
Mitsubishi Estate 221,000 4,833,465
Mitsui Fudosan 330,000 7,391,304
--------------
Total 12,224,769
- --------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE (0.5%)
Kamigumi 477,000 3,804,269
- --------------------------------------------------------------------------------
MEXICO (0.5%)
CONSTRUCTION MATERIALS
CEMEX ADR 56,202 3,794,759
- --------------------------------------------------------------------------------
NETHERLANDS (2.2%)
DIVERSIFIED FINANCIAL SERVICES (1.0%)
ING Groep 184,072 7,490,398
- --------------------------------------------------------------------------------
FOOD PRODUCTS (1.2%)
Royal Numico 189,274(b) 8,575,907
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
NORWAY (1.7%)
COMMERCIAL BANKS (1.0%)
DNB NOR 506,100(e) $ 7,036,139
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (0.7%)
TGS NOPEC Geophysical 79,400(b) 5,345,063
- --------------------------------------------------------------------------------
SOUTH AFRICA (3.1%)
FOOD & STAPLES RETAILING (0.6%)
Massmart Holdings 485,061 4,758,753
- --------------------------------------------------------------------------------
METALS & MINING (1.4%)
Anglo American 90,675 3,860,825
AngloGold Ashanti 116,623 6,343,583
--------------
Total 10,204,408
- --------------------------------------------------------------------------------
SPECIALTY RETAIL (1.1%)
Truworths Intl 1,593,133 7,708,494
- --------------------------------------------------------------------------------
SOUTH KOREA (3.8%)
COMMERCIAL BANKS (1.5%)
Kookmin Bank 61,470 5,508,766
Shinhan Financial Group 121,220 6,042,358
--------------
Total 11,551,124
- --------------------------------------------------------------------------------
MACHINERY (0.6%)
Hyundai Heavy Inds 46,140 4,423,646
- --------------------------------------------------------------------------------
METALS & MINING (1.2%)
POSCO 31,631 8,822,731
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.5%)
Samsung Electronics 5,000 3,414,996
- --------------------------------------------------------------------------------
SPAIN (0.5%)
SPECIALTY RETAIL
Inditex 95,648 3,890,975
- --------------------------------------------------------------------------------
SWEDEN (0.5%)
BUILDING PRODUCTS
ASSA ABLOY Cl B 183,600 3,562,306
- --------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
SWITZERLAND (5.3%)
CAPITAL MARKETS (2.2%)
Credit Suisse Group 60,934(b) $ 3,827,414
UBS 102,341(e) 12,130,404
--------------
Total 15,957,818
- --------------------------------------------------------------------------------
CHEMICALS (0.7%)
Syngenta 36,038(b) 5,027,072
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.4%)
Nobel Biocare Holding 11,707 2,893,239
- --------------------------------------------------------------------------------
PHARMACEUTICALS (2.0%)
Novartis 97,760 5,608,470
Roche Holding 60,941 9,370,624
--------------
Total 14,979,094
- --------------------------------------------------------------------------------
TAIWAN (1.3%)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT
Taiwan Semiconductor Mfg 1,700,000 3,629,154
Taiwan Semiconductor Mfg ADR 552,043 5,785,410
--------------
Total 9,414,564
- --------------------------------------------------------------------------------
UNITED KINGDOM (5.8%)
CAPITAL MARKETS (0.4%)
3i Group 180,271 2,932,219
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (0.5%)
Standard Chartered 143,220 3,802,514
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.1%)
British Energy Group 302,102(b) 3,646,845
Drax Group 284,544(b) 4,099,041
--------------
Total 7,745,886
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (0.9%)
Tesco 1,186,184 6,910,805
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.5%)
InterContinental Hotels Group 208,584 3,678,012
- --------------------------------------------------------------------------------
METALS & MINING (0.9%)
BHP Billiton 333,325 6,862,266
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (1.0%)
BP 570,017 7,031,716
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.5%)
Wolseley 135,518 3,392,917
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
UNITED STATES (39.2%)
AEROSPACE & DEFENSE (1.0%)
United Technologies 117,435 $ 7,376,092
- --------------------------------------------------------------------------------
BEVERAGES (1.0%)
Coca-Cola 58,701 2,463,094
PepsiCo 82,978 4,832,639
--------------
Total 7,295,733
- --------------------------------------------------------------------------------
BIOTECHNOLOGY (1.2%)
Amgen 67,935(b) 4,599,200
Myogen 125,308(b) 4,142,682
--------------
Total 8,741,882
- --------------------------------------------------------------------------------
CAPITAL MARKETS (2.4%)
E*TRADE Financial 410,762(b) 10,219,758
Goldman Sachs Group 23,250 3,726,743
Lehman Brothers Holdings 23,472 3,547,793
--------------
Total 17,494,294
- --------------------------------------------------------------------------------
CHEMICALS (--%)
Tronox Cl B 7,201(b) 124,580
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (0.8%)
Bank of America 116,611 5,821,221
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.7%)
Cisco Systems 249,609(b) 5,229,309
- --------------------------------------------------------------------------------
CONSUMER FINANCE (1.0%)
American Express 131,833 7,093,934
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.5%)
CIT Group 65,572 3,541,544
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (0.8%)
Weatherford Intl 112,580(b) 5,958,859
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.8%)
Biomet 50,000 1,859,000
St. Jude Medical 167,569(b) 6,615,624
Thermo Electron 123,238(b) 4,749,593
--------------
Total 13,224,217
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.5%)
WellPoint 152,136(b) 10,801,656
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES (2.1%)
Centex 107,528 5,978,557
DR Horton 320,766 9,629,395
--------------
Total 15,607,952
- --------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
UNITED STATES (CONT.)
INSURANCE (0.7%)
Genworth Financial Cl A 147,682 $ 4,903,042
- --------------------------------------------------------------------------------
MACHINERY (1.9%)
Caterpillar 147,158 11,145,748
Illinois Tool Works 29,352 3,014,450
--------------
Total 14,160,198
- --------------------------------------------------------------------------------
MEDIA (1.7%)
Clear Channel Communications 92,472 2,638,226
Comcast Cl A 151,139(b) 4,677,752
RH Donnelley 87,683 4,921,647
--------------
Total 12,237,625
- --------------------------------------------------------------------------------
METALS & MINING (1.3%)
Arch Coal 96,571 9,173,279
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (1.3%)
Mirant 393,994(b) 9,676,493
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (5.8%)
EOG Resources 92,573 6,501,402
Kerr-McGee 35,713 3,566,300
Marathon Oil 86,080 6,831,309
Mariner Energy --(b) 7
Occidental Petroleum 88,729 9,116,017
Ultra Petroleum 92,155(b) 5,894,234
Valero Energy 179,053 11,591,892
--------------
Total 43,501,161
- --------------------------------------------------------------------------------
PHARMACEUTICALS (2.5%)
Johnson & Johnson 85,087 4,986,949
Pfizer 354,745 8,985,691
Wyeth 102,010 4,964,827
--------------
Total 18,937,467
- --------------------------------------------------------------------------------
REAL ESTATE (1.9%)
CB Richard Ellis Group Cl A 89,988(b) 7,909,045
Jones Lang LaSalle 71,063 6,023,300
--------------
Total 13,932,345
- --------------------------------------------------------------------------------
ROAD & RAIL (0.2%)
CSX 20,062 1,374,046
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(A)
UNITED STATES (CONT.)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.8%)
Freescale Semiconductor Cl A 176,235(b) $ 5,572,551
- --------------------------------------------------------------------------------
SOFTWARE (1.4%)
Adobe Systems 103,099 4,041,481
Microsoft 263,547 6,364,659
--------------
Total 10,406,140
- --------------------------------------------------------------------------------
SPECIALTY RETAIL (2.0%)
Home Depot 239,380 9,558,443
Staples 185,068 4,887,646
--------------
Total 14,446,089
- --------------------------------------------------------------------------------
TOBACCO (0.5%)
Altria Group 45,584 3,334,925
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (2.4%)
American Tower Cl A 278,418(b) 9,505,190
Leap Wireless Intl 175,067(b) 8,044,329
--------------
Total 17,549,519
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $597,318,717) $ 721,220,985
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES (4.6%)(F)
- --------------------------------------------------------------------------------
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER RATE MATURITY VALUE(A)
COMMERCIAL PAPER
Alpine Securitization
05-03-06 4.76% $ 15,000,000(d) $ 14,990,083
Barton Capital
05-01-06 4.83 8,800,000(d) 8,796,458
Societe Generale North America
05-08-06 4.81 10,000,000 9,986,667
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $33,777,705) $ 33,773,208
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $631,096,422)(g) $ 754,994,193
================================================================================
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
(A) Securities are valued by procedures described in Note 1 to the financial
statements.
(B) Non-income producing.
(C) Foreign security values are stated in U.S. dollars.
(D) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Fund's Board of Directors. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 2006, the value
of these securities amounted to $23,786,541or 3.2% of net assets.
(E) At April 30, 2006, security was partially or fully on loan. See Note 5 to
the financial statements.
(F) Cash collateral received from security lending activity is invested in
short-term securities and represents 3.9% of net assets. See Note 5 to the
financial statements. 0.7% of net assets is the Fund's cash equivalent
position.
(G) At April 30, 2006, the cost of securities for federal income tax purposes
was approximately $631,096,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 129,556,000
Unrealized depreciation (5,658,000)
--------------------------------------------------------------------------
Net unrealized appreciation $ 123,898,000
--------------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(I) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(II) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(III) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(IV) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at www.riversource.com/funds.
- --------------------------------------------------------------------------------
12 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
RiverSource Global Equity Fund
APRIL 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 1)*
(identified cost $631,096,422) $ 754,994,193
Cash in bank on demand deposit 607,963
Foreign currency holdings (identified cost $6,203,115) (Note 1) 6,260,256
Capital shares receivable 335,086
Dividends and accrued interest receivable 2,170,000
Receivable for investment securities sold 601,695
- --------------------------------------------------------------------------------------------------------------------
Total assets 764,969,193
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------------------------------
Capital shares payable 26,645
Payable for investment securities purchased 3,138,368
Payable upon return of securities loaned (Note 5) 28,424,000
Accrued investment management services fee 15,587
Accrued distribution fee 7,780
Accrued service fee 25
Accrued transfer agency fee 1,786
Accrued administrative services fee 1,576
Other accrued expenses 134,722
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 31,750,489
- --------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 733,218,704
====================================================================================================================
- --------------------------------------------------------------------------------------------------------------------
REPRESENTED BY
- --------------------------------------------------------------------------------------------------------------------
Capital stock -- $.01 par value (Note 1) $ 998,873
Additional paid-in capital 1,113,638,633
Excess of distributions over net investment income (2,969,798)
Accumulated net realized gain (loss) (Note 7) (502,491,062)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 124,042,058
- --------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $ 733,218,704
====================================================================================================================
Net assets applicable to outstanding shares: Class A $ 586,787,361
Class B $ 132,640,551
Class C $ 4,481,927
Class Y $ 9,308,865
Net asset value per share of outstanding capital stock: Class A shares 79,036,182 $ 7.42
Class B shares 18,963,445 $ 6.99
Class C shares 644,986 $ 6.95
Class Y shares 1,242,707 $ 7.49
- -------------------------------------------------------------------------------------------------------------------
* Including securities on loan, at value (Note 5) $ 27,303,080
- --------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 13
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
RiverSource Global Equity Fund
PERIOD FROM
NOV. 1, 2005 TO PERIOD FROM TOTAL
NOV. 7, 2005 NOV. 8, 2005 TO NOV. 1, 2005 TO
(UNAUDITED) APRIL 30, 2006 APRIL 30, 2006
(NOTE 1) (UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------
Income:
Dividends $ 153,641 $ 4,987,242 $ 5,140,883
Interest 16,507 154,400 170,907
Fee income from securities lending (Note 5) -- 63,925 63,925
Less foreign taxes withheld -- (349,965) (349,965)
- --------------------------------------------------------------------------------------------------------------------
Total income 170,148 4,855,602 5,025,750
- --------------------------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 136,210 2,662,355 2,798,565
Distribution fee
Class A 21,737 617,020 638,757
Class B 19,844 563,531 583,375
Class C 455 16,116 16,571
Transfer agency fee 26,649 677,812 704,461
Incremental transfer agency fee
Class A 2,149 54,717 56,866
Class B 964 24,887 25,851
Class C 18 570 588
Service fee -- Class Y 124 3,670 3,794
Administrative services fees and expenses 8,774 249,260 258,034
Compensation of board members -- 5,492 5,492
Custodian fees 4,068 99,975 104,043
Printing and postage 3,850 94,600 98,450
Registration fees 1,050 47,648 48,698
Audit fees 805 19,195 20,000
Other 391 6,739 7,130
- --------------------------------------------------------------------------------------------------------------------
Total expenses 227,088 5,143,587 5,370,675
Earnings credits on cash balances (Note 2) (399) (20,072) (20,471)
- --------------------------------------------------------------------------------------------------------------------
Total net expenses 226,689 5,123,515 5,350,204
- --------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net (56,541) (267,913) (324,454)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
- --------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Security transactions (Note 3) 683,779 62,344,029 63,027,808
Foreign currency transactions 34,579 (10,068) 24,511
- --------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 718,358 62,333,961 63,052,319
Net change in unrealized appreciation (depreciation)
on investments and on translation of
assets and liabilities in foreign currencies 9,265,917 41,534,761 50,800,678
- --------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 9,984,275 103,868,722 113,852,997
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 9,927,734 $ 103,600,809 $ 113,528,543
====================================================================================================================
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
RiverSource Global Equity Fund
APRIL 30, 2006
SIX MONTHS ENDED OCT. 31, 2005
(UNAUDITED) YEAR ENDED
- --------------------------------------------------------------------------------------------------------------
OPERATIONS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ (324,454) $ 885,873
Net realized gain (loss) on investments 63,052,319 66,693,054
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 50,800,678 30,979,613
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 113,528,543 98,558,540
- --------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net Investment income
Class A (1,240,349) (2,338,575)
Class C (817) (2,880)
Class Y (25,142) (38,052)
- --------------------------------------------------------------------------------------------------------------
Total distributions (1,266,308) (2,379,507)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
- --------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 102,265,064 104,040,955
Class B shares 25,216,629 24,780,371
Class C shares 1,798,131 1,498,251
Class Y shares 1,988,881 1,968,825
Reinvestment of distributions at net asset value
Class A shares 1,230,859 2,297,175
Class C shares 850 2,823
Class Y shares 25,269 38,052
Payments for redemptions
Class A shares (52,898,504) (99,120,333)
Class B shares (Note 2) (14,760,010) (47,049,861)
Class C shares (Note 2) (222,165) (408,707)
Class Y shares (419,198) (1,162,458)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 64,225,806 (13,114,907)
- --------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 176,488,041 83,064,126
Net assets at beginning of period 556,730,663 473,666,537
- --------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 733,218,704 $ 556,730,663
==============================================================================================================
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 15
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
RiverSource Global Equity Fund
(Unaudited as to April 30, 2006)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource Global Series, Inc. (formerly AXP 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. The Fund
invests primarily in equity securities of companies around the world, including
companies located in developed and emerging countries.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fees and service fee (class specific
expenses) 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.
Prior to Nov. 8, 2005, the Fund invested all of its assets in the World Growth
Portfolio (the Portfolio). The Fund recorded its daily share of the Portfolio's
income, expenses and realized and unrealized gains and losses.
Effective at the close of business on Nov. 7, 2005, the Portfolio was liquidated
and the Fund exchanged its interest in the Portfolio for its proportionate share
(99.99%) of the Portfolio's assets and liabilities. Within the statement of
operations for the period from Nov. 1, 2005 to Nov. 7, 2005, income and expense
amounts include allocations from the Portfolio in the following amounts:
- --------------------------------------------------------------------------------
Dividends $153,641
- --------------------------------------------------------------------------------
Interest income $ 16,507
- --------------------------------------------------------------------------------
Investment management services fee $136,210
- --------------------------------------------------------------------------------
Custodian fees $ 4,024
- --------------------------------------------------------------------------------
Audit fees $ 630
- --------------------------------------------------------------------------------
Other $ 321
- --------------------------------------------------------------------------------
Earnings credits on cash balances $ (24)
- --------------------------------------------------------------------------------
All realized and unrealized gains (losses) presented for the period from Nov. 1,
2005 to Nov. 7, 2005 were as a result of allocations from the Portfolio.
- --------------------------------------------------------------------------------
16 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. Pursuant to procedures adopted by the
Board of Directors of the funds, Ameriprise Financial, Inc. (Ameriprise
Financial) utilizes Fair Value Pricing (FVP). FVP determinations are made in
good faith in accordance with these procedures. If a development or event is so
significant that there is a reasonably high degree of certainty that the effect
of the development or event has actually caused the closing price to no longer
reflect the actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the New York Stock Exchange.
Significant events include material movements in the U.S. securities markets
prior to the opening of foreign markets on the following trading day. FVP
results in an estimated price that reasonably reflects the current market
conditions in order to value the portfolio holdings such that shareholder
transactions receive a fair net asset value. Short-term securities maturing in
more than 60 days from the valuation date are valued at the market price or
approximate market value based on current interest rates; those maturing in 60
days or less are valued at amortized cost.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 17
- --------------------------------------------------------------------------------
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.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At April 30, 2006, foreign currency holdings consisted of
multiple denominations, primarily Taiwan dollars.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
- --------------------------------------------------------------------------------
18 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
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
Effective Nov. 8, 2005, the Fund entered into an Investment Management Services
Agreement with RiverSource Investments, LLC (the Investment Manager) to
determine which securities will be purchased, held or sold. Prior to the
withdrawal of the Fund's assets from the Portfolio, World Trust (the Trust), on
behalf of the Portfolio, had an Investment Management Services Agreement with
Ameriprise Financial. Prior to Nov. 8, 2005, the investment management fee was
assessed at the Portfolio level. 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. Prior to March 1, 2006, the management fee
percentage of the Fund's average daily net assets declined from 0.80% to 0.675%
annually as the Fund's assets increased. The fee may be adjusted upward or
downward by a performance incentive adjustment based on a comparison of the
performance of Class A shares of the Fund to the Lipper 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. For the period from Nov. 1, 2005 to Nov. 7, 2005,
the adjustment increased the fee by $51,279 and from the period from Nov. 8,
2005 to April 30, 2006, the adjustment increased the fee by $260,736.
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. A minor portion of additional administrative service
expenses paid by the Fund are consultants' fees and fund office expenses. Under
this agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate filing
fees and any other expenses properly payable by the Fund and approved by the
Board.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 19
- --------------------------------------------------------------------------------
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.
The Investment Manager has a Subadvisory Agreement with Threadneedle
International Limited, an indirect wholly-owned subsidiary of Ameriprise
Financial, to subadvise the assets of the Fund.
Under a separate Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with Ameriprise Financial Services, 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 up to 0.25% of the Fund's average daily net assets attributable to
Class A shares and up to 1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$757,365 for Class A, $35,140 for Class B and $113 for Class C for the six
months ended April 30, 2006.
During the period from Nov. 1, 2005 to Nov. 7, 2005, the Fund's custodian and
transfer agency fees were reduced by $399 as a result of earnings credits from
overnight cash balances. During the period from Nov. 8, 2005 to April 30, 2006,
the Fund's custodian and transfer agency fees were reduced by $20,072 as a
result of earnings credits from overnight cash balances. The Fund also pays
custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise
Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $6,242,385 and $2,768,723, respectively, for the period
from Nov. 1, 2005 to Nov. 7, 2005 and $455,498,980 and $391,672,116,
respectively, for the period from Nov. 8, 2005 to April 30, 2006. Realized gains
and losses are determined on an identified cost basis.
- --------------------------------------------------------------------------------
20 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED APRIL 30, 2006
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------------------------------------------------------------------------------
Sold 14,995,011 3,916,960 280,218 286,718
Issued for reinvested distributions 183,985 -- 135 3,743
Redeemed (7,719,006) (2,270,266) (34,682) (61,317)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) 7,459,990 1,646,694 245,671 229,144
- -------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2005
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------------------------------------------------------------------------------
Sold 17,716,088 4,520,559 276,626 343,576
Issued for reinvested distributions 417,668 -- 544 6,869
Redeemed (17,262,949) (8,504,166) (75,366) (199,031)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) 870,807 (3,983,607) 201,804 151,414
- -------------------------------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES
At April 30, 2006, securities valued at $27,303,080 were on loan to brokers. For
collateral, the Fund received $28,424,000 in cash. Cash collateral received is
invested in short-term securities, which are included in the short-term section
of the "Investments in securities." Income from securities lending amounted to
$63,925 for six months ended April 30, 2006. 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.
6. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary
funding of shareholder redemptions or for other temporary or emergency purposes.
The Fund must maintain asset coverage for borrowings of at least 300%. The
agreement, which enables the Fund to participate with other RiverSource funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.07% per annum. The Fund had no borrowings outstanding
during the six months ended April 30, 2006.
7. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$565,449,466 at Oct. 31, 2005, that if not offset by capital gains will expire
as follows:
2009 2010 2011
-------------------------------------------------------------------------
$391,304,630 $143,634,885 $30,509,951
-------------------------------------------------------------------------
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 21
- --------------------------------------------------------------------------------
8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), the parent company of RiverSource Investments, LLC
(RiverSource Investments), entered into settlement agreements with the
Securities and Exchange Commission (SEC) and Minnesota Department of Commerce
(MDOC) related to market timing activities. In connection with these matters,
the SEC and MDOC issued orders (the Orders) alleging that AEFC violated certain
provisions of the federal and Minnesota securities laws by failing to adequately
disclose market timing activities by allowing certain identified market timers
to continue to market time contrary to disclosures in mutual fund and variable
annuity product prospectuses. The Orders also alleged that AEFC failed to
implement procedures to detect and prevent market timing in 401(k) plans for
employees of AEFC and related companies and failed to adequately disclose that
there were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its employees.
As a result of the Orders, AEFC was censured and ordered to cease and desist
from committing or causing any violations of certain provisions of the
Investment Advisers Act of 1940, the Investment Company Act of 1940, and various
Minnesota laws. Pursuant to the terms of the Orders, AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to make presentations at least annually to its board of directors and the
relevant mutual funds' board that include an overview of policies and procedures
to prevent market timing, material changes to these policies and procedures and
whether disclosures related to market timing are consistent with the SEC order
and federal securities laws. AEFC also agreed to retain an independent
distribution consultant to assist in developing a plan for distribution of all
disgorgement and civil penalties ordered by the SEC in accordance with various
undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review of
its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal or arbitration 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 or arbitration 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.
- --------------------------------------------------------------------------------
22 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL 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.
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- -------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 6.23 $ 5.16 $ 4.62 $ 3.92 $ 4.69
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- .02 -- .01 --
Net gains (losses) (both realized and unrealized) 1.21 1.08 .54 .69 (.77)
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.21 1.10 .54 .70 (.77)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from and in excess of net investment income (.02) (.03) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.42 $ 6.23 $ 5.16 $ 4.62 $ 3.92
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 587 $ 446 $ 364 $ 366 $ 406
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.54%(c) 1.57% 1.41% 1.50% 1.39%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .04%(c) .33% .07% .26% .01%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 61% 93% 104% 132% 123%
- -------------------------------------------------------------------------------------------------------------------------
Total return(d) 19.40%(e) 21.48% 11.72% 17.86% (16.42%)
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 23
- --------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- -------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 5.88 $ 4.87 $ 4.40 $ 3.76 $ 4.53
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.02) (.03) (.03) (.04)
Net gains (losses) (both realized and unrealized) 1.13 1.03 .50 .67 (.73)
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.11 1.01 .47 .64 (.77)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.99 $ 5.88 $ 4.87 $ 4.40 $ 3.76
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 133 $ 102 $ 104 $ 142 $ 173
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.31%(c) 2.34% 2.18% 2.27% 2.16%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.74%)(c) (.41%) (.66%) (.52%) (.77%)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 61% 93% 104% 132% 123%
- -------------------------------------------------------------------------------------------------------------------------
Total return(d) 18.88%(e) 20.74% 10.68% 17.02% (17.00%)
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
24 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- -------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 5.85 $ 4.85 $ 4.38 $ 3.75 $ 4.52
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.02) (.02) (.03) (.04)
Net gains (losses) (both realized and unrealized) 1.12 1.03 .49 .66 (.73)
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.10 1.01 .47 .63 (.77)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from and in excess of net investment income -- (.01) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.95 $ 5.85 $ 4.85 $ 4.38 $ 3.75
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 4 $ 2 $ 1 $ 1 $ 1
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.30%(c) 2.33% 2.19% 2.29% 2.19%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.66%)(c) (.53%) (.69%) (.52%) (.78%)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 61% 93% 104% 132% 123%
- -------------------------------------------------------------------------------------------------------------------------
Total return(d) 18.84%(e) 20.89% 10.73% 16.80% (17.04%)
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 25
- --------------------------------------------------------------------------------
CLASS Y
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- -------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $ 6.29 $ 5.20 $ 4.65 $ 3.94 $ 4.70
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01 .04 .01 .02 .01
Net gains (losses) (both realized and unrealized) 1.21 1.09 .54 .69 (.77)
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.22 1.13 .55 .71 (.76)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from and in excess of net investment income (.02) (.04) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.49 $ 6.29 $ 5.20 $ 4.65 $ 3.94
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 9 $ 6 $ 4 $ 5 $ 8
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.35%(c) 1.38% 1.23% 1.30% 1.21%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .26%(c) .49% .25% .43% .18%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 61% 93% 104% 132% 123%
- -------------------------------------------------------------------------------------------------------------------------
Total return(d) 19.50%(e) 21.90% 11.88% 18.02% (16.17%)
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
26 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FUND EXPENSES EXAMPLE
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, including management fees; distribution and service (12b-1) fees; and
other Fund 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.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2006.
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 EQUITY FUND o 2006 SEMIANNUAL REPORT o 27
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2005 APRIL 30, 2006 THE PERIOD(a) EXPENSE RATIO
- -----------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,194.00 $ 8.28 1.54%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.97 $ 7.62 1.54%
- -----------------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,188.80 $12.40 2.31%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.19 $11.40 2.31%
- -----------------------------------------------------------------------------------------------------------
Class C
- -----------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,188.40 $12.34 2.30%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.24 $11.35 2.30%
- -----------------------------------------------------------------------------------------------------------
Class Y
- -----------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,195.00 $ 7.27 1.35%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.90 $ 6.68 1.35%
- -----------------------------------------------------------------------------------------------------------
(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 179/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2006:
+19.40% for Class A, +18.88% for Class B, +18.84% for Class C and +19.50%
for Class Y.
- --------------------------------------------------------------------------------
28 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
During the period covered by this report, RiverSource Investments, LLC
("RiverSource Investments" or the "investment manager"), a wholly-owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), served as the
investment manager to RiverSource funds under an Investment Management Services
Agreement ("IMS Agreement").
The Board of Directors/Trustees (the "Board") annually determines whether to
continue the IMS Agreement and subadvisory agreements, as applicable, by
evaluating the quality and level of services received and the costs associated
with those services. The Board did not make the specific determination this year
as each fund's IMS Agreement was approved by the vote of a majority of the
outstanding voting securities of the funds at a shareholder meeting held on Feb.
15, 2006. Also at this meeting, the subadvisory agreement between Threadneedle
International Limited and the investment manger, on behalf of the Fund, was
approved by the vote of a majority of the outstanding voting securities for the
Fund.
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
RiverSource Funds at (888) 791-3380; contacting your financial institution;
visiting www.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 during the most recent
12-month period ended June 30 is available without charge by visiting
www.riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 29
- --------------------------------------------------------------------------------
RESULTS OF MEETING OF SHAREHOLDERS
RIVERSOURCE GLOBAL EQUITY FUND
REGULAR MEETING OF SHAREHOLDERS HELD ON FEB. 15, 2006
(UNAUDITED)
A brief description of each proposal voted upon at the meeting and the votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes as to each proposal is set forth below. A vote is based on total
dollar interest in a fund.
ELECTION OF BOARD MEMBERS
AFFIRMATIVE WITHHOLD
- ------------------------------------------------------------------------------
Kathleen Blatz 432,528,927.03 15,265,356.99
- ------------------------------------------------------------------------------
Arne H. Carlson 431,508,807.28 16,285,476.74
- ------------------------------------------------------------------------------
Patricia M. Flynn 432,828,130.70 14,966,153.32
- ------------------------------------------------------------------------------
Anne P. Jones 432,426,670.65 15,367,613.37
- ------------------------------------------------------------------------------
Jeffrey Laikind 432,515,182.91 15,279,101.11
- ------------------------------------------------------------------------------
Stephen R. Lewis, Jr. 432,878,070.43 14,916,213.59
- ------------------------------------------------------------------------------
Catherine James Paglia 432,952,951.51 14,841,332.51
- ------------------------------------------------------------------------------
Vikki L. Pryor 433,246,512.97 14,547,771.05
- ------------------------------------------------------------------------------
Alan K. Simpson 430,940,047.35 16,854,236.67
- ------------------------------------------------------------------------------
Alison Taunton-Rigby 433,084,025.05 14,710,258.97
- ------------------------------------------------------------------------------
William F. Truscott 433,042,838.68 14,751,445.34
- ------------------------------------------------------------------------------
AMEND THE ARTICLES OF INCORPORATION TO PERMIT THE BOARD TO ESTABLISH THE MINIMUM
ACCOUNT VALUE AND TO CHANGE THE NAME OF THE CORPORATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
424,842,117.53 13,015,115.54 9,846,771.14 90,279.81
- --------------------------------------------------------------------------------
APPROVE AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE
INVESTMENTS, LLC
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
427,402,508.12 9,907,473.09 10,394,023.00 90,279.81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30 o RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
APPROVE A SUBADVISORY AGREEMENT BETWEEN RIVERSOURCE INVESTMENTS AND THREADNEEDLE
INTERNATIONAL LIMITED
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
427,135,306.34 10,560,563.50 10,008,134.37 90,279.81
- --------------------------------------------------------------------------------
APPROVE CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
DIVERSIFICATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
427,291,767.27 10,388,571.80 10,023,665.14 90,279.81
- --------------------------------------------------------------------------------
TEN PERCENT LIMITATION IN SINGLE ISSUER
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
425,971,176.19 11,537,913.00 10,194,915.02 90,279.81
- --------------------------------------------------------------------------------
LENDING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
424,924,497.10 13,086,348.67 9,693,158.44 90,279.81
- --------------------------------------------------------------------------------
BORROWING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- --------------------------------------------------------------------------------
425,718,610.65 12,657,150.53 9,328,243.03 90,279.81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL EQUITY FUND o 2006 SEMIANNUAL REPORT o 31
- --------------------------------------------------------------------------------
RIVERSOURCE SM GLOBAL EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
This report must be accompanied or preceded by the
Fund's current prospectus. RiverSource Funds are managed
by RiverSource Investments, LLC and distributed by
Ameriprise Financial Services, Inc., Member NASD. Both
RIVERSOURCE [LOGO] SM companies are part of Ameriprise Financial, Inc.
Investments
S-6451 U (6/06)
Semiannual Report
RIVERSOURCE [LOGO] SM
INVESTMENTS
RIVERSOURCE SM
GLOBAL TECHNOLOGY FUND
- --------------------------------------------------------------------------------
SEMIANNUAL REPORT FOR THE
PERIOD ENDED APRIL 30, 2006
> RIVERSOURCE GLOBAL TECHNOLOGY FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH
LONG-TERM CAPITAL GROWTH.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Fund Snapshot ............................................................. 2
Performance Summary ....................................................... 3
Questions & Answers
with Portfolio Management .............................................. 5
Investments in Securities ................................................. 9
Financial Statements ...................................................... 12
Notes to Financial Statements ............................................. 15
Fund Expenses Example ..................................................... 28
Approval of Investment Management
Services Agreement ..................................................... 30
Proxy Voting .............................................................. 30
Results of Meeting of Shareholders ........................................ 31
DALBAR [LOGO] RATED
2006
FOR COMMUNICATION
RiverSource Funds' 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 1
- --------------------------------------------------------------------------------
FUND SNAPSHOT
AT APRIL 30, 2006
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER <
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER SINCE YEARS IN INDUSTRY
Nina Hughes 6/02 7
- --------------------------------------------------------------------------------
FUND OBJECTIVE
- --------------------------------------------------------------------------------
For investors seeking long-term capital growth.
Inception dates by class
A: 11/13/96 B: 11/13/96 C: 6/26/00 I: 7/15/04 Y: 11/13/96
Ticker symbols by class
A: AXIAX B: INVBX C: AXICX I: -- Y: --
Total net assets $179.6 million
Number of holdings 73
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
- ---------------------------------
STYLE
VALUE BLEND GROWTH
- ---------------------------------
LARGE
- ---------------------------------
MEDIUM SIZE
- ---------------------------------
SMALL
- ---------------------------------
Shading within the style matrix indicates areas in which the Fund generally
invests.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS <
- --------------------------------------------------------------------------------
Percentage of portfolio assets
Cisco Systems (Communications Equipment) 4.2%
- --------------------------------------------------------------------------------
Samsung Electronics
(Semiconductors & Semiconductor Equipment) 4.0
- --------------------------------------------------------------------------------
Freescale Semiconductor Cl A
(Semiconductors & Semiconductor Equipment) 3.6
- --------------------------------------------------------------------------------
Integrated Device Technology
(Semiconductors & Semiconductor Equipment) 3.4
- --------------------------------------------------------------------------------
Sprint Nextel
(Diversified Telecommunication Services) 3.2
- --------------------------------------------------------------------------------
Adobe Systems (Software) 3.0
- --------------------------------------------------------------------------------
Analog Devices
(Semiconductors & Semiconductor Equipment) 2.5
- --------------------------------------------------------------------------------
Microsoft (Software) 2.5
- --------------------------------------------------------------------------------
Hewlett-Packard (Computers & Peripherals) 2.4
- --------------------------------------------------------------------------------
Juniper Networks (Communications Equipment) 2.2
- --------------------------------------------------------------------------------
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
Investment products involve risks including possible loss of principal and
fluctuation in value.
International investing involves increased risk and volatility, not typically
associated with domestic investing, due to potential political and economic
instability, limited liquidity, volatile prices, lack of accounting, auditing,
and financial reporting standards, changes in currency exchange rates, and
differences in how trades are cleared and settled. Risks are particularly
significant in emerging markets due to the dramatic pace of economic, social,
and political change.
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.
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.
- --------------------------------------------------------------------------------
2 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
For the six-month period ended April 30, 2006
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
RiverSource Global Technology Fund Class A (excluding sales charge) +17.09%
GSTI(R) Composite Index(1) (unmanaged) +13.22%
Lipper Science and Technology Funds Index(2) +8.64%
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 www.riversource.com/funds.
(1) The Goldman Sachs Technology Index(R) Composite Index (GSTI(R) Composite
Index), an unmanaged index published by Goldman Sachs, is a market
capitalization-weighted index of over 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, but
excludes brokerage commissions or other fees.
(2) The Lipper Science and Technology Funds Index includes the 30 largest
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. See "Fund Management and Compensation" for more
information.
The 5.75%% sales charge applicable to Class A shares of the Fund is not
reflected in the bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
- --------------------------------------------------------------------------------
SECTOR COMPOSITION* <
- --------------------------------------------------------------------------------
Percentage of portfolio assets at April 30, 2006
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 82.2%
Telecommunication Services 7.6%
Consumer Discretionary 5.2%
Short-Term Securities** 3.5%
Industrials 1.2%
Materials 0.3%
* Sectors can be comprised of several industries. Please refer to the
section entitled "Investments in Securities" for a complete listing.
** Of the 3.5%,1.1% is due to security lending activity and 2.4% is the
Fund's cash equivalent position.
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 3
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I CLASS Y
(INCEPTION DATES) (11/13/96) (11/13/96) (6/26/00) (7/15/04) (11/13/96)
AFTER AFTER
NAV(1) POP(2) NAV(1) CDSC(3) NAV(1) CDSC(4) NAV(5) NAV(5)
AT APRIL 30, 2006
- ----------------------------------------------------------------------------------------------------
6 months* +17.09% +10.37% +16.09% +11.09% +16.67% +15.67% +17.41% +17.00%
- ----------------------------------------------------------------------------------------------------
1 year +33.14% +25.47% +32.03% +27.03% +31.82% +30.82% +34.09% +32.95%
- ----------------------------------------------------------------------------------------------------
3 years +23.73% +21.32% +22.83% +21.94% +23.03% +23.03% N/A +23.91%
- ----------------------------------------------------------------------------------------------------
5 years -0.84% -2.00% -1.69% -2.09% -1.60% -1.60% N/A -0.75%
- ----------------------------------------------------------------------------------------------------
Since inception +5.53% +4.87% +4.69% +4.69% -14.44% -14.44% +20.09% +5.57%
- ----------------------------------------------------------------------------------------------------
AT MARCH 31, 2006
- ----------------------------------------------------------------------------------------------------
6 months* +13.30% +6.78% +12.99% +7.99% +13.56% +12.56% +13.66% +13.73%
- ----------------------------------------------------------------------------------------------------
1 year +26.37% +19.11% +25.79% +20.79% +26.42% +25.42% +27.32% +27.47%
- ----------------------------------------------------------------------------------------------------
3 years +27.49% +24.99% +26.41% +25.57% +26.63% +26.63% N/A +27.86%
- ----------------------------------------------------------------------------------------------------
5 years +2.43% +1.23% +1.57% +1.19% +1.78% +1.78% N/A +2.61%
- ----------------------------------------------------------------------------------------------------
Since inception +5.43% +4.77% +4.62% +4.62% -14.78% -14.78% +20.25% +5.53%
- ----------------------------------------------------------------------------------------------------
(1) Excluding sales charge.
(2) Returns at public offering price (POP) reflect a sales charge of 5.75%.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies
as follows: first year 5%; second and third year 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
(5) Sales charge is not applicable to these shares. Shares available to
institutional investors only.
* Not annualized.
- --------------------------------------------------------------------------------
4 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
WITH PORTFOLIO MANAGEMENT
Below, portfolio manager Nina Hughes discusses the Fund's results and
positioning for the semiannual period ended April 30, 2006.
Q: How did RiverSource Global Technology Fund perform for the six months
ended April 30, 2006?
A: RiverSource Global Technology Fund's Class A shares advanced 17.09%
(excluding sales charge) for the six months ended April 30, 2006,
outpacing its benchmark, the unmanaged Goldman Sachs Technology Index(R)
Composite Index (GSTI(R) Composite Index), which rose 8.64%. The Fund also
outperformed its peer group, represented by the Lipper Science and
Technology Funds Index, which rose 13.22% over the same period.
Q: What factors most significantly affected performance during the semiannual
period?
A: During the past six months, the technology sector advanced along with the
overall global equity market. For the Fund, individual stock selection was
the primary force behind its outperformance of the GSTI(R) Composite
Index. A slightly larger-than-benchmark allocation in semiconductors and a
below-benchmark weighting in internet stocks proved advantageous, but
otherwise, sector allocations had no significant impact.
Stock selection was favorable across all technology segments, with
particular strength in semiconductors, communications equipment and
telecommunications services.
Individual contributors during the six months included Broadcom, MEMC
Electronic Materials and Cisco Systems, all of which added to the Fund's
return. The Fund had a larger-than-GSTI(R) Composite Index position in
semiconductor stock Broadcom because we believe the company's growth
prospects are attractive, especially given that they produce semiconductor
chips for key market segments such as Voice Over Internet Protocols,
broadband, wireless handheld devices and 3G (third-generation) cell
phones. When we bought the stock, its risk/reward profile appeared very
compelling to us. While other investors appeared overly concerned about
the perceived expensiveness of the stock, based on our own earnings
calculations, we did not consider it too expensive. Rather, we saw
meaningful upside potential, which played out in the past six months.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 5
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> FOR THE FUND, INDIVIDUAL STOCK SELECTION WAS THE PRIMARY FORCE BEHIND ITS
OUTPERFORMANCE OF THE GSTI(R) COMPOSITE INDEX.
MEMC Electronic Materials provides raw wafers for the manufacture of
semiconductors. When we bought it, the stock was trading at an unusually
low valuation for a technology company, but we thought the outlook for
semiconductors was strong. Sales of cell phones and personal computers
were good and, in addition, semiconductors are being used more frequently
in automobiles, high definition TVs and other devices. We believed the
company would benefit from the increased semiconductor demand. Two other
factors also contributed to MEMC's strong results during the period. The
company benefited from a transition from 200 millimeter wafers to 300
millimeter wafers, which have a higher profit margin. And, the company
makes polisilicon, a necessary component for semiconductor production that
is in short supply. The supply/demand imbalance allowed the company to
raise polisilicon prices.
Cisco Systems, another key contributor, has started to show some growth.
In our view, the company did a good job during
the recent downturn, making strategic acquisitions and eliminating areas
of the company that weren't working. We now think Cisco Systems is
well-positioned for the next phase of growth as corporate technology
spending increases. We see communication equipment stocks starting to pick
up after lagging the technology industry for several years and we believe
Cisco Systems is well-positioned to participate in that upside.
In addition to the contributors above, our avoidance of Yahoo! had a
positive impact on relative performance. We had reduced overall exposure
to internet stocks because the early part of the year is typically a
slower period for on-line searches. However, we felt even more strongly
that Yahoo! was not an attractive stock within the internet segment. We
anticipated some of the challenges Yahoo! has faced, including the market
share loss to Google. Conversely, our below-GSTI(R) Composite Index
weighting in Apple Computer detracted from relative return. We were
concerned that the sales forecast for iPods was too optimistic and that
there was too much
- --------------------------------------------------------------------------------
6 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS
> STOCK SELECTION WAS FAVORABLE ACROSS ALL TECHNOLOGY SEGMENTS, WITH
PARTICULAR STRENGTH IN SEMICONDUCTORS, COMMUNICATIONS EQUIPMENT AND
TELECOMMUNICATIONS SERVICES.
emphasis on the iPod at Apple Computer. However, Apple Computer performed
very well due to a halo effect -- iPod buyers also ended up buying more
Apple personal computers, which have a higher profit margin than the iPod.
The increased computer sales drove Apple Computer's earnings projections
higher.
The portfolio's holdings of Symantec detracted from the Fund's
performance. We took a position in the stock after the merger between
Symantec and VERITAS Software. Although we were aware of potential
challenges for the merger, we thought the issues would be corrected within
12 months. In retrospect, we established the Fund's position a bit early.
We still believe Symantec has great growth prospects later this year and
consequently the Fund held onto the stock. We think Symantec is
well-positioned to benefit from strength in the computer security arena
and we also anticipate favorable results from its combined focus on
security and computer storage, an area where VERITAS Software had a
presence.
Internet auction stock eBay was another poor performer for the Fund.
Relative to the benchmark, our eBay position had little impact, but it did
hamper results on an absolute basis. The company has suffered from
compressing profit margins and falling prices amid increased competition
from Yahoo! and Google. We eliminated the stock from the portfolio, but
not soon enough to avoid the performance impact.
Q: What changes did you make to the Fund and how is it currently positioned?
A: Close to end of the period, we began to rebuild the Fund's position in
internet stocks, which we had previously reduced. In our opinion, the
sell-off in this group brought some stocks to attractive valuations. We
believe the internet-related area is one of the most promising segments
within the technology sector. We're seeing more advertising through
on-line services and great growth. We also increased the portfolio's
software exposure because we anticipate improved growth prospects later in
2006 as enterprise spending increases.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 7
- --------------------------------------------------------------------------------
> WE BELIEVE THE INTERNET-RELATED AREA IS ONE OF THE MOST PROMISING SEGMENTS
WITHIN THE TECHNOLOGY SECTOR.
The Fund continued to have larger-than-GSTI(R) Composite Index positions
in communications equipment and semiconductors.
We increased the Fund's underweight in information technology services
because we do not consider the valuations as attractive and believe there
are more compelling growth opportunities.
We also kept the portfolio's exposure to personal computer stocks below
that of the benchmark because we see increased price competition and PC
demand that is not particularly strong.
Q: How do you intend to manage the Fund in the coming months?
A: In general, we are quite optimistic about the near-term outlook for
technology stocks. As we alluded to above, we see likely increases in
corporate technology spending. The last time companies spent substantial
sums on technology was in the year 2000. That technology is now old enough
that we anticipate significant upgrading of infrastructure and software in
the near future. We should see some impact from this increased spending
later in 2006 and believe it will be particularly beneficial to
telecommunications and software companies.
- --------------------------------------------------------------------------------
8 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
RiverSource Global Technology Fund
APRIL 30, 2006 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
- -------------------------------------------------------------------------------
COMMON STOCKS (98.6%)
- -------------------------------------------------------------------------------
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (14.8%)
Alcatel 62,169(b,c) $ 896,340
Avocent 28,253(b) 761,136
CIENA 262,413(b) 1,073,269
Cisco Systems 366,009(b) 7,667,889
Corning 130,276(b) 3,599,526
CSR 65,990(b,c) 1,454,823
Juniper Networks 219,650(b) 4,059,132
Lucent Technologies 1,198,794(b) 3,344,635
Motorola 178,185 3,804,250
-----------
Total 26,661,000
- -------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (6.4%)
Apple Computer 41,383(b) 2,912,949
Hewlett-Packard 137,807 4,474,593
SanDisk 28,461(b) 1,816,666
Seagate Technology 83,871(b,c) 2,227,614
-----------
Total 11,431,822
- -------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.4%)
MasTec 60,000(b) 739,800
- -------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (5.2%)
Cogent Communications Group 203,500(b) 2,146,925
Sprint Nextel 239,084 5,929,283
Verizon Communications 40,095 1,324,338
-----------
Total 9,400,546
- -------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.8%)
Energy Conversion Devices 30,000(b) 1,500,300
- -------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.0%)
Avnet 35,674(b) 932,875
Intl DisplayWorks 164,000(b) 921,680
Jabil Circuit 46,551(b) 1,815,024
-----------
Total 3,669,579
- -------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.7%)
Sony 26,100(c) 1,311,304
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------------------------
ISSUER SHARES VALUE(a)
INTERNET SOFTWARE & SERVICES (3.4%)
Google Cl A 4,120(b) $ 1,721,913
MatrixOne 198,108(b) 1,428,359
Yahoo! 88,328(b) 2,895,391
-----------
Total 6,045,663
- -------------------------------------------------------------------------------
IT SERVICES (3.4%)
Cognizant Technology
Solutions Cl A 18,473(b) 1,175,068
Ness Technologies 271,354(b,c) 3,296,951
Patni Computer Systems ADR 39,664(b,c) 662,389
Satyam Computer Services ADR 24,729(c) 889,749
-----------
Total 6,024,157
- -------------------------------------------------------------------------------
MEDIA (4.5%)
Cablevision Systems Cl A 49,330 999,919
Comcast Cl A 81,288(b) 2,515,864
NTL 139,710 3,839,231
WorldSpace Cl A 130,705(b,d) 767,238
-----------
Total 8,122,252
- -------------------------------------------------------------------------------
METALS & MINING (0.3%)
Novastar Resources 851,972(b) 579,341
- -------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (30.0%)
Agere Systems 218,931(b) 3,441,595
Analog Devices 121,939 4,623,927
Atmel 127,964(b) 670,531
Broadcom Cl A 48,673(b) 2,000,947
Cypress Semiconductor 170,181(b) 2,920,306
Fairchild Semiconductor Intl 100,596(b) 2,079,319
Freescale Semiconductor Cl A 209,388(b) 6,620,848
Genesis Microchip 67,823(b,d) 1,066,178
Hynix Semiconductor 84,800(b,c) 2,963,368
Integrated Device Technology 406,015(b) 6,179,548
Intel 140,305 2,803,294
Intl Rectifier 30,145(b) 1,362,554
Maxim Integrated Products 66,806 2,355,580
PMC-Sierra 260,123(b) 3,233,329
Samsung Electronics 10,860(c) 7,417,372
Texas Instruments 112,309 3,898,245
-----------
Total 53,636,941
- -------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(a)
SOFTWARE (24.3%)
Activision 160,745(b) $ 2,280,972
Adobe Systems 138,962 5,447,311
BEA Systems 172,772(b) 2,289,229
Compuware 355,909(b) 2,733,381
i2 Technologies 56,276(b,d) 985,393
McAfee 36,982(b) 964,860
Mercury Interactive 88,242(b) 3,176,712
Microsoft 189,421 4,574,517
Novell 120,078(b) 987,041
Open Solutions 46,395(b) 1,262,872
OPNET Technologies 100,000(b) 1,231,000
Oracle 176,572(b) 2,576,185
Parametric Technology 116,628(b) 1,742,422
Quest Software 208,627(b) 3,590,471
SAP ADR 43,604(c) 2,382,087
Symantec 237,944(b) 3,897,523
TIBCO Software 393,341(b) 3,390,599
------------
Total 43,512,575
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (2.5%)
ALLTEL 41,829 2,692,533
Vodafone Group 774,780(c) 1,829,590
------------
Total 4,522,123
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $162,291,282) $177,157,403
- --------------------------------------------------------------------------------
OTHER (--%)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE(a)
UBI Soft Entertainment
Warrants 5,712(b,c,f) $ 54,759
- --------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $19,674) $ 54,759
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES (3.6%)(e)
- --------------------------------------------------------------------------------
ISSUER EFFECTIVE AMOUNT VALUE(a)
YIELD PAYABLE AT
MATURITY
COMMERCIAL PAPER
Barton Capital
05-01-06 4.83% $1,500,000(g) $1,499,396
Chesham Finance LLC
05-03-06 4.78 2,000,000 1,998,673
Societe Generale North America
05-08-06 4.81 3,000,000 2,996,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $6,494,935) $6,494,069
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $168,805,891)(h) $183,706,231
================================================================================
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
10 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At April 30, 2006, the
value of foreign securities represented 14.1% of net assets.
(d) At April 30, 2006, security was partially or fully on loan. See Note 6 to
the financial statements.
(e) Cash collateral received from security lending activity is invested in
short-term securities and represents 1.1% of net assets. See Note 6 to the
financial statements. 2.5% of net assets is the Fund's cash equivalent
position.
(f) 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 methods selected in good faith by the Fund's Board
of Directors. Information concerning such security holdings at April 30,
2006 is as follows:
SECURITY ACQUISITION COST
DATES
- --------------------------------------------------------------------------------
UBI Soft Entertainment
Warrants 12-02-03 $ 19,674
(g) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Fund's Board of Directors. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 2006, the value
of these securities amounted to $1,499,396 or 0.8% of net assets.
(h) At April 30, 2006, the cost of securities for federal income tax purposes
was approximately $168,806,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $20,488,000
Unrealized depreciation (5,588,000)
- ------------------------------------------------------------------------------
Net unrealized appreciation $14,900,000
- ------------------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at www.riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 11
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
RiverSource Global Technology Fund
APRIL 30, 2006 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 1)*
(identified cost $168,805,891) $183,706,231
Cash in bank on demand deposit 28,312
Foreign currency holdings (identified cost $2,680,525) 2,681,593
(Note 1)
Capital shares receivable 13,425
Dividends and accrued interest receivable 24,928
Receivable for investment securities sold 3,495,616
Unrealized appreciation on foreign currency contracts held, at value (Note 5) 1,857
- ----------------------------------------------------------------------------------------------------
Total assets 189,951,962
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Capital shares payable 9,261
Payable for investment securities purchased 8,158,231
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 2,229
Payable upon return of securities loaned (Note 6) 2,065,100
Accrued investment management services fee 3,572
Accrued distribution fee 2,314
Accrued service fee 1
Accrued transfer agency fee 1,076
Accrued administrative services fee 298
Other accrued expenses 60,406
- ----------------------------------------------------------------------------------------------------
Total liabilities 10,302,488
- ----------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $179,649,474
====================================================================================================
- ----------------------------------------------------------------------------------------------------
REPRESENTED BY
- ----------------------------------------------------------------------------------------------------
Capital stock - $.01 par value (Note 1) $ 806,003
Additional paid-in capital 531,001,246
Net operating loss (724,778)
Accumulated net realized gain (loss) (Note 8) (366,336,492)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 14,903,495
- ----------------------------------------------------------------------------------------------------
Total - representing net assets applicable to outstanding capital stock $179,649,474
====================================================================================================
Net assets applicable to outstanding shares: Class A $127,159,915
Class B $ 48,610,357
Class C $ 3,425,741
Class I $ 13,875
Class Y $ 439,586
Net asset value per share of outstanding capital stock: Class A shares 54,647,004 $ 2.33
Class B shares 24,068,376 $ 2.02
Class C shares 1,691,203 $ 2.03
Class I shares 5,882 $ 2.36
Class Y shares 187,847 $ 2.34
- ----------------------------------------------------------------------------------------------------
*Including securities on loan, at value (Note 6) $ 1,959,851
- ----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
RiverSource Global Technology Fund
PERIOD FROM PERIOD FROM TOTAL
NOV. 1, 2005 TO DEC. 6, 2005 TO NOV. 1, 2005 TO
DEC. 5, 2005 APRIL 30, 2006 APRIL 30, 2006
(UNAUDITED) (UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends $ 66,956 $ 744,942 $ 811,898
Interest 16,446 61,828 78,274
Fee income from securities lending (Note 6) 5,773 22,828 28,601
Less foreign taxes withheld -- (15,755) (15,755)
- -----------------------------------------------------------------------------------------------------------------------------
Total income 89,175 813,843 903,018
- -----------------------------------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 124,267 536,303 660,570
Distribution fee
Class A 29,535 124,855 154,390
Class B 45,867 193,129 238,996
Class C 3,150 13,442 16,592
Transfer agency fee 69,777 271,809 341,586
Incremental transfer agency fee
Class A 4,862 18,955 23,817
Class B 3,314 12,934 16,248
Class C 181 716 897
Service fee -- Class Y 33 155 188
Administrative services fees and expenses 9,904 45,545 55,449
Custodian fees 728 3,639 4,367
Compensation of board members 2,735 17,860 20,595
Printing and postage 6,992 41,130 48,122
Registration fees 2,508 28,688 31,196
Audit fees 2,833 14,167 17,000
Other 3,508 2,009 5,517
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 310,194 1,325,336 1,635,530
Earnings credits on cash balances (Note 2) (1,260) (6,474) (7,734)
- -----------------------------------------------------------------------------------------------------------------------------
Total net expenses 308,934 1,318,862 1,627,796
- -----------------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net (219,759) (505,019) (724,778)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Security transactions (Note 3) 238,101 22,408,822 22,646,923
Foreign currency transactions (23) 14,494 14,471
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 238,078 22,423,316 22,661,394
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 12,162,324 (6,900,324) 5,262,000
- -----------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 12,400,402 15,522,992 27,923,394
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 12,180,643 $ 15,017,973 $ 27,198,616
=============================================================================================================================
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 13
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
RiverSource Global Technology Fund
APRIL 30, 2006 OCT. 31, 2005
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ (724,778) $ (2,220,414)
Net realized gain (loss) on investments 22,661,394 22,846,390
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 5,262,000 (4,848,983)
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 27,198,616 15,776,993
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
- ------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 8,382,161 14,032,284
Class B shares 2,263,103 4,198,752
Class C shares 252,320 365,934
Class Y shares 81,032 144,798
Payments for redemptions
Class A shares (20,169,418) (51,747,616)
Class B shares (Note 2) (7,391,018) (21,314,709)
Class C shares (Note 2) (518,241) (1,409,826)
Class Y shares (25,574) (256,391)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (17,125,635) (55,986,774)
- ------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 10,072,981 (40,209,781)
Net assets at beginning of period 169,576,493 209,786,274
- ------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 179,649,474 $ 169,576,493
============================================================================================================
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
RiverSource Global Technology Fund
(Unaudited as to April 30, 2006)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of RiverSource Global Series, Inc. (formerly AXP 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. The Fund invests primarily in equity securities of companies in the
information technology industry throughout the world.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At April 30, 2006, Ameriprise Financial, Inc.
(Ameriprise Financial) owned 100% of Class I shares, which represents 0.01% of
the Fund's net assets.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fees and service fee (class specific
expenses) 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.
Prior to Dec. 6, 2005, the Fund invested all of its assets in the World
Technologies Portfolio (the Portfolio). The Fund recorded its daily share of the
Portfolio's income, expenses and realized and unrealized gains and losses.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 15
- --------------------------------------------------------------------------------
Effective at the close of business on Dec. 5, 2005, the Portfolio was liquidated
and the Fund exchanged its interest in the Portfolio for its proportionate share
(99.98%) of the Portfolio's assets and liabilities. Within the statement of
operations for the period from Nov. 1, 2005 to Dec. 5, 2005, income and expense
amounts include allocations from the Portfolio in the following amounts:
Dividends $66,956
- --------------------------------------------------------------------------------
Interest income $16,446
- --------------------------------------------------------------------------------
Fee income from securities lending $5,773
- --------------------------------------------------------------------------------
Investment management services fee $124,267
- --------------------------------------------------------------------------------
Custodian fees $2,664
- --------------------------------------------------------------------------------
Audit fees $3,721
- --------------------------------------------------------------------------------
Other $1,136
- --------------------------------------------------------------------------------
Earnings credits on cash balances $(250)
- --------------------------------------------------------------------------------
All realized and unrealized gains (losses) presented for the period from Nov. 1,
2005 to Dec. 5, 2005 were as a result of allocations from the Portfolio.
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.
Foreign securities are valued based on quotations from the principal market in
which such securities are normally traded. Pursuant to procedures adopted by the
Board of Directors of the funds, Ameriprise Financial utilizes Fair Value
Pricing (FVP). FVP determinations are made in good faith in accordance with
these procedures. If a development or event is so significant that there is a
reasonably high degree of certainty that the effect of the development or event
has actually caused the closing price to no longer reflect the actual value, the
closing prices, as determined at the close of the applicable foreign market, may
be adjusted to reflect the fair value of the affected foreign securities as of
the close of the New York Stock Exchange. Significant events include material
movements in the U.S. securities markets prior to the opening of foreign markets
on the following trading day. FVP results in an estimated price that reasonably
reflects the current market conditions in order to value the portfolio holdings
such that shareholder transactions receive a fair net asset value. 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.
- --------------------------------------------------------------------------------
16 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
At April 30, 2006, investments in securities included issues that are illiquid
which the Fund currently limits to 10% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at April 30, 2006 was
$54,759 representing 0.03% of net assets. These securities are valued at fair
value according to methods selected in good faith by the Board. According to
board guidelines, certain unregistered securities are determined to be liquid
and are not included within the 10% limitation specified above. Assets are
liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligations depends upon the credit standing of the other party. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 17
- --------------------------------------------------------------------------------
is reflected as a component of such gains or losses. In the statement of
operations, net realized gains or losses from foreign currency transactions, if
any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes. At April 30, 2006, foreign
currency holdings were entirely comprised of Taiwan dollars.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
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.
- --------------------------------------------------------------------------------
18 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
2. EXPENSES AND SALES CHARGES
Effective Dec. 6, 2005, the Fund entered into an Investment Management Services
Agreement with RiverSource Investments, LLC (the Investment Manager) to
determine which securities will be purchased, held or sold. Prior to the
withdrawal of the Fund's assets from the Portfolio, World Trust (the Trust), on
behalf of the Portfolio, had an Investment Management Services Agreement with
Ameriprise Financial. Prior to Dec. 6, 2005, the investment management fee was
assessed at the Portfolio level. 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 based on a comparison of the performance of
Class A shares of the Fund to the Lipper 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. For the period from Nov. 1, 2005 to Dec. 5, 2005,
the adjustment increased the fee by $3,580 and for the period from Dec. 6, 2005
to April 30, 2006, the adjustment increased the fee by $26,825.
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. A minor portion of additional administrative service
expenses paid by the Fund are consultants' fees and fund office expenses. Under
this agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate filing
fees and any other expenses properly payable by the Fund and approved by the
Board.
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.
Under a separate Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
o Class Y $17.50
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
The Transfer Agent charges an annual closed account fee of $5 per inactive
account, charged on a pro rata basis for 12 months from the date the account
becomes inactive. These fees are included in the transfer agency fees on the
statement of operations.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 19
- --------------------------------------------------------------------------------
The Fund has agreements with Ameriprise Financial Services, 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 up to 0.25% of the Fund's average daily net assets attributable to
Class A shares and up to 1.00% for Class B and Class C shares.
Under a Shareholder Service Agreement, the Fund pays the Distributor a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares.
Sales charges received by the Distributor for distributing Fund shares were
$107,480 for Class A, $36,380 for Class B and $437 for Class C for the six
months ended April 30, 2006.
The Investment Manager and its affiliates have agreed to waive certain fees and
expenses until Oct. 31, 2006. Under this agreement, net expenses, before giving
effect to any performance incentive adjustment, will not exceed 1.82% for Class
A, 2.59% for Class B, 2.59% for Class C, 1.13% for Class I and 1.63% for Class Y
of the Fund's average daily net assets
During the period from Nov. 1, 2005 to Dec. 5, 2005, the Fund's custodian and
transfer agency fees were reduced by $1,260 as a result of earnings credits from
overnight cash balances. During the period from Dec. 6, 2005 to April 30, 2006,
the Fund's custodian and transfer agency fees were reduced by $6,474 as a result
of earnings credits from overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $14,561,320 and $17,626,393, respectively, for the
period from Nov. 1, 2005 to Dec. 5, 2005 and $148,499,388 and $163,974,261,
respectively, for the period from Dec. 6, 2005 to April 30, 2006. 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:
SIX MONTHS ENDED APRIL 30, 2006
CLASS A CLASS B CLASS C CLASS I CLASS Y
- -------------------------------------------------------------------------------------------------------------------
Sold 3,784,496 1,179,272 129,841 -- 36,130
Issued for reinvested distributions -- -- -- -- --
Redeemed (9,164,673) (3,853,814) (267,910) -- (11,213)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (5,380,177) (2,674,542) (138,069) -- 24,917
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2005
CLASS A CLASS B CLASS C CLASS I CLASS Y
- -------------------------------------------------------------------------------------------------------------------
Sold 7,304,774 2,511,332 218,828 -- 76,170
Issued for reinvested distributions -- -- -- -- --
Redeemed (27,230,471) (12,759,119) (847,115) -- (138,673)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (19,925,697) (10,247,787) (628,287) -- (62,503)
- -------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
5. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 2006, the Fund has forward foreign currency exchange contracts that
obligate it to deliver currencies at specified future dates. The unrealized
appreciation and/or depreciation on these contracts is included in the
accompanying financial statements. See "Summary of significant accounting
policies." The terms of the open contracts are as follows:
EXCHANGE DATE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------
May 2, 2006 140,162 174,572 $ -- $2,229
European Monetary Unit U.S. Dollar
May 8, 2006 148,337,731 1,304,779 1,857 --
Japanese Yen U.S. Dollar
- ---------------------------------------------------------------------------------------------------------
Total $ 1,857 $2,229
- ---------------------------------------------------------------------------------------------------------
6. LENDING OF PORTFOLIO SECURITIES
At April 30, 2006, securities valued at $1,959,851 were on loan to brokers. For
collateral, the Fund received $2,065,100 in cash. Cash collateral received is
invested in short-term securities, which are included in the short-term section
of the "Investments in securities." Income from securities lending amounted to
$28,601 for six months ended April 30, 2006. 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.
7. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary
funding of shareholder redemptions or for other temporary or emergency purposes.
The Fund must maintain asset coverage for borrowings of at least 300%. The
agreement, which enables the Fund to participate with other RiverSource funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit
facility at a rate of 0.07% per annum. The Fund had no borrowings outstanding
during the six months ended April 30, 2006.
8. CAPITAL LOSS CARRY-OVER
For federal income tax purposes the Fund had a capital loss carry-over of
$386,068,821 at Oct. 31, 2005, that if not offset by capital gains will expire
as follows:
2009 2010
- --------------------------------------------------------------------------------
$304,769,594 $81,299,227
- --------------------------------------------------------------------------------
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 21
- --------------------------------------------------------------------------------
9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), the parent company of RiverSource Investments, LLC
(RiverSource Investments), entered into settlement agreements with the
Securities and Exchange Commission (SEC) and Minnesota Department of Commerce
(MDOC) related to market timing activities. In connection with these matters,
the SEC and MDOC issued orders (the Orders) alleging that AEFC violated certain
provisions of the federal and Minnesota securities laws by failing to adequately
disclose market timing activities by allowing certain identified market timers
to continue to market time contrary to disclosures in mutual fund and variable
annuity product prospectuses. The Orders also alleged that AEFC failed to
implement procedures to detect and prevent market timing in 401(k) plans for
employees of AEFC and related companies and failed to adequately disclose that
there were no such procedures. Pursuant to the MDOC Order, the MDOC also alleged
that AEFC allowed inappropriate market timing to occur by failing to have
written policies and procedures and failing to properly supervise its employees.
As a result of the Orders, AEFC was censured and ordered to cease and desist
from committing or causing any violations of certain provisions of the
Investment Advisers Act of 1940, the Investment Company Act of 1940, and various
Minnesota laws. Pursuant to the terms of the Orders, AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to make presentations at least annually to its board of directors and the
relevant mutual funds' board that include an overview of policies and procedures
to prevent market timing, material changes to these policies and procedures and
whether disclosures related to market timing are consistent with the SEC order
and federal securities laws. AEFC also agreed to retain an independent
distribution consultant to assist in developing a plan for distribution of all
disgorgement and civil penalties ordered by the SEC in accordance with various
undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review of
its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal or arbitration 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 or arbitration 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
- --------------------------------------------------------------------------------
22 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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.
10. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- --------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $1.99 $1.83 $1.72 $1.03 $1.60
- --------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01) (.02) (.03) (.02) (.03)
Net gains (losses) (both realized and unrealized) .35 .18 .14 .71 (.54)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .34 .16 .11 .69 (.57)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.33 $1.99 $1.83 $1.72 $1.03
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $127 $120 $146 $145 $81
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.64%(c) 1.75% 1.74% 1.94% 1.91%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.60%)(c) (.92%) (1.48%) (1.47%) (1.65%)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 94% 115% 349% 546% 391%
- --------------------------------------------------------------------------------------------------------------------------
Total return(d) 17.09%(e) 8.74% 6.40% 66.99% (35.62%)
- --------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 23
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- --------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $1.74 $1.60 $1.53 $.92 $1.44
- --------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.03) (.04) (.03) (.04)
Net gains (losses) (both realized and unrealized) .30 .17 .11 .64 (.48)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .28 .14 .07 .61 (.52)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.02 $1.74 $1.60 $1.53 $.92
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $49 $46 $59 $64 $38
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.42%(c) 2.53% 2.52% 2.75% 2.71%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (1.39%)(c) (1.71%) (2.26%) (2.27%) (2.45%)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 94% 115% 349% 546% 391%
- --------------------------------------------------------------------------------------------------------------------------
Total return(d) 16.09%(e) 8.75% 4.58% 66.30% (36.11%)
- --------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
24 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ---------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(a) 2005 2004 2003 2002
Net asset value, beginning of period $1.74 $1.61 $1.53 $.92 $1.44
- ---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02) (.03) (.04) (.03) (.04)
Net gains (losses) (both realized and unrealized) .31 .16 .12 .64 (.48)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .29 .13 .08 .61 (.52)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.03 $1.74 $1.61 $1.53 $.92
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $3 $3 $4 $4 $2
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 2.41%(c) 2.52% 2.49% 2.72% 2.69%
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (1.37%)(c) (1.69%) (2.23%) (2.26%) (2.39%)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 94% 115% 349% 546% 391%
- ---------------------------------------------------------------------------------------------------------------------------
Total return(d) 16.67%(e) 8.07% 5.23% 66.30% (36.11%)
- ---------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 25
- --------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- -------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(g) 2005 2004(b)
Net asset value, beginning of period $2.01 $1.83 $1.70
- -------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- (.01) (.02)
Net gains (losses) (both realized and unrealized) .35 .19 .15
- -------------------------------------------------------------------------------------------------------
Total from investment operations .35 .18 .13
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.36 $2.01 $1.83
- --------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $-- $-- $--
- -------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c) .97%(d) 1.04% 1.03%(d)
- -------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .09%(d) (.21%) (.73%)(d)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 94% 115% 349%
- -------------------------------------------------------------------------------------------------------
Total return(e) 17.41%(f) 9.84% 7.65%(f)
- -------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is July 15, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
26 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES(a)
- ---------------------------------------------------------------------------------------------------------------------------
Fiscal period ended Oct. 31, 2006(f) 2005 2004 2003 2002
Net asset value, beginning of period $2.00 $1.83 $1.72 $1.03 $1.60
- ---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- (.02) (.02) (.02) (.03)
Net gains (losses) (both realized and unrealized) .34 .19 .13 .71 (.54)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .34 .17 .11 .69 (.57)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.34 $2.00 $1.83 $1.72 $1.03
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b) 1.42%(c) 1.54% 1.55% 1.69% 1.72%
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets (.31%)(c) (.73%) (1.28%) (1.25%) (1.61%)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 94% 115% 349% 546% 391%
- ---------------------------------------------------------------------------------------------------------------------------
Total return(d) 17.00%(e) 9.29% 6.40% 66.99% (35.63%)
- ---------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Adjusted to an annual basis.
(d) Total return does not reflect payment of a sales charge.
(e) Not annualized.
(f) Six months ended April 30, 2006 (Unaudited).
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 27
- --------------------------------------------------------------------------------
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, including management fees; distribution and service (12b-1) fees; and
other Fund 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.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended April 30, 2006.
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.
- --------------------------------------------------------------------------------
28 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
NOV. 1, 2005 APRIL 30, 2006 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,170.90 $8.73 1.64%
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.48 $8.11 1.64%
- ------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,160.90 $12.82 2.42%
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.65 $11.94 2.42%
- ------------------------------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,166.70 $12.80 2.41%
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.70 $11.89 2.41%
- ------------------------------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,174.10 $5.17 .97%
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.76 $4.80 .97%
- ------------------------------------------------------------------------------------------------------------------
Class Y
- ------------------------------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,170.00 $7.56 1.42%
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.56 $7.02 1.42%
- ------------------------------------------------------------------------------------------------------------------
(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 179/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended April 30, 2006:
+17.09% for Class A, +16.09% for Class B, +16.67% for Class C, +17.41% for
Class I and +17.00% for Class Y.
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 29
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT
During the period covered by this report, RiverSource Investments, LLC
("RiverSource Investments" or the "investment manager"), a wholly-owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), served as the
investment manager to RiverSource funds under an Investment Management Services
Agreement ("IMS Agreement").
The Board of Directors/Trustees (the "Board") annually determines whether to
continue the IMS Agreement and subadvisory agreements, as applicable, by
evaluating the quality and level of services received and the costs associated
with those services. The Board did not make the specific determination this year
as each fund's IMS Agreement was approved by the vote of a majority of the
outstanding voting securities of the funds at a shareholder meeting held on Feb.
15, 2006.
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
RiverSource Funds at (888) 791-3380; contacting your financial institution;
visiting www.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 during the most recent
12-month period ended June 30 is available without charge by visiting
www.riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
30 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
RESULTS OF MEETING OF SHAREHOLDERS
RIVERSOURCE GLOBAL TECHNOLOGY FUND
REGULAR MEETING OF SHAREHOLDERS HELD ON FEB. 15, 2006
(UNAUDITED)
A brief description of each proposal voted upon at the meeting and the votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes as to each proposal is set forth below. A vote is based on total
dollar interest in a fund.
ELECTION OF BOARD MEMBERS
- -------------------------------------------------------------------------------
AFFIRMATIVE WITHHOLD
- -------------------------------------------------------------------------------
Kathleen Blatz 119,266,453.16 3,639,988.73
- -------------------------------------------------------------------------------
Arne H. Carlson 118,959,628.66 3,946,813.23
- -------------------------------------------------------------------------------
Patricia M. Flynn 119,332,435.11 3,574,006.78
- -------------------------------------------------------------------------------
Anne P. Jones 118,825,797.32 4,080,644.57
- -------------------------------------------------------------------------------
Jeffrey Laikind 119,129,361.12 3,777,080.77
- -------------------------------------------------------------------------------
Stephen R. Lewis, Jr. 119,485,384.92 3,421,056.97
- -------------------------------------------------------------------------------
Catherine James Paglia 119,082,811.91 3,823,629.98
- -------------------------------------------------------------------------------
Vikki L. Pryor 119,236,366.91 3,670,074.98
- -------------------------------------------------------------------------------
Alan K. Simpson 118,560,959.50 4,345,482.39
- -------------------------------------------------------------------------------
Alison Taunton-Rigby 119,332,353.63 3,574,088.26
- -------------------------------------------------------------------------------
William F. Truscott 119,203,170.60 3,703,271.29
- -------------------------------------------------------------------------------
AMEND THE ARTICLES OF INCORPORATION TO PERMIT THE BOARD TO ESTABLISH THE MINIMUM
ACCOUNT VALUE AND TO CHANGE THE NAME OF THE CORPORATION
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- -------------------------------------------------------------------------------------
115,934,296.65 4,354,100.69 2,618,040.27 4.28
APPROVE AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE
INVESTMENTS, LLC
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- -------------------------------------------------------------------------------------
117,285,412.45 3,095,978.52 2,525,046.64 4.28
- --------------------------------------------------------------------------------
RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT o 31
- --------------------------------------------------------------------------------
APPROVE CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
LENDING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- -----------------------------------------------------------------------------------------------
115,996,945.15 4,050,500.89 2,858,991.57 4.28
BORROWING
AFFIRMATIVE AGAINST ABSTAIN BROKER NON-VOTES
- -----------------------------------------------------------------------------------------------
116,353,705.54 3,798,482.96 2,754,249.11 4.28
- --------------------------------------------------------------------------------
32 o RIVERSOURCE GLOBAL TECHNOLOGY FUND o 2006 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
RIVERSOURCE SM GLOBAL TECHNOLOGY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
This report must be accompanied or preceded by the
Fund's current prospectus. RiverSource Funds are managed
by RiverSource Investments, LLC and distributed by
Ameriprise Financial Services, Inc., Member NASD. Both
RIVERSOURCE [LOGO] SM companies are part of Ameriprise Financial, Inc.
INVESTMENTS
S-6396 H (6/06)
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for
semi-annual reports.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing
date of this Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance
that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable for semi-annual reports.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RIVERSOURCE GLOBAL SERIES, INC.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date June 28, 2006
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/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date June 28, 2006
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date June 28, 2006