-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I1cSQHhpbZ3hVvTgCzaG9xdLo8UN+RCZFFrGzXF+7RCpqEJ1XQqpVC+3DzzcG5eH MQk44w0nEpxkyoyXR4vMyw== 0000950137-07-009666.txt : 20070703 0000950137-07-009666.hdr.sgml : 20070703 20070703124936 ACCESSION NUMBER: 0000950137-07-009666 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070430 FILED AS OF DATE: 20070703 DATE AS OF CHANGE: 20070703 EFFECTIVENESS DATE: 20070703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 IRS NUMBER: 411850486 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05696 FILM NUMBER: 07959045 BUSINESS ADDRESS: STREET 1: 50606 AMERIPRSE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126714321 MAIL ADDRESS: STREET 1: 50606 AMERIPRSE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: RIVERSOURCE GLOBAL SERIES, INC. DATE OF NAME CHANGE: 20060504 FORMER COMPANY: FORMER CONFORMED NAME: AXP GLOBAL SERIES INC DATE OF NAME CHANGE: 19991228 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL SERIES INC DATE OF NAME CHANGE: 19920703 0000842918 S000003513 RiverSource Emerging Markets Fund C000009724 RiverSource Emerging Markets Fund Class C C000009725 RiverSource Emerging Markets Fund Class I RSRIX C000009727 RiverSource Emerging Markets Fund Class A IDEAX C000009728 RiverSource Emerging Markets Fund Class B IEMBX C000043004 RiverSource Emerging Markets Fund Class R4 0000842918 S000003514 RiverSource Emerging Markets Bond Fund C000009729 RiverSource Emerging Markets Bond Fund Class A C000009730 RiverSource Emerging Markets Bond Fund Class B C000009731 RiverSource Emerging Markets Bond Fund Class C C000009732 RiverSource Emerging Markets Bond Fund Class I RSMIX C000043005 RiverSource Emerging Markets Bond Fund Class R4 C000043006 RiverSource Emerging Markets Bond Fund Class W REMWX 0000842918 S000003516 RiverSource Global Bond Fund C000009739 RiverSource Global Bond Fund Class A IGBFX C000009740 RiverSource Global Bond Fund Class B IGLOX C000009741 RiverSource Global Bond Fund Class C AGBCX C000009742 RiverSource Global Bond Fund Class I AGBIX C000043007 RiverSource Global Bond Fund Class R4 C000043008 RiverSource Global Bond Fund Class W RGBWX 0000842918 S000003517 RiverSource Global Equity Fund C000009743 RiverSource Global Equity Fund Class C C000009744 RiverSource Global Equity Fund Class A IGLGX C000009745 RiverSource Global Equity Fund Class B IDGBX C000043009 RiverSource Global Equity Fund Class R4 IDGYX C000043010 RiverSource Global Equity Fund Class R5 C000043011 RiverSource Global Equity Fund Class W C000043012 RiverSource Global Equity Fund Class R2 C000043013 RiverSource Global Equity Fund Class R3 0000842918 S000003518 RiverSource Global Technology Fund C000009747 RiverSource Global Technology Fund Class I C000009749 RiverSource Global Technology Fund Class A AXIAX C000009750 RiverSource Global Technology Fund Class B INVBX C000009751 RiverSource Global Technology Fund Class C AXICX C000043014 RiverSource Global Technology Fund Class R4 RSGTX 0000842918 S000007870 RiverSource Absolute Return Currency and Income Fund C000021407 RiverSource Absolute Return Currency and Income Fund Class A C000021408 RiverSource Absolute Return Currency and Income Fund Class B C000021409 RiverSource Absolute Return Currency and Income Fund Class C C000021410 RiverSource Absolute Return Currency and Income Fund Class I RVAIX C000043015 RiverSource Absolute Return Currency and Income Fund Class R4 C000043016 RiverSource Absolute Return Currency and Income Fund Class W RACWX N-CSRS 1 c15464nvcsrs.txt CERTIFIED SEMI-ANNUAL SHAREHOLDER REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-5696 RIVERSOURCE GLOBAL SERIES, INC. (Exact name of registrant as specified in charter) 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (Address of principal executive offices) (Zip code) Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474 (Name and address of agent for service) Registrant's telephone number, including area code: (612) 671-1947 Date of fiscal year end: 10/31 Date of reporting period: 4/30 Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) ABSOLUTE RETURN CURRENCY AND INCOME FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE RETURN. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 7 Fund Expenses Example............... 10 Investments in Securities........... 12 Financial Statements................ 17 Notes to Financial Statements....... 20 Proxy Voting........................ 39
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Absolute Return Currency and Income Fund (the Fund) seeks to provide shareholders with positive absolute return. FOREIGN CURRENCY EXPOSURE BREAKDOWN* Percentage of portfolio exposure: short forward currency contracts (pie graph) Japanese Yen 50.0 Canadian Dollar 30.0 Swiss Franc 20.0
Percentage of portfolio exposure: long forward currency contracts (pie graph) New Zealand Dollar 49.9 Norwegian Krone 30.1 British Pound 20.0
* The Fund does not actually take ownership of foreign currencies or sell actual foreign currencies. Rather, through forward currency contracts, the Fund gains the exposure that it would have if it had bought or sold the currencies directly. See Notes 1 and 5 in the Notes to Financial Statements of this report for more detail on these financial instruments. SECTOR BREAKDOWN Percentage of bond and cash & cash equivalents portfolio assets (pie graph) Cash & Cash Equivalents 64.2 Corporate Bonds(1) 15.1 Asset-Backed 12.9 Mortgage-Backed 4.2 Commercial Mortgage-Backed 3.6
(1) Includes Financials 12.3%, Industrials 1.0%, Telecommunication 0.8%, Consumer Staples 0.6% and Consumer Discretionary 0.4%. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 QUALITY BREAKDOWN Percentage of bond portfolio assets (PIE CHART) AAA bonds 62.9 AA bonds 23.7 A bonds 13.4
Bond ratings apply to underlying holdings of the Fund and not the Fund itself. Whenever possible, the Standard and Poor's rating is used to determine the credit quality of a security. Standard and Poor's rates the creditworthiness of corporate bonds, with 15 categories, ranging from AAA (highest) to D (lowest). Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. If Standard and Poor's doesn't rate a security, then Moody's rating is used. RiverSource Investments, LLC, the Fund's investment manager, rates a security using an internal rating system when Moody's doesn't provide a rating. PORTFOLIO MANAGERS
YEARS IN INDUSTRY Nicholas Pifer, CFA 17
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A -- 06/15/06 Class B -- 06/15/06 Class C -- 06/15/06 Class I RVAIX 06/15/06 Class R4(1) -- 06/15/06 Class W RACWX 12/01/06 Total net assets $100.6 million Number of holdings 75
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. - -------------------------------------------------------------------------------- 4 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) RiverSource Absolute Return Currency and Income Fund Class A (excluding sales charge) +5.88 Citigroup 3-month U.S. Treasury Bill Index(1) (unmanaged) +2.50
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 4.75% sales charge applicable to Class A shares of the Fund is not reflected in the 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 index does not reflect the effects of sales charges, expenses and taxes. It is not possible to invest directly in an index. (1) Citigroup 3-month U.S. Treasury Bill Index, an unmanaged index, represents the performance of three-month Treasury Bills. The index reflects reinvestment of all distributions and changes in market prices. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL NET EXPENSES(A) Class A 1.59% 1.47% Class B 2.35% 2.23% Class C 2.35% 2.23% Class I 1.24% 1.12% Class R4(b) 1.62% 1.31% Class W(c) 1.77% 1.57%
(a) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses will not exceed 1.47% for Class A, 2.23% for Class B, 2.23% for Class C, 1.12% for Class I and 1.31% for Class R4 and 1.57% for Class W. (b) Effective Dec. 11, 2006, Class Y was renamed Class R4. (c) Inception date for Class W is Dec. 1, 2006. For Class W, expenses are based on estimated amounts for the current fiscal year. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* INCEPTION Class A (inception 6/15/06) +5.88% +8.38% Class B (inception 6/15/06) +5.39% +7.67% Class C (inception 6/15/06) +5.39% +7.67% Class I (inception 6/15/06) +6.02% +8.73% Class R4** (inception 6/15/06) +5.83% +8.39% Class W (inception 12/1/06) N/A +5.04%* WITH SALES CHARGE Class A (inception 6/15/06) +0.85% +3.23% Class B (inception 6/15/06) +0.39% +2.67% Class C (inception 6/15/06) +4.39% +6.67%
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* INCEPTION Class A (inception 6/15/06) +5.71% +7.00% Class B (inception 6/15/06) +5.31% +6.46% Class C (inception 6/15/06) +5.31% +6.46% Class I (inception 6/15/06) +5.84% +7.32% Class R4** (inception 6/15/06) +5.76% +7.10% Class W (inception 12/1/06) N/A +3.70%* With sales charge Class A (inception 6/15/06) +0.69% +1.91% Class B (inception 6/15/06) +0.31% +1.46% Class C (inception 6/15/06) +4.31% +5.46%
Class A share performance reflects the maximum sales charge of 4.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R4 and Class W shares. Class I and Class R4 shares are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, Nic Pifer, portfolio manager for RiverSource Absolute Return Currency and Income Fund, discusses the Fund's results and positioning for the six-month period ended April 30, 2007. At April 30, 2007, approximately 96% of the Fund's shares were owned in the aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC (RiverSource). As a result of asset allocation decisions by RiverSource, it is possible that RiverSource Absolute Return Currency and Income Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 28, Class I capital share transactions for related activity during the most recent fiscal period). RiverSource seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. RiverSource Absolute Return Currency and Income Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information on the Fund's expenses, see the discussions beginning on pages 10 and 25. Q: How did RiverSource Absolute Return Currency and Income Fund perform for the six months ended April 30, 2007? A: RiverSource Absolute Return Currency and Income Fund's Class A shares increased 5.88% (excluding sales charge) for the six months ended April 30, 2007. The Fund outperformed its benchmark, the Citigroup 3-Month U.S. Treasury Bill Index (Citigroup Index), which increased 2.50% during the same period. Q: What factors most significantly affected the Fund's performance? A: We use a two-part investment process. The first part includes investments in high quality, short-term fixed income securities with minimal interest rate risk with a goal to generate positive total return. These short-term investments are also designated, as necessary, to cover obligations invested in through the second component of our strategy, which is based on a proprietary quantitative model. Our model uses various fundamental and technical factors, including current and historical data, to rank the anticipated value of nine different currencies from developed countries relative to the U.S. dollar. Based on that ranking, we enter into long forward currency contracts for the three most attractive currencies compared to the U.S. dollar and enter into short forward currency contracts for the three least attractive currencies compared to the U.S. dollar. The Fund experiences profits or losses to the extent the value of the currency appreciates or depreciates relative to the U.S. dollar. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS During the period, we were able to generate positive total return from our investment in short-term fixed income securities, and we were able to add additional value through the use of our proprietary quantitative model. For the six months ended April 30, 2007, the Fund's positioning in the New Zealand dollar, Norwegian krone, British pound, Japanese yen and Australian dollar benefited the Fund's results. Positioning in the Swedish krona, euro, Swiss franc and Canadian dollar detracted from the Fund's performance. DURING THE PERIOD, WE WERE ABLE TO GENERATE POSITIVE TOTAL RETURN FROM OUR INVESTMENT IN SHORT-TERM FIXED INCOME SECURITIES, AND WE WERE ABLE TO ADD ADDITIONAL VALUE THROUGH THE USE OF OUR PROPRIETARY QUANTITATIVE MODEL. Q: How would you describe your current investment strategy? A: We run our quantitative model weekly and reset currency positions as needed, applying the output of this model on a systematic basis. We generally seek neutral exposure to the U.S. dollar, which is the base currency. In our view, remaining neutral to the U.S. dollar helps control overall volatility of the investment strategy. We also use an externally developed but fully integrated risk management system to help us monitor and manage market risk. Q: What is the Fund's tactical view and strategy for the months ahead? A: We intend to stay disciplined to our systematic investment strategy. Through the use of our proprietary quantitative model, which determines the Fund's positions in forward foreign currency contracts relative to the U.S. dollar, we will continue to seek an absolute return that is unrelated to general movements in the U.S. dollar and other types of financial assets. Overall, we will continue to seek to generate positive total returns from the income produced by the Fund's investments in short-term debt obligations, plus or minus the gain or loss resulting from the fluctuations in the values of various foreign currencies relative to the U.S. dollar. - -------------------------------------------------------------------------------- 8 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS It is important to remember that the Fund does not actually take ownership of foreign currencies or sell actual foreign currencies. Rather, through forward currency contracts, the Fund gains economic exposure comparable to the exposure that it would have if it had bought or sold the currencies directly. Because the establishment of the Fund's forward foreign currency contracts requires little cash outlay, the Fund's assets will consist primarily of short-term U.S. dollar-denominated corporate debt securities rated investment grade, or, if unrated, determined to be of comparable quality. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 10 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,058.80 $ 6.89 1.35% Hypothetical (5% return before expenses) $1,000 $1,018.10 $ 6.76 1.35% Class B Actual(b) $1,000 $1,053.90 $10.69 2.10% Hypothetical (5% return before expenses) $1,000 $1,014.38 $10.49 2.10% Class C Actual(b) $1,000 $1,053.90 $10.69 2.10% Hypothetical (5% return before expenses) $1,000 $1,014.38 $10.49 2.10% Class I Actual(b) $1,000 $1,060.20 $ 5.57 1.09% Hypothetical (5% return before expenses) $1,000 $1,019.39 $ 5.46 1.09% Class R4 Actual(b) $1,000 $1,058.30 $ 6.63(c) 1.30% Hypothetical (5% return before expenses) $1,000 $1,018.35 $ 6.51(c) 1.30% Class W Actual(d) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,017.21 $ 7.65 1.53%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +5.88% for Class A, +5.39% for Class B, +5.39% for Class C, +6.02% for Class I and 5.83% for Class R4. (c) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. These changes were effective Dec. 11, 2006. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.31% for Class R4. Any amounts waived will not be reimbursed by the Fund. If these changes had been in place for the six-month period ended April 30, 2007, the actual expenses paid for Class R4 would have been $6.69 and the hypothetical expenses paid for Class R4 would have been $6.56. (d) The actual values and expenses paid are not presented because Class W does not have a full six months of history. The inception date of Class W is Dec. 1, 2006. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 11 INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
BONDS (36.2%) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) ASSET-BACKED (13.1%) AmeriCredit Automobile Receivables Trust Series 2004-CA Cl A3 (AMBAC) 03-06-09 3.00% $72,289(g) $72,278 Capital Auto Receivables Asset Trust Series 2006-SN1A Cl A4B 03-20-10 5.43 1,500,000(d,e) 1,500,000 Citibank Credit Card Issuance Trust Series 2003-A9 Cl A9 11-22-10 5.44 455,000(e) 455,479 College Loan Corp Trust Series 2004-1 Cl A2 04-25-16 5.47 2,500,000(e) 2,505,001 Countrywide Asset-backed Ctfs Series 2007-7 Cl 2A2 10-25-37 5.48 1,000,000(e,j) 1,000,000 Countrywide Home Equity Loan Trust Series 2005-H Cl 2A (FGIC) 12-15-35 5.56 273,076(e,g) 273,033 Countrywide Home Equity Loan Trust Series 2005-M Cl A2 (MBIA) 02-15-36 5.44 891,565(e,g) 891,426 Harley-Davidson Motorcycle Trust Series 2005-1 Cl A1 07-15-09 3.28 152,438 152,080 Residential Asset Securities Series 2006-KS2 Cl A2 03-25-36 5.45 800,000(e) 799,750 SLM Student Loan Trust Series 2003-2 Cl A3 12-15-15 5.45 29,794(e) 29,797 SLM Student Loan Trust Series 2003-4 Cl A3 12-15-15 5.45 79,537(e) 79,545 SLM Student Loan Trust Series 2004-3 Cl A3 04-25-16 5.45 1,158,858(e) 1,159,934 SLM Student Loan Trust Series 2005-5 Cl A1 01-25-18 5.36 146,952(e) 146,998
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) ASSET-BACKED (CONT.) SLM Student Loan Trust Series 2006-2 Cl A2 01-25-17 5.36% $275,244(e) $275,239 SLM Student Loan Trust Series 2006-5 Cl A2 07-25-17 5.35 1,500,000(e) 1,499,532 SLM Student Loan Trust Series 2006-A Cl A1 03-16-20 5.37 1,906,994(e) 1,906,956 Structured Asset Investment Loan Trust Series 2006-1 Cl A1 01-25-36 5.40 178,288(e) 178,205 Volkswagen Auto Lease Trust Series 2005-A Cl A3 05-20-08 3.82 134,690 134,330 --------------- Total 13,059,583 - ----------------------------------------------------------------------------------- COMMERCIAL MORTGAGE-BACKED (3.6%)(f) Morgan Stanley Capital I Series 2003-IQ6 Cl A1 12-15-41 2.80 1,300,252 1,282,719 Morgan Stanley Capital I Series 2006-XLF Cl A2 07-15-19 5.45 1,000,000(d,e) 1,000,187 TrizecHahn Office Properties Trust Series 2001-TZHA Cl C3 03-15-13 6.52 1,363,412(d) 1,373,835 --------------- Total 3,656,741 - ----------------------------------------------------------------------------------- MORTGAGE-BACKED (4.3%)(f) Deutsche Bank Alternative Mtge Loan Trust Collateralized Mtge Obligation Series 2006-AR6 Cl A3 02-25-37 5.41 669,402(e) 669,636 Downey Savings & Loan Assn Mtge Loan Trust Collateralized Mtge Obligation Series 2006-AR2 Cl 2AB1 11-19-37 5.41 1,142,576(b) 1,141,775
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 12 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) MORTGAGE-BACKED (CONT.) $x Harborview Mtge Loan Trust Collateralized Mtge Obligation Series 2006-12 Cl 2A11 01-19-38 5.41% $1,211,900(b) $1,212,858 Harborview Mtge Loan Trust Collateralized Mtge Obligation Series 2006-8 Cl 2A1B 08-21-36 5.57 1,270,598(b) 1,272,887 --------------- Total 4,297,156 - ----------------------------------------------------------------------------------- AUTOMOTIVE (0.4%) American Honda Finance 07-11-08 5.43 400,000(d,e) 400,570 - ----------------------------------------------------------------------------------- BANKING (5.7%) ANZ Natl Intl 08-07-09 5.40 750,000(c,d,e) 749,551 Bank of America Sr Nts 02-17-09 5.51 640,000(e) 641,398 Citigroup 06-09-09 5.48 640,000(e) 641,449 JPMorgan Chase & Co Sr Nts 12-22-08 5.40 400,000(e) 400,188 03-09-09 5.52 250,000(e) 250,746 Rabobank Nederland Sr Nts 01-15-09 5.38 600,000(c,d,e) 600,226 Santander US Debt Unipersonal Bank Guaranteed 09-19-08 5.41 640,000(c,d,e) 641,441 Wachovia Sr Nts 10-28-08 5.41 640,000(e) 640,545 Wells Fargo 03-10-08 5.38 640,000(e) 640,405 World Savings Bank FSB Sr Nts 03-02-09 5.47 400,000(e) 401,072 --------------- Total 5,607,021 - ----------------------------------------------------------------------------------- BROKERAGE (3.3%) Bear Stearns Companies 03-30-09 5.44 750,000(e) 750,652
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) BROKERAGE (CONT.) Credit Suisse First Boston USA Sr Nts 12-09-08 5.47% $640,000(e) $641,524 Lehman Brothers Holdings 10-22-08 5.45 640,000(e) 640,642 Merrill Lynch & Co 08-22-08 5.45 640,000(e) 640,485 Morgan Stanley Sr Unsecured 02-09-09 5.47 640,000(e) 640,813 --------------- Total 3,314,116 - ----------------------------------------------------------------------------------- CONSTRUCTION MACHINERY (1.0%) Caterpillar Financial Services 10-28-08 5.43 400,000(e) 400,482 John Deere Capital 06-10-08 5.47 640,000(e) 640,930 --------------- Total 1,041,412 - ----------------------------------------------------------------------------------- FOOD AND BEVERAGE (0.6%) Diageo Capital 11-10-08 5.46 640,000(c,e) 640,398 - ----------------------------------------------------------------------------------- LIFE INSURANCE (1.7%) ING Security Life Institutional Funding 01-14-08 5.44 640,000(d,e) 640,328 Pacific Life Global Funding 11-13-08 5.45 400,000(d,e) 400,789 Pricoa Global Funding 1 09-12-08 5.35 640,000(d,e) 640,332 --------------- Total 1,681,449 - ----------------------------------------------------------------------------------- NON CAPTIVE DIVERSIFIED (0.6%) General Electric Capital 12-01-08 5.51 640,000(e) 641,046 - ----------------------------------------------------------------------------------- OTHER FINANCIAL INSTITUTIONS (0.6%) Berkshire Hathaway Finance 01-11-08 5.40 640,000(e) 640,780 - ----------------------------------------------------------------------------------- PROPERTY & CASUALTY (0.6%) Allstate Life Global Funding Trusts Secured 11-14-07 5.38 640,000(e) 640,252 - -----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 13
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) WIRELINES (0.7%) BellSouth Sr Unsecured 08-15-08 5.46% $750,000(e) $750,470 - ----------------------------------------------------------------------------------- TOTAL BONDS (Cost: $36,359,087) $36,370,994 - -----------------------------------------------------------------------------------
MONEY MARKET FUND (6.7%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 6,714,142(i) $6,714,142 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $6,714,142) $6,714,142 - -----------------------------------------------------------------------------------
FLOATING RATE NOTES (3.0%) AMOUNT EFFECTIVE PAYABLE AT ISSUER YIELD MATURITY VALUE(A) White Pine Finance LLC 02-25-08 5.35% $3,000,000 $3,000,987 - ----------------------------------------------------------------------------------- TOTAL FLOATING RATE NOTES (Cost: $3,000,398) $3,000,987 - -----------------------------------------------------------------------------------
SHORT-TERM SECURITIES (55.2%) AMOUNT EFFECTIVE PAYABLE AT ISSUER YIELD MATURITY VALUE(A) ASSET-BACKED (34.1%) BA Credit Card Trust 05-02-07 5.15% $3,755,000(h) $3,753,928 CHARTA LLC 07-10-07 5.22 3,000,000(h) 2,969,433 Chesham Finance LLC 06-20-07 5.18 1,000,000 992,712 07-12-07 5.22 3,000,000 2,968,560 Cheyne Finance LLC 06-05-07 5.17 2,000,000 1,989,712 Cullinan Finance 06-05-07 5.17 1,183,000 1,176,914 06-08-07 5.43 1,000,000 994,148
SHORT-TERM SECURITIES (CONTINUED) AMOUNT EFFECTIVE PAYABLE AT ISSUER YIELD MATURITY VALUE(A) ASSET-BACKED (CONT.) Deer Valley Funding LLC 05-15-07 5.16% $3,500,000 $3,492,498 Five Finance 06-22-07 5.36 2,000,000 1,984,348 07-06-07 5.21 1,500,000 1,485,590 Gemini Securitization 06-21-07 5.27 3,500,000(h) 3,473,560 Nelnet Student Asset Funding LLC 05-01-07 5.29 3,035,000 3,034,554 Sigma Finance 05-10-07 5.24 3,000,000 2,995,642 Solitaire Funding LLC 05-16-07 5.16 3,000,000(h) 2,993,141 --------------- Total 34,304,740 - ----------------------------------------------------------------------------------- COMMERCIAL PAPER (21.1%) Dorada Finance 05-11-07 5.32 3,000,000 2,995,127 Ebury Finance LLC 07-05-07 5.21 2,700,000 2,674,455 07-25-07 5.24 950,000 938,246 Fairway Finance LLC 06-14-07 5.27 1,159,000(h) 1,151,409 Irish Life & Permanent 10-16-07 5.28 4,000,000(h) 3,903,307 Scaldis Capital LLC 06-25-07 5.19 3,000,000(h) 2,975,993 Thames Asset Global Securitization #1 05-21-07 5.17 3,555,000(h) 3,544,312 Westpac Banking 05-01-07 5.14 3,000,000(h) 2,999,571 --------------- Total 21,182,420 - ----------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $55,492,203) $55,487,160 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $101,565,830)(k) $101,573,283 ===================================================================================
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 14 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on April 30, 2007. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in U.S. dollar currency unless otherwise noted. At April 30, 2007, the value of foreign securities represented 2.6% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security 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, 2007, the value of these securities amounted to $7,947,259 or 7.9% 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, 2007. (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) The following abbreviations are used in the portfolio security descriptions to identify the insurer of the issue: AMBAC -- Ambac Assurance Corporation FGIC -- Financial Guaranty Insurance Company MBIA -- MBIA Insurance Corporation
(h) 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, 2007, the value of these securities amounted to $27,764,654 or 27.6% of net assets. (i) Affiliated Money Market Fund -- See Note 6 to the financial statements. (j) At April 30, 2007, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $1,000,000. (k) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $101,566,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $18,000 Unrealized depreciation (11,000) - ---------------------------------------------------------------------------- Net unrealized appreciation $7,000 - ----------------------------------------------------------------------------
See Notes 1 and 5 in the Notes to Financial Statements of this report for more detail on open forward foreign currency exchange contracts. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 15 HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- 16 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers (identified cost $94,851,688) $ 94,859,141 Affiliated money market fund (identified cost $6,714,142) (Note 6) 6,714,142 - ---------------------------------------------------------------------------- Total investments in securities (identified cost $101,565,830) 101,573,283 Accrued interest receivable 168,009 Unrealized appreciation on foreign currency contracts held, at value (Note 5) 267,073 - ---------------------------------------------------------------------------- Total assets 102,008,365 - ---------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit 84,458 Payable for securities purchased on a forward-commitment basis (Note 1) 1,000,000 Unrealized depreciation on foreign currency contracts held, at value (Note 5) 292,637 Accrued investment management services fee 7,371 Accrued distribution fee 86 Accrued transfer agency fee 1 Accrued administrative services fee 663 Other accrued expenses 28,029 - ---------------------------------------------------------------------------- Total liabilities 1,413,245 - ---------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $100,595,120 ============================================================================ REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 96,913 Additional paid-in capital 97,045,855 Undistributed net investment income 27,321 Accumulated net realized gain (loss) 3,443,142 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 5) (18,111) - ---------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $100,595,120 ============================================================================
Net assets applicable to outstanding shares: Class A $ 3,895,611 Class B $ 10,364 Class C $ 10,364 Class I $ 96,663,296 Class R4 $ 10,364 Class W $ 5,121 Net asset value per share of outstanding capital stock: Class A shares 375,624 $ 10.37 Class B shares 1,000 $ 10.36 Class C shares 1,000 $ 10.36 Class I shares 9,312,136 $ 10.38 Class R4 shares 1,000 $ 10.36 Class W shares 494 $ 10.37 - ------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 17 STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Interest $2,014,466 Income distributions from affiliated money market fund (Note 6) 369,828 Less foreign taxes withheld (1,298) - -------------------------------------------------------------------------- Total income 2,382,996 - -------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 395,632 Distribution fee Class A 11,549 Class B 51 Class C 51 Class W 5 Transfer agency fee Class A 32 Class B 1 Class R4 2 Class W 4 Service fee -- Class R4 1 Administrative services fees and expenses 35,562 Plan administration services fee -- Class R4 10 Compensation of board members 708 Custodian fees 5,385 Printing and postage 13,025 Registration fees 23,348 Professional fees 11,932 Other 1,033 - -------------------------------------------------------------------------- Total expenses 498,331 Expenses waived/reimbursed by the Investment Manager and its affiliates (Note 2) (2,735) - -------------------------------------------------------------------------- 495,596 Earnings and bank fee credits on cash balances (Note 2) (304) - -------------------------------------------------------------------------- Total net expenses 495,292 - -------------------------------------------------------------------------- Investment income (loss) -- net 1,887,704 - -------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) 11,551 Foreign currency transactions 3,451,968 Payment from affiliate (Note 1) 44,795 - -------------------------------------------------------------------------- Net realized gain (loss) on investments 3,508,314 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (93,632) - -------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 3,414,682 - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $5,302,386 ==========================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 18 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM APRIL 30, 2007 JUNE 15, 2006* TO SIX MONTHS ENDED OCT. 31, 2006 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 1,887,704 $ 846,221 Net realized gain (loss) on investments 3,508,314 738,569 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (93,632) 107,402 - ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 5,302,386 1,692,192 - ------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (179,428) (124,233) Class B (167) (95) Class C (167) (95) Class I (1,730,913) (684,162) Class R4 (209) (130) Class W (80) N/A Net realized gain Class A (98,464) -- Class B (99) -- Class C (99) -- Class I (704,931) -- Class R4 (99) -- Class W (49) N/A - ------------------------------------------------------------------------------------------- Total distributions (2,714,705) (808,715) - ------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class I shares 24,110,747 67,145,518 Class W shares 5,000 N/A Reinvestment of distributions at net asset value Class I shares 2,435,528 684,028 Payments for redemptions Class A shares (6,400,000) -- Class I shares (357,276) (475,083) - ------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 19,793,999 67,354,463 - ------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 22,381,680 68,237,940 Net assets at beginning of period (Note 1) 78,213,440 9,975,500** - ------------------------------------------------------------------------------------------- Net assets at end of period $100,595,120 $78,213,440 =========================================================================================== Undistributed net investment income $ 27,321 $ 50,581 - -------------------------------------------------------------------------------------------
* When shares became publicly available. ** Initial capital of $10,000,000 was contributed on June 8, 2006. The Fund had a decrease in net assets resulting from operations of $24,500 during the period from June 8, 2006 to June 15, 2006 (when shares became publicly available). - -------------------------------------------------------------------------------- See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 19 NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. The Fund invests primarily in short-term debt obligations and forward foreign currency contracts. On June 8, 2006, Ameriprise Financial, Inc. (Ameriprise Financial) invested $10,000,000 in the Fund (996,000 shares for Class A, 1,000 shares for Class B, 1,000 shares for Class C, 1,000 shares for Class I and 1,000 shares for Class R4), which represented the initial capital for each class at $10 per share. Operations commenced on June 15, 2006. As of the date of this report the Fund is only available to certain limited institutional investors and to investors purchasing Class W shares in authorized investment programs managed by investment professionals, including discretionary managed account programs. The Fund offers Class A, Class B, Class C, Class I and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. At April 30, 2007, Ameriprise Financial owned 100% of Class A, B, C and R4 shares and Ameriprise Financial and the affiliated funds-of-funds owned 100% of Class I shares. Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class W, offered through qualifying discretionary accounts. Class W shares are sold without a front-end sales charge or CDSC. At April 30, 2007, Ameriprise Financial owned 100% of Class W shares. - -------------------------------------------------------------------------------- 20 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT At April 30, 2007, Ameriprise Financial and the affiliated funds-of-funds owned 100% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 21 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, 2007, the Fund has entered into outstanding when-issued securities of $1,000,000. 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. 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. - -------------------------------------------------------------------------------- 22 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 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 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. PAYMENT FROM AFFILIATE During the six months ended April 30, 2007, Ameriprise Financial voluntarily reimbursed the Fund $44,795 for a loss on a trading error. 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. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 23 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. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS 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. - -------------------------------------------------------------------------------- 24 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 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 0.89% to 0.70% 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. Other expenses in the amount of $1,364 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $20.50 - - Class B $21.50 - - Class C $21.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $18.50 per shareholder account. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 25 In addition, the Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Effective Dec. 11, 2006, this fee was eliminated. 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. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to Class Y shares. The fee was calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. - -------------------------------------------------------------------------------- 26 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT For the six months ended April 30, 2007, the Investment Manager and its affiliates waived certain fees and expenses (excluding fees and expenses of acquired funds), such that net expenses were 1.35% for Class A, 2.10% for Class B, 2.10% for Class C, 1.09% for Class I and 1.30% for Class R4. Of these waived fees and expenses, the transfer agency fees waived for Class R4 were $2, and the management fees waived at the Fund level were $2,733. In addition, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.47% for Class A, 2.23% for Class B, 2.23% for Class C, 1.12% for Class I, 1.31% for Class R4 and 1.57% for Class W of the Fund's average daily net assets. During the six months ended April 30, 2007, the Fund's custodian and transfer agency fees were reduced by $304 as a result of earnings and bank fee credits from overnight cash balances. The Fund also pays custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $9,795,115 and $7,826,544, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 27 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS I CLASS R4(A) CLASS W(B) - -------------------------------------------------------------------------------------------- Sold -- -- -- 2,364,248 -- 494 Issued for reinvested distributions -- -- -- 239,676 -- -- Redeemed (620,376) -- -- (34,937) -- -- - -------------------------------------------------------------------------------------------- Net increase (decrease) (620,376) -- -- 2,568,987 -- 494 - --------------------------------------------------------------------------------------------
JUNE 15, 2006(C) TO OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS I CLASS R4(A) - -------------------------------------------------------------------------------------------- Sold -- -- -- 6,721,344 -- Issued for reinvested distributions -- -- -- 67,960 -- Redeemed -- -- -- (47,155) -- - -------------------------------------------------------------------------------------------- Net increase (decrease) -- -- -- 6,742,149 -- - --------------------------------------------------------------------------------------------
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007. (c) When shares became publicly available. - -------------------------------------------------------------------------------- 28 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 5. FORWARD FOREIGN CURRENCY CONTRACTS At April 30, 2007, the Fund has forward foreign currency exchange contracts that obligate it to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts 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 23, 2007 16,326,000 14,561,055 $ -- $147,054 Canadian Dollar U.S. Dollar May 23, 2007 2,914,354,000 24,636,116 174,594 -- Japanese Yen U.S. Dollar May 23, 2007 13,485,000 113,146 292 -- Japanese Yen U.S. Dollar May 23, 2007 11,825,000 9,816,292 24,953 -- Swiss Franc U.S. Dollar May 23, 2007 9,811,104 4,905,000 -- 3,779 U.S. Dollar British Pound May 23, 2007 14,675,024 87,684,000 67,234 -- U.S. Dollar Norwegian Krone May 23, 2007 89,023 120,000 -- 115 U.S. Dollar New Zealand Dollar May 23, 2007 24,489,175 32,916,000 -- 141,689 U.S. Dollar New Zealand Dollar - -------------------------------------------------------------------------------------------- Total $267,073 $292,637 - --------------------------------------------------------------------------------------------
6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 29 7. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other RiverSource funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. - -------------------------------------------------------------------------------- 30 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 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. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 31 Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 32 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 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, 2007(J) 2006(B) Net asset value, beginning of period $10.09 $9.98 - ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .20 .12 Net gains (losses) (both realized and unrealized) .38 .11 - ------------------------------------------------------------------------------------------------------------ Total from investment operations .58 .23 - ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.20) (.12) Distributions from realized gains (.10) -- - ------------------------------------------------------------------------------------------------------------ Total distributions (.30) (.12) - ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.37 $10.09 - ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $4 $10 - ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 1.35%(e),(f) 1.37%(e),(f) - ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 3.98%(f) 3.89%(f) - ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 22% 12% - ------------------------------------------------------------------------------------------------------------ Total return(g) 5.88%(h),(i) 2.37%(i) - ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class A would have been 1.36% for the six months ended April 30, 2007 and 1.59% for the period ended Oct. 31, 2006. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. (j) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 33 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(J) 2006(B) Net asset value, beginning of period $10.09 $9.97 - ------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .16 .09 Net gains (losses) (both realized and unrealized) .38 .12 - ------------------------------------------------------------------------------------------------------------- Total from investment operations .54 .21 - ------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.09) Distributions from realized gains (.10) -- - ------------------------------------------------------------------------------------------------------------- Total distributions (.27) (.09) - ------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.36 $10.09 - ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 2.10%(e),(f) 2.16%(e),(f) - ------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 3.26%(f) 3.11%(f) - ------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 22% 12% - ------------------------------------------------------------------------------------------------------------- Total return(g) 5.39%(h),(i) 2.16%(i) - -------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class B would have been 2.11% for the six months ended April 30, 2007 and 2.38% for the period ended Oct. 31, 2006. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. (j) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 34 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(J) 2006(B) Net asset value, beginning of period $10.09 $9.97 - ------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .16 .09 Net gains (losses) (both realized and unrealized) .38 .12 - ------------------------------------------------------------------------------------------------------------- Total from investment operations .54 .21 - ------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.09) Distributions from realized gains (.10) -- - ------------------------------------------------------------------------------------------------------------- Total distributions (.27) (.09) - ------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.36 $10.09 - ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 2.10%(e),(f) 2.16%(e),(f) - ------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 3.26%(f) 3.11%(f) - ------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 22% 12% - ------------------------------------------------------------------------------------------------------------- Total return(g) 5.39%(h),(i) 2.16%(i) - -------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class C would have been 2.11% for the six months ended April 30, 2007 and 2.38% for the period ended Oct. 31, 2006. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. (j) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 35 CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(J) 2006(B) Net asset value, beginning of period $10.10 $9.98 - ------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .21 .13 Net gains (losses) (both realized and unrealized) .39 .12 - ------------------------------------------------------------------------------------------------------------- Total from investment operations .60 .25 - ------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.22) (.13) Distributions from realized gains (.10) -- - ------------------------------------------------------------------------------------------------------------- Total distributions (.32) (.13) - ------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.38 $10.10 - ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $97 $68 - ------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.09%(e),(f) 1.12%(e),(f) - ------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 4.28%(e) 4.37%(e) - ------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 22% 12% - ------------------------------------------------------------------------------------------------------------- Total return(g) 6.02%(h),(i) 2.56%(i) - -------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) Adjusted to an annual basis. (f) 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 1.10% for the six months ended April 30, 2007 and 1.34% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. (j) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 36 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(J) 2006(B) Net asset value, beginning of period $10.09 $9.98 - ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .21 .13 Net gains (losses) (both realized and unrealized) .37 .11 - ------------------------------------------------------------------------------------------------------------ Total from investment operations .58 .24 - ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.21) (.13) Distributions from realized gains (.10) -- - ------------------------------------------------------------------------------------------------------------ Total distributions (.31) (.13) - ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.36 $10.09 - ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 1.30%(e),(f) 1.23%(e),(f) - ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 4.06%(f) 4.04%(f) - ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 22% 12% - ------------------------------------------------------------------------------------------------------------ Total return(g) 5.83%(h),(i) 2.42%(i) - ------------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class R4 would have been 1.35% for the six months ended April 30, 2007 and 1.45% for the period ended Oct. 31, 2006. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. (j) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 37 CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT 31, 2007(B) Net asset value, beginning of period $10.13 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .17 Net gains (losses) (both realized and unrealized) .33 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .50 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.16) Distributions from realized gains (.10) - ----------------------------------------------------------------------------------------------------------- Total distributions (.26) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.37 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.53%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 3.93%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 22% - ----------------------------------------------------------------------------------------------------------- Total return(f) 5.04%(g),(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) During the six months ended April 30, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (h) Not annualized. - -------------------------------------------------------------------------------- 38 RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 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 riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2007 SEMIANNUAL REPORT 39 RIVERSOURCE(R) ABSOLUTE RETURN CURRENCY AND INCOME 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by (RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of LOGO) Ameriprise Financial, Inc. S-6512 A (6/07)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) EMERGING MARKETS FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE EMERGING MARKETS FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 7 Fund Expenses Example............... 10 Investments in Securities........... 12 Financial Statements................ 17 Notes to Financial Statements....... 21 Approval of Investment Management Services Agreement............... 38 Proxy Voting........................ 41
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Emerging Markets Fund (the Fund) seeks to provide shareholders with long-term capital growth. COUNTRY BREAKDOWN Percentage of portfolio assets (PIE CHART) Brazil 13.4 South Korea 10.8 Russia 9.7 Taiwan 9.4 South Africa 9.3 Mexico 8.0 Other(1) 39.4
(1) Includes Hong Kong 6.3%, Indonesia 3.4%, India 2.9%, Israel 2.5%, Malaysia 2.5%, Chile 2.3%, Singapore 2.3%, Luxembourg 2.1%, Czech Republic 1.6%, Turkey 1.5%, Argentina 1.2%, Hungary 1.1%, United Kingdom 1.1%, Colombia 1.0%, Egypt 1.0%, Poland 1.0%, Peru 0.9%, Bermuda 0.8%, China 0.7%, Philippine Islands 0.7%, Thailand 0.7%, Bahamas 0.6%, Canada 0.6% and Cash & Cash Equivalents 0.6%. TOP TEN HOLDINGS Percentage of portfolio assets America Movil ADR Series L (Mexico) 3.6% Taiwan Semiconductor Mfg (Taiwan) 3.6% China Mobile (Hong Kong) 3.5% Petroleo Brasileiro ADR (Brazil) 3.0% Gazprom ADR (Russia) 3.0% Kookmin Bank (South Korea) 2.7% Naspers Series N (South Africa) 2.5% Companhia Vale do Rio Doce ADR (Brazil) 2.4% Impala Platinum Holdings (South Africa) 2.4% Banco Santander Chile ADR (Chile) 2.3%
For further detail about these holdings, please refer to the section entitled "Investments in Securities." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 STYLE MATRIX (STYLE MATRIX GRAPHIC)
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGERS THREADNEEDLE INTERNATIONAL LIMITED
YEARS IN INDUSTRY Julian Thompson 14 Jules Mort 10
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A IDEAX 11/13/96 Class B IEMBX 11/13/96 Class C -- 06/26/00 Class I RSRIX 03/04/04 Class R4(1) -- 11/13/96 Total net assets $627.1 million Number of holdings 85
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 4 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) Riversource Emerging Markets Fund Class A (excluding sales charge) +18.95 Morgan Stanley Capital International (MSCI) Emerging Markets Index(1) (unmanaged) +20.27 Lipper Emerging Markets Funds Index(2) +19.44
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The Morgan Stanley Capital International (MSCI) Emerging Markets Index, an unmanaged market capitalization-weighted index, is designed to measure equity market performance in the global emerging markets. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Emerging Markets Funds Index includes the 30 largest emerging markets funds tracked by Lipper Inc. The index's returns include net reinvested dividends. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL Class A 1.81% Class B 2.57% Class C 2.58% Class I 1.35% Class R4(a) 1.65%(b)
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. (b) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses, before giving effect to any performance incentive adjustment (that increased the management fee by 0.02%), will not exceed 1.64% for Class R4. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 11/13/96) +18.95% +17.81% +31.95% +23.76% +9.54% +10.43% Class B (inception 11/13/96) +18.58% +16.95% +30.99% +22.83% +8.70% +9.58% Class C (inception 6/26/00) +18.54% +16.90% +30.95% +22.85% N/A +12.60% Class I (inception 3/4/04) +19.30% +18.39% +32.59% N/A N/A +26.96% Class R4** (inception 11/13/96) +19.12% +18.09% +32.20% +24.04% +9.74% +10.64% WITH SALES CHARGE Class A (inception 11/13/96) +12.11% +11.04% +29.37% +22.30% +8.89% +9.81% Class B (inception 11/13/96) +14.00% +12.43% +30.20% +22.66% +8.70% +9.58% Class C (inception 6/26/00) +17.63% +15.99% +30.95% +22.85% N/A +12.60%
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 11/13/96) +23.43% +22.16% +26.65% +22.84% +9.26% +10.19% Class B (inception 11/13/96) +23.06% +21.23% +25.69% +21.88% +8.42% +9.34% Class C (inception 6/26/00) +22.99% +21.29% +25.74% +21.95% N/A +12.26% Class I (inception 3/4/04) +23.64% +22.73% +27.26% N/A N/A +26.46% Class R4** (inception 11/13/96) +23.54% +22.29% +26.88% +23.04% +9.45% +10.38% WITH SALES CHARGE Class A (inception 11/13/96) +16.34% +15.14% +24.17% +21.40% +8.61% +9.56% Class B (inception 11/13/96) +18.31% +16.55% +24.84% +21.70% +8.42% +9.34% Class C (inception 6/26/00) +22.04% +20.35% +25.74% +21.95% N/A +12.26%
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I and Class R4 shares. Class I and Class R4 are available to institutional investors only. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 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, 2007. 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 period? A: The Fund increased 18.95% for the six-month period ended April 30, 2007. The Fund underperformed its benchmark, the Morgan Stanley Capital International Emerging Markets Index (MSCI Index), which increased 20.27%. The Fund also underperformed its peer group, the Lipper Emerging Markets Funds Index, which increased 19.44% for the six-month time frame. Q: What factors most significantly affected performance? A: The Fund benefited from a greater-than-MSCI Index position in Latin America, which was the best performing region during the period. The Fund also benefited from having relatively low exposure to Asia, which was the worst performing area during the six-month period. Within these regions, the Fund's exposure to Brazil and Mexico was helpful, but low exposure to China and India offset some of that benefit. Within Latin America, the Fund's holding in Companhia Vale do Rio Doce, a Brazilian iron ore producer, was a major success. The company performed very strongly after its acquisition of Inco, the Canadian nickel producer. However, the Fund's holding in pulp producer Aracruz Celulose, also based in Brazil, turned in disappointing performance during the period. The financials and telecommunications sectors have been particularly strong areas of performance for the Fund. Notable successes include Garanti Bank in Turkey, China Merchants Bank in China and Partner Communications in Israel. The Fund's holding in Maxis Communications, a Malaysian mobile telecommunications operator, also added value to the Fund after the company received a takeover bid at a large premium. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS Weak performers during the period include Bajaj Hindustan, an Indian sugar producer, and Suzlon Energy, a marker of wind turbines also based in India. Bajaj Hindustan was sold during the period as the sugar price weakened significantly. Prime Success International Group, a Hong Kong-based shoemaker with outlets in China, was also a poor performer following a profits warning. THE FUND BENEFITED FROM A GREATER-THAN-MSCI INDEX POSITION IN LATIN AMERICA, WHICH WAS THE BEST PERFORMING REGION DURING THE PERIOD. Q: What changes did you make to the Fund? A: We reduced the Fund's exposure to the energy sector because we do not see much potential earnings growth in the sector. The Fund had a significant overweight relative to the MSCI Index in the energy sector and now the Fund is significantly underweight. We reinvested money from the energy sector into the telecommunications sector. The Fund is now overweight in telecommunications relative to the MSCI Index. We believe that telecommunications stocks have been undervalued, so we added some wireless telecommunications holdings to the Fund's portfolio. We also added exposure to the information technology sector during the period. We sold the Fund's holding in a Mexican-based cement producer that has a lot of exposure to the U.S. housing market and to Spain, where there are also concerns about the outlook for the economy in general and the housing market in particular. We also removed a long-term holding in a Russian brewery stock, which has produced disappointing earnings figures recently. We reduced our stake in Samsung Electronics following disappointing first quarter results from the South Korean company. During the period we added Mexican mobile firm America Movil, which announced very strong first quarter results. WE REDUCED THE FUND'S EXPOSURE TO THE ENERGY SECTOR BECAUSE WE DO NOT SEE MUCH POTENTIAL EARNINGS GROWTH IN THE SECTOR. - -------------------------------------------------------------------------------- 8 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS Q: How are you positioning the Fund in the coming months? A: Interest rates have risen in a number of different countries -- including Mexico and India -- partly reflecting food price inflation, which tends to be a large component of the inflation basket in many emerging economies. But we remain cautiously optimistic about the outlook for emerging markets. We expect corporate earnings to grow by a still robust 15% or so -- albeit down from last year. The Fund remains overweight in Latin America, underweight in Asia and slightly less than neutral in Eastern Europe, the Middle East and Africa. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 10 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,189.50 $ 9.83 1.81% Hypothetical (5% return before expenses) $1,000 $1,015.82 $ 9.05 1.81% Class B Actual(b) $1,000 $1,185.80 $13.93 2.57% Hypothetical (5% return before expenses) $1,000 $1,012.05 $12.82 2.57% Class C Actual(b) $1,000 $1,185.40 $13.93 2.57% Hypothetical (5% return before expenses) $1,000 $1,012.05 $12.82 2.57% Class I Actual(b) $1,000 $1,193.00 $ 7.45 1.37% Hypothetical (5% return before expenses) $1,000 $1,018.00 $ 6.85 1.37% Class R4 Actual(b) $1,000 $1,191.20 $ 9.02(c) 1.66% Hypothetical (5% return before expenses) $1,000 $1,016.56 $ 8.30(c) 1.66%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +18.95% for Class A, +18.58% for Class B, +18.54% for Class C, +19.30% for Class I and +19.12% for Class R4. (c) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses, (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.64% for Class R4. Any amounts waived will not be reimbursed by the Fund. These changes were effective Dec. 11, 2006. If these changes had been in place for the entire six-month period ended April 30, 2007, the actual expenses paid for Class R4 would have been $9.07 and the hypothetical expenses paid for Class R4 would have been $8.35. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 11 INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
COMMON STOCKS (97.0%)(c) ISSUER SHARES VALUE(A) ARGENTINA (1.2%) REAL ESTATE MANAGEMENT & DEVELOPMENT IRSA Inversiones y Representaciones GDR 368,158(b) $7,701,865 - ----------------------------------------------------------------------------------- BAHAMAS (0.6%) MARINE Ultrapetrol Bahamas 186,627(b) 3,919,167 - ----------------------------------------------------------------------------------- BERMUDA (0.8%) REAL ESTATE MANAGEMENT & DEVELOPMENT Hongkong Land Holdings 1,123,000 5,226,169 - ----------------------------------------------------------------------------------- BRAZIL (12.3%) AIRLINES (1.9%) GOL Linhas Aereas Inteligentes ADR 406,711 11,599,398 - ----------------------------------------------------------------------------------- BEVERAGES (0.9%) AmBev ADR 96,333 5,627,774 - ----------------------------------------------------------------------------------- CHEMICALS (0.6%) Braskem Series A 462,700 3,945,291 - ----------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.9%) Cyrela Brazil Realty 547,600 5,945,092 - ----------------------------------------------------------------------------------- METALS & MINING (2.5%) Companhia Vale do Rio Doce ADR 370,318 15,038,614 - ----------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (3.1%) Petroleo Brasileiro ADR 186,535 18,882,938 - ----------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (1.5%) Aracruz Celulose ADR 169,891 9,342,306 - -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) BRAZIL (CONT.) WIRELESS TELECOMMUNICATION SERVICES (0.9%) Tim Participacoes 419,808,000 $2,216,416 Tim Participacoes ADR 100,941 3,639,933 --------------- Total 5,856,349 - ----------------------------------------------------------------------------------- CANADA (0.6%) METALS & MINING Aur Resources 170,000 3,735,405 - ----------------------------------------------------------------------------------- CHILE (2.2%) COMMERCIAL BANKS Banco Santander Chile ADR 283,963 14,027,772 - ----------------------------------------------------------------------------------- CHINA (0.7%) MARINE (0.2%) Yangzijiang Shipbuilding Holdings 1,698,000(b) 1,475,550 - ----------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (0.5%) China Shenhua Energy Series H 1,206,500 2,981,624 - ----------------------------------------------------------------------------------- COLOMBIA (1.0%) COMMERCIAL BANKS BanColombia ADR 225,004 6,313,612 - ----------------------------------------------------------------------------------- CZECH REPUBLIC (1.6%) PHARMACEUTICALS Zentiva 140,660 10,068,935 - ----------------------------------------------------------------------------------- EGYPT (1.0%) DIVERSIFIED TELECOMMUNICATION SERVICES Telecom Egypt 2,214,681 6,211,648 - ----------------------------------------------------------------------------------- HONG KONG (6.2%) COMMERCIAL BANKS (1.1%) Bank of East Asia 1,106,000 6,788,448 - -----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 12 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) HONG KONG (CONT.) REAL ESTATE MANAGEMENT & DEVELOPMENT (1.1%) China Overseas Land & Investment 5,760,000 $6,986,451 - ----------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (0.6%) Prime Success Intl Group 5,420,973 3,564,241 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (3.4%) China Mobile 2,403,000 21,644,472 - ----------------------------------------------------------------------------------- HUNGARY (1.1%) OIL, GAS & CONSUMABLE FUELS MOL Magyar Olaj-es Gazipari 55,694 6,788,614 - ----------------------------------------------------------------------------------- INDIA (2.8%) ELECTRICAL EQUIPMENT (1.4%) Bharat Heavy Electricals 62,383 3,744,581 Suzlon Energy 183,562 5,248,735 --------------- Total 8,993,316 - ----------------------------------------------------------------------------------- IT SERVICES (1.4%) Satyam Computer Services 773,446 8,813,352 - ----------------------------------------------------------------------------------- INDONESIA (3.3%) AUTOMOBILES (0.9%) PT Astra Intl 3,716,000 5,841,344 - ----------------------------------------------------------------------------------- GAS UTILITIES (0.9%) Perusahaan Gas Negara 4,989,500 5,716,274 - ----------------------------------------------------------------------------------- MACHINERY (0.7%) United Tractors 5,397,500 4,645,857 - ----------------------------------------------------------------------------------- MARINE (0.8%) Berlian Laju Tanker 21,904,000(b) 4,715,978 - ----------------------------------------------------------------------------------- ISRAEL (2.5%) PHARMACEUTICALS (1.0%) Teva Pharmaceutical Inds ADR 162,001 6,206,258 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (1.5%) Partner Communications 571,546 9,400,839 - -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) LUXEMBOURG (2.1%) ENERGY EQUIPMENT & SERVICES (1.1%) Tenaris ADR 145,243 $6,733,465 - ----------------------------------------------------------------------------------- METALS & MINING (1.0%) Ternium ADR 231,715(b) 6,233,134 - ----------------------------------------------------------------------------------- MALAYSIA (2.5%) COMMERCIAL BANKS (0.5%) Bumiputra-Commerce Holdings 996,600 3,126,799 - ----------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (0.9%) Genting Group 2,241,000 5,545,090 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (1.1%) Maxis Communications 1,657,300 7,026,564 - ----------------------------------------------------------------------------------- MEXICO (7.9%) COMMERCIAL BANKS (1.4%) Grupo Financiero Banorte Series O 2,029,500 8,823,671 - ----------------------------------------------------------------------------------- HOUSEHOLD DURABLES (1.6%) Consorcio ARA 2,650,000 4,331,726 Corporacion GEO Series B 986,200(b) 5,411,645 --------------- Total 9,743,371 - ----------------------------------------------------------------------------------- METALS & MINING (0.9%) Grupo Mexico Series B 1,017,000 5,479,426 - ----------------------------------------------------------------------------------- MULTILINE RETAIL (0.5%) Grupo Famsa 532,000(b) 3,206,400 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (3.5%) America Movil ADR Series L 428,979 22,534,266 - ----------------------------------------------------------------------------------- PERU (0.9%) METALS & MINING Hochschild Mining 813,944(b) 5,726,208 - ----------------------------------------------------------------------------------- PHILIPPINE ISLANDS (0.7%) REAL ESTATE MANAGEMENT & DEVELOPMENT Filinvest Land 122,749,000(b) 4,516,033 - -----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) POLAND (1.0%) DIVERSIFIED TELECOMMUNICATION SERVICES Telekomunikacja Polska 763,530 $6,119,183 - ----------------------------------------------------------------------------------- RUSSIA (9.2%) ENERGY EQUIPMENT & SERVICES (1.2%) TMK GDR 210,059(b,d,e) 7,646,148 TMK Series S 1(b) 9 --------------- Total 7,646,157 - ----------------------------------------------------------------------------------- MEDIA (0.9%) CTC Media 220,851(b) 5,759,794 - ----------------------------------------------------------------------------------- METALS & MINING (1.0%) Mechel ADR 191,852 6,265,886 - ----------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (3.1%) Gazprom ADR 470,679 18,407,650 NovaTek GDR 20,333(d,e) 1,016,650 --------------- Total 19,424,300 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (3.0%) Mobile Telesystems ADR 163,744 9,022,294 Vimpel-Communications ADR 100,718(b) 9,745,474 --------------- Total 18,767,768 - ----------------------------------------------------------------------------------- SINGAPORE (2.3%) FOOD PRODUCTS (1.2%) China Fishery Group 1,336,000 4,338,171 Golden Agri-Resources 2,023,741 3,266,262 --------------- Total 7,604,433 - ----------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT (1.1%) Keppel Land 1,218,000 7,034,579 - ----------------------------------------------------------------------------------- SOUTH AFRICA (9.2%) DIVERSIFIED FINANCIAL SERVICES (1.6%) FirstRand 2,843,403 10,059,531 - ----------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (1.4%) Massmart Holdings 643,607 8,918,234 - ----------------------------------------------------------------------------------- MEDIA (2.5%) Naspers Series N 617,808 15,512,557 - -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) SOUTH AFRICA (CONT.) METALS & MINING (3.7%) Anglo Platinum 52,722 $8,472,020 Impala Platinum Holdings 462,829 14,934,236 --------------- Total 23,406,256 - ----------------------------------------------------------------------------------- SOUTH KOREA (10.8%) COMMERCIAL BANKS (4.9%) Kookmin Bank 190,335 17,049,565 Shinhan Financial Group 117,090 6,598,078 Woori Finance Holdings 251,740 6,268,235 --------------- Total 29,915,878 - ----------------------------------------------------------------------------------- MACHINERY (2.5%) Doosan Infracore 259,030 8,244,301 Hyundai Heavy Inds 28,742 7,249,833 --------------- Total 15,494,134 - ----------------------------------------------------------------------------------- PHARMACEUTICALS (1.0%) Yuhan 40,322 6,578,847 - ----------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.4%) Hynix Semiconductor 167,549(b) 5,715,389 Samsung Electronics 15,588 9,542,211 --------------- Total 15,257,600 - ----------------------------------------------------------------------------------- TAIWAN (9.4%) COMMUNICATIONS EQUIPMENT (0.6%) Compal Communications 1,144,000 3,997,504 - ----------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS (3.1%) Delta Electronics 1,968,000 6,143,208 Hon Hai Precision Industry 1,563,772 10,305,522 Tripod Technology 678,000 2,527,722 --------------- Total 18,976,452 - ----------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.4%) Chong Hong Construction 1,376,418 2,575,594 - -----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 14 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) TAIWAN (CONT.) SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (5.3%) MediaTek 546,400 $6,790,907 Powertech Technology 926,000 3,448,703 Taiwan Semiconductor Mfg 10,992,235 22,360,937 --------------- Total 32,600,547 - ----------------------------------------------------------------------------------- THAILAND (0.7%) HEALTH CARE PROVIDERS & SERVICES Bumrungrad Hospital 2,929,000 4,327,276 - ----------------------------------------------------------------------------------- TURKEY (1.4%) COMMERCIAL BANKS (1.4%) Turkiye Garanti Bankasi 1,878,963 9,059,853 - ----------------------------------------------------------------------------------- UNITED KINGDOM (1.0%) COMMERCIAL BANKS Standard Chartered 212,795 6,576,755 - ----------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $507,783,494) $608,578,498 - -----------------------------------------------------------------------------------
PREFERRED STOCKS (1.5%) ISSUER SHARES VALUE(A) BRAZIL (1.1%) Eletropaulo Metropolitana de Sao Paulo Series B 137,011,000 $7,101,183 - ----------------------------------------------------------------------------------- RUSSIA (0.4%) Transneft 1,293 2,433,681 - ----------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost: $7,815,576) $9,534,864 - -----------------------------------------------------------------------------------
MONEY MARKET FUND (0.6%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 3,660,583(f) $3,660,583 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $3,660,583) $3,660,583 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $519,259,653)(g) $621,773,945 ===================================================================================
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, 2007, the value of these securities amounted to $8,662,798 or 1.4% of net assets. (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). These securities may be valued at fair value according to procedures approved, in good faith, by the Fund's Board of Directors. Information concerning such security holdings at April 30, 2007, is as follows:
ACQUISITION SECURITY DATES COST - ---------------------------------------------------------------------------------- NovaTek GDR* 03-26-07 $1,210,297 TMK GDR* 10-31-06 4,537,274
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (f) Affiliated Money Market Fund -- See Note 6 to the financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 15 NOTES TO INVESTMENTS IN SECURITIES (CONTINUED) (g) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $519,260,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $109,089,000 Unrealized depreciation (6,575,000) - ------------------------------------------------------------------------------ Net unrealized appreciation $102,514,000 - ------------------------------------------------------------------------------
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 riversource.com/funds. - -------------------------------------------------------------------------------- 16 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers (identified cost $515,599,070) $618,113,362 Affiliated money market fund (identified cost $3,660,583) (Note 6) 3,660,583 - ---------------------------------------------------------------------------- Total investments in securities (identified cost $519,259,653) 621,773,945 Foreign currency holdings (identified cost $1,302,343) (Note 1) 1,290,655 Capital shares receivable 196,863 Dividends and accrued interest receivable 1,237,582 Receivable for investment securities sold 16,942,037 - ---------------------------------------------------------------------------- Total assets 641,441,082 - ---------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit 1,643,231 Capital shares payable 150,440 Payable for investment securities purchased 12,079,987 Unrealized depreciation on foreign currency contracts held, at value (Note 5) 230 Accrued investment management services fee 56,677 Accrued distribution fee 17,603 Accrued transfer agency fee 5,724 Accrued administrative services fee 4,128 Accrued plan administration services fee 161 Other accrued expenses 334,579 - ---------------------------------------------------------------------------- Total liabilities 14,292,760 - ---------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $627,148,322 ============================================================================
- -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 17 STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2007 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 597,822 Additional paid-in capital 446,603,823 Undistributed net investment income 76,637 Accumulated net realized gain (loss) 77,370,898 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 5) 102,499,142 - ---------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $627,148,322 ============================================================================
Net assets applicable to outstanding shares: Class A $481,999,843 Class B $ 85,299,943 Class C $ 5,269,121 Class I $ 46,864,959 Class R4 $ 7,714,456 Net asset value per share of outstanding capital stock: Class A shares 45,461,607 $ 10.60 Class B shares 8,749,828 $ 9.75 Class C shares 538,746 $ 9.78 Class I shares 4,319,489 $ 10.85 Class R4 shares 712,562 $ 10.83 - ------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 18 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 6,226,738 Interest 11,257 Income distributions from affiliated money market fund (Note 6) 187,888 Less foreign taxes withheld (717,186) - ---------------------------------------------------------------------------- Total income 5,708,697 - ---------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 3,399,196 Distribution fee Class A 574,981 Class B 410,789 Class C 25,745 Transfer agency fee Class A 447,830 Class B 85,286 Class C 5,228 Class R4 2,612 Service fee -- Class R4 701 Administrative services fees and expenses 236,924 Plan administration services fee Class R4 7,075 Compensation of board members 5,643 Custodian fees 321,056 Printing and postage 57,316 Registration fees 31,170 Professional fees 18,301 Other 17,347 - ---------------------------------------------------------------------------- Total expenses 5,647,200 Earnings and bank fee credits on cash balances (Note 2) (15,140) - ---------------------------------------------------------------------------- Total net expenses 5,632,060 - ---------------------------------------------------------------------------- Investment income (loss) -- net 76,637 - ---------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) 79,195,351 Foreign currency transactions (558,559) - ---------------------------------------------------------------------------- Net realized gain (loss) on investments 78,636,792 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 24,300,741 - ---------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 102,937,533 - ---------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $103,014,170 ============================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 19 STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 76,637 $ 429,653 Net realized gain (loss) on investments 78,636,792 128,956,749 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 24,300,741 19,880,782 - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 103,014,170 149,267,184 - ---------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A -- (740,974) Class I -- (108,672) Net realized gain Class A (98,237,563) -- Class B (18,756,980) -- Class C (1,197,981) -- Class I (9,663,102) -- Class R4 (1,447,453) -- - ---------------------------------------------------------------------------------------- Total distributions (129,303,079) (849,646) - ---------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class A shares (Note 2) 39,449,149 119,913,683 Class B shares 6,311,055 21,718,034 Class C shares 667,986 1,820,806 Class I shares 3,429,195 18,275,459 Class R4 shares 2,637,670 3,740,915 Reinvestment of distributions at net asset value Class A shares 97,169,998 733,024 Class B shares 18,551,153 -- Class C shares 1,147,176 -- Class I shares 9,658,984 108,604 Class R4 shares 1,447,453 -- Payments for redemptions Class A shares (60,888,056) (102,794,692) Class B shares (Note 2) (11,281,169) (43,209,233) Class C shares (Note 2) (1,012,254) (758,449) Class I shares (5,591,394) (5,997,277) Class R4 shares (1,771,781) (1,609,906) - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 99,925,165 11,940,968 - ---------------------------------------------------------------------------------------- Total increase (decrease) in net assets 73,636,256 160,358,506 Net assets at beginning of period 553,512,066 393,153,560 - ---------------------------------------------------------------------------------------- Net assets at end of period $ 627,148,322 $ 553,512,066 ======================================================================================== Undistributed net investment income $ 76,637 $ -- - ----------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 20 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. The Fund invests primarily in equity securities of emerging markets companies. The Fund offers Class A, Class B, Class C, Class I and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. At April 30, 2007, Ameriprise Financial, Inc. (Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 21 VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. ILLIQUID SECURITIES At April 30, 2007, 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, 2007 was $8,662,798 representing 1.38% of net assets. These securities may be valued at fair value according to procedures approved, 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. - -------------------------------------------------------------------------------- 22 RIVERSOURCE EMERGING MARKETS FUND -- 2007 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. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 23 FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At April 30, 2007, foreign currency holdings consisted of multiple denominations, 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. - -------------------------------------------------------------------------------- 24 RIVERSOURCE EMERGING MARKETS FUND -- 2007 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. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 25 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 1.10% to 0.90% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment 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. The adjustment increased the fee by $151,459 for the six months ended April 30, 2007. 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 an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% annually as the Fund's assets increase. Other expenses in the amount of $3,137 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. - -------------------------------------------------------------------------------- 26 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $19.50 - - Class B $20.50 - - Class C $20.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund will pay the Transfer Agent an annual asset-based fee of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $17.50 per shareholder account. Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Effective Dec. 11, 2006, this fee was eliminated. 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. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to those shares. The fee is calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. Sales charges received by the Distributor for distributing Fund shares were $454,976 for Class A, $22,726 for Class B and $532 for Class C for the six months ended April 30, 2007. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 27 In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Effective Dec. 11, 2006, with the renaming of Class Y as Class R4, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.64% for Class R4. During the six months ended April 30, 2007, the Fund's custodian and transfer agency fees were reduced by $15,140 as a result of earnings and bank fee credits from overnight cash balances. The Fund also pays custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $375,054,354 and $394,313,965, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS I CLASS R4* - ------------------------------------------------------------------------------------- Sold 3,744,914 650,284 67,204 316,870 247,519 Issued for reinvested distributions 9,935,583 2,056,669 126,760 966,865 145,035 Redeemed (5,790,362) (1,161,609) (105,377) (540,673) (178,645) - ------------------------------------------------------------------------------------- Net increase (decrease) 7,890,135 1,545,344 88,587 743,062 213,909 - -------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS I CLASS R4* - ------------------------------------------------------------------------------------- Sold 11,771,328 2,262,284 187,493 1,795,660 359,853 Issued for reinvested distributions 78,315 -- -- 11,456 -- Redeemed (10,104,721) (4,559,033) (78,887) (553,008) (155,126) - ------------------------------------------------------------------------------------- Net increase (decrease) 1,744,922 (2,296,749) 108,606 1,254,108 204,727 - -------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 28 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 5. FORWARD FOREIGN CURRENCY CONTRACTS At April 30, 2007, the Fund has a forward foreign currency exchange contract that obligates it to deliver currency at a specified future date. The unrealized depreciation on this contract is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contract are as follows:
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION - -------------------------------------------------------------------------------------- May 2, 2007 14,500,000 1,323,899 $-- $230 Mexican Peso U.S. Dollar - --------------------------------------------------------------------------------------
6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. 7. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other RiverSource funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 29 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. 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. - -------------------------------------------------------------------------------- 30 RIVERSOURCE EMERGING MARKETS FUND -- 2007 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, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 31 There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 32 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 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, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $11.32 $8.23 $6.27 $5.46 $4.00 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .01 .04 .03 .02 Net gains (losses) (both realized and unrealized) 1.91 3.10 1.95 .84 1.44 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.92 3.11 1.99 .87 1.46 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.02) (.03) (.06) -- Distributions from realized gains (2.64) -- -- -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (2.64) (.02) (.03) (.06) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.60 $11.32 $8.23 $6.27 $5.46 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $482 $425 $295 $191 $155 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.81%(d) 1.81% 1.79% 1.83% 2.02% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .11%(d) .19% .54% .41% .39% - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 145% 124% 128% 174% - ----------------------------------------------------------------------------------------------------------- Total return(e) 18.95%(f) 37.85% 31.83% 16.09% 36.50% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 33 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $10.63 $7.77 $5.95 $5.19 $3.83 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) (.05) (.01) (.02) (.02) Net gains (losses) (both realized and unrealized) 1.79 2.91 1.83 .81 1.38 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.76 2.86 1.82 .79 1.36 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- (.03) -- Distributions from realized gains (2.64) -- -- -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (2.64) -- -- (.03) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.75 $10.63 $7.77 $5.95 $5.19 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $85 $77 $74 $73 $72 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.57%(d) 2.57% 2.55% 2.59% 2.80% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.67%)(d) (.55%) (.24%) (.32%) (.39%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 145% 124% 128% 174% - ----------------------------------------------------------------------------------------------------------- Total return(e) 18.58%(f) 36.81% 30.59% 15.18% 35.51% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- 34 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $10.66 $7.79 $5.97 $5.20 $3.84 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.04) (.06) -- (.01) (.02) Net gains (losses) (both realized and unrealized) 1.80 2.93 1.82 .81 1.38 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.76 2.87 1.82 .80 1.36 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- (.03) -- Distributions from realized gains (2.64) -- -- -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (2.64) -- -- (.03) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.78 $10.66 $7.79 $5.97 $5.20 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $5 $5 $3 $1 $1 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.57%(d) 2.58% 2.56% 2.60% 2.80% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.71%)(d) (.57%) (.19%) (.34%) (.41%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 145% 124% 128% 174% - ----------------------------------------------------------------------------------------------------------- Total return(e) 18.54%(f) 36.84% 30.54% 15.37% 35.42% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 35 CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004(B) Net asset value, beginning of period $11.50 $8.35 $6.36 $6.54 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .03 .06 .01 Net gains (losses) (both realized and unrealized) 1.96 3.16 1.98 (.19) - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.99 3.19 2.04 (.18) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.04) (.05) -- Distributions from realized gains (2.64) -- -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (2.64) (.04) (.05) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.85 $11.50 $8.35 $6.36 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $47 $41 $19 $13 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.37%(e) 1.35% 1.30% 1.35%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .54%(e) .63% .97% .79%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 145% 124% 128% - ----------------------------------------------------------------------------------------------------------- Total return(f) 19.30%(g) 38.36% 32.32% (2.75%)(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 4, 2004 (inception date) to April 30, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 36 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $11.50 $8.33 $6.35 $5.52 $4.04 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .03 .05 .04 .03 Net gains (losses) (both realized and unrealized) 1.95 3.14 1.97 .86 1.45 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.97 3.17 2.02 .90 1.48 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- (.04) (.07) -- Distributions from realized gains (2.64) -- -- -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (2.64) -- (.04) (.07) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.83 $11.50 $8.33 $6.35 $5.52 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $8 $6 $2 $18 $18 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.66%(d) 1.63% 1.59% 1.65% 1.87% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .28%(d) .41% .81% .61% .54% - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 63% 145% 124% 128% 174% - ----------------------------------------------------------------------------------------------------------- Total return(e) 19.12%(f) 38.06% 31.87% 16.50% 36.63% - -----------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 37 APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment manager to the Fund. Under an investment management services agreement (the "IMS Agreement"), RiverSource provides investment advice and other services to the Fund and all RiverSource funds (collectively, the "Funds"). In addition, under the subadvisory agreement between RiverSource and the subadviser (the "Subadviser") (the "Subadvisory Agreement"), the Subadviser performs portfolio management and related services for the Fund. The Fund's Board of Directors (the "Board") and the Board's Investment Review and Contracts Committees monitor these services throughout the year. On an annual basis, the Board, including the independent Board members (the "Independent Directors"), considers renewal of the IMS Agreement and the Subadvisory Agreement (together, the "Advisory Agreements"). RiverSource prepares detailed reports for the Board and its Contracts Committee in March and April, including reports based on data provided by independent organizations to assist the Board in making this determination. In addition, throughout the year, the Board (or its committees) reviews information prepared by RiverSource addressing the services RiverSource provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the Advisory Agreements. At the April 11-12, 2007 in-person Board meeting, independent legal counsel to the Independent Directors reviewed with the Independent Directors various factors relevant to the Board's consideration of advisory agreements and the Board's legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved renewal of the Advisory Agreements. Nature, Extent and Quality of Services Provided by RiverSource and the Subadviser: The Board analyzed various reports and presentations they had received detailing the services performed by RiverSource and the Subadviser, as well as their expertise, resources and capabilities. The Board specifically considered many developments during the past year concerning the services provided by RiverSource, including, in particular, the growing strength and capabilities of many RiverSource offices and the increased investment and resources dedicated to the Fund's operations, particularly in the areas of trading systems, legal and compliance. Further, in connection with the Board's evaluation of the overall package of services provided by RiverSource, the Board considered the quality of the administrative, custody and transfer agency services provided by RiverSource affiliates to the Fund. The Board also reviewed the financial condition of RiverSource and the Subadviser, and each entity's ability to carry out its - -------------------------------------------------------------------------------- 38 RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT responsibilities under the Advisory Agreements. The Board also discussed the acceptability of the terms of the Advisory Agreements (including the relatively broad scope of services required to be performed by RiverSource and the Subadviser). The Board concluded that the services being performed under the Advisory Agreements were of a reasonably high quality. Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board determined that RiverSource and the Subadviser were in a position to continue to provide a high quality and level of services to the Fund. Investment Performance: For purposes of evaluating the nature, extent and quality of services provided under the Advisory Agreements, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered: (i) detailed reports containing data prepared by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group and the net assets of the Fund; and (ii) a report detailing the Fund's performance over various periods (including since inception), recent Fund inflows (and outflows) and a comparison of the Fund's net assets from December 2006 to December 2005. The Board observed that the Fund's investment performance met expectations. Additionally, the Board reviewed the performance of the Subadviser and the overall "subadvised" strategy. They noted, in particular, management's ongoing oversight and monitoring of the Subadviser's investment process and performance. Comparative Fees, Costs of Services Provided and the Profits Realized By RiverSource and its Affiliates from their Relationships with the Fund: The Board reviewed comparative fees and the costs of services to be provided under the Advisory Agreements. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (prepared by an independent organization) showing a comparison of the Fund's expenses with median expenses paid by funds in its peer group, as well as data showing the Fund's contribution to RiverSource's profitability. The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Funds' family, while assuring that the overall fees for each fund are generally in line with the "pricing philosophy" (i.e., that the total expense ratio of each fund, with few exceptions, is at or below the median expense ratio of funds in the same comparison group). The Board took into account that the Fund's total expense ratio (after considering proposed expense caps/waivers) was below the peer group's median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund's management fee was fair and reasonable in light of the extent and quality of services that the Fund receives. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 39 The Board also considered the expected profitability of RiverSource and its affiliates in connection with RiverSource providing investment management services to the Fund. In this regard, they referred to a detailed profitability report, discussing the profitability to RiverSource and Ameriprise Financial from managing and operating the Fund, including data showing comparative profitability over the last three years. The Board also considered the services acquired by the investment manager through the use of commission dollars paid by the Funds on portfolio transactions. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable. Economies of Scale to be Realized: The Board also considered the economies of scale that might be realized by RiverSource as the Fund grows and took note of the extent to which Fund shareholders might also benefit from such growth. The Board considered that the IMS Agreement provides for lower fees as assets increase at pre-established breakpoints and concluded that the IMS Agreement satisfactorily provided for sharing these economies of scale. Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees and subadvisory fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2007, the Board, including all of the Independent Directors, approved the renewal of the Advisory Agreements. - -------------------------------------------------------------------------------- 40 RIVERSOURCE EMERGING MARKETS FUND -- 2007 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 riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS FUND -- 2007 SEMIANNUAL REPORT 41 RIVERSOURCE(R) 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by (RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of LOGO) Ameriprise Financial, Inc. S-6344 M (6/07)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) EMERGING MARKETS BOND FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE EMERGING MARKETS BOND FUND SEEKS TO PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH CURRENT INCOME AND CAPITAL APPRECIATION. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 7 Fund Expenses Example............... 11 Investments in Securities........... 13 Financial Statements................ 17 Notes to Financial Statements....... 22 Approval of Investment Management Services Agreement............... 40 Proxy Voting........................ 42
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Emerging Markets Bond Fund (the Fund) seeks to provide shareholders with high total return through current income and, secondarily, through capital appreciation. COUNTRY BREAKDOWN Percentage of portfolio assets (PIE CHART) Brazil 17.2 Mexico 11.7 Cash & Cash Equivalents 10.3 Argentina 6.6 Turkey 6.5 Indonesia 6.1 Other(1) 41.6
(1) Includes Philippine Islands 5.4%, Russia 5.3%, Colombia 4.7%, Luxembourg 4.4%, Dominican Republic 3.4%, Uruguay 3.2%, Venezuela 3.0%, Panama 2.0%, Peru 1.9%, El Salvador 1.6%, Kazakhstan 1.5%, Ukraine 1.0%, Cayman Islands 0.9%, Jamaica 0.9%, Netherlands 0.7%, United Kingdom 0.7%, Costa Rica 0.6%, United States 0.3% and Malaysia 0.1%. QUALITY BREAKDOWN Percentage of bond portfolio assets (PIE CHART) AA bonds 1.6 A bonds 1.8 BBB bonds 16.5 BB bonds 55.1 B bonds 22.2 Non-rated bonds 2.8
Bond ratings apply to underlying holdings of the Fund and not the Fund itself. Whenever possible, the Standard and Poor's rating is used to determine the credit quality of a security. Standard and Poor's rates the creditworthiness of corporate bonds, with 15 categories, ranging from AAA (highest) to D (lowest). Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. If Standard and Poor's doesn't rate a security, then Moody's rating is used. RiverSource Investments, LLC, the Fund's investment manager, rates a security using an internal rating system when Moody's doesn't provide a rating. There are risks associated with an investment in a bond fund, including credit risk, interest rate risk, and prepayment and extension risk. See the Fund's prospectus for information on these and other risks associated with the Fund. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. Non-investment grade securities, commonly called "high-yield" or "junk" bonds, generally have more volatile prices and carry more risk to principal and income than investment grade securities. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 STYLE MATRIX
DURATION SHORT INT. LONG HIGH MEDIUM QUALITY X LOW
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGER
YEARS IN INDUSTRY Nicholas Pifer, CFA* 17
* The Fund is managed by a team of portfolio managers led by Nicholas Pifer. FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A -- 02/16/06 Class B -- 02/16/06 Class C -- 02/16/06 Class I RSMIX 02/16/06 Class R4(1) -- 02/16/06 Class W REMWX 12/01/06 Total net assets $79.8 million Number of holdings 107
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4. Weighted average life(2) 11.8 years Effective duration(3) 7.0 years Weighted average bond rating(4) BB
(2) 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. (3) 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. (4) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the underlying bonds in the portfolio. - -------------------------------------------------------------------------------- 4 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) RiverSource Emerging Markets Bond Fund Class A (excluding sales charge) +7.25 J.P. Morgan Emerging Markets Bond Index (EMBI)-Global(1)(unmanaged) +5.29 Lipper Emerging Markets Debt Funds Index(2) +6.90
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 4.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-Global), an unmanaged index, is based on U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities, such as Brady bonds, Eurobonds and loans. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Emerging Markets Debt Funds Index includes the 10 largest emerging markets debt funds tracked by Lipper Inc. The index's returns include reinvested dividends. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL NET EXPENSES(A) Class A 1.81% 1.45% Class B 2.57% 2.21% Class C 2.57% 2.21% Class I 1.46% 1.10% Class R4(b) 1.79% 1.29% Class W(c) 1.94% 1.45%
(a) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses will not exceed 1.45% for Class A, 2.21% for Class B, 2.21% for Class C, 1.10% for Class I, 1.29% for Class R4 and 1.45% for Class W. (b) Effective Dec. 11, 2006, Class Y was renamed Class R4. (c) Inception date for Class W is Dec. 1, 2006, expenses are based on estimated amounts for the current fiscal year. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 2/16/06) +7.25% +13.94% +10.71% Class B (inception 2/16/06) +6.84% +12.95% +9.88% Class C (inception 2/16/06) +6.78% +12.88% +9.79% Class I (inception 2/16/06) +7.41% +14.28% +11.02% Class R4** (inception 2/16/06) +7.32% +13.98% +10.78% Class W (inception 12/1/06) N/A N/A +5.98%* WITH SALES CHARGE Class A (inception 2/16/06) +2.15% +8.52% +6.31% Class B (inception 2/16/06) +1.84% +7.95% +6.60% Class C (inception 2/16/06) +5.78% +11.88% +9.79%
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 2/16/06) +7.75% +11.98% +9.81% Class B (inception 2/16/06) +7.34% +11.13% +9.07% Class C (inception 2/16/06) +7.27% +11.08% +8.97% Class I (inception 2/16/06) +7.91% +12.31% +10.10% Class R4** (inception 2/16/06) +7.82% +12.13% +9.96% Class W (inception 12/1/06) N/A N/A +4.22%* WITH SALES CHARGE Class A (inception 2/16/06) +2.63% +6.66% +5.13% Class B (inception 2/16/06) +2.34% +6.13% +5.52% Class C (inception 2/16/06) +6.27% +10.08% +8.97%
Class A share performance reflects the maximum sales charge of 4.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, Nic Pifer, portfolio manager for RiverSource Emerging Markets Bond Fund, discusses the Fund's results and positioning for the six months ended April 30, 2007. At April 30, 2007, approximately 72% of the Fund's shares were owned in aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC (RiverSource). As a result of asset allocation decisions by RiverSource, it is possible RiverSource Emerging Markets Bond Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 29, Class I capital share transactions for related activity during the most recent fiscal period). RiverSource seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. RiverSource Emerging Markets Bond Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information on the Fund's expenses, see the discussions beginning on pages 11 and 27. Q: How did RiverSource Emerging Markets Bond Fund perform for the six months ended April 30, 2007? A: RiverSource Emerging Markets Bond Fund's Class A shares increased 7.25% (excluding sales charge) for the six months ended April 30, 2007. The Fund outperformed both its benchmark, the J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-Global), which increased 5.29%, and the Lipper Emerging Markets Debt Funds Index, representing the Fund's peer group, which increased 6.90%, during the same period. Q: What factors most significantly affected the Fund's performance? A: The Fund portfolio's holdings of assets with average yields higher than the J.P. Morgan EMBI-Global was a primary contributor to the Fund's outperformance. Fund holdings of local currency-denominated sovereign bonds and U.S. dollar-denominated corporate bonds also contributed significantly to the Fund's outperformance during the semiannual period. Also benefiting the Fund's returns during the period was the movement of certain foreign currencies in which the Fund was invested. For example, the Brazilian real outperformed both the U.S. dollar and the J.P. Morgan EMBI- Global during the six-month period. Several other Latin American currencies also outpaced the Fund's benchmark index. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS A third factor contributing to the Fund's performance during the period was a decline in interest rates in Brazil and Colombia, where the Fund held sizable positions in local currency-denominated assets. As these bond markets rallied, the Fund's holdings there outperformed the J.P. Morgan EMBI-Global. Detracting somewhat from the Fund's results was the combined effect of holding a percentage of assets in cash and maintaining a duration shorter than that of the J.P. Morgan EMBI-Global during a period when U.S. Treasury rates rallied. We implemented this somewhat defensive duration strategy because we believed that U.S. Treasury rates had declined to levels that appeared too low. Rather than rising as we had anticipated though, rates continued to fall through the period. Duration is a measure of the Fund's sensitivity to interest rate changes. Q: What changes did you make to the Fund's portfolio during the period and how is it currently positioned? A: During the period, we gradually and opportunistically increased the portfolio's foreign currency exposure, especially in Brazil, Indonesia, Mexico and Colombia. We carried out this strategy in the context of a U.S. dollar that was depreciating against most of the major currencies during the semiannual period. Several emerging market currencies also benefitted from a robust investor risk appetite. Also, during the reporting period, we increased the Fund's allocation to corporate debt, as we saw attractive value in select corporate bonds. We particularly found opportunities to invest in certain corporate bonds within Brazil, Argentina and Kazakhstan. As of April 30, 2007, approximately 76% of the Fund's net assets were invested in sovereign debt and approximately 20% in corporate debt with the remainder in cash and cash equivalents. The Fund had its most significant allocations relative to the J.P. Morgan EMBI-Global in the bond markets of Colombia, Argentina, Uruguay, Dominican Republic, Jamaica and El Salvador. Conversely, it had its most modest exposures relative to the benchmark index in the bond markets of Venezuela, Malaysia, Turkey and Russia. The Fund had relatively neutral allocations compared to the benchmark index in the Philippines and Peru. - -------------------------------------------------------------------------------- 8 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS DURING THE PERIOD, WE GRADUALLY AND OPPORTUNISTICALLY INCREASED THE PORTFOLIO'S FOREIGN CURRENCY EXPOSURE, ESPECIALLY IN BRAZIL, INDONESIA, MEXICO AND COLOMBIA. Q: What is the Fund's tactical view and strategy for the months ahead? A: Based primarily on our value analysis, we continue to seek opportunities to invest in local currency-denominated sovereign bonds and U.S. dollar- denominated corporate bonds in emerging markets. At the same time, we have begun to see increased levels of corporate debt issuance, which means careful issue selection will likely become increasingly important in the months ahead. From a country perspective, we are monitoring opportunities in Indonesia, as it has recently been the beneficiary of strong economic growth and a healthy balance of payments. We believe there remains attractive relative value both in its local currency-denominated debt and in its U.S. dollar-denominated issues. 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. Three years of double-digit annual returns from investing in emerging markets likely suggest more modest returns for 2007, as we have already seen this year to date. Nonetheless, we believe more developing countries will continue to move into the emerging markets debt 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 use the capital markets. We expect that many existing emerging market countries will continue to deepen their local capital markets, which should present more liquid foreign currency investment opportunities to investors as well. FROM A COUNTRY PERSPECTIVE, WE ARE MONITORING OPPORTUNITIES IN INDONESIA, AS IT HAS RECENTLY BEEN THE BENEFICIARY OF STRONG ECONOMIC GROWTH AND A HEALTHY BALANCE OF PAYMENTS. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 9 QUESTIONS & ANSWERS 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. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- 10 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 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, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,072.50 $ 6.89 1.34% Hypothetical (5% return before expenses) $1,000 $1,018.15 $ 6.71 1.34% Class B Actual(b) $1,000 $1,068.40 $10.87 2.12% Hypothetical (5% return before expenses) $1,000 $1,014.28 $10.59 2.12% Class C Actual(b) $1,000 $1,067.80 $10.77 2.10% Hypothetical (5% return before expenses) $1,000 $1,014.38 $10.49 2.10% Class I Actual(b) $1,000 $1,074.10 $ 5.19 1.01% Hypothetical (5% return before expenses) $1,000 $1,019.79 $ 5.06 1.01% Class R4 Actual(b) $1,000 $1,073.20 $ 6.58(c) 1.28% Hypothetical (5% return before expenses) $1,000 $1,018.45 $ 6.41(c) 1.28% Class W Actual(d) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,018.55 $ 6.31 1.26%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +7.25% for Class A, +6.84% for Class B, +6.78% for Class C, +7.41% for Class I and +7.32% for Class R4. (c) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. These changes were effective Dec. 11, 2006. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.29% for Class R4. Any amounts waived will not be reimbursed by the Fund. If these changes had been in place for the entire six-month period ended April 30, 2007, the actual expenses paid for Class R4 would have been $6.63 and the hypothetical expenses paid for Class R4 would have been $6.46. (d) The actual values and expenses paid are not presented because Class W does not have a full six months of history. The inception date for Class W is Dec. 1, 2006. - -------------------------------------------------------------------------------- 12 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
BONDS (91.2%)(c) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) ARGENTINA (6.8%) Province of Buenos Aires 09-14-18 9.38% $1,000,000(d) $1,026,250 Province of Mendoza 09-04-18 5.50 321,034(d) 274,885 Republic of Argentina 03-28-11 7.00 325,000 326,788 08-03-12 5.48 150,000(f) 108,975 09-12-13 7.00 750,000 732,749 04-17-17 7.00 600,000 550,800 12-31-33 8.28 295,482 317,939 12-15-35 5.00 4,550,000(b) 691,600 Banco Hipotecario Sr Unsecured 04-27-16 9.75 975,000(d) 1,028,625 Banco Macro 02-01-17 8.50 300,000(d) 306,888 --------------- Total 5,365,499 - ---------------------------------------------------------------------------------- BRAZIL (17.6%) Federative Republic of Brazil 03-07-15 7.88 150,000 171,750 01-17-17 6.00 2,150,000 2,190,850 10-14-19 8.88 1,078,000 1,369,060 04-15-24 8.88 312,000 412,308 01-20-34 8.25 308,000 395,934 08-17-40 11.00 744,000 1,009,608 Federative Republic of Brazil (Brazilian Real) 01-10-28 10.25 1,000,000 544,071 Merrill Lynch & Co (Brazilian Real) 03-08-17 10.71 2,240,000 1,157,644 Banco ABN AMRO Real (Brazilian Real) 02-22-10 16.20 1,350,000 755,242 Banco BMG 01-15-16 9.15 650,000(d) 702,000 Banco Bradesco (Brazilian Real) 01-04-10 14.80 800,000(d) 433,274
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) BRAZIL (CONT.) Bertin Ltda Sr Unsub 10-05-16 10.25% $800,000(d) $892,999 BIE Bank & Trust (Brazilian Real) Sr Nts 02-02-09 14.10 250,000 129,325 Centrais Eletricas Brasileiras Sr Nts 11-30-15 7.75 486,000(d) 543,713 Eletropaulo Metropolitana de Sao Paulo (Brazilian Real) 06-28-10 19.13 2,400,000(d) 1,418,798 ISA Capital do Brasil Sr Nts 01-30-17 8.80 250,000(d) 269,375 JBS 02-07-11 9.38 400,000 422,000 JBS Sr Unsub 08-04-16 10.50 600,000(d) 687,000 Marfrig Overseas 11-16-16 9.63 450,000(d) 480,938 --------------- Total 13,985,889 - ---------------------------------------------------------------------------------- CAYMAN ISLANDS (0.9%) Peru Enhanced Pass-Thru Zero Coupon 05-31-18 3.78 1,084,000(d,g) 742,540 - ---------------------------------------------------------------------------------- COLOMBIA (4.7%) Republic of Colombia 01-27-17 7.38 480,000 528,960 05-21-24 8.13 152,000 181,412 09-18-37 7.38 1,400,000 1,565,200 Republic of Colombia (Colombian Peso) 03-01-10 11.75 1,000,000,000 506,612 10-22-15 12.00 1,808,000,000 991,037 --------------- Total 3,773,221 - ----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 13
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) COSTA RICA (0.6%) Republic of Costa Rica 02-01-12 8.11% $290,000(d) $317,550 03-20-14 6.55 180,000(d) 185,400 --------------- Total 502,950 - ---------------------------------------------------------------------------------- DOMINICAN REPUBLIC (3.5%) Dominican Republic 01-23-18 9.04 278,709(d) 323,999 04-20-27 8.63 250,000(d) 291,000 Aes Dominicana Energia Finance 12-13-15 11.00 700,000(d) 754,250 Cerveceria Nacional Dominicana Sr Unsecured 03-27-12 16.00 850,000(d) 935,150 EGE Haina Finance 04-26-17 9.50 450,000(d) 461,250 --------------- Total 2,765,649 - ---------------------------------------------------------------------------------- EL SALVADOR (1.6%) Republic of El Salvador 06-15-35 7.65 1,140,000(d) 1,316,700 - ---------------------------------------------------------------------------------- INDONESIA (6.2%) Republic of Indonesia 04-20-15 7.25 260,000(d) 281,125 02-17-37 6.63 1,450,000(d) 1,435,500 Republic of Indonesia (Indonesian Rupiah) 10-15-14 11.00 13,000,000,000 1,559,141 07-15-17 10.00 15,000,000,000 1,689,591 --------------- Total 4,965,357 - ---------------------------------------------------------------------------------- JAMAICA (0.9%) Government of Jamaica 03-15-39 8.00 700,000 703,500 - ---------------------------------------------------------------------------------- KAZAKHSTAN (1.6%) Kazkommerts Intl 11-03-15 8.00 300,000(d) 303,000 TuranAlem Finance 04-25-13 7.75 300,000(d) 296,250 02-10-15 8.50 400,000(d) 403,000 01-22-37 8.25 250,000(d) 250,938 --------------- Total 1,253,188 - ----------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) LUXEMBOURG (4.4%) Gaz Capital for Gazprom 11-22-16 6.21% $200,000(d) $202,000 Gaz Capital for Gazprom Sr Unsecured 03-07-22 6.51 900,000(d) 925,875 MHP 11-30-11 10.25 600,000(d) 631,500 TNK-BP Finance 07-18-16 7.50 600,000(d) 637,981 03-20-17 6.63 600,000(d) 599,630 UBS (Vimplecom) 05-23-16 8.25 500,000(d) 536,500 --------------- Total 3,533,486 - ---------------------------------------------------------------------------------- MALAYSIA (0.1%) TNB Capital 05-05-15 5.25 117,000(d) 116,396 - ---------------------------------------------------------------------------------- MEXICO (12.0%) Pemex Project Funding Master Trust 12-15-15 5.75 1,943,000 1,973,117 02-01-22 8.63 2,543,000 3,206,723 06-15-35 6.63 100,000(d) 105,500 06-15-35 6.63 1,009,000 1,069,540 Mexican Fixed Rate Bonds (Mexican Peso) 12-20-12 9.00 9,600,000 927,598 12-18-14 9.50 4,000,000 402,791 Controladora Comerical Mexicana (Mexican Peso) 03-30-27 8.70 9,000,000(d) 817,846 Vitro Sr Unsecured 02-01-17 9.13 970,000(d) 1,018,500 --------------- Total 9,521,615 - ---------------------------------------------------------------------------------- NETHERLANDS (0.7%) Majapahit Holding 10-17-16 7.75 500,000(d) 529,375 - ---------------------------------------------------------------------------------- PANAMA (2.0%) Republic of Panama 03-15-15 7.25 503,000 550,785 09-30-27 8.88 250,000 323,750 04-28-34 8.13 575,000 704,375 --------------- Total 1,578,910 - ----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 14 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) PERU (1.9%) Republic of Peru 05-03-16 8.38% $825,000 $986,700 07-21-25 7.35 209,000 242,440 03-14-37 6.55 306,000 323,748 --------------- Total 1,552,888 - ---------------------------------------------------------------------------------- PHILIPPINE ISLANDS (5.5%) Republic of Philippines 01-15-14 8.25 150,000 168,000 03-17-15 8.88 187,000 219,491 01-15-19 9.88 220,000 284,625 10-21-24 9.50 1,241,000 1,619,505 01-14-31 7.75 1,046,000 1,184,595 01-15-32 6.38 500,000 486,875 National Power 11-02-16 6.88 400,000(d) 408,000 --------------- Total 4,371,091 - ---------------------------------------------------------------------------------- RUSSIA (5.3%) Russian Federation 03-31-10 8.25 153,338(d) 160,238 03-31-30 7.50 2,553,170(d) 2,901,040 Russian Ministry of Finance 05-14-11 3.00 220,000 200,275 Gazstream 07-22-13 5.63 346,562(d) 346,995 Russian Standard Finance Sr Unsub 05-05-11 8.63 650,000(d) 657,313 --------------- Total 4,265,861 - ---------------------------------------------------------------------------------- TURKEY (6.7%) Republic of Turkey 01-15-14 9.50 290,000 336,038 03-15-15 7.25 1,979,000 2,063,107 09-26-16 7.00 850,000 869,125 02-05-25 7.38 1,600,000 1,648,000 02-14-34 8.00 200,000 220,278 03-17-36 6.88 150,000 145,313 --------------- Total 5,281,861 - ----------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UKRAINE (1.0%) Credit Suisse First Boston Intl for City of Kiev Ukraine 11-06-15 8.00% $100,000(d) $106,000 Govt of Ukraine 11-21-16 6.58 200,000(d) 203,000 CS Intl 02-09-16 8.40 300,000 312,300 Standard Bank London Holdings for NAK Naftogaz Ukrainy 09-30-09 8.13 200,000 202,480 --------------- Total 823,780 - ---------------------------------------------------------------------------------- UNITED KINGDOM (0.8%) UK SPV Credit Finance for JSC Commercial Bank Privatbank 02-06-12 8.00 600,000(d) 601,740 - ---------------------------------------------------------------------------------- UNITED STATES (0.3%) Freeport-McMoRan Copper & Gold Sr Unsecured 04-01-15 8.25 240,000 259,500 - ---------------------------------------------------------------------------------- URUGUAY (3.2%) Republic of Uruguay 05-17-17 9.25 100,000 123,750 11-18-22 8.00 395,000 453,263 Republic of Uruguay Pay-in-kind 01-15-33 7.88 100,000(e) 114,750 Republica Orient Uruguay 03-21-36 7.63 1,208,939 1,350,988 Republica Orient Uruguay (Uraguay Peso) 04-05-27 4.25 12,135,000 524,196 --------------- Total 2,566,947 - ---------------------------------------------------------------------------------- VENEZUELA (3.0%) Republic of Venezuela 10-08-14 8.50 774,000 853,722 02-26-16 5.75 1,465,000 1,364,720 01-13-34 9.38 171,000 214,349 --------------- Total 2,432,791 - ---------------------------------------------------------------------------------- TOTAL BONDS (Cost: $69,145,433) $72,810,734 - ----------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 15
MONEY MARKET FUND (10.5%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 8,393,157(h) $8,393,157 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $8,393,157) $8,393,157 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $77,538,590)(i) $81,203,891 ===================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) This is a variable rate security that entitles holders to receive only interest payments. Interest is paid annually, and the rate is 5% of Argentina GDP growth that exceeds the projected real GDP from Dec. 31, 2004, at an annual growth rate of 3%. (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, 2007, the value of these securities amounted to $27,867,826 or 34.9% of net assets. (e) Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or in additional securities. The securities usually have the same terms as the original holdings. (f) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on April 30, 2007. (g) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (h) Affiliated Money Market Fund -- See Note 6 to the financial statements. (i) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $77,539,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $3,701,000 Unrealized depreciation (36,000) - ------------------------------------------------------------------------------ Net unrealized appreciation $3,665,000 - ------------------------------------------------------------------------------
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 riversource.com/funds. - -------------------------------------------------------------------------------- 16 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers (identified cost $69,145,433) $72,810,734 Affiliated money market fund (identified cost $8,393,157) (Note 6) 8,393,157 - --------------------------------------------------------------------------- Total investments in securities (identified cost $77,538,590) 81,203,891 Cash in bank on demand deposit 23,874 Foreign currency holdings (identified cost $125,869) (Note 1) 126,444 Capital shares receivable 5,488,096 Accrued interest receivable 1,083,856 Receivable for investment securities sold 267,809 Unrealized appreciation on foreign currency contracts held, at value (Note 5) 193 - --------------------------------------------------------------------------- Total assets 88,194,163 - --------------------------------------------------------------------------- LIABILITIES Capital shares payable 14,995 Payable for investment securities purchased 8,331,995 Unrealized depreciation on foreign currency contracts held, at value (Note 5) 642 Accrued investment management services fee 4,094 Accrued distribution fee 391 Accrued transfer agency fee 135 Accrued administrative services fee 455 Other accrued expenses 37,331 - --------------------------------------------------------------------------- Total liabilities 8,390,038 - --------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $79,804,125 ===========================================================================
- -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 17 STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2007 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 75,340 Additional paid-in capital 75,092,547 Undistributed net investment income 82,675 Accumulated net realized gain (loss) 880,242 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 5) 3,673,321 - --------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $79,804,125 ===========================================================================
Net assets applicable to outstanding shares: Class A $13,527,015 Class B $ 547,917 Class C $ 61,935 Class I $57,206,289 Class R4 $ 15,107 Class W $ 8,445,862 Net asset value per share of outstanding capital stock: Class A shares 1,276,958 $ 10.59 Class B shares 51,755 $ 10.59 Class C shares 5,859 $ 10.57 Class I shares 5,400,211 $ 10.59 Class R4 shares 1,427 $ 10.59 Class W shares 797,836 $ 10.59 - ------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 18 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Interest $1,915,386 Income distributions from affiliated money market fund (Note 6) 89,374 Less foreign taxes withheld (34,980) - -------------------------------------------------------------------------- Total income 1,969,780 - -------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 202,881 Distribution fee Class A 15,607 Class B 2,789 Class C 273 Class W 516 Transfer agency fee Class A 4,046 Class B 250 Class C 22 Class R4 4 Class W 413 Service fee -- Class R4 2 Administrative services fees and expenses 22,542 Plan administration services fee -- R4 14 Compensation of board members 555 Custodian fees 6,901 Printing and postage 13,670 Registration fees 24,600 Professional fees 11,505 Other 3,472 - -------------------------------------------------------------------------- Total expenses 310,062 Expenses waived/reimbursed by the Investment Manager and its affiliates (Note 2) (1,055) - -------------------------------------------------------------------------- Total net expenses 309,007 - -------------------------------------------------------------------------- Investment income (loss) -- net 1,660,773 - -------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) 973,074 Foreign currency transactions 16,158 - -------------------------------------------------------------------------- Net realized gain (loss) on investments 989,232 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,502,019 - -------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 2,491,251 - -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $4,152,024 ==========================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 19 STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 2007 FOR THE PERIOD FROM SIX MONTHS ENDED FEB. 16, 2006* TO (UNAUDITED) OCT. 31, 2006 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 1,660,773 $ 1,472,122 Net realized gain (loss) on investments 989,232 (24,286) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,502,019 2,200,317 - ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 4,152,024 3,648,153 - ------------------------------------------------------------------------------------------ Distributions to shareholders from: Net investment income Class A (343,113) (361,037) Class B (13,049) (9,533) Class C (1,348) (927) Class I (1,256,854) (1,064,373) Class R4 (408) (456) Class W (15,432) N/A Net realized gain Class A (18,393) -- Class B (880) -- Class C (83) -- Class I (59,853) -- Class R4 (22) -- Class W (8) N/A - ------------------------------------------------------------------------------------------ Total distributions (1,709,443) (1,436,326) - ------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 20 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
APRIL 30, 2007 FOR THE PERIOD FROM SIX MONTHS ENDED FEB. 16, 2006* TO (UNAUDITED) OCT. 31, 2006 CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class A shares (Note 2) $ 1,472,413 $ 1,661,325 Class B shares 182,399 633,827 Class C shares 22,455 50,525 Class I shares 18,151,742 48,766,475 Class R4 shares 5,990 3,950 Class W shares 9,544,705 N/A Reinvestment of distributions at net asset value Class A shares 63,898 33,503 Class B shares 12,407 8,237 Class C shares 1,014 483 Class I shares 1,316,394 1,064,028 Class R4 shares 127 119 Class W shares 15,315 N/A Payments for redemptions Class A shares (198,736) (199,501) Class B shares (Note 2) (179,779) (152,644) Class C shares (Note 2) (2,502) (23,086) Class I shares (11,520,269) (4,452,607) Class R4 shares (6,002) -- Class W shares (1,146,856) N/A - ------------------------------------------------------------------------------------------ Increase (decrease) in net assets from capital share transactions 17,734,715 47,394,634 - ------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 20,177,296 49,606,461 Net assets at beginning of period (Note 1) 59,626,829 10,020,368** - ------------------------------------------------------------------------------------------ Net assets at end of period $ 79,804,125 $59,626,829 ========================================================================================== Undistributed net investment income $ 82,675 $ 52,106 - ------------------------------------------------------------------------------------------
* When shares became publicly available. ** Initial capital of $10,045,040 was contributed on Feb. 9, 2006. The Fund had a 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. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 21 NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. 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, Class I and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. At April 30, 2007, Ameriprise Financial and the affiliated funds-of-funds owned 100% of Class I shares. Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class W, offered through qualifying discretionary accounts. Class W shares are sold without a front-end sales charge or CDSC. At April 30, 2007, Ameriprise Financial and the affiliated funds-of-funds owned approximately 85% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. * Includes $45,040 invested by the RiverSource Income Builder Funds. ** Includes 4,504 shares purchased by the RiverSource Income Builder Funds. - -------------------------------------------------------------------------------- 22 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 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. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. 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, 2007, the Fund had no outstanding forward-commitments. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 23 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. 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. - -------------------------------------------------------------------------------- 24 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At April 30, 2007, foreign currency holdings were comprised of Indonesian rupiahs and Mexican pesos. 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. 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. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 25 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. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS 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. - -------------------------------------------------------------------------------- 26 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 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. Other expenses in the amount of $765 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $20.50 - - Class B $21.50 - - Class C $21.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $18.50 per shareholder account. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 27 In addition, the Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Effective Dec. 11, 2006, this fee was eliminated. 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. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to Class Y shares. The fee was calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. Sales charges received by the Distributor for distributing Fund shares were $12,758 for Class A and $731 for Class B for the six months ended April 30, 2007. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. - -------------------------------------------------------------------------------- 28 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT For the six months ended April 30, 2007, the Investment Manager and its affiliates waived certain fees and expenses (excluding fees and expenses of acquired funds), such that net expenses were 1.34% for Class A, 2.12% for Class B, 2.10% for Class C, 1.01% for Class I and 1.28% for Class R4. Of these waived fees and expenses, the management fees waived at the Fund level were $1,055. In addition, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.45% for Class A, 2.21% for Class B, 2.21% for Class C, 1.10% for Class I, 1.29% for Class R4 and 1.45% for Class W of the Fund's average daily net assets. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $37,487,464 and $20,346,069, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS I CLASS R4(A) CLASS W(B) - ------------------------------------------------------------------------------------------ Sold 142,425 17,703 2,184 1,731,785 583 905,880 Issued for reinvested distributions 6,147 1,197 98 126,856 12 1,449 Redeemed (19,153) (17,354) (241) (1,122,316) (583) (109,493) - ------------------------------------------------------------------------------------------ Net increase (decrease) 129,419 1,546 2,041 736,325 12 797,836 - ------------------------------------------------------------------------------------------
FEB. 16, 2006(C) TO OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS I CLASS R4(A) - ------------------------------------------------------------------------------------------ Sold 168,404 64,048 5,108 4,998,724 403 Issued for reinvested distributions 3,416 840 49 108,529 12 Redeemed (20,281) (15,679) (2,339) (448,871) -- - ------------------------------------------------------------------------------------------ Net increase (decrease) 151,539 49,209 2,818 4,658,382 415 - ------------------------------------------------------------------------------------------
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007. (c) When shares became publicly available. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 29 5. FORWARD FOREIGN CURRENCY CONTRACTS At April 30, 2007, the Fund has forward foreign currency exchange contracts that obligate it to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts 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 1, 2007 582,340 5,278,908,840 $ -- $642 U.S. Dollar Indonesian Rupiah May 4, 2007 583,890 5,300,552,486 193 -- U.S. Dollar Indonesian Rupiah - ------------------------------------------------------------------------------------------ Total $193 $642 - ------------------------------------------------------------------------------------------
6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. 7. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other RiverSource funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. - -------------------------------------------------------------------------------- 30 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. 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 EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 31 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, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. - -------------------------------------------------------------------------------- 32 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 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. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 33 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, 2007(I) 2006(B) Net asset value, beginning of period $10.16 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .28 .33 Net gains (losses) (both realized and unrealized) .45 .18 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .73 .51 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.28) (.33) Distributions from realized gains (.02) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.30) (.33) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 $10.16 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $14 $12 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.34%(e) 1.39%(e),(f) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 5.65%(e) 5.20%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% 32% - ----------------------------------------------------------------------------------------------------------- Total return(g) 7.25%(h) 5.25%(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class A would have been 1.81% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. (i) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 34 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(I) 2006(B) Net asset value, beginning of period $10.16 $9.97 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .24 .28 Net gains (losses) (both realized and unrealized) .45 .19 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .69 .47 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.24) (.28) Distributions from realized gains (.02) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.26) (.28) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 $10.16 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 2.12%(e) 2.20%(e),(f) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 4.85%(e) 4.51%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% 32% - ----------------------------------------------------------------------------------------------------------- Total return(g) 6.84%(h) 4.80%(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class B would have been 2.62% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. (i) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 35 CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(I) 2006(B) Net asset value, beginning of period $10.15 $9.97 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .25 .28 Net gains (losses) (both realized and unrealized) .43 .18 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .68 .46 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.24) (.28) Distributions from realized gains (.02) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.26) (.28) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.57 $10.15 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 2.10%(e) 2.19%(e),(f) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 4.92%(e) 4.46%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% 32% - ----------------------------------------------------------------------------------------------------------- Total return(g) 6.78%(h) 4.75%(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class C would have been 2.61% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. (i) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 36 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(I) 2006(B) Net asset value, beginning of period $10.16 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .30 .35 Net gains (losses) (both realized and unrealized) .44 .17 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .74 .52 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.29) (.34) Distributions from realized gains (.02) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.31) (.34) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 $10.16 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $57 $47 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.01%(e) 1.10%(e),(f) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 5.96%(e) 5.70%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% 32% - ----------------------------------------------------------------------------------------------------------- Total return(g) 7.41%(h) 5.44%(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class I would have been 1.52% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. (i) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 37 CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(I) 2006(B) Net asset value, beginning of period $10.16 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .29 .34 Net gains (losses) (both realized and unrealized) .44 .18 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .73 .52 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.28) (.34) Distributions from realized gains (.02) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.30) (.34) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 $10.16 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.28%(e) 1.25%(e),(f) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 5.68%(e) 5.37%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% 32% - ----------------------------------------------------------------------------------------------------------- Total return(g) 7.32%(h) 5.36%(h) - -----------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class R4 would have been 1.67% for the period ended Oct. 31, 2006. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. (i) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 38 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(B) Net asset value, beginning of period $10.24 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .25 Net gains (losses) (both realized and unrealized) .36 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .61 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.24) Distributions from realized gains (.02) - ----------------------------------------------------------------------------------------------------------- Total distributions (.26) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $8 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.26%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 7.92%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 38% - ----------------------------------------------------------------------------------------------------------- Total return(f) 5.98%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 39 APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment manager to the Fund. Under an investment management services agreement (the "IMS Agreement"), RiverSource provides investment advice and other services to the Fund and all RiverSource funds (collectively, the "Funds"). The Fund's Board of Directors (the "Board") and the Board's Investment Review and Contracts Committees monitor these services throughout the year. On an annual basis, the Board, including the independent Board members (the "Independent Directors"), considers renewal of the IMS Agreement. RiverSource prepares detailed reports for the Board and its Contracts Committee in March and April, including reports based on data provided by independent organizations to assist the Board in making this determination. In addition, throughout the year, the Board (or its committees) reviews information prepared by RiverSource addressing the services RiverSource provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the IMS Agreement. At the April 11-12, 2007 in-person Board meeting, independent legal counsel to the Independent Directors reviewed with the Independent Directors various factors relevant to the Board's consideration of advisory agreements and the Board's legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved renewal of the IMS Agreement. Nature, Extent and Quality of Services Provided by RiverSource: The Board analyzed various reports and presentations they had received detailing the services performed by RiverSource, as well as its expertise, resources and capabilities. The Board specifically considered many developments during the past year concerning the services provided by RiverSource, including, in particular, the growing strength and capabilities of many RiverSource offices and the increased investment and resources dedicated to the Fund's operations, particularly in the areas of trading systems, legal and compliance. Further, in connection with the Board's evaluation of the overall package of services provided by RiverSource, the Board considered the quality of the administrative, custody and transfer agency services provided by RiverSource affiliates to the Fund. The Board also reviewed the financial condition of RiverSource and the entity's ability to carry out its responsibilities under the IMS Agreement. The Board also discussed the acceptability of the terms of the IMS Agreement (including the relatively broad scope of services required to be performed by RiverSource). The Board concluded that the services being performed under the IMS Agreement were of a reasonably high quality. - -------------------------------------------------------------------------------- 40 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board determined that RiverSource was in a position to continue to provide a high quality and level of services to the Fund. Investment Performance: For purposes of evaluating the nature, extent and quality of services provided under the IMS Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered: (i) detailed reports containing data prepared by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group and the net assets of the Fund; and (ii) a report detailing the Fund's performance over various periods (including since inception), recent Fund inflows (and outflows) and a comparison of the Fund's net assets from December 2006 to December 2005. The Board observed that the Fund's investment performance met expectations. Comparative Fees, Costs of Services Provided and the Profits Realized By RiverSource and its Affiliates from their Relationships with the Fund: The Board reviewed comparative fees and the costs of services to be provided under the IMS Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (prepared by an independent organization) showing a comparison of the Fund's expenses with median expenses paid by funds in its peer group, as well as data showing the Fund's contribution to RiverSource's profitability. The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Funds' family, while assuring that the overall fees for each fund are generally in line with the "pricing philosophy" (i.e., that the total expense ratio of each fund, with few exceptions, is at or below the median expense ratio of funds in the same comparison group). The Board took into account that the Fund's total expense ratio (after considering proposed expense caps/waivers) was below the peer group's median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund's management fee was fair and reasonable in light of the extent and quality of services that the Fund receives. The Board also considered the expected profitability of RiverSource and its affiliates in connection with RiverSource providing investment management services to the Fund. In this regard, they referred to a detailed profitability report, discussing the profitability to RiverSource and Ameriprise Financial from managing and operating the Fund, including data showing comparative profitability over the last three years. The Board also considered the services acquired by the investment manager through the use of commission dollars paid by the Funds on portfolio transactions. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable. - -------------------------------------------------------------------------------- RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT 41 Economies of Scale to be Realized: The Board also considered the economies of scale that might be realized by RiverSource as the Fund grows and took note of the extent to which Fund shareholders might also benefit from such growth. The Board considered that the IMS Agreement provides for lower fees as assets increase at pre-established breakpoints and concluded that the IMS Agreement satisfactorily provided for sharing these economies of scale. Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2007, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement. PROXY VOTING The policy of the Board is to vote all proxies of the companies in which the Fund holds investments. The procedures are stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- 42 RIVERSOURCE EMERGING MARKETS BOND FUND -- 2007 SEMIANNUAL REPORT RIVERSOURCE(R) EMERGING MARKETS 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by (RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of LOGO) Ameriprise Financial, Inc. S-6511 C (6/07)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) GLOBAL BOND FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE GLOBAL BOND FUND SEEKS TO PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH INCOME AND GROWTH OF CAPITAL. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 7 Fund Expenses Example............... 11 Investments in Securities........... 13 Financial Statements................ 24 Notes to Financial Statements....... 30 Approval of Investment Management Services Agreement............... 50 Proxy Voting........................ 53
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Global Bond Fund (the Fund) seeks to provide shareholders with high total return through income and growth of capital. SECTOR BREAKDOWN Percentage of portfolio assets (PIE CHART) Foreign Government 55.6 Corporate Bonds(1) 15.4 Mortgage-Backed 11.6 Commercial Mortgage-Backed 9.0 U.S. Government Obligations & Agencies 5.3 Cash & Cash Equivalents 1.7 Asset-Backed 1.2 Other 0.2
(1) Includes Financials 7.9%, Telecommunication 2.5%, Consumer Discretionary 1.4%, Utilities 0.9%, Consumer Staples 0.8%, Health Care 0.6%, Energy 0.5%, Industrials 0.5% and Materials 0.3%. TOP TEN COUNTRIES Percentage of portfolio assets United States 37.6% Germany 10.1% Japan 9.9% France 6.8% United Kingdom 5.2% Italy 4.0% Netherlands 3.6% Spain 3.3% Canada 2.9% Belgium 2.1%
There are risks associated with an investment in a bond fund, including credit risk, interest rate risk, and prepayment and extension risk. See the Fund's prospectus for information on these and other risks associated with the Fund. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. Non-investment grade securities, commonly called "high-yield" or "junk" bonds, generally have more volatile prices and carry more risk to principal and income than investment grade securities. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 STYLE MATRIX
DURATION SHORT INT. LONG X X HIGH MEDIUM QUALITY LOW
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGERS
YEARS IN INDUSTRY Nicholas Pifer, CFA* 17
* The Fund is managed by a team of portfolio managers led by Nicholas Pifer. FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A IGBFX 03/20/89 Class B IGLOX 03/20/95 Class C AGBCX 06/26/00 Class I AGBIX 03/04/04 Class R4(1) -- 03/20/95 Class W RGBWX 12/01/06 (1) Effective Dec. 11, 2006, Class Y was renamed Class R4. Total net assets $497.3 million Number of holdings 268 Weighted average life(1) 6.0 years Effective duration(2) 4.4 years Weighted average bond rating(3) AA+
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into consideration the possibility that the issuer may call the bond before its maturity date. (2) EFFECTIVE DURATION measures the sensitivity of a security's price to parallel shifts in the yield curve (the graphical depiction of the levels of interest rates from two years out to 30 years). Positive duration means that as rates rise, the price decreases, and negative duration means that as rates rise, the price increases. (3) WEIGHTED AVERAGE BOND RATING represents the average credit quality of the underlying bonds in the portfolio. - -------------------------------------------------------------------------------- 4 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) RiverSource Global Bond Fund Class A (excluding sales charge) +3.92 Lehman Brothers Global Aggregate Index(1) (unmanaged) +3.54 Lipper Global Income Funds Index(2) +3.76
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 4.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The 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. (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. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL NET EXPENSES(A) Class A 1.38% 1.25% Class B 2.15% 2.02% Class C 2.15% 2.02% Class I 0.87% 0.87% Class R4(b) 1.19% 1.08% Class W(b) 1.34% 1.26%
(a) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses will not exceed 1.25% for Class A, 2.02% for Class B, 2.02% for Class C, 0.90% for Class I, 1.08% for Class R4 and 1.26% for Class W. (b) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date for Class W is Dec. 1, 2006. For Class W, expenses are based upon estimated amounts for the current fiscal year. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 3/20/89) +3.92% +7.12% +5.08% +7.79% +5.35% +7.42% Class B (inception 3/20/95) +3.48% +6.35% +4.27% +6.99% +4.54% +5.26% Class C (inception 6/26/00) +3.50% +6.25% +4.28% +6.97% N/A +5.86% Class I (inception 3/4/04) +3.98% +7.40% +5.52% N/A N/A +4.74% Class R4** (inception 3/20/95) +4.02% +7.32% +5.30% +8.04% +5.53% +6.10% Class W (inception 12/1/06) N/A N/A N/A N/A N/A +1.05%* WITH SALES CHARGE Class A (inception 3/20/89) -1.01% +2.03% +3.39% +6.75% +4.84% +7.14% Class B (inception 3/20/95) -1.52% +1.35% +3.03% +6.68% +4.54% +5.26% Class C (inception 6/26/00) +2.50% +5.25% +4.28% +6.97% N/A +5.86%
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 3/20/89) +3.78% +8.34% +3.43% +7.99% +5.24% +7.40% Class B (inception 3/20/95) +3.49% +7.71% +2.68% +7.17% +4.45% +5.22% Class C (inception 6/26/00) +3.35% +7.61% +2.68% +7.15% N/A +5.79% Class I (inception 3/4/04) +4.15% +8.95% +3.91% N/A N/A +4.56% Class R4** (inception 3/20/95) +3.88% +8.54% +3.64% +8.21% +5.42% +6.05% Class W (inception 12/1/06) N/A N/A N/A N/A N/A +0.14%* WITH SALES CHARGE Class A (inception 3/20/89) -1.15% +3.19% +1.76% +6.94% +4.73% +7.11% Class B (inception 3/20/95) -1.51% +2.71% +1.43% +6.86% +4.45% +5.22% Class C (inception 6/26/00) +2.35% +6.61% +2.68% +7.15% N/A +5.79%
Class A share performance reflects the maximum sales charge of 4.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, Nic Pifer, portfolio manager for RiverSource Global Bond Fund, discusses the Fund's results and positioning for the semiannual period ended April 30, 2007. At April 30, 2007, approximately 34% of the Fund's shares were owned in aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC (RiverSource). As a result of asset allocation decisions by RiverSource, it is possible RiverSource Global Bond Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 38, Class I capital share transactions for related activity during the most recent fiscal period). RiverSource seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. RiverSource Global Bond Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information on the Fund's expenses, see the discussions beginning on pages 11 and 35. Q: How did RiverSource Global Bond Fund perform for the semiannual period? A: RiverSource Global Bond Fund's Class A shares increased 3.92% (excluding sales charge) for the six months ended April 30, 2007. The Fund outperformed its benchmark, the Lehman Brothers Global Aggregate Index (Lehman Global Index), which increased 3.54%. The Fund also outperformed the Lipper Global Income Funds Index, representing the Fund's peer group, which increased 3.76% during the same period. RELATIVE TO THE LEHMAN GLOBAL INDEX, THE FUND BENEFITED MOST FROM EFFECTIVE CURRENCY POSITIONING. Q: What factors most significantly affected the Fund's performance? A: Currency markets had the most positive impact on the Fund's absolute performance, as the U.S. dollar fell 2.48% on a trade-weighted basis for the six months ended April 30, 2007. As the value of the U.S. dollar decreases, the dollar value of foreign investments typically increases and vice versa. Offsetting the positive effect of the falling U.S. dollar to some extent was the impact of static to rising bond yields in the major markets, which partially negated the coupon income from the bonds themselves. Remember, there is an inverse relationship between bond prices and interest rate movements, so that bond prices decline when interest rates rise and increase when interest rates fall. Global bonds produced only modestly positive returns in local currency terms for the semiannual period overall. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS Relative to the Lehman Global Index, the Fund benefited most from effective currency positioning. The Fund benefited most from its significant weightings in the euro, other European currencies, and the "dollar bloc" currencies as well as its modest exposure to the Japanese yen. The U.S. dollar weakened vs. the euro, the British pound, the New Zealand dollar and the Australian dollar and strengthened vs. the Japanese yen. The Fund's positioning in the Canadian dollar and the U.S. dollar detracted somewhat. On a sector basis, the Fund benefited from its exposure to high yield corporate bonds, where the Fund had an emphasis on comparatively high quality issues and bank loans compared to the Lehman Global Index. The Fund also benefited from its allocation to and issue selection within mortgage-backed securities and commercial mortgage-backed securities (CMBS), especially during the first months of the fiscal period. Modest exposure to the investment grade corporate bond sector relative to the Lehman Global Index further boosted Fund returns, particularly in late February and early March of 2007 when the equity markets declined rather sharply. Of course, the majority of the Fund's holdings remained in the government bond sector. The Fund also benefited significantly from the payment it received during the period as part of the settlement of the WorldCom class action case. Detracting modestly from the Fund's results relative to the Lehman Global Index was its yield curve positioning in the Japanese bond market, that is, the way the Fund was positioned to respond to changes in short-term vs. long-term interest rates. Japan's fixed income yield curve flattened during the period while the Fund had maintained a bias for a slight steepening. We maintained the Fund's duration, a principal measure of interest rate risk, shorter than that of the Lehman Global Index for much of the semiannual period, based on relative valuation analysis. The Fund's short duration positioning had a rather neutral effect on results because global bond yields remained static in the U.S. and Canada, moved up in core Europe and the U.K., and declined in Japan. - -------------------------------------------------------------------------------- 8 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS Q: What changes did you make to the Fund's portfolio during the period? A: As the euro and other European currencies rallied during the period vs. the U.S. dollar, we took the opportunity to pare back on the Fund's position in these European currencies, moving from a sizable exposure to a neutral allocation compared to the Lehman Global Index. We redeployed most of those assets into the U.S. dollar. We slightly reduced the Fund's positions in AAA-rated CMBS, pass-through mortgages, asset-backed securities and European covered bonds (bonds that are covered by a pool of assets collateralizing the bonds), while still maintaining significant exposure to these sectors. We modestly increased the Fund's allocation to high yield corporate bonds, primarily in the form of high yield bank loans. We slightly shortened the Fund's duration relative to the Lehman Global Index, primarily in the U.S. bond market. WE INTEND TO MAINTAIN THE FUND'S GENERALLY CONSERVATIVE PROFILE, A STANCE THAT WE BELIEVE WILL CONTINUE TO BENEFIT THE FUND DURING THE COMING MONTHS. Q: What is the Fund's tactical view and strategy for the months ahead? A: The semiannual period was characterized most by a cyclical divergence between the U.S. and the other major developed nations, with U.S. economic growth slowing, European economies growing rather robustly, and the Japanese economy growing at a near-trend rate. As a result, the U.S. Federal Reserve Board (the Fed) was on hold during the period, maintaining its targeted federal funds rate at 5.25%. The Canadian and Australian central banks were also on hold during the period. The European Central Bank as well as the U.K., Swedish and New Zealand central banks each raised its respective interest rates twice more during the period. Norway's central bank raised its interest rates three times during the period. The Bank of Japan raised its interest rates only one more time. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 9 QUESTIONS & ANSWERS Going forward, we believe the global economy as a whole is moving toward a trend-like rate of growth. We do expect some rebalancing of growth rates in the major economies, with the U.S. economy anticipated to bounce back in the second half of the year as the impact of the housing slowdown dissipates and with the European economy expected to moderate as the impact of higher interest rates takes effect. We expect the Fed to remain on hold for an extended period of time, the European Central Bank to finish its tightening by late 2007, and the Bank of Japan to perhaps raise rates twice more before ending its tightening cycle in early 2008. Given this rather static environment for bonds, we believe we are entering a period of largely narrow moves in bond yields. Given our benign view for the major central banks, we feel comfortable with the Fund's current positioning. We intend to maintain the Fund's generally conservative profile, a stance that we believe will continue to benefit the Fund during the coming months. As always, we constantly monitor the market for changing conditions and regularly 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. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- 10 RIVERSOURCE GLOBAL BOND FUND -- 2007 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, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,039.20 $ 6.32 1.25% Hypothetical (5% return before expenses) $1,000 $1,018.60 $ 6.26 1.25% Class B Actual(b) $1,000 $1,034.80 $10.19 2.02% Hypothetical (5% return before expenses) $1,000 $1,014.78 $10.09 2.02% Class C Actual(b) $1,000 $1,035.00 $10.14 2.01% Hypothetical (5% return before expenses) $1,000 $1,014.83 $10.04 2.01% Class I Actual(b) $1,000 $1,039.80 $ 4.35 .86% Hypothetical (5% return before expenses) $1,000 $1,020.53 $ 4.31 .86% Class R4 Actual(b) $1,000 $1,040.20 $ 5.46(c) 1.08% Hypothetical (5% return before expenses) $1,000 $1,019.44 $ 5.41(c) 1.08% Class W Actual(d) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,018.55 $ 6.31 1.26%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +3.92% for Class A, +3.48% for Class B, +3.50% for Class C, +3.98% for Class I and +4.02% for Class R4. (c) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. These changes were effective Dec. 11, 2006. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses, (excluding fees and expenses of acquired funds), will not exceed 1.08% for Class R4. Any amounts waived will not be reimbursed by the Fund. If these changes had been in place for the entire six-month period ended April 30, 2007, the actual and hypothetical expenses paid for Class R4 would have been the same as those expenses presented in the table above. (d) The actual values and expenses paid are not presented because Class W does not have a full six months of history. The inception date of Class W is Dec. 1, 2006. - -------------------------------------------------------------------------------- 12 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
BONDS (94.9%)(c) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) AUSTRALIA (1.6%) Commonwealth Bank of Australia (European Monetary Unit) Sr Unsub 11-12-09 3.38% 570,000 $759,347 New South Wales Treasury (Australian Dollar) 12-01-10 7.00 5,360,000 4,554,799 Queensland Treasury (Australian Dollar) 05-14-10 5.50 2,580,000 2,098,932 Telstra 04-01-12 6.38 500,000 523,693 --------------- Total 7,936,771 - ---------------------------------------------------------------------------------- AUSTRIA (1.1%) Republic of Austria (European Monetary Unit) 01-15-10 5.50 3,900,000 5,500,781 - ---------------------------------------------------------------------------------- BELGIUM (2.1%) Kingdom of Belgium (European Monetary Unit) 03-28-10 3.00 7,890,000 10,443,609 - ---------------------------------------------------------------------------------- BRAZIL (0.3%) Federative Republic of Brazil 01-15-18 8.00 1,129,000 1,281,415 - ---------------------------------------------------------------------------------- CANADA (2.8%) Canadian Natural Resources 02-15-37 6.50 240,000 246,913 03-15-38 6.25 500,000 496,301 Canadian Pacific Railway (Canadian Dollar) 06-15-10 4.90 380,000(d) 346,190 Cascades Sr Nts 02-15-13 7.25 20,000 20,300 Norampac 06-01-13 6.75 30,000 29,700
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) CANADA (CONT.) OPTI Canada 12-15-14 8.25% $60,000(d) $63,750 Province of British Columbia (Canadian Dollar) 08-23-10 6.38 4,735,000 4,546,112 Province of Ontario (Canadian Dollar) 03-08-14 5.00 6,000,000 5,624,973 Sun Media 02-15-13 7.63 100,000 102,750 TELUS 06-01-11 8.00 2,235,000 2,441,930 Videotron Ltee 01-15-14 6.88 180,000 182,250 --------------- Total 14,101,169 - ---------------------------------------------------------------------------------- CZECH REPUBLIC (0.3%) Czech Republic (Czech Koruna) 06-16-13 3.70 28,500,000 1,372,433 - ---------------------------------------------------------------------------------- DENMARK (0.7%) Danske Bank (European Monetary Unit) Sr Nts 03-16-10 3.94 750,000(h) 1,022,386 Realkredit Danmark (Danish Krone) Series 10D 01-01-08 4.00 12,860,000 2,349,359 --------------- Total 3,371,745 - ---------------------------------------------------------------------------------- FRANCE (6.7%) BNP Paribas (European Monetary Unit) Sr Unsub 10-20-08 3.98 750,000(h) 1,022,988 Dexia Municipal Agency (European Monetary Unit) 09-03-07 4.25 510,000 695,854
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 13
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) FRANCE (CONT.) Govt of France (European Monetary Unit) 04-25-12 5.00% 7,520,000 $10,654,759 04-25-13 4.00 7,835,000 10,607,044 10-25-16 5.00 6,525,000 9,457,243 Societe Generale (European Monetary Unit) Sr Unsecured 11-28-08 3.87 750,000(h) 1,023,088 --------------- Total 33,460,976 - ---------------------------------------------------------------------------------- GERMANY (9.9%) Allgemeine Hypothekenbank Rheinboden (European Monetary Unit) Series 501 09-02-09 5.00 1,800,000(d) 2,487,539 Bayerische Landesbank (Japanese Yen) Sr Nts 04-22-13 1.40 266,000,000 2,229,556 Bundesrepublik Deutschland (European Monetary Unit) 07-04-13 3.75 10,120,000 13,519,727 07-04-27 6.50 6,470,000 11,364,340 07-04-28 4.75 1,595,000 2,300,127 07-04-34 4.75 5,370,000 7,812,365 DEPFA Deutsche Pfandbriefbank (European Monetary Unit) Series G6 01-15-10 5.50 1,800,000 2,532,773 Deutsche Bank (European Monetary Unit) Sr Unsub 07-28-09 4.25 500,000 682,538 Kreditanstalt fuer Wiederaufbau (British Pound) 12-07-15 5.50 1,800,000 3,611,190 Rheinische Hypothekenbank (European Monetary Unit) Series 803 07-05-10 5.75 1,825,000(d) 2,599,120 --------------- Total 49,139,275 - ----------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) GREECE (1.1%) Hellenic Republic (European Monetary Unit) 10-22-22 5.90% 3,540,000 $5,564,638 - ---------------------------------------------------------------------------------- IRELAND (1.7%) Irish Govt (European Monetary Unit) 10-18-07 4.25 6,160,000 8,410,533 - ---------------------------------------------------------------------------------- ITALY (3.9%) Buoni Poliennali Del Tesoro (European Monetary Unit) 11-01-07 6.00 7,560,000 10,410,010 02-01-19 4.25 1,860,000 2,510,561 11-01-26 7.25 2,871,283 5,288,258 Telecom Italia Capital 11-15-33 6.38 1,235,000 1,201,278 --------------- Total 19,410,107 - ---------------------------------------------------------------------------------- JAPAN (9.8%) Development Bank of Japan (Japanese Yen) 06-20-12 1.40 538,000,000 4,564,463 Govt of Japan (Japanese Yen) 12-21-09 1.70 2,024,000,000 17,261,135 09-20-10 0.80 862,000,000 7,151,397 06-20-12 1.40 700,000,000 5,911,675 12-20-12 1.00 1,227,000,000 10,117,180 12-20-14 1.30 247,000,000 2,043,299 12-20-34 2.40 203,000,000 1,740,742 --------------- Total 48,789,891 - ---------------------------------------------------------------------------------- JERSEY (0.2%) ASIF III 11-25-08 3.99 800,000(h) 1,090,966 - ---------------------------------------------------------------------------------- MALAYSIA (0.3%) Petronas Capital 05-22-12 7.00 1,500,000(d) 1,622,991 - ---------------------------------------------------------------------------------- MEXICO (0.9%) Mexican Fixed Rate (Mexican Peso) 12-24-09 9.00 15,600,000 1,471,876 12-20-12 9.00 30,490,000 2,946,091
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 14 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) MEXICO (CONT.) United Mexican States 09-27-34 6.75% $270,000 $301,050 --------------- Total 4,719,017 - ---------------------------------------------------------------------------------- NETHERLANDS (3.3%) Bank Nederlandse Gemeenten (British Pound) Sr Unsub 08-06-07 7.38 980,000 1,965,463 Govt of Netherlands (European Monetary Unit) 01-15-08 2.50 7,670,000 10,350,281 07-15-12 5.00 2,365,000 3,353,737 Telefonica Europe 09-15-10 7.75 735,000 791,760 --------------- Total 16,461,241 - ---------------------------------------------------------------------------------- NEW ZEALAND (1.0%) Govt of New Zealand (New Zealand Dollar) 07-15-09 7.00 6,575,000 4,855,502 - ---------------------------------------------------------------------------------- NORWAY (1.2%) Govt of Norway (Norwegian Krone) 05-16-11 6.00 35,225,000 6,168,746 - ---------------------------------------------------------------------------------- POLAND (1.4%) Republic of Poland (Polish Zloty) 03-24-10 5.75 18,825,000 6,952,397 - ---------------------------------------------------------------------------------- SOUTH AFRICA (0.3%) Republic of South Africa (South African Rand) 08-31-10 13.00 10,357,500 1,675,495 - ---------------------------------------------------------------------------------- SOUTH KOREA (0.1%) Korea Development Bank (Japanese Yen) Series 21RG 06-25-08 0.98 70,000,000 584,876 - ----------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) SPAIN (3.3%) Caja de Ahorros y Monte de Piedad de Madrid (European Monetary Unit) 03-25-11 3.50% 2,400,000 $3,181,662 Govt of Spain (European Monetary Unit) 07-30-09 5.15 9,320,000 12,988,273 --------------- Total 16,169,935 - ---------------------------------------------------------------------------------- SUPRA-NATIONAL (1.0%) European Investment Bank (British Pound) 12-07-11 5.50 2,385,000 4,750,394 - ---------------------------------------------------------------------------------- SWEDEN (1.0%) Govt of Sweden (Swedish Krona) 01-28-09 5.00 15,700,000 2,383,241 03-15-11 5.25 16,620,000 2,579,461 --------------- Total 4,962,702 - ---------------------------------------------------------------------------------- UNITED KINGDOM (5.2%) Abbey Natl Treasury Services (European Monetary Unit) 05-27-09 3.97 750,000(h) 1,023,343 BT Group Sr Unsecured 12-15-10 8.63 550,000 613,515 HBOS Treasury Services (European Monetary Unit) 02-12-09 3.50 1,600,000 2,155,574 United Kingdom Treasury (British Pound) 03-07-12 5.00 6,050,000 11,956,644 09-07-14 5.00 5,010,000 9,923,326 --------------- Total 25,672,402 - ---------------------------------------------------------------------------------- UNITED STATES (33.7%) Anadarko Petroleum Sr Unsecured 09-15-36 6.45 400,000 401,010 AT&T Sr Nts 05-15-36 6.80 485,000 526,439
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 15
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Banc of America Commercial Mtge Series 2005-1 Cl A4 11-10-42 4.89% $750,000(f) $746,840 Banc of America Commercial Mtge Series 2005-4 Cl ASB 07-10-45 4.87 725,000(f) 711,897 Banc of America Commercial Mtge Series 2007-1 Cl A3 01-15-49 5.45 1,025,000(f) 1,030,770 Banc of America Large Loan Series 2006-LAQ Cl E 02-09-21 5.70 575,000(d,f,h) 576,193 Banc of America Large Loan Series 2006-LAQ Cl F 02-09-21 5.76 625,000(d,f,h) 626,296 Banc of America Large Loan Series 2006-LAQ Cl G 02-09-21 5.85 450,000(d,f,h) 450,230 Bank of America Sub Nts 03-15-17 5.30 1,070,000 1,057,792 10-15-36 6.00 935,000 946,089 Bear Stearns Commercial Mtge Securities Series 2003-T10 Cl A1 03-13-40 4.00 423,708(f) 411,794 Bear Stearns Commercial Mtge Securities Series 2006-PW14 Cl A4 12-11-38 5.20 875,000(f) 866,451 Bear Stearns Commercial Mtge Securities Series 2007-T26 Cl A4 01-12-45 5.47 1,050,000(f) 1,057,707 Brandywine Operating Partnership LP Sr Unsecured 05-01-17 5.70 220,000 219,465 Burlington Northern Sante Fe 01-15-15 4.88 700,000 670,968 08-15-36 6.20 200,000 200,246 Cadbury Schweppes US Finance LLC 10-01-08 3.88 2,820,000(d) 2,764,790
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) California State Teachers' Retirement System Trust Series 2002-C6 Cl A3 11-20-14 4.46% $1,828,838(d,f) $1,798,962 Capital Auto Receivables Asset Trust Series 2004-1 Cl CTFS 09-15-10 2.84 700,000 694,917 CDC Commercial Mtge Trust Series 2002-FX1 Cl A2 11-15-30 5.68 2,050,000(f) 2,085,133 CenterPoint Energy Resources 02-15-11 7.75 250,000 270,844 Chart Inds Sr Sub Nts 10-15-15 9.13 65,000 69,306 Chesapeake Energy 01-15-16 6.63 635,000 644,525 08-15-17 6.50 120,000 119,400 01-15-18 6.25 160,000 158,800 Cimarex Energy Sr Nts 05-01-17 7.13 15,000(b) 15,150 Citigroup Commercial Mtge Trust Series 2005-EMG Cl A1 09-20-51 4.15 870,559(d,f) 857,095 Citigroup (European Monetary Unit) Sr Nts 05-21-10 3.88 1,660,000 2,235,421 Comcast 03-15-37 6.45 245,000 247,777 Commercial Mtge Pass-Through Ctfs Series 2006-CN2A Cl BFL 02-05-19 5.63 400,000(d,f,h) 401,926 Community Health Systems Sr Unsecured 12-15-12 6.50 145,000 149,894 Cott Beverages USA 12-15-11 8.00 130,000 133,250
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 16 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2005-64CB Cl 1A1 12-25-35 5.50% $1,824,387(f) $1,831,717 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2005-6CB Cl 1A1 04-25-35 7.50 956,595(f) 994,222 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2006-22R Cl 1A2 05-25-36 6.00 1,880,000(f) 1,907,277 Countrywide Financial Sub Nts 05-15-16 6.25 650,000 656,637 Credit Suisse Mtge Capital Ctfs Series 2006-C2 Cl A3 03-15-39 5.66 900,000(f) 921,240 CS First Boston Mtge Securities Series 2003-CPN1 Cl A2 03-15-35 4.60 600,000(f) 581,269 CSX 08-01-13 5.50 915,000 920,059 DaVita 03-15-15 7.25 85,000 86,913 Dex Media West LLC/Finance Sr Unsecured Series B 08-15-10 8.50 85,000 89,038 Drive Auto Receivables Trust Series 2006-2 Cl A2 (MBIA) 07-15-11 5.30 1,125,000(d,i) 1,127,520 Dunkin Securitization Series 2006-1 Cl A2 (AMBAC) 06-20-31 5.78 1,600,000(d,i) 1,628,610 EchoStar DBS 10-01-14 6.63 165,000 167,475 Edison Mission Energy Sr Unsecured 06-15-13 7.50 120,000 124,800 Exelon 06-15-10 4.45 1,000,000 975,373
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Federal Home Loan Mtge Corp 07-12-10 4.13% $5,261,000 $5,157,811 Federal Home Loan Mtge Corp #A11799 08-01-33 6.50 234,404(f) 241,183 Federal Home Loan Mtge Corp #A15881 11-01-33 5.00 1,240,834(f) 1,202,752 Federal Home Loan Mtge Corp #E91486 09-01-17 6.50 305,481(f) 313,075 Federal Home Loan Mtge Corp #E99684 10-01-18 5.00 657,768(f) 650,300 Federal Home Loan Mtge Corp #G01535 04-01-33 6.00 1,588,726(f) 1,623,480 Federal Natl Mtge Assn #254686 04-01-18 5.50 1,606,739(f) 1,612,354 Federal Natl Mtge Assn #254722 05-01-18 5.50 835,354(f) 838,273 Federal Natl Mtge Assn #360800 01-01-09 5.74 1,143,918(f) 1,150,008 Federal Natl Mtge Assn #545874 08-01-32 6.50 251,754(f) 259,953 Federal Natl Mtge Assn #555528 04-01-33 6.00 1,179,860(f) 1,195,666 Federal Natl Mtge Assn #555734 07-01-23 5.00 946,114(f) 924,785 Federal Natl Mtge Assn #555740 08-01-18 4.50 1,455,871(f) 1,413,730 Federal Natl Mtge Assn #555851 01-01-33 6.50 1,398,060(f) 1,441,602 Federal Natl Mtge Assn #575487 04-01-17 6.50 716,837(f) 736,756 Federal Natl Mtge Assn #621581 12-01-31 6.50 308,338(f) 321,686 Federal Natl Mtge Assn #633966 03-01-17 6.00 177,168(f) 180,263 Federal Natl Mtge Assn #634749 03-01-17 5.50 745,012(f) 749,261 Federal Natl Mtge Assn #640996 05-01-32 7.50 499,001(f) 521,081 Federal Natl Mtge Assn #643381 06-01-17 6.00 454,411(f) 462,349
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 17
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Federal Natl Mtge Assn #645053 05-01-32 7.00% $937,237(f) $979,581 Federal Natl Mtge Assn #646147 06-01-32 7.00 396,025(f) 418,052 Federal Natl Mtge Assn #652284 08-01-32 6.50 356,618(f) 367,500 Federal Natl Mtge Assn #653145 07-01-17 6.00 261,856(f) 267,093 Federal Natl Mtge Assn #653730 09-01-32 6.50 167,826(f) 173,339 Federal Natl Mtge Assn #655589 08-01-32 6.50 1,581,877(f) 1,650,129 Federal Natl Mtge Assn #666424 08-01-32 6.50 251,169(f) 258,833 Federal Natl Mtge Assn #670461 11-01-32 7.50 319,599(f) 333,740 Federal Natl Mtge Assn #677333 01-01-33 6.00 4,375,279(f) 4,433,895 Federal Natl Mtge Assn #688034 03-01-33 5.50 540,956(f) 537,570 Federal Natl Mtge Assn #688691 03-01-33 5.50 888,044(f) 880,525 Federal Natl Mtge Assn #711503 06-01-33 5.50 1,235,059(f) 1,229,158 Federal Natl Mtge Assn #735029 09-01-13 5.28 847,084(f) 852,892 Federal Natl Mtge Assn #741850 09-01-33 5.50 1,979,526(f) 1,962,766 Federal Natl Mtge Assn #753507 12-01-18 5.00 2,671,798(f) 2,641,098 Federal Natl Mtge Assn #755498 11-01-18 5.50 1,239,494(f) 1,244,370 Federal Natl Mtge Assn #756236 01-01-34 6.00 4,367,255(f) 4,454,841 Federal Natl Mtge Assn #756788 11-01-33 6.50 221,063(f) 227,628 Federal Natl Mtge Assn #759336 01-01-34 6.00 4,251,321(f) 4,327,831 Federal Natl Mtge Assn #886292 07-01-36 7.00 4,549,958(f) 4,710,809 Federal Natl Mtge Assn #765946 02-01-34 5.50 4,507,731(f) 4,469,565
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) General Electric Capital Assurance Series 2003-1 Cl A3 05-12-35 4.77% $1,800,000(d,f) $1,782,276 General Electric Capital (European Monetary Unit) Sr Unsub 06-20-07 5.13 500,000 682,947 General Electric Capital (New Zealand Dollar) 02-04-10 6.63 2,765,000 1,984,285 Genworth Financial (Japanese Yen) 06-20-11 1.60 95,000,000 793,497 Govt Natl Mtge Assn #604708 10-15-33 5.50 1,087,440(f) 1,083,086 Govt Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2002-80 Cl CI 01-20-32 20.00 809,244(e,f) 69,255 Greenwich Capital Commercial Funding Series 2004-GG1 Cl A5 06-10-36 4.88 500,000(f) 495,114 Greif Sr Nts 02-01-17 6.75 80,000(d) 81,400 GS Mtge Securities II Series 2004-GG2 Cl A4 08-10-38 4.96 950,000(f) 941,909 Hertz Vehicle Financing LLC Series 2004-1A Cl A3 (MBIA) 05-25-09 2.85 400,000(d,i) 392,708 Home Depot Sr Unsecured 12-16-36 5.88 955,000 925,642 Indiana Michigan Power Sr Nts 03-15-37 6.05 385,000 385,814 IPALCO Enterprises Secured 11-14-08 8.38 250,000 258,125 Jarden 05-01-17 7.50 5,000 5,125
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 18 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) JPMorgan Chase Commercial Mtge Securities Series 2002-CIB5 Cl A1 10-12-37 4.37% $994,265(f) $978,227 JPMorgan Chase Commercial Mtge Securities Series 2003-CB6 Cl A2 07-12-37 5.26 900,000(f) 900,845 JPMorgan Chase Commercial Mtge Securities Series 2003-LN1 Cl A1 10-15-37 4.13 364,912(f) 354,659 JPMorgan Chase Commercial Mtge Securities Series 2003-ML1A Cl A1 03-12-39 3.97 362,692(f) 353,777 JPMorgan Chase Commercial Mtge Securities Series 2003-ML1A Cl A2 03-12-39 4.77 1,200,000(f) 1,171,819 JPMorgan Chase Commercial Mtge Securities Series 2004-LN2 Cl A1 07-15-41 4.48 1,553,319(f) 1,518,870 JPMorgan Chase Commercial Mtge Securities Series 2005-LDP5 Cl A1 12-15-44 5.04 2,086,042(f) 2,077,720 JPMorgan Chase Commercial Mtge Securities Series 2006-LDP6 Cl A4 04-15-43 5.48 825,000(f) 830,329 JPMorgan Chase Commercial Mtge Securities Series 2006-LDP6 Cl ASB 04-15-43 5.49 1,150,000(f) 1,161,480 K Hovnanian Enterprises 05-15-16 7.50 125,000 120,000 L-3 Communications 06-15-12 7.63 80,000 82,900 L-3 Communications Series B 10-15-15 6.38 80,000 79,600
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) LaBranche & Co Sr Nts 05-15-12 11.00% $160,000 $174,400 LB-UBS Commercial Mtge Trust Series 2004-C2 Cl A3 03-15-29 3.97 750,000(f) 716,220 LB-UBS Commercial Mtge Trust Series 2004-C8 Cl A2 12-15-29 4.20 1,300,000(f) 1,272,882 LB-UBS Commercial Mtge Trust Series 2005-C5 Cl AAB 09-15-30 4.93 1,375,000(f) 1,357,221 LB-UBS Commercial Mtge Trust Series 2006-C4 Cl AAB 06-15-32 5.87 750,000(f) 777,433 LB-UBS Commercial Mtge Trust Series 2007-C1 Cl A4 02-15-40 5.42 850,000(f) 853,024 Lehman Brothers Holdings Sr Nts 02-06-12 5.25 955,000 958,036 Lehman Brothers Holdings Sr Unsecured 01-18-12 6.63 190,000 200,764 Lehman XS Net Interest Margin Nts Collateralized Mtge Obligation Series 2006-GPM6 Cl A1 10-28-46 6.25 500,968(d,f) 500,577 Merrill Lynch & Co 05-02-17 5.70 1,245,000(b) 1,244,792 Merrill Lynch & Co Sub Nts 01-29-37 6.11 180,000 178,819 MidAmerican Energy Holdings 04-01-36 6.13 245,000 249,029 Mohegan Tribal Gaming Authority Sr Sub Nts 04-01-12 8.00 75,000 77,625 Morgan Stanley 01-09-17 5.45 265,000 261,983 04-27-17 5.55 1,440,000 1,432,123 Morgan Stanley Capital I Series 2003-T11 Cl A2 06-13-41 4.34 775,000(f) 761,668
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 19
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Morgan Stanley Capital I Series 2004-HQ4 Cl A5 04-14-40 4.59% $750,000(f) $732,188 Morgan Stanley Capital I Series 2006-T23 Cl AAB 08-12-41 5.80 575,000(f) 593,939 Morgan Stanley Capital I Series 2006-XLF Cl A2 07-15-19 5.45 1,150,000(d,f,h) 1,150,214 Morgan Stanley Dean Witter Capital I Series 2002-TOP7 Cl A2 01-15-39 5.98 2,200,000(f) 2,267,563 Natl Collegiate Student Loan Trust Collateralized Mtge Obligation Interest Only Series 2006-3 Cl AIO 01-25-12 0.00 2,400,000(e) 674,472 Nomura Asset Securities Series 1998-D6 Cl A3 03-15-30 6.99 1,200,000(f) 1,322,100 Northwest Pipeline Sr Nts 04-15-17 5.95 130,000(d) 130,488 NRG Energy 02-01-14 7.25 65,000 67,275 01-15-17 7.38 140,000 145,075 Omnicare 12-15-13 6.75 455,000 452,724 12-15-15 6.88 60,000 59,775 Overseas Private Investment U.S. Govt Guaranty Series 1996A 09-15-08 6.99 1,250,000 1,263,850 Pacific Gas & Electric Sr Unsub 03-01-37 5.80 300,000 296,037 Pokagon Gaming Authority Sr Nts 06-15-14 10.38 40,000(d) 44,800 Popular ABS Mtge Pass-Through Trust Series 2005-A Cl AF2 06-25-35 4.49 565,031 559,950
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Prudential Commercial Mtge Trust Series 2003-PWR1 Cl A1 02-11-36 3.67% $611,464(f) $591,017 Qwest 03-15-12 8.88 130,000 143,650 Qwest Sr Unsecured 10-01-14 7.50 165,000 174,488 Range Resources 03-15-15 6.38 70,000 69,475 05-15-16 7.50 30,000 31,125 Renaissance Home Equity Loan Trust Series 2005-4 Cl A3 02-25-36 5.57 800,000 797,504 Residential Capital LLC 06-30-10 6.38 965,000 967,580 RR Donnelley & Sons Sr Unsecured 01-15-17 6.13 1,680,000 1,673,120 SLM 10-01-13 5.00 200,000 181,132 Southern Star Central Sr Nts 03-01-16 6.75 105,000 105,525 Tennessee Gas Pipeline 04-01-37 7.63 355,000 415,046 Toyota Motor Credit (Japanese Yen) Sr Unsub 06-09-08 0.75 297,000,000 2,484,323 TXU Electric Delivery Secured 01-15-15 6.38 550,000 573,865 U.S. Treasury 02-15-08 3.38 775,000 765,282 02-15-10 4.75 1,590,000 1,598,820 02-15-17 4.63 2,995,000 2,993,595 02-15-26 6.00 3,565,000(j) 4,047,669 U.S. Treasury Inflation-Indexed Bond 04-15-12 2.00 10,026,700(g) 9,999,778 Verizon New York Series A 04-01-12 6.88 1,300,000 1,373,305
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 20 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Verizon Pennsylvania Series A 11-15-11 5.65% $970,000(j) $984,744 Wachovia Bank Commercial Mtge Trust Series 2003-C8 Cl A2 11-15-35 3.89 1,250,000(f) 1,222,856 Wachovia Bank Commercial Mtge Trust Series 2005-C18 Cl A4 04-15-42 4.94 750,000(f) 730,844 Wachovia Bank Commercial Mtge Trust Series 2005-C20 Cl A5 07-15-42 5.09 800,000(f) 795,514 Wachovia Bank Commercial Mtge Trust Series 2006-C27 Cl A3 07-15-45 5.76 525,000(f) 538,390 Wachovia Bank Commercial Mtge Trust Series 2006-C27 Cl APB 07-15-45 5.73 900,000(f) 918,692 Williams Companies Sr Nts 07-15-19 7.63 351,000 382,590 Wyeth 04-01-37 5.95 60,000 59,995 --------------- Total 167,485,489 - ---------------------------------------------------------------------------------- TOTAL BONDS (Cost: $449,907,189) $471,955,496 - ----------------------------------------------------------------------------------
SENIOR LOANS (1.8%)(c,k) COUPON PRINCIPAL BORROWER RATE AMOUNT VALUE(A) BERMUDA (--%) Intelsat Bermuda Term Loan 02-01-14 7.86% $200,000 $200,900 - -----------------------------------------------------------------------------------
SENIOR LOANS (CONTINUED) COUPON PRINCIPAL BORROWER RATE AMOUNT VALUE(A) GERMANY (0.1%) Celanese Tranche B Term Loan 04-06-14 7.10% $140,000(b) $140,656 04-06-14 7.10 275,000 276,290 --------------- Total 416,946 - ----------------------------------------------------------------------------------- NETHERLANDS (0.2%) VNU Tranche B Term Loan 08-09-13 7.61 703,233(b,c) 709,323 08-09-13 7.61 248,750(c) 250,904 --------------- Total 960,227 - ----------------------------------------------------------------------------------- UNITED STATES (1.5%) Aramark Letter of Credit 01-20-14 7.45 25,349 25,472 Aramark Tranche B Term Loan 01-20-14 7.48 354,696 356,420 Charter Communications Tranche B Term Loan 04-28-14 7.35 870,000(b) 867,286 04-28-14 7.35 205,000 204,360 Domtar Tranche B Term Loan 03-05-14 6.74 300,000 299,343 Ford Motor Tranche B Term Loan 12-15-13 8.36 124,688 125,389 Freeport-McMoRan Copper & Gold Tranche B Term Loan 03-17-14 7.07 525,840 527,402 HCA Tranche B Term Loan 01-21-13 7.60 2,224,425 2,247,671 Level 3 Communications Tranche B Term Loan 03-16-14 7.61 585,000(b) 587,679 Michaels Stores Tranche B Term Loan 10-13-13 8.13 263,053 264,713 Natl CineMedia LLC Term Loan 02-13-15 7.09 15,000 15,000
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 21
SENIOR LOANS (CONTINUED) COUPON PRINCIPAL BORROWER RATE AMOUNT VALUE(A) UNITED STATES (CONT.) Neiman Marcus Group Tranche B Term Loan 04-27-13 7.35% $315,000 $317,561 Pinnacle Foods Finance Tranche B Term Loan 03-30-14 8.10 450,000 452,813 Univision Communications Delayed Draw Term Loan 09-23-14 6.35 61,611(b) 60,918 Univision Communications Tranche B Term Loan 09-23-14 7.57 958,389 957,536 West Corp Tranche B Term Loan 10-25-13 7.70-7.76 239,400 240,997 --------------- Total 7,550,560 - ----------------------------------------------------------------------------------- TOTAL SENIOR LOANS (Cost: $9,111,204) $9,128,633 - -----------------------------------------------------------------------------------
MUNICIPAL BONDS (0.2%) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(A) Tobacco Settlement Financing Corporation Revenue Bonds Series 2007A-1 06-01-46 6.71% $1,200,000(b) $1,205,676 - ----------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (Cost: $1,199,880) $1,205,676 - -----------------------------------------------------------------------------------
MONEY MARKET FUND (1.7%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 8,222,857(l) $8,222,857 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $8,222,857) $8,222,857 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $468,441,130)(m) $490,512,662 ===================================================================================
NOTES TO INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) At April 30, 2007, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $4,827,814. (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, 2007, the value of these securities amounted to $21,433,675 or 4.3% of net assets. (e) Interest only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest only 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, 2007. (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. - -------------------------------------------------------------------------------- 22 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT NOTES TO INVESTMENTS IN SECURITIES (CONTINUED) (g) Inflation-indexed bonds are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. (h) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on April 30, 2007. (i) The following abbreviations are used in the portfolio security descriptions to identify the insurer of the issue: AMBAC -- Ambac Assurance Corporation MBIA -- MBIA Insurance Corporation
(j) 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 2007, 10-year $7,600,000 Japanese Govt Bond, June 2007, 10-year 300,000,000 U.S. Long Bond, June 2007, 20-year 4,700,000 SALE CONTRACTS U.S. Treasury Note, June 2007, 2-year 10,600,000 U.S. Treasury Note, June 2007, 5-year 3,600,000 U.S. Treasury Note, June 2007, 10-year 17,200,000
(k) Senior loans have rates of interest that float periodically based primarily on the London Interbank Offered Rate ("LIBOR") and other short-term rates. Remaining maturities of senior loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. (l) Affiliated Money Market Fund -- See Note 8 to the financial statements. (m) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $468,441,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $28,400,000 Unrealized depreciation (6,328,000) - ------------------------------------------------------------------------------ Net unrealized appreciation $22,072,000 - ------------------------------------------------------------------------------
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 riversource.com/funds. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 23 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers (identified cost $460,218,273) $482,289,805 Affiliated money market fund (identified cost $8,222,857) (Note 8) 8,222,857 - ---------------------------------------------------------------------------- Total investments in securities (identified cost $468,441,130) 490,512,662 Foreign currency holdings (identified cost $4,231,897) (Note 1) 4,265,367 Capital shares receivable 815,321 Accrued interest receivable 6,643,697 Receivable for investment securities sold 1,919,236 - ---------------------------------------------------------------------------- Total assets 504,156,283 - ---------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash on demand deposit 45,601 Capital shares payable 351,203 Payable for investment securities purchased 5,638,223 Unrealized depreciation on foreign currency contracts held, at value (Note 5) 687,790 Unrealized depreciation on swap transactions, at value (Note 7) 3,055 Accrued investment management services fee 28,868 Accrued distribution fee 10,481 Accrued transfer agency fee 446 Accrued administrative services fee 3,264 Accrued plan administration services fee 2 Other accrued expenses 97,350 - ---------------------------------------------------------------------------- Total liabilities 6,866,283 - ---------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $497,290,000 ============================================================================
- -------------------------------------------------------------------------------- 24 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2007 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 744,505 Additional paid-in capital 477,542,687 Undistributed net investment income 439,704 Accumulated net realized gain (loss) (Note 10) (2,851,329) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Notes 5, 6 and 7) 21,414,433 - ---------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $497,290,000 ============================================================================
Net assets applicable to outstanding shares: Class A $262,482,406 Class B $ 57,929,035 Class C $ 2,718,227 Class I $168,421,403 Class R4 $ 93,134 Class W $ 5,645,795 Net asset value per share of outstanding capital stock: Class A shares 39,315,787 $ 6.68 Class B shares 8,586,902 $ 6.75 Class C shares 405,660 $ 6.70 Class I shares 25,282,210 $ 6.66 Class R4 shares 13,948 $ 6.68 Class W shares 845,997 $ 6.67 - ------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 25 STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Interest $ 9,937,783 Income distributions from affiliated money market fund (Note 8) 200,155 Fee income from securities lending (Note 3) 6,589 Less foreign taxes withheld (66,533) - --------------------------------------------------------------------------- Total income 10,077,994 - --------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 1,713,849 Distribution fee Class A 332,693 Class B 301,223 Class C 14,213 Class W 1,067 Transfer agency fee Class A 337,616 Class B 81,256 Class C 3,746 Class R4 42 Class W 854 Service fee -- Class R4 12 Administrative services fees and expenses 193,710 Plan administration services fee -- Class R4 89 Compensation of board members 4,856 Custodian fees 72,060 Printing and postage 41,540 Registration fees 38,960 Professional fees 19,483 Other 5,306 - --------------------------------------------------------------------------- Total expenses 3,162,575 Expenses waived/reimbursed by the Investment Manager and its affiliates (Note 2) (191,712) - --------------------------------------------------------------------------- 2,970,863 Earnings and bank fee credits on cash balances (Note 2) (9,737) - --------------------------------------------------------------------------- Total net expenses 2,961,126 - --------------------------------------------------------------------------- Investment income (loss) -- net 7,116,868 - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 26 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF OPERATIONS (CONTINUED) SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) $ 5,228,534 Foreign currency transactions (975,400) Futures contracts (33,620) Swap transactions (63,714) - --------------------------------------------------------------------------- Net realized gain (loss) on investments 4,155,800 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 7,245,224 - --------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 11,401,024 - --------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $18,517,892 ===========================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 27 STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 7,116,868 $ 14,113,384 Net realized gain (loss) on investments 4,155,800 4,307,910 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 7,245,224 6,637,272 - ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 18,517,892 25,058,566 - ----------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (7,100,954) (15,319,991) Class B (1,370,456) (2,907,320) Class C (63,841) (127,417) Class I (4,308,506) (6,261,680) Class R4 (3,114) (4,811) Class W (11,953) N/A - ----------------------------------------------------------------------------------------- Total distributions (12,858,824) (24,621,219) - -----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 28 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class A shares (Note 2) $ 17,760,492 $ 47,932,918 Class B shares 4,053,059 8,983,786 Class C shares 177,065 679,733 Class I shares 19,542,040 74,810,942 Class R4 shares 47,643 10,801 Class W shares 7,359,065 N/A Reinvestment of distributions at net asset value Class A shares 6,644,273 14,313,214 Class B shares 1,283,846 2,699,471 Class C shares 57,964 111,372 Class I shares 4,308,233 6,261,148 Class R4 shares 3,114 4,811 Class W shares 11,816 N/A Payments for redemptions Class A shares (41,013,084) (138,853,002) Class B shares (Note 2) (11,390,011) (59,219,298) Class C shares (Note 2) (667,482) (1,955,029) Class I shares (1,965,807) (25,820,432) Class R4 shares (39,069) (19,002) Class W shares (1,759,868) N/A - ----------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 4,413,289 (70,058,567) - ----------------------------------------------------------------------------------------- Total increase (decrease) in net assets 10,072,357 (69,621,220) Net assets at beginning of period 487,217,643 556,838,863 - ----------------------------------------------------------------------------------------- Net assets at end of period $497,290,000 $487,217,643 ========================================================================================= Undistributed net investment income $ 439,704 $ 6,181,660 - -----------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 29 NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. The Fund invests primarily in debt obligations of U.S. and foreign issuers. The Fund offers Class A, Class B, Class C, Class I and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. At April 30, 2007, Ameriprise Financial, Inc. (Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I shares. Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class W, offered through qualifying discretionary accounts. Class W shares are sold without a front-end sales charge or CDSC. At April 30, 2007, Ameriprise Financial and the affiliated funds-of-funds owned approximately 34% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. - -------------------------------------------------------------------------------- 30 RIVERSOURCE GLOBAL BOND FUND -- 2007 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. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 31 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, 2007, the Fund has entered into outstanding when-issued securities of $3,395,149 and other forward-commitments of $1,432,665. 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. 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. - -------------------------------------------------------------------------------- 32 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At April 30, 2007, foreign currency holdings consisted of multiple denominations, 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. CMBS TOTAL RETURN SWAP TRANSACTIONS The Fund may enter into swap agreements to earn the total return on a specified security or index of fixed income securities. CBMS total return swaps are bilateral financial contracts designed to replicate synthetically the total returns of collateralized mortgage-backed securities. Under the terms of the swaps, the Fund either receives or pays the total return on a reference security or index applied to a notional principal amount. In return, the Fund agrees to pay or receive from the counterparty a floating rate, which is reset periodically based on short-term interest rates, applied to the same notional amount. The notional amounts of swap contracts are not recorded in the financial statements. Swaps are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time realized gain (loss) is recorded. Payments received or made are recorded as realized gains (losses). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 33 Swap agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. It may not be possible for the Fund to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Total return swaps are subject to the risk that the counterparty will default on its obligation to pay net amounts due to the Fund. 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. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. - -------------------------------------------------------------------------------- 34 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS Dividends from net investment income, declared and paid each calendar quarter, when available, are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES 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. Other expenses in the amount of $2,135 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 35 Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $20.50 - - Class B $21.50 - - Class C $21.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $18.50 per shareholder account. In addition, the Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Effective Dec. 11, 2006, this fee was eliminated. 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. - -------------------------------------------------------------------------------- 36 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT The Fund has agreements with Ameriprise Financial Services, Inc. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to Class Y shares. The fee was calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. Sales charges received by the Distributor for distributing Fund shares were $139,486 for Class A, $30,083 for Class B and $1,102 for Class C for the six months ended April 30, 2007. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. For the six months ended April 30, 2007, the Investment Manager and its affiliates waived certain fees and expenses (excluding fees and expenses of acquired funds), such that net expenses were 1.25% for Class A, 2.02% for Class B, 2.01% for Class C, 1.08% for Class R4 and 1.26% for Class W. Of these waived fees and expenses, the transfer agency fees waived for Class A, Class B, Class C, Class R4 and Class W were $154,442, $35,047, $1,634, $40 and $384, respectively, and the management fees waived at the Fund level were $165. In addition, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.25% for Class A, 2.02% for Class B, 2.02% for Class C, 0.90% for Class I, 1.08% for Class R4 and 1.26% for Class W of the Fund's average daily net assets. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 37 During the six months ended April 30, 2007, the Fund's custodian and transfer agency fees were reduced by $9,737 as a result of earnings and bank fee credits from overnight cash balances. The Fund also pay 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 $178,768,517 and $188,155,979, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. Income from securities lending amounted to $6,589 for the six months ended April 30, 2007. 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:
FOR THE SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS I CLASS R4* CLASS W** - ----------------------------------------------------------------------------------------------- Sold 2,690,252 607,105 26,705 2,968,213 7,225 1,109,840 Issued for reinvested distributions 1,012,504 193,708 8,798 657,449 475 1,788 Redeemed (6,209,771) (1,709,624) (100,290) (298,566) (5,956) (265,631) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (2,507,015) (908,811) (64,787) 3,327,096 1,744 845,997 - -----------------------------------------------------------------------------------------------
FOR THE YEAR ENDED OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS I CLASS R4* - ----------------------------------------------------------------------------------------------- Sold 7,394,126 1,374,250 104,714 11,574,667 1,649 Issued for reinvested distributions 2,234,083 417,094 17,325 977,816 751 Redeemed (21,409,456) (9,072,811) (300,714) (4,003,763) (2,933) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (11,781,247) (7,281,467) (178,675) 8,548,720 (533) - -----------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. ** For the period from Dec. 1, 2006 (inception date) to April 30, 2007. - -------------------------------------------------------------------------------- 38 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 5. FORWARD FOREIGN CURRENCY CONTRACTS At April 30, 2007, the Fund has forward foreign currency exchange contracts that obligate it to deliver currencies at specified future dates. The unrealized appreciation and/or depreciation on these contracts 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 7, 2007 2,530,000 2,188,581 $-- $ 91,187 Canadian Dollar U.S. Dollar May 7, 2007 16,050,000 2,295,349 -- 101,149 Swedish Krona U.S. Dollar May 9, 2007 21,825,000 29,341,530 -- 448,165 European Monetary Unit U.S. Dollar May 23, 2007 4,940,678 583,000,000 -- 47,289 U.S. Dollar Japanese Yen - ----------------------------------------------------------------------------------------------- Total $-- $687,790 - -----------------------------------------------------------------------------------------------
6. INTEREST RATE FUTURES CONTRACTS At April 30, 2007, investments in securities included securities valued at $417,232 that were pledged as collateral to cover initial margin deposits on open purchase and open sale contracts. See "Summary of significant accounting policies" and "Notes to investments in securities." The terms of the open purchase and sale contracts are as follows:
NUMBER OF NOTIONAL UNREALIZED TYPE OF SECURITY CONTRACTS MARKET VALUE GAIN (LOSS) - --------------------------------------------------------------------------------- PURCHASE CONTRACTS Euro-Bund, June 2007, 10-year (European Monetary Unit) 76 $11,837,586 $(183,165) Japanese Govt Bond, June 2007, 10-year (Japanese Yen) 3 3,373,337 10,198 U.S. Long Bond, June 2007, 20-year (U.S. Dollar) 47 5,252,250 8,304 - --------------------------------------------------------------------------------- Total $20,463,173 $(164,663) - ---------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 39
NUMBER OF NOTIONAL UNREALIZED SALE CONTRACTS CONTRACTS MARKET VALUE GAIN (LOSS) - --------------------------------------------------------------------------------- U.S. Treasury Note, June. 2007, 2-year (U.S. Dollar) 53 $10,850,094 $(17,550) U.S. Treasury Note, June 2007, 5-year (U.S. Dollar) 36 3,809,813 79 U.S. Treasury Note, June 2007, 10-year (U.S. Dollar) 172 18,632,438 (21,563) - --------------------------------------------------------------------------------- Total $33,292,345 $(39,034) - ---------------------------------------------------------------------------------
7. SWAP CONTRACTS At April 30, 2007, the Fund had the following open CBMS total return swap contract:
TERMINATION NOTIONAL UNREALIZED DATE AMOUNT (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 0.25%. Counterparty: Wachovia Oct. 1, 2007 $5,250,000 $(3,055) - ----------------------------------------------------------------------------------
8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. 9. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other RiverSource funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. - -------------------------------------------------------------------------------- 40 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 10. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund had a capital loss carry-over of $6,599,145 at Oct. 31, 2006, that if not offset by capital gains will expire as follows:
2010 2011 $6,100,374 $498,771
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. 11. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. 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 -- 2007 SEMIANNUAL REPORT 41 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, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. - -------------------------------------------------------------------------------- 42 RIVERSOURCE GLOBAL BOND FUND -- 2007 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. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 43 12. 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, 2007(H) 2006 2005 2004 2003 Net asset value, beginning of period $6.60 $6.59 $7.02 $6.57 $6.00 - --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10 .19 .16 .17 .18 Net gains (losses) (both realized and unrealized) .16 .14 (.23) .52 .60 - --------------------------------------------------------------------------------------------------------- Total from investment operations .26 .33 (.07) .69 .78 - --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.18) (.32) (.36) (.24) (.21) - --------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.68 $6.60 $6.59 $7.02 $6.57 - --------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $262 $276 $353 $389 $380 - --------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.25%(d),(e) 1.25%(d) 1.35%(d) 1.34% 1.36% - --------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 2.91%(e) 2.77% 2.42% 2.66% 2.73% - --------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 37% 68% 73% 92% 117% - --------------------------------------------------------------------------------------------------------- Total return(f) 3.92%(g) 5.17% (1.18%) 10.70% 13.25% - ---------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class A would have been 1.37% for the six months ended April 30, 2007 and 1.39% and 1.37% for the years ended Oct. 31, 2006 and 2005, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 44 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003 Net asset value, beginning of period $6.67 $6.59 $7.02 $6.57 $5.99 - ----------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .09 .13 .10 .14 .12 Net gains (losses) (both realized and unrealized) .14 .16 (.23) .50 .62 - ----------------------------------------------------------------------------------------------------- Total from investment operations .23 .29 (.13) .64 .74 - ----------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.15) (.21) (.30) (.19) (.16) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $6.75 $6.67 $6.59 $7.02 $6.57 - ----------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $58 $63 $111 $142 $158 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.02%(d),(e) 2.02%(d) 2.12%(d) 2.10% 2.12% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 2.14%(e) 1.98% 1.65% 1.90% 1.97% - ----------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 37% 68% 73% 92% 117% - ----------------------------------------------------------------------------------------------------- Total return(f) 3.48%(g) 4.45% (1.98%) 9.83% 12.39% - -----------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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 2.13% for the six months ended April 30, 2007 and 2.16% and 2.13% for the years ended Oct. 31, 2006 and 2005, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 45 CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003 Net asset value, beginning of period $6.62 $6.57 $6.99 $6.55 $5.98 - ----------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .09 .14 .11 .14 .13 Net gains (losses) (both realized and unrealized) .14 .13 (.22) .49 .60 - ----------------------------------------------------------------------------------------------------- Total from investment operations .23 .27 (.11) .63 .73 - ----------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.15) (.22) (.31) (.19) (.16) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $6.70 $6.62 $6.57 $6.99 $6.55 - ----------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 $4 $5 $5 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.01%(d),(e) 2.02%(d) 2.12%(d) 2.09% 2.14% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 2.15%(e) 2.00% 1.65% 1.91% 1.89% - ----------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 37% 68% 73% 92% 117% - ----------------------------------------------------------------------------------------------------- Total return(f) 3.50%(g) 4.25% (1.83%) 9.72% 12.41% - -----------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class C would have been 2.13% for the six months ended April 30, 2007 and 2.16% and 2.14% for the years ended Oct. 31, 2006 and 2005, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 46 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004(B) Net asset value, beginning of period $6.59 $6.61 $7.03 $6.77 - --------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10 .21 .19 .16 Net gains (losses) (both realized and unrealized) .16 .14 (.22) .24 - --------------------------------------------------------------------------------------------- Total from investment operations .26 .35 (.03) .40 - --------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.19) (.37) (.39) (.14) - --------------------------------------------------------------------------------------------- Net asset value, end of period $6.66 $6.59 $6.61 $7.03 - --------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $168 $145 $89 $24 - --------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) .86%(e) .88% .91% .89%(e) - --------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 3.31%(e) 3.18% 2.87% 3.07%(e) - --------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 37% 68% 73% 92% - --------------------------------------------------------------------------------------------- Total return(f) 3.98%(g) 5.52% (.56%) 6.06%(g) - ---------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 4, 2004 (inception date) to Oct. 31, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 47 CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004 2003 Net asset value, beginning of period $6.60 $6.61 $7.04 $6.59 $6.01 - -------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10 .20 .16 .18 .19 Net gains (losses) (both realized and unrealized) .16 .13 (.22) .52 .61 - -------------------------------------------------------------------------------------------------------- Total from investment operations .26 .33 (.06) .70 .80 - -------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.18) (.34) (.37) (.25) (.22) - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.68 $6.60 $6.61 $7.04 $6.59 - -------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.08%(d),(e) 1.08%(d) 1.18%(d) 1.17% 1.18% - -------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 3.08%(e) 2.95% 2.60% 2.83% 2.69% - -------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 37% 68% 73% 92% 117% - -------------------------------------------------------------------------------------------------------- Total return(f) 4.02%(g) 5.29% (1.00%) 10.86% 13.54% - --------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratios of expenses for Class R4 would have been 1.17% for the six months ended April 30, 2007 and 1.20% and 1.20% for the years ended Oct. 31, 2006 and 2005, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 48 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT 31, 2007(B) Net asset value, beginning of period $6.79 - ------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .09 Net gains (losses) (both realized and unrealized) (.02) - ------------------------------------------------ Total from investment operations .07 - ------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.19) - ------------------------------------------------ Net asset value, end of period $6.67 - ------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 - ------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 1.26%(e),(f) - ------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 3.17%(f) - ------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 37% - ------------------------------------------------ Total return(g) 1.05%(h) - ------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates waived/reimbursed the Fund for certain expenses. Had they not done so, the annual ratio of expenses for Class W would have been 1.39% for the period ended April 30, 2007. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 49 APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment manager to the Fund. Under an investment management services agreement (the "IMS Agreement"), RiverSource provides investment advice and other services to the Fund and all RiverSource funds (collectively, the "Funds"). The Fund's Board of Directors (the "Board") and the Board's Investment Review and Contracts Committees monitor these services throughout the year. On an annual basis, the Board, including the independent Board members (the "Independent Directors"), considers renewal of the IMS Agreement. RiverSource prepares detailed reports for the Board and its Contracts Committee in March and April, including reports based on data provided by independent organizations to assist the Board in making this determination. In addition, throughout the year, the Board (or its committees) reviews information prepared by RiverSource addressing the services RiverSource provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the IMS Agreement. At the April 11-12, 2007 in-person Board meeting, independent legal counsel to the Independent Directors reviewed with the Independent Directors various factors relevant to the Board's consideration of advisory agreements and the Board's legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved renewal of the IMS Agreement. Nature, Extent and Quality of Services Provided by RiverSource: The Board analyzed various reports and presentations they had received detailing the services performed by RiverSource, as well as its expertise, resources and capabilities. The Board specifically considered many developments during the past year concerning the services provided by RiverSource, including, in particular, the growing strength and capabilities of many RiverSource offices and the increased investment and resources dedicated to the Fund's operations, particularly in the areas of trading systems, legal and compliance. Further, in connection with the Board's evaluation of the overall package of services provided by RiverSource, the Board considered the quality of the administrative, custody and transfer agency services provided by RiverSource affiliates to the Fund. The Board also reviewed the financial condition of RiverSource and the entity's ability to carry out its responsibilities under the IMS Agreement. The Board also discussed the acceptability of the terms of the IMS Agreement (including the relatively broad scope of services required to be performed by RiverSource). The Board concluded that the services being performed under the IMS Agreement were of a reasonably high quality. - -------------------------------------------------------------------------------- 50 RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board determined that RiverSource was in a position to continue to provide a high quality and level of services to the Fund. Investment Performance: For purposes of evaluating the nature, extent and quality of services provided under the IMS Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered: (i) detailed reports containing data prepared by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group and the net assets of the Fund; and (ii) a report detailing the Fund's performance over various periods (including since inception), recent Fund inflows (and outflows) and a comparison of the Fund's net assets from December 2006 to December 2005. The Board observed that the Fund's investment performance met expectations. Comparative Fees, Costs of Services Provided and the Profits Realized By RiverSource and its Affiliates from their Relationships with the Fund: The Board reviewed comparative fees and the costs of services to be provided under the IMS Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (prepared by an independent organization) showing a comparison of the Fund's expenses with median expenses paid by funds in its peer group, as well as data showing the Fund's contribution to RiverSource's profitability. The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Funds' family, while assuring that the overall fees for each fund are generally in line with the "pricing philosophy" (i.e., that the total expense ratio of each fund, with few exceptions, is at or below the median expense ratio of funds in the same comparison group). The Board took into account that the Fund's total expense ratio (after considering proposed expense caps/waivers) approximated the peer group's median expense ratio. Based on its review, the Board concluded that the Fund's management fee was fair and reasonable in light of the extent and quality of services that the Fund receives. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 51 The Board also considered the expected profitability of RiverSource and its affiliates in connection with RiverSource providing investment management services to the Fund. In this regard, they referred to a detailed profitability report, discussing the profitability to RiverSource and Ameriprise Financial from managing and operating the Fund, including data showing comparative profitability over the last three years. The Board also considered the services acquired by the investment manager through the use of commission dollars paid by the Funds on portfolio transactions. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable. Economies of Scale to be Realized: The Board also considered the economies of scale that might be realized by RiverSource as the Fund grows and took note of the extent to which Fund shareholders might also benefit from such growth. The Board considered that the IMS Agreement provides for lower fees as assets increase at pre-established breakpoints and concluded that the IMS Agreement satisfactorily provided for sharing these economies of scale. Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2007, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement. - -------------------------------------------------------------------------------- 52 RIVERSOURCE GLOBAL BOND FUND -- 2007 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 riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL BOND FUND -- 2007 SEMIANNUAL REPORT 53 RIVERSOURCE(R) 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by (RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of LOGO) Ameriprise Financial, Inc. S-6339 W (6/07)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) GLOBAL EQUITY FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE GLOBAL EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 8 Fund Expenses Example............... 10 Investments in Securities........... 13 Financial Statements................ 18 Notes to Financial Statements....... 24 Approval of Investment Management Services Agreement............... 45 Proxy Voting........................ 48
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Global Equity Fund (the Fund) seeks to provide shareholders with long-term capital growth. COUNTRY BREAKDOWN Percentage of portfolio assets (PIE CHART) United States 31.9 Japan 9.8 Germany 7.7 United Kingdom 7.1 Switzerland 5.9 Hong Kong 5.4 Other(1) 32.2
(1) Includes Brazil 4.2%, South Korea 4.1%, Canada 3.3%, South Africa 2.1%, Australia 1.6%, Spain 1.6%, France 1.3%, Sweden 1.2%, Taiwan 1.2%, Bermuda 1.1%, Ireland 1.0%, Chile 0.9%, Luxembourg 0.9%, Mexico 0.9%, Norway 0.8%, Greece 0.7%, Netherlands 0.5%, Finland 0.3% and Cash & Cash Equivalents(2) 4.5%. (2) Of the 4.5%, 3.8% is due to security lending activity and 0.7% is the Fund's cash equivalent position. TOP TEN HOLDINGS Percentage of portfolio assets Google CI A (United States) 2.2% Roche Holding (Switzerland) 1.9% UBS (Switzerland) 1.9% Microsoft (United States) 1.8% Hypo Real Estate Holding (Germany) 1.7% Petroplus Holdings (Switzerland) 1.6% Shinhan Financial Group (South Korea) 1.5% Leap Wireless Intl (United States) 1.5% Aur Resources (Canada) 1.4% Continental (Germany) 1.3%
For further detail about these holdings, please refer to the section entitled "Investments in Securities." Fund holdings are as of the date given, are subject to change at any time and are not recommendations to buy or sell any security. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 STYLE MATRIX
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGERS THREADNEEDLE INTERNATIONAL LIMITED
YEARS IN INDUSTRY Dominic Rossi 21 Stephen Thornber 20
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A IGLGX 05/29/90 Class B IDGBX 03/20/95 Class C -- 06/26/00 Class R2 -- 12/11/06 Class R3 -- 12/11/06 Class R4(1) IDGYX 03/20/95 Class R5 -- 12/11/06 Class W -- 12/01/06 Total net assets $788.7 million Number of holdings 108
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 4 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) RiverSource Global Equity Fund Class A (excluding sales charge +11.66 Morgan Stanley Capital International (MSCI) All Country World Index(1) (unmanaged) +12.75 Lipper Global Funds Index(2) +11.90
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The Morgan Stanley Capital International (MSCI) All Country World Index, an unmanaged index of equity securities, is designed to measure equity market performance in the global developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Global Funds Index includes the 30 largest global funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL Class A 1.51% Class B 2.28% Class C 2.27% Class R2(a) 1.82% Class R3(a) 1.57% Class R4(a) 1.32%(b) Class R5(a) 1.07% Class W(a) 1.47%
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date for Class R2, Class R3 and Class R5 is Dec. 11, 2006. Inception date for Class W is Dec. 1, 2006. For Class R2, Class R3, Class R5 and Class W, expenses are based on estimated amounts for the current fiscal year. (b) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses, before giving effect to any performance incentive adjustment (that increased the management fee by 0.08%), will not exceed 1.27% for Class R4. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 5/29/90) +11.66% +13.17% +20.34% +11.99% +6.38% +6.63% Class B (inception 3/20/95) +11.23% +12.35% +19.43% +11.15% +5.57% +6.59% Class C (inception 6/26/00) +11.29% +12.39% +19.40% +11.13% N/A -0.01% Class R2 (inception 12/11/06) N/A N/A N/A N/A N/A +7.25%* Class R3 (inception 12/11/06) N/A N/A N/A N/A N/A +7.38%* Class R4** (inception 3/20/95) +11.56% +13.18% +20.50% +12.17% +6.54% +7.57% Class R5 (inception 12/11/06) N/A N/A N/A N/A N/A +7.52%* Class W (inception 12/1/06) N/A N/A N/A N/A N/A +8.19%* WITH SALES CHARGE Class A (inception 5/29/90) +5.24% +6.66% +17.99% +10.67% +5.75% +6.26% Class B (inception 3/20/95) +6.23% +7.35% +18.49% +10.88% +5.57% +6.59% Class C (inception 6/26/00) +10.29% +11.39% +19.40% +11.13% N/A -0.01%
- -------------------------------------------------------------------------------- 6 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 5/29/90) +12.75% +12.29% +17.55% +10.24% +5.93% +6.43% Class B (inception 3/20/95) +12.21% +11.38% +16.61% +9.38% +5.12% +6.30% Class C (inception 6/26/00) +12.24% +11.57% +16.65% +9.40% N/A -0.57% Class R2 (inception 12/11/06) N/A N/A N/A N/A N/A +3.27%* Class R3 (inception 12/11/06) N/A N/A N/A N/A N/A +3.28%* Class R4** (inception 3/20/95) +12.77% +12.31% +17.73% +10.43% +6.10% +7.29% Class R5 (inception 12/11/06) N/A N/A N/A N/A N/A +3.41%* Class W (inception 12/1/06) N/A N/A N/A N/A N/A +4.19%* WITH SALES CHARGE Class A (inception 5/29/90) +6.28% +5.83% +15.26% +8.94% +5.31% +6.05% Class B (inception 3/20/95) +7.21% +6.38% +15.62% +9.10% +5.12% +6.30% Class C (inception 6/26/00) +11.24% +10.57% +16.65% +9.40% N/A -0.57%
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class R2, Class R3, Class R4, Class R5 and Class W shares. Class R2, Class R3, Class R4 and Class R5 are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 7 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-month period ended April 30, 2007. 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 period? A: The Fund increased 11.66% (Class A shares excluding sales charge) for the six-month period ended April 30, 2007. The Fund underperformed its benchmark, the Morgan Stanley Capital International All Country World Index (MSCI Index), which increased 12.75% for the period. The Fund also underperformed the Lipper Global Funds Index, representing the Fund's peer group, which increased 11.90% over the same time frame. Q: What factors most significantly affected performance? A: The Fund's overweight in Japan relative to the MSCI Index was the largest detractor to performance during the six-month period. The Bank of Japan was very slow to raise interest rates and domestic Japanese institutions shunned the market. The Fund's exposure to Japanese financials particularly hurt performance with Tokai Tokyo Securities one of the largest detractors. Stock selection in Europe was a slight drag on performance as Carphone Warehouse Group in the U.K. performed poorly when Vodafone announced an exclusive distribution deal with one of Carphone's competitors. The Fund continues to hold the stock believing any setbacks are only temporary. The Fund's iron ore and copper positions in Latin America were key contributors to performance for the period as were the Fund's paper and pulp holdings in Latin America. Also contributing positively was South African retailer Massmart Holdings, which saw very strong sales figures that boosted the stock price. The company is one of the most profitable retailers in the world. Lastly, the Fund's positions in refining added value during the period. U.S. oil refiner Valero Energy, European-based oil refiner Petroplus Holdings, and Marathon Oil were all strong performers during the period. THE FUND'S IRON ORE AND COPPER POSITIONS IN LATIN AMERICA WERE KEY CONTRIBUTORS TO PERFORMANCE FOR THE PERIOD AS WERE THE FUND'S PAPER AND PULP HOLDINGS IN LATIN AMERICA. - -------------------------------------------------------------------------------- 8 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS Q: What changes did you make to the Fund during the six-month period? A: One of the most significant changes we made during the period was eliminating the Fund's overweight in Japan. We brought the Fund's weighting down to neutral because we now believe we can find better value elsewhere in the world. We still see a lot of potential in Japan and think the market is undervalued; however, we are waiting for the Japanese stock market to reflect the country's positive corporate growth and record profits. Additionally, we increased the Fund's exposure to Latin America and are adding to the Fund's U.S. exposure on a stock selection basis including eBay and Bowater. However, the U.S. remains the Fund's biggest underweight. During the period, we sold out of the Fund's positions in U.S. homebuilders such as DR Horton and Hovnanian when we saw the housing market continue to fall. ONE OF THE MOST SIGNIFICANT CHANGES WE MADE DURING THE PERIOD WAS ELIMINATING THE FUND'S OVERWEIGHT IN JAPAN. Q: How do you intend to manage the Fund in the months ahead? A: We remain optimistic about the outlook for equities. The background for global equities remains positive. Valuations are attractive, corporate results have been encouraging, and we expect recent robust merger and acquisition activity levels to continue. However, we recognize that equities have enjoyed a very strong run and that inflationary expectations are beginning to rise around the globe. We are beginning to anticipate some of the headwinds that the markets may encounter in the second half of the year, such as the impact of the weak dollar and higher interest rates. Thus, we are tempering our optimism with some caution. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 10 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,116.60 $ 7.24 1.38% Hypothetical (5% return before expenses) $1,000 $1,017.95 $ 6.90 1.38% Class B Actual(b) $1,000 $1,112.30 $11.26 2.15% Hypothetical (5% return before expenses) $1,000 $1,014.13 $10.74 2.15% Class C Actual(b) $1,000 $1,112.90 $11.21 2.14% Hypothetical (5% return before expenses) $1,000 $1,014.18 $10.69 2.14% Class R2 Actual(c) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,016.31 $ 8.55 1.71% Class R3 Actual(c) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,017.55 $ 7.30 1.46% Class R4 Actual(b) $1,000 $1,115.60 $ 6.40(d) 1.22% Hypothetical (5% return before expenses) $1,000 $1,018.74 $ 6.11(d) 1.22% Class R5 Actual(c) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,020.03 $ 4.81 .96%
- -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class W Actual(c) N/A N/A N/A N/A Hypothetical (5% return before expenses) $1,000 $1,018.00 $ 6.85 1.37%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +11.66% for Class A, +11.23% for Class B, +11.29% for Class C and +11.56% for Class R4. (c) The actual values and expenses paid are not presented because Class R2, Class R3, Class R5 and Class W do not have a full six months of history. The inception date of Class R2, Class R3 and Class R5 is Dec. 11, 2006. The inception date of Class W is Dec. 1, 2006. (d) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses, (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.27% for Class R4. Any amounts waived will not be reimbursed by the Fund. These changes were effective Dec. 11, 2006. If these changes had been in place for the entire six-month period ended April 30, 2007, the actual and hypothetical expenses paid for Class R4 would have been the same as those expenses presented in the table above. - -------------------------------------------------------------------------------- 12 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
COMMON STOCKS (98.5%)(c) ISSUER SHARES VALUE(A) AUSTRALIA (1.6%) BIOTECHNOLOGY (1.0%) CSL 113,745 $8,192,761 - ------------------------------------------------------------------------------------- METALS & MINING (0.6%) Oxiana 1,810,470 4,555,103 - ------------------------------------------------------------------------------------- BERMUDA (1.1%) INSURANCE Flagstone Reinsurance Holdings 54,200(b) 726,280 PartnerRe 109,090 7,856,662 --------------- Total 8,582,942 - ------------------------------------------------------------------------------------- BRAZIL (4.4%) CHEMICALS (0.8%) Braskem Series A 725,200 6,183,542 - ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.5%) Cyrela Brazil Realty 362,900 3,939,872 - ------------------------------------------------------------------------------------- METALS & MINING (1.0%) Cia Vale do Rio Doce ADR 225,975 7,726,085 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (1.1%) Petroleo Brasileiro ADR 85,884 8,694,037 - ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (1.0%) Aracruz Celulose ADR 144,690 7,956,503 - ------------------------------------------------------------------------------------- CANADA (3.4%) METALS & MINING (1.5%) Aur Resources 526,600 11,570,968 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (1.0%) Canadian Natural Resources 129,457 7,716,932 - ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (0.9%) Abitibi-Consolidated 2,785,823 7,303,374 - ------------------------------------------------------------------------------------- CHILE (0.9%) METALS & MINING Antofagasta 692,585 7,339,923 - -------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) FINLAND (0.3%) COMMUNICATIONS EQUIPMENT Nokia 101,478(b) $2,559,607 - ------------------------------------------------------------------------------------- FRANCE (1.3%) COMMERCIAL BANKS (1.0%) Societe Generale 36,688 7,774,220 - ------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (0.3%) Schneider Electric 18,726(f) 2,640,851 - ------------------------------------------------------------------------------------- GERMANY (7.9%) AEROSPACE & DEFENSE (1.0%) MTU Aero Engines Holding 142,389 8,268,334 - ------------------------------------------------------------------------------------- AUTO COMPONENTS (1.4%) Continental 78,215(f) 10,886,046 - ------------------------------------------------------------------------------------- CHEMICALS (1.0%) Bayer 120,061(f) 8,258,330 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.8%) Deutsche Boerse 27,740 6,502,514 - ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (0.6%) Siemens 38,584 4,656,943 - ------------------------------------------------------------------------------------- INSURANCE (1.2%) Allianz 42,705 9,713,773 - ------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (1.9%) Hypo Real Estate Holding 209,752 13,982,645 - ------------------------------------------------------------------------------------- GREECE (0.7%) CONSTRUCTION MATERIALS TITAN Cement 101,865 5,797,829 - ------------------------------------------------------------------------------------- HONG KONG (5.6%) HOTELS, RESTAURANTS & LEISURE (0.8%) Hongkong & Shanghai Hotels 4,277,500 6,520,928 - -------------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) HONG KONG (CONT.) REAL ESTATE MANAGEMENT & DEVELOPMENT (2.6%) China Overseas Land & Investment 4,998,000 $6,062,202 Great Eagle Holdings 1,412,000 5,170,198 Hang Lung Properties 2,955,000 8,753,921 --------------- Total 19,986,321 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (1.3%) Esprit Holdings 854,500 10,356,612 - ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.9%) China Mobile 801,500 7,219,328 - ------------------------------------------------------------------------------------- IRELAND (1.1%) COMMERCIAL BANKS Bank of Ireland 394,603 8,468,201 - ------------------------------------------------------------------------------------- JAPAN (10.1%) BUILDING PRODUCTS (0.5%) Asahi Glass 270,000 3,631,814 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (1.6%) Nomura Holdings 345,200 6,596,910 Tokai Tokyo Securities 1,076,000 5,772,025 --------------- Total 12,368,935 - ------------------------------------------------------------------------------------- COMMERCIAL BANKS (1.5%) Mitsubishi UFJ Financial Group 584 6,074,568 Mizuho Financial Group 1,018 6,125,797 --------------- Total 12,200,365 - ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (1.2%) GOLDCREST 183,980 9,147,353 - ------------------------------------------------------------------------------------- INSURANCE (0.9%) T&D Holdings 112,750 7,140,342 - ------------------------------------------------------------------------------------- MACHINERY (1.6%) AMADA 713,000 7,961,287 THK 220,900 5,382,746 --------------- Total 13,344,033 - ------------------------------------------------------------------------------------- OFFICE ELECTRONICS (1.2%) Canon 164,900 9,251,217 - ------------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT (1.6%) Mitsubishi Estate 221,000 6,851,489 Mitsui Fudosan 204,000 5,954,427 --------------- Total 12,805,916 - -------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) LUXEMBOURG (0.9%) METALS & MINING Ternium ADR 260,600(b) $7,010,140 - ------------------------------------------------------------------------------------- MEXICO (0.9%) WIRELESS TELECOMMUNICATION SERVICES America Movil ADR Series L 132,598 6,965,373 - ------------------------------------------------------------------------------------- NETHERLANDS (0.5%) FOOD PRODUCTS Royal Numico 75,405 4,154,822 - ------------------------------------------------------------------------------------- NORWAY (0.8%) ENERGY EQUIPMENT & SERVICES TGS NOPEC Geophysical 277,320(b) 6,344,490 - ------------------------------------------------------------------------------------- SOUTH AFRICA (2.2%) FOOD & STAPLES RETAILING (1.3%) Massmart Holdings 750,578 10,400,494 - ------------------------------------------------------------------------------------- MEDIA (0.9%) Naspers Series N 274,210 6,885,146 - ------------------------------------------------------------------------------------- SOUTH KOREA (4.2%) COMMERCIAL BANKS (2.2%) Kookmin Bank 57,283 5,131,217 Shinhan Financial Group 218,743 12,326,274 --------------- Total 17,457,491 - ------------------------------------------------------------------------------------- METALS & MINING (0.7%) POSCO 13,952 5,856,680 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.3%) Hynix Semiconductor 80,680(b) 2,752,136 Hynix Semiconductor GDR 206,781(b,d,e) 7,122,323 --------------- Total 9,874,459 - ------------------------------------------------------------------------------------- SPAIN (1.7%) BIOTECHNOLOGY (0.8%) Grifols 343,133(b) 5,966,644 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (0.9%) Inditex 120,384 7,405,096 - ------------------------------------------------------------------------------------- SWEDEN (1.3%) MACHINERY Atlas Copco Series A 260,800(f) 9,901,883 - -------------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 14 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) SWITZERLAND (6.1%) CAPITAL MARKETS (1.9%) UBS 231,509 $15,046,142 - ------------------------------------------------------------------------------------- CHEMICALS (0.6%) Syngenta 23,906(b) 4,749,145 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (1.6%) Petroplus Holdings 154,713(b) 12,810,549 - ------------------------------------------------------------------------------------- PHARMACEUTICALS (2.0%) Roche Holding 82,048 15,450,863 - ------------------------------------------------------------------------------------- TAIWAN (1.2%) ELECTRONIC EQUIPMENT & INSTRUMENTS (1.0%) Hon Hai Precision Industry 577,000 3,802,528 Hon Hai Precision Industry GDR 305,321(d,e) 4,059,883 --------------- Total 7,862,411 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.2%) Taiwan Semiconductor Mfg 983 2,000 Taiwan Semiconductor Mfg ADR 172,072 1,813,639 --------------- Total 1,815,639 - ------------------------------------------------------------------------------------- UNITED KINGDOM (7.4%) COMMERCIAL BANKS (1.3%) Barclays 163,771 2,364,220 Standard Chartered 269,531 8,330,268 --------------- Total 10,694,488 - ------------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.9%) Drax Group 426,142 6,791,345 - ------------------------------------------------------------------------------------- METALS & MINING (1.0%) Anglo American 153,417 8,078,680 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (1.0%) BG Group 539,701 7,776,770 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.9%) CSR 451,029(b) 6,849,655 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (1.3%) Carphone Warehouse Group 1,717,961 10,291,342 - -------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) UNITED KINGDOM (CONT.) TOBACCO (1.0%) Imperial Tobacco Group 172,931 $7,537,271 - ------------------------------------------------------------------------------------- UNITED STATES (32.9%) AEROSPACE & DEFENSE (1.3%) United Technologies 153,923 10,332,851 - ------------------------------------------------------------------------------------- BEVERAGES (1.6%) Hansen Natural 120,546(b) 4,604,857 PepsiCo 118,473 7,829,881 --------------- Total 12,434,738 - ------------------------------------------------------------------------------------- BIOTECHNOLOGY (0.8%) Genzyme 102,434(b) 6,689,965 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (2.7%) Bear Stearns Companies 40,209 6,260,541 Goldman Sachs Group 42,869 9,371,593 Lehman Brothers Holdings 71,739 5,400,512 --------------- Total 21,032,646 - ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (1.1%) Cisco Systems 310,356(b) 8,298,920 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.8%) CIT Group 108,524 6,473,457 - ------------------------------------------------------------------------------------- ELECTRIC UTILITIES (0.8%) Exelon 88,081 6,642,188 - ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (0.8%) ENSCO Intl 112,935 6,367,275 - ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (1.1%) St. Jude Medical 193,944(b) 8,298,864 - ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (1.2%) WellPoint 120,671(b) 9,529,389 - ------------------------------------------------------------------------------------- INSURANCE (0.5%) American Intl Group 55,978 3,913,422 - ------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (3.5%) eBay 299,604(b) 10,168,560 Google Cl A 37,815(b) 17,825,234 --------------- Total 27,993,794 - -------------------------------------------------------------------------------------
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) UNITED STATES (CONT.) LIFE SCIENCES TOOLS & SERVICES (1.3%) Exelixis 360,510(b) $3,871,877 Thermo Fisher Scientific 123,238(b) 6,415,771 --------------- Total 10,287,648 - ------------------------------------------------------------------------------------- MEDIA (1.2%) Comcast Cl A 364,595(b) 9,720,103 - ------------------------------------------------------------------------------------- METALS & MINING (1.2%) Freeport-McMoRan Copper & Gold 137,779 9,253,238 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (2.6%) Devon Energy 108,181 7,883,149 Marathon Oil 62,965 6,394,096 Valero Energy 93,423 6,561,097 --------------- Total 20,838,342 - ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (1.0%) Bowater 354,628 7,762,807 - ------------------------------------------------------------------------------------- PHARMACEUTICALS (0.7%) Wyeth 102,010 5,661,555 - ------------------------------------------------------------------------------------- ROAD & RAIL (1.0%) Norfolk Southern 144,625 7,699,835 - -------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) UNITED STATES (CONT.) SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.5%) Analog Devices 103,090 $3,981,336 - ------------------------------------------------------------------------------------- SOFTWARE (1.9%) Microsoft 501,409 15,012,185 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (2.6%) Abercrombie & Fitch Cl A 95,579 7,804,982 Home Depot 202,916 7,684,429 Staples 205,468 5,095,606 --------------- Total 20,585,017 - ------------------------------------------------------------------------------------- TOBACCO (0.5%) Altria Group 53,630 3,696,180 - ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (2.2%) American Tower Cl A 140,046(b) 5,321,748 Leap Wireless Intl 154,700(b) 11,808,251 --------------- Total 17,129,999 - ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $657,192,193) $776,857,271 - -------------------------------------------------------------------------------------
MONEY MARKET FUND (4.6%) (g) SHARES VALUE(A) RiverSource Short-Term Cash Fund 36,305,016(h) $36,305,016 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $36,305,016) $36,305,016 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $693,497,209)(i) $813,162,287 ===================================================================================
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, 2007, the value of these securities amounted to $11,182,206 or 1.4% of net assets. - -------------------------------------------------------------------------------- 16 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT NOTES TO INVESTMENTS IN SECURITIES (CONTINUED) (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). These securities may be valued at fair value according to procedures approved, in good faith, by the Fund's Board of Directors. Information concerning such security holdings at April 30, 2007, is as follows:
SECURITY ACQUISITION DATES COST - ---------------------------------------------------------------------------------- Hon Hai Precision Industry GDR* 03-05-07 $3,734,076 Hynix Semiconductor GDR* 06-26-06 thru 02-02-07 6,644,031
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (f) At April 30, 2007, security was partially or fully on loan. See Note 5 to the financial statements. (g) Cash collateral received from security lending activity is invested in an affiliated money market fund 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. (h) Affiliated Money Market Fund -- See Note 7 to the financial statements. (i) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $693,497,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $125,695,000 Unrealized depreciation (6,030,000) - ------------------------------------------------------------------------------ Net unrealized appreciation $119,665,000 - ------------------------------------------------------------------------------
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 riversource.com/funds. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 17 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers* (identified cost $657,192,193) $ 776,857,271 Affiliated money market fund (identified cost $36,305,016) (Note 7) 36,305,016 - ------------------------------------------------------------------------------ Total investments in securities (identified cost $693,497,209) 813,162,287 Foreign currency holdings (identified cost $689,150) (Note 1) 690,193 Capital shares receivable 237,488 Dividends and accrued interest receivable 2,195,744 Receivable for investment securities sold 7,536,320 - ------------------------------------------------------------------------------ Total assets 823,822,032 - ------------------------------------------------------------------------------ LIABILITIES Capital shares payable 273,507 Payable for investment securities purchased 4,007,597 Payable upon return of securities loaned (Note 5) 30,577,750 Unrealized depreciation on foreign currency contracts held, at value (Note 6) 4,138 Accrued investment management services fee 50,538 Accrued distribution fee 23,965 Accrued transfer agency fee 8,360 Accrued administrative services fee 5,115 Accrued plan administration services fee 195 Other accrued expenses 122,378 - ------------------------------------------------------------------------------ Total liabilities 35,073,543 - ------------------------------------------------------------------------------ Net assets applicable to outstanding capital stock $ 788,748,489 ==============================================================================
- -------------------------------------------------------------------------------- 18 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2007 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 955,609 Additional paid-in capital 1,082,000,248 Excess of distributions over net investment income (3,809,885) Accumulated net realized gain (loss) (Note 9) (410,108,727) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (Note 6) 119,711,244 - ------------------------------------------------------------------------------ Total -- representing net assets applicable to outstanding capital stock $ 788,748,489 ==============================================================================
Net assets applicable to outstanding shares: Class A $654,049,942 Class B $118,419,160 Class C $ 6,868,363 Class R2 $ 5,298 Class R3 $ 5,304 Class R4 $ 9,389,767 Class R5 $ 5,312 Class W $ 5,343 Net asset value per share of outstanding capital stock: Class A shares 78,476,644 $ 8.33 Class B shares 15,081,107 $ 7.85 Class C shares 883,321 $ 7.78 Class R2 shares 634 $ 8.36 Class R3 shares 634 $ 8.37 Class R4 shares 1,117,239 $ 8.40 Class R5 shares 634 $ 8.38 Class W shares 638 $ 8.37 - ------------------------------------------------------------------------------------------ * Including securities on loan, at value (Note 5) $ 29,232,270 - ------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 19 STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 7,327,500 Interest 14,242 Income distributions from affiliated money market fund (Note 7) 171,847 Fee income from securities lending (Note 5) 44,758 Less foreign taxes withheld (670,401) - --------------------------------------------------------------------------- Total income 6,887,946 - --------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 2,889,211 Distribution fee Class A 785,588 Class B 571,652 Class C 31,498 Class R2 10 Class R3 5 Class W 5 Transfer agency fee Class A 665,211 Class B 129,491 Class C 6,883 Class R2 1 Class R3 1 Class R4 3,448 Class R5 1 Class W 4 Service fee -- Class R4 931 Administrative services fees and expenses 296,566 Plan administration services fee Class R2 5 Class R3 5 Class R4 8,506 Compensation of board members 7,244 Custodian fees 112,890 Printing and postage 86,320 Registration fees 48,126 Professional fees 21,159 Other 18,951 - --------------------------------------------------------------------------- Total expenses 5,683,712 Earnings and bank fee credits on cash balances (Note 2) (27,115) - --------------------------------------------------------------------------- Total net expenses 5,656,597 - --------------------------------------------------------------------------- Investment income (loss) -- net 1,231,349 - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 20 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF OPERATIONS (CONTINUED) SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) $59,007,084 Foreign currency transactions 40,065 - --------------------------------------------------------------------------- Net realized gain (loss) on investments 59,047,149 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 23,719,717 - --------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 82,766,866 - --------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $83,998,215 ===========================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 21 STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 1,231,349 $ 636,865 Net realized gain (loss) on investments 59,047,149 98,555,283 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 23,719,717 22,761,204 - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 83,998,215 121,953,352 - ---------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (5,052,101) (1,251,232) Class B (46,137) -- Class C (24,578) (867) Class R2 (60) N/A Class R3 (61) N/A Class R4 (77,098) (25,269) Class R5 (61) N/A Class W (61) N/A - ---------------------------------------------------------------------------------------- Total distributions (5,200,157) (1,277,368) - ----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 22 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class A shares (Note 2) $ 45,345,679 $ 172,183,612 Class B shares 9,935,961 35,714,119 Class C shares 1,050,960 3,352,708 Class R2 shares 5,000 N/A Class R3 shares 5,000 N/A Class R4 shares 1,089,434 3,186,241 Class R5 shares 5,000 N/A Class W shares 5,000 N/A Reinvestment of distributions at net asset value Class A shares 4,972,723 1,230,861 Class B shares 45,360 -- Class C shares 23,937 850 Class R4 shares 77,098 25,268 Payments for redemptions Class A shares (69,438,591) (110,583,690) Class B shares (Note 2) (13,929,764) (46,861,081) Class C shares (Note 2) (523,484) (685,303) Class R4 shares (2,123,317) (1,565,797) - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (23,454,004) 55,997,788 - ---------------------------------------------------------------------------------------- Total increase (decrease) in net assets 55,344,054 176,673,772 Net assets at beginning of period 733,404,435 556,730,663 - ---------------------------------------------------------------------------------------- Net assets at end of period $788,748,489 $ 733,404,435 ======================================================================================== Undistributed (excess of distributions over) net investment income $ (3,809,885) $ 158,923 - ----------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 23 NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. Under normal market conditions, at least 80% of the Fund's net assets will be invested in equity securities, including companies located in developed and emerging countries. The Fund offers Class A, Class B, Class C and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. Effective Dec. 11, 2006, the Fund offers additional classes of shares, Class R2, Class R3 and Class R5, offered to certain institutional investors. These shares are sold without a front-end sales charge or CDSC. At April 30, 2007, Ameriprise Financial owned 100% of Class R2, Class R3 and Class R5 shares. Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class W, offered through qualifying discretionary accounts. Class W shares are sold without a front-end sales charge or CDSC. At April 30, 2007, Ameriprise Financial owned 100% of Class W shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. - -------------------------------------------------------------------------------- 24 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 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. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 25 ILLIQUID SECURITIES At April 30, 2007, 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, 2007 was $11,182,206 representing 1.42% of net assets. These securities may be valued at fair value according to procedures approved, 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 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. - -------------------------------------------------------------------------------- 26 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At April 30, 2007, foreign currency holdings consisted of multiple denominations. The Fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete its contract obligations. 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. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 27 Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. - -------------------------------------------------------------------------------- 28 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 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 0.80% to 0.57% 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 Global Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the fee by $43,400 for the six months ended April 30, 2007. 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 an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% annually as the Fund's assets increase. Other expenses in the amount of $3,811 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 29 Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $19.50 - - Class B $20.50 - - Class C $20.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund pays the Transfer Agent an annual asset-based fee of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $17.50 per shareholder account. In addition, the Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. The Transfer Agent charges an annual 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. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A, Class R3, and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4 and the introduction of Class R2 and Class R3. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares. Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to Class Y shares. The fee was calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. - -------------------------------------------------------------------------------- 30 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT Sales charges received by the Distributor for distributing Fund shares were $486,285 for Class A, $26,879 for Class B and $386 for Class C for the six months ended April 30, 2007. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Effective Dec. 11, 2006, with the renaming of Class Y as Class R4, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.27% for Class R4. During the six months ended April 30, 2007, the Fund's custodian and transfer agency fees were reduced by $27,115 as a result of earnings and bank fee credits from overnight cash balances. The Fund also pays custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $365,572,087 and $400,222,712, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS R2(A) - ------------------------------------------------------------------------------------ Sold 5,750,631 1,336,190 143,043 634 Issued for reinvested distributions 636,712 6,146 3,279 -- Redeemed (8,769,818) (1,861,381) (70,288) -- - ------------------------------------------------------------------------------------ Net increase (decrease) (2,382,475) (519,045) 76,034 634 - ------------------------------------------------------------------------------------
CLASS R3(A) CLASS R4(B) CLASS R5(A) CLASS W(C) - ------------------------------------------------------------------------------------ Sold 634 136,267 634 638 Issued for reinvested distributions -- 9,796 -- -- Redeemed -- (274,991) -- -- - ------------------------------------------------------------------------------------ Net increase (decrease) 634 (128,928) 634 638 - ------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 31
YEAR ENDED OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS R4(B) - ------------------------------------------------------------------------------------ Sold 24,909,235 5,476,744 511,941 450,583 Issued for reinvested distributions 183,985 -- 135 3,744 Redeemed (15,810,293) (7,193,343) (104,104) (221,723) - ------------------------------------------------------------------------------------ Net increase (decrease) 9,282,927 (1,716,599) 407,972 232,604 - ------------------------------------------------------------------------------------
(a) For the period from Dec. 11, 2006 (inception date) to April 30, 2007. (b) Effective Dec. 11, 2006, Class Y was renamed Class R4. (c) For the period from Dec. 1, 2006 (inception date) to April 30, 2007. 5. LENDING OF PORTFOLIO SECURITIES In order to generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets (which includes collateral for securities on loan) to broker-dealers, banks, or other institutional borrowers of securities. The Fund receives collateral in the form of cash and U.S. government securities, equal to at least 100% of the value of securities loaned, which is marked to the market value of the loaned securities daily until the securities are returned, e.g., if the value of the securities on loan increases, additional cash collateral is provided by the borrower. The Investment Manager serves as securities lending agent for the Fund under the investment management services agreement pursuant to which the Fund has agreed to reimburse the Investment Manager for expenses incurred by it in connection with the lending program, and pursuant to guidelines adopted by and under the oversight of the Board. At April 30, 2007, securities valued at $29,232,270 were on loan to brokers. For collateral, the Fund received $30,577,750 in cash. Cash collateral received is invested in an affiliated money market fund and short-term securities, including U.S. government securities or other high-grade debt obligations, which are included in the "Investments in securities." Income from securities lending amounted to $44,758 for the six months ended April 30, 2007. 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. FORWARD FOREIGN CURRENCY CONTRACTS At April 30, 2007, the Fund has a forward foreign currency exchange contract that obligates it to deliver currency at a specified future date. The unrealized appreciation and/or depreciation on this contract is included in the accompanying financial statements. See "Summary of significant accounting policies." The terms of the open contract are as follows:
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------- May 2, 2007 1,223,561 199,000,000 $-- $4,138 European Monetary Unit Japanese Yen - -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 32 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 7. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. 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 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. 9. CAPITAL LOSS CARRY-OVER For federal income tax purposes, the Fund had a capital loss carry-over of $468,974,678 at Oct. 31, 2006, that if not offset by capital gains will expire as follows:
2009 2010 2011 $294,829,842 $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 -- 2007 SEMIANNUAL REPORT 33 10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. 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. - -------------------------------------------------------------------------------- 34 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 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, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 35 There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 36 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 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, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $7.52 $6.23 $5.16 $4.62 $3.92 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .01 .02 -- .01 Net gains (losses) (both realized and unrealized) .86 1.30 1.08 .54 .69 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .87 1.31 1.10 .54 .70 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.02) (.03) -- -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.33 $7.52 $6.23 $5.16 $4.62 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $654 $608 $446 $364 $366 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.38%(d) 1.51% 1.57% 1.41% 1.50% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .45%(d) .23% .33% .07% .26% - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% 112% 93% 104% 132% - ----------------------------------------------------------------------------------------------------------- Total return(e) 11.66%(f) 21.01% 21.48% 11.72% 17.86% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 37 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $7.06 $5.88 $4.87 $4.40 $3.76 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) (.02) (.03) (.03) Net gains (losses) (both realized and unrealized) .80 1.19 1.03 .50 .67 - -------------------------------------------------------------------------------------------------------------- Total from investment operations .79 1.18 1.01 .47 .64 - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.85 $7.06 $5.88 $4.87 $4.40 - -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $118 $110 $102 $104 $142 - -------------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.15%(d) 2.28% 2.34% 2.18% 2.27% - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.32%)(d) (.54%) (.41%) (.66%) (.52%) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% 112% 93% 104% 132% - -------------------------------------------------------------------------------------------------------------- Total return(e) 11.23%(f) 20.07% 20.74% 10.68% 17.02% - --------------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- 38 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $7.02 $5.85 $4.85 $4.38 $3.75 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) (.02) (.02) (.03) Net gains (losses) (both realized and unrealized) .80 1.18 1.03 .49 .66 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .79 1.17 1.01 .47 .63 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) -- (.01) -- -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.78 $7.02 $5.85 $4.85 $4.38 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $7 $6 $2 $1 $1 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.14%(d) 2.27% 2.33% 2.19% 2.29% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.31%)(d) (.50%) (.53%) (.69%) (.52%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% 112% 93% 104% 132% - ----------------------------------------------------------------------------------------------------------- Total return(e) 11.29%(f) 20.03% 20.89% 10.73% 16.80% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 39 CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007(B) Net asset value, beginning of period $7.89 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05 Net gains (losses) (both realized and unrealized) .52 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .57 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.36 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.71%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .02%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% - ----------------------------------------------------------------------------------------------------------- Total return(f) 7.25%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- 40 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(B) Net asset value, beginning of period $7.89 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06 Net gains (losses) (both realized and unrealized) .52 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .58 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.37 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.46%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .28%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% - ----------------------------------------------------------------------------------------------------------- Total return(f) 7.38%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 41 CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $7.60 $6.29 $5.20 $4.65 $3.94 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .02 .04 .01 .02 Net gains (losses) (both realized and unrealized) .84 1.31 1.09 .54 .69 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .87 1.33 1.13 .55 .71 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.02) (.04) -- -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.40 $7.60 $6.29 $5.20 $4.65 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 $9 $6 $4 $5 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.22%(d) 1.32% 1.38% 1.23% 1.30% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .62%(d) .44% .49% .25% .43% - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% 112% 93% 104% 132% - ----------------------------------------------------------------------------------------------------------- Total return(e) 11.56%(f) 21.26% 21.90% 11.88% 18.02% - -----------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- 42 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(B) Net asset value, beginning of period $7.89 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07 Net gains (losses) (both realized and unrealized) .52 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .59 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.38 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) .96%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .78%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% - ----------------------------------------------------------------------------------------------------------- Total return(f) 7.52%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 43 CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(B) Net asset value, beginning of period $7.83 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06 Net gains (losses) (both realized and unrealized) .58 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .64 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.37 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.37%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .30%(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 48% - ----------------------------------------------------------------------------------------------------------- Total return(f) 8.19%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to April 30, 2007 (Unaudited). (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- 44 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment manager to the Fund. Under an investment management services agreement (the "IMS Agreement"), RiverSource provides investment advice and other services to the Fund and all RiverSource funds (collectively, the "Funds"). In addition, under the subadvisory agreement between RiverSource and the subadviser (the "Subadviser") (the "Subadvisory Agreement"), the Subadviser performs portfolio management and related services for the Fund. The Fund's Board of Directors (the "Board") and the Board's Investment Review and Contracts Committees monitor these services throughout the year. On an annual basis, the Board, including the independent Board members (the "Independent Directors"), considers renewal of the IMS Agreement and the Subadvisory Agreement (together, the "Advisory Agreements"). RiverSource prepares detailed reports for the Board and its Contracts Committee in March and April, including reports based on data provided by independent organizations to assist the Board in making this determination. In addition, throughout the year, the Board (or its committees) reviews information prepared by RiverSource addressing the services RiverSource provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the Advisory Agreements. At the April 11-12, 2007 in-person Board meeting, independent legal counsel to the Independent Directors reviewed with the Independent Directors various factors relevant to the Board's consideration of advisory agreements and the Board's legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved renewal of the Advisory Agreements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 45 Nature, Extent and Quality of Services Provided by RiverSource and the Subadviser: The Board analyzed various reports and presentations they had received detailing the services performed by RiverSource and the Subadviser, as well as their expertise, resources and capabilities. The Board specifically considered many developments during the past year concerning the services provided by RiverSource, including, in particular, the growing strength and capabilities of many RiverSource offices and the increased investment and resources dedicated to the Fund's operations, particularly in the areas of trading systems, legal and compliance. Further, in connection with the Board's evaluation of the overall package of services provided by RiverSource, the Board considered the quality of the administrative, custody and transfer agency services provided by RiverSource affiliates to the Fund. The Board also reviewed the financial condition of RiverSource and the Subadviser, and each entity's ability to carry out its responsibilities under the Advisory Agreements. The Board also discussed the acceptability of the terms of the Advisory Agreements (including the relatively broad scope of services required to be performed by RiverSource and the Subadviser). The Board concluded that the services being performed under the Advisory Agreements were of a reasonably high quality. Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board determined that RiverSource and the Subadviser were in a position to continue to provide a high quality and level of services to the Fund. Investment Performance: For purposes of evaluating the nature, extent and quality of services provided under the Advisory Agreements, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered: (i) detailed reports containing data prepared by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group and the net assets of the Fund; and (ii) a report detailing the Fund's performance over various periods (including since inception), recent Fund inflows (and outflows) and a comparison of the Fund's net assets from December 2006 to December 2005. The Board observed that the Fund's investment performance was appropriate in light of the particular management style and market conditions involved. Additionally, the Board reviewed the performance of the Subadviser and the overall "subadvised" strategy. They noted, in particular, management's ongoing oversight and monitoring of the Subadviser's investment process and performance. - -------------------------------------------------------------------------------- 46 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT Comparative Fees, Costs of Services Provided and the Profits Realized By RiverSource and its Affiliates from their Relationships with the Fund: The Board reviewed comparative fees and the costs of services to be provided under the Advisory Agreements. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (prepared by an independent organization) showing a comparison of the Fund's expenses with median expenses paid by funds in its peer group, as well as data showing the Fund's contribution to RiverSource's profitability. The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Funds' family, while assuring that the overall fees for each fund are generally in line with the "pricing philosophy" (i.e., that the total expense ratio of each fund, with few exceptions, is at or below the median expense ratio of funds in the same comparison group). The Board took into account that the Fund's total expense ratio (after considering proposed expense caps/waivers) was below the peer group's median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund's management fee was fair and reasonable in light of the extent and quality of services that the Fund receives. The Board also considered the expected profitability of RiverSource and its affiliates in connection with RiverSource providing investment management services to the Fund. In this regard, they referred to a detailed profitability report, discussing the profitability to RiverSource and Ameriprise Financial from managing and operating the Fund, including data showing comparative profitability over the last three years. The Board also considered the services acquired by the investment manager through the use of commission dollars paid by the Funds on portfolio transactions. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable. Economies of Scale to be Realized: The Board also considered the economies of scale that might be realized by RiverSource as the Fund grows and took note of the extent to which Fund shareholders might also benefit from such growth. The Board considered that the IMS Agreement provides for lower fees as assets increase at pre-established breakpoints and concluded that the IMS Agreement satisfactorily provided for sharing these economies of scale. Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees and subadvisory fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2007, the Board, including all of the Independent Directors, approved the renewal of the Advisory Agreements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT 47 PROXY VOTING The policy of the Board is to vote all proxies of the companies in which the Fund holds investments. The procedures are stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- 48 RIVERSOURCE GLOBAL EQUITY FUND -- 2007 SEMIANNUAL REPORT RIVERSOURCE(R) 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by (RIVERSOURCE INVESTMENTS RiverSource Investments, LLC. These companies are part of LOGO) Ameriprise Financial, Inc. S-6451 V (6/07)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE(R) GLOBAL TECHNOLOGY FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 2007 RIVERSOURCE GLOBAL TECHNOLOGY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. TABLE OF CONTENTS Fund Snapshot....................... 3 Performance Summary................. 5 Questions & Answers with Portfolio Management........ 7 Fund Expenses Example............... 11 Investments in Securities........... 13 Financial Statements................ 16 Notes to Financial Statements....... 20 Approval of Investment Management Services Agreement............... 36 Proxy Voting........................ 39
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- 2 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT FUND SNAPSHOT AT APRIL 30, 2007 FUND OBJECTIVE RiverSource Global Technology Fund (the Fund) seeks to provide shareholders with long-term capital growth. SECTOR BREAKDOWN* Percentage of portfolio assets (PIE CHART) Information Technology 79.6 Telecommunication Services 8.6 Cash & Cash Equivalents(2) 5.5 Consumer Discretionary 3.8 Industrials 1.2 Financials 0.8 Other(1) 0.5
* Sectors can be comprised of several industries. Please refer to the section entitled "Investments in Securities" for a complete listing. (1) Includes Utilities 0.3% and Materials 0.2%. (2) Of the 5.5%, 3.8% is due to security lending activity and 1.7% is the Fund's cash equivalent position. TOP TEN HOLDINGS Percentage of portfolio assets SanDisk 3.7% Intel 3.0% PMC-Sierra 2.9% Oracle 2.9% Google Cl A 2.5% Microsoft 2.5% Telefonaktiebolaget LM Ericsson ADR 2.4% Cisco Systems 2.4% Dell 2.3% QUALCOMM 2.2%
For further detail about these holdings, please refer to the section entitled "Investments in Securities." 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. Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. 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. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 3 FUND SNAPSHOT AT APRIL 30, 2007 STYLE MATRIX (STYLE MATRIX GRAPHIC) STYLE VALUE BLEND GROWTH X LARGE X MEDIUM SIZE X SMALL Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGER
YEARS IN INDUSTRY Nina Hughes 9
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A AXIAX 11/13/96 Class B INVBX 11/13/96 Class C AXICX 06/26/00 Class I -- 07/15/04 Class R4(1) RSGTX 11/13/96
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4. Total net assets $169.9 million Number of holdings 75
- -------------------------------------------------------------------------------- 4 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended April 30, 2007 (BAR CHART) Global Technology Fund +7.44 Goldman Sachs Technology Index(R) (GSTI(R)) Composite Index +8.14 Lipper Science and Technology Funds Index +8.28
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The Goldman Sachs Technology Index(R) (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. (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. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL Class A 1.69% Class B 2.47% Class C 2.45% Class I 1.01% Class R4(a) 1.31%(b)
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. (b) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses, before giving effect to any performance incentive adjustment (that increased the management fee by 0.07%), will not exceed 1.41% for Class R4. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 5 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT APRIL 30, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 11/13/96) +7.44% +11.59% +14.54% +11.78% +9.12% +6.09% Class B (inception 11/13/96) +7.18% +10.89% +13.55% +10.99% +8.27% +5.26% Class C (inception 6/26/00) +6.67% +10.34% +13.55% +10.99% N/A -11.20% Class I (inception 7/15/04) +7.72% +12.29% N/A N/A N/A +17.24% Class R4** (inception 11/13/96) +7.82% +11.97% +14.84% +12.10% +9.20% +6.17% WITH SALES CHARGE Class A (inception 11/13/96) +1.25% +5.18% +12.30% +10.46% +8.47% +5.49% Class B (inception 11/13/96) +2.18% +5.89% +12.51% +10.72% +8.27% +5.26% Class C (inception 6/26/00) +5.67% +9.34% +13.55% +10.99% N/A -11.20%
AT MARCH 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION Class A (inception 11/13/96) +8.62% +9.57% +10.26% +8.19% +8.75% +5.82% Class B (inception 11/13/96) +8.46% +9.00% +9.51% +7.48% +7.94% +5.03% Class C (inception 6/26/00) +8.46% +8.46% +9.29% +7.48% N/A -11.68% Class I (inception 7/15/04) +8.90% +10.30% N/A N/A N/A +16.48% Class R4** (inception 11/13/96) +8.55% +9.48% +10.35% +8.49% +8.84% +5.90% With sales charge Class A (inception 11/13/96) +2.36% +3.28% +8.10% +6.91% +8.11% +5.22% Class B (inception 11/13/96) +3.46% +4.00% +8.39% +7.18% +7.94% +5.03% Class C (inception 6/26/00) +7.46% +7.46% +9.29% +7.48% N/A -11.68%
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I and Class R4 shares. Class I and Class R4 shares are available to institutional investors only. * Not annualized. ** Effective Dec. 11, 2006, Class Y was renamed Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, portfolio manager Nina Hughes discusses the Fund's results and positioning for the six months ended April 30, 2007. Q: How did RiverSource Global Technology Fund perform for the semiannual period ended April 30, 2007? A: RiverSource Global Technology Fund's Class A shares increased 7.44% (excluding sales charge) for the six months ended April 30, 2007, underperforming its benchmark, the unmanaged Goldman Sachs Technology Index(R) (GSTI(R)) Composite Index, which increased 8.14% and its peer group, represented by the Lipper Science and Technology Funds Index, which increased 8.28% during the same period. Q: What factors most significantly affected performance during the fiscal year? A: The technology sector showed some very positive growth at the end of 2006, then experienced some ups and downs in early 2007 before advancing very sharply and rapidly in the final month of the semiannual period. During periods when technology stocks go up, the market tends to favor funds that are the most aggressive and the most similar to the GSTI Composite Index. We position the Fund more for the longer term, and the Fund's performance over longer periods has supported that approach. Most of the Fund's underperformance resulted from stock selection. Individual detractors included Spansion, Rackable Systems and XM Satellite Radio Holdings. Compared to the GSTI Composite Index, the Fund had a smaller position in the strongly performing Microsoft, which hampered results during the period. Spansion is a mid-cap company that provides memory for cell phones, specifically NOR Flash memory. Our analysis of the company, a spin-off from Advanced Micro Devices, showed the stock had an extremely good valuation, trading at less than book value, and had potential for favorable growth dynamics later this year. However, the inventory correction impacting some cell phone companies was more significant than we expected. One of Spansion's major customers, Motorola, pulled back orders, causing Spansion to miss its earnings numbers. We think Spansion will continue to gain market share and believe the company is well-positioned for future growth. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS Rackable Systems, another mid-cap company, provides computer network storage capacity. The company is a low-cost producer and was gaining share in its market, which we thought would offset any downward pricing pressure. However, some of the company's larger customers were able to negotiate much lower prices than we anticipated, which reduced Rackable Systems' earnings. Even though the company was achieving top line growth, its bottom line suffered. Once we saw this substantial problem, we exited the stock, avoiding a second meaningful decline. The Fund had a small position in XM Satellite Radio Holdings. We saw the merger with Sirius Satellite Radio as advantageous because a successful business model for satellite radio requires a larger number of subscribers. Given enough subscribers, we think the growth prospects could be excellent. However, we thought this merger would be completed much faster. We reduced the Fund's holding of XM Satellite Radio Holdings because it is difficult to predict when or if the merger will go through. The Fund's position in Microsoft was smaller than that of the GSTI Composite Index. We did not consider Microsoft's growth prospects overly compelling. Though the Fund benefited from its exposure to Microsoft, the underweight did contribute to its underperformance vs. the GSTI Composite Index. Positive contributors to the Fund's performance during the six-month period included Cogent Communications Group, Nuance Communications and Kronos. Cogent Communications Group is an Internet service company that provides Internet connectivity for office buildings. Our research showed the company had great operating leverage and was a leader in its market. We anticipate strong upside growth in its future earnings. Nuance Communications is a leader in the speech recognition business, providing software to call centers, dictation services and hospitals. Speech technology is becoming sophisticated and effective enough that we are seeing reporters and medical professionals using it as well as implementation in cars beyond luxury models. Nuance Communications has been growing by acquisition, but also organically. Kronos provides workforce and resource management software. The Fund benefited when Kronos was acquired by a private equity firm late in the semiannual period. - -------------------------------------------------------------------------------- 8 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT QUESTIONS & ANSWERS Q: What changes did you make to the Fund and how is it currently positioned? A: We have begun to increase exposure to telecommunications-related stocks, as well as semiconductors. We are specifically focusing on companies that provide memory for telecommunications and computer devices. There had been overcapacity in this area, but we are seeing potential for shortages at the end of 2007 and we want the Fund to be well-positioned should that occur. THE LARGE AMOUNT OF PRIVATE EQUITY MONEY WAITING TO BE PUT TO WORK SHOULD ALSO HELP SUPPORT THE TECHNOLOGY SECTOR AS IT IS A KEY AREA OF FOCUS FOR PRIVATE INVESTORS. On the telecommunications side there appear to be strong drivers for growth. Spending in the telecommunications arena has been weak in the recent past as companies were occupied by merger and acquisition activity. Now companies that have merged are likely to start spending to attract customers and keep the ones they have. In addition, we are seeing the shift from 2G (second generation) to 3G (third generation) technology, which should increase spending. The Fund's annualized turnover rate during the period was 110%. Q: How do you intend to manage the Fund in the coming months? A: We are positioning the Fund consistent with our outlook for continued improvement in the technology sector, while recognizing that companies are still working their way through an inventory correction. Technology companies in general are better positioned and valuations are very attractive, something we have not often seen in the past. The large amount of private equity money waiting to be put to work should also help support the technology sector as it is a key area of focus for private investors. We see excellent growth drivers for technology. For the remainder of 2007, we anticipate solid growth in enterprise spending. We also see increased spending by telecommunications companies, which should benefit communications equipment stocks. Next year, we anticipate a better outlook for personal computer-related stocks, which have not performed as well lately. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 9 QUESTIONS & ANSWERS We continue to seek companies with extremely compelling risk/reward profiles, that appear unattractive to other investors, but which we believe will ultimately reward the Fund for investing early. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- 10 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 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, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended April 30, 2007. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED NOV. 1, 2006 APRIL 30, 2007 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $1,074.40 $ 8.54 1.66% Hypothetical (5% return before expenses) $1,000 $1,016.56 $ 8.30 1.66% Class B Actual(b) $1,000 $1,071.80 $12.48 2.43% Hypothetical (5% return before expenses) $1,000 $1,012.74 $12.13 2.43% Class C Actual(b) $1,000 $1,066.70 $12.40 2.42% Hypothetical (5% return before expenses) $1,000 $1,012.79 $12.08 2.42% Class I Actual(b) $1,000 $1,077.20 $ 5.36 1.04% Hypothetical (5% return before expenses) $1,000 $1,019.64 $ 5.21 1.04% Class R4 Actual(b) $1,000 $1,078.20 $ 7.11(c) 1.38% Hypothetical (5% return before expenses) $1,000 $1,017.95 $ 6.90(c) 1.38%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended April 30, 2007: +7.44% for Class A, +7.18% for Class B, +6.67% for Class C, +7.72% for Class I and +7.82% for Class R4. (c) In September 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from an account-based fee to an asset-based fee, and adopting a plan administration services agreement. In addition, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Fund's Board, such that net expenses, (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.41% for Class R4. Any amounts waived will not be reimbursed by the Fund. These changes were effective Dec. 11, 2006. If these changes had been in place for the entire six-month period ended April 30, 2007, the actual expenses paid for Class R4 would have been $6.96 and the hypothetical expenses paid for Class R4 would have been $6.76. - -------------------------------------------------------------------------------- 12 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT INVESTMENTS IN SECURITIES APRIL 30, 2007 (UNAUDITED) (Percentages represent value of investments compared to net assets)
COMMON STOCKS (99.6%) ISSUER SHARES VALUE(A) COMMERCIAL SERVICES & SUPPLIES (0.5%) PeopleSupport 63,318(b) $795,907 - ----------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (14.1%) Ciena 88,411(b) 2,578,065 Cisco Systems 159,447(b) 4,263,613 JDS Uniphase 122,415(b) 2,017,399 Juniper Networks 81,825(b) 1,829,607 Nokia ADR 72,991(b,c) 1,843,023 Opnext 42,540(b) 570,887 Packeteer 101,052(b) 959,994 QUALCOMM 88,745 3,887,031 Telefonaktiebolaget LM Ericsson ADR 114,508(c) 4,370,770 Tellabs 158,457(b) 1,682,813 --------------- Total 24,003,202 - ----------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (12.3%) Apple 36,539(b) 3,646,592 Brocade Communications Systems 169,175(b) 1,652,840 Dell 163,453(b) 4,120,650 Hewlett-Packard 61,725 2,601,092 SanDisk 152,120(b) 6,609,613 Seagate Technology 98,245(c) 2,176,127 --------------- Total 20,806,914 - ----------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.8%) Compass Diversified Trust 90,300 1,427,643 - ----------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (6.6%) AT&T 71,003 2,749,236 Cogent Communications Group 142,036(b) 3,616,237 France Telecom 51,463(c) 1,504,728 Global Crossing 59,709(b,c,d) 1,722,008 Qwest Communications Intl 189,473(b) 1,682,520 --------------- Total 11,274,729 - -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) ELECTRICAL EQUIPMENT (0.8%) Energy Conversion Devices 37,458(b,d) $1,326,388 - ----------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS (2.4%) Cogent 93,231(b) 1,308,963 LG.Philips LCD ADR 136,263(b,c,d) 2,753,875 --------------- Total 4,062,838 - ----------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.3%) JA Solar Holdings ADR 19,566(b,c) 477,215 - ----------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL (0.8%) Priceline.com 23,534(b) 1,309,432 - ----------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (6.5%) eBay 77,911(b) 2,644,299 Google Cl A 9,654(b) 4,550,702 Keynote Systems 27,921(b) 379,726 VeriSign 126,828(b) 3,468,746 --------------- Total 11,043,473 - ----------------------------------------------------------------------------------- IT SERVICES (3.0%) Electronic Data Systems 75,034 2,193,994 Ness Technologies 221,480(b,c) 2,954,543 --------------- Total 5,148,537 - ----------------------------------------------------------------------------------- MEDIA (3.3%) Virgin Media 118,074 2,979,007 WorldSpace Cl A 116,991(b,d) 397,769 XM Satellite Radio Holdings Cl A 185,468(b) 2,169,976 --------------- Total 5,546,752 - ----------------------------------------------------------------------------------- METALS & MINING (0.2%) Thorium Power 1,500,909(b) 382,732 - ----------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (21.0%) Atmel 497,561(b) 2,647,025 Broadcom Cl A 67,884(b) 2,209,624 Conexant Systems 349,401(b) 541,572
See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONT.) Intel 247,391 $5,318,906 KLA-Tencor 37,629 2,090,291 LSI 224,354(b) 1,907,009 Maxim Integrated Products 74,185 2,353,148 Natl Semiconductor 50,259 1,321,812 NetLogic Microsystems 45,453(b,d) 1,398,134 NVIDIA 70,108(b) 2,305,852 PMC-Sierra 671,563(b) 5,191,182 Samsung Electronics 2,056(c) 1,258,583 Spansion Cl A 329,804(b) 3,238,675 United Microelectronics ADR 171,069(c) 561,106 Xilinx 114,347 3,370,950 --------------- Total 35,713,869 - ----------------------------------------------------------------------------------- SOFTWARE (24.6%) Adobe Systems 91,390(b) 3,798,168 BEA Systems 110,496(b) 1,302,748 Business Objects ADR 90,175(b,c) 3,382,464 Citrix Systems 99,646(b) 3,248,460 Cognos 60,999(b,c) 2,629,667 Glu Mobile 39,891(b) 448,175 Kronos 59,867(b) 3,266,942 Lawson Software 140,812(b) 1,253,227 Microsoft 150,765 4,513,904 MSC.Software 95,522(b) 1,247,517 Nuance Communications 202,385(b,d) 3,118,753
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) SOFTWARE (CONT.) OPNET Technologies 100,000(b) $1,125,000 Oracle 274,280(b) 5,156,465 Quest Software 52,875(b) 899,404 Salary.com 21,269(b) 255,228 Salesforce.com 38,544(b) 1,618,848 Symantec 169,630(b) 2,985,488 TIBCO Software 115,073(b) 1,049,466 Ubisoft Entertainment 11,424(b,c) 566,633 --------------- Total 41,866,557 - ----------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (2.4%) Sprint Nextel 128,799 2,579,844 Vodafone Group 520,432(c) 1,480,547 --------------- Total 4,060,391 - ----------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $157,302,773) $169,246,579 - -----------------------------------------------------------------------------------
MONEY MARKET FUND (5.9%)(e) SHARES VALUE(A) RiverSource Short-Term Cash Fund 10,009,522(f) $10,009,522 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $10,009,522) $10,009,522 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $167,312,295)(g) $179,256,101 ===================================================================================
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, 2007, the value of foreign securities represented 16.3% of net assets. (d) At April 30, 2007, security was partially or fully on loan. See Note 5 to the financial statements. (e) Cash collateral received from security lending activity is invested in an affiliated money market fund and represents 4.0% of net assets. See Note 5 to the financial statements. 1.9% of net assets is the Fund's cash equivalent position. (f) Affiliated Money Market Fund -- See Note 6 to the financial statements. - -------------------------------------------------------------------------------- 14 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT NOTES TO INVESTMENTS IN SECURITIES (CONTINUED) (g) At April 30, 2007, the cost of securities for federal income tax purposes was approximately $167,312,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $16,808,000 Unrealized depreciation (4,864,000) - ------------------------------------------------------------------------------ Net unrealized appreciation $11,944,000 - ------------------------------------------------------------------------------
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 riversource.com/funds. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 15 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2007 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated issuers* (identified cost $157,302,773) $ 169,246,579 Affiliated money market fund (identified cost $10,009,522) (Note 6) 10,009,522 - ------------------------------------------------------------------------------ Total investments in securities (identified cost $167,312,295) 179,256,101 Foreign currency holdings (identified cost $2,910) (Note 1) 2,789 Capital shares receivable 20,589 Dividends and accrued interest receivable 31,992 Receivable for investment securities sold 1,521,776 - ------------------------------------------------------------------------------ Total assets 180,833,247 - ------------------------------------------------------------------------------ LIABILITIES Capital shares payable 42,197 Payable for investment securities purchased 3,976,708 Payable upon return of securities loaned (Note 5) 6,857,000 Accrued investment management services fee 10,186 Accrued distribution fee 6,362 Accrued transfer agency fee 3,889 Accrued administrative services fee 849 Accrued plan administration services fee 4 Other accrued expenses 84,213 - ------------------------------------------------------------------------------ Total liabilities 10,981,408 - ------------------------------------------------------------------------------ Net assets applicable to outstanding capital stock $ 169,851,839 ==============================================================================
- -------------------------------------------------------------------------------- 16 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2007 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value (Note 1) $ 681,859 Additional paid-in capital 502,581,300 Net operating loss (1,052,105) Accumulated net realized gain (loss) (Note 8) (344,302,900) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 11,943,685 - ------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 169,851,839 ===========================================================================================
Net assets applicable to outstanding shares: Class A $ 124,401,504 Class B $ 41,766,486 Class C $ 3,478,964 Class I $ 15,591 Class R4 $ 189,294 Net asset value per share of outstanding capital stock: Class A shares 47,888,028 $ 2.60 Class B shares 18,669,330 $ 2.24 Class C shares 1,550,367 $ 2.24 Class I shares 5,882 $ 2.65 Class R4 shares 72,252 $ 2.62 - ------------------------------------------------------------------------------------------- * Including securities on loan, at value (Note 5) $ 6,364,970 - -------------------------------------------------------------------------------------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 17 STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 407,995 Income distributions from affiliated money market fund (Note 6) 121,230 Fee income from securities lending (Note 5) 22,670 Less foreign taxes withheld (10,353) - --------------------------------------------------------------------------- Total income 541,542 - --------------------------------------------------------------------------- Expenses (Note 2): Investment management services fee 718,122 Distribution fee Class A 156,161 Class B 212,850 Class C 17,584 Transfer agency fee Class A 231,170 Class B 83,321 Class C 6,683 Class R4 283 Service fee -- Class R4 68 Administrative services fees and expenses 51,434 Plan administration services fee -- Class R4 350 Compensation of board members 1,576 Custodian fees 20,385 Printing and postage 38,220 Registration fees 31,380 Professional fees 15,693 Other 14,989 - --------------------------------------------------------------------------- Total expenses 1,600,269 Earnings and bank fee credits on cash balances (Note 2) (6,622) - --------------------------------------------------------------------------- Total net expenses 1,593,647 - --------------------------------------------------------------------------- Investment income (loss) -- net (1,052,105) - --------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (Note 3) 20,262,167 Foreign currency transactions (23,803) - --------------------------------------------------------------------------- Net realized gain (loss) on investments 20,238,364 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (6,980,060) - --------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 13,258,304 - --------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $12,206,199 ===========================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 18 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS
APRIL 30, 2007 OCT. 31, 2006 SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OPERATIONS Investment income (loss) -- net $ (1,052,105) $ (1,876,776) Net realized gain (loss) on investments 20,238,364 24,531,936 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (6,980,060) 9,282,250 - -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 12,206,199 31,937,410 - -------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 4) Proceeds from sales Class A shares (Note 2) 9,956,089 16,756,579 Class B shares 1,935,945 3,746,698 Class C shares 335,255 483,485 Class R4 shares 210,624 179,064 Payments for redemptions Class A shares (17,506,697) (36,795,583) Class B shares (Note 2) (5,597,673) (15,568,576) Class C shares (Note 2) (509,816) (854,294) Class R4 shares (596,061) (43,302) - -------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (11,772,334) (32,095,929) - -------------------------------------------------------------------------------------- Total increase (decrease) in net assets 433,865 (158,519) Net assets at beginning of period 169,417,974 169,576,493 - -------------------------------------------------------------------------------------- Net assets at end of period $169,851,839 $169,417,974 ======================================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 19 NOTES TO FINANCIAL STATEMENTS (Unaudited as to April 30, 2007) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of RiverSource Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Global Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board. 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, Class I and Class R4 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares have no sales charge and are offered only to qualifying institutional investors. Effective Dec. 11, 2006, the Board approved renaming Class Y as Class R4, terminating the shareholder servicing agreement, revising the fee structure under the transfer agent agreement from account-based to asset-based, and adopting a plan administration services agreement. At April 30, 2007, Ameriprise Financial, Inc. (Ameriprise Financial) owned 100% of Class I shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- 20 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board of Directors of the funds generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign equities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial will fair value foreign equity securities pursuant to procedures adopted by the Board of Directors of the funds, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. OPTION TRANSACTIONS To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the 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. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 21 Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At April 30, 2007, foreign currency holdings 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. - -------------------------------------------------------------------------------- 22 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income to 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. RECENT ACCOUNTING PRONOUNCEMENTS On Sept. 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of SFAS 157 is required for fiscal years beginning after Nov. 15, 2007 and interim periods within those fiscal years. The impact of SFAS 157 on the Fund's financial statements is being evaluated. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 23 In June 2006, the FASB issued FASB Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated to determine the impact, if any, to the Fund. The adoption of FIN 48 is not anticipated to have a material impact on the Fund. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES Under an Investment Management Services Agreements 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 0.595% 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. The adjustment increased the fee by $100,915 for the six months ended April 30, 2007. 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. - -------------------------------------------------------------------------------- 24 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT Other expenses in the amount of $1,056 are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. Compensation of Board members includes, for the former Board Chair, compensation as well as retirement benefits. Certain other aspects of the former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Professional fees include fees paid by the Fund for legal services and independent auditor services. Under a 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: - - Class A $19.50 - - Class B $20.50 - - Class C $20.00 Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as Class R4, the fee structure under the Transfer Agency Agreement was revised from an account-based fee for Class Y to an asset-based fee for Class R4. The Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of $17.50 per shareholder account. Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Effective Dec. 11, 2006, this fee was eliminated. 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 -- 2007 SEMIANNUAL REPORT 25 The Fund has agreements with Ameriprise Financial Services, Inc. and RiverSource Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was adopted for the restructured Class R4. The fee is calculated at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares. Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid the Distributor a fee for service provided to shareholders by the Distributor and other servicing agents with respect to Class Y shares. The fee was calculated at a rate of 0.10% of the Fund's average daily net assets attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was terminated. Sales charges received by the Distributor for distributing Fund shares were $84,716 for Class A, $14,811 for Class B and $240 for Class C for the six months ended April 30, 2007. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Effective Dec. 11, 2006, with the renaming of Class Y as Class R4, the Investment Manager and its affiliates have agreed to waive certain fees and expenses until Oct. 31, 2007, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds) before giving effect to any performance incentive adjustment, will not exceed 1.41% for Class R4. During the six months ended April 30, 2007, the Fund's custodian and transfer agency fees were reduced by $6,622 as a result of earnings and bank fee credits from overnight cash balances. The Fund also pays custodian fees to Ameriprise Trust Company, an affiliate of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $185,331,271 and $197,628,424, respectively, for the six months ended April 30, 2007. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- 26 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED APRIL 30, 2007 CLASS A CLASS B CLASS C CLASS I CLASS R4* - ------------------------------------------------------------------------------------- Sold 3,926,240 885,427 153,156 -- 83,875 Issued for reinvested distributions -- -- -- -- -- Redeemed (6,912,822) (2,558,153) (232,877) -- (235,416) - ------------------------------------------------------------------------------------- Net increase (decrease) (2,986,582) (1,672,726) (79,721) -- (151,541) - -------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2006 CLASS A CLASS B CLASS C CLASS I CLASS R4* - ------------------------------------------------------------------------------------- Sold 7,679,804 1,956,234 247,215 -- 80,137 Issued for reinvested distributions -- -- -- -- -- Redeemed (16,832,375) (8,357,096) (446,399) -- (19,274) - ------------------------------------------------------------------------------------- Net increase (decrease) (9,152,571) (6,400,862) (199,184) -- 60,863 - -------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. 5. LENDING OF PORTFOLIO SECURITIES In order to generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets (which includes collateral for securities on loan) to broker-dealers, banks, or other institutional borrowers of securities. The Fund receives collateral in the form of cash and U.S. government securities, equal to at least 100% of the value of securities loaned, which is marked to the market value of the loaned securities daily until the securities are returned, e.g., if the value of the securities on loan increases, additional cash collateral is provided by the borrower. The Investment Manager serves as securities lending agent for the Fund under the investment management services agreement pursuant to which the Fund has agreed to reimburse the Investment Manager for expenses incurred by it in connection with the lending program, and pursuant to guidelines adopted by and under the oversight of the Board. At April 30, 2007, securities valued at $6,364,970 were on loan to brokers. For collateral, the Fund received $6,857,000 in cash. Cash collateral received is invested in an affiliated money market fund and short-term securities, including U.S. government securities or other high-grade debt obligations, which are included in the "Investments in securities." Income from securities lending amounted to $22,670 for the six months ended April 30, 2007. 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. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 27 6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. 7. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other RiverSource funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. The Fund had no borrowings under the facility outstanding during the six months ended April 30, 2007. 8. CAPITAL LOSS CARRY-OVER For federal income tax purposes the Fund had a capital loss carry-over of $362,948,879 at Oct. 31, 2006, that if not offset by capital gains will expire as follows:
2009 2010 $281,649,652 $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. - -------------------------------------------------------------------------------- 28 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 9. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. 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 TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 29 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, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. - -------------------------------------------------------------------------------- 30 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 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. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. 10. 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, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $2.42 $1.99 $1.83 $1.72 $1.03 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) (.02) (.02) (.03) (.02) Net gains (losses) (both realized and unrealized) .20 .45 .18 .14 .71 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .18 .43 .16 .11 .69 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.60 $2.42 $1.99 $1.83 $1.72 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $124 $123 $120 $146 $145 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.66%(d) 1.69% 1.75% 1.74% 1.94% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (1.02%)(d) (.89%) (.92%) (1.48%) (1.47%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 110% 196% 115% 349% 546% - ----------------------------------------------------------------------------------------------------------- Total return(e) 7.44%(f) 21.61% 8.74% 6.40% 66.99% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 31 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $2.09 $1.74 $1.60 $1.53 $.92 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) (.03) (.03) (.04) (.03) Net gains (losses) (both realized and unrealized) .18 .38 .17 .11 .64 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .15 .35 .14 .07 .61 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.24 $2.09 $1.74 $1.60 $1.53 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $42 $42 $46 $59 $64 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.43%(d) 2.47% 2.53% 2.52% 2.75% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (1.79%)(d) (1.66%) (1.71%) (2.26%) (2.27%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 110% 196% 115% 349% 546% - ----------------------------------------------------------------------------------------------------------- Total return(e) 7.18%(f) 20.12% 8.75% 4.58% 66.30% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- 32 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $2.10 $1.74 $1.61 $1.53 $.92 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) (.03) (.03) (.04) (.03) Net gains (losses) (both realized and unrealized) .17 .39 .16 .12 .64 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .14 .36 .13 .08 .61 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.24 $2.10 $1.74 $1.61 $1.53 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 $3 $4 $4 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 2.42%(d) 2.45% 2.52% 2.49% 2.72% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (1.78%)(d) (1.66%) (1.69%) (2.23%) (2.26%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 110% 196% 115% 349% 546% - ----------------------------------------------------------------------------------------------------------- Total return(e) 6.67%(f) 20.69% 8.07% 5.23% 66.30% - -----------------------------------------------------------------------------------------------------------
(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 and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 33 CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(H) 2006 2005 2004(B) Net asset value, beginning of period $2.46 $2.01 $1.83 $1.70 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) (.01) (.02) Net gains (losses) (both realized and unrealized) .20 .46 .19 .15 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .19 .45 .18 .13 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.65 $2.46 $2.01 $1.83 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.04%(e) 1.01% 1.04% 1.03%(e) - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.41%)(e) (.22%) (.21%) (.73%)(e) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 110% 196% 115% 349% - ----------------------------------------------------------------------------------------------------------- Total return(f) 7.72%(g) 22.39% 9.84% 7.65%(g) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from July 15, 2004 (Inception date) to Oct. 31, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. (h) Six months ended April 30, 2007 (Unaudited). - -------------------------------------------------------------------------------- 34 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED OCT. 31, 2007(G) 2006 2005 2004 2003 Net asset value, beginning of period $2.43 $2.00 $1.83 $1.72 $1.03 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.02) (.02) (.02) (.02) Net gains (losses) (both realized and unrealized) .20 .45 .19 .13 .71 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .19 .43 .17 .11 .69 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.62 $2.43 $2.00 $1.83 $1.72 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $1 $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(b),(c) 1.38%(d) 1.47% 1.54% 1.55% 1.69% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets (.63%)(d) (.68%) (.73%) (1.28%) (1.25%) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 110% 196% 115% 349% 546% - ----------------------------------------------------------------------------------------------------------- Total return(e) 7.82%(f) 21.50% 9.29% 6.40% 66.99% - -----------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4. (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings and bank fee credits on cash balances. Includes the impact of a performance incentive adjustment fee, if any. (c) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (d) 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, 2007 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 35 APPROVAL OF INVESTMENT MANAGEMENT SERVICES AGREEMENT RiverSource Investments, LLC ("RiverSource"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves as the investment manager to the Fund. Under an investment management services agreement (the "IMS Agreement"), RiverSource provides investment advice and other services to the Fund and all RiverSource funds (collectively, the "Funds"). The Fund's Board of Directors (the "Board") and the Board's Investment Review and Contracts Committees monitor these services throughout the year. On an annual basis, the Board, including the independent Board members (the "Independent Directors"), considers renewal of the IMS Agreement. RiverSource prepares detailed reports for the Board and its Contracts Committee in March and April, including reports based on data provided by independent organizations to assist the Board in making this determination. In addition, throughout the year, the Board (or its committees) reviews information prepared by RiverSource addressing the services RiverSource provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the IMS Agreement. At the April 11-12, 2007 in-person Board meeting, independent legal counsel to the Independent Directors reviewed with the Independent Directors various factors relevant to the Board's consideration of advisory agreements and the Board's legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved renewal of the IMS Agreement. Nature, Extent and Quality of Services Provided by RiverSource: The Board analyzed various reports and presentations they had received detailing the services performed by RiverSource, as well as its expertise, resources and capabilities. The Board specifically considered many developments during the past year concerning the services provided by RiverSource, including, in particular, the growing strength and capabilities of many RiverSource offices and the increased investment and resources dedicated to the Fund's operations, particularly in the areas of trading systems, legal and compliance. Further, in connection with the Board's evaluation of the overall package of services provided by RiverSource, the Board considered the quality of the administrative, custody and transfer agency services provided by RiverSource affiliates to the Fund. The Board also reviewed the financial condition of RiverSource and the entity's ability to carry out its responsibilities under the IMS Agreement. The Board also discussed the acceptability of the terms of the IMS Agreement (including the relatively broad scope of services required to be performed by RiverSource). The Board concluded that the services being performed under the IMS Agreement were of a reasonably high quality. - -------------------------------------------------------------------------------- 36 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board determined that RiverSource was in a position to continue to provide a high quality and level of services to the Fund. Investment Performance: For purposes of evaluating the nature, extent and quality of services provided under the IMS Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered: (i) detailed reports containing data prepared by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group and the net assets of the Fund; and (ii) a report detailing the Fund's performance over various periods (including since inception), recent Fund inflows (and outflows) and a comparison of the Fund's net assets from December 2006 to December 2005. The Board observed that the Fund's investment performance met expectations. Comparative Fees, Costs of Services Provided and the Profits Realized By RiverSource and its Affiliates from their Relationships with the Fund: The Board reviewed comparative fees and the costs of services to be provided under the IMS Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (prepared by an independent organization) showing a comparison of the Fund's expenses with median expenses paid by funds in its peer group, as well as data showing the Fund's contribution to RiverSource's profitability. The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Funds' family, while assuring that the overall fees for each fund are generally in line with the "pricing philosophy" (i.e., that the total expense ratio of each fund, with few exceptions, is at or below the median expense ratio of funds in the same comparison group). The Board took into account that the Fund's total expense ratio (after considering proposed expense caps/waivers) approximated the peer group's median expense ratio. Based on its review, the Board concluded that the Fund's management fee was fair and reasonable in light of the extent and quality of services that the Fund receives. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 37 The Board also considered the expected profitability of RiverSource and its affiliates in connection with RiverSource providing investment management services to the Fund. In this regard, they referred to a detailed profitability report, discussing the profitability to RiverSource and Ameriprise Financial from managing and operating the Fund, including data showing comparative profitability over the last three years. The Board also considered the services acquired by the investment manager through the use of commission dollars paid by the Funds on portfolio transactions. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable. Economies of Scale to be Realized: The Board also considered the economies of scale that might be realized by RiverSource as the Fund grows and took note of the extent to which Fund shareholders might also benefit from such growth. The Board considered that the IMS Agreement provides for lower fees as assets increase at pre-established breakpoints and concluded that the IMS Agreement satisfactorily provided for sharing these economies of scale. Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2007, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement. - -------------------------------------------------------------------------------- 38 RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 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 riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE GLOBAL TECHNOLOGY FUND -- 2007 SEMIANNUAL REPORT 39 RIVERSOURCE(R) 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(R) mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members NASD, and managed by RiverSource Investments, LLC. These companies are part of (RIVERSOURCE INVESTMENTS companies are part of Ameriprise Financial, Inc. LOGO) S-6396 J (6/07)
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/ Patrick T. Bannigan ---------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date June 26, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ Patrick T. Bannigan ---------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date June 26, 2007 By /s/ Jeffrey P. Fox ---------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer Date June 26, 2007 EX-99.CERT 2 c15464exv99wcert.txt CERTIFICATION Exhibit (a)(2) Ex. 99.CERT. Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Patrick T. Bannigan, certify that: 1. I have reviewed this report on Form N-CSR of RiverSource Global Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 26, 2007 /s/ Patrick T. Bannigan - ------------------------------------- Name: Patrick T. Bannigan Title: President and Principal Executive Officer Exhibit (a)(2) Ex. 99.CERT. Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Jeffrey P. Fox, certify that: 5. I have reviewed this report on Form N-CSR of RiverSource Global Series, Inc.; 6. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 7. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 8. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 6. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 26, 2007 /s/ Jeffrey P. Fox - ------------------------------------- Name: Jeffrey P. Fox Title: Treasurer and Principal Financial Officer EX-99.906CERT 3 c15464exv99w906cert.txt 906 CERTIFICATION Exhibit (b) Ex. 99.906.CERT. CERTIFICATION RIVERSOURCE GLOBAL SERIES, INC. (the Registrant) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Each of the undersigned below certifies that 1. This report on Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: July 3, 2007 /s/ Patrick T. Bannigan ----------------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date: July 3, 2007 /s/ Jeffrey P. Fox ----------------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----