-----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, MDXznKwM6FlY5l7uU2+1IhQcAC0LK7b1tlCwoUyaUQxktkXR/JLjap7PXQzBSDj9 Tp1vKQ9aYms52/a/t1itJg== 0000950137-08-008959.txt : 20080630 0000950137-08-008959.hdr.sgml : 20080630 20080630130329 ACCESSION NUMBER: 0000950137-08-008959 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20080630 DATE AS OF CHANGE: 20080630 EFFECTIVENESS DATE: 20080630 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: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-25824 FILM NUMBER: 08924833 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 S000007870 RiverSource Absolute Return Currency and Income Fund C000021407 RiverSource Absolute Return Currency and Income Fund Class A RARAX C000021408 RiverSource Absolute Return Currency and Income Fund Class B C000021409 RiverSource Absolute Return Currency and Income Fund Class C RARCX 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 C000055911 RiverSource Absolute Return Currency and Income Fund Class R5 497 1 c25962xe497.txt DEFINITIVE MATERIAL (RIVERSOURCE INVESTMENTS LOGO) RiverSource Advanced Alpha SM Strategies PROSPECTUS JUNE 27, 2008 RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL. RIVERSOURCE 130/30 U.S. EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL. RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE RETURN. RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund Classes A, B, C, I and R5 RiverSource Absolute Return Currency and Income Fund Classes A, B, C, I, R4, R5 and W As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. You may qualify for sales charge discounts on purchases of Class A shares. Please notify your financial institution if you have other accounts holding shares of RiverSource funds to determine whether you qualify for a sales charge discount. See "Buying and Selling Shares" for more information. NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE TABLE OF CONTENTS RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND................... 4 THE FUND................................................. 4P Objective................................................ 4p Principal Investment Strategies.......................... 4p Principal Risks.......................................... 5p Past Performance......................................... 9p Fees and Expenses........................................ 10p RIVERSOURCE 130/30 U.S. EQUITY FUND......................... 12P THE FUND................................................. 12P Objective................................................ 12p Principal Investment Strategies.......................... 12p Principal Risks.......................................... 14p Past Performance......................................... 17p Fees and Expenses........................................ 19p RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND........ 22P THE FUND................................................. 22P Objective................................................ 22p Principal Investment Strategies.......................... 22p Principal Risks.......................................... 23p Past Performance......................................... 27p Fees and Expenses........................................ 28p Other Investment Strategies and Risks....................... 30p Fund Management and Compensation............................ 32p FINANCIAL HIGHLIGHTS FOR RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND.............................................. 35P FINANCIAL HIGHLIGHTS FOR RIVERSOURCE 130/30 U.S. EQUITY FUND..................................................... 41P FINANCIAL HIGHLIGHTS FOR RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND................................. 47P BUYING AND SELLING SHARES................................... S.1
- -------------------------------------------------------------------------------- 2P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS Description of Share Classes................................ S.2 Investment Options -- Classes of Shares.................. S.2 Sales Charges............................................ S.5 Opening an Account....................................... S.12 Exchanging or Selling Shares................................ S.14 Exchanges................................................ S.17 Selling Shares........................................... S.19 VALUING FUND SHARES......................................... S.19 DISTRIBUTIONS AND TAXES..................................... S.20 GENERAL INFORMATION......................................... S.22
RIVERSOURCE COMPLEX OF FUNDS The RiverSource complex of funds includes funds branded "RiverSource," "RiverSource Partners," and "Threadneedle." These funds share the same Board of Directors/Trustees and the same policies and procedures including those set forth in the service section. RiverSource Variable Portfolio Funds are sold exclusively as underlying investment options of variable insurance policies and annuity contracts offered by affiliated insurance companies. Please see the Statement of Additional Information (SAI) for a complete list of mutual funds included in the RiverSource complex of funds. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS 3P RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND THE FUND OBJECTIVE RiverSource 120/20 Contrarian Equity Fund (the Fund) seeks to provide shareholders with long-term growth of capital. Because any investment involves risk, there is no assurance this objective can be achieved. Only shareholders can change the Fund's objective. PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, at least 80% of the Fund's net assets (including any borrowings for investment purposes) are invested in equity securities. In pursuit of the Fund's objective, the investment manager (RiverSource Investments, LLC) will hold long positions and short positions. A long position is an ordinary purchase of a security. When the Fund takes a short position, it sells a security that it has borrowed in anticipation of a decline in the price of the security. To complete the short sale transaction, the Fund buys back the same security in the market and returns it to the lender. If the price of the security falls sufficiently, the Fund will make money. If it instead increases in price, the Fund will lose money. Up to 25% of the Fund's net assets may be invested in foreign investments. The Fund expects to maintain an approximate net 100% long asset exposure to the equity market (long market exposure minus short market exposure), targeting 110% to 120% long exposure and 10% to 20% short exposure. Actual exposure will vary over time based on factors such as market movements and the investment manager's assessment of market conditions. Based on these factors, the Fund's long exposure may range between 80% and 120%, and the Fund's short exposure may range between 0% and 20%. The Fund can invest in any economic sector and, at times, it may emphasize one or more particular sectors. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. When the Fund makes a short sale, the cash proceeds of the sale are pledged to the broker affecting the sale and held in a segregated account with the Fund's custodian in order to secure the Fund's obligation to cover the short position. However, the Fund may use all or a portion of the cash proceeds of short sales to purchase additional securities. When the Fund does this it is required to pledge other liquid securities it owns in order to meet its obligations with the broker. In addition to individual stocks, the investment manager may use exchange traded funds (ETFs), and certain derivative instruments, including equity swaps, futures, options and forward contracts. These instruments may be used by the Fund to obtain additional long or short exposure to a security (or basket of securities) or to hedge existing long or short positions. - -------------------------------------------------------------------------------- 4P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS INVESTMENT PROCESS The investment manager employs a "contrarian" investment process, selecting investments (long positions) by seeking to: - - Select companies that are undervalued based on a variety of measures, including, but not limited to price-to-earnings ratios, price-to-book ratios, price-to-free cash flow, current and projected dividends, sum-of-the parts or breakup value and historic relative price valuations. - - Identify companies with moderate growth potential based on: - effective management, as demonstrated by overall performance; and - financial strength. In evaluating whether to sell a security, the investment manager considers, among other factors, whether: - - The security is overvalued relative to other potential investments. - - The security has reached the investment manager's price objective. - - The company has met the investment manager's earnings and/or growth expectations. - - The security exhibits unacceptable correlation characteristics with other portfolio holdings. - - The company or the security no longer meets the other standards described above. The primary objective of the investment manager in selecting short positions is management of the potential additional risk introduced through the selection of the Fund's long positions. The Fund seeks to mitigate these potential additional risks through short sales of ETFs or through the use of derivative instruments. In evaluating whether to close out a short position, the investment manager considers changes in potential additional risks introduced by changes in the Fund's long positions, and gradual or unrelated changes in the market which may introduce new potential risks to the Fund. The Fund aims to maintain an overall market risk profile similar to the Russell 3000(R) Index. PRINCIPAL RISKS The Fund is designed for long-term investors with above-average risk tolerance. Please remember that with any mutual fund investment you may lose money. Principal risks associated with an investment in the Fund include: ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 5P Because the Fund takes both long and short positions, there is the risk that the value of the securities held long might decrease and the value of the securities sold short might increase in response to activities of an individual company or in response to general market conditions. In this case, the Fund's potential losses could exceed those of other mutual funds that hold only long stock positions. There is no guarantee that the investment techniques and risk analyses employed by the investment manager will produce the desired results. DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to Principal Risks to which it is otherwise exposed, and may expose the Fund to additional risks, including hedging risk, correlation risk and liquidity risk. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. See the Statement of Additional Information (SAI) for more information on derivative instruments and related risks. ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. - -------------------------------------------------------------------------------- 6P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. SHORT SELLING RISK. The Fund may make short sales, which involves selling a security the Fund does not own in anticipation that the security's price will decline. The Fund must borrow those securities to make delivery to the buyer. The Fund may not always be able to borrow a security it wants to sell short. The Fund will suffer a loss if it sells a security short and the value of the security rises rather than falls. It is possible that the Fund's long positions will decline in value at the same time that the value of its short positions increase, thereby increasing potential losses to the Fund. Short sales expose the Fund to the risk that it will be required to buy the security sold short (also known as "covering" the short position) at a time when the security has appreciated in value, thus resulting in a loss to the Fund. The Fund may also be required to close out a short position at a time when it might not otherwise choose, for example, if the lender of the security calls it back, which may have the effect of reducing or eliminating potential gain, or cause the Fund to realize a loss. Short positions introduce more risk to the Fund than long positions (purchases) because the maximum sustainable loss on a security purchased (held long) is limited to the amount paid for the security plus the transaction costs, whereas there is no maximum attainable price of the shorted security. Therefore, in theory, securities sold short have unlimited risk. Additionally, the Fund's use of short sales in effect "leverages" the Fund, as the Fund may use the cash proceeds from short sales to invest in additional long positions. This leverage effect potentially exposes the Fund to greater risks due to unanticipated market movements, which may magnify losses and increase the volatility of returns. See also Leverage Risk and Market Risk. In addition, the Fund will incur additional expenses by engaging in short sales in the form of transaction costs, and interest and dividend expenses paid to the lender of the security. COUNTERPARTY RISK. The risk that a counterparty to a financial instrument entered into by the Fund or held by a special purpose or structured vehicle becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund will typically enter into financial instrument transactions with counterparties whose credit rating is investment grade, or, if unrated, determined to be of comparable quality by the investment manager. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 7P LEVERAGE RISK. Leverage occurs when the Fund increases its assets available for investment using borrowings, short sales, derivatives, or similar instruments or techniques. Due to the fact that short sales involve borrowing securities and then selling them, the Fund's short sales effectively leverage the Fund's assets. The use of leverage may make any change in the Fund's net asset value ("NAV") even greater and thus result in increased volatility of returns. The Fund's assets that are used as collateral to secure the short sales may decrease in value while the short positions are outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage can also create an interest expense that may lower the Fund's overall returns. Lastly, there is no guarantee that a leveraging strategy will be successful. ETF RISK. The price movement of an ETF may not track the underlying index and may result in a loss. In addition, shareholders bear both their proportionate share of the Fund's expenses and similar expenses incurred through ownership of the ETF. FOREIGN RISK. The following are all components of foreign risk: Country risk includes the political, economic, and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. - -------------------------------------------------------------------------------- 8P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS SMALL AND MID-SIZED COMPANY RISK. Investments in small and mid-sized companies often involve greater risks than investments in larger, more established companies because small and mid-sized companies may lack the management experience, financial resources, product diversification, experience, and competitive strengths of larger companies. Additionally, in many instances the securities of small and mid-sized companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less and may be more volatile than is typical of larger companies. SECTOR RISK. If a fund emphasizes one or more economic sectors, it may be more susceptible to the financial, market or economic events affecting the particular issuers and industries in which it invests than funds that do not emphasize particular sectors. The more a fund diversifies, the more it spreads risk and potentially reduces the risks of loss and volatility. PAST PERFORMANCE The bar chart and past performance table are not presented because the Fund has not had a full calendar year of operations. The Fund's shares became available to the public on Oct. 18, 2007. When available, the Fund intends to compare its performance to the performance of the Russell 3000(R) Index, an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index reflects reinvestment of all distributions and changes in market prices. The Fund's performance will be measured against this index for purposes of determining the performance incentive adjustment. See "Fund Management and Compensation" for more information. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 9P FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Expenses are based on the Fund's annualized expenses for the most recent fiscal period, adjusted to reflect current fees. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS I CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales ;(as a percentage of offering price at time of purchase) None 5% 1% None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C Management fees(b) 0.95% 0.95% 0.95% Distribution (12b-1) fees 0.25% 1.00% 1.00% Other expenses(c) 0.81% 0.81% 0.81% Total annual fund operating expenses 2.01% 2.76% 2.76% Fee waiver/expense reimbursement 0.51% 0.51% 0.51% Total annual (net) fund operating expenses(d) 1.50% 2.25% 2.25%
CLASS I CLASS R5 Management fees(b) 0.95% 0.95% Distribution (12b-1) fees 0.00% 0.00% Other expenses(c) 0.65% 0.70% Total annual fund operating expenses 1.60% 1.65% Fee waiver/expense reimbursement 0.43% 0.43% Total annual (net) fund operating expenses(d) 1.17% 1.22%
(a) This charge may be reduced depending on the value of your total investments in RiverSource Funds. See "Sales Charges." (b) The Fund's management fee may be increased or decreased due to the effect of a performance incentive adjustment. The index against which the Fund's performance will be measured for purposes of determining the performance incentive adjustment is the Russell 3000 Index. See "Fund Management and Compensation" for more information. (c) Other expenses include an administrative services fee, a transfer agency fee (for all classes except Class I), a custody fee and other nonadvisory expenses. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired funds fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will 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 by the Fund with respect to such investments will vary. (d) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until April 30, 2009, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net Fund expenses (excluding fees and expenses of acquired funds and certain other expenses as outlined in the Fund's SAI or as may be approved by the Fund's Board of Trustees), before giving effect to any performance incentive adjustment, will not exceed 1.50% for Class A, 2.25% for Class B, 2.25% for Class C, 1.17% for Class I and 1.22% for Class R5. - -------------------------------------------------------------------------------- 10P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS EXAMPLES These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $719 $1,123 $1,552 $2,745 Class B $728(b) $1,208(b) $1,615(b) $2,876(c) Class C $328(b) $ 808 $1,415 $3,057 Class I $119 $ 463 $ 831 $1,869 Class R5 $124 $ 479 $ 858 $1,924
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $719 $1,123 $1,552 $2,745 Class B $228 $ 808 $1,415 $2,876(b) Class C $228 $ 808 $1,415 $3,057 Class I $119 $ 463 $ 831 $1,869 Class R5 $124 $ 479 $ 858 $1,924
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 11P RIVERSOURCE 130/30 U.S. EQUITY FUND THE FUND OBJECTIVE RiverSource 130/30 U.S. Equity Fund (the Fund) seeks to provide shareholders with long-term growth of capital. Because any investment involves risk, there is no assurance this objective can be achieved. Only shareholders can change the Fund's objective. PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, at least 80% of the Fund's net assets (including any borrowings for investment purposes) are invested in equity securities of U.S. companies. In pursuit of the Fund's objective, the investment manager (RiverSource Investments, LLC) will hold long and short positions in both growth and value companies, and at times may favor growth or value based on available opportunities. A long position is an ordinary purchase of a security. When the Fund takes a short position, it sells a security that it has borrowed in anticipation of a decline in the price of the security. To complete the short sale transaction, the Fund buys back the same security in the market and returns it to the lender. If the price of the security falls sufficiently, the Fund will make money. If it instead increases in price, the Fund will lose money. Up to 25% of the Fund's net assets may be invested in foreign investments. The Fund expects to maintain an approximate net 100% long asset exposure to the equity market (long market exposure minus short market exposure), targeting 130% long exposure and 30% short exposure, however, actual exposure will vary over time based on factors such as market movements and the investment manager's assessment of market conditions. Based on these factors, the Fund's long exposure may range between 80% and 140%, and the Fund's short exposure may range between 0% and 40%. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. When the Fund makes a short sale, the cash proceeds of the sale are pledged to the broker affecting the sale and held in a segregated account with the Fund's custodian in order to secure the Fund's obligation to cover the short position. However, the Fund may use all or a portion of the cash proceeds of short sales to purchase additional securities. When the Fund does this it is required to pledge other liquid securities it owns in order to meet its obligations with the broker. In addition to individual stocks, the investment manager may use exchange traded funds (ETFs), and certain derivative instruments, including equity swaps, futures, options, forward contracts and structured notes. These instruments may be used by the Fund to obtain additional long or short exposure to a security (or basket of securities) or to hedge existing long or short positions. - -------------------------------------------------------------------------------- 12P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS INVESTMENT PROCESS The investment manager employs separate qualitative processes in optimizing for growth and value, seeking to identify securities that offer the greatest promise for out-performance (long positions) and securities with the greatest promise for underperformance (short positions). When optimizing for growth, the investment manager invests in companies it believes to have above-average long-term growth potential, or technological superiority, and sells short companies it believes are experiencing or will experience negative changes that will cause their stock prices to fall. The investment manager selects these companies based, among other factors, on its relative consideration of: - - Effectiveness of management. - - Financial strength. - - Competitive market or product position. - - Technological advantage (or disadvantage) relative to other companies. When optimizing for value, the investment manager invests in companies that appear to be undervalued by various measures or that may be temporarily out of favor, but that are believed to have good prospects for capital appreciation, and sells short companies it believes are experiencing or will experience negative changes that will cause their stock prices to fall. The investment manager selects these companies based, among other factors, on its relative consideration of: - - The stability, anticipated stability, or prospects for improvement of underlying fundamentals of a company. - - Whether a company is undervalued (overvalued), based on consideration of certain empirical evidence such as: - One or more of the company's ratios, such as price-to-earnings or price-to- cash flow, is low (high) relative to the general market, or has a yield that exceeds (trails) the market; - One or more of the company's valuation ratios is low (high) relative to historical levels for the stock; - One or more of the company's valuation ratios or other financial measures make that stock attractive (unattractive) relative to its peers; or - The relative intrinsic value of the company, as identified by the investment manager, suggests the company is not properly valued. The investment manager may sell a long position or close out a short position for several reasons, such as to secure gains (security has reached the investment manager's price objective and/or earnings or growth expectations), limit losses (minimize potential losses due to unanticipated market movement) or redeploy assets into opportunities believed to be more promising than others. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 13P In addition to selling securities short that the investment manager believes have the greatest promise for underperformance, the investment manager may also establish short positions in an effort to mitigate potential additional risks introduced through the selection of the Fund's active long and short positions, or through evolutionary or unrelated changes in the market which may introduce new potential risks to the Fund. PRINCIPAL RISKS The Fund is designed for long-term investors with above-average risk tolerance. Please remember that with any mutual fund investment you may lose money. Principal risks associated with an investment in the Fund include: ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. Because the Fund takes both long and short positions, there is the risk that the value of the securities held long might decrease and the value of the securities sold short might increase in response to activities of an individual company or in response to general market conditions. In this case, the Fund's potential losses could exceed those of other mutual funds that hold only long stock positions. There is no guarantee that the investment techniques and risk analyses employed by the investment manager will produce the desired results. ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. - -------------------------------------------------------------------------------- 14P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS SHORT SELLING RISK. The Fund may make short sales, which involves selling a security the Fund does not own in anticipation that the security's price will decline. The Fund must borrow those securities to make delivery to the buyer. The Fund may not always be able to borrow a security it wants to sell short. The Fund will suffer a loss if it sells a security short and the value of the security rises rather than falls. It is possible that the Fund's long positions will decline in value at the same time that the value of its short positions increase, thereby increasing potential losses to the Fund. Short sales expose the Fund to the risk that it will be required to buy the security sold short (also known as "covering" the short position) at a time when the security has appreciated in value, thus resulting in a loss to the Fund. The Fund may also be required to close out a short position at a time when it might not otherwise choose, for example, if the lender of the security calls it back, which may have the effect of reducing or eliminating potential gain, or cause the Fund to realize a loss. Short positions introduce more risk to the Fund than long positions (purchases) because the maximum sustainable loss on a security purchased (held long) is limited to the amount paid for the security plus the transaction costs, whereas there is no maximum attainable price of the shorted security. Therefore, in theory, securities sold short have unlimited risk. Additionally, the Fund's use of short sales in effect "leverages" the Fund, as the Fund may use the cash proceeds from short sales to invest in additional long positions. This leverage effect potentially exposes the Fund to greater risks due to unanticipated market movements, which may magnify losses and increase the volatility of returns. See also Leverage Risk and Market Risk. In addition, the Fund will incur additional expenses by engaging in short sales in the form of transaction costs, and interest and dividend expenses paid to the lender of the security. COUNTERPARTY RISK. The risk that a counterparty to a financial instrument entered into by the Fund or held by special purpose or structured vehicle becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund will typically enter into financial instrument transactions with counterparties whose credit rating is investment grade, or, if unrated, determined to be of comparable quality by the investment manager. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 15P LEVERAGE RISK. Leverage occurs when the Fund increases its assets available for investment using borrowings, short sales, derivatives, or similar instruments or techniques. Due to the fact that short sales involve borrowing securities and then selling them, the Fund's short sales effectively leverage the Fund's assets. The use of leverage may make any change in the Fund's net asset value ("NAV") even greater and thus result in increased volatility of returns. The Fund's assets that are used as collateral to secure the short sales may decrease in value while the short positions are outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage can also create an interest expense that may lower the Fund's overall returns. Lastly, there is no guarantee that a leveraging strategy will be successful. DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to Principal Risks to which it is otherwise exposed, and may expose the Fund to additional risks, including hedging risk, correlation risk and liquidity risk. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. See the SAI for more information on derivative instruments and related risks. ETF RISK. The price movement of an ETF may not track the underlying index and may result in a loss. In addition, shareholders bear both their proportionate share of the Fund's expenses and similar expenses incurred through ownership of the ETF. - -------------------------------------------------------------------------------- 16P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS FOREIGN RISK. The following are all components of foreign risk: Country risk includes the political, economic, and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. SMALL AND MID-SIZED COMPANY RISK. Investments in small and mid-sized companies often involve greater risks than investments in larger, more established companies because small and mid-sized companies may lack the management experience, financial resources, product diversification, experience, and competitive strengths of larger companies. Additionally, in many instances the securities of small and mid-sized companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less and may be more volatile than is typical of larger companies. SECTOR RISK. If a fund emphasizes one or more economic sectors, it may be more susceptible to the financial, market or economic events affecting the particular issuers and industries in which it invests than funds that do not emphasize particular sectors. The more a fund diversifies, the more it spreads risk and potentially reduces the risks of loss and volatility. PAST PERFORMANCE The bar chart and past performance table are not presented because the Fund has not had a full calendar year of operations. The Fund's shares became available to the public on Oct. 18, 2007. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 17P When available, the Fund intends to compare its performance to the performance of the Russell 1000(R) Index, an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the Russell 3000 Index. The index reflects reinvestment of all distributions and changes in market prices. The Fund's performance will be measured against this index for purposes of determining the performance incentive adjustment. See "Fund Management and Compensation" for more information. - -------------------------------------------------------------------------------- 18P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Expenses are based on the Fund's annualized expenses for the most recent fiscal period, adjusted to reflect current fees. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS I CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None 5% 1% None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C Management fees(b) 0.95% 0.95% 0.95% Distribution (12b-1) fees 0.25% 1.00% 1.00% Other expenses Dividend and interest expenses on securities sold short(c) 0.57% 0.57% 0.57% Remainder of other expenses(d) 1.38% 1.40% 1.38% Total other expenses 1.95% 1.97% 1.95% Total annual fund operating expenses 3.15% 3.92% 3.90% Fee waiver/expense reimbursement 1.08% 1.10% 1.08% Total annual (net) fund operating expenses(e) 2.07% 2.82% 2.82% Acquired fund fees and expenses(f) 0.03% 0.03% 0.03% Total fund and acquired fund fees and expenses(f) 2.10% 2.85% 2.85%
CLASS I CLASS R5 Management fees(b) 0.95% 0.95% Distribution (12b-1) fees 0.00% 0.00% Other expenses Dividend and interest expenses on securities sold short(c) 0.57% 0.57% Remainder of other expenses(d) 1.14% 1.19% Total other expenses 1.71% 1.76% Total annual fund operating expenses 2.66% 2.71% Fee waiver/expense reimbursement 0.93% 0.93% Total annual (net) fund operating expenses(e) 1.73% 1.78% Acquired fund fees and expenses(f) 0.03% 0.03% Total fund and acquired fund fees and expenses(f) 1.76% 1.81%
(a) This charge may be reduced depending on the value of your total investments in RiverSource Funds. See "Sales Charges." - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 19P (b) The Fund's management fee may be increased or decreased due to the effect of a performance incentive adjustment. The index against which the Fund's performance will be measured for purposes of determining the performance incentive adjustment is the Russell 1000 Index. See "Fund Management and Compensation" for more information. (c) Dividends on short sales are the dividends paid to the lenders of the borrowed securities. The expenses relating to dividends on short sales will vary depending on whether the securities the Fund sells short pay dividends and on the size of any such dividends. Interest expenses on short sales are amounts paid to a broker when the proceeds of the short sale are released to the Fund so that it can purchase additional long securities. (d) Remainder of other expenses includes an administrative services fee, a transfer agency fee (for all classes except Class I), a custody fee and other nonadvisory expenses. (e) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until April 30, 2009, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net Fund expenses (excluding dividend and interest expenses on securities sold short fees and expenses of other affiliated and unaffiliated mutual funds (acquired funds), and certain other expenses as outlined in the Fund's SAI or as may be approved by the Fund's Board of Trustees), before giving effect to any performance incentive adjustment, will not exceed 1.50% for Class A, 2.25% for Class B, 2.25% for Class C, 1.16% for Class I and 1.21% for Class R5. (f) In addition to the Fund's total annual operating expenses that the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the acquired funds (affiliated and unaffiliated funds) in which the Fund invests. The Fund's "Acquired fund fees and expenses," based on its investment in the acquired funds, is as shown. - -------------------------------------------------------------------------------- 20P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS EXAMPLES These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $776 $1,404 $2,056 $3,793 Class B $788(b) $1,504(b) $2,137(b) $3,932(c) Class C $388(b) $1,100 $1,929 $4,082 Class I $179 $ 748 $1,343 $2,958 Class R5 $184 $ 763 $1,368 $3,007
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $776 $1,404 $2,056 $3,793 Class B $288 $1,104 $1,937 $3,932(b) Class C $288 $1,100 $1,929 $4,082 Class I $179 $ 748 $1,343 $2,958 Class R5 $184 $ 763 $1,368 $3,007
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 21P RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND THE FUND OBJECTIVE RiverSource Absolute Return Currency and Income Fund (the Fund) seeks to provide shareholders with positive absolute return. Because any investment involves risk, there is no assurance this objective can be achieved. Only shareholders can change the Fund's objective. PRINCIPAL INVESTMENT STRATEGIES The Fund is a non-diversified fund that, under normal market conditions, will invest at least 80% of its net assets (including any borrowings for investment purposes) in short-duration debt obligations (or securities that invest in such debt obligations, including an affiliated money market fund) and forward foreign currency contracts. In pursuit of the Fund's objective, to provide absolute return, the investment manager (RiverSource Investments, LLC), seeks to generate positive total returns from the income produced by the short-term debt obligations, plus (minus) the gain (loss) resulting from fluctuations in the values of various foreign currencies relative to the U.S. dollar. The Fund's investment in short-duration debt obligations will consist primarily of (i) U.S. dollar denominated non-government, corporate and structured debt securities rated investment grade, or, if unrated, determined to be of comparable quality by the investment manager, and (ii) shares of an affiliated money market fund. A small portion of the Fund's portfolio may consist of U.S. government securities. In addition to producing income, these holdings will be designated by the Fund, as necessary, to cover obligations with respect to, or that may result from, the Fund's investments in forward currency contracts. The Fund targets a portfolio duration of one to five months but may extend the portfolio duration up to one year. 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. A forward contract requires the purchase or delivery of a foreign currency at some future date. The price paid for the contract is the current price of the foreign currency in U.S. dollars plus or minus an adjustment based on the interest rate differential between the U.S. dollar and the foreign currency. It is expected that the gross notional value of the Fund's forward foreign currency contracts will be equivalent to at least 80% of the Fund's net assets. - -------------------------------------------------------------------------------- 22P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS The investment manager utilizes a quantitative, proprietary model that uses various fundamental and technical factors, including current and historical data, to rank the anticipated value of several developed countries' currencies relative to the U.S. dollar. The investment manager will enter into long forward currency contracts for a limited number of the currencies that rank higher in the model, and the Fund will experience profits (losses) to the extent the value of the currency appreciates (depreciates) relative to the U.S. dollar. Conversely, the investment manager will enter into short forward currency contracts for a limited number of the currencies that rank lower in the model, and the Fund will experience profits (losses) to the extent the value of the currency depreciates (appreciates) relative to the U.S. dollar. Except to close or reduce existing positions, the Fund will not enter into long and short forward currency contracts in the same currency at the same time. The investment manager runs the model regularly and generally seeks to maintain long and short forward currency contracts with approximately equal gross notional values. PRINCIPAL RISKS This Fund is designed for investors with above-average risk tolerance. Please remember that with any mutual fund investment you may lose money. Principal risks associated with an investment in the Fund include: MARKET RISK. The market value of securities and currencies may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities and currencies may fluctuate, sometimes rapidly and unpredictably. CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or a note. If the Fund purchases unrated securities, or if the rating of a security is reduced after purchase, the Fund will depend on the investment manager's analysis of credit risk more heavily than usual. INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices: when interest rates rise, bond prices fall. In general, the longer the maturity or duration of a bond, the greater its sensitivity to changes in interest rates. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME 23P FUND -- 2008 PROSPECTUS FOREIGN CURRENCY RISK. The Fund's exposure to foreign currencies subjects the Fund to constantly changing exchange rates and the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being sold forward. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and economic or political developments in the U.S. or abroad. As a result, the Fund's exposure to foreign currencies may reduce the returns of the Fund. Trading of foreign currencies also includes the risk of clearing and settling trades which, if prices are volatile, may be difficult. DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to Principal Risks to which it is otherwise exposed, and may expose the Fund to additional risks, including counterparty credit risk, leverage risk, hedging risk, correlation risk, and liquidity risk. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. See the SAI for more information on derivative instruments and related risks. QUANTITATIVE MODEL RISK. The quantitative methodology employed by the investment manager has been tested using historical market data, but has only recently begun to be used to manage open-end mutual funds. There can be no assurance that the methodology will enable the Fund to achieve its objective. - -------------------------------------------------------------------------------- 24P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. COUNTERPARTY RISK. The risk that a counterparty to a financial instrument entered into by the Fund or held by special purpose or structured vehicle becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund will typically enter into financial instrument transactions with counterparties whose credit rating is investment grade, or, if unrated, determined to be of comparable quality by the investment manager. DIVERSIFICATION RISK. The Fund is non-diversified. A non-diversified fund may invest more of its assets in fewer issuers than if it were a diversified fund. Because each investment has a greater effect on the Fund's performance, the Fund may be more exposed to the risks of loss and volatility then a fund that invests more broadly. GEOGRAPHIC CONCENTRATION RISK. The Fund may be particularly susceptible to economic, political or regulatory events affecting companies and countries within the specific geographic region in which the Fund focuses its investments. Currency devaluations could occur in countries that have not yet experienced currency devaluation to date, or could continue to occur in countries that have already experienced such devaluations. As a result, the Fund may be more volatile than a more geographically diversified fund. PREPAYMENT AND EXTENSION RISK. The risk that a bond or other security might be called, or otherwise converted, prepaid, or redeemed, before maturity. This risk is primarily associated with asset-backed securities, including mortgage backed securities. If a security is converted, prepaid, or redeemed, before maturity, particularly during a time of declining interest rates, the investment manager may not be able to reinvest in securities providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise, the likelihood of prepayment decreases. The investment manager may be unable to capitalize on securities with higher interest rates because the Fund's investments are locked in at a lower rate for a longer period of time. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME 25P FUND -- 2008 PROSPECTUS TAX RISK. As a regulated investment company, a fund must derive at least 90% of its gross income for each taxable year from sources treated as "qualifying income" under the Internal Revenue Code of 1986, as amended. The Fund currently intends to take positions in forward currency contracts with notional value exceeding 80% of the Fund's total net assets. Although foreign currency gains currently constitute "qualifying income," the Treasury Department has the authority to issue regulations excluding from the definition of "qualifying income" a fund's foreign currency gains not "directly related" to its "principal business" of investing in stocks or securities (or options and futures with respect thereto). Such regulations might treat gains from some of the Fund's foreign currency-denominated positions as not "qualifying income" and there is a remote possibility that such regulations might be applied retroactively, in which case, the Fund might not qualify as a regulated investment company for one or more years. In the event the Treasury Department issues such regulations, the Fund's Board of Directors may authorize a significant change in investment strategy or Fund liquidation. RISKS OF INVESTING IN AFFILIATED MONEY MARKET FUND. In addition to the fees and expenses that the Fund directly bears, the Fund indirectly bears the fees and expenses of the affiliated money market fund in which it invests. To the extent these fees and expenses are expected to exceed 0.01% of the Fund's average daily net assets, they will be reflected in the Fund's Annual Operating Expenses set forth in the table under "Fees and Expenses." Additionally, by investing in an affiliated money market fund, the Fund will be exposed to the investment risks of the affiliated money market fund. To the extent the Fund invests a significant portion of its assets in the affiliated money market fund, the Fund will bear increased indirect expenses and be more susceptible to the investment risks of the affiliated money market fund, which include: ACTIVE MANAGEMENT RISK. The affiliated money market fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the fund's investment objective. Due to its active management, the affiliated money market fund could underperform other mutual funds with similar investment objectives. CONCENTRATION RISK. Investments that are concentrated in a particular issuer, geographic region, or sector will be more susceptible to changes in price. The more a fund diversifies, the more it spreads risk. For example, if the affiliated money market fund concentrates its investments in banks, the value of these investments may be adversely affected by economic or regulatory developments in the banking industry. CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or - -------------------------------------------------------------------------------- 26P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS a note. If the affiliated money market fund purchases unrated securities, or if the rating of a security is reduced after purchase, the affiliated money market fund will depend on the investment manager's analysis of credit risk more heavily than usual. REINVESTMENT RISK. Reinvestment risk is the risk that the affiliated money market fund will not be able to reinvest income or principal at the same rate it currently is earning. PAST PERFORMANCE The bar chart and past performance table are not presented because the Fund has not had a full calendar year of operations. The Fund began operations on June 15, 2006. When available, the Fund intends to compare its performance to the Citigroup 3-month U.S. Treasury Bill Index, an unmanaged index, representing the performance of three-month Treasury bills. The index reflects reinvestment of all distributions and changes in market prices. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME 27P FUND -- 2008 PROSPECTUS FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Expenses are based on the Fund's most recent fiscal year, adjusted to reflect current fees. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS I CLASS R4(b) CLASS R5 CLASS A CLASS B CLASS C CLASS W Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 3.00%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None 5% 1% None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C CLASS W Management fees 0.89% 0.89% 0.89% 0.89% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.25% Other expenses(c) 0.22% 0.21% 0.23% 0.40% Total annual fund operating expenses 1.36% 2.10% 2.12% 1.54% Fee waiver/expense reimbursement 0.00% 0.00% 0.00% 0.00% Total annual (net) fund operating expenses(d) 1.36% 2.10% 2.12% 1.54%
CLASS CLASS I R4(b) CLASS R5 Management fees 0.89% 0.89% 0.89% Distribution (12b-1) fees 0.00% 0.00% 0.00% Other expenses(c) 0.18% 0.50% 0.17% Total annual fund operating expenses 1.07% 1.39% 1.06% Fee waiver/expense reimbursement 0.00% 0.04% 0.00% Total annual (net) fund operating expenses(d) 1.07% 1.35% 1.06%
(a) This charge may be reduced depending on the value of your total investments in RiverSource funds. See "Sales Charges." (b) Effective Dec. 11, 2006, the following changes were implemented: 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. (c) Other expenses include an administrative services fee, a transfer agency fee (for all classes except Class I), a custody fee, other nonadvisory expenses and, a plan administration services fee (for Class R4). Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired funds fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will 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 by the Fund with respect to such investment will vary. (d) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2008, 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 expenses will not exceed 1.47% for Class A, 2.23% for Class B, 2.22% for Class C, 1.17% for Class I, 1.35% for Class R4, 1.22% for Class R5 and 1.62% for Class W. - -------------------------------------------------------------------------------- 28P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS EXAMPLES These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $434 $ 718 $1,023 $1,891 Class B $713(b) $1,058(b) $1,330(b) $2,246(c) Class C $315(b) $ 664 $1,140 $2,456 Class I $109 $ 341 $ 591 $1,310 Class R4 $137 $ 436 $ 758 $1,670 Class R5 $108 $ 337 $ 586 $1,299 Class W $157 $ 487 $ 840 $1,840
(a) Includes a 3.00% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $434 $718 $1,023 $1,891 Class B $213 $658 $1,130 $2,246(b) Class C $215 $664 $1,140 $2,456 Class I $109 $341 $ 591 $1,310 Class R4 $137 $436 $ 758 $1,670 Class R5 $108 $337 $ 586 $1,299 Class W $157 $487 $ 840 $1,840
(a) Includes a 3.00% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME 29P FUND -- 2008 PROSPECTUS REFERENCES TO THE "FUND" THROUGHOUT THE REMAINDER OF THE PROSPECTUS REFER TO RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND, RIVERSOURCE 130/30 U.S. EQUITY FUND AND RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND SINGULARLY OR COLLECTIVELY AS THE CONTEXT REQUIRES. OTHER INVESTMENT STRATEGIES AND RISKS Other Investment Strategies. In addition to the principal investment strategies previously described, the Fund may utilize investment strategies that are not principal investment strategies, including for RiverSource Absolute Return Currency and Income Fund, investment in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds (ETFs), also referred to as "acquired funds") ownership of which results in the Fund bearing its proportionate share of the acquired funds' fees and expenses. Investment in ETFs is a principal investment strategy for RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund. Although ETFs are generally designed to replicate the price and yield of a specified market index, there is no guarantee that an ETF will track its specified market index, which may result in a loss. For more information on strategies and holdings, and the risks of such strategies, including derivative instruments that the Fund may use, see the Fund's SAI and its annual and semiannual reports. Unusual Market Conditions. During unusual market conditions, each of RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund may temporarily invest more of its assets in money market securities, and RiverSource Absolute Return Currency and Income Fund may temporarily have less exposure to forward currency contracts than during normal market conditions. Although investing in these securities would serve primarily to attempt to avoid losses, this type of investing also could prevent the Fund from achieving its investment objective. During these times, the portfolio managers may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. Instead of investing in money market securities directly, the Fund may invest in shares of an affiliated money market fund. See "Cash Reserves" for more information. - -------------------------------------------------------------------------------- 30P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS Securities Transaction Commissions. Securities transactions involve the payment by the Fund of brokerage commissions to broker-dealers, on occasion as compensation for research or brokerage services (commonly referred to as "soft dollars"), as the portfolio managers buy and sell securities for the Fund in pursuit of its objective. A description of the policies governing the Fund's securities transactions and the dollar value of brokerage commissions paid by the Fund are set forth in the SAI. Funds that invest primarily in fixed income securities do not typically generate brokerage commissions that are used to pay for research or brokerage services. The brokerage commissions do not include implied commissions or mark-ups (implied commissions) paid by the Fund for principal transactions (transactions made directly with a dealer or other counterparty), including most fixed income securities (and certain other instruments, including derivatives). Brokerage commissions do not reflect other elements of transaction costs, including the extent to which the Fund's purchase and sale transactions may cause the market to move and change the market price for an investment. Although brokerage commissions and implied commissions are not reflected in the expense table under "Fees and Expenses," they are reflected in the total return of the Fund. Portfolio Turnover. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of brokerage commissions paid or mark-ups to broker-dealers that the Fund pays when it buys and sells securities. Capital gains and increased brokerage commissions or mark-ups paid to broker-dealers may adversely affect a fund's performance. The Fund's historical portfolio turnover rate, which measures how frequently the Fund buys and sells investments, is shown in the "Financial Highlights." Directed Brokerage. The Fund's Board of Directors/Trustees (Board) has adopted a policy prohibiting the investment manager, or any subadviser, from considering sales of shares of the Fund as a factor in the selection of broker-dealers through which to execute securities transactions. Additional information regarding securities transactions can be found in the SAI. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS 31P FUND MANAGEMENT AND COMPENSATION INVESTMENT MANAGER RiverSource Investments, LLC (the investment manager or RiverSource Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is the investment manager to the RiverSource funds, and is a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise Financial is a financial planning and financial services company that has been offering solutions for clients' asset accumulation, income management and protection needs for more than 110 years. In addition to managing investments for all of the RiverSource funds, RiverSource Investments manages investments for itself and its affiliates. For institutional clients, RiverSource Investments and its affiliates provide investment management and related services, such as separate account asset management, and institutional trust and custody, as well as other investment products. For all of its clients, RiverSource Investments seeks to allocate investment opportunities in an equitable manner over time. See the SAI for more information. RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND RIVERSOURCE 130/30 U.S. EQUITY FUND The Fund pays RiverSource Investments a fee for managing its assets. Under the Investment Management Services Agreement (Agreement), the fee for the most recent fiscal period based on the Fund's average daily net assets was the following:
MANAGEMENT FEE FOR FISCAL PERIOD ENDED FUND APRIL 30, 2008 RiverSource 120/20 Contrarian Equity Fund 0.95% RiverSource 130/30 U.S. Equity Fund 0.95%
Beginning Nov. 1, 2009, the management fee will include an adjustment under the terms of a performance incentive adjustment arrangement under the Agreement. For RiverSource 120/20 Contrarian Equity Fund, the adjustment will be computed by comparing the Fund's performance to the performance of the Russell 3000 Index. For RiverSource 130/30 U.S. Equity Fund, the adjustment will be computed by comparing the Fund's performance to the performance of the Russell 1000 Index. In certain circumstances, the Fund's Board may approve a change in the index without shareholder approval. The maximum adjustment (increase or decrease) is 0.50% of the Fund's average net assets on an annual basis. Under the Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. A discussion regarding the basis for the Board approving the Agreement is available in the Fund's annual or semiannual report to shareholders. - -------------------------------------------------------------------------------- 32P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND The Fund pays RiverSource Investments a fee for managing its assets. Under the Investment Management Services Agreement (Agreement), the fee for the most recent fiscal year was 0.89% of the Fund's average daily net assets. Under the Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. A discussion regarding the basis for the Board approving the Agreement is available in the Fund's most recent annual or semiannual shareholder report. Portfolio Manager(s). The portfolio managers responsible for the day-to-day management of the Fund are: RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND Warren Spitz, Senior Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 2000 as a Senior Portfolio Manager. - - Portfolio Manager, Prudential Global Asset Management, 1987 to 2000. - - Began investment career in 1984. - - MBA, Wharton School, University of Pennsylvania. Steve Schroll, Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 1998 as a Senior Security Analyst. - - Senior Equity Analyst, Piper Jaffray, 1988 to 1998; Equity Analyst, First Asset Management, 1985 to 1988; Equity Analyst, Dain Rauscher, 1981 to 1985. - - Began investment career in 1981. - - MBA, University of Minnesota. Laton Spahr, CFA, Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 2001 as a Security Analyst. - - Sector Analyst, Holland Capital Management, 2000 to 2001; Statistical Research Intern, Friess Associates, 1998 to 1999. - - Began investment career in 1998. - - MS, University of Wisconsin, Applied Security Analysis Program. Paul Stocking, Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 1995 as a Senior Equity Analyst. - - Vice President, JP Morgan Securities, 1987 to 1995; Investment Banking. - - Began investment career in 1987. - - MBA, University of Chicago. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS 33P RIVERSOURCE 130/30 U.S. EQUITY FUND Robert Ewing, CFA, Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 2002. - - Prior to that, Analyst and Portfolio Manager at Fidelity Investments from 1990 to 2002. - - Began investment career in 1988. - - BS, Boston College Carroll School of Management. Nick Thakore, Portfolio Manager - - Managed the Fund since 2007. - - Joined RiverSource Investments in 2002. - - Prior to that, Analyst and Portfolio Manager at Fidelity Investments from 1993 to 2002. - - Began investment career in 1993. - - MBA, Wharton School at University of Pennsylvania. Messrs. Ewing and Thakore are responsible for the direct, day-to-day management of the Fund, constructing a portfolio of long and short positions based on investment processes designed to identify the best value and growth opportunities. In making investment decisions for the portfolio, they draw from their own ideas as well as those from a team of research analysts they oversee who support the investment processes by contributing both long and short investment ideas for potential implementation in the portfolio. RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND Nicholas Pifer, CFA, Portfolio Manager - - Managed the Fund since 2006. - - Leader of the global sector team. - - Joined RiverSource Investments in 2000. - - Fixed Income Portfolio Manager, Investment Advisers, Inc., 1997 to 2000. - - Began investment career in 1990. - - MA, Johns Hopkins University School of Advanced International Studies. The fixed income department of RiverSource Investments is divided into six sector teams, each of which includes a portfolio manager or portfolio managers and several analysts, and each of which specializes in a specific sector of the fixed income market. The Fund's portfolio manager leads the team that specializes in the sector in which the Fund primarily invests. The SAI provides additional information about portfolio manager compensation, management of other accounts and ownership of shares in the Fund. - -------------------------------------------------------------------------------- 34P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- 2008 PROSPECTUS FINANCIAL HIGHLIGHTS FOR RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THE INFORMATION FOR THE FISCAL PERIOD ENDED APRIL 30, 2008 HAS BEEN DERIVED FROM THE FINANCIAL STATEMENTS AUDITED BY ERNST & YOUNG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS, IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THIS PROSPECTUS, IS AVAILABLE UPON REQUEST. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 35P CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.83 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .04 Net gains (losses) (both realized and unrealized) (2.59) - ---------------------------------------------------------------------- Total from investment operations (2.55) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Tax return of capital (.03) - ---------------------------------------------------------------------- Net asset value, end of period $17.25 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $36 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.01%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.50%(f) - ---------------------------------------------------------------------- Net investment income (loss) .40%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 23% - ---------------------------------------------------------------------- Total return(i) (12.87%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 36P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.83 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) (.03) Net gains (losses) (both realized and unrealized) (2.58) - ---------------------------------------------------------------------- Total from investment operations (2.61) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Tax return of capital (.02) - ---------------------------------------------------------------------- Net asset value, end of period $17.20 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.76%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 2.25%(f) - ---------------------------------------------------------------------- Net investment income (loss) (.25%)(f) - ---------------------------------------------------------------------- Portfolio turnover rate 23% - ---------------------------------------------------------------------- Total return(i) (13.17%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 37P CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.83 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) (.03) Net gains (losses) (both realized and unrealized) (2.59) - ---------------------------------------------------------------------- Total from investment operations (2.62) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Tax return of capital (.02) - ---------------------------------------------------------------------- Net asset value, end of period $17.19 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.76%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 2.25%(f) - ---------------------------------------------------------------------- Net investment income (loss) (.27%)(f) - ---------------------------------------------------------------------- Portfolio turnover rate 23% - ---------------------------------------------------------------------- Total return(i) (13.21%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 38P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.83 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .07 Net gains (losses) (both realized and unrealized) (2.59) - ---------------------------------------------------------------------- Total from investment operations (2.52) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Tax return of capital (.03) - ---------------------------------------------------------------------- Net asset value, end of period $17.28 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.62%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.20%(f) - ---------------------------------------------------------------------- Net investment income (loss) .81%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 23% - ---------------------------------------------------------------------- Total return(i) (12.69%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS 39P CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.83 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .07 Net gains (losses) (both realized and unrealized) (2.60) - ---------------------------------------------------------------------- Total from investment operations (2.53) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Tax return of capital (.03) - ---------------------------------------------------------------------- Net asset value, end of period $17.27 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.65%(g) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.25%(g) - ---------------------------------------------------------------------- Net investment income (loss) .76%(g) - ---------------------------------------------------------------------- Portfolio turnover rate 23% - ---------------------------------------------------------------------- Total return(i) (12.75%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 40P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 120/20 CONTRARIAN EQUITY FUND -- 2008 PROSPECTUS FINANCIAL HIGHLIGHTS FOR RIVERSOURCE 130/30 U.S. EQUITY FUND THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THE INFORMATION FOR THE FISCAL PERIOD ENDED APRIL 30, 2008 HAS BEEN DERIVED FROM THE FINANCIAL STATEMENTS AUDITED BY ERNST & YOUNG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS, IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THIS PROSPECTUS, IS AVAILABLE UPON REQUEST. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 41P CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.68 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .20 Net gains (losses) (both realized and unrealized) (2.73) - ---------------------------------------------------------------------- Total from investment operations (2.53) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) Distributions from realized gains (.03) - ---------------------------------------------------------------------- Total distributions (.09) - ---------------------------------------------------------------------- Net asset value, end of period $17.06 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $10 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(d),(e) 3.15%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(e),(g),(h) 2.09%(f) - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(d),(e) 2.56%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(e),(g),(h) 1.50%(f) - ---------------------------------------------------------------------- Net investment income (loss) 2.15%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 118% - ---------------------------------------------------------------------- Total return(i) (12.89%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 42P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.68 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .13 Net gains (losses) (both realized and unrealized) (2.73) - ---------------------------------------------------------------------- Total from investment operations (2.60) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) Distributions from realized gains (.03) - ---------------------------------------------------------------------- Total distributions (.08) - ---------------------------------------------------------------------- Net asset value, end of period $17.00 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(d),(e) 3.92%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(e),(g),(h) 2.84%(f) - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(d),(e) 3.34%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(e),(g),(h) 2.25%(f) - ---------------------------------------------------------------------- Net investment income (loss) 1.44%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 118% - ---------------------------------------------------------------------- Total return(i) (13.24%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 43P CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.68 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .14 Net gains (losses) (both realized and unrealized) (2.74) - ---------------------------------------------------------------------- Total from investment operations (2.60) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) Distributions from realized gains (.03) - ---------------------------------------------------------------------- Total distributions (.07) - ---------------------------------------------------------------------- Net asset value, end of period $17.01 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(d),(e) 3.90%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(e),(g),(h) 2.83%(f) - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(d),(e) 3.32%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(e),(g),(h) 2.25%(f) - ---------------------------------------------------------------------- Net investment income (loss) 1.49%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 118% - ---------------------------------------------------------------------- Total return(i) (13.24%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 44P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.68 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .19 Net gains (losses) (both realized and unrealized) (2.70) - ---------------------------------------------------------------------- Total from investment operations (2.51) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) Distributions from realized gains (.03) - ---------------------------------------------------------------------- Total distributions (.09) - ---------------------------------------------------------------------- Net asset value, end of period $17.08 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(d),(e) 2.66%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(e),(g),(h) 1.75%(f) - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(d),(e) 2.10%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(e),(g),(h) 1.20%(f) - ---------------------------------------------------------------------- Net investment income (loss) 1.96%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 118% - ---------------------------------------------------------------------- Total return(i) (12.77%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS 45P CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED APRIL 30, 2008(B) Net asset value, beginning of period $19.68 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .18 Net gains (losses) (both realized and unrealized) (2.69) - ---------------------------------------------------------------------- Total from investment operations (2.51) - ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) Distributions from realized gains (.03) - ---------------------------------------------------------------------- Total distributions (.09) - ---------------------------------------------------------------------- Net asset value, end of period $17.08 - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(d),(e) 2.71%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (including dividend and interest expenses on securities sold short)(e),(g),(h) 1.81%(f) - ---------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(d),(e) 2.15%(f) - ---------------------------------------------------------------------- Net expenses after expense waiver/reimbursement (excluding dividend and interest expenses on securities sold short)(e),(g),(h) 1.25%(f) - ---------------------------------------------------------------------- Net investment income (loss) 1.90%(f) - ---------------------------------------------------------------------- Portfolio turnover rate 118% - ---------------------------------------------------------------------- Total return(i) (12.78%)(j) - ----------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (when shares became publicly available) to April 30, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds, and dividend and interest expenses on securities sold short), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the period ended April 30, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. - -------------------------------------------------------------------------------- 46P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE 130/30 U.S. EQUITY FUND -- 2008 PROSPECTUS FINANCIAL HIGHLIGHTS FOR RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTION). THE INFORMATION FOR THE FISCAL YEAR ENDED OCT. 31, 2007 HAS BEEN DERIVED FROM THE FINANCIAL STATEMENTS AUDITED BY ERNST & YOUNG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS, IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THE PROSPECTUS, IS AVAILABLE UPON REQUEST. THE INFORMATION FOR THE PERIOD ENDED ON OCT. 31, 2006 HAS BEEN AUDITED BY KPMG LLP. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS 47P CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007 2006(B) Net asset value, beginning of period $10.09 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .41(c) .12 Net gains (losses) (both realized and unrealized) .57 .11 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .98 .23 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.39) (.12) Distributions from realized gains (.10) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.49) (.12) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.58 $10.09 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 $10 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.36% 1.59%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 1.36% 1.37%(f),(g) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.98% 3.89%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 12% - ----------------------------------------------------------------------------------------------------------- Total return(h) 9.96%(i) 2.37%(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds). (h) Total return does not reflect payment of a sales charge. (i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (j) Not annualized. - -------------------------------------------------------------------------------- 48P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007 2006(B) Net asset value, beginning of period $10.09 $9.97 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .34(c) .09 Net gains (losses) (both realized and unrealized) .59 .12 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .93 .21 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.34) (.09) Distributions from realized gains (.10) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.44) (.09) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.58 $10.09 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.10% 2.38%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 2.10% 2.16%(f),(g) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.26% 3.11%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 12% - ----------------------------------------------------------------------------------------------------------- Total return(h) 9.38%(i) 2.16%(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds). (h) Total return does not reflect payment of a sales charge. (i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS 49P CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007 2006(B) Net asset value, beginning of period $10.09 $9.97 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .34(c) .09 Net gains (losses) (both realized and unrealized) .58 .12 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .92 .21 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.34) (.09) Distributions from realized gains (.10) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.44) (.09) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.57 $10.09 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.12% 2.38%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 2.12% 2.16%(f),(g) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.42% 3.11%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 12% - ----------------------------------------------------------------------------------------------------------- Total return(h) 9.37%(i) 2.16%(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is and before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds). (h) Total return does not reflect payment of a sales charge. (i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (j) Not annualized. - -------------------------------------------------------------------------------- 50P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007 2006(B) Net asset value, beginning of period $10.10 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .44(c) .13 Net gains (losses) (both realized and unrealized) .59 .12 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.03 .25 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.44) (.13) Distributions from realized gains (.10) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.54) (.13) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 $10.10 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $122 $68 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.07% 1.34%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 1.07% 1.12%(f),(g) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 4.34% 4.37%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 12% - ----------------------------------------------------------------------------------------------------------- Total return(h) 10.49%(i) 2.56%(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from June 15, 2006 (when shares became publicly available) to Oct. 31, 2006. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds). (h) Total return does not reflect payment of a sales charge. (i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (j) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS 51P CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT. 31, 2007 2006(B) Net asset value, beginning of period $10.09 $9.98 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .42(c) .13 Net gains (losses) (both realized and unrealized) .59 .11 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.01 .24 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.42) (.13) Distributions from realized gains (.10) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.52) (.13) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.58 $10.09 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.36% 1.45%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 1.31% 1.23%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 4.13% 4.04%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 12% - ----------------------------------------------------------------------------------------------------------- Total return(h) 10.27%(i) 2.42%(j) - -----------------------------------------------------------------------------------------------------------
* 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) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds). (h) Total return does not reflect payment of a sales charge. (i) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (j) Not annualized. - -------------------------------------------------------------------------------- 52P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED OCT 31, 2007(B) Net asset value, beginning of period $10.58 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .02 Net gains (losses) (both realized and unrealized) .03 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .05 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) Distributions from realized gains -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.04) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.59 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.06%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 1.06%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 4.43%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% - ----------------------------------------------------------------------------------------------------------- Total return(g) .44%(h) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Oct. 18, 2007 (inception date) to Oct. 31, 2007. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS 53P 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)(c) .36 Net gains (losses) (both realized and unrealized) .55 - ----------------------------------------------------------------------------------------------------------- Total from investment operations .91 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.36) Distributions from realized gains (.10) - ----------------------------------------------------------------------------------------------------------- Total distributions (.46) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.58 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.54%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e) 1.54%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.88%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% - ----------------------------------------------------------------------------------------------------------- Total return(g) 9.21%(h),(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to Oct. 31, 2007. (c) Per share amount has been calculated using the average shares outstanding method. (d) Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratio. (f) Adjusted to an annual basis. (g) Total return does not reflect payment of a sales charge. (h) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (i) Not annualized. - -------------------------------------------------------------------------------- 54P RIVERSOURCE ADVANCED ALPHA(SM) STRATEGIES -- RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2008 PROSPECTUS RIVERSOURCE COMPLEX OF FUNDS THE RIVERSOURCE COMPLEX OF FUNDS INCLUDES FUNDS BRANDED "RIVERSOURCE," "RIVERSOURCE PARTNERS," AND "THREADNEEDLE" (EACH INDIVIDUALLY, A "FUND" OR A "RIVERSOURCE FUND" AND COLLECTIVELY, THE "FUNDS" OR THE "RIVERSOURCE FUNDS"). THESE FUNDS SHARE THE SAME BOARD OF DIRECTORS/TRUSTEES (THE "BOARD"), AND THE SAME POLICIES AND PROCEDURES INCLUDING THOSE SET FORTH IN THIS SERVICE SECTION. FOR EXAMPLE, FOR PURPOSES OF CALCULATING THE INITIAL SALES CHARGE ON THE PURCHASE OF CLASS A SHARES OF A FUND, AN INVESTOR OR FINANCIAL ADVISOR SHOULD CONSIDER THE COMBINED MARKET VALUE OF ALL RIVERSOURCE FUNDS (INCLUDING "THREADNEEDLE" OR "RIVERSOURCE PARTNERS" BRANDED FUNDS), OWNED BY THE INVESTOR AS DEFINED UNDER "INITIAL SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA)." BUYING AND SELLING SHARES The RiverSource funds are generally available directly and through broker-dealers, banks, and other financial intermediaries or institutions (financial institutions), including certain qualified and non-qualified plans, wrap fee products or other investment products sponsored by financial institutions. THESE FINANCIAL INSTITUTIONS MAY CHARGE YOU ADDITIONAL FEES FOR THE SERVICES THEY PROVIDE AND THEY MAY HAVE DIFFERENT POLICIES NOT DESCRIBED IN THIS PROSPECTUS. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the financial institutions through which your shares of the fund(s) are held. Since the fund (and its service providers) may not have a record of your account transactions, you should always contact the financial institution through which you purchased or at which you maintain your shares of the fund to make changes to your account or to give instructions concerning your account, or to obtain information about your account. The fund and its service providers, including the distributor and the transfer agent, are not responsible for the failure of one of these financial institutions to carry out its obligations to its customers. - -------------------------------------------------------------------------------- S-6400-2 S.1 DESCRIPTION OF SHARE CLASSES INVESTMENT OPTIONS -- CLASSES OF SHARES The RiverSource funds offer different classes of shares. There are differences among the fees and expenses for each share class. See the "Fees and Expenses" table for more information. Not everyone is eligible to buy every share class. After determining which share classes you are eligible to buy, decide which share class best suits your needs. Your financial institution can help you with this decision. The following table shows the key features of each share class. (THE COVER OF THIS PROSPECTUS INDICATES WHICH CLASSES ARE CURRENTLY OFFERED FOR THESE FUNDS.) INVESTMENT OPTIONS SUMMARY
CONTINGENT PLAN INITIAL DEFERRED SALES DISTRIBUTION AND ADMINISTRATION AVAILABILITY(A) SALES CHARGE CHARGE (CDSC) SERVICE FEE(B) FEE - ------------------------------------------------------------------------------------------------------------- Class A Available to Yes. Payable at No. Yes. No. all investors. time of purchase. 0.25% Lower or no sales charge for larger investments. - ------------------------------------------------------------------------------------------------------------- Class Available to No. Entire Maximum 5% CDSC during Yes. No. B(c)(d) all investors. purchase price is the first year decreasing 1.00% invested in to 0% after six years. shares of the fund. - ------------------------------------------------------------------------------------------------------------- Class C Available to No. Entire 1% CDSC may apply if you Yes. No. all investors. purchase price is sell shares within one 1.00% invested in year after purchase. shares of the fund. - ------------------------------------------------------------------------------------------------------------- Class I Limited to No. No. No. No. qualifying institutional investors. - ------------------------------------------------------------------------------------------------------------- Class R4 Limited to No. No. No. Yes. qualifying 0.25% institutional investors. - ------------------------------------------------------------------------------------------------------------- Class R5 Limited to No. No. No. No. qualifying institutional investors. - ------------------------------------------------------------------------------------------------------------- Class W Limited to No. No. Yes. No. qualifying 0.25% discretionary managed accounts. - -------------------------------------------------------------------------------------------------------------
(a) See "Buying and Selling Shares, Determining which class of shares to purchase" for more information on availability of share classes and eligible investors. See "Buying and Selling Shares, Opening an Account" for information on minimum investment and account balance requirements. (b) For each of Class A, Class B, Class C and Class W shares, as applicable, each fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940, as amended, that allows it to pay distribution and shareholder servicing-related expenses for the sale of shares and the servicing of shareholders. This plan has been reviewed and approved by the Board. Because these fees are paid out of fund assets on an on-going - -------------------------------------------------------------------------------- S.2 basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution (sales) or servicing charges. (c) See "Buying and Selling Shares, Sales Charges, Class B and Class C -- contingent deferred sales charge alternative" for more information on the timing of conversion of Class B shares to Class A shares. Timing of conversion will vary depending on the date of your original purchase of the Class B shares. (d) Class B shares of RiverSource Absolute Return Currency and Income Fund are only available for exchanges from Class B shares of another RiverSource fund. DISTRIBUTION AND SERVICE FEES The distribution and shareholder servicing fees for Class A, Class B, Class C and Class W shares are subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended, and are used to reimburse the distributor for certain expenses it incurs in connection with distributing a fund's shares and directly and indirectly providing services to fund shareholders. These expenses include payment of distribution and shareholder servicing fees to financial institutions that sell shares of the fund or provide services to fund shareholders, up to 0.25% of the average daily net assets of Class A, Class B, Class C and Class W shares sold and held through them. For Class A, Class B and Class W shares, the distributor begins to pay these fees immediately after purchase. For Class C shares, the distributor pays these fees in advance for the first 12 months. Financial institutions also receive distribution fees up to 0.75% of the average daily net assets of Class C shares sold and held through them, which the distributor begins to pay 12 months after purchase. For Class B shares, and, for the first 12 months following the sale of Class C shares, the fund's distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to financial institutions that sell Class B shares, and to pay for other distribution related expenses. Financial institutions may compensate their financial advisors with the shareholder servicing and distribution fees paid to them by the distributor. IF YOU MAINTAIN SHARES OF THE FUND DIRECTLY WITH THE FUND, WITHOUT WORKING DIRECTLY WITH A FINANCIAL INSTITUTION OR FINANCIAL ADVISOR, DISTRIBUTION AND SERVICE FEES WILL BE RETAINED BY THE DISTRIBUTOR. PLAN ADMINISTRATION FEE Class R4 shares pay an annual plan administration services fee for the provision of various administrative, recordkeeping, communication and educational services. The fee for Class R4 shares is equal on an annual basis to 0.25% of assets attributable to the class. - -------------------------------------------------------------------------------- S.3 DETERMINING WHICH CLASS OF SHARES TO PURCHASE CLASS A, CLASS B AND CLASS C SHARES Class B shares of RiverSource Absolute Return Currency and Income Fund are not currently available for new purchases. However, if you own Class B shares of another RiverSource fund, you may exchange into Class B shares of RiverSource Absolute Return Currency and Income Fund, if you meet the minimum investment and account balance requirements set forth in "Opening an Account," subject to the limitations set forth in this section. New purchases of Class B shares will not be permitted if your Rights of Accumulation are $50,000 or higher, and no new purchases of Class C shares will be permitted if your Rights of Accumulation are $1,000,000 or higher. See "Sales Charges, Initial Sales Charge -- Rights of Accumulation (ROA)" for information on Rights of Accumulation. Class B shares have a higher annual distribution fee than Class A shares and a contingent deferred sales charge (CDSC) for six years. Class B shares convert to Class A shares in the ninth year of ownership. Class B shares purchased through reinvested dividends and distributions also will convert to Class A shares in the same proportion as the other Class B shares. Class C shares also have a higher annual distribution fee than Class A shares. Class C shares have no sales charge if you hold the shares for longer than one year. Unlike Class B shares, Class C shares do not convert to Class A shares. As a result, you will pay a distribution fee for as long as you hold Class C shares. If you choose a deferred sales charge option (Class B or Class C), you should consider the length of time you intend to hold your shares. To help you determine which investment is best for you, consult your financial institution. CLASS I SHARES. The following eligible investors may purchase Class I shares: - - Any fund distributed by RiverSource Distributors, Inc., if the fund seeks to achieve its investment objective by investing primarily in shares of the fund and other RiverSource funds. Class I shares may be purchased, sold or exchanged only through the distributor or an authorized financial institution. CLASS R4 AND CLASS R5 SHARES. The following eligible institutional investors may purchase Class R4 and Class R5 shares: - - Qualified employee benefit plans. - - Trust companies or similar institutions, and charitable organizations that meet the definition in Section 501(c)(3) of the Internal Revenue Code. - - Non-qualified deferred compensation plans whose participants are included in a qualified employee benefit plan described above. - -------------------------------------------------------------------------------- S.4 - - State sponsored college savings plans established under Section 529 of the Internal Revenue Code. - - Health Savings Accounts (HSAs) created pursuant to public law 108-173. Additionally, the following eligible investors may purchase Class R5 shares: - - Institutional or corporate accounts above a threshold established by the distributor (currently $1 million per fund or $10 million in all RiverSource funds). - - Bank Trust departments. Class R4 and Class R5 shares generally are not available to retail non-retirement accounts, traditional and Roth IRAs, Coverdell Educational Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs and individual 403(b) plans. Class R4 and Class R5 shares may be purchased, sold or exchanged only through the distributor or an authorized financial institution. CLASS W SHARES. The following eligible investors may purchase Class W shares: - - Investors purchasing through authorized investment programs managed by investment professionals, including discretionary managed account programs. Class W shares may be purchased, sold or exchanged only through the distributor or an authorized financial institution. Shares originally purchased in a discretionary managed account may continue to be held in Class W outside of a discretionary managed account, but no additional Class W purchases may be made and no exchanges to Class W shares of another fund may be made outside of a discretionary managed account. IN ADDITION, FOR CLASS I, CLASS R4, CLASS R5 AND CLASS W SHARES, THE DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY ACCEPT OR AUTHORIZE FINANCIAL INSTITUTIONS TO ACCEPT INVESTMENTS FROM OTHER PURCHASERS NOT LISTED ABOVE. For more information, see the SAI. SALES CHARGES CLASS A -- INITIAL SALES CHARGE ALTERNATIVE Your purchase price for Class A shares is generally the net asset value (NAV) plus a front-end sales charge. The distributor receives the sales charge and re-allows a portion of the sales charge to the financial institution through which you purchased the shares. The distributor retains the balance of the sales charge. The distributor retains the full sales charge you pay when you purchase shares of the fund directly (not through a separately authorized financial institution). Sales charges vary depending on the amount of your purchase. - -------------------------------------------------------------------------------- S.5 SALES CHARGE* FOR CLASS A SHARES: For RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund
MAXIMUM AS A % OF AS A % OF NET RE-ALLOWANCE AS A % TOTAL MARKET VALUE PURCHASE PRICE** AMOUNT INVESTED OF PURCHASE PRICE - ---------------------------------------------------------------------------------------- Up to $49,999 5.75% 6.10% 5.00% $50,000 -- $99,999 4.75 4.99 4.00 $100,000 -- $249,999 3.50 3.63 3.00 $250,000 -- $499,999 2.50 2.56 2.15 $500,000 -- $999,999 2.00 2.04 1.75 $1,000,000 or more 0.00 0.00 0.00***
For RiverSource Absolute Return Currency and Income Fund
MAXIMUM AS A % OF AS A % OF NET RE-ALLOWANCE AS A % TOTAL MARKET VALUE PURCHASE PRICE** AMOUNT INVESTED OF PURCHASE PRICE - ---------------------------------------------------------------------------------------- Up to $49,999 3.00% 3.09% 2.50% $50,000 -- $99,999 3.00 3.09 2.50 $100,000 -- $249,999 2.50 2.56 2.15 $250,000 -- $499,999 2.00 2.04 1.75 $500,000 -- $999,999 1.50 1.52 1.25 $1,000,000 or more 0.00 0.00 0.00***
* Because of rounding in the calculation of the offering price, the portion of the sales charge retained by the distributor may vary and the actual sales charge you pay may be more or less than the sales charge calculated using these percentages. ** Purchase price includes the sales charge. ***Although there is no sales charge for purchases with a total market value over $1,000,000, and therefore no re-allowance, the distributor may pay a financial institution the following: a sales commission of up to 1.00% for a sale with a total market value of $1,000,000 to $2,999,999; a sales commission up to 0.50% for a sale of $3,000,000 to $9,999,999; and a sales commission up to 0.25% for a sale of $10,000,000 or more. INITIAL SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA). You may be able to reduce the sales charge on Class A shares, based on the combined market value of accounts in your ROA group, as described below. The current market values of the following investments are eligible to be added together for purposes of determining the sales charge on your purchase: - - Your current investment in a fund; and - -------------------------------------------------------------------------------- S.6 - - Previous investments you and members of your household have made in Class A, Class B or Class C shares in the fund and other RiverSource funds, provided your investment was subject to a sales charge. Your household consists of you, your spouse or domestic partner and your unmarried children under age 21 sharing a mailing address. The following accounts are eligible to be included in determining the sales charge on your purchase: - - Individual or joint accounts; - - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are invested in Class A, Class B or Class C shares that were subject to a sales charge; - - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; - - Revocable trust accounts for which you or a member of your household, individually, is the beneficial owner/grantor; - - Accounts held in the name of your, your spouse's, or your domestic partner's sole proprietorship or single owner limited liability company or S corporation; and - - Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan. The following accounts are NOT eligible to be included in determining the sales charge on your purchase: - - Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); - - Investments in Class A shares where the sales charge is waived, for example, purchases through wrap accounts; - - Investments in Class D, Class E, Class I, Class R2, Class R3, Class R4, Class R5, Class W or Class Y shares; - - Investments in 529 plans, donor advised funds, variable annuities, variable life insurance products, wrap accounts or managed separate accounts; and - - Charitable and irrevocable trust accounts. If you purchase RiverSource fund shares through different financial institutions, and you want to include those assets toward a reduced sales charge, you must inform your financial institution in writing about the other accounts when placing your purchase order. Contact your financial institution to determine what information is required. - -------------------------------------------------------------------------------- S.7 Unless you provide your financial institution in writing with information about all of the accounts that may count toward a sales charge reduction, there can be no assurance that you will receive all of the reductions for which you may be eligible. You should request that your financial institution provide this information to the fund when placing your purchase order. For more information on rights of accumulation, please see the SAI. INITIAL SALES CHARGE -- LETTER OF INTENT (LOI). Generally, if you intend to invest $50,000 or more (including any existing ROA) over a period of up to 13 months, you may be able to reduce the front-end sales charge(s) for investments in Class A shares by completing and filing an LOI. The required form of LOI may vary by financial institution. Existing ROA can be included in your LOI. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI. Five percent of the commitment amount will be placed in escrow. At the end of the 13-month period, the LOI will end and the shares will be released from escrow. If you do not invest the commitment amount by the end of the 13 months, the remaining unpaid sales charge will be redeemed from the escrowed shares and the remaining balance released from escrow. Existing ROA Example. Shareholder currently has $60,000 ROA in RiverSource funds. Shareholder completes an LOI to invest $100,000 in RiverSource funds (ROA eligible accounts). Shareholder only needs to invest an additional $40,000 in RiverSource funds' Class A shares in order to fulfill the LOI commitment and receive reduced front-end sales charge(s) over the next 13 months. Notification Obligation. You must request the reduced sales charge when you buy shares. If you do not complete and file an LOI, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. You should request that your financial institution provide this information to the fund when placing your purchase order. For more detail on LOIs, please contact your financial institution or see the SAI. INITIAL SALES CHARGE -- WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES. Sales charges do not apply to: - - current or retired Board members, officers or employees of RiverSource funds or RiverSource Investments or its affiliates, their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - - current or retired Ameriprise Financial Services, Inc. (Ameriprise Financial Services) financial advisors, employees of financial advisors, their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - -------------------------------------------------------------------------------- S.8 - - registered representatives and other employees of financial institutions having a selling agreement with the distributor, including their spouses, domestic partners, children, parents and their spouse's or domestic partner's parents. - - portfolio managers employed by subadvisers of the RiverSource funds, including their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - -retirement plans qualified or created under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code, if those purchases are made through a broker, agent, or other financial institution. - - direct rollovers from qualified employee benefit plans, provided that the rollover involves a transfer to Class A shares in the same fund. - - purchases made: - with dividend or capital gain distributions from a fund or from the same class of another RiverSource fund; - through or under a wrap fee product or other investment product sponsored by a financial institution having a selling agreement with the distributor; - through state sponsored college savings plans established under Section 529 of the Internal Revenue Code; - through bank trust departments. - - shareholders whose original purchase was in a Strategist fund merged into a RiverSource fund in 2000. The distributor may, in its sole discretion, authorize the waiver of sales charges for additional purchases or categories of purchases. Policies related to reducing or waiving the sales charge may be modified or withdrawn at any time. Unless you provide your financial institution with information in writing about all of the factors that may count toward a waiver of the sales charge, there can be no assurance that you will receive all of the waivers for which you may be eligible. You should request that your financial institution provide this information to the fund when placing your purchase order. Because the current prospectus is available on riversource.com free of charge, RiverSource Investments does not separately disclose information regarding breakpoint discounts on the website. - -------------------------------------------------------------------------------- S.9 CLASS B AND CLASS C -- CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE FOR CLASS B, the CDSC is based on the sale amount and the number of years between purchase and sale. The following table shows how CDSC percentages on sales decline:
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:* First year 5% Second year 4% Third year 4% Fourth year 3% Fifth year 2% Sixth year 1% Seventh or eighth year 0%
* Because of rounding in the calculation, the portion of the CDSC retained by the distributor may vary and the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. Although there is no front-end sales charge when you buy Class B shares, the distributor pays a sales commission of 4% to financial institutions that sell Class B shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class B shares. You may not make additional purchases of Class B shares if your ROA exceeds $49,999.99. Purchases made prior to May 21, 2005 age on a calendar year basis. Purchases made beginning May 21, 2005 age on a daily basis. For example, a purchase made on Nov. 12, 2004 completed its first year on Dec. 31, 2004 under calendar year aging. However, a purchase made on Nov. 12, 2005 completed its first year on Nov. 11, 2006 under daily aging. Class B shares purchased prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares purchased beginning May 21, 2005 will convert to Class A shares one month after the completion of the eighth year of ownership. FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year after purchase. Although there is no front-end sales charge when you buy Class C shares, the distributor pays a total amount up to 1% (including sales commission and advance of service fees) to financial institutions that sell Class C shares. See "Buying and Selling Shares -- Distribution and Service Fees." A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class C shares. You may not make additional purchases of Class C shares if your ROA exceeds $999,999.99. - -------------------------------------------------------------------------------- S.10 For both Class B and Class C, if the amount you sell causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC will be based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you do not have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. EXAMPLE Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 3 1/2 years, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 3% because the sale was made during the fourth year after the purchase. CDSC -- WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on sales of shares: - - in the event of the shareholder's death; - - held in trust for an employee benefit plan; or - - held in IRAs or certain qualified plans, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans, provided that the shareholder is: - at least 59 1/2 years old AND - taking a retirement distribution (if the sale is part of a transfer to an IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived) OR - selling under an approved substantially equal periodic payment arrangement. CDSC -- WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on sales of shares in the event of the shareholder's death. CLASS I, CLASS R4, CLASS R5 AND CLASS W -- NO SALES CHARGE. For each of Class I, Class R4, Class R5 and Class W, there is no initial sales charge or CDSC. - -------------------------------------------------------------------------------- S.11 OPENING AN ACCOUNT Financial institutions are required by law to obtain certain personal information from each person who opens an account in order to verify the identity of the person. As a result, when you open an account you will be asked to provide your name, permanent street address, date of birth, and Social Security or Employer Identification number. You may also be asked for other identifying documents or information. If you do not provide this information, the financial institution through which you are investing in the fund may not be able to open an account for you. If the financial institution through which you are investing in the fund is unable to verify your identity, your account may be closed, or other steps may be taken, as deemed appropriate. When you buy shares, your order will be priced at the next NAV calculated after your order is accepted by the fund or an authorized financial institution. You may establish and maintain your account with an authorized financial institution or directly with the fund. The fund may appoint servicing agents to accept purchase orders and to accept exchange (and sale) orders on its behalf. Accounts maintained by the fund will be supported by the fund's transfer agent. METHODS OF PURCHASING SHARES These methods of purchasing shares generally apply to Class A, Class B, and Class C shares. CLASS B OF RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND IS CURRENTLY CLOSED TO INVESTORS FOR NEW PURCHASES. ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INSTITUTION ALL REQUESTS The financial institution through which you buy shares may have different policies not described in this prospectus, including different minimum investment amounts and minimum account balances. - -------------------------------------------------------------------------------- ACCOUNT ESTABLISHED WITH THE FUND BY MAIL You or the financial institution through which you buy shares may establish an account directly with the fund. To establish an account in this fashion, complete a RiverSource funds account application with your financial advisor or investment professional, and mail the account application to the address below. Account applications may be obtained at riversource.com or may be requested by calling (888) 791-3380. Make your check payable to the fund. The fund does not accept cash, credit card convenience checks, money orders, traveler's checks, starter checks, third or fourth party checks, or other cash equivalents. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- S.12 METHODS OF PURCHASING SHARES (CONTINUED) ACCOUNT ESTABLISHED WITH THE FUND (CONT.) BY MAIL (CONT.) Mail your check and completed application to: REGULAR MAIL RIVERSOURCE FUNDS P.O. BOX 8041 BOSTON, MA 02266-8041 EXPRESS MAIL RIVERSOURCE FUNDS C/O BFDS 30 DAN ROAD CANTON, MA 02021-2809 If you already have an account, include your name, account number, and the name of the fund and class of shares you wish to purchase along with your check. You can make scheduled investments in the fund by moving money from your checking account or savings account. See the Minimum Investment and Account Balance chart below for more information regarding scheduled investment plans. - -------------------------------------------------------------------------------- BY WIRE OR ACH Fund shares purchased in an account established and maintained with the fund may be paid for by federal funds wire. Before sending a wire, call (888) 791-3380 to notify the fund's transfer agent of the wire and to receive further instructions. If you are establishing an account with a wire purchase, you are required to send a signed account application to the address above. Please include the wire control number or your new account number on the application. Your bank or financial institution may charge additional fees for wire transactions. - -------------------------------------------------------------------------------- BY EXCHANGE Call (888) 791-3380 or send signed written instructions to the address above. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- S.13 MINIMUM INVESTMENT AND ACCOUNT BALANCE
FOR ALL FUNDS, CLASSES AND ACCOUNTS CLASS W - ------------------------------------------------------------------------------------- INITIAL INVESTMENT $10,000 $500 - ------------------------------------------------------------------------------------- ADDITIONAL INVESTMENTS $100 None - ------------------------------------------------------------------------------------- ACCOUNT BALANCE* $5,000 $500
* If your fund account balance falls below the minimum account balance for any reason, including a market decline, you may be asked to increase it to the minimum account balance or establish a scheduled investment plan. If you do not do so within 30 days, your shares may be automatically redeemed and the proceeds mailed to you. - -------------------------------------------------------------------------------- MINIMUM INVESTMENT AND ACCOUNT BALANCE -- SCHEDULED INVESTMENT PLANS
FOR ALL FUNDS, CLASSES AND ACCOUNTS CLASS W - ------------------------------------------------------------------------------------- INITIAL INVESTMENT $10,000 $500 - ------------------------------------------------------------------------------------- ADDITIONAL INVESTMENTS $100 None - ------------------------------------------------------------------------------------- ACCOUNT BALANCE** $5,000 $500
** If your fund account balance is below the minimum initial investment described above, you must make payments at least monthly. - -------------------------------------------------------------------------------- These minimums may be waived for accounts that are managed by an investment professional, for accounts held in approved discretionary or non-discretionary wrap programs, for accounts that are a part of an employer-sponsored retirement plan, or for other account types if approved by the distributor. The fund reserves the right to modify its minimum account requirements at any time, with or without prior notice. Please contact your financial institution for information regarding wire or electronic funds transfer. IMPORTANT: Payments sent by electronic fund transfers (ACH), a bank authorization or check that are not guaranteed may take up to 10 days to clear. If you request a sale within 10 days of purchase, this may cause your sale request to fail to process if the requested amount includes unguaranteed funds. EXCHANGING OR SELLING SHARES You may exchange or sell shares by having your financial institution process your transaction. If your account is maintained directly with your financial institution, you must contact that financial institution to exchange or sell shares of the fund. If your account was established with the fund, there are a variety of methods you may use to exchange or sell shares of the fund. - -------------------------------------------------------------------------------- S.14 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INSTITUTION ALL REQUESTS You can exchange or sell shares by having your financial institution process your transaction. The financial institution through which you purchased shares may have different policies not described in this prospectus, including different transaction limits, exchange policies and sale procedures. - -------------------------------------------------------------------------------- ACCOUNT ESTABLISHED WITH THE FUND BY MAIL Mail your exchange or sale request to: REGULAR MAIL RIVERSOURCE FUNDS P.O. BOX 8041 BOSTON, MA 02266-8041 EXPRESS MAIL RIVERSOURCE FUNDS C/O BFDS 30 DAN ROAD CANTON, MA 02021-2809 Include in your letter: - your name - the name of the fund(s) - your account number - the class of shares to be exchanged or sold - your Social Security number or Employer Identification number - the dollar amount or number of shares you want to exchange or sell - specific instructions regarding delivery or exchange destination - signature(s) of registered account owner(s) - any special documents the transfer agent may require in order to process your order Corporate, trust or partnership accounts may need to send additional documents. Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners. A Medallion Signature Guarantee is required if: - Amount is over $50,000. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- S.15 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED) ACCOUNT ESTABLISHED WITH THE FUND (CONT.) BY MAIL (CONT.) - You want your check made payable to someone other than yourself. - Your address has changed within the last 30 days. - You want the check mailed to an address other than the address of record. - You want the proceeds sent to a bank account not on file. - You are the beneficiary of the account and the account owner is deceased (additional documents may be required). A Medallion Signature Guarantee assures that a signature is genuine and not a forgery. The financial institution providing the Guarantee is financially liable for the transaction if the signature is a forgery. Eligible guarantors include commercial banks, trust companies, savings associations, and credit unions as defined by the Federal Deposit Insurance Act. Note: A guarantee from a notary public is not acceptable. NOTE: Any express mail delivery charges you pay will vary depending on domestic or international delivery instructions. - -------------------------------------------------------------------------------- BY TELEPHONE Call (888) 791-3380. Unless you elect not to have telephone exchange and sale privileges, they will automatically be available to you. Reasonable procedures will be used to confirm authenticity of telephone exchange or sale requests. Telephone privileges may be modified or discontinued at any time. Telephone exchange and sale privileges automatically apply to all accounts except custodial, corporate or qualified retirement accounts. You may request that these privileges NOT apply by writing to the address above. Payment will be mailed to the address of record and made payable to the names listed on the account. Telephone sale requests are limited to $100,000 per day. - -------------------------------------------------------------------------------- BY WIRE OR ACH You can wire money from your fund account to your bank account. Make sure we have your bank account information on file. If we do not have this information, you will need to send written instructions with your bank's name and a voided check or savings account deposit slip. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- S.16 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED) ACCOUNT ESTABLISHED WITH THE FUND (CONT.) BY WIRE OR ACH (CONT.) Call (888) 791-3380 or send a letter of instruction, with a Medallion Signature Guarantee if required, to the address above. A service fee may be charged against your account for each wire sent. Minimum amount: $100 Your bank or financial institution may charge additional fees for wire transactions. - -------------------------------------------------------------------------------- BY SCHEDULED PAYOUT PLAN You may elect to receive regular periodic payments through an automatic sale of shares. See the SAI for more information. - -------------------------------------------------------------------------------- EXCHANGES Generally, you may exchange your fund shares for shares of the same class of any other publicly offered RiverSource fund without a sales charge. For complete information on the fund you are exchanging into, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after your transaction request is received in good order. You may be subject to a sales charge if you exchange from a money market fund into an equity or fixed income fund. SHORT-TERM TRADING AND OTHER SO-CALLED MARKET TIMING PRACTICES ARE FREQUENT TRADING PRACTICES BY CERTAIN SHAREHOLDERS INTENDED TO PROFIT AT THE EXPENSE OF OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND SHORTLY AFTER PURCHASE. MARKET TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE BY PREVENTING THE INVESTMENT MANAGER FROM FULLY INVESTING THE ASSETS OF THE FUND, DILUTING THE VALUE OF SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING THE FUND'S TRANSACTION COSTS. FUNDS THAT INVEST IN SECURITIES THAT TRADE INFREQUENTLY MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF INEFFICIENCIES IN THE SECURITIES MARKETS. FUNDS THAT INVEST IN SECURITIES THAT TRADE ON OVERSEAS SECURITIES MARKETS MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF CHANGES IN THE VALUES OF SECURITIES BETWEEN THE CLOSE OF OVERSEAS MARKETS AND THE CLOSE OF U.S. MARKETS, WHICH IS GENERALLY THE TIME AT WHICH A FUND'S NAV IS CALCULATED. TO THE EXTENT THAT A FUND HAS SIGNIFICANT HOLDINGS OF SMALL CAP STOCKS, HIGH YIELD BONDS, TAX-EXEMPT SECURITIES OR FOREIGN SECURITIES, THE RISKS OF MARKET TIMING MAY BE GREATER FOR THE FUND THAN FOR OTHER FUNDS. SEE "PRINCIPAL INVESTMENT STRATEGIES" FOR A DISCUSSION OF THE TYPES OF SECURITIES IN WHICH YOUR FUND INVESTS. - -------------------------------------------------------------------------------- S.17 SEE "VALUING FUND SHARES" FOR A DISCUSSION OF THE RIVERSOURCE FUNDS' POLICY ON FAIR VALUE PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE FREQUENCY AND EFFECT OF MARKET TIMING. THE RIVERSOURCE FUNDS' BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER MARKET TIMING THAT MAY BE HARMFUL TO THE FUNDS. EACH FUND SEEKS TO ENFORCE THIS POLICY THROUGH ITS SERVICE PROVIDERS AS FOLLOWS: - - The fund tries to distinguish market timing from trading that it believes is not harmful, such as periodic rebalancing for purposes of asset allocation or dollar cost averaging or other purchase and exchange transactions not believed to be inconsistent with the best interest of fund shareholders or the Board's policy. The fund uses a variety of techniques to monitor for and detect abusive trading practices. These techniques may vary depending on the type of fund, the class of shares and where the shares are maintained. Under the fund's procedures, there is no set number of transactions in the fund that constitutes market timing. Even one purchase and subsequent sale by related accounts may be market timing. Generally, the fund seeks to restrict the exchange privilege of an investor who makes more than three exchanges into or out of the fund in any 90-day period. Accounts held by a retirement plan or a financial institution for the benefit of its participants or clients, which typically engage in daily transactions, are not subject to this limit, although the fund may seek the assistance of financial institutions in applying similar restrictions on their participants or clients. The fund's ability to monitor and discourage abusive trading practices in omnibus accounts is more limited. - -The fund may rely on the monitoring policy of a financial institution, for example, a retirement plan administrator or similar financial institution, authorized to distribute the funds, if it determines the policy and procedures of such financial institutions are sufficient to protect the fund and its shareholders. - - If an investor's trading activity is determined to be market timing or otherwise harmful to existing shareholders, the fund reserves the right to modify or discontinue the investor's exchange privilege or reject the investor's purchases or exchanges, including purchases or exchanges accepted by a financial institution. The fund may treat accounts it believes to be under common control as a single account for these purposes, although it may not be able to identify all such accounts. - - Although the fund does not knowingly permit market timing, it cannot guarantee that it will be able to identify and restrict all short-term trading activity. The fund receives purchase and sale orders through financial institutions where market timing activity may not always be successfully detected. Other exchange policies: - - Exchanges must be made into the same class of shares of the new fund. - -------------------------------------------------------------------------------- S.18 - - Exchanges into RiverSource Tax-Exempt Money Market Fund may be made only from Class A shares. - - If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. - - Once the fund receives your exchange request, you cannot cancel it. - - Shares of the new fund may not be used on the same day for another exchange or sale. - - Shares of the Class W originally purchased, but no longer held in a discretionary managed account, may not be exchanged for Class W shares of another fund. You may continue to hold these shares in the fund. Changing your investment to a different fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new fund. SELLING SHARES You may sell your shares at any time. The payment will be sent within seven days after your request is received in good order. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is received in good order, minus any applicable CDSC. REPURCHASES. You can change your mind after requesting a sale and use all or part of the sale proceeds to purchase new shares in the same account, fund and class from which you sold. If you reinvest in Class A, you will purchase the new shares at NAV, up to the amount of the sale proceeds, instead of paying a sales charge on the date of a new purchase. If you reinvest in Class B or Class C, any CDSC you paid on the amount you are reinvesting also will be reinvested. In order for you to take advantage of this repurchase waiver, you must notify your financial institution within 90 days of the date your sale request was processed. Contact your financial institution for information on required documentation. The repurchase privilege may be modified or discontinued at any time and use of this option may have tax consequences. The fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. VALUING FUND SHARES For classes of shares sold with an initial sales charge, the public offering or purchase price is the net asset value plus the sales charge. For funds or classes of shares sold without an initial sales charge, the public offering price is the NAV. - -------------------------------------------------------------------------------- S.19 Orders in good form are priced at the NAV next determined after you place your order. Good form or good order means that your instructions have been received in the form required by the fund. This may include, for example, providing the fund name and account number, the amount of the transaction and all required signatures. For more information, contact your financial institution. The NAV is the value of a single share of the fund. The NAV is determined by dividing the value of the fund's assets, minus any liabilities, by the number of shares outstanding. The NAV is calculated as of the close of business on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that the NYSE is open. Securities are valued primarily on the basis of market quotations. Market quotations are obtained from outside pricing services approved and monitored under procedures adopted by the Board. Certain short-term securities with maturities of 60 days or less are valued at amortized cost. When reliable market quotations are not readily available, investments are priced at fair value based on procedures adopted by the Board. These procedures are also used when the value of an investment held by a fund is materially affected by events that occur after the close of a securities market but prior to the time as of which the fund's NAV is determined. Valuing investments at fair value involves reliance on judgment. The fair value of an investment is likely to differ from any available quoted or published price. To the extent that a fund has significant holdings of foreign securities, small cap stocks, high yield bonds or tax-exempt securities that may trade infrequently, fair valuation may be used more frequently than for other funds. RiverSource funds use an unaffiliated service provider to assist in determining fair values for foreign securities. Foreign investments are valued in U.S. dollars. Some of a fund's securities may be listed on foreign exchanges that trade on weekends or other days when the fund does not price its shares. In that event, the NAV of the fund's shares may change on days when shareholders will not be able to purchase or sell the fund's shares. DISTRIBUTIONS AND TAXES As a shareholder you are entitled to your share of your fund's net income and net gains. Each fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS Your fund's net investment income is distributed to you as dividends. Dividends may be composed of qualified dividend income, which is eligible for preferential tax rates under current tax law, as well as other ordinary dividend income, which may include dividends which are non-qualified dividends, interest income and short-term capital gains. Because of the types of income earned by fixed income funds, it is unlikely those funds will distribute qualified dividend income. Generally, capital gains are realized when a security is sold for a higher price than was paid for it. - -------------------------------------------------------------------------------- S.20 Generally, capital losses are realized when a security is sold for a lower price than was paid for it. Typically, each realized capital gain or loss is long-term or short-term depending on the length of time the fund held the security. Realized capital gains and losses offset each other. The fund offsets any net realized capital gains by any available capital loss carryovers. Net short-term capital gains, if any, are included in net investment income and are taxable as ordinary income when distributed to the shareholder. Net realized long-term capital gains, if any, are distributed by the end of the calendar year as capital gain distributions. If the fund's distributions exceed its current and accumulated earnings and profits, that portion of the fund's distributions will be treated as a return of capital to the shareholders to the extent of their basis in their shares. A return of capital will generally not be taxable; however, any amounts received in excess of basis are treated as capital gain. Forms 1099 sent to shareholders report any return of capital. Certain derivative instruments subject the fund to special tax rules, the effect of which may be to accelerate income to the fund, defer fund losses, cause adjustments in the holding periods of fund securities, convert capital gains into ordinary income and convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the fund, unless you request distributions in cash. The financial institution through which you purchased shares may have different policies. Distributions are reinvested at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. TAXES If you buy shares shortly before the record date of a distribution, you may pay taxes on money earned by the fund before you were a shareholder. You will pay the full pre-distribution price for the shares, then receive a portion of your investment back as a distribution, which may be taxable. For tax purposes, an exchange is considered a sale and purchase, and may result in a gain or loss. A sale is a taxable transaction. Generally, if you sell shares for less than their cost, the difference is a capital loss or if you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). - -------------------------------------------------------------------------------- S.21 You may not create a tax loss or reduce a tax gain, based on paying a sales charge, by exchanging shares before the 91st day after the day of purchase. If you buy Class A shares and exchange into another fund before the 91st day after the day of purchase, you may not be able to include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of the second fund you purchased. For more information, see the SAI. Distributions related to shares not held in IRAs or other retirement accounts are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. Shares held in an IRA or qualified retirement account are generally subject to different tax rules. Taking a distribution from your IRA or qualified retirement plan may subject you to federal taxes, withholding, penalties and reporting requirements. Please consult your tax advisor. Income received by a fund may be subject to foreign tax and withholding. Tax conventions between certain countries and the U.S. may reduce or eliminate these taxes. IMPORTANT: This information is a brief and selective summary of some of the tax rules that apply to an investment in a fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. GENERAL INFORMATION AVAILABILITY AND TRANSFERABILITY OF FUND SHARES Please consult with your financial institution to determine the availability of the RiverSource funds. RiverSource funds may only be purchased or sold directly or through financial institutions authorized by the distributor to offer the RiverSource funds. NOT ALL FINANCIAL INSTITUTIONS ARE AUTHORIZED TO SELL THE FUNDS. If you set up an account at a financial institution that does not have, and is unable to obtain, a selling agreement with the distributor of the RiverSource funds, you will not be able to transfer RiverSource fund holdings to that account. In that event, you must either maintain your RiverSource fund holdings with your current financial institution, find another financial institution with a selling agreement, or sell your shares, paying any applicable CDSC. Please be aware that transactions in taxable accounts are taxable events and may result in income tax liability. ADDITIONAL SERVICES AND COMPENSATION In addition to acting as the fund's investment manager, RiverSource Investments and its affiliates also receive compensation for providing other services to the funds. - -------------------------------------------------------------------------------- S.22 Administration Services. Ameriprise Financial, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, provides or compensates others to provide administrative services to the RiverSource funds. These services include administrative, accounting, treasury, and other services. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." Custody Services. Ameriprise Trust Company, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (Ameriprise Trust Company), provides custody services to RiverSource Absolute Return Currency and Income Fund. The Bank of New York (BNY), One Wall Street, New York, New York, 10286, provides custody services to RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund. In addition, Ameriprise Trust Company and BNY are paid for certain transaction fees and out-of-pocket expenses incurred while providing services to the funds. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." Distribution and Shareholder Services. RiverSource Distributors, Inc., 50611 Ameriprise Financial Center, Minneapolis, Minnesota 55474, (the distributor or RiverSource Distributors), provides underwriting and distribution services to the RiverSource funds. Under the Distribution Agreement and related distribution and shareholder servicing plans, the distributor receives distribution and shareholder servicing fees. The distributor may retain a portion of these fees to support its distribution and shareholder servicing activity. The distributor re-allows the remainder of these fees (or the full fee) to the financial institutions that sell fund shares and provide services to shareholders. Fees paid by a fund for these services are set forth under "Distribution (12b-1) fees" in the expense table under "Fees and Expenses." More information on how these fees are used is set forth under "Investment Options -- Classes of Shares" and in the SAI. The distributor also administers any sales charges paid by an investor at the time of purchase or at the time of sale. See "Shareholder Fees (fees paid directly from your investment)" under "Fees and Expenses" for the scheduled sales charge of each share class. See "Buying and Selling Shares, Sales Charges" for variations in the scheduled sales charges, and for how these sales charges are used by the distributor. See "Other Investment Strategies and Risks" for the RiverSource funds' policy regarding directed brokerage. Transfer Agency Services. RiverSource Service Corporation, 734 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or RiverSource Service Corporation), provides or compensates others to provide transfer agency services to the RiverSource funds. The RiverSource funds pay the transfer agent a fee that varies by class, as set forth in the SAI, and reimburses the transfer agent for its out-of-pocket expenses incurred while providing these transfer agency services to the funds. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." RiverSource Service Corporation pays a portion of these fees to - -------------------------------------------------------------------------------- S.23 financial institutions that provide sub-recordkeeping and other services to fund shareholders. The SAI provides additional information about the services provided and the fee schedules for the transfer agent agreements. Plan Administration Services. Under a Plan Administration Services Agreement the fund pays for plan administration services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account recordkeeping, education services and administration to various plan types, including 529 plans, retirement plans and Health Savings Accounts (HSAs). Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." PAYMENTS TO FINANCIAL INSTITUTIONS The distributor and its affiliates make or support additional cash payments out of their own resources (including profits earned from providing services to the fund) to financial institutions, including inter-company allocation of resources or payments to affiliated broker-dealers, in connection with agreements between the distributor and financial institutions pursuant to which these financial institutions sell fund shares and provide services to their clients who are shareholders of the fund. These payments and intercompany allocations (collectively, "payments") do not change the price paid by investors in the fund or fund shareholders for the purchase or ownership of fund shares of the fund, and these payments are not reflected in the fees and expenses of the fund, as they are not paid by the fund. In exchange for these payments, a financial institution may elevate the prominence or profile of the fund within the financial institution's organization, and may provide the distributor and its affiliates with preferred access to the financial institution's registered representatives or preferred access to the financial institution's customers. These arrangements are sometimes referred to as marketing and/or sales support payments, program and/or shareholder servicing payments, or revenue sharing payments. These arrangements create potential conflicts of interest between a financial institution's pecuniary interest and its duties to its customers, for example, if the financial institution receives higher payments from the sale of a certain fund than it receives from the sale of other funds, the financial institution or its representatives may be incented to recommend or sell shares of the fund where it receives or anticipates receiving the higher payment instead of other investment options that may be more appropriate for the customer. Employees of Ameriprise Financial and its affiliates, including employees of affiliated broker-dealers, may be separately incented to recommend or sell shares of the fund, as employee compensation and business unit operating goals at all levels are tied to the company's success. Certain employees, directly or indirectly, may receive higher compensation and other benefits as investment in the fund increases. In addition, management, sales leaders and other employees may spend more of their time and resources promoting Ameriprise Financial and - -------------------------------------------------------------------------------- S.24 its subsidiary companies, including RiverSource Investments and the distributor, and the products they offer, including the fund. These payments are typically negotiated based on various factors including, but not limited to, the scope and quality of the services provided by the financial institution, its reputation in the industry, its ability to attract and retain assets, its access to target markets, its customer relationships, the profile the fund may obtain within the financial institution, and the access the distributor or other representatives of the fund may have within the financial institution for advertisement, training or education, including opportunities to present at or sponsor conferences for the registered representatives of the financial institution and its customers. These payments are usually calculated based on a percentage of fund assets owned through the financial institution and/or as a percentage of fund sales attributable to the financial institution. Certain financial institutions require flat fees instead of, or in addition to, these asset-based fees as compensation for including or maintaining a fund on their platforms, and, in certain situations, may require the reimbursement of ticket or operational charges -- fees that a financial institution charges its registered representatives for effecting transactions in the fund. The amount of payment varies by financial institution (e.g., initial platform set-up fees, ongoing maintenance or service fees, or asset or sales based fees). The amount of payments also varies by the type of sale. For instance, purchases of one fund may warrant a greater or lesser amount of payments than purchases of another fund. Additionally, sale and maintenance of shares on a stand alone basis may result in a greater or lesser amount of payments than the sale and maintenance of shares made through a plan, wrap or other fee-based program. Payments to affiliates may include payments as compensation to employees of RiverSource Investments who are licensed by the distributor in respect of certain sales and solicitation activity on behalf of the fund. These payments may be and often are significant. Additional information concerning the amount and calculation of these payments is available in the fund's SAI. Payments to affiliated broker-dealers are within the range of the payments the distributor pays to similarly-situated third party financial institutions and the payments such affiliated broker-dealers receive from third party fund sponsors related to the sale of their sponsored funds. However, because of the large amount of RiverSource fund assets (in aggregate) currently held in customer accounts of the affiliated broker-dealers, the distributor and its affiliates, in the aggregate, pay significantly more in absolute dollars than other third-party fund sponsors pay to the affiliated broker-dealers for the sale and servicing of their sponsored funds. This level of payment creates potential conflicts of interest which the affiliated broker-dealers seek to mitigate by disclosure and implementation of internal controls, as well as the rules and regulations of applicable regulators. - -------------------------------------------------------------------------------- S.25 From time to time, to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations, the distributor and its affiliates may make other reimbursements or payments to financial institutions or their registered representatives, including non-cash compensation, in the form of gifts of nominal value, occasional meals, tickets, or other entertainment, support for due diligence trips, training and educational meetings or conference sponsorships, support for recognition programs, and other forms of non-cash compensation permissible under regulations to which these financial institutions and their representatives are subject. To the extent these are made as payments instead of reimbursement, they may provide profit to the financial institution to the extent the cost of such services was less than the actual expense of the service. The financial institution through which you are purchasing or own shares of the fund has been authorized directly or indirectly by the distributor to sell the fund and/or to provide services to you as a shareholder of the fund. Investors and current shareholders may wish to take such payment arrangements into account when considering and evaluating any recommendations they receive relating to fund shares. If you have questions regarding the specific details regarding the payments your financial institution may receive from the distributor or its affiliates related to your purchase or ownership of the fund, please contact your financial institution. The SAI contains additional detail regarding payments made by the distributor to financial institutions. The payments described in this section are in addition to fees paid by the fund to the distributor under 12b-1 plans, which fees may be used to compensate financial institutions for the distribution of fund shares and the servicing of fund shareholders, or paid by the fund to the transfer agent under the transfer agent agreement or plan administration agreement, which fees may be used to support networking or servicing fees to compensate financial institutions for supporting shareholder account maintenance, sub-accounting, plan recordkeeping or other services provided directly by the financial institution to shareholders or plans and plan participants, including retirement plans, 529 plans, Health Savings Account plans, or other plans, where participants beneficially own shares of the fund. Financial institutions may separately charge you additional fees. See "Buying and Selling Shares." ADDITIONAL MANAGEMENT INFORMATION MANAGER OF MANAGERS EXEMPTION. The RiverSource funds have received an order from the Securities and Exchange Commission that permits RiverSource Investments, subject to the approval of the Board, to appoint a subadviser or change the terms of a subadvisory agreement for a fund without first obtaining shareholder approval. The order permits the fund to add or change unaffiliated subadvisers or change the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. - -------------------------------------------------------------------------------- S.26 Before certain fixed income funds may rely on the order, holders of a majority of the fund's outstanding voting securities will need to approve operating the fund in this manner. There is no assurance shareholder approval will be received, and no changes will be made without shareholder approval until that time. For more information, see the SAI. RiverSource Investments or its affiliates may have other relationships, including significant financial relationships, with current or potential subadvisers or their affiliates, which may create a conflict of interest. In making recommendations to the Board to appoint or to change a subadviser, or to change the terms of a subadvisory agreement, RiverSource Investments does not consider any other relationship it or its affiliates may have with a subadviser, and RiverSource Investments discloses the nature of any material relationships it has with a subadviser to the Board. AFFILIATED PRODUCTS. RiverSource Investments also serves as investment manager to RiverSource funds which are structured to provide asset-allocation services to shareholders of those funds by investing in shares of other RiverSource funds (Funds of Funds) and to discretionary managed accounts that invest exclusively in RiverSource funds (collectively referred to as "affiliated products"). These affiliated products, individually or collectively, may own a significant percentage of the fund's outstanding shares. The fund may experience relatively large purchases or redemptions from the affiliated products. Although RiverSource Investments may seek to minimize the impact of these transactions, for example, by structuring them over a reasonable period of time or through other measures, the fund may experience increased expenses as it buys and sells securities to manage transactions for the affiliated products. In addition, because the affiliated products may own a substantial portion of the fund, a redemption by one or more affiliated products could cause the fund's expense ratio to increase as the fund's fixed costs would be spread over a smaller asset base. RiverSource Investments monitors expense levels and is committed to offering funds that are competitively priced. RiverSource Investments reports to the Board on the steps it has taken to manage any potential conflicts. See the SAI for information on the percent of the fund owned by affiliated products. CASH RESERVES. RiverSource 120/20 Contrarian Equity Fund and RiverSource 130/30 U.S. Equity Fund may invest daily cash balances in RiverSource Short-Term Cash Fund (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 may, in addition to investing its daily cash balance, invest a higher percentage of its assets in Short Term Cash Fund, as an alternative to investing directly in short-duration debt obligations, as part of its principal investment strategy. While Short-Term Cash Fund does not pay an advisory fee to RiverSource Investments, it does incur other expenses, and is expected to operate at a very low expense ratio. A fund will invest in Short-Term Cash Fund only to - -------------------------------------------------------------------------------- S.27 the extent it is consistent with the fund's investment objectives and policies. Short-Term Cash Fund is not insured or guaranteed by the FDIC or any other government agency. FUND HOLDINGS DISCLOSURE. The Board has adopted policies and procedures that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by a fund. A description of these policies and procedures is included in the SAI. LEGAL PROCEEDINGS. 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 fund is 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 fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the fund. Information regarding certain pending and settled legal proceedings may be found in the fund's shareholder reports and in the SAI. Additionally, 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. - -------------------------------------------------------------------------------- S.28 RiverSource Funds can be purchased from authorized financial institutions. The fund can be found under the "RiverSource" banner in most mutual fund quotations. Additional information about the fund and its investments is available in the fund's SAI, and annual and semiannual reports to shareholders. In the fund's annual report, you will find a discussion of market conditions and investment strategies that significantly affected the fund's performance during its most recent fiscal year. The SAI is incorporated by reference in this prospectus. For a free copy of the SAI, the annual report, or the semiannual report, or to request other information about the fund, contact RiverSource Funds or your financial institution. To make a shareholder inquiry, contact the financial institution through whom you purchased the fund. RiverSource Funds 734 Ameriprise Financial Center Minneapolis, MN 55474 (888) 791-3380 RiverSource Funds information available at RiverSource Investments website address: riversource.com/funds You may review and copy information about the fund, including the SAI, at the Securities and Exchange Commission's (Commission) Public Reference Room in Washington, D.C. (for information about the public reference room call 1-202-551-8090). Reports and other information about the fund are available on the EDGAR Database on the Commission's Internet site at www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the Commission, 100 F Street, N.E., Washington, D.C. 20549-0102. Investment Company File # RiverSource 120/20 Contrarian Equity Fund 811-21852 RiverSource 130/30 U.S. Equity Fund 811-21852 RiverSource Absolute Return Currency and Income Fund 811-5696 TICKER SYMBOL RiverSource 120/20 Contrarian Equity Fund Class A: RCEAX Class B: -- Class C: RECCX Class I: -- Class R5: RCERX RiverSource 130/30 U.S. Equity Fund Class A: RUSAX Class B: -- Class C: RUSCX Class I: -- Class R5: RUSRX RiverSource Absolute Return Currency and Income Fund Class A: RARAX Class B: -- Class C: RARCX Class I: RVAIX Class R5: RARRX Class W: RACWX
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