RiverSource Absolute Return Currency and Income Fund

Second Quarter 2008 Fund Update

Below, portfolio manager Nic Pifer discusses the Fund's results and positioning for the second quarter of 2008.

How did the Fund perform for the period?

RiverSource Absolute Return Currency and Income Fund’s (the Fund) Class A shares increased 0.11% (excluding sales charge) for the quarter ended June 30, 2008. The Fund underperformed its benchmark, the Citigroup 3-Month U.S. Treasury Bill Index (Citigroup Index), which increased 0.39% during the same period.

Average annual total returns, which reflect Class A share performance at the maximum sales charge of 3.00% as of June 30, 2008, were 1-year: (5.17%), and since inception (6/15/06): 2.53%. The Class A share total expense ratio for the Fund is 1.36%.

The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. To obtain performance information current to the most recent month-end click here.

What factors most significantly affected the Fund's performance?

We use a two-part investment process. The first part includes investments in high quality, short-term fixed income securities with minimal interest rate risk with a goal to generate positive total return. These short-term investments are also designated, as necessary, to cover obligations invested through the second component of our strategy, which is based on a proprietary quantitative model. Our model uses various fundamental and technical factors, including current and historical data, to rank the anticipated value of nine different currencies from developed countries relative to the U.S. dollar. Based on that ranking, we enter into long forward currency contracts for the three most attractive currencies compared to the U.S. dollar and enter into short forward currency contracts for the three least attractive currencies compared to the U.S. dollar. The Fund experiences profits or losses to the extent the value of the currency appreciates or depreciates relative to the U.S. dollar.

For the quarter ended June 30, 2008, the Fund's positioning in the Japanese yen, Canadian dollar, and Norwegian krone aided performance. Positioning in the Australian dollar, Swiss franc, Swedish krona, New Zealand dollar, euro, and British pound detracted from the Fund's performance.

How are you positioning the Fund going forward?

We intend to stay disciplined to our systematic investment strategy. Through the use of our proprietary quantitative model, which determines the Fund's positions in forward foreign currency contracts relative to the U.S. dollar, we will continue to seek an absolute return that is unrelated to general movements in the U.S. dollar and other types of financial assets. Overall, we will continue to seek to generate positive total returns from the income produced by the Fund’s investments in short-term debt obligations, plus or minus the gain or loss resulting from the fluctuations in the values of various foreign currencies relative to the U.S. dollar.

More Information

• View the fact sheet for Absolute Return Currency and Income Fund