Only SQL Server 2005 RDL files can be converted to RDLC files. If you have RDL files from a previous version, you must upgrade them to SQL Server 2005 before migrating them to the .rdlc file format. To upgrade a report definition, open it in the SQL Server 2005 version of Report Designer.
Converting a report definition of either file type requires that you re-create data source and query information. Be sure to choose a data source schema that is the same as or structurally identical to the one used in the original report. If the schema is different, the report layout might not be valid for the data source you want to use. If you want to use different data sources, it is easier to re-create the report from the beginning rather than convert it.
RDL-to-RDLC Conversion
When converting a .rdl file to .rdlc format, you must manually replace the data source and query information in the report definition with data constructs provided in your application.
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Rename the .rdl file to use the .rdlc file extension.
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In Visual Studio 2008, open the solution or project that will contain the report.
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Create or add the dataset that defines the data you want to use to your projector solution. For more information, see http://msdn.microsoft.com/en-us/library/ms252094.aspx.
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On the Project menu, click Add Existing Item and then select the .rdlc file that you created in the first step.
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In the project, open the form or Web page that will contain the report.
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From the Toolbox, in the Data group, drag a ReportViewer control onto the form or Web page.
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In the ReportViewer Tasks smart tags panel, in Choose Reports, select the .rdlc file to use with the control.
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In the ReportViewer Tasks smart tags panel, in Choose Data Sources, select the dataset you want to use. The dataset object, binding source object, and table object will appear at the bottom of the workspace. For more information about updating data source references, see http://msdn.microsoft.com/en-us/library/ms252085.aspx.
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Save all files, and then build or deploy the project to verify that the report contains the data you expect.
Go thr this link for more details;
http://msdn.microsoft.com/en-us/library/ms252109.aspx
Best Luck!!!!!!!!!!!!!!
Sujit.