Ex-99.17(g)
SUPPLEMENT - DATED AUGUST 26, 2009
TO THE STATEMENTS OF ADDITIONAL INFORMATION, AND SUPPLEMENTS THERETO,
AS SHOWN BELOW:
FUND SAI DATED THE SUPPLEMENT THERETO:
---- --------- -----------------------------
SELIGMAN CAPITAL FUND, INC. 5/1/09
SELIGMAN CASH MANAGEMENT FUND, INC. 5/1/09
SELIGMAN CORE FIXED INCOME FUND, INC. 2/2/09 Supplement dated May 20, 2009
SELIGMAN COMMON STOCK FUND, INC. 5/1/09
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. 5/1/09
SELIGMAN FRONTIER FUND, INC. 3/2/09 Supplement dated May 20, 2009
SELIGMAN GLOBAL FUND SERIES, INC. 3/2/09 Supplement dated May 20, 2009
7/1/09
SELIGMAN GROWTH FUND, INC. 5/1/09
SELIGMAN HIGH INCOME FUND SERIES 5/1/09
SELIGMAN INCOME AND GROWTH FUND, INC. 5/1/09
SELIGMAN LASALLE REAL ESTATE FUND SERIES, INC. 5/1/09
SELIGMAN MUNICIPAL FUND SERIES, INC. 2/2/09 Supplement dated May 20, 2009
SELIGMAN MUNICIPAL SERIES TRUST 2/2/09 Supplement dated May 20, 2009
SELIGMAN TARGETHORIZON ETF PORTFOLIOS, INC. 2/2/09 Supplement dated May 20, 2009
SELIGMAN VALUE FUND SERIES, INC. 5/1/09
THE STATEMENTS OF ADDITIONAL INFORMATION, AND THE SUPPLEMENTS THERETO AS SHOWN
ABOVE, FOR EACH OF THE ABOVE-LISTED FUNDS IS HEREBY REVISED AS FOLLOWS:
The following is hereby added to the section "Investing in a Fund" after the
existing paragraph under the caption "Class A Shares":
For Class A shares purchased without a sales charge where a commission was
separately paid by the distributor to an authorized financial intermediary
effecting the purchase, a 1% CDSC may be charged if you sell your shares
within 18 months after purchase. A CDSC will be based on the original
purchase cost or the current market value of the shares being sold,
whichever is less.
The following is hereby added to the section "Investing in a Fund" following the
last bulleted paragraph under the caption "Initial Sales Charge -- Waivers of
the sales charge for Class A shares."
"CDSC -- WAIVERS OF THE CDSC FOR CLASS A SHARES. The CDSC will be waived on
sales of shares:"
The following is hereby deleted from the "Investing in a Fund" section under the
caption "CDSC - Waivers of the CDSC for Class B shares.":
- for shares of Seligman funds in retail retirement plans sold to
Merrill to which no sales commission or transaction fee was paid to an
authorized financial institution at the time of purchase."
The following is hereby added to the section "Investing in a Fund" under the
following captions:
a) "CDSC -- WAIVERS OF THE CDSC FOR CLASS A SHARES. The CDSC will be waived on
sales of shares:"
b) "CDSC -- WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on
sales of shares:"
c) "CDSC -- WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on
sales of shares:"
- in connection with participation in the Merrill Lynch Small Market
401(k) Program, retirement programs administered or serviced by the
Princeton Retirement Group, Paychex, ADP Retirement Services, Hartford
Securities Distribution Company, Inc. or NYLIM Service Company LLC,
retirement programs or accounts administered or serviced by Mercer HR
Services, LLC or its affiliates, or retirement programs or accounts
administered or serviced by firms that have a written agreement with
the distributor that contemplates a waiver of CDSCs, provided that no
sales commission or transaction fee was paid to such authorized
financial institution at the time of purchase.
THE STATEMENTS OF ADDITIONAL INFORMATION, FOR EACH OF THE ABOVE-LISTED FUNDS
EXCEPT FOR:
- SELIGMAN COMMON STOCK FUND, INC.,
- SELIGMAN CORE FIXED INCOME FUND, INC.,
- SELIGMAN HIGH INCOME FUND SERIES, AND
- SELIGMAN INCOME AND GROWTH FUND, INC.
ARE HEREBY REVISED AS FOLLOWS:
The table of "Fund Officers" which appears in the section "Management of the
Series" or "Management of the Fund", as applicable, is hereby revised as
follows:
The entry for Lawrence P. Vogel is hereby replaced with the following:
POSITION WITH
FUND/SERIES AND
NAME, ADDRESS, AGE LENGTH OF TIME SERVED PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
------------------ --------------------- -------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2009 Vice President - Investment Accounting, Ameriprise Financial,
105 Ameriprise Financial Center Inc. since 2002; Chief Financial Officer, RiverSource
Minneapolis, MN 55474 Distributors, Inc. since 2006
Age 54
SUPPLEMENT DATED JULY 27, 2009 TO THE STATEMENT OF ADDITIONAL INFORMATION, DATED
MAY 1, 2009, FOR SELIGMAN CASH MANAGEMENT FUND, INC.
(THE "FUND")
The following change will be effective on or about September 25, 2009:
The FUND NAME will be changed to RiverSource Government Money Market Fund.
STATEMENT OF ADDITIONAL INFORMATION (SAI) SUPPLEMENT DATED JUNE 22, 2009*
FUND SAI DATE FORM #
------------------------------------------------------------------------------------------------
RIVERSOURCE VARIABLE PORTFOLIO FUNDS MAY 1, 2009 S-6466-20 AG
RIVERSOURCE DISCIPLINED ASSET ALLOCATION PORTFOLIOS MAY 1, 2009 S-6521-20 C
SELIGMAN ASSET ALLOCATION SERIES, INC. MAY 1, 2009 N/A
SELIGMAN CAPITAL FUND, INC. MAY 1, 2009 N/A
SELIGMAN CASH MANAGEMENT FUND, INC. MAY 1, 2009 N/A
SELIGMAN COMMON STOCK FUND, INC. MAY 1, 2009 N/A
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. MAY 1, 2009 N/A
SELIGMAN CORE FIXED INCOME FUND, INC. FEB. 2, 2009 N/A
SELIGMAN FRONTIER FUND, INC. MARCH 2, 2009 N/A
SELIGMAN GLOBAL FUND SERIES, INC. MARCH 2, 2009 N/A
SELIGMAN GROWTH FUND, INC. MAY 1, 2009 N/A
SELIGMAN HIGH INCOME FUND SERIES MAY 1, 2009 N/A
SELIGMAN INCOME AND GROWTH FUND, INC. MAY 1, 2009 N/A
SELIGMAN LASALLE REAL ESTATE FUND SERIES, INC. MAY 1, 2009 N/A
SELIGMAN MUNICIPAL FUND SERIES, INC. FEB. 2, 2009 N/A
SELIGMAN MUNICIPAL SERIES TRUST FEB. 2, 2009 N/A
SELIGMAN NEW JERSEY MUNICIPAL FUND, INC. FEB. 2, 2009 N/A
SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES FEB. 2, 2009 N/A
SELIGMAN PORTFOLIOS, INC. MAY 1, 2009 N/A
SELIGMAN TARGETHORIZON ETF PORTFOLIOS, INC. FEB. 2, 2009 N/A
SELIGMAN VALUE FUND SERIES, INC. MAY 1, 2009 N/A
The section, Portfolio Holdings Disclosure, for each of the above listed funds
has been revised as follows:
PORTFOLIO HOLDINGS DISCLOSURE
Each fund's Board and the investment manager believe that the investment ideas
of the investment manager with respect to management of a fund should benefit
the fund and its shareholders, and do not want to afford speculators an
opportunity to profit by anticipating fund trading strategies or by using fund
portfolio holdings information for stock picking. However, each fund's Board
also believes that knowledge of the fund's portfolio holdings can assist
shareholders in monitoring their investments, making asset allocation decisions,
and evaluating portfolio management techniques.
Each fund's Board has therefore adopted the investment manager's policies and
approved the investment manager's procedures, including the investment manager's
oversight of subadviser practices, relating to disclosure of the fund's
portfolio securities. These policies and procedures are intended to protect the
confidentiality of fund portfolio holdings information and generally prohibit
the release of such information until such information is made public, unless
such persons have been authorized to receive such information on a selective
basis, as described below. It is the policy of the fund not to provide or permit
others to provide portfolio holdings on a selective basis, and the investment
manager does not intend to selectively disclose portfolio holdings or expect
that such holdings information will be selectively disclosed, except where
necessary for the fund's operation or where there are legitimate business
purposes for doing so and, in any case, where conditions are met that are
designed to protect the interests of the fund and its shareholders. Although the
investment manager seeks to limit the selective disclosure of portfolio holdings
information and such selective disclosure is monitored under the fund's
compliance program for conformity with the policies and procedures, there can be
no assurance that these policies will protect the fund from the potential misuse
of holdings information by individuals or firms in possession of that
information. Under no circumstances may the investment manager, its affiliates
or any employee thereof receive any consideration or compensation for disclosing
such holdings information.
A complete schedule of each fund's portfolio holdings is available semi-annually
and annually in shareholder reports filed on Form N-CSR and, after the first and
third fiscal quarters, in regulatory filings on Form N-Q. These shareholder
reports and regulatory filings are filed with the SEC in accordance with federal
securities laws and are generally available within sixty (60) days of the end of
a fund's fiscal quarter, on the SEC's website. In addition, the investment
manager makes publicly available information regarding a fund's top ten holdings
(including name and percentage of a fund's assets invested in each such holding)
and the percentage breakdown of a fund's investments by country, sector and
industry, as applicable. This holdings information is made publicly available
through the website as of month-end, approximately ten (10) days following the
month-end. In addition to the monthly top ten holdings and the portfolio
holdings information made available on the SEC website as part of a fund's
annual,
semi-annual and fiscal quarter filings, the investment manager also publishes on
its website each fund's full portfolio holdings (including name and percentage
of a fund's assets invested in each such holding) as of the end of each calendar
quarter. This full list of portfolio holdings is made available approximately
thirty (30) days following the end of each calendar quarter.
From time to time, the investment manager may make partial or complete fund
holdings information that is not publicly available on the website or otherwise
available in advance of the time restrictions noted above (1) to its affiliated
and unaffiliated service providers that require the information in the normal
course of business in order to provide services to the fund (including, without
limitation entities identified by name in the fund's prospectus or this SAI,
such as custodians, auditors, subadvisers, financial printers (Cenveo, Inc.,
Bowne, Vestek, Data Communique, Inc.), pricing services (including Reuters
Pricing Service, FT Interactive Data Corporation, Bear Stearns Pricing Service,
and Kenny S&P), proxy voting services (such as Risk Metrics), and companies that
deliver or support systems that provide analytical or statistical information
(including Factset Research Systems, Bloomberg, L.P.), (2) to facilitate the
review and/or rating of the fund by ratings and rankings agencies (including
Morningstar, Inc., Thomson Financial and Lipper Inc.), (3) entities that provide
trading, research or other investment related services (including Citigroup,
Merrill Lynch & Co., and Morgan Stanley), and (4) fund intermediaries that
include the funds in discretionary wrap or other investment programs that
request such information in order to support the services provided to investors
in the programs. In such situations, the information is released subject to
confidentiality agreements, duties imposed under applicable policies and
procedures (for example, applicable codes of ethics) designed to prevent the
misuse of confidential information, general duties under applicable laws and
regulations, or other such duties of confidentiality. In addition, the fund
discloses holdings information as required by federal, state or international
securities laws, and may disclose holdings information in response to requests
by governmental authorities, or in connection with litigation or potential
litigation, a restructuring of a holding, where such disclosure is necessary to
participate or explore participation in a restructuring of the holding (e.g., as
part of a bondholder group), or to the issuer of a holding, pursuant to a
request of the issuer or any other party who is duly authorized by the issuer.
Each fund's Board has adopted the policies of the investment manager and
approved the procedures Ameriprise Financial has established to ensure that the
fund's holdings information is only disclosed in accordance with these policies.
Before any selective disclosure of holdings information is permitted, the person
seeking to disclose such holdings information must submit a written request to
the Portfolio Holdings Committee ("PHC"). The PHC is comprised of members from
the investment manager's General Counsel's Office, Compliance, and
Communications. The PHC has been authorized by the fund's Board to perform an
initial review of requests for disclosure of holdings information to evaluate
whether there is a legitimate business purpose for selective disclosure, whether
selective disclosure is in the best interests of a fund and its shareholders, to
consider any potential conflicts of interest between the fund, the investment
manager, and its affiliates, and to safeguard against improper use of holdings
information. Factors considered in this analysis are whether the recipient has
agreed to or has a duty to keep the holdings information confidential and
whether risks have been mitigated such that the recipient has agreed or has a
duty to use the holdings information only as necessary to effectuate the purpose
for which selective disclosure was authorized, including a duty not to trade on
such information. Before portfolio holdings may be selectively disclosed,
requests approved by the PHC must also be authorized by a fund's Chief
Compliance Officer or the fund's General Counsel. On at least an annual basis
the PHC reviews the approved recipients of selective disclosure and, where
appropriate, requires a resubmission of the request, in order to re-authorize
any ongoing arrangements. These procedures are intended to be reasonably
designed to protect the confidentiality of fund holdings information and to
prohibit their release to individual investors, institutional investors,
intermediaries that distribute the fund's shares, and other parties, until such
holdings information is made public or unless such persons have been authorized
to receive such holdings information on a selective basis, as set forth above.
Although the investment manager has set up these procedures to monitor and
control selective disclosure of holdings information, there can be no assurance
that these procedures will protect a fund from the potential misuse of holdings
information by individuals or firms in possession of that information.
For each of Seligman Capital Fund, Seligman Communications and Information Fund,
Seligman Frontier Fund, Seligman Growth Fund, Seligman Value Fund Series, Inc.
on behalf of its Seligman Large-Cap Value Fund and Seligman Smaller-Cap Value
Fund (each, a "fund"), the last sentence of the second paragraph (the last
sentence of the first paragraph in Seligman Frontier Fund's SAI) under
Investment Strategies and Risks -- Foreign Securities has been revised as
follows:
The fund may invest up to 25% of its net assets in foreign investments.
For Seligman LaSalle Real Estate Fund Series, Inc. on behalf of its Seligman
LaSalle Monthly Dividend Fund, the first and second sentences of the first
paragraph under Investment Strategies and Risks -- Foreign Securities have been
revised as follows:
The Monthly Dividend Fund may invest up to 25% of its net assets in foreign
investments.
For Seligman Portfolios, Inc., the first sentence of the first paragraph under
Investment Strategies and Risks -- Foreign Investment Risk Factors has been
revised as follows:
Each of Seligman Global Technology Portfolio and Seligman International Growth
Portfolio may invest up to 100% of its total assets in foreign securities. Each
of Seligman Capital Portfolio, Seligman Communications and Information
Portfolio, Seligman Large-Cap Value Portfolio and Seligman Smaller-Cap Value
Portfolio may invest up to 25% of its net assets in foreign investments. Each of
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio and Seligman
Investment Grade Fixed Income Portfolio may invest up to 10% of its total assets
in foreign securities, except that this 10% limit does not apply to foreign
securities held through Depositary Receipts which are traded in the US or to
commercial paper and certificates of deposit issued by foreign banks.
For Seligman Portfolios, Inc., the first sentence of the first paragraph under
Investment Strategies and Risks -- Other Investment Companies has been revised
as follows:
Each Portfolio may invest in securities issued by other investment companies.
S-6466-120 A (6/09)
* Valid until next update
SELIGMAN CASH MANAGEMENT FUND, INC.
(the "Fund")
Statement of Additional Information
May 1, 2009
200 Ameriprise Financial Center
Minneapolis, MN 55474
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
Effective November 7, 2008, RiverSource Investments, LLC ("RiverSource
Investments" or "investment manager"), investment manager to the RiverSource
Family of Funds, and a wholly owned subsidiary of Ameriprise Financial, Inc.
("Ameriprise Financial"), completed its acquisition (the "Acquisition") of J. &
W. Seligman & Co. Incorporated ("Seligman"). With the Acquisition completed and
shareholders of the Fund having previously approved (at a special meeting held
on November 3, 2008) a new investment management services agreement ("Management
Agreement") between RiverSource Investments and the Fund, RiverSource
Investments is the new investment manager of the Fund effective November 7,
2008.
This Statement of Additional Information ("SAI") expands upon and supplements
the information contained in the Fund's current Prospectus, dated May 1, 2009,
offering Class A shares, Class B shares, Class C shares and Class R shares, and
the Fund's current Prospectus, dated May 1, 2009 offering Class I shares
(together, the "Prospectuses"). Effective on or about June 13, 2009, the
Seligman funds' Class R shares will be renamed as Class R2 shares and the
Seligman funds' Class I shares will be renamed as Class R5 shares. At such time,
the Fund will then offer the following classes of shares: Class A, Class B,
Class C, Class R2 and Class R5 shares.
This SAI, although not in itself a Prospectus, is incorporated by reference into
the Prospectuses in its entirety. It should be read in conjunction with the
Prospectuses, which you may obtain by writing or calling the Fund at the above
address or telephone numbers, respectively.
The financial statements and notes included in the Fund's Annual Report, which
includes the Report of Independent Registered Public Accounting Firm thereon,
are incorporated herein by reference. The Annual Report will be furnished to you
without charge if you request a copy of this SAI.
The RiverSource Family of Funds includes a comprehensive array of funds from
RiverSource Investments, including the Seligman funds. RiverSource Investments
has also partnered with a number of professional investment managers, including
its affiliate, Threadneedle Investments, to expand the array of funds offered in
the RiverSource Family of Funds. The Seligman funds share the same Board of
Directors/Trustees as the other funds in the RiverSource Family of Funds.
Effective on or about June 13, 2009, the Seligman funds will share the same
policies and procedures as, and maybe exchanged for shares of, the RiverSource
funds, RiverSource Partners funds and Threadneedle funds. For example, for
purposes of calculating the initial sales charge on the purchase of Class A
shares of a Seligman fund, for rights of cumulation purposes, an investor or
financial advisor may include the market value of any RiverSource funds,
RiverSource Partners funds or Threadneedle funds in this calculation. This SAI
includes a list of mutual funds included in RiverSource Family of Funds.
The Fund is governed by a Board that meets regularly to review a wide variety of
matters affecting the Fund. Detailed information about Fund governance, the
Fund's investment manager, RiverSource Investments and other aspects of Fund
management can be found by referencing the Table of Contents below.
The website references in this SAI are inactive textual references and
information contained in or otherwise accessible through these websites does not
form a part of this SAI.
Table of Contents
Fund History ............................................................. 3
Description of the Fund and its Investments and Risks .................... 3
Management of the Fund ................................................... 7
Control Persons and Principal Holders of Securities ...................... 14
Investment Advisory and Other Services ................................... 15
Securities Transactions .................................................. 20
Capital Stock and Other Securities ....................................... 23
Investing in a Fund ...................................................... 23
Taxation of the Fund ..................................................... 30
Underwriters ............................................................. 34
Calculation of Yield ..................................................... 35
Financial Statements ..................................................... 36
Information Regarding Pending and Settled Legal Proceedings .............. 36
General Information ...................................................... 38
Appendix A-The Seligman Funds ............................................ 40
Appendix B-The RiverSource Funds, RiverSource Partners funds, and
Threadneedle funds .................................................... 41
Appendix C-Investment Management Fee Schedule ............................ 42
Appendix D-Administrative Services Fee Schedule .......................... 45
TXCM1A
2
FUND HISTORY
The Fund was incorporated under the laws of the state of Maryland on July 12,
1976. As of November 7, 2008, the Fund is part of the RiverSource Family of
Funds. The RiverSource Family of Funds includes a comprehensive array of funds
managed by RiverSource Investments, including the Fund and the other Seligman
mutual funds.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectuses.
The Fund will invest only in US dollar-denominated securities having a remaining
maturity of 13 months (397 days) or less and will maintain a dollar-weighted
average portfolio maturity of 90 days or less. The Fund will limit its
investments to those securities that, in accordance with guidelines adopted by
the Fund's Board of Directors, present minimal credit risks. Accordingly, the
Fund will not purchase any security (other than a US government security) unless
(i) it is rated in one of the two highest rating categories assigned to
short-term debt securities by at least two nationally recognized statistical
rating organizations ("NRSRO's") such as Moody's Investors Service ("Moody's")
and Standard & Poor's Ratings Services ("S&P"), or (ii) if not so rated, it is
determined to be of comparable quality. Determinations of the comparable quality
will be made in accordance with procedures established by the Directors. These
standards must be satisfied at the time an investment is made. If the quality of
the investment later declines, the Fund may continue to hold the investment,
subject in certain circumstances to a finding by the Board of Directors that
disposing of the investment would not be in the Fund's best interest.
Presently, the Fund only invests in either US government securities or
securities that are rated in the top category by Moody's and S&P. However, the
Fund is permitted to invest up to 5% of its assets in securities rated in the
second highest rating category by two NRSRO's, provided that not more than the
greater of 1% of its total assets or $1,000,000 are invested in any one such
security.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT SECURITIES. The Fund may invest
in commercial paper and short-term corporate debt securities. Commercial paper
includes short-term unsecured promissory notes with maturities not exceeding
nine months issued in bearer form by bank holding companies, corporations and
finance companies to finance short-term credit needs. Corporate debt securities
include bonds and notes issued by corporations to finance longer-term credit
needs. Investments in commercial paper issued by bank holding companies will be
limited at the time of investment to the 100 largest US bank holding companies
in terms of assets.
MONEY MARKET INSTRUMENTS. The Fund invests in high-quality money market
instruments having a remaining maturity of 13 months (397 days) or less,
including the following:
US Government, Agency and Instrumentality Obligations. These securities are
issued or guaranteed as to principal and interest by the United States
government or by agencies or instrumentalities thereof and include a variety of
obligations, which differ in their interest rates, maturities, and dates of
issue. Some of these obligations are issued directly by the United States
Treasury such as US Treasury Bills, notes, and bonds; others are guaranteed by
the US Treasury, such as securities issued by the Small Business Administration,
the General Services Administration, and Farmers Home Administration; others are
supported by the right of the issuer to borrow from the Treasury, such as
securities issued by Federal Home Loan Banks; while others are supported only by
the credit of the agency or instrumentality and not by the Treasury, such as
securities issued by the Federal National Mortgage Association. There can be no
assurance that the US Government will provide financial support to such an
agency or instrumentality if it is not obligated to do so by law.
Bank Obligations. These instruments include obligations of domestic banks
(including foreign branches) and foreign banks with maturities not exceeding 13
months (397 days) including negotiable certificates of deposit, bank notes,
bankers' acceptances, fixed time deposits and commercial paper. Investments in
such obligations will be limited at the time of investment to the obligations of
the 100 largest domestic banks in terms of assets which are subject to
regulatory supervision by the US Government or state governments and the
obligations of the 100 largest foreign banks in terms of assets with branches or
agencies in the United States.
3
Negotiable certificates of deposit are certificates issued against funds
deposited in a bank. They are for a definite period of time, earn a specific
rate of return, and are negotiable. Bankers' acceptances are short-term credit
instruments primarily used to finance the import, export, transfer or storage of
goods. They are termed "accepted" when a bank guarantees their payment at
maturity. Fixed time deposits represent funds deposited in a bank. They are for
a definite period of time and earn a specific rate of return. Fixed time
deposits are made in foreign branches of domestic banks and in foreign banks.
Fixed time deposits, unlike negotiable certificates of deposit, generally do not
have a market and may be subject to penalties for early withdrawal of funds.
Investments in foreign banks and foreign branches of United States banks involve
certain risks not generally associated with investments in domestic banks. While
domestic banks and US branches of foreign banks are required to maintain certain
reserves and are subject to other regulations, such requirements and regulations
may not apply to foreign branches. Investments in foreign banks and branches may
also be subject to other risks, including future political and economic
developments, the seizure or nationalization of foreign deposits and the
establishment of exchange controls or other restrictions.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements under which
it acquires a money market instrument, qualified for purchase by the Fund,
subject to resale at an agreed upon price and date. Such resale price reflects
an agreed upon interest rate effective for the period of time the instrument is
held by the Fund and is unrelated to the interest rate on the instrument.
Repurchase agreements usually are for short periods, such as one week or less,
but may be for longer periods. Although the Fund may enter into repurchase
agreements with respect to any money market instruments qualified for purchase,
such agreements generally involve US Government securities. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating the
securities underlying the agreement, decline in value of the underlying
securities and loss of interest.
The Fund will not invest more than 10% of its assets in repurchase agreements of
more than one week's duration and in fixed time deposits, other than overnight
deposits, subject to withdrawal penalties.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
brokers, dealers and financial institutions provided that cash, or equivalent
collateral, equal to at least 100% of the market value of the securities loaned
is maintained by the borrower with the Fund. During the time such securities are
on loan, the borrower will pay the Fund any income accruing thereon and the Fund
may invest the cash collateral and earn additional income or may receive an
agreed upon fee from the borrower who has delivered equivalent collateral. Loans
are subject to termination at the option of the Fund or the borrower. The Fund
may pay reasonable administrative and custodial fees in connection with a loan
and may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund will not lend
more than 25% of the value of its total assets, and it is not intended that
payments received on account of interest paid on securities loaned will exceed
10% of the annual gross income of the Fund without offset for realized
short-term capital losses, if any. The Fund has not loaned any portfolio
securities to date.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fundamental Restrictions
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the Fund's outstanding voting securities. Under these policies, the
Fund may not:
Issue senior securities or borrow money, except from banks for temporary
purposes in an amount not to exceed 5% of the value of the total assets of
the Fund;
Make loans, except loans of portfolio securities and except to the extent
that the purchase of notes, bonds or other evidences of indebtedness, the
entry into repurchase agreements or deposits with banks, may be considered
loans;
Mortgage or pledge any of its assets, except to the extent, up to a maximum
of 5% of its total assets, necessary to secure borrowings permitted by
paragraph 1;
4
Underwrite the securities of other issuers; make "short" sales of
securities, or purchase securities on "margin"; write or purchase put or
call options;
Invest more than 25% of the market value of its total assets in securities
of issuers in any one industry, provided that the Fund reserves the right
to concentrate investments in money market instruments issued by the US
Government or its agencies or instrumentalities or banks or bank holding
companies;
Invest more than 5% of its gross assets (taken at market) in the securities
of any one issuer, other than the US Government, its agencies or
instrumentalities, or buy more than 10% of the voting securities of any one
issuer, other than US Government agencies or instrumentalities;
Buy or hold any real estate or securities of corporations or trusts whose
principal business is investing in interests in real estate, or buy or hold
oil or gas interests, or buy or hold any commodity or commodity contracts;
Buy securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided however, that
securities guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded;
Invest in securities with contractual or other restrictions on resale,
except in connection with repurchase agreements;
Deal with its directors and officers, or firms they are associated with, in
the purchase or sale of securities except as broker, or purchase or hold
the securities of any issuer, if to its knowledge, directors or officers of
the Fund or of the Manager individually owning beneficially more than 0.5%
of the securities of that other company own in the aggregate more than 5%
of such securities; or
Invest in the securities of companies for purposes of exercising control or
management of such companies or in securities issued by other investment
companies, except in connection with a merger, consolidation, acquisition
or reorganization or for the purpose of hedging the Fund's obligations
under its deferred compensation plan for directors.
For purposes of applying the 25% limitation on the securities of issuers in any
particular industry (as described above), the Fund will generally use the
industry classifications provided by the Global Industry Classification System.
The Fund also may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940, as amended ("1940 Act"), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding shares of the Fund;
or (2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
The Fund also may not acquire any securities of a registered open-end investment
company or a registered unit investment trust in reliance on subparagraph (F) or
subparagraph (G) of Section 12(d)(1) of the 1940 Act. This policy is not
fundamental.
Disclosure of Portfolio Holdings
Each fund's Board and the investment manager believe that the investment ideas
of the investment manager with respect to management of a fund should benefit
the fund and its shareholders, and do not want to afford speculators an
opportunity to profit by anticipating fund trading strategies or by using fund
portfolio holdings information for stock picking. However, each fund's Board
also believes that knowledge of the fund's portfolio holdings can assist
shareholders in monitoring their investments, making asset allocation decisions,
and evaluating portfolio management techniques.
Each fund's Board has therefore adopted the investment manager's policies and
approved the investment manager's procedures, including the investment manager's
oversight of subadviser practices, relating to disclosure of the fund's
portfolio securities. These policies and procedures are intended to protect the
confidentiality of fund portfolio holdings information and generally prohibit
the release of such information until such information is made public, unless
such persons have been authorized to receive such information on a selective
basis, as described below. It is
5
the policy of the fund not to provide or permit others to provide holdings
information on a selective basis, and the investment manager does not intend to
selectively disclose holdings information or expect that such holdings
information will be selectively disclosed, except where necessary for the fund's
operation or where there are legitimate business purposes for doing so and, in
any case, where conditions are met that are designed to protect the interests of
the fund and its shareholders. Although the investment manager seeks to limit
the selective disclosure of portfolio holdings information and such selective
disclosure is monitored under the fund's compliance program for conformity with
the policies and procedures, there can be no assurance that these policies will
protect the fund from the potential misuse of holdings information by
individuals or firms in possession of that information. Under no circumstances
may the investment manager, its affiliates or any employee thereof receive any
consideration or compensation for disclosing such holdings information.
A complete schedule of each fund's portfolio holdings is available semi-annually
and annually in shareholder reports filed on Form N-CSR and, after the first and
third fiscal quarters, in regulatory filings on Form N-Q. These shareholder
reports and regulatory filings are filed with the SEC in accordance with federal
securities laws and are generally available within sixty (60) days of the end of
a fund's fiscal quarter, on the SEC's website. Once holdings information is
filed with the SEC, it will also be posted on the website for the RiverSource
funds at riversource.com/funds and for the Seligman funds at seligman.com, and
it may be mailed, e-mailed or otherwise transmitted to any person.
In addition, the investment manager makes publicly available information
regarding a fund's top ten holdings (including name and percentage of a fund's
assets invested in each such holding) and the percentage breakdown of a fund's
investments by country, sector and industry, as applicable. This holdings
information is generally made available through the website, marketing
communications (including printed advertisements and sales literature), and/or
telephone customer service centers that support the fund. This holdings
information is generally as of a month-end and is not released until it is at
least fifteen (15) days old.
From time to time, the investment manager may make partial or complete fund
holdings information that is not publicly available on the website or otherwise
available in advance of the time restrictions noted above (1) to its affiliated
and unaffiliated service providers that require the information in the normal
course of business in order to provide services to the fund (including, without
limitation entities identified by name in the fund's prospectus or this SAI,
such as custodians, auditors, subadvisers, financial printers (Cenveo, Inc.,
Vestek, Data Communique, Inc.), pricing services (including Reuters Pricing
Service, FT Interactive Data Corporation, Bear Stearns Pricing Service, and
Kenny S&P), proxy voting services (Risk Metrics Group, formerly Institutional
Shareholder Services), and companies that deliver or support systems that
provide analytical or statistical information (including Factset Research
Systems, Bloomberg, L.P. Investment Technology Group, Inc.), operational
functions (Brown Brothers Harriman & Co. (2) to facilitate the review and/or
rating of the fund by ratings and rankings agencies (including Morningstar,
Inc., Thomson Financial and Lipper Inc.), (3) entities that provide trading,
research or other investment related services (including Citigroup, Lehman
Brothers Holdings, Merrill Lynch & Co., and Morgan Stanley), and (4) fund
intermediaries that include the funds in discretionary wrap or other investment
programs that request such information in order to support the services provided
to investors in the programs. In such situations, the information is released
subject to confidentiality agreements, duties imposed under applicable policies
and procedures (for example, applicable codes of ethics) designed to prevent the
misuse of confidential information, general duties under applicable laws and
regulations, or other such duties of confidentiality. In addition, the fund
discloses holdings information as required by federal, state or international
securities laws, and may disclose holdings information in response to requests
by governmental authorities, or in connection with litigation or potential
litigation, a restructuring of a holding, where such disclosure is necessary to
participate or explore participation in a restructuring of the holding (e.g., as
part of a bondholder group), or to the issuer of a holding, pursuant to a
request of the issuer or any other party who is duly authorized by the issuer.
Each fund's Board has adopted the policies of the investment manager and
approved the procedures Ameriprise Financial has established to ensure that the
fund's holdings information is only disclosed in accordance with these policies.
Before any selective disclosure of holdings information is permitted, the person
seeking to disclose such holdings information must submit a written request to
the Portfolio Holdings Committee ("PHC"). The PHC is comprised of members from
the investment manager's General Counsel's Office, Compliance, and
Communications. The PHC has been authorized by the fund's Board to perform an
initial review of requests for disclosure of holdings information to evaluate
whether there is a legitimate business purpose for selective disclosure, whether
selective disclosure is in the best interests of a fund and its shareholders, to
consider any potential conflicts of interest between the fund, the investment
manager, and its affiliates, and to safeguard against improper use of holdings
information. Factors considered in this analysis are whether the recipient has
agreed to or has a duty to
6
keep the holdings information confidential and whether risks have been mitigated
such that the recipient has agreed or has a duty to use the holdings information
only as necessary to effectuate the purpose for which selective disclosure was
authorized, including a duty not to trade on such information. Before portfolio
holdings may be selectively disclosed, requests approved by the PHC must also be
authorized by a fund's Chief Compliance Officer or the fund's General Counsel.
On at least an annual basis the PHC reviews the approved recipients of selective
disclosure and, where appropriate, requires a resubmission of the request, in
order to re-authorize any ongoing arrangements. These procedures are intended to
be reasonably designed to protect the confidentiality of fund holdings
information and to prohibit their release to individual investors, institutional
investors, intermediaries that distribute the fund's shares, and other parties,
until such holdings information is made public or unless such persons have been
authorized to receive such holdings information on a selective basis, as set
forth above.
Although the investment manager has set up these procedures to monitor and
control selective disclosure of holdings information, there can be no assurance
that these procedures will protect a fund from the potential misuse of holdings
information by individuals or firms in possession of that information.
MANAGEMENT OF THE FUND
Board Members and Officers
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board.
On November 7, 2008, RiverSource Investments, a wholly-owned subsidiary of
Ameriprise Financial, announced the closing of its Acquisition of Seligman. With
the Acquisition completed and shareholders having previously elected (at a
special meeting held on November 3, 2008) ten new directors (collectively, the
"New Board Members"), the New Board Members took office on November 7, 2008. The
New Board Members are Kathleen Blatz, Arne H. Carlson, Pamela G. Carlton,
Patricia M. Flynn, Anne P. Jones, Jeffrey Laikind, Stephen R. Lewis, Jr.,
Catherine James Paglia, Alison Taunton-Rigby and William F. Truscott. The New
Board Members also became directors/trustees of the other Seligman funds in
November 2008 and also serve as directors/trustees of the other funds in the
RiverSource Family of Funds. Messrs. Leroy C. Richie and John F. Maher, who were
members of the Board prior to November 7, 2008, have continued to serve on the
Board after the Acquisition, which resulted in an overall increase from ten
directors to 12 directors of the Fund.
Information with respect to the members of the Board is shown below. Each member
oversees 162 portfolios in the fund complex managed by RiverSource Investments,
which includes 58 Seligman funds and 104 RiverSource funds, RiverSource Partners
funds and Threadneedle funds. Board members serve until the next regular
shareholders' meeting or until he or she reaches the mandatory retirement age
established by the Board.
INDEPENDENT BOARD MEMBERS
POSITION WITH
FUND AND
LENGTH OF TIME PRINCIPAL OCCUPATION DURING LAST OTHER COMMITTEE
NAME, ADDRESS, AGE SERVED FIVE YEARS DIRECTORSHIPS MEMBERSHIPS
--------------------- ----------------- -------------------------------------- ------------------ ---------------------
Kathleen Blatz Board member Attorney; Chief Justice, Minnesota Other funds in the Board Governance,
901 S. Marquette Ave. since November 7, Supreme Court, 1998-2006 RiverSource Compliance,
Minneapolis, MN 55402 2008 Family of Funds Investment Review,
Age 54 Audit
Arne H. Carlson Board member Chair, RiverSource Funds, 1999-2006; Other funds in the Board Governance,
901 S. Marquette Ave. since November 7, former Governor of Minnesota RiverSource Compliance,
Minneapolis, MN 55402 2008 Family of Funds Contracts, Executive,
Age 74 Investment Review
Pamela G. Carlton Board member President, Springboard-Partners in Other funds in the Distribution,
901 S. Marquette Ave. since November 7, Cross Cultural Leadership (consulting RiverSource Investment Review,
Minneapolis, MN 55402 2008 company) Family of Funds Audit
Age 54
Patricia M. Flynn Board member Trustee Professor of Economics and Other funds in the Board Governance,
901 S. Marquette Ave. since November 7, Management, Bentley University; RiverSource Contracts, Investment
Minneapolis, MN 55402 2008 Former Dean, McCallum Graduate Family of Funds Review
Age 58 School of Business, Bentley University
7
INDEPENDENT BOARD MEMBERS
POSITION WITH
FUND AND
LENGTH OF TIME PRINCIPAL OCCUPATION DURING LAST OTHER COMMITTEE
NAME, ADDRESS, AGE SERVED FIVE YEARS DIRECTORSHIPS MEMBERSHIPS
--------------------- ----------------- -------------------------------------- ------------------ ------------------------
Anne P. Jones Board member Attorney and Consultant Other funds in the Board Governance,
901 S. Marquette Ave. since November 7, RiverSource Compliance, Executive,
Minneapolis, MN 55402 2008 Family of Funds Investment Review,
Age 74 Audit
Jeffrey Laikind, CFA Board member Former Managing Director, Shikiar American Distribution,
901 S. Marquette Ave. since November 7, Asset Management Progressive Executive, Investment
Minneapolis, MN 55402 2008 Insurance; other Review, Audit
Age 73 funds in the
RiverSource
Family of Funds
Stephen R. Lewis, Jr. Board member and President Emeritus and Professor of Valmont Board Governance,
901 S. Marquette Ave. Chair of Board Economics, Carleton College Industries, Inc. Compliance, Contracts,
Minneapolis, MN 55402 since November 7, (manufactures Executive, Investment
Age 70 2008 Irrigation Review
systems); other
funds in the
RiverSource
Family of Funds
John F. Maher Board member Retired President and Chief Executive Other funds in the Distribution,
901 S. Marquette Ave. since 2006 Officer and former Director, Great RiverSource Investment Review,
Minneapolis, MN 55402 Western Financial Corporation Family of Funds Audit
Age 65 (financial services), 1986-1997.
Catherine James Paglia Board member Director, Enterprise Asset Other funds in the Board Governance,
901 S. Marquette Ave. since November 7, Management, Inc. (private real estate RiverSource Compliance, Contracts,
Minneapolis, MN 55402 2008 and asset management company) Family of Funds Executive, Investment
Age 56 Review
Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. (law Digital Ally, Inc., Contracts,
901 S. Marquette Ave. since 2000 firm) since 1987; and Vice President (digital imaging); Distribution,
Minneapolis, MN 55402 and General Counsel, Automotive Infinity, Inc. Investment Review
Age 66 Legal Affairs, Chrysler Corporation, (oil and gas
1990-1997 exploration and
production); and
OGE Energy
Corp., (energy
and energy
services); other
funds in the
RiverSource
Family of Funds
Alison Taunton-Rigby Board member Chief Executive Officer and Director, Idera Contracts, Distribution,
901 S. Marquette Ave. since November 7, RiboNovix, Inc. since 2003 Pharmaceuticals, Executive, Investment
Minneapolis, MN 55402 2008 (biotechnology); former President, Inc. Review
Age 65 Forester Biotech (biotechnology);
Healthways, Inc.
(health
management
programs); other
funds in the
RiverSource
Family of Funds
8
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
POSITION WITH
FUND AND
LENGTH OF TIME PRINCIPAL OCCUPATION DURING LAST OTHER COMMITTEE
NAME, ADDRESS, AGE SERVED FIVE YEARS DIRECTORSHIPS MEMBERSHIPS
--------------------- ----------------- -------------------------------------- ------------------ -----------
William F. Truscott Board member President - U.S. Asset Management Other funds in the None
53600 Ameriprise and Vice and Chief Investment Officer, RiverSource
Financial Center President since Ameriprise Financial, Inc. since Family of Funds
Minneapolis, MN 55474 November 7, 2005; President, Chairman of the
Age 48 2008 Board and Chief Investment Officer,
RiverSource Investments, LLC since
2001; Director, President and Chief
Executive Officer, Ameriprise
Certificate Company since 2006;
Chairman of the Board and Chief
Executive Officer, RiverSource
Distributors, Inc. since 2006 and
of RiverSource Fund Distributors,
Inc. since 2008; and Senior Vice
President - Chief Investment
Officer, Ameriprise Financial,
Inc., 2001-2005
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments and Ameriprise Financial.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is a Vice President, the
other officers are:
FUND OFFICERS
POSITION WITH
FUND AND LENGTH OF TIME
NAME, ADDRESS, AGE SERVED* PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
------------------------ --------------------------- -------------------------------------------------------------------------
Patrick T. Bannigan President since November 7, Director and Senior Vice President - Asset Management, Products and
172 Ameriprise Financial 2008 Marketing, RiverSource Investments, LLC and; Director and Vice
Center President - Asset Management, Products and Marketing, RiverSource
Minneapolis, MN 55474 Distributors, Inc. since 2006 and of RiverSource Fund Distributors, Inc.
Age 43 since 2008; Managing Director and Global Head of Product, Morgan
Stanley Investment Management, 2004-2006; President, Touchstone
Investments, 2002-2004
Michelle M. Keeley Vice President since Executive Vice President - Equity and Fixed Income, Ameriprise
172 Ameriprise Financial November 7, 2008 Financial, Inc. and RiverSource Investments, LLC since 2006; Vice
Center President - Investments, Ameriprise Certificate Company since 2003;
Minneapolis, MN 55474 Senior Vice President - Fixed Income, Ameriprise Financial, Inc., 2002-
Age 45 2006 and RiverSource Investments, LLC, 2004-2006
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments, LLC since
172 Ameriprise Financial November 7, 2008 2009; Vice President - Asset Management and Trust Company Services,
Center RiverSource Investments, LLC, 2006-2009; Vice President - Operations
Minneapolis, MN 55474 and Compliance, RiverSource Investments, LLC, 2004-2006; Director of
Age 43 Product Development - Mutual Funds, Ameriprise Financial, Inc., 2001-
2004
Scott R. Plummer Vice President, General Vice President and Chief Counsel - Asset Management, Ameriprise
172 Ameriprise Financial Counsel and Secretary since Financial, Inc. since 2005; Chief Counsel, RiverSource Distributors, Inc.
Center November 7, 2008 and Chief Legal Officer and Assistant Secretary, RiverSource Investments,
Minneapolis, MN 55474 LLC, since 2006; Chief Counsel, RiverSource Fund Distributors, Inc. since
Age 49 2008; Vice President, General Counsel and Secretary, Ameriprise
Certificate Company since 2005; Vice President - Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005; Senior Vice President
and Chief Compliance Officer, USBancorp Asset Management, 2002-2004
9
FUND OFFICERS
POSITION WITH
FUND AND LENGTH OF TIME
NAME, ADDRESS, AGE SERVED* PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
--------------------- ----------------------------- -------------------------------------------------------------------------
Lawrence P. Vogel Treasurer since 2000 Vice President, Managed Assets, Investment Accounting of Ameriprise
100 Park Avenue, Financial, Inc. since 2009; Treasurer, Seligman Data Corp. since 2000.
New York, NY 10017 Senior Vice President, Investment Companies, J. & W. Seligman & Co.
Age 52 Incorporated, 1992-2008; former Vice President of the Seligman funds
Eleanor T.M. Hoagland Chief Compliance Officer Chief Compliance Officer, RiverSource Investments, LLC and Kenwood
100 Park Avenue, since 2004; Anti-Money Capital Management LLC since 2009; Chief Compliance Officer for each
New York, NY 10017 Laundering Prevention of the Seligman funds since 2004 and all funds in the RiverSource Family
Age 58 Officer and Identity Theft of Funds, Ameriprise Certificate Company, Seligman Data Corp. and
Prevention Officer since 2008 RiverSource Service Corporation since 2009; Anti-Money Laundering
Prevention Officer and Identity Theft Prevention Officer for each of the
Seligman funds since 2008; and Managing Director, J. & W. Seligman &
Co. Incorporated, and Vice-President for each of the Seligman funds,
2004-2008
* All officers are elected annually by the Board of Directors and serve until
their successors are elected and qualify or their earlier resignation.
BOARD COMMITTEES
The Board initially approved the Management Agreement and other contracts with
the investment manager and its affiliates, and other service providers. The
Management Agreement was also approved by shareholders at a special meeting held
on November 3, 2008. Once the contracts are approved, the Board monitors the
level and quality of services including commitments of service providers to
achieve expected levels of investment performance and stockholder services. In
addition, the Board oversees that processes are in place to assure compliance
with applicable rules, regulations and investment policies and addresses
possible conflicts of interest. Annually, the Board evaluates the services
received under the contracts by receiving reports covering investment
performance, stockholder services, marketing, and the investment manager's
profitability in order to determine whether to continue existing contracts or
negotiate new contracts.
The Board of Directors met 15 times during the year ended December 31, 2008,
which includes 13 meetings by the Board as constituted prior to the Acquisition
of Seligman and 2 meetings by the Board as currently constituted. As of November
7, 2008, the Board has organized the following standing committees to facilitate
its work (accordingly, no committee meetings have been held prior to such date
for these committees): Board Governance Committee, Compliance Committee,
Contracts Committee, Distribution Committee, Executive Committee, Investment
Review Committee and Audit Committee. These Committees are comprised solely of
Directors who are not "interested persons" of the Fund as that term is defined
in the 1940 Act (i.e., they are independent directors). The table above
describing each Director also includes their respective committee memberships.
The duties of these committees are described below.
Mr. Lewis, as Chairman of the Board, acts as a point of contact between the
independent Directors and RiverSource Investments between Board meetings in
respect of general matters.
Board Governance Committee. Recommends to the Board the size, structure and
composition of the Board and its committees; the compensation to be paid to
members of the Board; and a process for evaluating the Board's performance. The
committee also makes recommendations to the Board regarding responsibilities and
duties of the Board, oversees proxy voting and supports the work of the Chairman
of the Board in relation to furthering the interests of the Fund and other funds
in the RiverSource Family of Funds and their shareholders on external matters.
The members of this committee are not "interested persons" as that term is
defined in the 1940 Act. The committee, which operates pursuant to a written
charter, also reviews candidates for Board membership, including candidates
recommended by stockholders. This committee met 10 times during the year ended
December 31, 2008, which includes, prior to the Acquisition of Seligman, 7
meetings by the Fund's then-existing Board Operations Committee and 2 meetings
by the Fund's then existing Director Nominating Committee, each of which
performed functions similar to the Board Governance Committee, which met 1 time
during the period after the Acquisition of Seligman.
To be considered as a candidate for director, recommendations must include a
curriculum vitae and be mailed to the Chairman of the Board, RiverSource Family
of Funds, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. To
be timely for consideration by the committee, the submission, including all
required information,
10
must be submitted in writing not less than 120 days before the date of the proxy
statement for the previous year's meeting of shareholders, if such a meeting
held. The committee will consider only one candidate submitted by such a
shareholder or group for nomination for election at a meeting of shareholders,
if such a meeting is held. The committee will not consider self-nominated
candidates or candidates nominated by members of a candidate's family, including
such candidate's spouse, children, parents, uncles, aunts, grandparents, nieces
and nephews.
The committee will consider and evaluate candidates submitted by the nominating
shareholder or group on the basis of the same criteria as those used to consider
and evaluate candidates submitted from other sources. The committee may take
into account a wide variety of factors in considering Director candidates,
including (but not limited to): (i) the candidate's knowledge in matters
relating to the investment company industry; (ii) any experience possessed by
the candidate as a director or senior officer of other public or private
companies; (iii) the candidate's educational background; (iv) the candidate's
reputation for high ethical standards and personal and professional integrity;
(v) any specific financial, technical or other expertise possessed by the
candidate, and the extent to which such expertise would complement the Board's
existing mix of skills and qualifications; (vi) the candidate's perceived
ability to contribute to the ongoing functions of the Board, including the
candidate's ability and commitment to attend meetings regularly, work
collaboratively with other members of the Board and carry out his or her duties
in the best interests of the Fund; (vii) the candidate's ability to qualify as
an independent director; and (viii) such other criteria as the committee
determines to be relevant in light of the existing composition of the Board and
any anticipated vacancies or other factors.
Compliance Committee. This committee supports the Fund's maintenance of a strong
compliance program by providing a forum for independent Board members to
consider compliance matters impacting the Fund or its key service providers;
developing and implementing, in coordination with the Fund's Chief Compliance
Officer (CCO), a process for the review and consideration of compliance reports
that are provided to the Board; and providing a designated forum for the Fund's
CCO to meet with independent Board members on a regular basis to discuss
compliance matters. This committee met 8 times during the year ended December
31, 2008, which includes, prior to the Acquisition of Seligman, 7 meetings by
the Fund's then existing Board of Directors, which performed functions similar
to the Compliance Committee, which met 1 time during the period after the
Acquisition of Seligman.
Contracts Committee. This committee reviews and oversees the contractual
relationships with service providers and receives and analyzes reports covering
the level and quality of services provided under contracts with the Fund. It
also advises the Board regarding actions taken on these contracts during the
annual review process. This committee met 8 times during the year ended December
31, 2008, which includes, prior to the Acquisition of Seligman, 7 meetings by
the Fund's then existing Board Operations Committee, which performed functions
similar to the Contracts Committee, which met 1 time during the period after the
Acquisition of Seligman.
Distribution Committee. This committee reviews and supports product development,
marketing, sales activity and practices related to the Fund, and reports to the
Board as appropriate. This committee met 8 times during the year ended December
31, 2008, which includes, prior to the Acquisition of Seligman, 7 meetings by
the Fund's then existing Board of Directors, which performed functions similar
to the Distribution Committee, which met 1 time during the period after the
Acquisition of Seligman.
Executive Committee. This committee acts for the Board between meetings of the
Board. This committee did not meet during the year ended December 31, 2008.
Investment Review Committee. This committee reviews and oversees the management
of the Fund's assets and considers investment management policies and
strategies; investment performance; risk management techniques; and securities
trading practices and reports areas of concern to the Board. This committee met
8 times during the year ended December 31, 2008, which includes, prior to the
Acquisition of Seligman, 7 meetings by the Fund's then existing Board of
Directors, which performed functions similar to the Investment Review Committee,
which met 1 time during the period after the Acquisition of Seligman.
Audit Committee. This committee oversees the accounting and financial reporting
processes of the Fund and internal controls over financial reporting and
oversees the quality and integrity of the Fund's financial statements and
independent audits as well as the Fund's compliance with legal and regulatory
requirements relating to the Fund's accounting and financial reporting, internal
controls over financial reporting and independent audits. The committee also
makes recommendations regarding the selection of the Fund's independent
registered public accounting firm and reviews and evaluates the qualifications,
independence and performance of such firm. This committee operates pursuant to a
written charter. This committee met 4 times during the year ended December 31,
2008, which includes
11
3 meetings by the audit committee as constituted prior to the Acquisition of
Seligman and 1 meeting by the Audit Committee as currently constituted.
PROCEDURES FOR COMMUNICATIONS TO THE BOARD OF DIRECTORS
The Board of Directors has adopted a process for shareholders to send
communications to the Board. To communicate with the Board of Directors or an
individual Director, a shareholder must send written communications to Board
Services Corporation, 901 Marquette Avenue South, Minneapolis, Minnesota 55402,
addressed to the Board of Directors of the Fund or the individual Director. All
shareholder communications received in accordance with this process will be
forwarded to the Board of Directors or the individual Director.
Beneficial Ownership of Shares
As of December 31, 2008, the Directors beneficially owned shares in the Fund and
the RiverSource Family of Funds (which includes the Seligman funds) as follows:
Aggregate Dollar
Range of
Shares Owned by
Director/Trustee
Dollar Range of Fund in the RiverSource
Name Shares Owned by Director Family of Funds (*)
---------------------- ------------------------- -------------------
INDEPENDENT BOARD MEMBERS
Kathleen Blatz None Over $100,000
Arne H. Carlson None Over $100,000
Pamela G. Carlton None $50,001-$100,000
Patricia M. Flynn None Over $100,000
Anne P. Jones None Over $100,000
Jeffrey Laikind None Over $100,000
Stephen R. Lewis, Jr. None Over $100,000
John F. Maher None Over $100,000
Catherine James Paglia None Over $100,000
Leroy C. Richie None Over $100,000
Alison Taunton-Rigby None Over $100,000
AFFILIATED BOARD MEMBERS
William F. Truscott None Over $100,000
* Total includes deferred compensation invested in share equivalents.
Compensation
The New Board Members became Directors of the Fund and substantially all of the
Seligman-branded funds effective November 7, 2008 at the completion of
RiverSource Investments' Acquisition of Seligman. For the year ended December
31, 2008, any compensation received by the New Board Members from the Fund (and
other Seligman-branded funds) would relate to the period of November 7, 2008
through December 31, 2008. Only Messrs. Maher and Richie were Directors of the
Fund (and other Seligman-branded funds) during the entire year ended December
31, 2008. Messrs. Maher and Richie became directors of the other funds in the
RiverSource Family of Funds on December 10, 2008 and November 12, 2008,
respectively. Total Directors' fees paid by the Fund to the current independent
Directors for the year ended December 31, 2008 were as follows (this amount does
not reflect fees paid to former directors who resigned in the fourth quarter of
2008):
12
Total compensation
Pension or from Fund and
Aggregate Retirement Benefits RiverSource Family
Compensation Accrued as Part of of Funds Paid
Name from Fund Fund Expenses to Directors (1)(2)
-------------------------- ------------ ------------------- -------------------
Kathleen Blatz $ 107 N/A $177,500
Arne H. Carlson 107 N/A 180,000
Pamela G. Carlton 98 N/A 165,000
Patricia M. Flynn (3) 54 N/A 167,500
Anne P. Jones 107 N/A 177,500
Jeffrey Laikind 98 N/A 165,000
Stephen R. Lewis, Jr. (3) 176 N/A 400,000
John F. Maher (4) 2,892 N/A 89,450
Catherine James Paglia (3) 11 N/A 170,000
Leroy C. Richie 3,100 N/A 116,366
Alison Taunton-Rigby 98 N/A 167,500
----------
(1) At December 31, 2008, the Directors had oversight responsibilities for 163
investment companies, including the Fund.
(2) Ms. Flynn, Mr. Lewis, Mr. Maher and Ms. Paglia elected to defer a portion
of the total compensation payable during the period in the amount of
$82,208, $60,000, $77,825 and $166,667, respectively.
The independent Board members determine the amount of compensation that they
receive, including the amount paid to the Chair of the Board. In determining
compensation for the independent Board members, the independent Board members
take into account a variety of factors including, among other things, their
collective significant work experience (e.g., in business and finance,
government or academia). The independent Board members also recognize that these
individuals' advice and counsel are in demand by other organizations, that these
individuals may reject other opportunities because the time demands of their
duties as independent Board members, and that they undertake significant legal
responsibilities. The independent Board members also consider the compensation
paid to independent board members of other mutual fund complexes of comparable
size. In determining the compensation paid to the Chair, the independent Board
members take into account, among other things, the Chair's significant
additional responsibilities (e.g., setting the agenda for Board meetings,
communicating or meeting regularly with the funds' Chief Compliance Officer,
Counsel to the independent Board members, and the funds' service providers)
which result in a significantly greater time commitment required of the Board
Chair. The Chair's compensation, therefore, has generally been set at a level
between 2.5 and 3 times the level of compensation paid to other independent
Board members.
The independent Board members are paid an annual retainer of $95,000. Committee
and sub-committee Chairs each receive an additional annual retainer of $5,000.
In addition, independent Board members are paid the following fees for attending
Board and committee meetings: $5,000 per day of in-person Board meetings and
$2,500 per day of in-person committee or sub-committee meetings (if such
meetings are not held on the same day as a Board meeting). Independent Board
members are not paid for special meetings conducted by telephone. The Board's
Chair will receive total annual cash compensation of $400,000. The fees payable
to the Chairman as well as the other fees described above that are payable to
the other independent directors are the aggregate director/trustee fees paid by
all of the funds (other than any fund-of-funds) in the RiverSource Family of
Funds, including the Fund. These fees are accrued monthly based upon the
relative net assets of these funds.
The independent Board members may elect to defer payment of up to 100% of the
compensation they receive in accordance with a Deferred Compensation Plan (the
"Deferred Plan"). Under the Deferred Plan, a Board member may elect to have his
or her deferred compensation treated as if they had been invested in shares of
one or more RiverSource funds, RiverSource Partners funds, Threadneedle funds
and, as available, the Seligman funds, and the amount paid to the Board member
under the Deferred Plan will be determined based on the performance of such
investments. Distributions may be taken in a lump sum or over a period of years.
The Deferred Plan will remain unfunded for federal income tax purposes under the
Internal Revenue Code of 1986, as amended. It is anticipated that deferral of
Board member compensation in accordance with the Deferred Plan will have, at
most, a negligible impact on Fund assets and liabilities.
13
Code of Ethics
The funds in the RiverSource Family of Funds (which includes the Seligman
funds), RiverSource Investments (the investment manager for the funds) and the
distributor have each adopted a Code of Ethics (collectively, the "Codes") and
related procedures reasonably designed to prevent violations of Rule 204A-1
under the Investment Advisers Act of 1940 and Rule 17j-1 under the 1940 Act. The
Codes contain provisions reasonably necessary to prevent a fund's access persons
from engaging in any conduct prohibited by paragraph (b) of Rule 17j-1, which
indicates that it is unlawful for any affiliated person of or principal
underwriter for a fund, or any affiliated person of an investment adviser of or
principal underwriter for a fund, in connection with the purchase or sale,
directly or indirectly, by the person of a security held or to be acquired by a
fund (i) to employ any device, scheme or artifice to defraud a fund; (ii) to
make any untrue statement of a material fact to a fund or omit to state a
material fact necessary in order to make the statements made to a fund, in light
of the circumstances under which they are made, not misleading; (iii) to engage
in any act, practice or course of business that operates or would operate as a
fraud or deceit on a fund; or (iv) to engage in any manipulative practice with
respect to a fund. The Codes prohibit affiliated personnel from engaging in
personal investment activities that compete with or attempt to take advantage of
planned portfolio transactions for the fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons
As of April 2, 2009, there was no person or persons who controlled the Fund,
either through a significant ownership of shares or any other means of control.
Principal Holders
As of April 2, 2009, the following principal holders owned 5% or more of the
then outstanding shares of capital stock of a Class of shares of the Fund:
Percentage
of Total
Name and Address Class Shares Held
--------------------------------------------------------------- ----- -----------
Seligman Advisors, Inc., Attn: Controller, 100 Park Avenue, New A 13.43%
York, New York 10017
State Street Bank & Trust Company FBO North Carolina College I 23.03%
Savings Program-NCBI, 105 Rosemont Avenue, Westwood, MA
02090
State Street Bank & Trust Company FBO North Carolina College I 20.46%
Savings Program-NCBI, 105 Rosemont Avenue, Westwood, MA
02090
State Street Bank & Trust Company FBO North Carolina College I 14.91%
Savings Program-NCBI, 105 Rosemont Avenue, Westwood, MA
02090
Patricks Plain, LLC, Easton, MD 21601 I 9.77%
Fisher Foundation, Easton, MD 21601 I 9.77%
Patterson & Co. FBO Seligman Data Corp. 401K Thrift Plan, I 8.29%
1525 West Wt. Harris Blvd., Charlotte, NC 28288
Patterson & Co. FBO J. & W. Seligman & Co. Matched 6.77%
Accumulation Plan, 1525 West Wt. Harris Blvd., Charlotte, NC
28288
State Street Bank & Trust Company FBO North Carolina College I 5.26%
Savings Program-NCBF, 105 Rosemont Avenue, Westwood, MA
02090
14
Management Ownership
As of April 2, 2009, Directors and officers of the Fund as a group owned less
than 1% of the Fund's Class A shares of the then outstanding shares of capital
stock of the Fund. As of the same date, Directors and officers of the Fund did
not own any Class B shares, Class C shares, Class I shares or Class R shares of
the then outstanding shares of capital stock of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Manager
With the completion of the Acquisition of Seligman by RiverSource Investments
and with shareholders having previously approved (at a special meeting held on
November 3, 2008) the Management Agreement between the Fund and RiverSource
Investments, RiverSource Investments is the new investment manager of the Fund
effective November 7, 2008.
RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis, Minnesota
55474, is also the investment manager of the other funds in the RiverSource
Family of Funds and is a wholly-owned subsidiary of 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 the RiverSource Family of 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.
Under the Management Agreement, dated November 7, 2008, subject to the control
of the Board of Directors, RiverSource Investments manages the investment of the
assets of the Fund, including making purchases and sales of portfolio securities
consistent with the Fund's investment objectives and policies.
Effective November 7, 2008, the Fund pays RiverSource Investments a fee for
managing its assets (Seligman no longer receives a fee effective November 7,
2008). The fee structure under which the Fund paid management fees to Seligman
prior to the Acquisition has been eliminated. Under the Management Agreement
with RiverSource Investments, the management fee rate is 0.40% of the Fund's
average daily net assets. For the years ended December 31, 2008, 2007 and 2006,
the Fund paid Seligman (the Fund's investment manager prior to November 7, 2008)
and, since the Acquisition, RiverSource Investments $893,335, $776,197 and
$751,739, respectively. The amounts paid to Seligman prior to the Acquisition
were equal to 0.42%, 0.41% and 0.41% respectively, per annum of the Fund's
average daily net assets. The amounts paid to RiverSource Investments on and
after the Acquisition were equal to 0.40% of the Fund's average daily net
assets. Seligman (prior to the Acquisition) and RiverSource Investments and its
affiliates (on and after the Acquisition), at their discretion, reimbursed
certain class-specific expenses of certain share classes to allow those classes
to maintain certain dividend rates. Absent such expense reimbursements, the
dividend rates in respect of such share classes would have been lower or
negative. As of the date of this SAI, Ameriprise Financial provides
administrative services to the Fund(s) at no cost and RiverSource Investments
provides investment management services for a fee. Effective in the second half
of 2009, Ameriprise Financial will charge the Fund a fee for its services (which
would be reflected in the Fund's "Other Expenses" in the fee table of the
prospectus). There will be no net impact to the fees that the Fund(s) will pay
because the administrative fee will be fully offset by a reduction in the
investment management fees charged to the Fund(s). Please see the Appendices C
and D in this SAI for the schedule of investment management fees and
administrative fees effective in the second half of 2009.
The Management Agreement provides that it became effective on November 7, 2008
and shall continue in full force and effect until November 7, 2010, and from
year to year thereafter if such continuance is approved in the manner required
by the 1940 Act (i.e., by a vote of a majority of the Board of Directors or of
the outstanding voting securities of the Fund and by a vote of a majority of
Directors who are not parties to the Management Agreement or interested persons
of any such party). The Management Agreement may be terminated by either the
Fund or RiverSource Investments at any time by giving the other party 60 days'
written notice of such intention to terminate, provided that any termination
shall be made without the payment of any penalty, and provided further that
termination may be effected either by the Board or by a vote of the majority of
the outstanding voting shares of the Fund. The Management Agreement will
terminate automatically in the event of its assignment, as such term is defined
in the 1940 Act.
15
Except for bad faith, intentional misconduct or negligence in regard to the
performance of its duties under the Management Agreement, neither RiverSource
Investments, nor any of its respective directors, officers, partners,
principals, employees, or agents will be liable for any acts or omissions or for
any loss suffered by the Fund or its shareholders or creditors. Each of
RiverSource Investments, and its respective directors, officers, partners,
principals, employees and agents, will be entitled to rely, and will be
protected from liability in reasonably relying, upon any information or
instructions furnished to it (or any of them as individuals) by the Fund or its
agents which is believed in good faith to be accurate and reliable. RiverSource
Investments does not warrant any rate of return, market value or performance of
any assets in the Fund. Notwithstanding the foregoing, the federal securities
laws impose liabilities under certain circumstances on persons who act in good
faith and, therefore, the Fund does not waive any right which it may have under
such laws or regulations.
Principal Underwriter
RiverSource Fund Distributors, Inc., formerly Seligman Advisors, Inc., an
affiliate of RiverSource Investments, located at 50611 Ameriprise Financial
Center, Minneapolis, Minnesota 55402, acts as general distributor of the shares
of the Fund, as well as the other funds in the RiverSource Family of Funds. The
distributor is an "affiliated person" (as defined in the 1940 Act) of
RiverSource Investments, which is itself an affiliated person of the Fund. Those
individuals identified above under "Management Information" as directors or
officers of both the Fund and the distributor are affiliated persons of both
entities.
Administrative Services
Under an Administrative Services Agreement, Ameriprise Financial provides the
Fund(s) with administration and accounting services. As of the date of this SAI,
Ameriprise Financial provides administrative services to the Fund(s) at no cost
and RiverSource Investments provides investment management services for a fee.
Effective in the second half of 2009, Ameriprise Financial will charge the Fund
a fee for its services (which would be reflected in the Fund's "Other Expenses"
in the fee table of the prospectus). There will be no net impact to the fees
that the Fund(s) will pay because the administrative fee will be fully offset by
a reduction in the investment management fees charged to the Fund. Please see
the Appendices C and D in this SAI for the schedule of investment management
fees and administrative fees effective in the second half of 2009.
Third parties with which Ameriprise Financial contracts to provide services for
the fund or its shareholders may pay a fee to Ameriprise Financial to help
defray the cost of providing administrative and accounting services. The amount
of any such fee is negotiated separately with each service provider and does not
constitute compensation for investment advisory, distribution, or other
services. Payment of any such fee neither increases nor reduces fees or expenses
paid by shareholders of the fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of
RiverSource Investments, regularly advise the Fund or RiverSource Investments
with respect to the Fund's investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on Class A shares of the funds as set forth below:
INITIAL SALES CHARGE(a) FOR CLASS A SHARES
For equity funds and funds-of-funds (equity)
MAXIMUM
AS A % OF AS A % OF REALLOWANCE
PURCHASE NET AMOUNT AS A % OF
TOTAL MARKET VALUE PRICE(b) INVESTED 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(c),(d)
16
For fixed income funds except those listed below and funds-of-funds (fixed
income)
MAXIMUM
REALLOWANCE
AS A % OF AS A % OF AS A % OF
TOTAL MARKET VALUE PURCHASE PRICE(b) NET AMOUNT INVESTED PURCHASE PRICE
------------------ ----------------- ------------------- --------------
Up to $49,999 4.75% 4.99% 4.00%
$50,000--$99,999 4.25 4.44 3.50
$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(c),(d)
For RiverSource Absolute Return Currency and Income Fund, RiverSource Floating
Rate Fund, RiverSource Inflation Protected Securities Fund, RiverSource
Intermediate Tax- Exempt Fund, RiverSource Limited Duration Bond Fund and
RiverSource Short Duration U.S. Government Fund
MAXIMUM
REALLOWANCE
AS A % OF AS A % OF AS A % OF
TOTAL MARKET VALUE PURCHASE PRICE(b) NET AMOUNT INVESTED 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(c),(d)
----------
(a) 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.
(b) Purchase price includes the sales charge.
(c) 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 intermediary the following out of its own resources: a sales
commission of up to 1.00% for a sale of $1,000,000 to $3,999,999; a sales
commission up to 0.50% for a sale of $4,000,000 to $49,999,999; and a sales
commission up to 0.25% for a sale of $50,000,000 or more.
(d) For certain eligible employee benefit plans defined under section 401(a),
401(k), 457 and 403(b) which meet eligibility rules for the waiver of
applicable sales charges, the distributor may pay the following out of its
own resources: a sales commission of 1.00% for a sale of $1 to $3,999,999
received in eligible employee benefit plans; a sales commission up to 0.50%
for a sale of $4,000,000 to $49,999,999; and a sales commission up to 0.25%
for a sale of $50,000,000 or more. See "Initial Sales Charge -- Waivers of
the sales charge for Class A shares" for employee benefit plan eligibility
rules.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan ("12b-1 Plan") in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the Fund may pay to the distributor an administration,
shareholder services and distribution fee in respect of the Fund's shares, other
than in respect of the Fund's Class I shares. Payments under the 12b-1 Plan may
include, but are not limited to: (1) compensation to securities dealers and
other organizations ("Service Organizations") for providing distribution
assistance with respect to assets invested in the Fund; (2) compensation to
Service Organizations for providing administration, accounting and other
shareholder services with respect to Fund shareholders; and (3) otherwise
promoting the sale of shares of the Fund, including paying for the preparation
of advertising and sales literature and the printing and distribution of such
promotional materials and Prospectuses to prospective investors and defraying
the distributor's costs incurred in connection with its marketing efforts with
respect to shares of the Fund. RiverSource Investments, in its sole discretion,
may also make similar payments to the distributor from its own resources, which
may include the management fee that RiverSource Investments receives from the
Fund. Payments made by the Fund under the 12b-1 Plan are intended to be used to
encourage sales of shares of the Fund, as well as to discourage redemptions.
Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Directors. Expenses of distribution activities that
benefit both the Fund and other funds will be allocated among the applicable
funds based on relative gross sales during the quarter in which such expenses
are incurred, in accordance with a methodology approved by the Board of
Directors of the Fund.
17
Class A
Under the 12b-1 Plan, the Fund, with respect to Class A shares, is authorized to
pay monthly to the distributor a service fee at an annual rate of up to 0.25% of
the average daily net asset value of the Class A shares. Effective on or about
June 13, 2009, the Fund's Class A shares will pay a 0.10% 12b-1 fee. These fees
will be used by the distributor exclusively to make payments to Service
Organizations which have entered into agreements with the distributor. Such
Service Organizations will receive from the distributor a continuing fee of up
to 0.25% (currently 0.10%) on an annual basis, payable quarterly, of the average
daily net assets of Class A shares attributable to the particular Service
Organization for providing personal service and/or maintenance of shareholder
accounts. The fee payable to Service Organizations from time to time shall,
within such limits, be determined by the Directors of the Fund. The Fund is not
obligated to pay the distributor for any such costs it incurs in excess of the
fee described above. No expense incurred in one year by the distributor with
respect to Class A shares of the Fund may be paid from Class A 12b-1 fees
received from the Fund in any other year. If the Fund's 12b-1 Plan is terminated
in respect of Class A shares, no amounts (other than amounts accrued but not yet
paid) would be owed by the Fund to the distributor with respect to Class A
shares. The Fund did not make payments under the 12b-1 Plan with respect to
Class A shares during the year ended December 31, 2008.
Class B
Under the 12b-1 Plan, the Fund, with respect to Class B shares, is authorized to
pay monthly a 12b-1 fee at an annual rate of up to 1% of the average daily net
asset value of the Class B shares. This fee is comprised of (1) a distribution
fee equal to 0.75% per annum, substantially all of which is paid directly to one
or more third parties that have purchased the distributor's rights to this fee
(the "Purchasers") to compensate them for having funded, at the time of sale of
Class B shares (i) a 4% sales commission to Service Organizations and (ii) prior
to August 1, 2004, a payment of up to 0.35% of sales to the distributor to help
defray its costs of distributing Class B shares; and (2) a service fee of up to
0.25% per annum which is paid to the distributor. A small portion of the
distribution fee is paid to the distributor in connection with sales of Class B
shares for which no commissions are paid; the distributor may pay the entire
12b-1 fee to Service Organizations who have not received any sales commission
for the sale of Class B shares. The service fee is used by the distributor
exclusively to make payments to Service Organizations which have entered into
agreements with the distributor. Such Service Organizations receive from the
distributor a continuing service fee of up to 0.25% on an annual basis, payable
quarterly, of the average daily net assets of Class B shares attributable to the
particular Service Organization for providing personal service and/or
maintenance of shareholder accounts. The amounts expended by the distributor or
the Purchasers in any one year upon the initial purchase of Class B shares of
the Fund may exceed the 12b-1 fees paid by the Fund in that year. The Fund's
12b-1 Plan permits expenses incurred in respect of Class B shares in one year to
be paid from Class B 12b-1 fees received from the Fund in any other year;
however, in any year the Fund is not obligated to pay any 12b-1 fees in excess
of the fees described above. The distributor and the Purchasers are not
reimbursed for expenses which exceed such fees. If the Fund's 12b-1 Plan is
terminated in respect of Class B shares, no amounts (other than amounts accrued
but not yet paid) would be owed by that Fund to the distributor or the
Purchasers with respect to Class B shares. The total amount paid by the Fund in
respect of Class B shares for the year ended December 31, 2008 was $73,616,
equivalent to 1% per annum of the Class B shares' average daily net assets.
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, is authorized to
pay monthly to the distributor a 12b-1 fee at an annual rate of up to 1% of the
average daily net asset value of the Class C shares. This fee is used by the
distributor as follows: During the first year following the sale of Class C
shares, a distribution fee of 0.75% of the average daily net assets attributable
to such Class C shares is used, along with any CDSC proceeds, to (1) reimburse
the distributor for its (A) payment at the time of sale of Class C shares of a
0.75% sales commission to Service Organizations or (B) ongoing payment of 0.75%
of the average daily net assets attributable to such Class C shares to Service
Organizations who elect not to receive a time-of-sale payment and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
the distributor. In addition, during the first year following the sale of Class
C shares, a service fee of up to 0.25% of the average daily net assets
attributable to such Class C shares is used to reimburse the distributor for its
prepayment to Service Organizations at the time of sale of Class C shares of a
service fee of 0.25% of the net asset value of the Class C shares sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale) and for its ongoing payment of a
service fee of 0.25% of the average daily net assets attributable to such Class
C shares to those Service Organizations who elect not to receive a time-of-sale
payment. The payment of service fees to the distributor is limited to amounts
the distributor actually paid to Service
18
Organizations as service fees at either the time of sale or the ongoing services
fees paid to Service Organizations who elect not to receive such service fees at
the time of sale. After the initial one-year period following a sale of Class C
shares, the 12b-1 fee attributable to such Class C shares is paid to Service
Organizations for providing continuing shareholder services and distribution
assistance in respect of the Fund. The total amount paid by the Fund in respect
of Class C shares for the year ended December 31, 2008 was $145,419, equivalent
to 1% per annum of the Class C shares' average daily net assets.
The amounts expended by the distributor in any one year with respect to Class C
shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year. The
Fund's 12b-1 Plan permits expenses incurred by the distributor in respect of
Class C shares in one year to be paid from Class C 12b-1 fees in any other year;
however, in any year the Fund is not obligated to pay any 12b-1 fees in excess
of the fees described above.
As of December 31, 2008, the distributor incurred $3,299,645 of expenses in
respect of the Fund's Class C shares and Class D shares (which converted to
Class C shares) that were not reimbursed from the amount received from the
Fund's 12b-1 Plan. This amount is equal to 19.91% of the net assets of Class C
shares at December 31, 2008.
If the Fund's 12b-1 Plan is terminated in respect of Class C shares of the Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by the
Fund to the distributor with respect to Class C shares.
Class R
Under the 12b-1 Plan, the Fund, with respect to Class R shares, is authorized to
pay monthly to the distributor a 12b-1 fee at an annual rate of up to 0.50% of
the average daily net asset value of the Class R shares. This 12b-1 fee is
comprised of (1) a distribution fee equal to 0.25% of the average daily net
assets attributable to the Class R shares and (2) a service fee of up to 0.25%
of the average daily net asset value of the Class R shares. Such service fee
payments are not currently being made and will be made only upon approval of the
Fund's Board of Directors. The distributor does not plan to pay any Rule 12b-1
fees to service organizations in respect of Class R Shares of the Fund. However,
the distributor will charge the Fund the distribution fee of 0.25% of the Class
R Shares in order to support the distribution services provided by the
distributor, including those expenses borne by the distributor in connection
with any front-end fees paid by the distributor to service organizations and
other expenses of distribution. The total amount paid by the Fund to the
distributor in respect of Class R shares for the year ended December 31, 2008
was $3,299, equivalent to 0.25% per annum of the Class R shares' average daily
net assets.
The amounts expended by the distributor in any one year with respect to Class R
shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year. The
Fund's 12b-1 Plan permits expenses incurred by the distributor in respect of
Class R shares in one fiscal year to be paid from Class R 12b-1 fees in any
other fiscal year; however, in any fiscal year the Fund is not obligated to pay
any 12b-1 fees in excess of the fees described above.
As of December 31, 2008, the distributor incurred $287 of expenses in respect of
the Fund's Class R shares that were not reimbursed from the amount received from
the Fund's 12b-1 Plan. This amount is equal to 0.02% of the net assets of Class
R shares at December 31, 2008.
Payments made by the Fund under the 12b-1 Plan for the year ended December 31,
2008, were spent on the following activities in the following amounts:
Class A Class B Class C** Class R
------- ------- --------- -------
Compensation to underwriters $-0- $ 218 $ -0- $3,012
Compensation to broker/dealers -0- 18,289 145,419 287
Other Compensation* -0- 55,109 -0- -0-
* Payment is made to the Purchasers to compensate them for having funded, at
the time of sale, payments to broker/dealers and underwriters.
** Includes payments with respect to Class C shares and Class D shares, which
converted to Class C shares on May 16, 2008.
The 12b-1 Plan was initially approved on July 16, 1992 by the Board of
Directors, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Fund and who have no direct or
indirect financial interest in the operation of the 12b-1 Plan or in any
agreement related to the 12b-1 Plan ("Qualified Directors") and was approved by
shareholders of the Fund at a Special Meeting of the Shareholders held on
19
November 23, 1992. Although the 12b-1 Plan became effective in respect of the
Class A shares on January 1, 1993, Seligman Advisors, Inc. elected to waive the
fee through April 30, 2000. Effective on or about June 13, 2009, Class A shares
will pay a 0.10% 12b-1 fee. The 12b-1 Plan was approved in respect of the Class
B shares on March 21, 1996 by the Board of Directors of the Fund, including a
majority of the Qualified Directors, and became effective in respect of the
Class B shares on April 22, 1996. The 12b-1 Plan was approved in respect of the
Class D shares (which were renamed as new Class C shares effective May 16, 2008)
on March 18, 1993 by the Directors; including a majority of the Qualified
Directors, and became effective in respect of the Class D shares (effective May
16, 2008, renamed as new Class C shares) on May 1, 1993. The 12b-1 Plan was
approved in respect of Class R shares on March 20, 2003 by the Directors,
including a majority of the Qualified Directors, and became effective in respect
of the Class R shares on April 30, 2003. The 12b-1 Plan will continue in effect
until December 31 of each year so long as such continuance is approved annually
by a majority vote of both the Directors of the Fund and the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. The 12b-1 Plan may not be amended to increase materially the amounts
payable to Service Organizations with respect to a class without the approval of
a majority of the outstanding voting securities of the class. If the amount
payable in respect of Class A shares under the 12b-1 Plan is proposed to be
increased materially, the Fund will either (1) permit holders of Class B shares
to vote as a separate class on the proposed increase or (2) establish a new
class of shares subject to the same payment under the 12b-1 Plan as existing
Class A shares, in which case the Class B shares will thereafter convert into
the new class instead of into Class A shares. No material amendment to the 12b-1
Plan may be made except by vote of a majority of both the Directors and the
Qualified Directors.
The 12b-1 Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
For the year ended December 31, 2008, RiverSource Services, Inc., formerly
Seligman Services, Inc., acted as a broker/dealer of record for shareholder
accounts that did not have a designated financial advisor. As such, it received
compensation pursuant to the Fund's 12b-1 Plan for providing personal services
and account maintenance to such accounts. For the year ended December 31, 2008,
it received service fees pursuant to the Fund's 12b-1 Plan of $4,369.
Other Service Providers
BOARD SERVICES CORPORATION
The funds have an agreement with Board Services Corporation (Board Services)
located at 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402. This
agreement sets forth the terms of Board Services' responsibility to serve as an
agent of the funds for purposes of administering the payment of compensation to
each in dependent Board member, to provide office space for use by the funds and
their boards, and to provide any other services to the boards or the independent
members, as may be reasonably requested.
RIVERSOURCE SERVICE CORPORATION
Effective on or about June 13, 2009, RiverSource Service Corporation ("RSC")
will serve as the Seligman funds' transfer, shareholder service and dividend
paying agent (RSC already serves as transfer, shareholder service and dividend
paying agent for the other funds in the RiverSource Family of Funds). RSC
provides or compensates others to provide such services to the RiverSource
Family of Funds.
As of the date hereof, SDC is the transfer, shareholder service and
dividend-paying agent for the Fund through on or about June 12, 2009. SDC
charges the Fund at cost for its services. These costs include amounts paid by
SDC to financial intermediaries and other third parties who provide sub-transfer
agency services. SDC's address is 100 Park Avenue, New York, New York 10017.
SECURITIES TRANSACTIONS
Except as otherwise noted, the description of policies and procedures in this
section also applies to any fund subadviser. Subject to policies set by the
Board, as well as the terms of the investment management agreements, the
investment manager or subadviser is authorized to determine, consistent with a
fund's investment objective and policies, which securities will be purchased,
held, or sold. In determining where the buy and sell orders are to be placed,
the investment manager has been directed to use its best efforts to obtain the
best available price and the most favorable execution except where otherwise
authorized by the Board.
20
Each fund, the investment manager, any subadviser and RiverSource Fund
Distributors, Inc. (principal underwriter and distributor of the RiverSource
Family of Funds) has a strict Code of Ethics that prohibits affiliated personnel
from engaging in personal investment activities that compete with or attempt to
take advantage of planned portfolio transactions for the funds.
A fund's securities may be traded on an agency basis with brokers or dealers or
on a principal basis with dealers. In an agency trade, the broker-dealer
generally is paid a commission. In a principal trade, the investment manager
will trade directly with the issuer or with a dealer who buys or sells for its
own account, rather than acting on behalf of another client. The investment
manager may pay the dealer a commission or instead, the dealer's profit, if any,
is the difference, or spread, between the dealer's purchase and sale price for
the security.
BROKER-DEALER SELECTION
In selecting broker-dealers to execute transactions, the investment manager and
each subadviser will consider from among such factors as the ability to minimize
trading costs, trading expertise, infrastructure, ability to provide information
or services, financial condition, confidentiality, competitiveness of commission
rates, evaluations of execution quality, promptness of execution, past history,
ability to prospect for and find liquidity, difficulty of trade, security's
trading characteristics, size of order, liquidity of market, block trading
capabilities, quality of settlement, specialized expertise, overall
responsiveness, willingness to commit capital and research services provided.
The Board has adopted a policy prohibiting the investment manager, or any
subadviser, from considering sales of shares of the funds as a factor in the
selection of broker-dealers through which to execute securities transactions.
On a periodic basis, the investment manager makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions, including
review by an independent third-party evaluator. The review evaluates execution,
operational efficiency, and research services.
COMMISSION DOLLARS
Broker-dealers typically provide a bundle of services including research and
execution of transactions. The research provided can be either proprietary
(created and provided by the broker-dealer) or third party (created by a third
party but provided by the broker-dealer). Consistent with the interests of the
fund, the investment manager and each subadviser may use broker-dealers who
provide both types of research products and services in exchange for
commissions, known as "soft dollars," generated by transactions in fund
accounts.
The receipt of research and brokerage products and services is used by the
investment manager, and by each subadviser, to the extent it engages in such
transactions, to supplement its own research and analysis activities, by
receiving the views and information of individuals and research staffs of other
securities firms, and by gaining access to specialized expertise on individual
companies, industries, areas of the economy and market factors. Research and
brokerage products and services may include reports on the economy, industries,
sectors and individual companies or issuers; statistical information; accounting
and tax law interpretations; political analyses; reports on legal developments
affecting portfolio securities; information on technical market actions; credit
analyses; on-line quotation systems; risk measurement; analyses of corporate
responsibility issues; on-line news services; and financial and market database
services. Research services may be used by the investment manager in providing
advice to multiple RiverSource accounts, including the funds (or by any
subadviser to any other client of the subadviser) even though it is not possible
to relate the benefits to any particular account or fund.
On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
Board has adopted a policy authorizing the investment manager to do so, to the
extent authorized by law, if the investment manager or subadviser determines, in
good faith, that such commission is reasonable in relation to the value of the
brokerage or research services provided by a broker or dealer, viewed either in
the light of that transaction or the investment manager's or subadviser's
overall responsibilities with respect to a fund and the other funds or accounts
for which it acts as investment manager (or by any subadviser to any other
client of that subadviser).
As a result of these arrangements, some portfolio transactions may not be
effected at the lowest commission, but overall execution may be better. The
investment manager and each subadviser have represented that under its
procedures the amount of commission paid will be reasonable and competitive in
relation to the value of the brokerage services and research products and
services provided.
21
The investment manager or a subadviser may use step-out transactions. A
"step-out" is an arrangement in which the investment manager or subadviser
executes a trade through one broker-dealer but instructs that broker-dealer to
step-out all or a part of the trade to another broker-dealer. The second
broker-dealer will clear and settle, and receive commissions for, the
stepped-out portion. The investment manager or subadviser may receive research
products and services in connection with step-out transactions.
Use of fund commissions may create potential conflicts of interest between the
investment manager or subadviser and a fund.
However, the investment manager and each subadviser has policies and procedures
in place intended to mitigate these conflicts and ensure that the use of fund
commissions falls within the "safe harbor" of Section 28(e) of the Securities
Exchange Act of 1934. Some products and services may be used for both investment
decision-making and non-investment decision-making purposes ("mixed use" items).
The investment manager and each subadviser, to the extent it has mixed use
items, has procedures in place to assure that fund commissions pay only for the
investment decision-making portion of a mixed-use item.
TRADE AGGREGATION AND ALLOCATION
Generally, orders are processed and executed in the order received. When a fund
buys or sells the same security as another portfolio, fund, or account, the
investment manager or subadviser carries out the purchase or sale pursuant to
policies and procedures designed in such a way believed to be fair to the fund.
Purchase and sale orders may be combined or aggregated for more than one account
if it is believed it would be consistent with best execution. Aggregation may
reduce commission costs or market impact on a per-share and per-dollar basis,
although aggregation may have the opposite effect. There may be times when not
enough securities are received to fill an aggregated order, including in an
initial public offering, involving multiple accounts. In that event, the
investment manager and each subadviser has policies and procedures designed in
such a way believed to result in a fair allocation among accounts, including a
fund.
From time to time, different portfolio managers with the investment manager may
make differing investment decisions related to the same security. However, with
certain exceptions for funds managed using strictly quantitative methods, a
portfolio manager or portfolio management team may not sell a security short if
the security is owned in another portfolio managed by that portfolio manager or
portfolio management team. On occasion, a fund may purchase and sell a security
simultaneously in order to profit from short-term price disparities.
The investment manager has portfolio management teams in its Minneapolis and Los
Angeles offices that may share research information regarding leveraged loans.
The investment manager operates separate and independent trading desks in these
locations for the purpose of purchasing and selling leveraged loans. As a
result, the investment manager does not aggregate orders in leveraged loans
across portfolio management teams. For example, funds and other client accounts
being managed by these portfolio management teams may purchase and sell the same
leveraged loan in the secondary market on the same day at different times and at
different prices. There is also the potential for a particular account or group
of accounts, including a fund, to forego an opportunity or to receive a
different allocation (either larger or smaller) than might otherwise be obtained
if the investment manager were to aggregate trades in leveraged loans across the
portfolio management teams. Although the investment manager does not aggregate
orders in leveraged loans across its portfolio management teams in Minneapolis
and Los Angeles, it operates in this structure subject to its duty to seek best
execution.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE INVESTMENT MANAGER
Affiliates of the investment manager may engage in brokerage and other
securities transactions on behalf of a fund according to procedures adopted by
the Board and to the extent consistent with applicable provisions of the federal
securities laws. Subject to approval by the Board, the same conditions apply to
transactions with broker-dealer affiliates of any subadviser. The investment
manager will use an affiliate only if (i) the investment manager determines that
the fund will receive prices and executions at least as favorable as those
offered by qualified independent brokers performing similar brokerage and other
services for the fund and (ii) the affiliate charges the fund commission rates
consistent with those the affiliate charges comparable unaffiliated customers in
similar transactions and if such use is consistent with terms of the investment
management services agreement.
Commissions
The Fund will not incur commissions in connection with the purchase and sale of
portfolio securities. Because fixed-income securities generally trade on a net
basis, they normally do not incur brokerage commissions.
22
Regular Broker-Dealers
During the year ended December 31, 2008, the Fund did not acquire securities of
its regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
of their parents.
CAPITAL STOCK AND OTHER SECURITIES
Capital Stock
The Fund is authorized to issue 1,400,000,000 shares of capital stock, each with
a par value of $0.01 per share, divided into five classes, designated Class A
common stock, Class B common stock, Class C common stock, Class I common stock
and Class R common stock. Each share of the Fund's classes of common stock is
equal as to earnings, assets, and voting privileges, except that each class
bears its own separate distribution and, potentially, certain other class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the 1940 Act or applicable state law.
The Fund has adopted a Plan ("Multiclass Plan") pursuant to Rule 18f-3 under the
1940 Act permitting the issuance and sale of multiple classes of common stock.
In accordance with the Fund's Articles of Incorporation, the Board of Directors
may authorize the creation of additional classes of common stock with such
characteristics as are permitted by the Multiclass Plan and Rule 18f-3. The 1940
Act requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. All shares have noncumulative voting rights for the election of
directors. Each outstanding share is fully paid and non-assessable, and each is
freely transferable. There are no liquidation, conversion, or preemptive rights.
The Board of Directors is authorized to classify or reclassify and issue any
unissued common stock of the Fund into any number of other classes without
further action by shareholders.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
by the provisions of the 1940 Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment company such as
the Fund shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding shares of each class affected by
such matter. Rule 18f-2 further provides that a class shall be deemed to be
affected by a matter unless it is clear that the interests of each class in the
matter are substantially identical or that the matter does not significantly
affect any interest of such class. However, the Rule exempts the selection of
independent auditors, the approval of principal distributing contracts and the
election of directors from the separate voting requirements of the Rule.
Other Securities
The Fund has no authorized securities other than common stock.
INVESTING IN A FUND
Effective on or about June 13, 2009, the Seligman funds' Class R shares are
renamed as Class R2 shares and the Seligman funds' Class I shares are renamed as
Class R5 shares. All references in this section "Investing in a Fund" reflect
the renamed shares classes (i.e., Seligman fund Class I shares in existence on
or about June 12, 2009 are reflected below as Class R5 shares, and the Class I
shares reflected below are a new share class for the Seligman funds).
SALES CHARGE
FOR FUNDS OTHER THAN MONEY MARKET FUNDS:
Investors should understand that the purpose and function of the initial sales
charge and distribution fee for Class A shares is the same as the purpose and
function of the contingent deferred sales charge ("CDSC") and distribution fee
for Class B and Class C shares. The sales charges and distribution fees
applicable to each class pay for the distribution of shares of a fund.
Shares of a fund are sold at the public offering price. The public offering
price is the NAV of one share adjusted for the sales charge for Class A. For
Class B, Class C, Class D, Class E, Class I, Class R2, Class R3, Class R4, Class
R5, Class W and Class Y there is no initial sales charge so the public offering
price is the same as the NAV.
23
CLASS A - CALCULATION OF THE SALES CHARGE
Sales charges are determined as shown in the following tables. The first table
is organized by investment category.
CLASS A INITIAL SALES CHARGE
For all funds EXCEPT RiverSource Absolute Return Currency and Income Fund,
RiverSource Floating Rate Fund, RiverSource Inflation Protected Securities Fund,
RiverSource Intermediate Tax-Exempt Fund, RiverSource Limited Duration Bond Fund
and RiverSource Short Duration U.S. Government Fund:
FUND-OF FUNDS - FIXED INCOME, STATE TAX-
EXEMPT FIXED INCOME, TAXABLE FIXED INCOME,
BALANCED, EQUITY, FUND-OF-FUNDS - EQUITY TAX-EXEMPT FIXED INCOME
---------------------------------------- ------------------------------------------
FUND CATEGORY SALES CHARGE (a) AS A PERCENTAGE OF:
-------------------------- -------------------------------------------------------------------------------------
PUBLIC OFFERING PUBLIC OFFERING
TOTAL MARKET VALUE PRICE (b) NET AMOUNT INVESTED PRICE (b) NET AMOUNT INVESTED
-------------------------- ----------------- ------------------- --------------- -------------------
Up to $49,999 5.75% 6.10% 4.75% 4.99%
$50,000 - $99,999 4.75% 4.99% 4.25% 4.44%
$100,000 - $249,999 3.50% 3.63% 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56% 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04% 2.00% 2.04%
$1,000,000 or more(c), (d) 0.00% 0.00% 0.00% 0.00%
For RiverSource Absolute Return Currency and Income Fund, RiverSource Floating
Rate Fund, RiverSource Inflation Protected Securities Fund, RiverSource
Intermediate Tax-Exempt Fund, RiverSource Limited Duration Bond Fund and
RiverSource Short Duration U.S. Government Fund:
SALES CHARGE (a) AS A PERCENTAGE SALES CHARGE (a) AS A PERCENTAGE
TOTAL MARKET VALUE OF PUBLIC OFFERING PRICE(b) OF NET AMOUNT INVESTED
-------------------------- -------------------------------- --------------------------------
Up to $49,999 3.00% 3.09%
$50,000 - $99,999 3.00% 3.09%
$100,000 - $249,999 2.50% 2.56%
$250,000 - $499,999 2.00% 2.04%
$500,000 - $999,999 1.50% 1.52%
$1,000,000 or more(c), (d) 0.00% 0.00%
(a) Because of rounding in the calculation of purchase 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.
(b) Purchase price includes the sales charge.
(c) 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 intermediary the following out of its own resources: a sales
commission of up to 1.00% for a sale of $1,000,000 to $3,999,999; a sales
commission up to 0.50% for a sale of $4,000,000 to $49,999,999; and a sales
commission up to 0.25% for a sale of $50,000,000 or more.
(d) For certain eligible employee benefit plans defined under section 401(a),
401(k), 457 and 403(b) which meet eligibility rules for the waiver of
applicable sales charges, the distributor may pay the following out of its
own resources: a sale commission of 1.00% for a sale of $1 to $3,999,999
received in eligible employee benefit plans; a sales commission of up to
0.50% for a sale of $4,000,000 to $49,999,999; and a sales commission up to
0.25% for a sale of $50,000,000 or more. See "Initial Sales Charge -
Waivers of the sales charge for Class A shares" for employee benefit plan
eligibility rules.
CLASS A - LETTER OF INTENT (LOI)
If you intend to invest $50,000 or more over a period of time, you may be able
to reduce the sales charge you pay on investments in Class A by completing a LOI
form and committing to invest a certain amount. The LOI must be filed with and
accepted in good order by the distributor. The LOI can start at any time and you
will have up to 13 months to fulfill your commitment. Existing Rights of
Accumulation (ROA) can be included for purposes of meeting your commitment under
the LOI. For example, a shareholder currently has $60,000 ROA in the funds.
Shareholder completes an LOI to invest $100,000 in the funds (ROA eligible
accounts). Shareholder only needs to invest an additional $40,000 in the funds'
Class A shares over the next 13 months in order to fulfill the LOI commitment,
during which time the shareholder receives reduced front-end sales charge(s) on
investments. Your investments during this 13 month period will be charged the
sales charge that applies to the amount you have committed to invest under the
LOI. A portion of your commitment will be invested in Class A shares and placed
in escrow. At the end of the 13-month period, the LOI will end and the shares
will be released from escrow (less any amount necessary to pay sales charges to
the extent the LOI commitment was not met, as described below). Once the LOI has
ended or your investments entitle you to a lower sale charge than would
otherwise be available to you under the LOI, future
24
sales charges will be determined by ROA as described in the prospectus. If you
do not invest the commitment amount by the end of the 13-month period, the
remaining unpaid sales charge will be redeemed from the escrowed shares and the
remaining balance released from escrow. The commitment amount does not include
purchases in any class of funds other than Class A; does not include any new
reinvested dividends and directed dividends earned in any funds during the
13-month period; purchases in funds held within a wrap product; and purchases of
money market funds unless they are subsequently exchanged to Class A shares of a
fund within the 13-month period. A LOI is not an option (absolute right) to buy
shares. If you purchase shares through different channels, for example, in a
brokerage account or through a third party, you must inform your financial
institution in writing about the LOI when placing any purchase orders during the
period of the LOI. If you do not complete and file the LOI form, or do not
request the reduced sales charge at the time of purchase, you will not be
eligible for the reduced sales charge.
CLASS A SHARES
Class A shares may be sold at net asset value to certain persons since such
sales require less sales effort and lower sales-related expenses as compared
with sales to the general public. If you are eligible to purchase Class A shares
without a sales charge, you should inform your financial advisor, financial
intermediary or the transfer agent of such eligibility and be prepared to
provide proof thereof.
INITIAL SALES CHARGE-- WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES. Sales
charges do not apply to:
shareholders whose original purchase was in a Strategist fund merged into a
RiverSource fund in 2000.
participants of "eligible employee benefit plans" including 403(b) plans
for which Ameriprise Financial Services, Inc. (Ameriprise Financial
Services) serves as broker-dealer, and the school district or group
received a written proposal from Ameriprise Financial Services between
November 1, 2007 and December 31, 2008 (each a Qualifying 403(b) Plan). In
order for participants in one of these 403(b) plans to receive this waiver,
at least one participant account of the 403(b) plan must have been funded
at Ameriprise Financial Services prior to December 31, 2009. This waiver
may be discontinued for any Qualifying 403(b) Plan, in the sole discretion
of the distributor, after December 31, 2009.
to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act.
plans that (i) own Class B shares of any Seligman fund and (ii) participate
in Seligman Growth 401(k) through Ascensus's (formerly BISYS)third party
administration platform may, with new contributions, purchase Class A
shares at net asset value. Class A shares purchased at net asset value are
subject to a CDSC of 1% on shares purchased within 18 months prior to plan
termination.
to participants in retirement and deferred compensation plans and trusts
used to fund those plans, including but not limited to, those defined in
Sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code and
"rabbi trusts" for which Charles Schwab & Co., Inc. acts as broker dealer.
to participants in plans established at the transfer agent (Seligman funds
only) prior to January 7, 2008, the plan had $500,000 or 50 participants
when the shares were initially purchased.
to participants in retirement and benefit plans made through financial
intermediaries that perform participant recordkeeping or other
administrative services for the plans and that have entered into special
arrangements as alliance program partners with the funds and/or the
distributor specifically for such purchases.
to other investment companies in the RiverSource Family of Funds pursuant
to a "fund of funds" arrangement.
CLASS B SHARES
Class B shares have a CDSC for six years. Class B shares purchased in a
RiverSource fund prior to May 21, 2005 will convert to Class A shares in the
ninth calendar year of ownership. Class B shares purchased in a Seligman fund on
or prior to June 12, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership. Class B shares purchased in a RiverSource fund
beginning May 21, 2005 and Class B shares purchased in a Seligman fund beginning
June 13, 2009 will convert to Class A shares one month after the eighth year of
ownership.
CDSC - WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on sales
of shares:
for shares of Seligman funds in retail retirement plans sold to Merrill to
which no sales commission or transaction fee was paid to an authorized
financial institution at the time of purchase.
25
for shares of RiverSource funds held in investment-only accounts (i.e.
accounts where Ameriprise Trust Company does not act as the custodian) at
Ameriprise Financial Services on behalf of a trust for an employee benefit
plan
for shares of RiverSource funds held in IRAs or certain qualified plans,
prior to June 12, 2009 such as Keogh plans, tax-sheltered custodial
accounts or corporate pension plans where Ameriprise Trust Company is
acting as custodian, 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.
CLASS C SHARES
Class C shares are available to all investors. Class C shares are sold without a
front-end sales charge. For Class C shares, a 1% CDSC may apply if shares are
sold within one year after purchase. Class C shares are subject to a
distribution fee.
CDSC - WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on sales
of shares:
for shares of RiverSource funds held in investment-only accounts (i.e.
accounts where Ameriprise Trust Company does not act as the custodian) at
Ameriprise Financial Services on behalf of a trust for an employee benefit
plan and for shares of RiverSource funds held in tax-sheltered custodial
accounts where Ameriprise Trust Company is the custodian, in cases where
the sale is not a full liquidation of the Qualified Plan Account, and in
cases where the sale is a full liquidation of a Qualified Plan Account held
for the benefit of multiple plan participants, but the full liquidation is
not the result of a mutual fund line-up (plan investment option) change or
plan termination.
CLASS D SHARES
Class D shares are offered through wrap fee programs or other investment
products. Class D shares are sold without a frontend sales charge or CDSC. Class
D shares are subject to a distribution fee.
CLASS E SHARES
Class E shares are offered to qualifying institutional investors and brokerage
accounts. Class E shares are sold without a front-end sales charge or CDSC.
Class E shares are subject to a plan administration fee.
CLASS I SHARES
Class I shares are offered to qualifying institutional investors. Class I shares
are sold without a front-end sales charge or CDSC.
CLASS R SHARES
Class R2, Class R3, Class R4 and Class R5 shares are offered to certain
institutional investors. Class R2, Class R3, Class R4 and Class R5 shares are
sold without a front-end sales charge or a CDSC. Class R2 and Class R3 shares
are subject to a distribution fee. Class R2, Class R3 and R4 shares are subject
to a plan administration fee. The following investors are eligible to purchase
Class R2, Class R3, 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;
Nonqualified deferred compensation plans;
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); and
Bank Trusts.
26
CLASS W SHARES
Class W shares are offered to qualifying discretionary accounts. Class W shares
are sold without a front-end sales charge or CDSC. Class W shares are subject to
a distribution fee.
CLASS Y SHARES
Class Y shares are offered to certain institutional investors. Class Y shares
are sold without a front-end sales charge or a CDSC. Class Y shares are subject
to a plan administration fee. The following investors are eligible to purchase
Class Y 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;
Nonqualified deferred compensation plans; and
State sponsored college savings plans established under Section 529 of the
Internal Revenue Code.
In addition, for Class I, Class R and Class W shares, the distributor, in its
sole discretion, may accept investments from other purchasers not listed above.
FUND REORGANIZATIONS
Class A shares may be issued without an initial sales charge in connection with
the acquisition of cash and securities owned by other investment companies. Any
CDSC will be waived in connection with the redemption of shares of the fund if
the fund is combined with another fund or in connection with a similar
reorganization transaction.
REJECTION OF BUSINESS
Each fund and the distributor of the fund reserve the right to reject any
business, in its sole discretion.
SELLING SHARES
You have a right to sell your shares at any time. For an explanation of sales
procedures, please see the applicable prospectus.
During an emergency, the Board can suspend the computation of NAV, stop
accepting payments for purchase of shares, or suspend the duty of a fund to
redeem shares for more than seven days. Such emergency situations would occur
if:
- The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or
- Disposal of a fund's securities is not reasonably practicable or it is
not reasonably practicable for the fund to determine the fair value of
its net assets, or,
- The SEC, under the provisions of the 1940 Act, declares a period of
emergency to exist.
Should a fund stop selling shares, the Board may make a deduction from the value
of the assets held by the fund to cover the cost of future liquidations of the
assets so as to distribute these costs fairly among all shareholders.
Each RiverSource fund has elected to be governed by Rule 18f-1 under the 1940
Act, which obligates the RiverSource fund to redeem shares in cash, with respect
to any one shareholder during any 90-day period, up to the lesser of $250,000 or
1% of the net assets of the fund at the beginning of the period. Although
redemptions in excess of this limitation would normally be paid in cash, the
RiverSource fund reserves the right to make these payments in whole or in part
in securities or other assets in case of an emergency, or if the payment of a
redemption in cash would be detrimental to the existing shareholders of the
RiverSource fund as determined by the Board. In these circumstances, the
securities distributed would be valued as set forth in this SAI. Should a
RiverSource fund distribute securities, a shareholder may incur brokerage fees
or other transaction costs in converting the securities to cash.
27
Offering Price
When you buy or sell Fund shares, you do so at the Class's net asset value
("NAV") next calculated after the distributor or the transfer agent accepts your
request. However, in some cases, the Fund has authorized certain financial
intermediaries (and other persons designated by such financial intermediaries)
to receive purchase and redemption orders on behalf of the Fund. In such
instances, customer orders will be priced at the Class's NAV next calculated
after the authorized financial intermediary (or other persons designated by such
financial intermediary) receives the request.
NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern
time), on each day that the NYSE is open for business. The NYSE is currently
closed on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. NAV per share for a class is computed by dividing such class's
share of the value of the net assets of the Fund (i.e., the value of its assets
less liabilities) by the total number of outstanding shares of such class. All
expenses of the Fund, including the management fee, are accrued daily and taken
into account for the purpose of determining NAV.
VALUING FUND SHARES
FOR FUNDS OTHER THAN MONEY MARKET FUNDS. A fund's securities are valued as
follows as of the close of business of the New York Stock Exchange (the
Exchange):
Securities traded on a securities exchange for which a last-quoted sales
price is readily available are valued at the last-quoted sales price on the
exchange where such security is primarily traded.
Securities traded on a securities exchange for which a last-quoted sales
price is not readily available are valued at the mean of the closing bid
and asked prices, looking first to the bid and asked prices on the exchange
where the security is primarily traded and, if none exist, to the
over-the-counter market.
Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.
Securities included in the NASDAQ National Market System for which a
last-quoted sales price is not readily available, and other securities
traded over-the-counter but not included in the NASDAQ National Market
System are valued at the mean of the closing bid and asked prices.
Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.
Foreign securities traded outside the United States are generally valued as
of the time their trading is complete, which is usually different from the
close of the Exchange. Foreign securities quoted in foreign currencies are
translated into U.S. dollars utilizing spot exchange rates at the close of
regular trading on the Exchange.
Occasionally, events affecting the value of securities occur between the
time the primary market on which the securities are traded closes and the
close of the Exchange. If events materially affect the value of securities,
the securities will be valued at their fair value according to procedures
decided upon in good faith by the Board. This occurs most commonly with
foreign securities, but may occur in other cases. The fair value of a
security is likely to be different from the quoted or published price.
Short-term securities maturing more than 60 days from the valuation date
are valued at the readily available market price or approximate market
value based on current interest rates. Short-term securities maturing in 60
days or less that originally had maturities of more than 60 days at
acquisition date are valued at amortized cost using the market value on the
61st day before maturity. Short-term securities maturing in 60 days or less
at acquisition date are valued at amortized cost. Amortized cost is an
approximation of market value determined by systematically increasing the
carrying value of a security if acquired at a discount, or reducing the
carrying value if acquired at a premium, so that the carrying value is
equal to maturity value on the maturity date.
Securities without a readily available market price and securities for
which the price quotations or valuations received from other sources are
deemed unreliable or not reflective of market value are valued at fair
value as determined in good faith by the Board. The Board is responsible
for selecting methods it believes provide fair value.
When possible, bonds are valued at an evaluated bid by a pricing service
independent from the funds. If a valuation of a bond is not available from
a pricing service, the bond will be valued by a dealer knowledgeable about
the bond if such a dealer is available.
The assets of funds-of-funds consist primarily of shares of the underlying
funds, which are valued at their NAVs. Other securities held by funds-of-funds
are valued as described above.
28
FOR MONEY MARKET FUNDS. In accordance with Rule 2a-7 of the 1940 Act, all of the
securities in the fund's portfolio are valued at amortized cost. The amortized
cost method of valuation is an approximation of market value determined by
systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to maturity value on the maturity date. Amortized cost
does not take into consideration unrealized capital gains or losses.
The Board has established procedures designed to stabilize the fund's price per
share for purposes of sales and redemptions at $1, to the extent that it is
reasonably possible to do so. These procedures include review of the fund's
securities by the Board, at intervals deemed appropriate by it, to determine
whether the fund's net asset value per share computed by using available market
quotations deviates from a share value of $1 as computed using the amortized
cost method. The Board must consider any deviation that appears and, if it
exceeds 0.5%, it must determine what action, if any, needs to be taken. If the
Board determines a deviation exists that may result in a material dilution of
the holdings of current shareholders or investors, or in any other unfair
consequences for shareholders, it must undertake remedial action that it deems
necessary and appropriate. Such action may include withholding dividends,
calculating net asset value per share for purposes of sales and redemptions
using available market quotations, making redemptions in kind, and selling
securities before maturity in order to realize capital gains or losses or to
shorten average portfolio maturity.
While the amortized cost method provides certainty and consistency in portfolio
valuation, it may result in valuations of securities that are either somewhat
higher or lower than the prices at which the securities could be sold. This
means that during times of declining interest rates the yield on the fund's
shares may be higher than if valuations of securities were made based on actual
market prices and estimates of market prices. Accordingly, if using the
amortized cost method were to result in a lower portfolio value, a prospective
investor in the fund would be able to obtain a somewhat higher yield than the
investor would get if portfolio valuations were based on actual market values.
Existing shareholders, on the other hand, would receive a somewhat lower yield
than they would otherwise receive. The opposite would happen during a period of
rising interest rates.
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
distributor, Class A, Class B, Class C, Class I and Class R shares are sold at
NAV(1). Using each Class's NAV at December 31, 2008, the maximum offering price
of the Fund's shares is as follows:
Class A
Net asset value and offering price per share(1)........... $1.00
=====
Class B
Net asset value and offering price per share(1)........... $1.00
=====
Class C
Net asset value and offering price per share(1)........... $1.00
=====
Class I
Net asset value and offering price per share.............. $1.00
=====
Class R
Net asset value and offering price per share(1)........... $1.00
=====
----------
(1) Class A shares acquired by exchange that were originally purchased at net
asset value due to the size of the purchase or purchases by eligible
employee benefit plans are subject to a 1% CDSC, if such shares are
redeemed within 18 months of purchase or prior to plan termination,
respectively. Class B shares are subject to a CDSC declining from 5% in the
first year after purchase to 0% after six years. Class C shares are subject
to a 1% CDSC on redemptions within one year of purchase. Class R shares are
subject to a 1% CDSC on shares redeemed within 1 year of a retirement
plan's initial purchase.
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectuses. In unusual circumstances, payment may be postponed,
or the right of redemption postponed for more than seven days, if: (i) the
orderly liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE; (ii) during periods of emergency which make the
disposal by the Fund of its shares impracticable; or (iii) such other
29
periods as ordered by the SEC for the protection of the Fund's shareholders.
Under these circumstances, redemption proceeds may be made in securities (i.e.,
a redemption in kind). If payment is made in securities, a shareholder may incur
brokerage expenses in converting these securities to cash.
Anti-Money Laundering
As part of the Fund's responsibility for the prevention of money laundering, you
may be required by the Fund, RiverSource Investments, the distributor or the
transfer agent or their respective service providers to provide additional
information, including information needed to verify the source of funds used to
purchase shares and your identity or the identity of any underlying beneficial
owners of your shares. In the event of delay or failure by you to produce any
requested information, the Fund, the distributor or the transfer agent or their
service providers may refuse to accept a subscription or, to the extent
permitted or required by applicable law, cause a complete redemption of your
shares from the Fund. The Fund, by written notice to you, may suspend payment to
you of any proceeds or distributions if the Fund, the distributor or transfer
agent or their service providers reasonably deem it necessary to do so in order
to comply with applicable laws and regulations, including any anti-money
laundering laws and regulations applicable to the Fund, RiverSource Investments,
the distributor or the transfer agent or their respective service providers.
Arrangements Permitting Frequent Trading of Fund Shares
The Fund has no arrangements with any person to permit frequent trading of Fund
shares.
TAXATION OF THE FUND
TAXES
SUBCHAPTER M COMPLIANCE
The fund has elected to be taxed under Subchapter M of the Internal Revenue Code
as a regulated investment company. The fund intends to maintain its
qualification as a regulated investment company by meeting certain requirements
relating to distributions, source of income, and asset diversification.
Distribution requirements include distributing at least 90% of the fund's
investment company taxable income (which includes net short-term capital gains)
and tax-exempt ordinary income to fund shareholders each taxable year. The
source of income rules require that at least 90% of the fund's gross income be
derived from dividends, interest, certain payments with respect to securities
loans, gain from the sale or other disposition of stock, securities or foreign
currencies (subject to certain limitations), and certain other income derived
with respect to its business of investing in stock, securities or currencies,
and net income from certain interests in qualified publicly traded partnerships.
Asset diversification requirements are met when the fund owns, at the end of
each quarter of its taxable year, a portfolio, 50% of which includes cash and
cash items, U.S. government securities, securities of other regulated investment
companies and, securities of other issuers in which the fund has not invested
more than 5% of the value of the fund's assets (or 10% of the value of the
outstanding voting securities of any one issuer). Also, no more than 25% of the
fund's assets may be invested in the securities of any one issuer or two or more
issuers which the fund controls and which are engaged in the same or similar
trades or businesses (excepting U.S. government securities and securities of
other regulated investment companies) or the securities of one or more qualified
publicly traded partnerships. This is a simplified description of the relevant
laws.
If the fund fails to qualify as a regulated investment company under Subchapter
M, the fund would be taxed as a corporation on the entire amount of its taxable
income (including its net capital gain) without a dividends paid deduction.
Also, all of a shareholder's distributions would generally be taxable to
shareholders as qualified dividend income (QDI) (or could be treated as a return
of capital, if there weren't sufficient earnings and profits) and generally
would be eligible for the dividends received deduction in the case of corporate
shareholders.
Under federal tax law, by the end of a calendar year a fund must declare and pay
dividends representing 98% of ordinary income for that calendar year and 98% of
net capital gains (both long-term and short-term) for the 12-month period ending
Oct. 31 of that calendar year. The fund is subject to a non-deductible excise
tax equal to 4% of the excess, if any, of the amount required to be distributed
over the amount actually distributed. The fund intends to comply with federal
tax law and avoid any excise tax. For purposes of the excise tax distributions,
section 988 ordinary gains and losses are distributable based on an Oct. 31 year
end. This is an exception to the general rule that ordinary income is paid based
on a calendar year end.
30
The fund intends to distribute sufficient dividends within each calendar year,
as well as on a fiscal year basis, to avoid income and excise taxes.
A fund may be subject to U.S. taxes resulting from holdings in passive foreign
investment companies (PFIC). To avoid unfavorable tax consequences, a fund may
make an election to mark to market its PFIC investments. A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year is passive
income or 50% or more of the average value of its assets consists of assets that
produce or could produce passive income.
Income earned by a fund may have had foreign taxes imposed and withheld on it in
foreign countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% of a fund's total assets at the
close of its fiscal year consists of securities of foreign corporations, the
fund will be eligible to file an election with the Internal Revenue Service
(IRS) under which shareholders of the fund would be required to include their
pro rata portions of foreign taxes withheld by foreign countries as gross income
in their federal income tax returns. These pro rata portions of foreign taxes
withheld may be taken as a credit or deduction in computing the shareholders'
federal income taxes. If the election is filed, the fund will report to its
shareholders the per share amount of such foreign taxes withheld and the amount
of foreign tax credit or deduction available for federal income tax purposes.
A fund may use equalization payments to satisfy its requirement to make
distributions of net investment income and capital gain net income. Equalization
payments occur when a fund allocates a portion of its net investment income and
realized capital gain net income to redemptions of fund shares. These payments
reduce the amount of taxable distributions paid to shareholders. The IRS has not
issued any guidance concerning the methods used to allocate investment income
and capital gain to redemptions of shares. If the IRS determines that a fund is
using an improper method of allocation for these purposes, the fund may be
liable for additional federal income tax.
This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state, and local income tax laws to fund distributions.
EXCHANGES, PURCHASES AND SALES
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. If you sell shares for less
than their cost, the difference is a capital loss. 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 more than
one year).
Capital gain of a non-corporate US shareholder that is recognized in a taxable
year beginning before January 1, 2011 is generally taxed at a maximum rate of
15% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less (after taking into account certain hedging transactions), any loss realized
will be treated as long-term capital loss to the extent that it does not exceed
the long-term capital gain distribution.
A capital loss on a sale or redemption of a security in a nonqualified account
may be disallowed for tax purposes if the same or a substantially identical
security is purchased or acquired (including shares acquired through dividend
reinvestment) within 30 days before or after the date of the loss transaction.
This is called a wash sale. When a wash sale occurs, the loss is disallowed to
the extent of shares repurchased, and the cost basis on the security acquired is
increased by the amount of the loss that is disallowed. The loss is disallowed
in a nonqualified account whether the purchase is in a nonqualified account or
in an IRA or Roth IRA, however, an individual's cost basis in an IRA or Roth IRA
is not increased due to the wash sale rules. The wash sale rules apply only to
capital losses. Sales of securities that result in capital gains are generally
recognized when incurred.
If you buy Class A shares and within 91 days exchange into another fund, you may
not 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.
31
FOR EXAMPLE
You purchase 100 shares of an equity fund having a public offering price of
$10.00 per share. With a sales load of 5.75%, you pay $57.50 in sales load. With
a NAV of $9.425 per share, the value of your investment is $942.50. Within 91
days of purchasing that fund, you decide to exchange out of that fund, now at a
NAV of $11.00 per share, up from the original NAV of $9.425, and purchase a
second fund, at a NAV of $15.00 per share. The value of your investment is now
$1,100.00 ($11.00 x 100 shares). You cannot use the $57.50 paid as a sales load
when calculating your tax gain or loss in the sale of the first fund shares. So
instead of having a $100.00 gain ($1,100.00 - $1,000.00), you have a $157.50
gain ($1,100.00 - $942.50). You can include the $57.50 sales load in the
calculation of your tax gain or loss when you sell shares in the second fund.
The following paragraphs provide information based on a fund's investment
category.
FOR STATE TAX-EXEMPT FIXED INCOME AND TAX-EXEMPT FIXED INCOME FUNDS, all
distributions of net investment income during the fund's fiscal year will have
the same percentage designated as tax-exempt. This percentage is expected to be
substantially the same as the percentage of tax-exempt income actually earned
during any particular distribution period.
FOR BALANCED, EQUITY, FUNDS-OF-FUNDS, TAXABLE MONEY MARKET AND TAXABLE FIXED
INCOME FUNDS, if you have a nonqualified investment in a fund and you wish to
move part or all of those shares to an IRA or qualified retirement account in
the fund, you can do so without paying a sales charge. However, this type of
exchange is considered a redemption of shares and may result in a gain or loss
for tax purposes. See wash sale discussion above. In addition, this type of
exchange may result in an excess contribution under IRA or qualified plan
regulations if the amount exchanged exceeds annual contribution limitations. You
should consult your tax advisor for further details about this complex subject.
DISTRIBUTIONS
DIVIDENDS
Net investment income dividends (other than qualified dividend income) received
and distributions from the excess of net short-term capital gains over net
long-term capital losses should be treated as ordinary income for federal income
tax purposes. Corporate shareholders are generally entitled to a deduction equal
to 70% of that portion of a fund's dividend that is attributable to dividends
the fund received from domestic (U.S.) securities. If there is debt-financed
portfolio stock, that is, bank financing is used to purchase long securities,
the 70% dividends received deduction would be reduced by the average amount of
portfolio indebtedness divided by the average adjusted basis in the stock. This
does not impact the qualified dividend income available to individual
shareholders.
Only certain QDI will be subject to the 15% and 0% (for lower-bracket taxpayers)
tax rates for 2008-2010. QDI is dividends earned from domestic corporations and
qualified foreign corporations. Qualified foreign corporations are corporations
incorporated in a U.S. possession, corporations whose stock is readily tradable
on an established U.S. securities market (ADRs), and certain other corporations
eligible for relief under an income tax treaty with the U.S. that includes an
exchange of information agreement. PFICs are excluded from this treatment.
Holding periods for shares must also be met to be eligible for QDI treatment
(more than 60 days for common stock and more than 90 days for certain
preferred's dividends).
Dividends declared in October, November or December, payable to shareholders of
record on a specified date in such a month and paid in the following January
will be treated as having been paid by a fund and received by each shareholder
in December. Under this rule, therefore, shareholders may be taxed in one year
on dividends or distributions actually received in January of the following
year.
CAPITAL GAINS DISTRIBUTIONS
Capital gain distributions, if any, received by shareholders (in cash or
invested in additional shares) should be treated as long-term capital gains
regardless of how long shareholders owned their shares. Short-term capital gains
earned by a fund are paid to shareholders as part of their ordinary income
dividend and are taxable as ordinary income. Special rates on capital gains may
apply to sales of precious metals, if any, owned directly by a fund and to
investments in REITs.
Individual shareholders will be subject to federal income tax on distributions
of net capital gains generally at a maximum rate of 15% if designated as derived
from a fund's capital gains from property held for more than one
32
year and recognized in the taxable years beginning before January 1, 2011. Net
capital gain of a corporate shareholder is taxed at the same rate as ordinary
income. Such distributions are not eligible for the dividends received deduction
allowed to corporate shareholders. Shareholders receiving distributions in the
form of additional shares issued by a fund will generally be treated for federal
income tax purposes as having received a distribution in an amount equal to the
cash that could have been elected to be received instead of the additional
shares.
Under the Internal Revenue Code of 1986 (the Code), gains or losses attributable
to fluctuations in exchange rates that occur between the time a fund accrues
interest or other receivables, or accrues expenses or other liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables or pays such liabilities generally are treated as ordinary income or
ordinary loss. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition may be treated as ordinary or capital gains or losses. These
gains or losses, referred to under the Code as "section 988" gains or losses,
may increase or decrease the amount of a fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
RETURN OF CAPITAL
If a mutual fund is the holder of record of any share of stock on the record
date for any dividend payable with respect to the stock, the dividend will be
included in gross income by the fund as of the later of (1) the date the share
became ex-dividend or (2) the date the fund acquired the share. Because the
dividends on some foreign equity investments may be received some time after the
stock goes ex-dividend, and in certain rare cases may never be received by the
fund, this rule may cause a fund to pay income to its shareholders that it has
not actually received. To the extent that the dividend is never received, the
fund will take a loss at the time that a determination is made that the dividend
will not be received.
If a 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 its shareholders. A return of capital is a return of a portion of the
shareholder's original investment. A return of capital will generally not be
taxable, however, any amounts received in excess of a shareholder's tax basis
are treated as capital gain. Forms 1099 will be sent to shareholders to report
any return of capital.
WITHHOLDING
Unless a shareholder provides a certified taxpayer identification number (social
security number for individuals) on the account application or other document
and certifies that the shareholder is not subject to backup withholding, the
fund is required to withhold and remit to the IRS 28% backup withholding on
taxable and exempt-interest dividends and redemptions. Shareholders should be
aware that, under regulations promulgated by the IRS, a fund may be fined for
each account for which a certified taxpayer identification number (social
security number for individuals) is not provided.
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder") depends on whether the income from the fund is
"effectively connected" with a US trade or business carried on by such
shareholder. If the income from the fund is not effectively connected with a US
trade or business carried on by a foreign shareholder, ordinary income and
qualified dividends paid to such foreign shareholders generally will be subject
to a 30% US withholding tax under existing provisions of the Internal Revenue
Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty or
law. Nonresident shareholders are urged to consult their own tax advisers
concerning the applicability of the US withholding tax.
If the income from the fund is effectively connected with a US trade or business
carried on by a foreign shareholder, then ordinary income dividends, qualified
dividends, capital gain dividends, undistributed capital gains credited to such
shareholder and any gains realized upon the sale of shares of the fund will be
subject to US federal income tax at the graduated rates applicable to US
citizens or domestic corporations. In the case of foreign non-corporate
shareholders, the fund may be required to backup withhold US federal income tax
on distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless such shareholders furnish the fund with proper
documentation related to their foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the fund, the procedure
for claiming the benefit of a lower treaty rate and the applicability of foreign
taxes.
33
UNDERWRITERS
Distribution of Securities
The Fund and the distributor are parties to a Distributing Agreement under which
the distributor acts as the exclusive agent for distribution of shares of the
Fund. The distributor accepts orders for the purchase of Fund shares, which are
offered continuously. The distributor retains any CDSCs paid by investors on all
Fund classes other than Class B.
Compensation
The distributor, which is an affiliated person of RiverSource Investments, which
is an affiliated person of the Fund, received the following commissions and
other compensation from the Fund during the year ended December 31, 2008:
Compensation on Redemptions
and Repurchases
(CDSC on Class A, Class C and Brokerage Other
R Shares Retained)(1) Commissions Compensation(2)
----------------------------- ----------- ---------------
$16,471 $-0- $3,230
(1) The distributor has sold its rights to collect a substantial portion of the
distribution fees paid by the Fund in respect of Class B shares and any
CDSC imposed on redemptions of Class B shares to the Purchasers in
connection with an arrangement discussed above under "Rule 12b-1 Plan."
(2) During the year ended December 31, 2008, the distributor received
distribution and service fees in respect of Class B, Class C and Class R
shares pursuant to the Fund's Rule 12b-1 Plan. These amounts and the
arrangements pursuant to which such compensation is paid are detailed under
"Rule 12b-1 Plan."
PAYMENTS TO FINANCIAL INTERMEDIARIES
The distributor and its affiliates make or support additional cash payments out
of their own resources (including profits earned from providing services to the
funds) to financial intermediaries, including inter-company allocation of
resources or payment to affiliated broker-dealers, in connection with agreements
between the distributor and financial intermediaries pursuant to which these
financial intermediaries sell fund shares and provide services to their clients
who are shareholders of the funds. These payments and intercompany allocations
(collectively, "payments") do not change the price paid by investors and fund
shareholders for the purchase or ownership of shares of the funds, and these
payments are not reflected in the fees and expenses of the funds, as they are
not paid by the funds. These payments are in addition to fees paid by the funds
to the distributor under 12b-1 plans, which fees may be used to compensate
financial intermediaries for the distribution of fund shares and the servicing
of fund shareholders, or paid by the funds 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
intermediaries for supporting shareholder account maintenance, sub-accounting,
plan recordkeeping or other services provided directly by the financial
intermediary 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 funds.
These payments are typically made pursuant to an agreement between the
distributor and the financial intermediary, and are typically made in support of
marketing and sales support efforts or program and shareholder servicing, as
further described below. These payments are usually calculated based on a
percentage of fund assets owned through the financial intermediary and/or as a
percentage of fund sales attributable to the financial intermediary. Certain
financial intermediaries require flat fees instead of or in addition to these
asset-based fees as compensation for including or maintaining funds on their
platforms, and, in certain situations, may require the reimbursement of ticket
or operational charges -- fees that a financial intermediary charges its
representatives for effecting transactions in the funds. The amount of payment
varies by financial intermediary, and often is significant. In addition, the
amount of payments may differ based upon the type of fund sold or maintained;
for instance, the amount of payments for an equity fund may differ from payments
for a money-market or fixed income fund. Asset-based payments generally will be
made in a range of up to 0.25% of assets or 0.25% of sales or some combination
thereof. Exceptions to these general ranges will be considered on a case-by-case
basis. Flat fees or annual minimum fees required by a financial intermediary in
addition to such asset-based fees, are considered on a case-by-case basis.
34
MARKETING AND SALES SUPPORT
Payments may be paid in support of retail, institutional, plan or other
fee-based advisory program distribution efforts. These payments are typically
made by the distributor in its efforts to advertise to and/or educate the
financial intermediary's personnel, including its registered representatives,
about the fund. As a result of these payments, the distributor may obtain a
higher profile and greater visibility for the fund within the financial
intermediary's organization, including placement of the fund on the financial
intermediary's preferred or recommended list. The distributor may also obtain
greater access to sales meetings, sales representatives, and management
representatives of the financial intermediary, including potentially having
increased opportunity for fund representatives to participate in and/or present
at conferences or seminars, sales or training programs for invited registered
representatives and their clients and other events sponsored by the financial
intermediary.
PROGRAM AND SHAREHOLDER SERVICING
Payments may be made in support of recordkeeping, reporting, transaction
processing, and other plan administration services provided by a financial
intermediary to or through retirement plans, 529 plans, Health Savings Account
plans, or other plans or fee-based advisory programs but may also be made in
support of certain retail advisory programs, including wrap programs. A
financial intermediary may perform program services itself or may arrange with a
third party to perform program services. These payments may also include
services rendered in connection with fund selection and monitoring, employee
enrollment and education, plan balance rollover or separation, or other similar
services.
OTHER PAYMENTS
The distributor and its affiliates may separately pay financial intermediaries
in order to participate in and/or present at conferences or seminars, sales or
training programs for invited registered representatives and other financial
intermediary employees, client and investor events and other financial
intermediary-sponsored events, and for travel expenses, including lodging
incurred by registered representatives and other employees in connection with
prospecting, asset retention and due diligence trips. The amount of these
payments varies depending upon the nature of the event. The distributor and its
affiliates make payments for such events as they deem appropriate, subject to
internal guidelines and applicable law.
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 payment to financial intermediaries 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
intermediaries and their representatives are subject. To the extent these are
made as payments instead of reimbursement, they may provide profit to the
financial intermediary to the extent the cost of such services was less than the
actual expense of the service.
FINANCIAL INTERMEDIARY ARRANGEMENTS
The financial intermediary through which you are purchasing or own shares of
funds has been authorized directly or indirectly by the distributor to sell
funds and/or to provide services to you as a shareholder of funds. 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 intermediary may receive from the distributor or its affiliates
related to your purchase or ownership of funds, please contact your financial
intermediary.
CALCULATION OF YIELD
Yield Calculations
The following performance information relates to periods prior to December 31,
2008.
The current and effective yields of the Class A, Class B, Class C, Class I and
Class R shares of the Fund may be quoted in reports, sales literature, and
advertisements published by the Fund. The current yield of Class A shares is
computed by determining the net change exclusive of capital changes in the value
of a hypothetical pre-existing account having a balance of one share at the
beginning of a seven-day calendar period, dividing the net change in account
value by the value of the account at the beginning of the period, and
multiplying the return over the seven-
35
day period by 365/7. For purposes of the calculation, net change in account
value reflects the value of additional shares purchased with dividends from the
original share and dividends declared on both the original share and any such
additional shares, but does not reflect realized gains or losses or unrealized
appreciation or depreciation. Effective yield is computed by annualizing the
seven-day return with all dividends reinvested in additional Fund shares.
The current and effective yields of the Fund's Class B shares, Class C shares,
Class I and Class R shares are computed in the same manner as discussed above
for Class A shares. Class B, Class C and Class R shares are subject to a CDSC if
such shares are held for less than six years (for Class B shares), less than 18
months (for Class C shares) or less than one year (for Class R shares). Because
Class B, Class C and Class R shares bear a higher distribution fee than Class A
shares, the yield of Class B, Class C and Class R shares will be lower than the
yield of Class A shares. Class I shares are not subject to a CDSC and do not
bear any 12b-1 (distribution and service) fees.
The following are examples of the yield calculations for Class A, Class B, Class
C, Class I and Class R shares for the seven-day period ended December 31, 2008.
The weighted average life to maturity of investments was 17 days at December 31,
2008.
Effective on or about June 13, 2009, the Seligman funds' Class R shares will be
renamed as Class R2 shares and the Seligman funds' Class I shares will be
renamed as Class R5 shares.
Class A Class B Class C Class I Class R
------------ ------------ ------------ ------------ ------------
Total dividends per share
from net investment income
(seven days ended 12/31/08) $0.000047810 $0.000001918 $0.000001918 $0.000047810 $0.000001918
Annualized (365 day basis) 0.0025 0.0001 0.0001 0.0025 0.0001
Average net asset value per
share 1.000 1.000 1.000 1.000 1.000
Annualized historical net
yield per share (seven days
ended 12/31/08)* 0.25% 0.01% 0.01% 0.25% 0.01%
Effective yield (seven days
ended 12/31/08** 0.25% 0.01% 0.01% 0.25% 0.01%
----------
* This represents the annualized average net investment income per share for
the seven days ended December 31, 2008.
** Annualized average net investment income for the same period with dividends
reinvested.
The amounts paid to RiverSource Investments on and after the Acquisition were
equal to 0.40% of the Fund's average daily net assets. Seligman (prior to the
Acquisition) and RiverSource Investments and its affiliates (on and after the
Acquisition), at their discretion, reimbursed certain class-specific expenses of
certain share classes to allow those classes to maintain certain dividend rates.
Absent such expense reimbursements, the dividend rates in respect of such share
classes would have been lower or negative.
FINANCIAL STATEMENTS
The Fund's Annual Report to Shareholders for the year ended December 31, 2008,
contains a portfolio of the investments of the Fund as of December 31, 2008, as
well as certain other financial information as of this date. The financial
statements and notes included in the Annual Report, which includes the report of
the Fund's former auditors, Deloitte & Touche, LLP, Independent Registered
Public Accounting Firm thereon, are incorporated herein by reference. The Annual
Report will be furnished without charge to investors who request copies of this
SAI. Effective May 18, 2009, Ernst & Young LLP serves as the Fund's independent
auditors.
INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action
36
derivatively on behalf of those funds under the Investment Company Act of 1940.
The plaintiffs allege that fees allegedly paid to the defendants by the funds
for investment advisory and administrative services are excessive. The
plaintiffs seek remedies including restitution and rescission of investment
advisory and distribution agreements. The plaintiffs voluntarily agreed to
transfer this case to the United States District Court for the District of
Minnesota (the District Court). In response to defendant's motion to dismiss the
complaint, the District Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Defendants moved for summary judgment in
April 2007. Summary judgment was granted in the defendants' favor on July 9,
2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of
Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth
Circuit reversed summary judgment and remanded to the District Court for further
proceedings.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Board of
Directors/Trustees.
In September 2006, the Office of the Attorney General of the State of New York
("NYAG") commenced a civil action in New York State Supreme Court against J. &
W. Seligman & Co. Incorporated ("Seligman"), Seligman Advisors, Inc. (now know
as RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the "Seligman Parties"), alleging, in substance, that the
Seligman Parties permitted various persons to engage in frequent trading and, as
a result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds as follows:
$150,000 to Seligman Global Growth Fund, $550,000 to Seligman Global Smaller
Companies Fund, $7.7 million to Seligman Communications and Information Fund and
$2.9 million to Seligman Global Technology Fund. These settlement payments are
reflected in the net asset values of these four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG.
In addition to the foregoing matter, the New York staff of the SEC indicated in
September 2005 that it was considering recommending to the Commissioners of the
SEC the instituting of a formal action against Seligman and Seligman Advisors,
Inc. relating to frequent trading in the Seligman Funds. Seligman responded to
the staff in October 2005 that it believed that any action would be both
inappropriate and unnecessary, especially in light of the fact that Seligman had
previously resolved the underlying issue with the Independent Directors of the
Seligman Funds and made recompense to the affected Seligman Funds. There have
been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of
37
Ameriprise Financial or its affiliates to perform under their contracts with the
Funds, these proceedings are subject to uncertainties and, as such, we are
unable to estimate the possible loss or range of loss that may result. An
adverse outcome in one or more of these proceedings could result in adverse
judgments, settlements, fines, penalties or other relief that could have a
material adverse effect on the consolidated financial condition or results of
operations of Ameriprise Financial.
GENERAL INFORMATION
CUSTODIAN. As of the date hereof, State Street Bank and Trust Company (SSBT),
801 Pennsylvania Avenue, Kansas City, Missouri 64105, serves as custodian for
the Fund's portfolio securities and is located at 801 Pennsylvania Avenue,
Kansas City, Missouri 64105. The Fund expects to terminate its relationship with
SSBT and to hire JPMorgan Chase, N.A., located at 1 Chase Manhattan Plaza, New
York, NY 10005, to serve as custodian in the near future. Currently, SSBT also
maintains, under the general supervision of the RiverSource Investments, the
accounting records and determines the net asset value for the Fund.
ADMINISTRATION SERVICES. Ameriprise Financial, Inc., 200 Ameriprise Financial
Center, Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the Seligman funds, as well as the other funds in the
RiverSource Family of Funds. These services include administrative, accounting,
treasury, and other services.
BOARD SERVICES. The funds in the RiverSource Family of Funds, including the
Fund, have an agreement with Board Services Corporation (Board Services) located
at 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402. This agreement
sets forth the terms of Board Services' responsibility to serve as an agent of
the funds for purposes of administering the payment of compensation to each
independent Board member, to provide office space for use by the funds and their
boards, and to provide any other services to the boards or the independent
members, as may be reasonably requested.
TRANSFER, SHAREHOLDER SERVICE AND DIVIDEND PAYING AGENT. Seligman Data Corp.,
will serve as transfer, shareholder service and dividend paying agent to the
Fund through on or about June 12, 2009, and is located at 100 Park Avenue, New
York, New York 10017. In connection with the termination of the relationship
between SDC and the Fund, as approved by the Fund's Board, effective on or about
June 13, 2009, RiverSource Service Corporation will serve as the Fund's
transfer, shareholder service and dividend paying agent. RSC is located at 734
Ameriprise Financial Center, Minneapolis, MN 55474, and performs, at cost,
certain recordkeeping functions for the Fund, maintains the records of
shareholder accounts and furnishes dividend paying, redemption and related
services.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. Effective March 18, 2009, Ernst &
Young LLP, 220 S. 6th Street #1400, Minneapolis, MN 55402Two World Financial
Center, New York, New York 10281, serves as the Independent Registered Public
Accounting Firm for the Fund and in such capacity audits the Fund's annual
financial statements and financial highlights.
On March 11, 2009, the Audit Committee of the Board of Directors recommended,
and the Board of Directors, including a majority of those members who are not
"interested persons" of the Fund (as defined in the 1940 Act), approved Ernst &
Young LLP as the independent registered public accounting firm to serve as
auditors for the Fund for 2009. Ernst & Young LLP began service as the Fund's
independent registered public accounting firm effective March 18, 2009. Prior to
March 11, 2009, the Fund's independent registered public accounting firm was
Deloitte & Touche LLP.
The firm of Ernst & Young LLP has extensive experience in investment company
accounting and auditing. Ernst & Young LLP has served as the independent
registered public accounting firm for the funds in the RiverSource Family of
Funds since July 2007. In connection with the Acquisition of Seligman and the
Fund becoming part of the RiverSource Family of Funds, the Audit Committee and
Board determined that it would be in the best interest of the Fund if one
independent registered public accounting firm were to perform audit and
accounting services for all funds in the RiverSource Family of Funds. Ernst &
Young LLP was chosen due to the fact that the firm is familiar with RiverSource
Investments and with the management and operations of the funds advised by
RiverSource Investments.
The reports of Deloitte & Touche LLP on the Fund's financial statements as of
and for the fiscal years ended December 31, 2008 and 2007 did not contain any
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles.
38
During the Fund's fiscal years ended December 31, 2008 and 2007 and the
subsequent interim period preceding the appointment of Ernst & Young LLP, (a)
there were no disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused them to make reference thereto in their
reports on the Fund's financial statements and (b) there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K. The Fund has furnished
a copy of the above disclosure to Deloitte & Touche LLP.
During the Fund's fiscal years ended December 31, 2008 and 2007 and the
subsequent interim period preceding Ernst & Young LLP's appointment, neither the
Fund nor anyone on behalf of the Fund consulted with Ernst & Young LLP on any
matter regarding: (1) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, and neither a written
report was provided to the Fund nor oral advice was provided that Ernst & Young
LLP concluded was an important factor considered by the Fund in reaching a
decision as to the accounting, auditing or financial reporting issue; or (2)
either a disagreement or a reportable event, as defined in Item 304(a)(1)(iv)
and (v) of Regulation S-K, respectively.
39
APPENDIX A
THE SELIGMAN FUNDS*
SELIGMAN ASSET ALLOCATION SERIES, INC.
Seligman Asset Allocation Aggressive Growth Fund
Seligman Asset Allocation Balanced Fund
Seligman Asset Allocation Growth Fund
Seligman Asset Allocation Moderate Growth Fund
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Core Fixed Income Fund, Inc.
Seligman Frontier Fund, Inc.
SELIGMAN GLOBAL FUND SERIES, INC.
Seligman Emerging Markets Fund
Seligman Global Smaller Companies Fund
Seligman Global Growth Fund
Seligman Global Technology Fund
Seligman International Growth Fund
Seligman Growth Fund, Inc.
SELIGMAN HIGH INCOME FUND SERIES
Seligman U.S. Government Securities Fund
Seligman High-Yield Fund
Seligman Income and Growth Fund, Inc.
Seligman LaSalle International Real Estate Fund, Inc.
SELIGMAN LASALLE REAL ESTATE FUND SERIES, INC.
Seligman LaSalle Global Real Estate Fund
Seligman LaSalle Monthly Dividend Real Estate Fund
SELIGMAN MUNICIPAL FUND SERIES, INC.
Seligman National Municipal Fund
Seligman Colorado Municipal Fund
Seligman Georgia Municipal Fund
Seligman Louisiana Municipal Fund
Seligman Maryland Municipal Fund
Seligman Massachusetts Municipal Fund
Seligman Michigan Municipal Fund
Seligman Minnesota Municipal Fund
Seligman Missouri Municipal Fund
Seligman New York Municipal Fund
Seligman Ohio Municipal Fund
Seligman Oregon Municipal Fund
Seligman South Carolina Municipal Fund
SELIGMAN MUNICIPAL SERIES TRUST
Seligman California Municipal High-Yield Fund
Seligman California Municipal Quality Fund
Seligman Florida Municipal Fund
Seligman North Carolina Municipal Fund
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
SELIGMAN PORTFOLIOS, INC.
Seligman Capital Portfolio
Seligman Cash Management Portfolio
Seligman Common Stock Portfolio
Seligman Communications and Information Portfolio
Seligman Global Technology Portfolio
Seligman International Growth Portfolio
Seligman Investment Grade Fixed Income Portfolio
Seligman Large-Cap Value Portfolio
Seligman Smaller-Cap Value Portfolio
SELIGMAN TARGETHORIZON ETF PORTFOLIOS, INC.
Seligman TargETFund 2045
Seligman TargETFund 2035
Seligman TargETFund 2025
Seligman TargETFund 2015
Seligman TargETFund Core
SELIGMAN VALUE FUND SERIES, INC.
Seligman Large-Cap Value Fund
Seligman Smaller-Cap Value Fund
Tri-Continental Corporation
* Effective on or about June 13, 2009, the Seligman funds will share the same
policies and procedures as, and may be exchanged for shares of, the
RiverSource funds, RiverSource Partners funds and Threadneedle funds.
40
APPENDIX B
THE RIVERSOURCE FUNDS, RIVERSOURCE PARTNERS FUNDS, AND THREADNEEDLE FUNDS.*
RiverSource Bond Series, Inc.
RiverSource Floating Rate Fund
RiverSource Income Opportunities Fund
RiverSource Inflation Protected Securities Fund
RiverSource Limited Duration Bond Fund
RiverSource California Tax-Exempt Trust
RiverSource California Tax-Exempt Fund
RiverSource Dimensions Series, Inc.
RiverSource Disciplined Small and Mid Cap Equity Fund
RiverSource Disciplined Small Cap Value Fund
RiverSource Diversified Income Series, Inc.
RiverSource Diversified Bond Fund
RiverSource Equity Series, Inc.
RiverSource Mid Cap Growth Fund
RiverSource Global Series, Inc.
RiverSource Absolute Return Currency and Income Fund
RiverSource Emerging Markets Bond Fund
RiverSource Global Bond Fund
RiverSource Global Technology Fund
Threadneedle Emerging Markets Fund
Threadneedle Global Equity Fund
RiverSource Government Income Series, Inc.
RiverSource Short Duration U.S. Government Fund
RiverSource U.S. Government Mortgage Fund
RiverSource High Yield Income Series, Inc.
RiverSource High Yield Bond Fund
RiverSource Income Series, Inc.
RiverSource Income Builder Basic Income Fund
RiverSource Income Builder Enhanced Income Fund
RiverSource Income Builder Moderate Income Fund
RiverSource International Managers Series, Inc.
RiverSource Partners International Select Growth Fund
RiverSource Partners International Select Value Fund
RiverSource Partners International Small Cap Fund
RiverSource International Series, Inc.
RiverSource Disciplined International Equity Fund
Threadneedle European Equity Fund
Threadneedle Global Equity Income Fund
Threadneedle Global Extended Alpha Fund
Threadneedle International Opportunity Fund
RiverSource Investment Series, Inc.
RiverSource Balanced Fund
RiverSource Disciplined Large Cap Growth Fund
RiverSource Diversified Equity Income Fund
RiverSource Disciplined Large Cap Value Fund
RiverSource Mid Cap Value Fund
RiverSource Large Cap Series, Inc.
RiverSource Disciplined Equity Fund
RiverSource Growth Fund
RiverSource Large Cap Equity Fund
RiverSource Large Cap Value Fund
RiverSource Managers Series, Inc.
RiverSource Partners Aggressive Growth Fund
RiverSource Partners Fundamental Value Fund
RiverSource Partners Select Value Fund
RiverSource Partners Small Cap Equity Fund
RiverSource Partners Small Cap Value Fund
RiverSource Market Advantage Series, Inc.
RiverSource Portfolio Builder Aggressive Fund
RiverSource Portfolio Builder Conservative Fund
RiverSource Portfolio Builder Moderate Aggressive Fund
RiverSource Portfolio Builder Moderate Conservative Fund
RiverSource Portfolio Builder Moderate Fund
RiverSource Portfolio Builder Total Equity Fund
RiverSource S&P 500 Index Fund
RiverSource Small Company Index Fund
RiverSource Money Market Series, Inc.
RiverSource Cash Management Fund
RiverSource Sector Series, Inc.
RiverSource Dividend Opportunity Fund
RiverSource Real Estate Fund
RiverSource Selected Series, Inc.
RiverSource Precious Metals and Mining Fund
RiverSource Series Trust
RiverSource 120/20 Contrarian Equity Fund
RiverSource Retirement Plus 2010 Fund
RiverSource Retirement Plus 2015 Fund
RiverSource Retirement Plus 2020 Fund
RiverSource Retirement Plus 2025 Fund
RiverSource Retirement Plus 2030 Fund
RiverSource Retirement Plus 2035 Fund
RiverSource Retirement Plus 2040 Fund
RiverSource Retirement Plus 2045 Fund
RiverSource Short Term Investments Series, Inc.
RiverSource Short-Term Cash Fund
RiverSource Special Tax-Exempt Series Trust
RiverSource Minnesota Tax-Exempt Fund
RiverSource New York Tax-Exempt Fund
RiverSource Strategic Allocation Series, Inc.
RiverSource Strategic Allocation Fund
RiverSource Strategic Income Allocation Fund
RiverSource Strategy Series, Inc.
RiverSource Equity Value Fund
RiverSource Partners Small Cap Growth Fund
RiverSource Small Cap Advantage Fund
RiverSource Tax-Exempt Income Series, Inc.
RiverSource Tax-Exempt High Income Fund
RiverSource Tax-Exempt Money Market Series, Inc.
RiverSource Tax-Exempt Money Market Fund
RiverSource Tax-Exempt Series, Inc.
RiverSource Intermediate Tax-Exempt Fund
RiverSource Tax-Exempt Bond Fund
RiverSource Variable Series Trust
Disciplined Asset Allocation Portfolios - Aggressive
Disciplined Asset Allocation Portfolios - Conservative
Disciplined Asset Allocation Portfolios - Moderate
Disciplined Asset Allocation Portfolios - Moderately Aggressive
Disciplined Asset Allocation Portfolios - Moderately Conservative
RiverSource Partners Variable Portfolio - Fundamental Value Fund
RiverSource Partners Variable Portfolio - Select Value Fund
RiverSource Partners Variable Portfolio - Small Cap Value Fund
RiverSource Variable Portfolio - Balanced Fund
RiverSource Variable Portfolio - Cash Management Fund
RiverSource Variable Portfolio - Core Equity Fund
RiverSource Variable Portfolio - Diversified Bond Fund
RiverSource Variable Portfolio - Diversified Equity Income Fund
RiverSource Variable Portfolio - Global Bond Fund
RiverSource Variable Portfolio - Global Inflation Protected Securities Fund
RiverSource Variable Portfolio - Growth Fund
RiverSource Variable Portfolio - High Yield Bond Fund
RiverSource Variable Portfolio - Income Opportunities Fund
RiverSource Variable Portfolio - Large Cap Equity Fund
RiverSource Variable Portfolio - Large Cap Value Fund
RiverSource Variable Portfolio - Mid Cap Growth Fund
RiverSource Variable Portfolio - Mid Cap Value Fund
RiverSource Variable Portfolio - S&P 500 Index Fund
RiverSource Variable Portfolio - Short Duration U.S. Government Fund
RiverSource Variable Portfolio - Small Cap Advantage Fund
Threadneedle Variable Portfolio - Emerging Markets Fund
Threadneedle Variable Portfolio - International Opportunity Fund
* Effective on or about June 13, 2009, the Seligman funds will share the same
policies and procedures as, and may be exchanged for shares of, the
RiverSource funds, RiverSource Partners funds and Threadneedle funds.
41
APPENDIX C
INVESTMENT MANAGEMENT FEE SCHEDULE
The table below outlines the investment management fees, effective in the second
half of 2009, to be charged to the funds by RiverSource Investments for
providing investment management services. The asset charge for each calendar day
of each year will be equal to the total of 1/365th (1/366th in each leap year)
of the amount computed in accordance with the fee schedule in the table below:
ANNUAL RATE AT
FUND NET ASSETS (BILLIONS) EACH ASSET LEVEL
---------------------------------------------------- --------------------- ----------------
Seligman Capital Fund, Inc. First $1.0 0.805%
Next $1.0 0.765%
Over $2.0 0.715%
Seligman Cash Management Fund, Inc. First $1.0 0.330%
Next $0.5 0.313%
Next $0.5 0.295%
Next $0.5 0.278%
Next $2.5 0.260%
Next $1.0 0.240%
Next $1.5 0.220%
Next $1.5 0.215%
Next $1.0 0.190%
Next $5.0 0.180%
Next $5.0 0.170%
Next $4.0 0.160%
Over $24.0 0.150%
Seligman Communications and Information Fund, Inc. First $3.0 0.855%
Next $3.0 0.825%
Over $6.0 0.725%
Seligman Frontier Fund, Inc. First $750 million 0.885%
Over $750 million 0.790%
Seligman Global Fund Series, Inc. First $100 million 0.95%
Seligman Global Smaller Companies Fund Over $100 million 0.85%
Seligman Global Fund Series, Inc. First $2 billion 0.95%
Seligman Global Technology Fund Next $2 billion 0.91%
Over $4 billion 0.87%
Seligman Growth Fund, Inc. First $1 billion 0.655%
Next $1 billion 0.615%
Over $2 billion 0.565%
Seligman LaSalle Real Estate Fund, Inc. All asset levels 0.915%
Seligman LaSalle Global Real Estate Fund
Seligman LaSalle Real Estate Fund, Inc. All asset levels 0.855%
Seligman LaSalle Monthly Dividend Real Estate Fund
Seligman Municipal Fund Series, Inc. First $1.0 0.410%
Seligman National Municipal Class Next $1.0 0.385%
Next $1.0 0.360%
Next $3.0 0.335%
Next $1.5 0.310%
Next $2.5 0.300%
Next $5.0 0.290%
Next $9.0 0.280%
Next $26.0 0.260%
Over $50.0 0.250%
42
ANNUAL RATE AT
FUND NET ASSETS (BILLIONS) EACH ASSET LEVEL
---------------------------------------------------- --------------------- ----------------
Seligman Municipal Fund Series, Inc. First $0.25 0.410%
Seligman Minnesota Municipal Class Next $0.25 0.385%
Seligman New York Municipal Class Next $0.25 0.360%
Next $0.25 0.345%
Next $6.5 0.320%
Next $2.5 0.310%
Next $5.0 0.300%
Next $9.0 0.290%
Next $26.0 0.270%
Over $50.0 0.250%
Seligman Municipal Series Trust First $0.25 0.410%
Seligman California Municipal High-Yield Series Next $0.25 0.385%
Seligman California Municipal Quality Series Next $0.25 0.360%
Next $0.25 0.345%
Next $6.5 0.320%
Next $2.5 0.310%
Next $5.0 0.300%
Next $9.0 0.290%
Next $26.0 0.270%
Over $50.0 0.250%
Seligman Portfolios, Inc. All asset levels 0.355%
Seligman Capital Portfolio
Seligman Portfolios, Inc. All asset levels 0.355%
Seligman Cash Management Portfolio
Seligman Portfolios, Inc. All asset levels 0.355%
Seligman Common Stock Portfolio
Seligman Portfolios, Inc. All asset levels 0.705%
Seligman Communications and Information Portfolio
Seligman Portfolios, Inc. First $2 billion 0.95%
Seligman Global Technology Portfolio Next $2 billion 0.91%
Over $4 billion 0.87%
Seligman Portfolios, Inc. First $50 million 0.950%
Seligman International Growth Portfolio Next $1 billion 0.900%
Over $1.05 billion 0.860%
Seligman Portfolios, Inc. All asset levels 0.345%
Seligman Investment Grade Fixed Income Portfolio
Seligman Portfolios, Inc. First $500 million 0.755%
Seligman Large-Cap Value Portfolio Next $500 million 0.660%
Over $1 billion 0.565%
Seligman Portfolios, Inc. First $500 million 0.935%
Seligman Smaller-Cap Value Portfolio Next $500 million 0.840%
Over $1 billion 0.745%
Seligman TargetHorizon ETF Portfolios, Inc. First $500 million 0.455%
Seligman TargETFund 2025 Next $500 million 0.410%
Over $1 billion 0.365%
Seligman TargetHorizon ETF Portfolios, Inc. First $500 million 0.455%
Seligman TargETFund 2015 Next $500 million 0.410%
Over $1 billion 0.365%
Seligman TargetHorizon ETF Portfolios, Inc. First $500 million 0.455%
Seligman TargETFund Core Next $500 million 0.410%
Over 1 billion 0.365%
Seligman TargetHorizon ETF Portfolios, Inc. First $500 million 0.455%
Seligman TargETFund 2035 Next $500 million 0.410%
Over $1 billion 0.365%
Seligman TargetHorizon ETF Portfolios, Inc. First $500 million 0.455%
Seligman TargETFund 2045 Next $500 million 0.410%
Over $1 billion 0.365%
Seligman Value Fund Series, Inc. First $0.5 0.755%
Seligman Large-Cap Value Fund Next $0.5 0.660%
Over $1.0 0.565%
Seligman Value Fund Series, Inc. First $0.5 0.935%
Seligman Smaller-Cap Value Fund Next $0.5 0.840%
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ANNUAL RATE AT
FUND NET ASSETS (BILLIONS) EACH ASSET LEVEL
---------------------------------------------------- --------------------- ----------------
Over $1.0 0.745%
Seligman LaSalle International Real Estate Fund, Inc. All asset levels 0.915%
Tri-Continental Corporation All asset levels 0.355%
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APPENDIX D
ADMINISTRATIVE SERVICES FEE SCHEDULE
The table below outlines the administrative services fees, effective in the
second half of 2009, to be charged to the funds by Ameriprise Financial for
providing administrative services. The asset charge for each calendar day of
each year will be equal to the total of 1/365th (1/366th in each leap year) of
the amount computed in accordance with the fee schedule in the table below:
FUNDS
ASSET LEVELS AND BREAKPOINTS IN APPLICABLE FEES
500,000,001 - 1,000,000,001 - 3,000,000,001 -
0 - 500,000,000 1,000,000,000 3,000,000,000 12,000,000,000 12,000,000,001 +
--------------- ------------- --------------- --------------- ----------------
0.080% 0.075% 0.070% 0.060% 0.050%
LaSalle Global Real Estate Fund 0.080% 0.075% 0.070% 0.060% 0.050%
LaSalle International Real Estate Fund 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Global Smaller Companies Fund 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Frontier Fund 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Global Technology 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Global Technology Portfolio 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman International Growth Portfolio 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Smaller-Cap Value Fund 0.080% 0.075% 0.070% 0.060% 0.050%
Seligman Smaller-Cap Value Portfolio 0.080% 0.075% 0.070% 0.060% 0.050%
----- ----- ----- ----- -----
0.070% 0.065% 0.060% 0.050% 0.040%
Seligman California Municipal High Yield 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman California Municipal Quality 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman Investment Grade Fixed Income Portfolio 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman Minnesota Municipal Fund 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman National Municipal Fund 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman New York Municipal Fund 0.070% 0.065% 0.060% 0.050% 0.040%
----- ----- ----- ----- -----
0.060% 0.055% 0.050% 0.040% 0.030%
Seligman LaSalle Monthly Dividend Real Estate 0.060% 0.055% 0.050% 0.040% 0.30%
Seligman Capital Fund 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Capital Portfolio 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Cash Management Fund 0.060% 0.055% 0.050% 0.040% 0.030%
45
Seligman Cash Management Portfolio 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Common Stock Portfolio 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Communications and Information Fund 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Communications and Information
Portfolio 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Growth Fund 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Large-Cap Value Fund 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman Large-Cap Value Portfolio 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman TargETFund 2015 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman TargETFund 2025 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman TargETFund 2035 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman TargETFund 2045 0.060% 0.055% 0.050% 0.040% 0.030%
Seligman TargETFund Core 0.060% 0.055% 0.050% 0.040% 0.030%
Tri-Continental Corporation 0.060% 0.055% 0.050% 0.040% 0.030%
46