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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-03596
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
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(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31
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Annual Report
and Prospectus (SELIGMAN LOGO)
SELIGMAN
COMMUNICATIONS AND INFORMATION FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
DECEMBER 31, 2009
(Prospectus also enclosed)
SELIGMAN COMMUNICATIONS AND INFORMATION FUND SEEKS TO
PROVIDE SHAREHOLDERS WITH CAPITAL GAIN.
<Table>
This annual report includes a prospectus that
describes in detail the Funds' objectives,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 26
Statement of Operations............ 28
Statements of Changes in Net
Assets........................... 30
Financial Highlights............... 31
Notes to Financial Statements...... 36
Report of Independent Registered
Public Accounting Firm........... 55
Federal Income Tax Information..... 57
Board Members and Officers......... 58
Proxy Voting....................... 62
</Table>
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
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> Seligman Communications and Information Fund (the Fund) Class A shares gained
59.92% (excluding sales charge) for the 12 months ended Dec. 31, 2009.
> The Fund underperformed its benchmark, the S&P North American Technology
Sector Index, which gained 63.19% during the same 12-month period.
> The Fund outperformed its peer group, as represented by the Lipper Science &
Technology Funds Index, which rose 57.90% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended Dec. 31, 2009)
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<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Seligman Communications and
Information Fund
Class A (excluding sales
charge) +59.92% +5.27% +8.81% -0.18%
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S&P North American Technology
Sector Index (unmanaged) +63.19% +2.64% +3.75% -6.59%
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Lipper Science & Technology
Funds Index +57.90% +1.01% +3.00% -6.94%
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</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting seligman.com or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
fees and expenses. The Fund's returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices and average do not reflect the effects of sales charges, expenses
(excluding Lipper) and taxes. It is not possible to invest directly in an index.
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2 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
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AVERAGE ANNUAL TOTAL RETURNS
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<Table>
<Caption>
AT DEC. 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
6/23/83) +59.92% +5.27% +8.81% -0.18% N/A
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Class B (inception
4/22/96) +58.69% +4.49% +7.98% -0.93% N/A
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Class C (inception
5/27/99) +58.71% +4.48% +8.00% -0.92% N/A
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Class I (inception
8/3/09) N/A N/A N/A N/A +16.99%**
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Class R2 (inception
4/30/03) +59.44% +4.98% +8.54% N/A +12.56%
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Class R3 (inception
8/3/09) N/A N/A N/A N/A +16.71%**
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Class R4 (inception
8/3/09) N/A N/A N/A N/A +16.84%**
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Class R5 (inception
11/30/01) +60.60% +5.74% +9.31% N/A +6.39%
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With sales charge
Class A (inception
6/23/83) +50.72% +3.21% +7.53% -0.77% N/A
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Class B (inception
4/22/96) +53.69% +3.56% +7.69% -0.93% N/A
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Class C (inception
5/27/99) +57.71% +4.48% +8.00% -0.92% N/A
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</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5
shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to
qualifying institutional investors only.
*For classes with less than 10 years performance.
**Not annualized.
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
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<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
LARGE
X MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
The products of technology companies may be subject to severe competition and
rapid obsolescence, and technology stocks may be subject to greater price
fluctuations, government regulation, and limited liquidity as compared to other
investments. In addition, investments in one economic sector, such as
technology, may result in greater price fluctuations than owning a portfolio of
diversified investments. Investments in small- and mid-capitalization companies
involve greater risks and potential volatility than investments in larger, more
established companies. See the Fund's prospectus for information on these and
other risks associated with the Fund.
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4 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholders,
Seligman Communications and Information Fund (the Fund) Class A shares gained
59.92% (excluding sales charge) for the 12 months ended Dec. 31, 2009. The Fund
underperformed its benchmark, the S&P North American Technology Sector Index
(the S&P NATS Index), which rose 63.19% for the 12-month period. The Fund
outperformed its peer group, as measured by the Lipper Science & Technology
Funds Index, which increased 57.90% for the same period.
SIGNIFICANT PERFORMANCE FACTORS
The economic environment firmed as the year progressed. The technology industry
was not as adversely affected by the economic malaise as many had expected.
Business spending, on software in particular, proved to be fairly resilient,
attributable to the fact that so many business processes are mission critical.
The software industry was also supported by the necessity of ongoing maintenance
payments for continued product use.
Further supporting the technology industry in 2009 was the unexpected strength
of personal computers (PCs) and cell phones sales. While the final figures of
worldwide sales are not yet available, it is estimated that PC unit sales ended
down only 8% in 2009, a figure much better than
SECTOR BREAKDOWN(1) (at Dec. 31, 2009)
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<Table>
<Caption>
Consumer Discretionary 1.2%
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Health Care 5.2%
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Information Technology 85.8%
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Telecommunication Services 1.8%
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Utilities 0.1%
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Other(2) 5.9%
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</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan). The Fund's
composition is subject to change.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
analysts expected. PC demand in emerging economies -- which fared better,
overall, than developed economies in the recession -- is surging where
penetration levels are still low. The cell phone market also held up well, due
mainly to the ongoing move to smart phones with greater functionality and
Internet features. Multitudinous product launches and innovations have prompted
consumers to replace their phones in greater frequency than was perhaps seen
only a few years ago.
The electronics industry was a prime beneficiary of the improvement we saw in PC
and cell phone sales as the year progressed. Inventories were rebuilt throughout
the electronics industry supply chain, which gave rise to significant positive
earnings surprises within semiconductors in particular, but also through many
areas of electronics, beginning in June and extending through year-end.
Semiconductors had been negatively impacted the most in 2008 and returned as the
strongest performing industry in 2009. Overall, IT spending was in the negative
single digits, not a cataclysmic decline, as compared to other market sectors.
Software was the Fund's largest weighting, considerably overweight, relative to
the S&P NATS Index during the year and stock selection, particularly within
systems software was a significant contributor to the
TOP TEN HOLDINGS(1) (at Dec. 31, 2009)
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<Table>
<Caption>
Synopsys 7.1%
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Check Point Software Technologies 5.6%
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Microsoft 5.6%
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Amdocs 5.4%
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Symantec 5.2%
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Oracle 5.2%
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Cisco Systems 5.1%
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Apple 5.0%
- ------------------------------------------------
Open Text 4.4%
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BMC Software 4.2%
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</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan and Cash &
Cash Equivalents).
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
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6 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
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Fund's investment results, on an absolute and relative basis. Notable names
within software included CHECK POINT SOFTWARE TECHNOLOGIES, SYMANTEC, MCAFEE,
SYNOPSIS, AMDOCS, OPEN TEXT, MICROSOFT, BMC SOFTWARE, and PARAMETRIC TECHNOLOGY.
The semiconductor industry also contributed significantly to the Fund's results
during the year. The Fund maintained a sizable underweight, relative to the S&P
NATS Index during the year, but stock selection led the Fund to substantially
outperform the index. Most outstanding was the Fund's holding in chip
manufacturer MARVELL TECHNOLOGY GROUP.
The Fund was underweight in computer and peripherals, an industry that
outperformed for the year. While the allocation detracted from relative
performance, stock selection more than overcame the detraction, with strong
results from APPLE, NETAPP, EMC and HEWLETT-PACKARD. The Fund also maintained an
underweight in communications equipment. Strong contributions from RIVERBED
TECHNOLOGY (which the Fund no longer owns), QUALCOMM and CISCO SYSTEMS added to
the Fund's results.
Within the health care sector, an area which is not represented in the S&P NATS
Index, the Fund benefited from its position in LIFE TECHNOLOGIES as well as from
ADVANCED MEDICAL OPTICS, which was acquired in Feb. 2009 by ABBOTT LABORATORIES,
a company which the Fund also owns.
The largest areas of relative detraction came from areas in which the Fund was
not invested, or was late to the game. The Fund had little exposure to
We currently view the technology sector as a rising tide that's lifting all
boats.
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
contract manufacturing services, an area that rallied strongly during the year.
Commodity semiconductor companies, such as those that produce flash memory and
DRAM chips, which were among the top performing semiconductor companies in 2009
was also an area of missed opportunity. Certain travel-related Internet sites
and online retailers that garnered strong returns were also missed opportunities
for the Fund.
The Fund was also modestly involved with disk drive stocks, which proved to be
extremely strong during the year. The Fund did own WESTERN DIGITAL and SEAGATE
TECHNOLOGY, which returned disappointing results.
CHANGES TO THE FUND'S PORTFOLIO
The only notable change to our allocations was with regard to the semiconductor
capital equipment. The Fund had minimal exposure to the area at the start of the
year. We added positions in this industry to the Fund, such as NOVELLUS SYSTEMS,
PARADYNE, and VERIGY in response to the dramatically improving capital spending
environment as fundamentals in the electronics industry improved and balance
sheets of chip companies strengthened. We've also seen a great improvement in
pricing (more than doubling from their lows) for commodity semiconductors,
especially for DRAM memory chips and band flash chips, which further supports
our rationale for increasing the Fund's exposure to this industry.
While we continue to maintain a significant overweight in software, we pared
back considerably our exposure to video game software during the year. Given the
rise of social networking websites, as well as the advent of casual games on
platforms such as the iPhone and iPod touch, we saw declining prospects for this
niche of the software industry. This tactical move proved advantageous as video
game stocks delivered disappointing results on the whole in 2009.
While we did not implement any significant industry re-allocations, we took
advantage of opportunities present in the market to add to return. For example,
we added to our position in Marvell Technology at an attractive price, which
proved fortuitous when Marvell rallied strongly from the bottom. We also added
to the Fund's position in Apple at the nadir early in 2009 when CEO and co-
founder Steve Jobs announced he was taking a
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8 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
medical leave of absence. Apple's stock price rebounded, more than doubling from
the level at which we added to the position.
OUR FUTURE STRATEGY
IT budgets are showing signs of improving in 2010. It appears that global
enterprise spending, or at least budgetary intentions, for 2010 indicate a 4-5%
growth in IT budgets. There seems to be pent-up demand for storage and servers,
so data center equipment certainly may be on the upswing. We are anticipating
strong results from data center-centric companies as earnings results are
announced in the first quarter of 2010.
We also anticipate meaningful improvement in software projects that have been
held on pause for some time now that the recovery is showing some legs and we
have experienced some stabilization. We anticipate a nice recovery in enterprise
software demand for new licenses and for new products as 2010 unfolds.
Within semiconductors, we anticipate a significant increase in capital spending.
Semiconductors are coming off very depressed levels. Factoring in the rising
prices of commodity chips and the high utilization rates in existing chip
factory facilities, we believe current forecasts of 50-60% growth in capital
spending within semiconductors may be proven correct.
We are seeing vast improvements in the financing environment. We anticipate a
marked increase in initial public offering activity within the technology sector
in 2010. Valuations among technology companies are running a wide spectrum
currently. While some technology companies are at frothy levels, there are still
many companies out there with reasonable valuations. We are finding more value
in larger companies, as companies with smaller floats (small capitalization
structure) are pricing in at the expensive end of the spectrum. We plan to
navigate carefully, likely underweighting smaller, more expensive companies, as
we anticipate secondary offerings with many of these companies, many of which
are in the software and Internet-related areas. We are fairly positive about the
prospects for software and plan to continue to overweight the industry.
There are still a lot of technology companies that are flush with cash, which
lends to our anticipation of a step-up in acquisition activity, as well as
increased share repurchases. We also anticipate that, as the
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
semiconductor industry continues to improve, chip companies may start hiring
once again, increasing spending on design tools and engineers.
<Table>
(PHOTO - ) (PHOTO - ) (PHOTO - )
Paul Wick Reema Shah Ajay Diwan
Portfolio Manager Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in Seligman Communications and Information Fund Class A shares (from
1/1/00 to 12/31/09) as compared to the performance of the S&P North American
Technology Sector Index, the Lipper Science & Technology Funds Index and the
Lipper Science & Technology Funds Average. In comparing the Fund's Class A
shares to the indices and average, you should take into account the fact that
the Fund's performance reflects the maximum initial sales charge of 5.75%, while
such charges are not reflected in the performance of the indices and average.
Returns for the Fund include the reinvestment of any distributions paid during
each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting seligman.com. Also see "Past
Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at Dec. 31, 2009
1 YEAR 3 YEARS 5 YEARS 10 YEARS
SELIGMAN COMMUNICATIONS AND INFORMATION FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $15,072 $10,995 $14,379 $9,257
- ------------------------------------------------------------------------------------------
Average annual total return +50.72% +3.21% +7.53% -0.77%
- ------------------------------------------------------------------------------------------
S&P NORTH AMERICAN TECHNOLOGY SECTOR INDEX(1)
Cumulative value of $10,000 $16,319 $10,814 $12,023 $5,059
- ------------------------------------------------------------------------------------------
Average annual total return +63.19% +2.64% +3.75% -6.59%
- ------------------------------------------------------------------------------------------
LIPPER SCIENCE & TECHNOLOGY FUNDS INDEX(2)
Cumulative value of $10,000 $15,790 $10,306 $11,591 $4,872
- ------------------------------------------------------------------------------------------
Average annual total return +57.90% +1.01% +3.00% -6.94%
- ------------------------------------------------------------------------------------------
LIPPER SCIENCE & TECHNOLOGY FUNDS AVERAGE(3)
Cumulative value of $10,000 $16,034 $10,124 $11,386 $5,059
- ------------------------------------------------------------------------------------------
Average annual total return +60.34% +0.41% +2.63% -6.93%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
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12 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN SELIGMAN COMMUNICATIONS AND
INFORMATION FUND LINE GRAPH)
<Table>
<Caption>
SELIGMAN COMMUNICATIONS
AND INFORMATION
FUND CLASS S&P NORTH LIPPER SCIENCE LIPPER SCIENCE
A (INCLUDES AMERICAN TECHNOLOGY AND TECHNOLOGY AND TECHNOLOGY
SALES CHARGE) SECTOR INDEX(1) FUNDS INDEX(2) FUNDS AVERAGE(3)
----------------------- ------------------- -------------- ----------------
1/1/00 $ 9,425 $10,000 $10,000 $10,000
3/00 10,919 11,582 12,178 11,918
6/00 9,780 10,565 10,892 10,617
9/00 8,287 9,539 10,663 10,337
12/00 5,891 6,216 6,973 6,848
3/01 5,437 4,503 4,846 4,763
6/01 6,596 5,163 5,431 5,337
9/01 4,554 3,327 3,434 3,400
12/01 6,101 4,440 4,551 4,577
3/02 5,782 4,116 4,228 4,294
6/02 4,347 2,974 3,065 3,117
9/02 3,416 2,168 2,301 2,316
12/02 3,858 2,652 2,668 2,732
3/03 3,755 2,638 2,661 2,725
6/03 4,710 3,230 3,268 3,385
9/03 4,880 3,599 3,596 3,706
12/03 5,488 4,088 4,037 4,201
3/04 5,818 4,044 4,081 4,252
6/04 5,822 4,119 4,058 4,284
9/04 5,147 3,665 3,631 3,836
12/04 6,068 4,207 4,203 4,450
3/05 5,684 3,841 3,856 4,079
6/05 5,835 3,899 3,983 4,211
9/05 6,427 4,172 4,278 4,528
12/05 6,515 4,293 4,429 4,685
3/06 7,322 4,482 4,740 5,004
6/06 6,816 4,069 4,300 4,560
9/06 7,339 4,368 4,461 4,731
12/06 7,935 4,678 4,727 4,979
3/07 8,064 4,678 4,795 5,048
6/07 8,739 5,165 5,216 5,490
9/07 9,262 5,496 5,600 5,814
12/07 9,119 5,470 5,519 5,659
3/08 7,870 4,656 4,654 4,802
6/08 8,410 4,805 4,829 4,966
9/08 7,374 4,203 4,111 4,234
12/08 5,789 3,100 3,085 3,168
3/09 6,383 3,247 3,220 3,300
6/09 7,369 3,913 3,843 3,949
9/09 8,507 4,574 4,518 4,664
12/09 9,257 5,059 4,872 5,059
</Table>
(1) The S&P North American Technology Sector Index (the "NATS Index"), an
unmanaged benchmark, is a modified capitalization-weighted index based on a
universe of technology related stocks. The index reflects reinvestment of
all distributions and changes in market prices.
(2) The Lipper Science & Technology Funds Index (Lipper Index) includes the 30
largest science and technology tracked by Lipper Inc. The Lipper Index's
returns include net reinvested dividends.*
(3) The Lipper Science & Technology Funds Average (Lipper Average), an unmanaged
benchmark, measures the performance of mutual funds that invest at least 65%
of their equity portfolios in science and technology stocks. The average
reflects reinvestment of all distributions and changes in market prices.*
* On Jan. 1, 2010, the Lipper Index replaced the Lipper Average as the Fund's
secondary benchmark. The Lipper Average includes all funds categorized by
Lipper within the broad universe of funds in the Lipper Average, whereas the
Lipper Index includes only a select peer group from the Lipper Average, as
described above. This change was made to bring the selection of the Seligman
Fund secondary benchmarks in line with the practice of the RiverSource
Family of Funds, which would permit a common shareholder experience and
provide a more focused peer group for performance comparison purposes.
Information on both the Lipper Index and the Lipper Average will be included
for a one-year transition period. Thereafter, only the Lipper Index will be
included.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held until Dec. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
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14 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
JULY 1, 2009(a) DEC. 31, 2009 THE PERIOD(b) EXPENSE RATIO
- --------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,256.20 $ 8.02 1.41%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.10 $ 7.17 1.41%
- --------------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,251.70 $12.32 2.17%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.27 $11.02 2.17%
- --------------------------------------------------------------------------------------------
Class C
- --------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,251.50 $12.26 2.16%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.32 $10.97 2.16%
- --------------------------------------------------------------------------------------------
Class I
- --------------------------------------------------------------------------------------------
Actual(d) $1,000 $1,169.90 $ 4.50 1.01%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.11 $ 5.14 1.01%
- --------------------------------------------------------------------------------------------
Class R2
- --------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,254.20 $10.11 1.78%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.23 $ 9.05 1.78%
- --------------------------------------------------------------------------------------------
Class R3
- --------------------------------------------------------------------------------------------
Actual(d) $1,000 $1,167.10 $ 6.86 1.54%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.44 $ 7.83 1.54%
- --------------------------------------------------------------------------------------------
Class R4
- --------------------------------------------------------------------------------------------
Actual(d) $1,000 $1,168.40 $ 5.70 1.28%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.75 $ 6.51 1.28%
- --------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
JULY 1, 2009(a) DEC. 31, 2009 THE PERIOD(b) EXPENSE RATIO
- --------------------------------------------------------------------------------------------
Class R5
- --------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,259.20 $ 5.75 1.01%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.11 $ 5.14 1.01%
- --------------------------------------------------------------------------------------------
</Table>
(a) The beginning account values for Classes I, R3 and R4 are as of the close of
business on Aug. 3, 2009 (when shares of these classes became publicly
available) for actual expense calculations, and as of July 1, 2009 for
hypothetical expense calculations.
(b) Expenses are equal to the annualized expense ratio for each class as
indicated above, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period). Actual expenses
for Classes I, R3 and R4 are equal to the annualized expense ratio for each
class as indicated above, multiplied by the average account value over the
period, multiplied by 150/365 (to reflect the number of days in the period).
(c) Based on the actual return for the six months ended Dec. 31, 2009: +25.62%
for Class A, +25.17% for Class B, +25.15% for Class C, +25.42% for Class R2
and +25.92% for Class R5.
(d) Based on the actual return for the period from Aug. 3, 2009 (when shares
became publicly available) to Dec. 31, 2009: +16.99% for Class I, +16.71%
for Class R3 and +16.84% for Class R4.
- --------------------------------------------------------------------------------
16 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
DEC. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (94.5%)
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (8.9%)
Cisco Systems 7,402,400(b,d) $177,213,456
Nortel Networks 819(b,c) 19
Polycom 427,100(b,d) 10,664,687
QUALCOMM 3,044,000(d) 140,815,440
---------------
Total 328,693,602
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (15.0%)
Apple 834,400(b,d) 175,941,584
Dell 1,328,000(b,d) 19,070,080
Electronics for Imaging 4,792,700(b,d,g) 62,353,027
EMC 3,711,600(b) 64,841,652
Hewlett-Packard 1,858,502 95,731,438
NetApp 1,839,630(b,d) 63,264,876
Teradata 1,435,700(b) 45,124,051
Western Digital 617,300(b,d) 27,253,795
---------------
Total 553,580,503
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.9%)
Deutsche Telekom ADR 2,374,900(c,d) 34,911,030
Qwest Communications
Intl 4,049,200(d) 17,047,132
Telecom Italia 10,418,100(c,d) 16,227,890
---------------
Total 68,186,052
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.2%)
AGA Medical Holdings 866,063(b,d) 12,791,751
Inverness Medical Innovations 210,600(b,d) 8,742,006
Medtronic 403,722(d) 17,755,694
St. Jude Medical 2,116,800(b) 77,855,903
---------------
Total 117,145,354
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (0.1%)
Emdeon Cl A 249,077(b) 3,798,424
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (6.6%)
eBay 1,444,533(b,d) 34,004,307
Open Text 3,791,698(b,c,g) 154,132,523
VeriSign 2,274,400(b,d) 55,131,456
Workstream 2,601(b,c) 717
---------------
Total 243,269,003
- -------------------------------------------------------------------------------------
IT SERVICES (6.0%)
Amdocs 6,572,498(b,c) 187,513,368
Fidelity Natl Information Services 1,346,312(d) 31,557,553
---------------
Total 219,070,921
- -------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.4%)
Life Technologies 289,265(b,d) 15,108,311
- -------------------------------------------------------------------------------------
MEDIA (1.2%)
DreamWorks Animation
SKG Cl A 1,075,400(b,d) 42,962,230
- -------------------------------------------------------------------------------------
OFFICE ELECTRONICS (0.9%)
Xerox 4,003,200(d) 33,867,072
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (1.5%)
Abbott Laboratories 1,048,000 56,581,520
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (5.5%)
Avago Technologies 1,217,316(b,c,d) 22,264,710
Lam Research 290,400(b) 11,386,584
Marvell Technology Group 1,380,943(b,c,d) 28,654,567
Microchip Technology 401,400(d) 11,664,684
Natl Semiconductor 1,230,500(d) 18,900,480
Novellus Systems 2,995,200(b,d) 69,907,968
Teradyne 2,031,500(b,d) 21,797,995
Xilinx 732,600(d) 18,358,956
---------------
Total 202,935,944
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SOFTWARE (43.3%)
Adobe Systems 789,500(b) $29,037,810
Aspen Technology 2,252,000(b) 22,080,860
BMC Software 3,669,864(b) 147,161,546
Check Point Software Technologies 5,781,443(b,c) 195,875,289
McAfee 692,500(b) 28,094,725
Mentor Graphics 6,962,400(b) 61,477,992
Micro Focus Intl 1,739,000(c) 12,723,572
Microsoft 6,421,900 195,803,731
NICE Systems ADR 354,300(b,c) 10,997,472
Nuance Communications 7,659,100(b) 119,022,414
Oracle 7,450,800 182,842,632
Parametric Technology 8,827,116(b) 144,235,075
SolarWinds 348,711(b) 8,023,840
SonicWALL 1,087,000(b) 8,272,070
Symantec 10,221,200(b) 182,857,268
Synopsys 11,090,171(b) 247,089,011
---------------
Total 1,595,595,307
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $3,217,244,735) $3,480,794,243
- -------------------------------------------------------------------------------------
<Caption>
PREFERRED STOCKS & OTHER (0.1%)
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (--%)
Flashpoint Technology
Cv 246,914(b,e,f) $--
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (0.1%)
Silver Peak Systems
Cv 2,620,545(b,f) 2,201,259
- -------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (--%)
Miasole
Cv 805,620(b,f) 1,611,240
- -------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS & OTHER
(Cost: $21,074,781) $3,812,499
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (6.0%)
SHARES VALUE(a)
RiverSource Short-Term
Cash Fund, 0.18% 220,333,806(h) $220,333,806
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $220,333,806) $220,333,806
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (14.8%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND (0.1%)
JPMorgan Prime Money
Market Fund 1,962,282 $1,962,282
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (CONTINUED)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
ASSET-BACKED COMMERCIAL PAPER (2.9%)
Antalis US Funding
01-20-10 0.23% $6,997,183 $6,997,183
Arabella Finance LLC
01-19-10 0.65 9,994,222 9,994,222
Belmont Funding LLC
01-04-10 0.48 9,997,733 9,997,733
Cancara Asset Securitisation LLC
01-20-10 0.28 14,989,383 14,989,383
Ebbets Funding LLC
01-07-10 0.56 3,997,822 3,997,822
Giro Balanced Funding
01-04-10 0.45 9,999,125 9,999,125
Grampian Funding LLC
01-04-10 0.25 9,997,639 9,997,639
01-14-10 0.27 9,997,975 9,997,975
Rhein-Main Securitisation
01-21-10 0.41 4,994,761 4,994,761
03-08-10 0.36 9,990,900 9,990,900
03-15-10 0.30 4,996,292 4,996,292
Versailles Commercial Paper LLC
01-19-10 0.35 9,996,792 9,996,792
---------------
Total 105,949,827
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (CONTINUED)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
CERTIFICATES OF DEPOSIT (9.5%)
Banco Bilbao Viz Argentaria, London
03-01-10 0.26% $10,005,075 $10,005,075
Banco Espirito Santo e Commerciale
01-07-10 0.47 9,999,086 9,999,086
Banco Popular Espanol
01-14-10 0.38 15,000,000 15,000,000
01-25-10 0.41 4,998,178 4,998,178
Banco Santander Central Hispano
01-13-10 0.32 12,000,000 12,000,000
Bank of Austria
01-15-10 0.30 9,997,501 9,997,501
Bank of Tokyo Securities
03-19-10 0.29 5,000,000 5,000,000
03-23-10 0.29 4,000,000 4,000,000
Banque Federative du Credit Mutuel
01-19-10 0.35 3,996,425 3,996,425
Bayrische Hypo-Und Vereinsbank
01-04-10 0.50 11,000,000 11,000,000
Caisse des Depots
01-28-10 0.27 1,998,621 1,998,621
Caixa Geral de Deposit
01-08-10 0.35 5,000,000 5,000,000
03-15-10 0.30 20,000,000 20,000,000
Commerzbank
01-04-10 0.18 15,000,000 15,000,000
01-04-10 0.23 9,998,020 9,998,020
Credit Industrial et Commercial
01-06-10 0.38 5,000,000 5,000,000
02-03-10 0.33 5,000,000 5,000,000
03-04-10 0.38 2,000,000 2,000,000
03-10-10 0.35 5,000,000 5,000,000
Den Danske Bank
01-04-10 0.25 15,000,000 15,000,000
Dexia Bank
01-11-10 0.40 14,994,502 14,994,502
01-29-10 0.40 4,998,278 4,998,278
DZ Bank
01-05-10 0.29 4,997,587 4,997,587
Erste Bank der Oesterreichischen Sparkassen
01-05-10 0.23 15,000,000 15,000,000
Hong Kong Shanghai Bank
01-04-10 0.29 5,000,000 5,000,000
Jyske Bank
03-03-10 0.41 4,994,937 4,994,937
KBC Bank
01-14-10 0.31 7,997,865 7,997,865
01-25-10 0.32 10,000,000 10,000,000
Mizuho Corporate Bank
01-25-10 0.32 10,000,000 10,000,000
02-19-10 0.29 5,000,000 5,000,000
Natixis
01-19-10 0.30 1,999,001 1,999,001
Norinchukin Bank
01-13-10 0.31 12,000,000 12,000,000
01-19-10 0.27 4,998,725 4,998,725
NyKredit Bank
03-22-10 0.44 10,000,000 10,000,000
03-29-10 0.43 5,000,000 5,000,000
Pohjola Bank
03-15-10 0.39 5,994,091 5,994,091
Raiffeisen Zentralbank Oesterreich
01-06-10 0.28 15,000,000 15,000,000
Skandinaviska Enskilda Banken
01-04-10 0.40 3,000,000 3,000,000
State of Hessen
01-04-10 0.20 15,000,000 15,000,000
Sumitomo Mitsui Banking
02-12-10 0.31 5,000,000 5,000,000
02-22-10 0.31 12,000,000 12,000,000
Unicredito Italiano
03-08-10 0.34 4,995,707 4,995,707
---------------
Total 347,963,599
- -------------------------------------------------------------------------------------
COMMERCIAL PAPER (0.5%)
BTM Capital
02-05-10 0.39 14,985,213 14,985,213
KBC Financial Products
01-11-10 0.43 4,997,910 4,997,910
---------------
Total 19,983,123
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (CONTINUED)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
REPURCHASE AGREEMENTS (1.8%)(i)
Cantor Fitzgerald
dated 12-31-09, matures 01-04-10,
repurchase price
$68,000,151 0.02% $68,000,000 $68,000,000
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR
SECURITIES ON LOAN
(Cost: $543,858,831) $543,858,831
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $4,002,512,153)(j) $4,248,799,379
=====================================================================================
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
NOTES TO PORTFOLIO OF INVESTMENTS
<Table>
ADR -- American Depository Receipt
</Table>
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At Dec. 31, 2009, the
value of foreign securities, excluding short-term securities, represented
18.02% of net assets.
(d) At Dec. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Negligible market value.
(f) Identifies issues considered to be illiquid as to their marketability (see
Note 2 to the financial statements). The aggregate value of such securities
at Dec. 31, 2009 was $3,812,499, representing 0.10% of net assets.
Information concerning such security holdings at Dec. 31, 2009 is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
---------------------------------------------------------------
Flashpoint Technology
Cv 09-10-99 $1,000,844
Miasole
Cv 07-10-08 10,032,163
Silver Peak Systems
Cv 01-14-08 10,041,774
</Table>
- --------------------------------------------------------------------------------
20 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(g) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during
the year ended Dec. 31, 2009 are as follows:
<Table>
<Caption>
BEGINNING PURCHASE SALES ENDING DIVIDEND
ISSUER COST COST COST COST INCOME VALUE(A)
---------------------------------------------------------------------------------------------------
Advanced Medical
Optics $50,768,397 $1,310,483 $52,078,880 $-- $-- $--
Electronics for
Imaging 114,087,063 1,011,454 -- 115,098,517 -- 62,353,027
Mentor Graphics 85,683,849 7,063,800 19,408,675 73,338,974 -- 61,477,992
Open Text* 67,338,550 113,510,718 49,486,823 131,362,445 -- 154,132,523
Parametric
Technology* 33,400,035 102,134,954 19,803,807 115,731,182 -- 144,235,075
Riverbed
Technology* 24,526,259 32,628,126 57,154,385 -- -- --
Synopsys 295,761,714 -- 21,094,877 274,666,837 -- 247,089,011
---------------------------------------------------------------------------------------------------
Total $671,565,867 $257,659,535 $219,027,447 $710,197,955 $-- $669,287,628
---------------------------------------------------------------------------------------------------
</Table>
* Issuer was not an affiliate for the entire year ended Dec. 31, 2009.
(h) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Dec. 31, 2009.
(i) The table below represents securities received as collateral subject to
repurchase agreements. This collateral is deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have
an aggregate market value greater than or equal to the repurchase price
plus accrued interest at all times. On a daily basis, the market value of
securities held as collateral for repurchase agreements is monitored to
ensure the existence of the proper level of collateral.
<Table>
<Caption>
CANTOR FITZGERALD (0.02%)
SECURITY DESCRIPTION VALUE(A)
-----------------------------------------------------------
Fannie Mae Pool $46,030,710
Fannie Mae Principal Strip 119,178
Fannie Mae REMICS 269,631
Federal Farm Credit Bank 137,974
Federal Home Loan Banks 284,247
Federal Home Loan Mtge Corp 78,740
Federal Natl Mtge Assn 895,692
Freddie Mac Gold Pool 1,587,814
Freddie Mac Non Gold Pool 13,732,068
Freddie Mac REMICS 1,021,339
Ginnie Mae I Pool 2,132,043
Ginnie Mae II Pool 655,681
US Treasury Inflation Indexed Bonds 213,681
US Treasury Strip Coupon 2,201,202
-----------------------------------------------------------
Total market value for collateralized
securities $69,360,000
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(j) At Dec. 31, 2009, the cost of securities for federal income tax purposes
was $4,024,661,884 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $395,479,767
Unrealized depreciation (171,342,272)
-----------------------------------------------------------
Net unrealized appreciation $224,137,495
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
22 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Level 3 investments due to lack of market transparency and corroboration to
support these quoted prices. Additionally, valuation models may be used as the
pricing source for any remaining investments classified as Level 3. These models
rely on one or more significant unobservable inputs and/or significant
assumptions by the Fund Administrator. Inputs used in a valuation model may
include, but are not limited to, financial statement analysis, discount rates
and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Dec. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT DEC. 31, 2009
------------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- -----------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $3,480,794,243 $-- $-- $3,480,794,243
Preferred Stocks &
Other(a) -- -- 3,812,499 3,812,499
- -----------------------------------------------------------------------------------------------
Total Equity Securities 3,480,794,243 -- 3,812,499 3,484,606,742
- -----------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(b) 220,333,806 -- -- 220,333,806
Investments of Cash
Collateral Received
for Securities on
Loan(c) 1,962,282 541,896,549 -- 543,858,831
- -----------------------------------------------------------------------------------------------
Total Other 222,296,088 541,896,549 -- 764,192,637
- -----------------------------------------------------------------------------------------------
Total $3,703,090,331 $541,896,549 $3,812,499 $4,248,799,379
- -----------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Money market fund that is a sweep investment for cash balances in the Fund
at Dec. 31, 2009.
(c) Asset categories for Investments of Cash Collateral are identified in the
Portfolio of Investments.
The following table is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value.
<Table>
<Caption>
PREFERRED STOCKS
& OTHER
- ------------------------------------------------------------------
Balance as of Dec. 31, 2008 $12,122,633
Accrued discounts/premiums (33)
Realized gain (loss) --
Change in unrealized appreciation
(depreciation)* (8,310,101)
Net purchases (sales) --
Transfers in and/or out of Level 3 --
- ------------------------------------------------------------------
Balance as of Dec. 31, 2009 $3,812,499
- ------------------------------------------------------------------
</Table>
* Change in unrealized appreciation (depreciation) relating to securities held
at Dec. 31, 2009 was $(8,310,101).
- --------------------------------------------------------------------------------
24 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1(800) SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
DEC. 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $2,528,121,561) $2,815,319,114
Affiliated money market fund (identified cost $220,333,806) 220,333,806
Investments of cash collateral received for securities on loan
(identified cost $543,858,831) 543,858,831
Other affiliated issuers (identified cost $710,197,955) 669,287,628
- ---------------------------------------------------------------------------------
Total investments in securities (identified cost $4,002,512,153) 4,248,799,379
Foreign currency holdings (identified cost $157) 158
Capital shares receivable 9,478,229
Dividends and accrued interest receivable 749,421
Receivable for investment securities sold 9,139,640
- ---------------------------------------------------------------------------------
Total assets 4,268,166,827
- ---------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 9,925,103
Payable for investment securities purchased 28,479,478
Payable upon return of securities loaned 543,858,831
Accrued investment management services fees 86,531
Accrued distribution fees 1,532,138
Accrued transfer agency fees 2,094,033
Accrued administrative services fees 5,103
Accrued plan administration services fees 14,984
Other accrued expenses 404,181
- ---------------------------------------------------------------------------------
Total liabilities 586,400,382
- ---------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $3,681,766,445
- ---------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.10 par value $ 9,893,743
Additional paid-in capital 3,655,293,532
Accumulated net investment loss (72,743)
Accumulated net realized gain (loss) (229,635,811)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 246,287,724
- ---------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $3,681,766,445
- ---------------------------------------------------------------------------------
*Value of securities on loan $ 523,221,578
- ---------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $2,788,834,356 71,908,305 $38.78(1)
Class B $ 106,645,895 3,289,023 $32.42
Class C $ 694,889,021 21,418,226 $32.44
Class I $ 39,507,415 980,688 $40.29
Class R2 $ 37,012,489 971,801 $38.09
Class R3 $ 16,436 431 $38.13
Class R4 $ 7,565 188 $40.24
Class R5 $ 14,853,268 368,766 $40.28
- -------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $41.15. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 27
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED DEC. 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 11,047,020
Interest 485,247
Income distributions from affiliated money market fund 260,337
Income from securities lending -- net 569,338
Less foreign taxes withheld (44,148)
- ---------------------------------------------------------------------------------
Total income 12,317,794
- ---------------------------------------------------------------------------------
Expenses:
Investment management services fees 25,152,110
Distribution fees
Class A 5,402,710
Class B 1,008,895
Class C 5,611,229
Class R2 133,982
Class R3 11
Transfer agency fees
Class A 8,380,661
Class B 416,071
Class C 2,209,964
Class R2 80,307
Class R3 3
Class R4 2
Class R5 47,585
Administrative services fees 868,517
Plan administration services fees
Class R2 42,705
Class R3 11
Class R4 6
Compensation of board members 88,879
Custodian fees 557,425
Printing and postage 716,685
Registration fees 343,000
Professional fees 70,966
Other 214,378
- ---------------------------------------------------------------------------------
Total expenses 51,346,102
- ---------------------------------------------------------------------------------
Investment income (loss) -- net (39,028,308)
- ---------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
28 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ (117,017,425)
Security transactions -- affiliated issuers 65,564,607
Foreign currency transactions (92,111)
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (51,544,929)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 1,412,780,368
- ---------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 1,361,235,439
- ---------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $1,322,207,131
- ---------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED DEC. 31, 2009 2008
OPERATIONS
Investment income (loss) -- net $ (39,028,308) $ (42,023,306)
Net realized gain (loss) on investments (51,544,929) (164,881,769)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies 1,412,780,368 (1,192,084,260)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 1,322,207,131 (1,398,989,335)
- ---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 513,854,272 192,361,081
Class B shares 12,141,432 9,938,711
Class C shares 81,075,171 34,569,940
Class D shares* N/A 11,131,628
Class I shares 35,623,554 N/A
Class R2 shares 16,237,775 15,245,618
Class R3 shares 15,000 N/A
Class R4 shares 6,627 N/A
Class R5 shares 7,161,434 11,095,507
Conversions from Class B to Class A
Class A shares 20,508,952 69,644,133
Class B shares (20,508,952) (69,644,133)
Conversions from Class D to Class C*
Class C shares N/A 518,264,197
Class D shares N/A (518,264,197)
Payments for redemptions
Class A shares (391,795,379) (511,877,671)
Class B shares (25,038,254) (41,470,202)
Class C shares (89,519,549) (100,660,944)
Class D shares* N/A (30,769,594)
Class I shares (478,828) N/A
Class R2 shares (11,225,467) (9,770,927)
Class R5 shares (19,961,642) (13,147,865)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 128,096,146 (433,354,718)
- ---------------------------------------------------------------------------------------------
Proceeds from regulatory settlements (Note 10) 7,971,302 --
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 1,458,274,579 (1,832,344,053)
Net assets at beginning of year 2,223,491,866 4,055,835,919
- ---------------------------------------------------------------------------------------------
Net assets at end of year $3,681,766,445 $ 2,223,491,866
- ---------------------------------------------------------------------------------------------
Accumulated net investment loss $ (72,743) $ (24,830)
- ---------------------------------------------------------------------------------------------
</Table>
* Effective May 16, 2008, Class D shares converted to Class C shares.
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. Per share net investment income (loss)
amounts are calculated based on average shares outstanding during the period.
Total returns assume reinvestment of all dividends and distributions. Total
returns do not reflect payment of sales charges, if any, and are not annualized
for periods of less than one year.
<Table>
<Caption>
YEAR ENDED DEC. 31,
CLASS A -------------------------------------------------------
PER SHARE DATA 2009 2008 2007 2006 2005
Net asset value, beginning of period $24.25 $38.20 $33.24 $27.29 $25.42
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.37) (.36) (.32) (.27) (.29)
Net gains (losses) (both realized and
unrealized) 14.81 (13.59) 5.28 6.22 2.16
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 14.44 (13.95) 4.96 5.95 1.87
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement .09 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $38.78 $24.25 $38.20 $33.24 $27.29
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 59.92%(a) (36.52%) 14.92% 21.80% 7.36%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.61% 1.52% 1.46% 1.51% 1.58%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(c) 1.61% 1.52% 1.46% 1.49% 1.53%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.18%) (1.12%) (.89%) (.88%) (1.16%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2,789 $1,642 $2,907 $2,613 $2,262
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 150% 133% 206% 187% 136%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED DEC. 31,
CLASS B -------------------------------------------------------
PER SHARE DATA 2009 2008 2007 2006 2005
Net asset value, beginning of period $20.43 $32.42 $28.42 $23.51 $22.08
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.51) (.52) (.50) (.42) (.42)
Net gains (losses) (both realized and
unrealized) 12.42 (11.47) 4.50 5.33 1.85
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 11.91 (11.99) 4.00 4.91 1.43
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement .08 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.42 $20.43 $32.42 $28.42 $23.51
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 58.69%(a) (36.98%) 14.07% 20.88% 6.48%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 2.39% 2.27% 2.21% 2.26% 2.33%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(c) 2.39% 2.27% 2.21% 2.24% 2.28%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.97%) (1.87%) (1.64%) (1.63%) (1.91%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $107 $94 $269 $365 $484
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 150% 133% 206% 187% 136%
- ----------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED DEC. 31,
CLASS C -------------------------------------------------------
PER SHARE DATA 2009 2008 2007 2006 2005
Net asset value, beginning of period $20.44 $32.43 $28.44 $23.52 $22.08
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.51) (.50) (.50) (.42) (.42)
Net gains (losses) (both realized and
unrealized) 12.43 (11.49) 4.49 5.34 1.86
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 11.92 (11.99) 3.99 4.92 1.44
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement .08 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.44 $20.44 $32.43 $28.44 $23.52
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 58.71%(a) (36.97%) 14.03% 20.92% 6.52%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 2.36% 2.27% 2.21% 2.26% 2.33%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(c) 2.36% 2.27% 2.21% 2.24% 2.28%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.94%) (1.87%) (1.64%) (1.63%) (1.91%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $695 $447 $268 $213 $178
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 150% 133% 206% 187% 136%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
CLASS I YEAR ENDED DEC. 31,
PER SHARE DATA 2009(d)
Net asset value, beginning of period $34.44
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08)
Net gains (losses) (both realized and
unrealized) 5.93
- ----------------------------------------------------------------------
Total from investment operations 5.85
- ----------------------------------------------------------------------
Net asset value, end of period $40.29
- ----------------------------------------------------------------------
TOTAL RETURN 16.99%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.00%(e)
- ----------------------------------------------------------------------
Net investment income (loss) (.50%)(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $40
- ----------------------------------------------------------------------
Portfolio turnover rate 150%
- ----------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED DEC. 31,
CLASS R2* -------------------------------------------------------
PER SHARE DATA 2009 2008 2007 2006 2005
Net asset value, beginning of period $23.89 $37.73 $32.92 $27.09 $25.29
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.46) (.43) (.41) (.34) (.36)
Net gains (losses) (both realized and
unrealized) 14.57 (13.41) 5.22 6.17 2.16
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 14.11 (13.84) 4.81 5.83 1.80
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement .09 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $38.09 $23.89 $37.73 $32.92 $27.09
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 59.44%(a) (36.68%) 14.61% 21.52% 7.12%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.93% 1.77% 1.71% 1.76% 1.83%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(c) 1.93% 1.77% 1.71% 1.74% 1.78%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.50%) (1.37%) (1.14%) (1.13%) (1.41%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $37 $20 $25 $12 $6
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 150% 133% 206% 187% 136%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
CLASS R3 YEAR ENDED DEC. 31,
PER SHARE DATA 2009(d)
Net asset value, beginning of period $32.67
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.16)
Net gains (losses) (both realized and
unrealized) 5.62
- ----------------------------------------------------------------------
Total from investment operations 5.46
- ----------------------------------------------------------------------
Net asset value, end of period $38.13
- ----------------------------------------------------------------------
TOTAL RETURN 16.71%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.54%(e)
- ----------------------------------------------------------------------
Net investment income (loss) (1.08%)(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- ----------------------------------------------------------------------
Portfolio turnover rate 150%
- ----------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS R4 YEAR ENDED DEC. 31,
PER SHARE DATA 2009(d)
Net asset value, beginning of period $34.44
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.12)
Net gains (losses) (both realized and
unrealized) 5.92
- ----------------------------------------------------------------------
Total from investment operations 5.80
- ----------------------------------------------------------------------
Net asset value, end of period $40.24
- ----------------------------------------------------------------------
TOTAL RETURN 16.84%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Total expenses 1.28%(e)
- ----------------------------------------------------------------------
Net investment income (loss) (.76%)(e)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- ----------------------------------------------------------------------
Portfolio turnover rate 150%
- ----------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED DEC. 31,
CLASS R5* -------------------------------------------------------
PER SHARE DATA 2009 2008 2007 2006 2005
Net asset value, beginning of period $25.08 $39.32 $34.07 $27.83 $25.81
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.27) (.21) (.17) (.13) (.17)
Net gains (losses) (both realized and
unrealized) 15.38 (14.03) 5.42 6.37 2.19
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 15.11 (14.24) 5.25 6.24 2.02
- ----------------------------------------------------------------------------------------------------------
Proceeds from regulatory settlement .09 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $40.28 $25.08 $39.32 $34.07 $27.83
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 60.60%(a) (36.22%) 15.41% 22.42% 7.83%
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.27% 1.04% 1.01% 1.04% 1.08%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(c) 1.27% 1.04% 1.01% 1.02% 1.03%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.87%) (.64%) (.44%) (.41%) (.66%)
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15 $20 $33 $24 $18
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 150% 133% 206% 187% 136%
- ----------------------------------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
* On June 13, 2009, Class R and Class I shares (in existence on or before June
13, 2009) were redesignated as Class R2 and Class R5 shares, respectively.
(a) In March and May of 2009, the Fund received proceeds from regulatory
settlements. Had the Fund not received these proceeds, the total return
would have been lower by 0.36%.
(b) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
reported expense ratios.
(c) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(d) For the period from Aug. 3, 2009 (when shares became publicly available) to
Dec. 31, 2009.
(e) Annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
Seligman Communications and Information Fund, Inc. (the Fund) is registered
under the Investment Company Act of 1940, as amended (the 1940 Act) as a
diversified, open-end management investment company and has one billion
authorized shares of capital stock. The Fund invests at least 80% of its net
assets in the securities of companies operating in the communications,
information and related industries.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally 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 originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Effective June 13, 2009, Class R and Class I* shares were redesignated as
Class R2 and Class R5 shares, respectively. Class R2 and Class R5 shares are
offered without a front-end sales charge or CDSC to qualifying institutional
investors. Prior to June 13, 2009, Class R shares (redesignated to Class R2
shares) charged a 1% CDSC on shares sold within one year of initial purchase.
- - Class I*, Class R3 and Class R4 shares are offered without a front-end sales
charge or CDSC to qualifying institutional investors. These share classes
became available Aug. 3, 2009.
Effective May 16, 2008, Class D shares converted to Class C shares and as of
that date the Fund no longer offers Class D shares.
At Dec. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares.
* All references within the report reflect the redesignated share classes
(i.e. the Class I shares in existence on or before June 13, 2009 are
reflected as Class R5 shares, and the Class I shares reflected are a new
share class for the Fund.)
- --------------------------------------------------------------------------------
36 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM )(Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP but
rather organized it into a hierarchy where all guidance within the Codification
carries an equal level of authority. The Codification became effective for
financial statements issued for interim and annual periods ending after Sept.
15, 2009. The Codification did not have an effect on the Fund's financial
statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Fund's Board of Directors (the Board) generally
contemplate the use of fair valuation in the event that price quotations or
valuations are not readily available, price quotations or
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
valuations from other sources are not reflective of market value and thus deemed
unreliable, or a significant event has occurred in relation to a security or
class of securities (such as foreign securities) that is not reflected in price
quotations or valuations from other sources. A fair value price is a good faith
estimate of the value of a security at a given point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those 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. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Dec. 31, 2009, foreign currency holdings were entirely
comprised of Taiwan dollars.
- --------------------------------------------------------------------------------
38 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Generally, securities received as
collateral subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. On a daily basis, the market value of securities
held as collateral for repurchase agreements is monitored to ensure the
existence of the proper level of collateral.
ILLIQUID SECURITIES
At Dec. 31, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at Dec. 31, 2009 was
$3,812,499 representing 0.10% of net assets. Certain illiquid securities may be
valued, in good faith, by management at fair value according to procedures
approved by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
RECENT ACCOUNTING PRONOUNCEMENT
On Jan. 21, 2010, the FASB issued an Accounting Standards Update (the
amendment), Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements, which provides guidance on how
investment assets and liabilities are to be valued and disclosed. Specifically,
the amendment requires reporting entities to disclose the input and valuation
techniques used to measure fair value for both recurring and nonrecurring fair
value measurements for Level 2 or Level 3 positions. The amendment also requires
that transfers between all levels (including Level 1 and Level 2) be disclosed
on a gross basis (i.e., transfers out must be disclosed separately from
transfers in), and the reason(s) for the transfer. Additionally purchases,
sales, issuances and settlements must be disclosed on a gross basis in the Level
3 rollforward. The effective date of the amendment is for interim and annual
periods beginning after Dec. 15, 2009, however, the requirement to provide the
Level 3 activity for purchases, sales, issuances and settlements on a gross
basis will be effective for interim and annual periods beginning after Dec. 15,
2010. At this time the Fund is evaluating the implications of the amendment and
the impact to the financial statements.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
- --------------------------------------------------------------------------------
40 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities.
OPTION TRANSACTIONS
The Fund may buy and write options traded on any U.S. or foreign exchange, or in
the over-the-counter (OTC) market to produce incremental earnings, protect
gains, and facilitate buying and selling of securities for investments. The Fund
may also buy and sell put and call options and write covered call options on
portfolio securities. Options are contracts which entitle the holder to purchase
or sell securities or other financial instruments at a specified price, or in
the case of index options, to receive or pay the difference between the index
value and the strike price of the index option. Completion of options traded in
the OTC market depends upon the credit standing of the other party. Cash
collateral may be collected by the Fund to secure certain OTC options trades.
Cash collateral held by the Fund for such option trades must be returned to the
counterparty upon closure, exercise or expiration of the contract.
Option contracts purchased are recorded as investments and options contracts
written are recorded as liabilities of the Fund. Option contracts are valued
daily at the closing prices on their primary exchanges and unrealized
appreciation or depreciation is recorded. Option contracts, including OTC option
contracts, with no readily available market value are valued using quotations
obtained from independent brokers as of the close of the NYSE. The Fund will
realize a gain or loss when the option transaction expires or is exercised. When
options on debt securities or futures are exercised, the Fund will realize a
gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
The risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of being unable to
enter into a closing transaction if a liquid secondary market does not exist.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The Fund's maximum payout in the case of
written put option contracts represents the maximum potential amount of future
payments (undiscounted) that the Fund could be required to make as a guarantor
for written put options. For OTC options contracts, the transaction is also
subject to counterparty credit risk. The maximum payout amount may be offset by
the subsequent sale, if any, of assets obtained upon the exercise of the put
options by holders of the option contracts or proceeds received upon entering
into the contracts. At Dec. 31, 2009, and for the year then ended, the Fund had
no written or purchased options.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT DEC. 31, 2009
At Dec. 31, 2009, the fund had no outstanding derivatives.
- --------------------------------------------------------------------------------
42 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DEC. 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ----------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ----------------------------------------------------------------------------
Foreign exchange contracts $351,964
- ----------------------------------------------------------------------------
Total $351,964
- ----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
IN INCOME
- ----------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
- ----------------------------------------------------------------------------
Foreign exchange contracts $--
- ----------------------------------------------------------------------------
Total $--
- ----------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At Dec. 31, 2009, the Fund had no outstanding forward foreign currency
contracts. The monthly average gross notional amount for these contracts was
$300,000 for the year ended Dec. 31, 2009.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. Effective June 29,
2009, the management fee is equal to a percentage of the Fund's average daily
net assets that declines from 0.855% to 0.725% as the Fund's net assets
increase. Prior to June 29, 2009, the Investment Manager received an annual fee,
equal to a percentage of the Fund's average daily net assets that declined from
0.90% to 0.75% as the Fund's net assets increased. The management fee for the
year ended Dec. 31, 2009 was 0.87% of the Fund's average daily net assets. The
reduction in the investment management services fee schedule on June 29, 2009 is
related to the elimination of the administrative portion of the management fee
that is now being charged separately to the Fund through the Administrative
Services Agreement with Ameriprise Financial. See Administrative services fees
below for more information.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, effective June 29, 2009, the Fund
pays Ameriprise Financial an annual fee for administration and accounting
services equal to a percentage of the Fund's average daily net assets that
declines from 0.06% to 0.03% as the Fund's net assets increase. The fee for the
period from June 29, 2009 through Dec. 31, 2009 was 0.03% of the Fund's average
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
daily net assets. Prior to June 29, 2009, Ameriprise Financial administered
certain aspects of the Fund's business and other affairs for no additional fee.
The fees payable under the Administrative Services Agreement beginning on June
29, 2009 are offset by corresponding decreases in the investment management fees
charged to the Fund and the elimination of separate fees that were previously
payable to State Street Bank and Trust Company, in its capacity as the Fund's
prior administrative agent.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Dec. 31,
2009, other expenses paid to this company were $15,617.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Effective June 15, 2009, under a Transfer Agency Agreement, RiverSource Service
Corporation (the Transfer Agent) maintains Fund shareholder accounts and records
and provides Fund shareholder services. Under the Agreement, each Fund pays the
Transfer Agent an annual account-based fee at a rate equal to $19.50 for Class
A, $20.50 for Class B and $20.00 for Class C for this service. The Transfer
Agent also charges an annual fee of $3 per account serviced directly by the Fund
or its designated agent for Class A, Class B and Class C shares. The Fund also
pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the
Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and
Class R5 shares. The Transfer Agent charges an annual fee of $5 per inactive
account, charged on a pro rata basis for the 12 month period from the date the
account becomes inactive. These fees are included in the transfer agency fees in
the Statement of Operations.
Prior to June 15, 2009, Seligman Data Corp. (SDC), owned by six associated
investment companies, provided shareholder servicing and transfer agency
services to the Fund, as well as certain other Seligman funds. In January 2009,
the Board approved the Fund's termination of the shareholder servicing and
- --------------------------------------------------------------------------------
44 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
transfer agency relationship with SDC and the engagement of RiverSource Service
Corporation to provide shareholder servicing and transfer agency services. As a
result of the Board's termination of the shareholder servicing and transfer
agency relationship with SDC (which was SDC's sole business), SDC has exited the
transfer agent business, effective June 15, 2009.
For the period from Jan. 1, 2009 to June 15, 2009, SDC charged the Fund
$3,591,869 for shareholder account and transfer agent services in accordance
with a methodology approved by the Fund's Board. Class R5 shares received more
limited shareholder services than the Fund's other classes of shares. SDC did
not allocate to Class R5 the costs of any of its departments that did not
provide services to the Class R5 shareholders. Costs of SDC directly
attributable to the other classes of the Fund were charged to those classes in
proportion to their relative net asset values. Costs directly attributable to
Class R5 shares were charged to Class R5. The remaining charges were allocated
to all classes by SDC pursuant to a formula based on their net assets,
shareholder transaction volumes and number of shareholder accounts.
In connection with the termination of the Fund's relationship with SDC, the Fund
incurred certain non-recurring charges, including charges relating to the
remaining periods of SDC's leases (the Non-Recurring Charges). These Non-
Recurring Charges were incurred over a period from Jan. 28, 2009 to June 12,
2009, and amounted to $3,764,056 or 0.13% of the Fund's average daily net assets
for the year ended Dec. 31, 2009. These Non-Recurring Charges are included in
transfer agency fees in the Statement of Operations.
The Fund and certain other associated investment companies (together, the
Guarantors) have severally but not jointly guaranteed the performance and
observance of all the terms and conditions of a lease entered into by SDC,
including the payment of rent by SDC (the Guaranty). The lease and the Guaranty
expire in January 2019. At Dec. 31, 2009, the Fund's total potential future
obligation over the life of the Guaranty is $4,051,251. The liability remaining
at Dec. 31, 2009 for Non-Recurring Charges amounted to $2,078,084 and is
included within accrued transfer agency fees in the Statement of Assets and
Liabilities.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement, effective June 15, 2009, the
Fund pays the Transfer Agent an annual fee at a rate of 0.25% of the Fund's
average daily net assets attributable to Class R2, Class R3 and Class R4 shares
for the provision of various administrative, recordkeeping, communication and
educational services.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Class R2 shares and a fee at an
annual rate of up to 1.00% of the Fund's average daily net assets attributable
to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee,
up to 0.75% was reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $1,333,000 and $20,771,000
for Class B and Class C shares, respectively. These amounts are based on the
most recent information available as of Oct. 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $3,217,828 for Class A, $230,474 for Class B and
$39,161 for Class C for the year ended Dec. 31, 2009. Effective June 13, 2009,
the 1% CDSC was eliminated for Class R2 shares.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $4,044,782,726 and $4,039,460,061, respectively, for the
year ended Dec. 31, 2009. Realized gains and losses are determined on an
identified cost basis.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED DEC. 31, 2009 2008(a)
- -------------------------------------------------------------------
CLASS A
Sold 16,217,513 5,980,227
Converted from Class B(b) 687,488 2,142,260
Redeemed (12,729,267) (16,494,168)
- -------------------------------------------------------------------
Net increase (decrease) 4,175,734 (8,371,681)
- -------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
46 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED DEC. 31, 2009 2008(a)
- -------------------------------------------------------------------
CLASS B
Sold 463,755 356,378
Converted to Class A(b) (812,029) (2,528,843)
Redeemed (968,789) (1,529,507)
- -------------------------------------------------------------------
Net increase (decrease) (1,317,063) (3,701,972)
- -------------------------------------------------------------------
CLASS C
Sold 3,054,623 1,271,822
Converted from Class D(c) N/A 16,354,190
Redeemed (3,514,832) (4,022,668)
- -------------------------------------------------------------------
Net increase (decrease) (460,209) 13,603,344
- -------------------------------------------------------------------
CLASS D(C)
Sold N/A 385,097
Converted to Class C N/A (16,369,687)
Redeemed N/A (1,062,301)
- -------------------------------------------------------------------
Net increase (decrease) N/A (17,046,891)
- -------------------------------------------------------------------
CLASS I(D)
Sold 993,229 N/A
Redeemed (12,541) N/A
- -------------------------------------------------------------------
Net increase (decrease) 980,688 N/A
- -------------------------------------------------------------------
CLASS R2(E)
Sold 521,139 481,706
Redeemed (373,741) (323,620)
- -------------------------------------------------------------------
Net increase (decrease) 147,398 158,086
- -------------------------------------------------------------------
CLASS R3(D)
Sold 431 N/A
- -------------------------------------------------------------------
Net increase (decrease) 431 N/A
- -------------------------------------------------------------------
CLASS R4(D)
Sold 188 N/A
- -------------------------------------------------------------------
Net increase (decrease) 188 N/A
- -------------------------------------------------------------------
CLASS R5(E)
Sold 231,418 345,910
Redeemed (666,534) (393,335)
- -------------------------------------------------------------------
Net increase (decrease) (435,116) (47,425)
- -------------------------------------------------------------------
</Table>
(a) Certain line items from the prior year have been renamed to conform to the
current year presentation.
(b) Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
(c) Effective May 16, 2008, Class D shares converted to Class C shares.
(d) For the period from Aug. 3, 2009 (when shares became publicly available) to
Dec. 31, 2009.
(e) Effective June 13, 2009, Class R and Class I shares were redesignated as
Class R2 and Class R5 shares, respectively.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
7. LENDING OF PORTFOLIO SECURITIES
Effective May 15, 2009, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At Dec. 31, 2009, securities valued at $523,221,578 were
on loan, secured by cash collateral of $543,858,831 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$569,338 earned from securities lending from June 26, 2009 through Dec. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
- --------------------------------------------------------------------------------
48 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Investments. The cost of the Fund's purchases from sales of shares of
RiverSource Short-Term Cash Fund aggregated $1,388,461,661 and $1,168,127,855,
respectively, for the year ended Dec. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Dec. 31, 2009, can be found in the
Portfolio of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
15, 2009, replacing the prior credit facilities. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $500 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to the Fund based on
its borrowings at a rate equal to the sum of the federal funds rate plus (A)
1.25% per annum plus (B) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility.
For the period from June 17, 2009 through Oct. 15, 2009, the credit facility
agreement, which was a collective agreement between the Fund and certain other
funds in the RiverSource Family of Funds, severally and not jointly, permitted
collective borrowings up to $475 million. Interest was charged to the Fund based
on its borrowings at a rate equal to the federal funds rate plus 0.75%. The Fund
also paid a commitment fee equal to its pro rata share of the amount of the
credit facility at a rate of 0.06% per annum.
Prior to June 17, 2009, the Fund participated in a joint $200 million committed
line of credit that was shared by substantially all funds in the Seligman Group
of Investment Companies. The Board had limited the Fund's borrowings to 10% of
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
its net assets. Borrowings pursuant to the credit facility were subject to
interest at a rate equal to the overnight federal funds rate plus 0.50%. The
Fund incurred a commitment fee of 0.12% per annum on its share of the unused
portion of the credit facility. The credit facility may have been drawn upon
only for temporary purposes and was subject to certain other customary
restrictions. The Fund had no borrowings during the year ended Dec. 31, 2009.
10. PROCEEDS FROM REGULATORY SETTLEMENTS
In May 2009, as a result of a settlement of an administrative proceeding brought
by the Securities and Exchange Commission against an unaffiliated third party
relating to market timing and/or late trading of mutual funds, the Fund received
$271,302, which represented the Fund's portion of the proceeds from the
settlement (the Fund was not a party to the proceeding). The proceeds received
by the Fund were recorded as an increase to additional paid-in capital.
In March 2009, without admitting or denying any violations of law or wrongdoing,
J&W Seligman & Co., Incorporated (Seligman), Seligman Advisors, Inc., Seligman
Data Corp. and Brian T. Zino entered into a stipulation of settlement with the
Office of the Attorney General of the State of New York (NYAG) and settled the
claims made by the NYAG. Under the terms of the settlement, Seligman paid $7.7
million to the Fund. The proceeds received by the Fund were recorded as an
increase to additional paid-in capital.
11. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of foreign currency
transactions, post-October losses and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, accumulated net investment loss has been decreased by $38,980,395
and accumulated net realized loss has been decreased by $7,416,229 resulting in
a net reclassification adjustment to decrease paid-in capital by $46,396,624.
- --------------------------------------------------------------------------------
50 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
For the years ended 2009 and 2008 there were no distributions.
At Dec. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income $ --
Undistributed accumulated long-term gain $ --
Accumulated realized loss $(207,486,080)
Unrealized appreciation (depreciation) $ 224,065,250
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$207,486,080 at Dec. 31, 2009, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2011 2016 2017
$12,308,398 $97,889,818 $97,287,864
</Table>
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
12. RISKS RELATING TO CERTAIN INVESTMENTS
CONCENTRATION RISK
The Fund concentrates its investments in companies in the communications,
information and related industries. Therefore, the Fund may be susceptible to
factors affecting these industries and the Fund's net asset value may fluctuate
more than a fund that invests in a wider range of industries. In addition, the
rapid pace of change within many of these industries tends to create a more
volatile operating environment than in other industries.
13. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Feb. 22, 2010, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
14. 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
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' 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. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
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' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review
- --------------------------------------------------------------------------------
52 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
concerning mutual fund trading practices. Seligman's review, which covered the
period 2001-2003, noted one arrangement that permitted frequent trading in
certain open-end registered investment companies managed by Seligman (the
Seligman Funds); this arrangement was in the process of being closed down by
Seligman before September 2003. Seligman identified three other arrangements
that permitted frequent trading, all of which had been terminated by September
2002. In January 2004, Seligman, on a voluntary basis, publicly disclosed these
four arrangements to its clients and to shareholders of the Seligman Funds.
Seligman also provided information concerning mutual fund trading practices to
the SEC and the Office of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known 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
was and had 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. 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
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
legal, arbitration or regulatory proceedings that are likely to have a material
adverse effect on the Funds or the ability of Ameriprise Financial or its
affiliates to perform under their contracts with the Funds. Ameriprise Financial
is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
54 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Communications and Information Fund,
Inc. (the Fund) as of December 31, 2009, and the related statements of
operations, changes in net assets, and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets and financial highlights of the
Fund for the periods presented through December 31, 2008, were audited by other
auditors whose report dated February 27, 2009, expressed an unqualified opinion
on those financial statements and financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audit provides a reasonable basis
for our opinion.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the 2009 financial statements and financial highlights audited
by us as referred to above present fairly, in all material respects, the
financial position of Seligman Communications and Information Fund, Inc. at
December 31, 2009, the results of its operations, changes in its net assets and
the financial highlights for the year then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
February 22, 2010
- --------------------------------------------------------------------------------
56 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
Fiscal year ended Dec. 31, 2009
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 57
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. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman 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
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 71 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Aquila Pharmaceuticals,
Minneapolis, MN 55402 Biopharmaceuticals Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 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; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds (for RiverSource and Threadneedle funds) or seligman.com
(for Seligman funds).
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 Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 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
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 and Ameriprise Financial, Inc. since 2005; Compliance
Minneapolis, MN 55474 Identity Theft Director, Ameriprise Financial, Inc., 2004-2008
Age 46 Prevention Officer
since 2008
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT 61
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting seligman.com; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting seligman.com; or
searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
62 SELIGMAN COMMUNICATIONS AND INFORMATION FUND -- 2009 ANNUAL REPORT
SELIGMAN COMMUNICATIONS AND INFORMATION FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
SELIGMAN.COM
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. Seligman mutual funds are part of the
RiverSource Family of Funds, and are distributed by
RiverSource Fund Distributors, Inc., Member FINRA, and
managed by RiverSource Investments, LLC. RiverSource and
Threadneedle are part of Ameriprise Financial, Inc. Seligman
is an offering brand of RiverSource Investments.
(SELIGMAN LOGO) (C)2010 RiverSource Investments, LLC. SL-9907 A (3/10)
</Table>
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P.
Jones, each qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP for
professional services rendered for the audit of the annual financial
statements for Seligman Communications and Information Fund, Inc. were as
follows:
2009 - $19,765
(b) Audit-Related Fees. The fees for the year ended Dec. 31, to Ernst & Young
LLP for additional audit-related services rendered related to the
semiannual financial statement review, the transfer agent 17Ad-13 review
and other consultations and services required to complete the audit for
Seligman Communications and Information Fund, Inc. were as follows:
2009 - $4,050
(c) Tax Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP for
tax compliance related services rendered for Seligman Communications and
Information Fund, Inc. were as follows:
2009 - $8,042
(d) All Other Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP
for additional professional services rendered for Seligman Communications
and Information Fund, Inc. were as follows:
2009 - $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young LLP
for the registrant and to the registrant's investment adviser and any entity
controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant must be pre-approved
by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2009 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant
were as follows:
2009 - $810,778
(h) 100% of the services performed in item (g) above during 2009 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Investments.
(a) The complete schedule of investments is included in Item 1 of this Form
N-CSR.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not
applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date
of this Form N-CSR, the registrant's Principal Financial Officer and
Principal Executive Officer have concluded that those disclosure
controls and procedures provide reasonable assurance that the material
information required to be disclosed by the registrant on this report is
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal executive
officer and principal financial officer, as required to be disclosed
under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Seligman Communications and Information Fund, Inc.
By /s/ Patrick T. Bannigan
-----------------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date March 5, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
-----------------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date March 5, 2010
By /s/ Jeffrey P. Fox
-----------------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date March 5, 2010