SELIGMAN GLOBAL FUND SERIES, INC.
(the "Series")
Seligman Emerging Markets Fund
Seligman Global Growth Fund
Seligman Global Smaller Companies Fund
Seligman Global Technology Fund
Seligman International Growth Fund
(each, a "Fund", collectively, the "Funds")
Statement of Additional Information
March 2, 2009
200 Ameriprise Financial Center
Minneapolis, MN 55747
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
Effective November 7, 2008, RiverSource Investments, LLC ("RiverSource
Investments" or "investment manager"), investment manager to the RiverSource
Group of Funds, and a wholly owned subsidiary of Ameriprise Financial, Inc.
("Ameriprise Financial"), completed its acquisition (the "Acquisition") of J. &
W. Seligman & Co. Incorporated ("Seligman"). With the Acquisition completed and
shareholders of the Funds having previously approved (at a special meeting held
on November 3, 2008) a new investment management services agreement between
RiverSource Investments and the Series (on behalf of each Fund), RiverSource
Investments became the new investment manager of the Funds effective
November 7, 2008. Shareholders of the Funds (other than Seligman Global
Technology Fund) also approved at the November meeting a subadvisory agreement
between RiverSource Investments and Wellington Management Company, LLP.
This Statement of Additional Information ("SAI") expands upon and supplements
the information contained in the current Prospectus, dated March 2, 2009,
offering Class A shares, Class B shares, Class C shares and Class R shares of
each Fund in the Series, and the current Prospectus of the Series, dated
March 2, 2009, offering Class I shares of Seligman Emerging Markets Fund,
Seligman Global Growth Fund, Seligman Global Smaller Companies Fund and
Seligman International Growth Fund (together, the "Prospectuses"). This SAI,
although not in itself a Prospectus, is incorporated by reference into the
Prospectuses in its entirety. It should be read in conjunction with the
Prospectuses, which you may obtain by writing or calling the Funds at the above
address or telephone numbers, respectively.
The financial statements and notes included in the Series' Annual Report, which
includes the Report of Independent Registered Public Accounting Firm thereon,
are incorporated herein by reference. The Annual Report will be furnished to
you, without charge, if you request a copy of this SAI.
The RiverSource Group of Funds includes a comprehensive array of funds from
RiverSource Investments, including Seligman funds. RiverSource Investments has
also partnered with a number of professional investment managers, including its
affiliate, Threadneedle Investments, to expand the array of funds offered in
the RiverSource Group of Funds, RiverSource funds, RiverSource Partners funds
and Threadneedle funds share the same Board of Directors/Trustees (the
"Board"), and the same policies and procedures. Although the Seligman funds,
including the Series, share the same Board, they do not currently have the same
policies and procedures, and may not be exchanged for shares of the RiverSource
funds, RiverSource Partners funds or Threadneedle funds.
The Series is governed by a Board that meets regularly to review a wide variety
of matters affecting the Series. Detailed information about Fund governance,
the Funds' investment manager, RiverSource Investments and other aspects of
Fund management can be found by referencing the Table of Contents on the
following page.
The website references in this SAI are inactive textual references, and
information contained in or otherwise accessible through these websites does
not form a part of this SAI.
Table of Contents
Series History.............................................. 3
Description of the Funds and their Investments and Risks.... 3
Management of the Funds..................................... 15
Control Persons and Principal Holders of Securities......... 23
Investment Advisory and Other Services...................... 26
Portfolio Managers.......................................... 36
Brokerage Allocation and Other Practices.................... 42
Capital Stock and Other Securities.......................... 44
Purchase, Redemption, and Pricing of Shares................. 44
Taxation of the Series...................................... 52
Underwriters................................................ 55
Calculation of Performance Data............................. 58
Financial Statements........................................ 63
Information Regarding Pending and Settled Legal Proceedings. 63
General Information......................................... 65
Appendix A: The Seligman Funds.............................. 66
Appendix B: The RiverSource Group of Funds.................. 67
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Series History
The Series was incorporated in Maryland on November 22, 1991 under the name
Seligman International Fund Series, Inc. It changed its name to Seligman
Henderson Global Fund Series, Inc. on May 25, 1993, and changed its name to its
present name on January 21, 2000. As of November 7, 2008, the Series is part of
the RiverSource Group of Funds. The RiverSource Group of Funds includes a
comprehensive array of funds managed by RiverSource Investments, including the
Series and the other Seligman mutual funds.
Description of the Funds and their Investments and Risks
Classification
The Series is a diversified, open-end management investment company, or mutual
fund, which consists of five separate and distinct series, or funds:
Seligman Emerging Markets Fund ("Emerging Markets Fund")
Seligman Global Growth Fund ("Global Growth Fund")
Seligman Global Smaller Companies Fund ("Global Smaller Companies Fund")
Seligman Global Technology Fund ("Global Technology Fund")
Seligman International Growth Fund ("International Growth Fund")
Investment Strategies and Risks
The following information regarding each Fund's investments and risks
supplements the information contained in the Series' Prospectuses.
General. In allocating each Fund's investments among geographic regions and
individual countries, such factors as the relative economic growth potential of
the various economies and securities markets; expected levels of inflation;
financial, social and political conditions influencing investment
opportunities; and the outlook for currency relationships will be considered.
Each Fund may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. Each Fund will normally
invest its assets in equity securities, including common stock, securities
convertible into or exchangeable for common stock, depositary receipts, and
warrants. A Fund may, however, invest up to 20% (25% in the case of Global
Growth Fund and International Growth Fund) of its assets in preferred stock and
debt securities. A Fund that invests "primarily" in a certain type of security
invests at least 65% of its net assets (including any amounts borrowed for
investment purposes) in that type of security. Dividends or interest income are
considered only when it is believed that such income will favorably influence
the market value of a security in light of each Fund's objective of capital
appreciation. Equity securities in which each Fund invests may be listed on US
or foreign stock exchanges or traded in US or foreign over-the-counter markets.
Debt securities in which each Fund may invest are not required to be rated by a
recognized rating agency. As a matter of policy, each Fund, with the exception
of the Emerging Markets Fund, will invest only in "investment-grade" debt
securities or, in the case of unrated securities, debt securities that are
deemed to be of equivalent quality to "investment-grade" securities.
"Investment-grade" debt securities are rated within the four highest rating
categories as determined by Moody's Investors Service ("Moody's") or Standard &
Poor's Ratings Services ("S&P"). Securities rated within the highest of the
four investment-grade categories (i.e., Aaa by Moody's and AAA by S&P) are
judged to be of the best quality and carry the smallest degree of risk. For
capital appreciation, the Emerging Markets Fund may invest up to 5% of its
assets in governmental and corporate debt securities that, at the time of
purchase by the Fund, are rated Baa or lower by Moody's and BBB or lower by S&P
or, if unrated, deemed to be of comparable quality. The Emerging Markets Fund
will not invest in debt securities rated lower than C by Moody's or C by S&P
or, if unrated, deemed to be of comparable quality. Securities rated Baa/BBB or
lower lack high quality investment characteristics and may also have
speculative characteristics. Debt securities are interest-rate sensitive, so
their value tends to decrease when interest rates rise and increase when
interest rates fall.
Each Fund may invest in securities represented by European Depositary Receipts
("EDRs"), American Depositary Receipts ("ADRs"), Brazilian Depositary Receipts
("BDRs") and Global Depositary Receipts ("GDRs") (collectively, "Depositary
Receipts"). ADRs are receipts generally issued by a domestic bank or trust
company that represent the deposit of a security of a foreign issuer. ADRs may
be publicly traded on exchanges or over-the-
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counter in the United States and are quoted and settled in US dollars at a
price that generally reflects the US dollar equivalent of the home country
share price. EDRs and GDRs are receipts similar to ADRs and are typically
issued by foreign banks or trust companies and traded in Europe. BDRs are
typically issued by Brazilian banks or trust companies and are traded in
Brazil. Depositary Receipts may be issued as sponsored or unsponsored programs.
In sponsored programs, the issuer has made arrangements to have its securities
traded in the form of a Depositary Receipt. In unsponsored programs, the issuer
may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, the issuers of unsponsored Depositary Receipts are not
obligated to disclose material information in the United States and, therefore,
the import of such information may not be reflected in the market value of such
securities. For purposes of a Fund's investment policies, an investment in
Depositary Receipts will be deemed to be an investment in the underlying
security.
By investing in foreign securities, a Fund will attempt to take advantage of
differences among economic trends and the performance of securities markets in
various countries. During certain periods, the return on equity investments in
some countries has exceeded the return on similar investments in the United
States. The investment manager believes that, in comparison with investment
companies investing solely in domestic securities, it may be possible to obtain
significant appreciation from a portfolio of foreign investments and securities
from various markets that offer different investment opportunities and are
affected by different economic trends. International and global diversification
reduces the effect events in any one country will have on a Fund's entire
investment portfolio. Of course, a decline in the value of a Fund's investments
in one country may offset potential gains from investments in another country.
Foreign Investment Risk Factors. Investments in securities of foreign issuers
may involve risks that are not associated with domestic investments, and there
can be no assurance that a Fund's foreign investments will present less risk
than a portfolio of domestic securities. Foreign issuers may lack uniform
accounting, auditing and financial reporting standards, practices and
requirements, and there is generally less publicly available information about
foreign issuers than there is about US issuers. Governmental regulation and
supervision of foreign stock exchanges, brokers and listed companies may be
less pervasive than is customary in the United States. Securities of some
foreign issuers are less liquid, and their prices are more volatile than
securities of comparable domestic issuers. Foreign securities settlement
practices may in some instances be subject to delays and related administrative
uncertainties which could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon and may involve a risk of loss to a
Fund. Foreign securities markets may have substantially less trading volume
than US markets and far fewer traded issues. Fixed brokerage commissions on
foreign securities exchanges are generally higher than in the United States and
transaction costs with respect to smaller capitalization companies may be
higher than those of larger capitalization companies. Income from foreign
securities may be reduced by a withholding tax at the source or other foreign
taxes. In some countries, there may also be the possibility of expropriation or
confiscatory taxation (in which case a Fund could lose its entire investment in
a certain market); limitations on the removal of moneys or other assets of a
Fund; political or social instability or revolution; or diplomatic developments
that could affect investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside the United States.
Each Fund may invest in sovereign debt. The actions of governments concerning
their respective economies could have an important effect on their ability or
willingness to service their sovereign debt. Such actions could have
significant effects on market conditions and on the prices of securities and
instruments held by a Fund, including the securities and instruments of foreign
private issuers. Factors which may influence the ability or willingness of
foreign sovereigns to service debt include, but are not limited to: the
availability of sufficient foreign exchange on the date payment is due; the
relative size of its debt service burden to the economy as a whole; its balance
of payments (including export performance) and cash flow situation; its access
to international credits and investments; fluctuations in interest and currency
rates and reserves; and its government's policies towards the International
Monetary Fund, the World Bank and other international agencies. If a foreign
sovereign defaults on all or a portion of its foreign debt, a Fund may have
limited legal recourse against the issuer and/or guarantor. In some cases,
remedies must be pursued in the courts of the defaulting party itself, and the
ability of the holder of foreign sovereign debt securities to obtain recourse
may be subject to the political climate in the prevailing country.
Foreign Currency Risk Factors. Investments in foreign securities will usually
be denominated in foreign currency, and each Fund may be affected, favorably or
unfavorably, by the relative strength of the US dollar, changes in foreign
currency and US dollar exchange rates, and exchange control regulations. A Fund
may incur costs in connection with conversions between various currencies. A
Fund's net asset value per share will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect the
value of
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dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the US dollar and other
currencies is generally determined by the forces of supply and demand in the
foreign exchange markets (which in turn are affected by interest rates, trade
flow, and numerous other factors, including, in some countries, local
governmental intervention), but can sometimes be affected by the imposition of
fixed exchange rates that may overvalue a foreign currency, to the detriment of
foreign investors.
Emerging Market Investment Risk Factors. Some of the risks described in the
preceding paragraphs may be more severe for investments in emerging countries.
By comparison with the United States and other developed countries, emerging
countries may have relatively unstable governments, economies based on a less
diversified industrial base and securities markets that trade a smaller number
of securities. Companies in emerging markets may generally be smaller, less
seasoned and more recently organized than many domestic companies. Prices of
securities traded in the securities markets of emerging countries tend to be
volatile. Furthermore, foreign investors are subject to many restrictions in
emerging countries. These restrictions may require, among other things,
governmental approval prior to making investments or repatriating income or
capital or the payment of special levies and taxes, or may impose limits on the
amount or type of securities held by foreigners or on the companies in which
the foreigners may invest.
The economies of individual emerging countries may differ favorably or
unfavorably from the US economy in such respects as growth of gross domestic
product, rates of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency, and balance of payment position and may be based on
a substantially less diversified industrial base. Further, the economies of
emerging countries generally are heavily dependent upon international trade
and, accordingly, have been, and may continue to be, adversely affected by
trade barriers, exchange controls, managed adjustments in relative currency
values, and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Risks of Investments in Russia. The Emerging Markets Fund may invest a portion
of its assets in securities issued by companies located in Russia. Because of
the recent formation of the Russian securities markets as well as the
underdeveloped state of Russia's banking system, settlement, clearing and
registration of securities transactions are subject to significant risks.
Ownership of shares is defined according to entries in the company's share
register and normally evidenced by extracts from the register. Also, there is
no central registration system for shareholders and it is possible for the Fund
to lose its investment through fraud, negligence or mere oversight. While the
Fund will endeavor to ensure that its interest continues to be appropriately
recorded either through a custodian or other agent inspecting the share
register and by obtaining extracts of share registers through regular
confirmations, these extracts have no legal enforceability and it is possible
that subsequent illegal amendment or other fraudulent act may deprive the Fund
of its ownership rights or improperly dilute its interest. In addition, while
applicable Russian regulations impose liability on registrars for losses
resulting from their errors, it may be difficult for the Fund to enforce any
rights it may have against the registrar or issuer of the securities in the
event of loss of share registration. As a result of these investment
activities, the Fund could incur substantial losses.
Smaller Company Investment Risk Factors. Although smaller companies may
generally have greater earnings and sales growth potential than larger
companies, investments in such companies may involve greater risks, such as
limited product lines, limited markets and limited financial and managerial
resources. Less frequently traded securities may be subject to more abrupt
price movements than securities that trade more frequently.
Technology Investment Risk Factors. The value of Global Technology Fund shares
may be susceptible to factors affecting technology and technology-related
industries and to greater risk and market fluctuation than an investment in a
fund that invests in a broader range of portfolio securities. Technology and
technology-related industries may be subject to greater governmental regulation
than many other industries in certain countries, as well as changes in
governmental policies, and the need for regulatory approvals may have a
material adverse effect on these industries. Additionally, these companies may
be subject to risks of developing technologies, competitive pressures, and
other factors and are dependent upon consumer and business acceptance as new
technologies evolve. Securities of smaller, less experienced companies also may
involve greater risks, such as limited product lines, limited markets and
limited financial and managerial resources, and trading in such securities may
be subject to more abrupt price movements than trading in the securities that
trade more frequently.
Derivatives. Each Fund may invest in financial instruments commonly known as
"derivatives" only for hedging or investment purposes. A Fund will not invest
in derivatives for speculative purposes, which means where the derivative
investment exposes the Fund to undue risk of loss, such as where the risk of
loss is greater than the cost of the investment.
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A derivative is generally defined as an instrument whose value is derived from,
or based upon, some underlying index, reference rate (e.g., interest rates or
currency exchange rates), security, commodity, or other asset. A Fund will not
invest in a specific type of derivative without prior approval from the Series'
Board of Directors after consideration of, among other things, how the
derivative instrument serves the Fund's investment objective, and the risks
associated with the investment. Pursuant to this policy, each Fund is permitted
to invest in forward foreign currency exchange contracts, commodities and
commodity contracts, rights and warrants, options and access trades, as more
fully described below.
Forward Foreign Currency Exchange Contracts. Changes in exchange rates will be
considered in making investment decisions. As one way of managing exchange rate
risk, each Fund may enter into forward currency exchange contracts. A forward
foreign currency exchange contract is an agreement to purchase or sell a
specific currency at a future date and at a price set at the time the contract
is entered into. A Fund will usually enter into these contracts to fix the US
dollar value of a security that it has agreed to buy or sell for the period
between the date the trade was entered into and the date the security is
delivered and paid for. A Fund may also use these contracts to hedge the US
dollar value of securities it already owns. A Fund may be required to cover
certain forward currency contract positions by establishing an account with its
custodian that will contain only liquid assets, including, but not limited to,
US Government securities or other liquid high-grade debt obligations.
A Fund may enter into a forward contract to sell or buy the amount of a foreign
currency it believes may experience a substantial movement against another
currency (including the US dollar). In this case, the contract would
approximate the value of some or all of a Fund's portfolio securities
denominated in such foreign currency. If appropriate, a Fund may hedge all or
part of its foreign currency exposure through the use of a basket of currencies
or a proxy currency where such currencies or proxy currency act as an effective
proxy for other currencies. In these circumstances, a Fund may enter into a
forward contract where the amount of the foreign currency to be sold exceeds
the value of the securities denominated in such currency. The use of this
basket hedging technique may be more efficient and economical than entering
into separate forward contracts for each currency held in a Fund. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market
movement in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term currency
market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Under certain circumstances, a
Fund may commit a substantial portion or the entire value of its assets to the
consummation of these contracts. The effect a substantial commitment of a
Fund's assets to forward contracts could have on the investment program of such
Fund and its ability to purchase additional securities will be considered.
Except as set forth above and immediately below, a Fund will also not enter
into such forward contracts or maintain a net exposure to such contracts where
the consummation of the contracts would oblige a Fund to deliver an amount of
foreign currency in excess of the value of such Fund's portfolio securities or
other assets denominated in that currency. A Fund, in order to avoid excess
transactions and transaction costs, may nonetheless maintain a net exposure to
forward contracts in excess of the value of its portfolio securities or other
assets denominated in that currency provided the excess amount is covered by
cash or liquid securities, denominated in any currency, having a value at least
equal at all times to the amount of such excess. Under normal circumstances,
consideration of the prospect for currency parities will be incorporated into
the longer-term investment decisions made with regard to overall
diversification strategies. However, it is believed that it is important to
have the flexibility to enter into such forward contracts when it is determined
that the best interests of a Fund will be served.
At the maturity of a forward contract, a Fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency such
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the
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foreign currency received upon the sale of the portfolio security if its market
value exceeds the amount of foreign currency a Fund is obligated to deliver.
However, a Fund may use cash or liquid securities, denominated in any currency,
to cover the amount by which the value of a forward contract exceeds the value
of the securities to which it relates.
If a Fund retains the portfolio security and engages in an offsetting
transaction, such Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If a Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between a Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, such Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, a Fund will
suffer a loss to the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.
A Fund's dealing in forward foreign currency exchange contracts will generally
be limited to the transactions described above. However, each Fund reserves the
right to enter into forward foreign currency contracts for different purposes
and under different circumstances. Of course, a Fund is not required to enter
into forward contracts with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate.
Although a Fund will seek to benefit by using forward contracts, anticipated
currency movements may not be accurately predicted and the Fund may therefore
incur a gain or loss on a forward contract. A forward contract may help reduce
a Fund's losses on securities denominated in foreign currency, but it may also
reduce the potential gain on the securities depending on changes in the
currency's value relative to the US dollar or other currencies. Additionally,
this method of hedging against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange at a future date. Foreign currency forward
contracts may not be available to a Fund on reasonable terms in many situations
and a Fund may frequently choose not to enter into such contracts even when
they are available.
Investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
or "spread" based on the difference between the prices at which they are buying
and selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange should
the Fund desire to resell that currency to the dealer.
Commodities and Commodity Contracts. Each Fund may purchase and sell
commodities and commodity contracts only to the extent that such activities do
not result in that Fund being a "commodity pool" as defined in the Commodity
Exchange Act and the Commodity Futures Trading Commission's regulations and
interpretations thereunder. Approval of the Board of Directors must be granted
for a Fund to invest in any new type of commodity if it is of a type the Fund
has not previously utilized.
Use of these instruments can involve substantial risks. For example, derivative
instruments can present investment risk to a Fund if the fluctuations in
interest rates, currency values or the market to which the financial instrument
is tied are not accurately predicted. Certain derivative instruments may
involve the use of leverage and, as a result, there is the risk that the Fund
could lose more than the amount of its original investment. For example, a Fund
may purchase futures contracts by making a relatively small "margin deposit"
and, if such contract is thereafter sold at a loss, that Fund could lose
substantially more than the original margin deposit. Although the Funds will
utilize only exchange-traded futures and options thereon, there can be no
assurance that it will be able to close out positions when it wishes to. In
addition, a futures or options strategy may not provide an exact hedge to a
position.
Rights and Warrants. Each Fund may invest in common stock rights and warrants
believed to provide capital appreciation opportunities. No more than 2% of net
assets of a Fund may be invested in warrants not listed on the New York or
American Stock Exchanges. For purposes of this restriction, rights and warrants
acquired by a Fund in units or attached to securities may be deemed to have
been purchased without cost.
Options. The investment manager must seek approval of the Board of Directors of
the Series to invest in any option if it is of a type the Funds have not
previously utilized. Pursuant to this policy, the Board has approved the
investment manager's request that the Funds be permitted to purchase put
options, call options, put spreads, call spreads and collars, and to sell
covered call options (i.e., where a Fund owns the underlying security) and
covered put options (i.e., where a Fund maintains cash or other collateral to
cover the obligation created by the put). These instruments are described below.
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An option is a contract that gives the holder the right to purchase ("call") or
sell ("put") a specified security for an agreed upon price at any time before
the contract's expiration date. The amount paid for an option is known as the
premium, and the exercise price is known as the strike price. The purchaser of
an option has the right, but not the obligation, to purchase or sell a
security. The seller (or "writer") of an option, conversely, has an obligation
to sell or purchase a security if the option is exercised. Some options have
standardized terms and are traded on securities exchanges. Others are privately
negotiated and have no or only a limited trading market. Options may be used
individually or in combinations (e.g., put spreads and collars) to hedge
securities positions or to seek increased investment returns.
In order for a purchased put option to be profitable, the market price of the
underlying security must decline sufficiently below the strike price to cover
the premium and transaction costs. Conversely, in order for a purchased call
option to be profitable, the market price of the underlying security must
increase sufficiently above the strike price to cover the premium and
transaction costs. By using options in this manner, a Fund will reduce any
profit it might have otherwise realized in the underlying security by the
premium paid and by transaction costs.
Put spreads and collars are designed to protect against a decline in value of a
security an investor owns. A collar involves the purchase of a put and the
simultaneous writing of a call on the same security at a higher strike price.
The put protects the investor from a decline in the price of the security below
the put's strike price. The call means that the investor will not benefit from
increases in the price of the stock beyond the call's strike price. In a put
spread, an investor purchases a put and simultaneously writes a put on the same
security at a lower strike price. This combination protects the investor
against a decline in the stock price down to the lower strike price. The
premium received for writing the call (in the case of a collar) or writing the
put (in the case of a put spread) offsets, in whole or in part, the premium
paid to purchase the put. In a call spread, an investor purchases a call and
simultaneously sells a call on the same security, with the call sold having a
higher strike price than the call purchased. The purchased call is designed to
provide exposure to a potential increase in the value of a security an investor
owns. The premium received for writing the call offsets, in part, the premium
paid to purchase the corresponding call, but it also means that the investor
will not benefit from increases in the price of the security beyond the sold
call's strike price.
Options offer large amounts of leverage, which will result in a Fund's net
asset value being more sensitive to changes in the value of the underlying
security. The successful use of options depends in part on the ability of the
investment manager to manage future price fluctuations, and the degree of
correlation between the options and the prices of the underlying securities. If
the investment manager is incorrect in its expectation of changes in market
prices or the correlation between the instruments or indices on which such
options may be written and purchased and the instruments in a Fund's investment
portfolio, the Funds may incur losses that it would not otherwise incur. The
use of options can also increase a Fund's transaction costs. Options
transactions can involve a high degree of risk, including the possibility of a
total loss of the amount invested. The purchaser of an option runs the risk of
losing the entire premium paid if the option expires "out of the money" (i.e.,
if the strike price for a call option is higher than the market price, or the
strike price for a put option is lower than the market price). The seller of an
option earns premium income but is subject to the risk of having to sell the
underlying security at significantly less than its market price (or buy a
security at significantly more than its market price). When options are
purchased on the over-the-counter market, there is a risk that the counterparty
that wrote the option will be unable to perform its obligations under the
option contract. Such over-the-counter options may also be illiquid and, in
such cases, the Funds may have difficulty closing out its position, in which
case the Funds could lose money in the event of adverse price movements.
Access Trades. Each Fund may participate in access trades with a global
securities broker as counterparty. Access trades are over-the-counter
transactions that provide access to a designated security, group of securities
or market index without directly investing in the reference security/index. For
a commission, the counterparty agrees to provide a return based on the return
of the reference security/index. Access trades are typically used in foreign
markets where limits on direct foreign ownership can affect prices and/or where
there are significant complexities in directly purchasing or selling shares in
the reference security/index. Since access trades are over-the-counter
transactions, each Fund bears the risk that the counterparty will be unable or
unwilling to meet its obligations. In addition, since over-the-counter markets
are generally less liquid than exchanges, a Fund may not be able to sell when
it is deemed advantageous to do so. These risks will be potentially mitigated
by limiting access trade exposure by a Fund to 5% of total assets at the time
of purchase and dealing with counterparties believed to be reputable.
Futures Contracts. The Fund may utilize index futures contracts. Futures
contracts, which trade on a securities exchange, are standardized as to
quantity, delivery date and settlement conditions, including
8
specific securities acceptable for delivery against the futures contract. In
the case of index futures, settlement is made in cash based on the value of a
specified underlying index. More commonly, futures contracts are closed out
prior to expiration by an offsetting purchase or sale. Since the counterparty
to every futures contact is a securities exchange, offsetting transactions are
netted to close out positions. The Fund may incur a loss if the closing
transaction occurs at an unfavorable price as compared with that of the opening
trade (including transaction costs). There can be no assurance that the Fund
will be able to enter into an offsetting transaction with respect to a
particular contract at a particular time. If the Funds are not able to enter
into an offsetting transaction, the Fund will continue to be required to
maintain the position, including the maintenance of margins, which could result
in the Fund incurring substantial losses.
Margin deposits must be made at the time a futures contract position is
acquired. The Fund is required to deposit in a segregated account, typically
with its custodian, in the name of the futures broker through whom the
transaction was effected, "initial margin" consisting of cash and/or other
appropriate liquid assets in an amount generally equal to 10% or less of the
contract value. Margin must also be deposited when writing a call or put option
on a futures contract, in accordance with applicable exchange rules. Initial
margin on futures contracts is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required by
a securities exchange to increase the level of its initial margin payment, and
initial margin requirements might be increased generally in the future by
regulatory action.
Subsequent "variation margin" payments are made daily to and from the futures
broker as the value of the futures position varies, a process known as
"marking-to-market." When the Fund purchases or sells futures contracts, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If the Fund has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous. Purchasers and sellers of futures positions can
enter into offsetting closing transactions by selling or purchasing,
respectively, an instrument identical to the instrument held or written. Under
certain circumstances, exchanges upon which futures contracts trade may
establish daily limits on the amount that the price of a future contract can
vary from the previous day's settlement price; once that limit is reached, no
trades may be made that day at a price beyond the limit. Daily price limits do
not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures contract position, it could
incur substantial losses. The Fund would continue to be subject to market risk
with respect to the position. In addition, the Fund would continue to be
required to make daily variation margin payments and might be required to
maintain the position being hedged by the futures contract or to designate
liquid assets on its books and records.
Certain characteristics of the futures markets might increase the risk that
movements in the prices of futures contracts might not correlate perfectly with
movements in the prices of the investments being hedged. For example, all
participants in the futures contracts markets are subject to daily variation
margin calls and might be compelled to liquidate futures contracts positions
whose prices are moving unfavorably to avoid being subject to further calls.
These liquidations could increase price volatility of the instruments and
distort the normal price relationship between the futures or options and the
investments being hedged. Also, since initial margin deposit requirements in
the futures markets are less onerous than margin requirements in the securities
markets, there might be increased participation by speculators in the futures
markets. This participation also might cause temporary price distortions. In
addition, activities of large traders in both the futures and securities
markets involving arbitrage, "program trading" and other investment strategies
might result in temporary price distortions.
The Fund would deal only in standardized contracts on recognized exchanges.
Each exchange guarantees performance under contract provisions through a
clearing corporation, a nonprofit organization managed by the exchange
membership.
Options on Futures. The Fund may utilize options on index futures ("options on
futures"). Options on futures are effectively options on the instrument that
underlies a futures contract. A call option on a futures contract gives the
holder the right to enter into a long futures contract at a fixed futures
price. A put option on a futures contract gives the holder the right to enter
into a short futures contract at a fixed futures price.
9
Purchasers and sellers of options on futures can enter into offsetting closing
transactions by selling or purchasing, respectively, an offsetting option on
the same futures contract. There is also risk that the Fund may have difficulty
in closing out positions in options on futures. Although the Fund intends to
close out any positions on a securities market, there can be no assurance that
such a market will exist for a particular contract at a particular time.
Under certain circumstances, exchanges upon which futures are traded may
establish daily limits on the amount that the price of an option on a futures
contract can vary from the previous day's settlement price. Once that limit is
reached, no trades may be made that day at a price beyond the limit. Daily
price limits do not limit potential losses because prices could move to the
daily limit for several consecutive days with little or no trading, thereby
preventing liquidation of unfavorable positions held by the Fund.
Options on futures held by the Fund, to the extent not exercised, will expire
and the Fund would experience a loss to the extent of any premium paid for the
option. If the Fund were unable to liquidate an option on a futures contract
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position.
Certain characteristics of the futures market might increase the risk that
movements in the prices of options on futures contracts might not correlate
perfectly with movements in the prices of any exposure being hedged. For
example, all participants in the options on futures markets are subject to
daily variation margin calls and might be compelled to liquidate options on
futures positions whose prices are moving unfavorably to avoid being subject to
further calls. These liquidations could increase price volatility of the
instruments and distort the normal price relationship between the futures or
options and the investments being hedged. Also, because initial margin deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets, there might be increased participation by
speculators in the futures markets. This participation also might cause
temporary price distortions. In addition, activities of traders in both the
futures and securities markets involving arbitrage, "program trading" and other
investment strategies might result in temporary price distortions.
Other Investment Companies. Each Fund may invest in securities issued by other
investment companies. Such investments are subject to the limitations on
investments in other investment companies imposed by the Investment Company Act
of 1940, as amended (the "1940 Act"), which generally prohibits each Fund from
holding more than 3% of the outstanding voting securities of another investment
company, and from investing more than 5% of its total assets in any one
investment company, or more than 10% of its total assets in other investment
companies overall. The Funds' investments in other investment companies may
include investment in exchange-traded funds ("ETFs") if appropriate investment
opportunities arise. ETFs are registered funds that trade on a stock exchange
or otherwise traded in the over-the-counter market and generally seek to track
the performance of a specified securities index or a basket of securities.
Securities traded in the over-the-counter market present additional risks, such
as counterparty and liquidity risks.
If a Fund invests in other investment companies, shareholders would bear not
only that Fund's expenses (including operating expenses and management fees),
but also similar expenses of the underlying investment companies, and that
Fund's returns will therefore be lower.
Short Sales. Each Fund may sell securities short "against-the-box." A short
sale "against-the-box" is a short sale in which a Fund owns an equal amount of
the securities sold short (or securities convertible into or exchangeable for
the securities sold short) without payment of further consideration for
securities of the same issuer as, and equal in amount to, the securities sold
short.
Investments to Control. The Funds may not invest for the purpose of controlling
or managing any company. If a Fund acquires a large percentage of the
securities of a single issuer, it could be deemed to have invested in such
issuer for the purpose of exercising control. If one of the Funds were to make
such acquisitions, there is a risk that such Fund would become less
diversified, which could increase the volatility of the Fund and increase the
Fund's exposure to market, credit and other risks associated with certain
issuers' financial condition and business operations.
10
Repurchase Agreements. Each Fund may enter into repurchase agreements as a
short-term cash management tool. A repurchase agreement is an agreement under
which a Fund acquires a security, generally a US Government obligation, subject
to resale at a mutually agreed-upon price and time. The resale price reflects
an agreed-upon interest rate effective for the period of time a Fund holds the
security and is unrelated to the interest rate on the security. A Fund's
repurchase agreement will at all times be fully collateralized. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating
securities underlying the agreement, a decline in the value of the underlying
securities and a loss of interest. Repurchase agreements are typically entered
into for periods of one week or less. As a matter of fundamental policy, a Fund
will not enter into repurchase agreements of more than one week's duration if
more than 10% of its net assets would be invested in such agreements and other
illiquid securities.
Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities (i.e., securities not
readily marketable without registration under the Securities Act of 1933, as
amended ("1933 Act")), funding agreements issued by domestic insurance
companies and other securities that are not readily marketable. Each Fund does
not currently expect to invest more than 5% of its assets in such securities. A
Fund may purchase restricted securities that can be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act, and the
Funds' Board of Directors may determine, when appropriate, that specific Rule
144A securities are liquid and not subject to the 15% limitation on illiquid
securities. Should the Board of Directors make this determination, it will
carefully monitor the security (focusing on such factors, among others as
trading activity and availability of information) to determine that the Rule
144A security continues to be liquid. It is not possible to predict with
assurance exactly how the market for Rule 144A securities will further evolve.
This investment practice could have the effect of increasing the level of
illiquidity in a Fund, if and to the extent that qualified institutional buyers
become for a time uninterested in purchasing Rule 144A securities.
Borrowing. Each Fund may from time to time borrow money to increase its
portfolio of securities or for other purposes. Under the 1940 Act, each Fund is
generally permitted to borrow from banks in amounts not exceeding one-third of
the value of its total assets, less liabilities other than such borrowings. The
Board of Directors has adopted a non-fundamental restriction under which a Fund
may not borrow more than 15% of the value of its total assets. Borrowings may
be secured by a mortgage or pledge of a Fund's assets.
Borrowed money creates an opportunity for greater capital appreciation, but at
the same time increases exposure to capital risk. The net cost of any money
borrowed would be an expense that otherwise would not be incurred, and this
expense will limit a Fund's net investment income in any given period.
Any gain in the value of securities purchased with money borrowed in excess of
the cost of amounts borrowed would cause the net asset value of a Fund's shares
to increase more than otherwise would be the case. Conversely, any decline in
the value of securities purchased with money borrowed or any gain in value less
than the cost of amounts borrowed would cause the net asset value of a Fund's
shares to decline more than would otherwise be the case.
Lending of Portfolio Securities. Each Fund may lend portfolio securities if it
is believed that such loans will be beneficial to the Fund. The borrower must
maintain with the Fund cash or equivalent collateral equal to at least 100% of
the market value of the securities loaned. During the time portfolio securities
are on loan, the borrower pays the Fund amounts equal to the amounts of any
dividends or interest paid on the securities. The Funds may invest the
collateral and earn additional income or receive an agreed-upon amount of
interest income from the borrower. Loans made by the Funds will generally be
short-term. Loans are subject to termination at the option of the lending Fund
or the borrower. The Funds may pay reasonable administrative and custodial fees
in connection with a loan and may pay a negotiated portion of the interest
earned on the collateral to the borrower or placing broker. The Funds do not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to the
investment. A Fund may lose money if a borrower defaults on its obligation to
return securities and the value of the collateral held by that Fund is
insufficient to replace the loaned securities. In addition, each Fund is
responsible for any loss that might result from its investment of the
borrower's collateral. Amounts paid to a Fund by borrowers in lieu of dividends
may not be eligible to be passed through to the Fund's shareholders as
qualifying dividend income that would be subject to a lower rate of federal
income tax.
Except as otherwise specifically noted above, the Funds' investment strategies
are not fundamental and a Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
11
Fundamental Restrictions
Each Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of a Fund's outstanding voting securities. Under these policies, the
Funds may not:
. Purchase or sell commodities or commodity contracts, except to the
extent permissible under applicable law and interpretations, as they may
be amended from time to time;
. Purchase securities on margin except as permitted by the 1940 Act or any
rule thereunder, any Securities and Exchange Commission ("SEC") or SEC
staff interpretations thereof or any exemptions therefrom which may be
granted by the SEC;
. Issue senior securities or borrow money, except as permitted by the 1940
Act or any rule thereunder, any SEC or SEC staff interpretations thereof
or any exemptions therefrom which may be granted by the SEC;
. Make loans, except as permitted by the 1940 Act or any rule thereunder,
any SEC or SEC staff interpretations thereof or any exemptions therefrom
which may be granted by the SEC;
. Underwrite the securities of other issuers, except insofar as a Fund may
be deemed an underwriter under the 1933 Act in disposing of a portfolio
security or in connection with investments in other investment companies;
. Purchase or hold any real estate, except a Fund may invest in securities
secured by real estate or interests therein or issued by persons
(including real estate investment trusts) which deal in real estate or
interests therein;
. Make any investment inconsistent with a Fund's classification as a
diversified company under the 1940 Act;
. Invest 25% or more of its total assets, at market value, in the
securities of issuers in any particular industry, provided that this
limitation shall exclude securities issued or guaranteed by the US
Government or any of its agencies or instrumentalities; or
. Purchase or retain the securities of any issuer (other than the shares
of a Fund), if to the Fund's knowledge, those directors and officers of
the Series and the directors and officers of the investment manager or
subadviser, who individually own beneficially more than 1/2 of 1% of
the outstanding securities of such, together own beneficially more than
5% of such outstanding securities.
Certain of the Funds' fundamental policies set forth above prohibit
transactions "except as permitted by the 1940 Act or any rule thereunder, any
SEC or SEC staff interpretations thereof or any exemptions therefrom which may
be granted by the SEC." The following discussion explains the flexibility that
the Funds gain from these exceptions.
Purchase of securities on margin - A purchase on margin involves a loan from
the broker-dealer arranging the transaction. The "margin" is the cash or
securities that the borrower places with the broker-dealer as collateral
against the loan. However, the purchase of securities on margin is effectively
prohibited by the 1940 Act because the Funds generally may borrow only from
banks. Thus, under current law, this exception does not provide any additional
flexibility to the Funds.
Issuing senior securities - A "senior security" is an obligation with respect
to the earnings or assets of a company that takes precedence over the claims of
that company's common stock with respect to the same earnings or assets. The
1940 Act prohibits a mutual fund from issuing senior securities other than
certain borrowings, but SEC staff interpretations allow a fund to engage in
certain types of transactions that otherwise might raise senior security
concerns (such as short sales, buying and selling financial futures contracts
and selling put and call options), provided that the fund maintains segregated
deposits or portfolio securities, or otherwise covers the transaction with
offsetting portfolio securities, in amounts sufficient to offset any liability
associated with the transaction. The exception in the fundamental policy allows
the Funds to operate in reliance upon these staff interpretations.
12
Borrowing money - The 1940 Act permits a fund to borrow up to 33 1/3% of its
total assets (including the amounts borrowed) from banks, plus an additional 5%
of its total assets for temporary purposes, which may be borrowed from banks or
other sources.
Making loans - The 1940 Act generally prohibits the Funds from making loans to
affiliated persons but does not otherwise restrict the Funds' ability to make
loans.
A Fund also may not change its investment objective without shareholder
approval.
Under the 1940 Act, a "vote of a majority of the outstanding voting securities"
of a Fund means the affirmative vote of the lesser of (l) more than 50% of the
outstanding shares of the Fund; or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.
The Funds also may not acquire any securities of a registered open-end
investment company or a registered unit investment trust in reliance on
subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. This
policy is not fundamental.
The Series, on behalf of its Emerging Markets Fund, Global Smaller Companies
Fund and Global Technology Fund, will provide shareholders with at least 60
days prior notice of any change in the "80%" investment policy of these Funds
as described in the Prospectuses. Such notice will be provided in plain English
in a separate written document and will contain the following prominent
statement, in bold-face type: "Important Notice Regarding Change in Investment
Policy". This prominent statement will also appear on the envelope in which the
notice is delivered or, if the notice is delivered separately from other
communications to shareholders, such statement will appear either on the notice
or on the envelope in which the notice is delivered. This policy is not
fundamental.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, a Fund may invest up to 100% of its assets in cash or cash
equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for
such securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. A Fund's investments in foreign cash equivalents will be limited to
those that are believed to equate generally to the standards established for US
cash equivalents. Investments in bank obligations will be limited at the time
of investment to the obligations of the 100 largest domestic banks in terms of
assets which are subject to regulatory supervision by the US Government or
state governments, and the obligations of the 100 largest foreign banks in
terms of assets with branches or agencies in the United States.
Portfolio Turnover
A Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned during the fiscal year.
Securities whose maturity or expiration date at the time of acquisition were
one year or less are excluded from the calculation. Portfolio turnover will not
be a limiting factor in managing the Fund' investments. The Funds' portfolio
turnover rates for the fiscal years ended October 31, 2008 and 2007 were:
Fund 2008 2007
---- ------ ------
Emerging Markets Fund......... 123.49% 106.56%
Global Growth Fund............ 79.25 86.05
Global Smaller Companies Fund. 83.70 72.24
Global Technology Fund........ 171.14 208.35
International Growth Fund*.... 344.77 235.33
----
* The significant increase in the International Growth Fund's portfolio
turnover rate from 2007 to 2008 was due primarily to the volatile market
conditions of 2008.
13
Disclosure of Portfolio Holdings
The Funds' full portfolio holdings, as well as portfolio weightings, are
published quarterly, generally no earlier than 15 calendar days after the end
of each calendar quarter on the website of the Fund's distributor, RiverSource
Fund Distributors, Inc., formerly Seligman Advisors, Inc. (the "distributor"),
(www.seligman.com). In addition, the Funds' top 10 holdings and the aggregate
weighting of the top 10 holdings are published monthly, generally no sooner
than 5 days after the end of each month. Employees may freely distribute the
Funds' portfolio holdings information described above to third parties the day
after such information appears on the distributor's website. The foregoing
monthly and quarterly information will remain available on the distributor's
website for at least 5 months from the end of the period shown.
In accordance with the policies and procedures approved by the Series' Board of
Directors, the Funds' portfolio holdings may be disclosed to certain parties
prior to its public release if the disclosure is intended for research or other
legitimate business purposes and the recipient is subject to a duty of
confidentiality. Disclosures of portfolio holdings for such purposes (which may
be on-going) are considered on a case-by-case basis, and the Funds' procedures
require the prior written approval of the Chief Investment Officer of
RiverSource Investments (or a designee) and the Funds' Chief Compliance Officer
("CCO") with respect to disclosures intended for research purposes, and the
President of RiverSource Investments or the distributor (or their respective
designees) and the Funds' CCO with respect to disclosures intended for other
legitimate business purposes. In connection with the CCO's review and approval,
the CCO considers whether such disclosure is in the best interests of the
applicable Fund. If prior approval is granted, the recipient must enter into a
written agreement prior to the release of the Funds' portfolio holdings
information that includes, among other things, a requirement that the holdings
be kept confidential and places limits on the use of the information for
trading purposes. The CCO, who reports directly to the Series' Board of
Directors regarding compliance with the Funds' policies, and RiverSource
Investments' Chief Compliance Officer monitor compliance with this policy.
In addition, the Funds' policies expressly permit RiverSource Investments'
employees to release the Funds' holdings information without a confidentiality
agreement as necessary to facilitate the execution of securities transactions
or to respond to questions about RiverSource Investments' views on individual
securities or whether the Funds own or do not own a particular security;
provided, that individual securities weightings will not be disclosed unless
such weightings are otherwise provided in the quarterly disclosure noted above.
Portfolio managers (or their designees) may also disclose certain information
about individual securities or information about a particular investment style
on an occasional basis to third parties for research purposes, provided that
the information does not include the name of the Funds or the weightings of
particular securities unless otherwise provided in the quarterly disclosure
noted above. The Funds may also permit their auditors to have access to the
Funds' portfolio holdings as necessary in connection with their auditing
services.
Currently, RiverSource Investments has entered into ongoing arrangements to
disclose the Funds' portfolio holdings prior to the public disclosure of such
information with the following third party research providers: FactSet Research
Systems, Inc. and Vestek Systems, Inc. The portfolio holdings are released to
these research providers on an as-needed basis (including daily, if necessary).
In addition, RiverSource Investments discloses the Global Technology Fund's
portfolio holdings to State Street Bank and Trust Company ("SSBT") in
connection with back-office, and/or administrative services provided by SSBT,
and to RiskMetrics Group (formerly, Institutional Shareholder Services) in
connection with proxy voting. Also, RiverSource Investments discloses portfolio
holdings to JPMorgan Chase Bank N.A. in connection with custodial services
provided by such entity. RiverSource Investments discloses portfolio holdings
to the third parties listed above on a daily basis. Accordingly, the time
elapsed between the date of such information and the date of its disclosure is
generally less than 24 hours.
With respect to the Funds subadvised by Wellington Management Company, LLP
("Wellington Management"), Wellington Management has adopted the policies and
procedures relating to the disclosure of portfolio holdings approved by the
Series' Board of Directors. Currently, Wellington Management has entered into
ongoing arrangements to disclose such Funds' portfolio holdings prior to the
public disclosure of such information with the following third parties: Brown
Brothers Harriman & Co. (daily, in connection with certain operational
functions); FactSet Research Systems, Inc. (daily, in connection with
analytical services); Investment Technology Group, Inc. (weekly, in connection
with analytical services); SSBT (daily, in connection with certain operational
functions).
All of the above mentioned disclosures have been approved, as applicable, and
are made pursuant to the terms of confidentiality agreements or provisions that
prohibit the disclosure and restrict the use of the holdings information. No
compensation is received by any party in consideration of the disclosure of the
Funds' portfolio holdings pursuant to these arrangements.
14
Management of the Series
Board Members and Officers
Shareholders elect a Board that oversees the Funds' operations. The Board
appoints officers who are responsible for day-to-day business decisions based
on policies set by the Board.
On November 7, 2008, RiverSource Investments, a wholly-owned subsidiary of
Ameriprise Financial, announced the closing of its Acquisition of Seligman, 100
Park Avenue, New York, New York 10017. With the Acquisition completed and
shareholders having previously elected (at special meetings held on November 3,
2008) ten new directors (collectively, the "New Board Members"), the New Board
Members took office on November 7, 2008. The New Board Members are: Kathleen
Blatz, Arne H. Carlson, Pamela G. Carlton, Patricia M. Flynn, Anne P. Jones,
Jeffrey Laikind, Stephen R. Lewis, Jr., Catherine James Paglia, Alison
Taunton-Rigby and William F. Truscott. Messrs. Leroy C. Richie and John F.
Maher, who were members of the Board prior to November 7, 2008, will continue
to serve on the Board after the Acquisition, which would result in an overall
increase from ten directors to 12 directors.
Information with respect to the members of the Board is shown below. Each
member oversees 163 portfolios in the fund complex managed by RiverSource
Investments, which includes 59 Seligman funds and 104 RiverSource funds. Board
members serve until the next regular shareholders' meeting or until he or she
reaches the mandatory retirement age established by the Board. Under the
current Board policy, members may serve until the end of the meeting following
their 75th birthday, or the fifteenth anniversary of the first Board meeting
they attended as members of the Board, whichever occurs first. This policy does
not apply to Ms. Jones who may retire after her 75th birthday.
Independent Board Members
Position with
Series and
Length of Time Principal Occupation Other Committee
Name, Address, Age Served During Last Five Years Directorships Memberships
- ---------------------- ------------------- ---------------------- --------------------- ----------------------
Kathleen Blatz Board member since Attorney; Chief None Board Governance,
901 S. Marquette Ave. November 7, 2008 Justice, Compliance,
Minneapolis, MN 55402 Minnesota Supreme Investment Review,
Age 54 Court, 1998-2006 Joint Audit
Arne H. Carlson Board member since Chair, RiverSource None Board Governance,
901 S. Marquette Ave. November 7, 2008 Funds, 1999-2006; Compliance,
Minneapolis, MN 55402 former Governor of Contracts, Executive,
Age 74 Minnesota Investment Review
Pamela G. Carlton Board member since President, None Distribution,
901 S. Marquette Ave. November 7, 2008 Springboard-Partners Investment Review,
Minneapolis, MN 55402 in Cross Cultural Joint Audit
Age 54 Leadership
(consulting
company)
Patricia M. Flynn Board member since Trustee Professor of None Board Governance,
901 S. Marquette Ave. November 7, 2008 Economics and Contracts, Investment
Minneapolis, MN 55402 Management, Bentley Review
Age 58 College; Former
Dean, McCallum
Graduate School of
Business, Bentley
College
Anne P. Jones Board member since Attorney and None Board Governance,
901 S. Marquette Ave. November 7, 2008 Consultant Compliance,
Minneapolis, MN 55402 Executive, Investment
Age 74 Review, Joint Audit
Jeffrey Laikind, CFA Board member since Former Managing American Progressive Distribution,
901 S. Marquette Ave. November 7, 2008 Director, Shikiar Insurance Investment Review,
Minneapolis, MN 55402 Asset Management Joint Audit
Age 73
15
Independent Board Members
Position with
Series and
Length of Time Principal Occupation Other Committee
Name, Address, Age Served During Last Five Years Directorships Memberships
- ----------------------- ------------------- ----------------------- ------------------------ ----------------------
Stephen R. Lewis, Jr. Board member since President Emeritus Valmont Industries, Board Governance,
901 S. Marquette Ave. November 7, 2008 and Professor of Inc. (manufactures Compliance,
Minneapolis, MN 55402 Economics, Carleton irrigation Contracts, Executive,
Age 70 College systems) Investment Review
John F. Maher Board member since Retired President and None Distribution,
901 S. Marquette Ave. 2006 Chief Executive Investment Review,
Minneapolis, MN 55402 Officer and former Joint Audit
Age 64 Director, Great
Western Financial
Corporation (financial
services), 1986-1997
Catherine James Paglia Board member since Director, Enterprise None Board Governance,
901 S. Marquette Ave. November 7, 2008 Asset Management, Compliance,
Minneapolis, MN 55402 Inc. (private real Contracts,
Age 56 estate and asset Executive, Investment
management Review
company)
Leroy C. Richie Board member since Counsel, Lewis & Digital Ally, Inc. Contracts,
901 S. Marquette Ave. 2000 Munday, P.C. (law (digital imaging); Distribution,
Minneapolis, MN 55402 firm) since 1987; and Infinity, Inc. (oil and Investment Review
Age 66 Vice President and gas exploration and
General Counsel, production); and OGE
Automotive Legal Energy Corp. (energy
Affairs, Chrysler and energy services)
corporation, 1990-
1997
Alison Taunton-Rigby Board member since Chief Executive Idera Contracts,
901 S. Marquette Ave. November 7, 2008 Officer and Director, Pharmaceuticals, Distribution,
Minneapolis, MN 55402 RiboNovix, Inc. since Inc. (biotechnology); Executive, Investment
Age 64 2003 (biotechnology); Healthways, Inc. Review
former President, (health
Forester Biotech management
programs)
Board Member Affiliated With RiverSource Investments*
Position with
Series and
Length of Time Principal Occupation Other Committee
Name, Address, Age Served During Last Five Years Directorships Memberships
- ---------------------- ---------------------- ------------------------- ------------- ------------------
William F. Truscott Board member and Vice President - U.S. Asset None Investment Review
53600 Ameriprise President since 2008 Management and Chief
Financial Center Investment Officer,
Minneapolis, MN 55474 Ameriprise Financial,
Age 48 Inc. and President,
Chairman of the Board
and Chief Investment
Officer, RiverSource
Investments, LLC since
2005; Director,
President and Chief
Executive Officer,
Ameriprise Certificate
Company; Chairman of
the Board, Chief
Executive Officer and
President, RiverSource
Distributors, Inc. since
2006; Chief Executive
Officer and President,
RiverSource Fund
Distributors, Inc. since
2008; Senior Vice
President - Chief
Investment Officer,
Ameriprise Financial,
Inc.; and Chairman of
the Board and Chief
Investment Officer,
RiverSource
Investments, LLC,
2001-2005
- --------
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
16
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
other officers are:
Fund Officers
Position held
with the Series and Principal occupation
Name, address, age length of service during past five years
- ---------------------- --------------------- ------------------------------------------------------------------------------
Patrick T. Bannigan President since Director and Senior Vice President - Asset Management, Products and
172 Ameriprise November 7, 2008 Marketing, RiverSource Investments, LLC and; Director and Vice President
Financial Center - Asset Management, Products and Marketing, RiverSource Distributors,
Minneapolis, MN 55474 Inc. since 2006; Managing Director and Global Head of Product, Morgan
Age 43 Stanley Investment Management, 2004-2006; President, Touchstone
Investments, 2002-2004
Michelle M. Keeley Vice President since Executive Vice President - Equity and Fixed Income, Ameriprise Financial,
172 Ameriprise November 7, 2008 Inc. and RiverSource Investments, LLC since 2006; Vice President -
Financial Center Investments, Ameriprise Certificate Company since 2003; Senior Vice
Minneapolis, MN 55474 President - Fixed Income, Ameriprise Financial, Inc., 2002-2006 and
Age 44 RiverSource Investments, LLC, 2004-2006
Amy K. Johnson Vice President since Vice President - Asset Management and Trust Company Services,
5228 Ameriprise November 7, 2008 RiverSource Investments, LLC since 2006; Vice President - Operations and
Financial Center Compliance, RiverSource Investments, LLC, 2004-2006; Director of Product
Minneapolis, MN 55474 Development - Mutual Funds, Ameriprise Financial, Inc., 2001-2004
Age 43
Scott R. Plummer Vice President, Vice President and Chief Counsel - Asset Management, Ameriprise
5228 Ameriprise General Counsel and Financial, Inc. since 2005; Chief Counsel, RiverSource Distributors, Inc. and
Financial Center Secretary since Chief Legal Officer and Assistant Secretary, RiverSource Investments, LLC
Minneapolis, MN 55474 November 7, 2008 since 2006; Vice President, General Counsel and Secretary, Ameriprise
Age 49 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
Lawrence P. Vogel Treasurer since 2000 Treasurer, Seligman Data Corp. since 2000. Senior Vice President,
100 Park Avenue, Investment Companies, J. & W. Seligman & Co. Incorporated, from 1992 to
New York, NY 10017 2008.
Age 52
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC since 2009; Chief
100 Park Avenue, Officer since 2004; Compliance Officer for each of the Seligman funds since 2004; and Anti-
New York, NY 10017 Money Laundering Money Laundering Prevention Officer and Identity Theft Prevention Officer
Age 57 Prevention Officer for each of the Seligman funds since November 2008; and Managing
and Identity Theft Director, J. & W. Seligman & Co. Incorporated and Vice-President for each
Prevention Officer of the Seligman funds from 2004 to 2008.
since 2008.
The Board initially approves an investment management services agreement and
other contracts with the investment manager and its affiliates, and other
service providers. Once the contracts are approved, the Board monitors the
level and quality of services including commitments of service providers to
achieve expected levels of investment performance and shareholder services. In
addition, the Board oversees that processes are in place to assure compliance
with applicable rules, regulations and investment policies and addresses
possible conflicts of interest. Annually, the Board evaluates the services
received under the contracts by receiving reports covering investment
performance, shareholder services, marketing, and the investment manager's
profitability in order to determine whether to continue existing contracts or
negotiate new contracts.
As of November 7, 2008, the Board has organized the following committees to
facilitate its work (accordingly, no committee meetings have been held prior to
such date):
Board Governance Committee. Recommends to the Board the size, structure and
composition of the Board and its committees; the compensation to be paid to
members of the Board; and a process for evaluating the Board's performance. The
committee also reviews candidates for Board membership including candidates
recommended by shareholders. The committee also makes recommendations to the
Board regarding responsibilities and duties of the Board, oversees proxy voting
and supports the work of the chairperson of the Board in relation to furthering
the interests of the Funds and their shareholders on external matters.
17
Compliance Committee. This committee supports the Series' maintenance of a
strong compliance program by providing a forum for independent Board members to
consider compliance matters impacting the Funds or their key service providers;
developing and implementing, in coordination with the Series' Chief Compliance
Officer (CCO), a process for the review and consideration of compliance reports
that are provided to the Board; and providing a designated forum for the
Series' CCO to meet with independent Board members on a regular basis to
discuss compliance matters.
Contracts Committee. This committee reviews and oversees the contractual
relationships with service providers and receives and analyzes reports covering
the level and quality of services provided under contracts with the Series. It
also advises the Board regarding actions taken on these contracts during the
annual review process.
Distribution Committee. This committee reviews and supports product
development, marketing, sales activity and practices related to the Series, and
reports to the Board as appropriate.
Executive Committee. This committee acts for the Board between meetings of the
Board.
Investment Review Committee. This committee reviews and oversees the management
of the Series' assets and considers investment management policies and
strategies; investment performance; risk management techniques; and securities
trading practices and reports areas of concern to the Board.
Joint Audit Committee. This committee oversees the accounting and financial
reporting processes of the Series and internal controls over financial
reporting and oversees the quality and integrity of the Series' financial
statements and independent audits as well as the Series' compliance with legal
and regulatory requirements relating to the Series' accounting and financial
reporting, internal controls over financial reporting and independent audits.
The committee also makes recommendations regarding the selection of the Series'
independent auditor and reviews and evaluates the qualifications, independence
and performance of the auditor.
Beneficial Ownership of Shares
As of December 31, 2008, the Directors beneficially owned shares in the Series
and the RiverSource Group of Funds (which includes the Seligman funds) as
follows:
Dollar Range of Shares Owned By Director Aggregate Dollar Range
------------------------------------------------------------- of Shares Owned by
Emerging Global Global Smaller Global International Director in RiverSource
Name Markets Growth Companies Technology Growth Group of Funds*
- ---- -------- ----------- -------------- ----------- ------------- -----------------------
INDEPENDENT BOARD MEMBERS
Kathleen
Blatz......... None None None None None Over $100,000
Arne H.
Carlson....... None None None None None Over $100,000
Pamela
G.
Carlton....... None None None None None $50,001-$100,000
Patricia
M.
Flynn......... None None None None None Over $100,000*
Anne P.
Jones......... None None None None None Over $100,000
Jeffrey
Laikind....... None None None None None Over $100,000
Stephen
R.
Lewis,
Jr............ None None None None None Over $100,000*
John F.
Maher......... None $1-$10,000 $1-$10,000 $1-$10,000 None Over $100,000*
Catherine
James
Paglia........ None None None None None Over $100,000*
Leroy C.
Richie........ None $1-$10,000 $1-$10,000 $1-$10,000 None Over $100,000
Alison
Taunton-Rigby. None None None None None Over $100,000
AFFILIATED BOARD MEMBERS
William
F.
Truscott...... None None None None None Over $100,000
- --------
* Total includes deferred compensation invested in share equivalents.
18
Compensation None of the New Board Members received any compensation from the
Series or any of the other Seligman funds for the fiscal year ended October 31,
2008. The New Board Members became Directors of the Series and the other
Seligman funds effective November 7, 2008 at the completion of RiverSource
Investments' Acquisition of Seligman. Only Messrs. Maher and Richie were
directors of the Series and the other Seligman funds during the fiscal year
ended October 31, 2008. Messrs. Richie and Maher became directors/trustees of
the RiverSource funds on November 12, 2008 and December 10, 2008, respectively.
Accordingly, they did not receive any compensation from the RiverSource Group
of Funds during the fiscal year ended October 31, 2008. The aggregate
compensation received by the New Board Members relates only to the
RiverSource-branded funds. Group of Funds
Pension or Total
Retirement Compensation
Benefits from Series and
Aggregate Accrued as Fund Complex
Compensation Part of Series Paid
Name and Position with Series from Series (1) Expenses to Directors (1)(2)
- ----------------------------- --------------- -------------- -------------------
Kathleen Blatz............... n/a n/a $175,000
Arne H. Carlson.............. n/a n/a 175,00
Pamela G. Carlton............ n/a n/a 162,500
Patricia M. Flynn(3)......... n/a n/a 167,500
Anne P. Jones................ n/a n/a 172,500
Jeffrey Laikind.............. n/a n/a 162,500
Stephen R. Lewis, Jr.(3)..... n/a n/a 397,500
John F. Maher (4)............ $6,426 n/a 93,000
Catherine James Paglia(3).... n/a n/a 167,500
Leroy C. Richie.............. $7,088 n/a 105,000
Alison Taunton-Rigby......... n/a n/a 165,000
- --------
(1)For the fiscal year ended October 31, 2008. Messrs. Maher and Richie did not
receive any payments from the RiverSource-branded funds for the fiscal year
ended October 31, 2008. The New Board Members did not receive any
compensation from the Seligman-branded funds for the fiscal year ended
October 31, 2008.
(2)At October 31, 2008, which precedes the date that RiverSource Investments
acquired Seligman, the Messrs. Maher and Richie had oversight
responsibilities for the Seligman funds, which consisted of 59 investment
companies, including the Fund, and the New Board members had oversight
responsibility of the RiverSource branded funds, which consisted of 104
investment companies.
(3)Ms. Flynn, Mr. Lewis and Ms. Paglia elected to defer a portion of the total
cash compensation payable during the period in the amount of $80,667,
$69,250 and $167,500, respectively.
(4)Compensation is being deferred.
The independent Board members determine the amount of compensation that they
receive, including the amount paid to the Chair of the Board. In determining
compensation for the independent Board members, the independent Board members
take into account a variety of factors including, among other things, their
collective significant work experience (e.g., in business and finance,
government or academia). The independent Board members also recognize that
these individuals' advice and counsel are in demand by other organizations,
that these individuals may reject other opportunities because the time demands
of their duties as independent Board members, and that they undertake
significant legal responsibilities. The independent Board members also consider
the compensation paid to independent board members of other mutual fund
complexes of comparable size. In determining the compensation paid to the
Chair, the independent Board members take into account, among other things, the
Chair's significant additional responsibilities (e.g., setting the agenda for
Board meetings, communicating or meeting regularly with the Series' Chief
Compliance Officer, Counsel to the independent Board members, and the Series'
service providers) which result in a significantly greater time commitment
required of the Board Chair. The Chair's compensation, therefore, has generally
been set at a level between 2.5 and 3 times the level of compensation paid to
other independent Board members.
19
The independent Board members are paid an annual retainer of $95,000. Committee
and sub-committee Chairs each receive an additional annual retainer of $5,000.
In addition, independent Board members are paid the following fees for
attending Board and committee meetings: $5,000 per day of in-person Board
meetings and $2,500 per day of in-person committee or sub-committee meetings
(if such meetings are not held on the same day as a Board meeting). Independent
Board members are not paid for special telephonic meetings. The Board's Chair
will receive total annual cash compensation of $400,000.
The independent Board members may elect to defer payment of up to 100% of the
compensation they receive in accordance with a Deferred Compensation Plan (the
"Deferred Plan"). Under the Deferred Plan, a Board member may elect to have his
or her deferred compensation treated as if they had been invested in shares of
one or more RiverSource funds and, as available, the Seligman funds, and the
amount paid to the Board member under the Deferred Plan will be determined
based on the performance of such investments. Distributions may be taken in a
lump sum or over a period of years. The Deferred Plan will remain unfunded for
federal income tax purposes under the Internal Revenue Code of 1986, as
amended. It is anticipated that deferral of Board member compensation in
accordance with the Deferred Plan will have, at most, a negligible impact on
Fund assets and liabilities.
Code of Ethics
The funds in the RiverSource Group of Funds (which includes the Seligman
funds), RiverSource Investments, the investment manager for the Seligman funds,
the distributor of the RiverSource Group of Funds, have each adopted a Code of
Ethics (collectively, the "Codes") and related procedures reasonably designed
to prevent violations of Rule 204A-1 under the Investment Advisers Act of 1940
and Rule 17j-1 under the 1940 Act. The Codes contain provisions reasonably
necessary to prevent a fund's access persons from engaging in any conduct
prohibited by paragraph (b) of Rule 17j-1, which indicates that it is unlawful
for any affiliated person of or principal underwriter for a fund, or any
affiliated person of an investment adviser of or principal underwriter for a
fund, in connection with the purchase or sale, directly or indirectly, by the
person of a security held or to be acquired by a fund (i) to employ any device,
scheme or artifice to defraud a fund; (ii) to make any untrue statement of a
material fact to a fund or omit to state a material fact necessary in order to
make the statements made to a fund, in light of the circumstances under which
they are made, not misleading; (iii) to engage in any act, practice or course
of business that operates or would operate as a fraud or deceit on a fund; or
(iv) to engage in any manipulative practice with respect to a fund. The Codes
prohibit affiliated personnel from engaging in personal investment activities
that compete with or attempt to take advantage of planned portfolio
transactions for the fund.
Wellington Management
The subadviser for each Fund except Global Technology Fund, Wellington
Management has adopted a code of ethics meeting the requirements of Rule 17j-1
under the 1940 Act, which permits personnel covered by the rule to invest in
securities that may be purchased or held by the Funds. The Series' Board of
Directors reviews the code of ethics of Wellington Management at least annually
and receives certifications from Wellington Management regarding compliance
with such code of ethics annually.
Proxy Voting Policies
GENERAL GUIDELINES, POLICIES AND PROCEDURES
The funds uphold a long tradition of supporting sound and principled corporate
governance. The Board, which consists of a majority of independent Board
members, determines policies and votes proxies. The funds' investment manager,
RiverSource Investments, and the funds' administrator, Ameriprise Financial,
provide support to the Board in connection with the proxy voting process.
GENERAL GUIDELINES
Corporate Governance Matters -- The Board supports proxy proposals that it
believes are tied to the interests of shareholders and votes against proxy
proposals that appear to entrench management. For example:
.. The Board generally votes in favor of proposals for an independent chairman
or, if the chairman is not independent, in favor of a lead independent
director.
.. The Board supports annual election of all directors and proposals to
eliminate classes of directors.
.. In a routine election of directors, the Board will generally vote with
management's recommendations because the
20
Board believes that management and nominating committees of independent
directors are in the best position to know what qualifications are required
of directors to form an effective board. However, the Board will generally
vote against a nominee who has been assigned to the audit, compensation, or
nominating committee if the nominee is not independent of management based on
established criteria. The Board will also withhold support for any director
who fails to attend 75% of meetings or has other activities that appear to
interfere with his or her ability to commit sufficient attention to the
company and, in general, will vote against nominees who are determined to
have been involved in options backdating.
.. The Board generally supports proposals requiring director nominees to
receive a majority of affirmative votes cast in order to be elected to the
board, and opposes cumulative voting based on the view that each director
elected should represent the interests of all shareholders.
.. Votes in a contested election of directors are evaluated on a case-by-case
basis. In general, the Board believes that incumbent management and
nominating committees, with access to more and better information, are in
the best position to make strategic business decisions. However, the Board
will consider an opposing slate if it makes a compelling business case for
leading the company in a new direction.
Shareholder Rights Plans -- The Board generally supports shareholder rights
plans based on a belief that such plans force uninvited bidders to negotiate
with a company's board. The Board believes these negotiations allow time for
the company to maximize value for shareholders by forcing a higher premium from
a bidder, attracting a better bid from a competing bidder or allowing the
company to pursue its own strategy for enhancing shareholder value. The Board
supports proposals to submit shareholder rights plans to shareholders and
supports limiting the vote required for approval of such plans to a majority of
the votes cast.
Auditors -- The Board values the independence of auditors based on established
criteria. The Board supports a reasonable review of matters that may raise
concerns regarding an auditor's service that may cause the Board to vote
against a management recommendation, including, for example, auditor
involvement in significant financial restatements, options backdating, material
weaknesses in control, attempts to limit auditor liability or situations where
independence has been compromised.
Stock Option Plans and Other Management Compensation Issues -- The Board
expects company management to give thoughtful consideration to providing
competitive long-term employee incentives directly tied to the interest of
shareholders. The Board votes against proxy proposals that it believes dilute
shareholder value excessively. The Board believes that equity compensation
awards can be a useful tool, when not abused, for retaining employees and
giving them incentives to engage in conduct that will improve the performance
of the company. In this regard, the Board generally favors minimum holding
periods of stock obtained by senior management pursuant to an option plan and
will vote against compensation plans for executives that it deems excessive.
Social and Corporate Policy Issues -- The Board believes proxy proposals should
address the business interests of the corporation. Shareholder proposals
sometime seek to have the company disclose or amend certain business practices
based purely on social or environmental issues rather than compelling business
arguments. In general, the Board recognizes our fund shareholders are likely to
have differing views of social and environmental issues and believes that these
matters are primarily the responsibility of a company's management and its
board of directors.
POLICIES AND PROCEDURES
The policy of the Board is to vote all proxies of the companies in which a fund
holds investments. Because of the volume and complexity of the proxy voting
process, including inherent inefficiencies in the process that are outside the
control of the Board or the Proxy Team (below), not all proxies may be voted.
The Board has implemented policies and procedures that have been reasonably
designed to vote proxies and to ensure that there are no conflicts between
interests of a fund's shareholders and those of the funds' principal
underwriters, RiverSource Investments, or other affiliated persons. In
exercising its proxy voting responsibilities, the Board may rely upon the
research or recommendations of one or more third party service providers.
The administration of the proxy voting process is handled by the RiverSource
Proxy Administration Team ("Proxy Team"). In exercising its responsibilities,
the Proxy Team may rely upon one or more third party service providers. The
Proxy Team assists the Board in identifying situations where its guidelines do
not clearly require a vote in a particular manner and assists in researching
matters and making voting recommendations. RiverSource Investments may
recommend that a proxy be voted in a manner contrary to the Board's guidelines.
In making recommendations to the Board about voting on a proposal, the
investment manager relies on its own investment personnel (or the investment
personnel of a fund's subadviser(s)) and information obtained from an
independent research firm. The investment manager makes the recommendation in
writing. The process requires that Board members who are independent from the
investment manager consider the recommendation and decide how to vote the proxy
proposal or establish a protocol for voting the proposal.
21
On an annual basis, or more frequently as determined necessary, the Board
reviews recommendations to revise the existing guidelines or add new
guidelines. Recommendations are based on, among other things, industry trends
and the frequency that similar proposals appear on company ballots.
The Board considers management's recommendations as set out in the company's
proxy statement. In each instance in which a fund votes against management's
recommendation (except when withholding votes from a nominated director), the
Board sends a letter to senior management of the company explaining the basis
for its vote. This permits both the company's management and the Board to have
an opportunity to gain better insight into issues presented by the proxy
proposal(s).
Voting in Countries Outside the United States (Non-U.S. Countries) -- Voting
proxies for companies not domiciled in the United States may involve greater
effort and cost due to the variety of regulatory schemes and corporate
practices. For example, certain non-U.S. countries require securities to be
blocked prior to a vote, which means that the securities to be voted may not be
traded within a specified number of days before the shareholder meeting. The
Board typically will not vote securities in non-U.S. countries that require
securities to be blocked as the need for liquidity of the securities in the
funds will typically outweigh the benefit of voting. There may be additional
costs associated with voting in non-U.S. countries such that the Board may
determine that the cost of voting outweighs the potential benefit.
Securities on Loan -- The Board will generally refrain from recalling
securities on loan based upon its determination that the costs and lost revenue
to the funds, combined with the administrative effects of recalling the
securities, generally outweigh the benefit of voting the proxy. While neither
the Board nor the funds' administrator assesses the economic impact and
benefits of voting loaned securities on a case-by-case basis, situations may
arise where the Board requests that loaned securities be recalled in order to
vote a proxy. In this regard, if a proxy relates to matters that may impact the
nature of a company, such as a proposed merger or acquisition, and the funds'
ownership position is more significant, the Board has established a guideline
to direct the funds' administrator to use its best efforts to recall such
securities based upon its determination that, in these situations, the benefits
of voting such proxies generally outweigh the costs or lost revenue to the
funds, or any potential adverse administrative effects to the funds, of not
recalling such securities.
Investment in Affiliated Funds -- Certain funds may invest in shares of other
Seligman funds (referred to in this context as "underlying funds") and may own
substantial portions of these underlying funds. The proxy policy of the funds
is to ensure that direct public shareholders of underlying funds control the
outcome of any shareholder vote. To help manage this potential conflict of
interest, recognizing that the direct public shareholders of these underlying
funds may represent only a minority interest, the policy of the funds is to
vote proxies of the underlying funds in the same proportion as the vote of the
direct public shareholders. If there are no direct public shareholders of an
underlying fund, the policy is to cast votes in accordance with instructions
from the independent members of the Board.
22
Information regarding how the Series voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30, is available
(i) without charge upon request by calling toll free (800) 221-2450 in the U.S.
or collect (212) 682-7600 outside the U.S. and (ii) on the SEC's website at
www.sec.gov. Information for each new 12-month period ending June 30 will be
available not later than August 31 of that year.
Control Persons and Principal Holders of Securities
Control Persons
As of February 5, 2009, there was no person or persons who controlled any of
the Funds, either through a significant ownership of shares or any other means
of control.
Principal Holders
As of February 5, 2009, the following principal holders owned 5% or more of the
then outstanding shares of capital stock of a Class of shares for the following
Funds:
Percentage of
Total Shares
Name and Address Fund/Class Held
- ---------------- ---------- -------------
Morgan Stanley & Co., Harborside Financial Center, Plaza II 3/rd/ Floor, Jersey City, Emerging 25.43%
NJ 07311 Markets/A
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Emerging 7.76%
Jacksonville, FL 32246 Markets/A
State Street Bank & Trust Co Cust Seligman Asset Allocation Growth Fund, Attn Emerging 5.82%
Son Diskin, 801 Pennsylvania Ave, Kansas City MO 64105 Markets/A
Morgan Stanley & Co., Harborside Financial Center, Plaza II 3/rd/ floor, Jersey City Emerging 6.11%
NJ 07311 Markets/B
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Emerging 51.10%
Jacksonville, FL 32246 Markets/C
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 Emerging 5.08%
Markets/C
State Street Bank & Trust Co., FBO North Carolina College Savings Program Emerging 36.83%
NCBE, 105 Rosemont Avenue, Westwood, MA 02090 Markets/I
Patterson & Co., FBO J. & W. Seligman & Co., Incorporated Matched Emerging 14.72%
Accumulation Plan, Attn. Pension Plan Services, 1525 West WT Harris Blvd, Markets/I
Charlotte, NC 28288
State Street Bank & Trust Co., FBO North Carolina College Savings Program Emerging 22.17%
NCBD, 105 Rosemont Avenue, Westwood, MA 02090 Markets/I
Patterson & Co., FBO The Seligman Data Corp. 401K/Thrift Plan, Attn. Pension Emerging 13.12%
Plan Services, 1525 West WT Harris Blvd, Charlotte, NC 28288 Markets/I
State Street Bank & Trust Co., FBO North Carolina College Savings Program Emerging 9.47%
NCBF, 105 Rosemont Avenue, Westwood, MA 02090 Markets/I
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 16.32%
Jacksonville, FL 32246 Growth /A
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 15.14%
Jacksonville, FL 32246 Growth /B
Morgan Stanley & Co, Harborside Financial Center, Plaza II 3/rd/ Floor, Jersey City Global 8.60%
NJ 07311 Growth/B
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 16.67%
Jacksonville, FL 32246 Growth/C
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 Global 6.24%
Growth/C
23
Percentage of
Total Shares
Name and Address Fund/Class Held
- ---------------- --------------- -------------
Patterson & Co. FBO J. & W. Seligman & Co., Incorporated Matched Accumulation Global 89.17%
Plan, Attn. Pension Plan Services, 1525 West WT Harris Blvd, Charlotte, NC 28288 Growth/I
Patterson & Co. FBO The Seligman Data Corp. 401K/Thrift Plan, Attn. Pension Global 10.72%
Plan Services, 1525 West WT Harris Blvd, Charlotte, NC 28288 Growth/I
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 10.50%
Jacksonville, FL 32246 Smaller
Companies/A
State Street Bank & Trust Co. FBO. Seligman Asset Allocation Growth Fund, 801 Global Smaller 6.75%
Pennsylvania Ave., Kansas City, MO 64105 Companies/A
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 14.46%
Jacksonville, FL 32246 Smaller
Companies/B
Morgan Stanley & Co., Harborside Financial Center, Plaza II 3/rd/ Floor, Jersey City, Global 6.53%
NJ 07311 Smaller
Companies/B
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 18.23%
Jacksonville, FL 32246 Smaller
Companies/C
New Moon Settlement, U/A Dtd Michael Paul Egerton-Vernon, Ttee Ferdinand Global 54.52%
Chaffart, Ttee, Rathbone House, 15 Esplanade Channel Islands UK Smaller
Companies/I
Virginia Settlement, U/A Dtd Michael Paul Egerton-Vernon, Ttee Ferdinand Global 14.90%
Chaffart, Ttee, Rathbone House, 15 Esplanade Channel Islands UK Smaller
Companies/I
24
Percentage of
Total Shares
Name and Address Fund/Class Held
- ---------------- --------------- -------------
State Street Bank & Trust Co., FBO North Carolina College Savings Program Global Smaller 12.79%
NCBE, 105 Rosemont Avenue, Westwood, MA 02090 Companies/I
State Street Bank & Trust Co., FBO North Carolina College Savings Program Global Smaller 6.88%
NCBD, 105 Rosemont Avenue, Westwood, MA 02090 Companies/I
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 13.63%
Jacksonville, FL 32246 Technology/A
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 Global 6.75%
Technology/A
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 32.13%
Jacksonville, FL 32246 Technology/B
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 Global 5.00%
Technology/B
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 Global 6.60%
Technology/C
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, Global 20.21%
Jacksonville, FL 32246 Technology/C
State Street Bank & Trust Co. FBO. Seligman Asset Allocation Moderate Growth International 11.92%
Fund, 801 Pennsylvania Ave., Kansas City, MO 64105 Growth/A
Percentage of
Total Shares
Name and Address Fund/Class Held
- ---------------- -------------- -------------
State Street Bank & Trust Co. FBO. Seligman Asset Allocation Balanced Fund, 801 International
Pennsylvania Ave., Kansas City, MO 64105 Growth/A 6.13%
State Street Bank & Trust Co. FBO. Seligman Asset Allocation Growth Fund, 801 International
Pennsylvania Ave., Kansas City, MO 64105 Growth/A 5.65%
Morgan Stanley & Co., Harborside Financial Center, Plaza II 3/rd/ Floor, Jersey City, International
NJ 07311 Growth/B 23.46%
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 International
Growth/B 10.11%
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, International
Jacksonville, FL 32246 Growth/B 5.02%
CitiGroup Global House Account, 333 West 34/th/ Street, New York, NY 10001 International
Growth/C 5.06%
MLPF&S, FBO Customers, Attn. Fund Admin., 4800 Deer Lake Drive East, International
Jacksonville, FL 32246 Growth/C 10.10%
State Street Bank & Trust Co., FBO North Carolina College Savings Program International
NCBE, 105 Rosemont Avenue, Westwood, MA 02090 Growth/I 34.03%
State Street Bank & Trust Co., FBO North Carolina College Savings Program International
NCBG, 105 Rosemont Avenue, Westwood, MA 02090 Growth/I 17.34%
State Street Bank & Trust Co., FBO North Carolina College Savings Program International
NCBF, 105 Rosemont Avenue, Westwood, MA 02090 Growth/I 17.48%
State Street Bank & Trust Co., FBO North Carolina College Savings Program International
NCBD, 105 Rosemont Avenue, Westwood, MA 02090 Growth/I 11.91%
25
Management Ownership
As of February 5, 2009, Directors and officers of the Funds as a group owned
less than 1% of the Class A shares of each Fund in the Series. As of February
5, 2009, Directors and officers of the Series did not own any Class B, Class C,
Class I or Class R shares of the Funds.
Investment Advisory and Other Services
RiverSource Investments
With the completion of the Acquisition of Seligman by RiverSource Investments
and with shareholders having previously approved (at a special meeting held on
November 3, 2008) a new investment management services agreement between the
Series (on behalf of each Fund) and RiverSource Investments (the "Management
Agreement"), RiverSource Investments became the new investment manager of the
Funds effective November 7, 2008. Shareholders of the Funds (other than
Seligman Global Technology Fund) also approved at the November meeting a
subadvisory agreement between RiverSource Investments and Wellington Management
Company, LLP. ("Subadvisory Agreement"),
RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis,
Minnesota 55474, is also the investment manager of the other funds in the
RiverSource Group of Funds, which includes the "RiverSource" funds,
"RiverSource Partners" funds, the "Threadneedle" funds and the "Seligman"
funds, and is a wholly-owned subsidiary of Ameriprise Financial. Ameriprise
Financial is a financial planning and financial services company that has been
offering solutions for clients' asset accumulation, income management and
protection needs for more than 110 years. In addition to managing investments
for the RiverSource Group of Funds, RiverSource Investments manages investments
for itself and its affiliates. For institutional clients, RiverSource
Investments and its affiliates provide investment management and related
services, such as separate account asset management, and institutional trust
and custody, as well as other investment products.
Effective November 7, 2008, each Fund will pay RiverSource Investments a fee
for managing its assets. The fees paid by each Fund to RiverSource Investments
will be the same annual fee rate that was paid to Seligman prior to November 7,
2008.
Subject to the control of the Series' Board of Directors, RiverSource
Investments is responsible for the investments of each Fund (with the
assistance of Wellington Management in the case of the Emerging Markets Fund,
the Global Growth Fund, the Global Smaller Companies Fund and the International
Growth Fund (collectively, the "Subadvised Funds")). Other than the Subadvisory
Agreement with Wellington Management there are no other management-related
service contracts under which services are or may be provided to the Funds. No
person or persons, other than the directors, officers, employees of RiverSource
Investments, or the Series regularly advise the Series or the Funds with
respect to their investments (other than as discussed below, Wellington
Management).
Each Fund pays RiverSource Investments a fee for its management services equal
to a percentage of that Fund's average daily net assets. Each Fund's fee rate
declines as that Fund's net assets increase. With respect to the Emerging
Markets Fund, RiverSource Investments receives a fee equal to an annual rate of
1.25% of the average daily net assets on the first $1 billion of net assets,
1.15% on the next $1 billion and 1.05% of average daily net assets in excess of
$2 billion. With respect to each of the Global Growth Fund and International
Growth Fund, RiverSource Investments receives a fee equal to an annual rate of
1.00% of the average daily net assets on the first $50 million of net assets,
0.95% on the next $1 billion and 0.90% of average daily net assets in excess of
$1,050,000,000. With respect to the Global Smaller Companies Fund, RiverSource
Investments receives a fee equal to an annual rate of 1.00% of the average
daily net assets on the first $100 million of net assets and 0.90% of average
daily net assets in excess of $100 million. The management fee rate with
respect to the Global Technology Fund is equal to an annual rate of 1.00% of
average daily net assets on the first $2 billion of net assets, 0.95% of
average daily net assets on the next $2 billion and 0.90% of average daily net
assets in excess of $4 billion.
The following table indicates the management fees paid by each Fund as well as
the percentage of each Fund's average daily net assets for the fiscal years
ended October 31, 2008, 2007 and 2006 (RiverSource Investments became the
manager of the Funds on November 7, 2008).
26
Management % of
Fiscal Year Fee Average Daily
Fund Ended Paid ($) Net Assets (%)
---- ----------- ---------- --------------
Emerging Markets Fund......... 10/31/08 $1,587,834 1.25%
10/31/07 1,481,382 1.25
10/31/06 1,227,598 1.25
Global Growth Fund............ 10/31/08 $ 371,413 1.00%
10/31/07 415,810 1.00
10/31/06 477,772 1.00
Global Smaller Companies Fund. 10/31/08 $1,772,967 0.95%
10/31/07 2,081,618 0.95
10/31/06 1,902,324 0.95
Global Technology Fund........ 10/31/08 $3,571,473 1.00%
10/31/07 3,876,481 1.00
10/31/06 3,726,566 1.00
International Growth Fund..... 10/31/08 $ 813,827 0.98%
10/31/07 986,014 0.97
10/31/06 843,575 0.98
Each Fund pays all its expenses other than those assumed by the RiverSource
Investments, including fees payable to RiverSource Investments for its services
under the terms of the Management Agreement, taxes, brokerage commissions and
charges in connection with the purchase and sale of assets, premium on the bond
required by Rule 17g-1 under the 1940 Act, fees and expenses of attorneys
(i) it employs in matters not involving the assertion of a claim by a third
party against a Fund, its Board members and officers, (ii) it employs in
conjunction with a claim asserted by the Board against RiverSource Investments,
except that RiverSource Investments shall reimburse the Series (or a Fund
thereof, as the case may be) for such fees and expenses if it is ultimately
determined by a court of competent jurisdiction, or RiverSource Investments
agrees, that it is liable in whole or in part to the Series (or a Fund thereof,
as the case may be), (iii) it employs to assert a claim against a third party,
and (iv) it or RiverSource Investments employs, with the approval of the Board,
to assist in the evaluation of certain investments or other matters related to
the management of the Series, fees paid for the qualification and registration
for public sale of the securities of a Fund under the laws of the United States
and of the several states in which such securities shall be offered for sale,
fees of consultants employed by the Series, Board member, officer and employee
expenses which shall include fees, salaries, memberships, dues, travel,
seminars, pension, profit sharing, and all other benefits paid to or provided
for Board members, officers and employees, directors and officers liability
insurance, errors and omissions liability insurance, worker's compensation
insurance and other expenses applicable to the Board members, officers and
employees, except the Series will not pay any fees or expenses of any person
who is an officer or employee of RiverSource Investments or its affiliates,
filing fees and charges incurred by the Series in connection with filing any
amendment to its organizational documents, or incurred in filing any other
document with the state where the Series is organized or its political
subdivisions, organizational expenses of the Series, expenses incurred in
connection with lending portfolio securities of a Fund, expenses properly
payable by the Series and approved by the Board, and other expenses payable by
the Series pursuant to separate agreement of the Series and any of its service
providers.
The Management Agreement provides that it is effective on November 7, 2008 and
shall continue in full force and effect until November 7, 2010, and from year
to year thereafter if such continuance is approved in the manner required by
the 1940 Act (i.e., by a vote of a majority of the Board of Directors or of the
outstanding voting securities of a Fund and by a vote of a majority of
Directors who are not parties to the Management Agreement or interested persons
of any such party). The Management Agreement may be terminated by either a Fund
or RiverSource Investments at any time by giving the other party 60 days'
written notice of such intention to terminate, provided that any termination
shall be made without the payment of any penalty, and provided further that
termination may be effected either by the Board or by a vote of the majority of
the outstanding voting shares of a Fund. The Management Agreement will
terminate automatically in the event of its assignment, as such term is defined
in the 1940 Act.
Except for bad faith, intentional misconduct or negligence in regard to the
performance of its duties under the Management Agreement, neither RiverSource
Investments, nor any of its respective directors, officers, partners,
27
principals, employees, or agents will be liable for any acts or omissions or
for any loss suffered by the Series or its shareholders or creditors. Each of
RiverSource Investments, and its respective directors, officers, partners,
principals, employees and agents, will be entitled to rely, and will be
protected from liability in reasonably relying, upon any information or
instructions furnished to it (or any of them as individuals) by the Series or
its agents which is believed in good faith to be accurate and reliable.
RiverSource Investments does not warrant any rate of return, market value or
performance of any assets in a Fund. Notwithstanding the foregoing, the federal
securities laws impose liabilities under certain circumstances on persons who
act in good faith and, therefore, the Series does not waive any right which it
may have under such laws or regulations.
Subadvisory Arrangement
On September 15, 2003, Wellington Management assumed responsibility for
providing investment advisory services to the Subadvised Funds. The subadvisory
arrangement between Seligman (the predecessor investment manager) and
Wellington Management was approved initially by the Board of Directors of the
Series in respect of each Subadvised Fund on September 4, 2003. The engagement
by Seligman of Wellington Management was approved by the shareholders of each
Subadvised Fund at a special meeting held on December 4, 2003. The subadvisory
arrangement between RiverSource Investments and Wellington Management was
initially approved by the Directors on July 29, 2008. The engagement by
RiverSource Investments of Wellington Management was approved by the
shareholders of each Subadvised Fund at a special meeting held on November 3,
2008.
At the July 29, 2008 meeting, the Board of Directors approved the Management
Agreement as well the Subadvisory Agreement. These new agreements became
effective on November 7, 2008.
The fees payable by each Subadvised Fund did not increase as a result of the
engagement of Wellington Management. The fees of Wellington Management are paid
by RiverSource Investments (not by the Subadvised Fund), and the fees payable
by each Subadvised Fund to RiverSource Investments were unchanged.
Wellington Management is a Massachusetts limited liability partnership with
principal offices at 75 State Street, Boston, Massachusetts 02109. Wellington
Management is a professional investment counseling firm that provides
investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions. Wellington Management and its
predecessor organizations have provided investment advisory services for over
70 years. As of January 31, 2009, Wellington Management had investment
management authority with respect to approximately $402 billion in assets
(which does not include agency mortgage-backed security pass-through accounts
managed for the federal reserve).
Under the Subadvisory Agreement, Wellington Management is responsible for
providing investment advisory services to each Subadvised Fund. Wellington
Management is also responsible for selecting brokers for the execution of
purchases and sales on behalf of each Subadvised Fund.
Terms of the Subadvisory Agreement
Services. Under the Subadvisory Agreement, Wellington Management, subject to
the control of the Board of Directors and in accordance with the objectives,
policies and principles of the relevant Subadvised Fund set forth in the
applicable Prospectus and this SAI and the requirements of the 1940 Act and
other applicable law, furnishes RiverSource Investments and each Subadvised
Fund with such investment advice, research and assistance as RiverSource
Investments or the Subadvised Fund shall from time to time reasonably request.
In this regard, it is the responsibility of Wellington Management, in respect
of each Subadvised Fund: (i) to participate in the development of the
Subadvised Fund's overall investment strategy and in the determination of
investment allocations; (ii) to provide investment advice and research to the
Subadvised Fund with respect to existing and potential investments in
securities, including company visits and meetings with management; (iii) to
determine securities and other assets for investment; (iv) to select brokers
and dealers; (v) to cause the execution of trades, including foreign exchange
dealings; and (vi) unless otherwise agreed to by RiverSource Investments, vote
proxies solicited by or with respect to issuers of securities in which assets
of the Subadvised Funds may be invested from time to time. Wellington
Management's responsibilities extend to all of each Subadvised Fund's assets.
Under the Management Agreement, RiverSource Investments has responsibility for
investment management services provided under the Subadvisory Agreement.
28
Liability. The Subadvisory Agreement provides that, subject to Section 36 of
the 1940 Act, Wellington Management shall not be liable to the Series for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the performance of its duties under
the Subadvisory Agreement except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under the Subadvisory Agreement, provided,
however, that Wellington Management will be liable for any loss incurred by the
Series, any Subadvised Fund, RiverSource Investments or their respective
affiliates to the extent such losses arise out of any act or omission directly
attributable to Wellington Management which results, directly or indirectly, in
a material error in the net asset value of a Subadvised Fund.
Compensation. Under the Subadvisory Agreement, Wellington Management receives
in respect of each Subadvised Fund each month a fee calculated on each day
during such month at the annual rates set forth below:
Subadvisory Fee as a Percentage of Average
Subadvised Fund Daily Net Assets
--------------- ------------------------------------------
Emerging Markets Fund......... 0.65%
Global Growth Fund............
-up to $50 million............ 0.45%
-over $50 million............. 0.40%
International Growth Fund.....
-up to $50 million............ 0.45%
-over $50 million............. 0.40%
Global Smaller Companies Fund.
-up to $100 million........... 0.75%
-over $100 million............ 0.65%
This fee is paid by RiverSource Investments and does not affect the total fee
paid by any Subadvised Fund to RiverSource Investments pursuant to the New
Management Agreement.
Expenses. Pursuant to the Subadvisory Agreement, Wellington Management pays all
of its expenses arising from the performance of its duties under the
Subadvisory Agreement, other than the cost of securities, including brokerage
commissions and similar fees and charges for the acquisition, disposition,
lending or borrowing of each Subadvised Fund's investments.
Termination. The Subadvisory Agreement provides that it is effective
November 7, 2008 and will continue in effect until November 7, 2010, and from
year to year thereafter if such continuance is approved in the manner required
by the 1940 Act. The Subadvisory Agreement may be terminated at any time, with
respect to a Subadvised Fund, without payment of penalty, by the Subadvised
Fund on 60 days' written notice to Wellington Management by vote of the
Directors of the Series or by vote of the majority of the outstanding voting
securities (as defined by the 1940 Act) of the Subadvised Fund. The Subadvisory
Agreement also provides that it may also be terminated, with respect to a
Subadvised Fund, by Wellington Management or RiverSource Investments at any
time upon not less than 60 days' written notice to the other and to the Series.
The Subadvisory Agreement will automatically terminate in the event of its
assignment in respect of a Subadvised Fund, and upon termination of the
Management Agreement in respect of a Subadvised Fund.
Principal Underwriter
RiverSource Fund Distributors, Inc., formerly known as Seligman Advisors Inc.
(an affiliate of RiverSource Investments), located at 100 Park Avenue, New
York, New York 10017, acts as general distributor of the shares of each Fund,
the other Seligman mutual funds, as well as the other funds in the RiverSource
Group of Funds. The distributor is an "affiliated person" (as defined in the
1940 Act) of RiverSource Investments, which is itself an affiliated person of
the Funds. Those individuals identified above under "Management Information" as
directors or officers of both the Funds and the distributor are affiliated
persons of both entities.
Administrative Services
Under an Administrative Services Agreement effective November 7, 2008,
Ameriprise Financial administers certain aspects of the Series' business and
other affairs at no cost. Ameriprise Financial provides the Series with such
office space, and certain administrative, accounting and other services and
executive and other personnel as are necessary for Series operations.
Ameriprise Financial pays all of the compensation of Board members of the
Series who are
29
employees or consultants of RiverSource Investments and of the officers and
employees of the Series. Ameriprise Financial reserves the right to seek Board
approval to increase the fees payable by a Fund of the Series under the
Administrative Services Agreement. However, Ameriprise Financial anticipates
that any such increase in fees would be offset by corresponding decreases in
advisory fees under the Management Agreement. If an increase in fees under the
Administrative Services Agreement would not be offset by corresponding
decreases in advisory fees, the affected Fund(s) will inform shareholders prior
to the effectiveness of such increase. Ameriprise Financial also provides
senior management for Seligman Data Corp. ("SDC").
Other Investment Advice
No person or persons, other than directors, officers, employees of RiverSource
Investments or Wellington Management regularly advise the Funds or RiverSource
Investments with respect to the Funds' investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares of the Funds, as set forth below: Class A shares:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
------------------ ----------------- --------------- --------------
Less than $ 50,000.. 5.75% 6.10% 5.00%
$50,000 - $ 99,999.. 4.50 4.71 4.00
$100,000 - $249,999. 3.50 3.63 3.00
$250,000 - $499,999. 2.50 2.56 2.25
$500,000 - $999,999. 2.00 2.04 1.75
$1,000,000 and over. 0 0 0
- --------
(1)"Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
Rule 12b-1 Plans
Each Fund has adopted an Administration, Shareholder Services and Distribution
Plan ("12b-1 Plan") in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under its 12b-1 Plan, each Fund may pay to the distributor an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, Class C and Class R shares. (There is no administration, shareholder
services and distribution fee in respect of any Fund's Class I shares.)
Payments under the 12b-1 Plan may include, but are not limited to:
(1) compensation to securities dealers and other organizations ("Service
Organizations") for providing distribution assistance with respect to assets
invested in a Fund; (2) compensation to Service Organizations for providing
administration, accounting and other shareholder services with respect to Fund
shareholders; and (3) otherwise promoting the sale of shares of a Fund,
including paying for the preparation of advertising and sales literature and
the printing and distribution of such promotional materials and Prospectuses to
prospective investors and defraying the distributor's costs incurred in
connection with its marketing efforts with respect to shares of a Fund.
RiverSource Investments may also make similar payments to the distributor from
its own resources, which may include the management fee that RiverSource
Investments receives from each Fund. Payments made by each Fund under its Rule
12b-1 Plan are intended to be used to encourage sales of such Fund, as well as
to discourage redemptions.
Fees paid by each Fund under its 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class
or any other Seligman fund. Expenses attributable to more than one class of a
Fund are allocated between the classes in accordance with a methodology
approved by the Series' Board of Directors. Each Fund may participate in joint
distribution activities with other Seligman funds, and the expenses of such
activities will be allocated among the applicable funds based on relative
sales, in accordance with a methodology approved by the Board.
30
Class A
Under its 12b-1 Plan, each Fund, with respect to Class A shares, is authorized
to pay monthly to the distributor a service fee at an annual rate of up to
0.25% of the average daily net asset value of the Class A shares. This fee is
used by the distributor exclusively to make payments to Service Organizations
which have entered into agreements with the distributor. Such Service
Organizations receive from the distributor a continuing service fee of up to
0.25% on an annual basis, payable quarterly, of the average daily net assets of
Class A shares attributable to the particular Service Organization for
providing personal service and/or maintenance of shareholder accounts. The fee
payable to Service Organizations from time to time shall, within such limits,
be determined by the Directors. The Funds are not obligated to pay the
distributor for any such costs it incurs in excess of the fee described above.
No expenses incurred in one fiscal year by the distributor with respect to
Class A shares of a Fund may be paid from Class A 12b-1 fees received from that
Fund in any other fiscal year. If a Fund's 12b-1 Plan is terminated in respect
of Class A shares, no amounts (other than amounts accrued but not yet paid)
would be owed by that Fund to the distributor with respect to Class A shares.
The total amount paid by each Fund to the distributor in respect of Class A
shares for the fiscal year ended October 31, 2008 and such amounts as a
percentage of Class A shares' average daily net assets, were as follows:
Total % of Average
Fund Fees Paid Net Assets
---- --------- ------------
Emerging Markets Fund......... $165,246 0.25%
Global Growth Fund............ 56,368 0.25
Global Smaller Companies Fund. 230,850 0.25
Global Technology Fund........ 623,168 0.25
International Growth Fund..... 99,447 0.25
Class B
Under its 12b-1 Plan, each Fund, with respect to Class B shares, is authorized
to pay monthly a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class B shares. This fee is comprised of (1) a
distribution fee equal to 0.75% per annum, substantially all of which is paid
directly to one or more third parties that have purchased the distributor's
rights to this fee (the "Purchasers") to compensate them for having funded, at
the time of sale of Class B shares (i) a 4% sales commission to Service
Organizations and (ii) prior to August 1, 2004, a payment of up to 0.35% of
sales to the distributor to help defray its costs of distributing Class B
shares; and (2) a service fee of up to 0.25% per annum which is paid to the
distributor. A small portion of the distribution fee is paid to the distributor
in connection with sales of Class B shares for which no commissions are paid;
the distributor may pay this portion of the distribution fee to Service
Organizations who have not received any sales commission for the sale of Class
B shares. The service fee is used by the distributor exclusively to make
payments to Service Organizations, which have entered into agreements with the
distributor. Such Service Organizations receive from the distributor a
continuing service fee of up to 0.25% on an annual basis, payable quarterly, of
the average daily net assets of Class B shares attributable to the particular
Service Organization for providing personal service and/or maintenance of
shareholder accounts. The amounts expended by the distributor or the Purchasers
in any one year upon the initial purchase of Class B shares of a Fund may
exceed the 12b-1 fees paid by that Fund in that year. Each Fund's 12b-1 Plan
permits expenses incurred in respect of Class B shares in one fiscal year to be
paid from Class B 12b-1 fees received from the Fund in any other fiscal year;
however, in any fiscal year the Funds are not obligated to pay any 12b-1 fees
in excess of the fees described above. the distributor and the Purchasers are
not reimbursed for expenses which exceed such fees. If a Fund's 12b-1 Plan is
terminated in respect of Class B shares, no amounts (other than amounts accrued
but not yet paid) would be owed by that Fund to the distributor or the
Purchasers with respect to Class B shares. The total amount paid by each Fund
in respect of Class B shares for the fiscal year ended October 31, 2008, was
equal to 1% per annum of the Class B shares' average daily net assets, as
follows:
Total
Fund Fees Paid
---- ---------
Emerging Markets Fund......... $ 55,576
Global Growth Fund............ 23,251
Global Smaller Companies Fund. 44,658
Global Technology Fund........ 158,593
International Growth Fund..... 55,984
31
Class C
Under the 12b-1 Plan, each Fund, with respect to Class C shares, is authorized
to pay monthly to the distributor a 12b-1 fee at an annual rate of up to 1% of
the average daily net asset value of such Fund's Class C shares. This fee is
used by the distributor as follows: During the first year following the sale of
Class C shares, a distribution fee of 0.75% of the average daily net assets
attributable to such Class C shares is used, along with any CDSC proceeds, to
(1) reimburse the distributor for its (A) payment at the time of sale of Class
C shares of a 0.75% sales commission to Service Organizations or, (B) ongoing
payment of 0.75% of the average daily net assets attributable to such Class C
shares to Service Organizations who elect not to receive a time of sale
payment, and (2) pay for other distribution expenses, including paying for the
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and Prospectuses to prospective
investors and other marketing costs of the distributor. In addition, during the
first year following the sale of Class C shares, a service fee of up to 0.25%
of the average daily net assets attributable to such Class C shares is used to
reimburse the distributor for its prepayment to Service Organizations at the
time of sale of Class C shares of a service fee of 0.25% of the net asset value
of the Class C shares sold (for shareholder services to be provided to Class C
shareholders over the course of the one year immediately following the sale)
and for its ongoing payment of a service fee of 0.25% of the average daily net
assets attributable to such Class C shares to those Service Organizations who
elect not to receive a time of sale payment. The payment of service fees to the
distributor is limited to amounts the distributor actually paid to Service
Organizations as service fees at either the time of sale or the ongoing service
fees paid to Service Organizations who elect not to receive such service fees
at the time of sale. After the initial one-year period following a sale of
Class C shares, the entire 12b-1 fee attributable to such Class C shares is
paid to Service Organizations for providing continuing shareholder services and
distribution assistance in respect of the Funds. The total amount paid by each
Fund to the distributor in respect of Class C shares for the fiscal year ended
October 31, 2008 was equal to 1% per annum of the average daily net assets of
Class C shares and Class D shares, which converted to Class C shares on May 16,
2008, as follows:
Total
Fund Fees Paid
---- ---------
Emerging Markets Fund......... $190,827
Global Growth Fund............ 60,255
Global Smaller Companies Fund. 194,613
Global Technology Fund........ 485,775
International Growth Fund..... 126,315
The amounts expended by the distributor in any one year with respect to Class C
shares of a Fund may exceed 12b-1 fees paid by the Fund in that year. Each
Fund's 12b-1 Plan permits expenses incurred by the distributor in respect of
Class C shares in one fiscal year to be paid from Class C 12b-1 fees received
from the Fund in any other fiscal year; however, in any fiscal year the Funds
are not obligated to pay any 12b-1 fees in excess of the fees described above.
As of September 30, 2008 (the most recent date such information was available),
the distributor incurred the following amounts of expenses in respect of each
Fund's Class C shares and Class D shares that were not reimbursed from the
amounts received from each Fund's 12b-1 Plan. Also shown below are percentages
of each Fund's net assets:
Amount of Unreimbursed
Expenses Incurred with % of the Net Assets of
Respect to Class C and Class Class C at
Fund D Shares September 30, 2008
- ---- ---------------------------- ----------------------
Emerging Markets Fund......... $1,322,946 5.39%
Global Growth Fund............ 1,513,818 22.00
Global Smaller Companies Fund. 4,263,821 14.42
Global Technology Fund........ 5,771,566 8.44
International Growth Fund..... 1,916,941 13.56
32
If the 12b-1 Plan is terminated in respect to Class C shares of any Fund, no
amounts (other than amounts accrued but not yet paid) would be owed by that
Fund to the distributor with respect to Class C shares.
Class R
Under the 12b-1 Plan, the Funds, with respect to Class R shares, are authorized
to pay monthly to the distributor a 12b-1 fee at an annual rate of up to 0.50%
of the average daily net asset value of the Class R shares. This 12b-1 fee is
comprised of (1) a distribution fee equal to 0.25% of the average daily net
assets attributable to the Class R shares and (2) a service fee of up to 0.25%
of the average daily net asset value of the Class R shares. The 12b-1 fee is
used by the distributor in one of two ways, depending on the payout option
chosen by Service Organizations. This fee is used by the distributor as follows:
Option 1 - Service Organization opts for time of sale payment. A distribution
fee of 0.25% of the average daily net assets attributable to such Class R
shares is used, along with any CDSC proceeds, to (1) reimburse the distributor
for its payment at the time of sale of Class R shares of a 0.75% sales
commission to the Service Organization, and (2) pay for other distribution
expenses, including paying for the preparation of advertising and sales
literature and the printing and distribution of such promotional materials and
Prospectuses to prospective investors and other marketing costs of the
distributor. In addition, during the first year following the sale of Class R
shares, a service fee of up to 0.25% of the average daily net assets
attributable to such Class R shares is used to reimburse the distributor for
its prepayment to the Service Organization at the time of sale of Class R
shares of a service fee of 0.25% of the net asset value of the Class R shares
sold (for shareholder services to be provided to Class R shareholders over the
course of the one year immediately following the sale). After the initial
one-year period following a sale of Class R shares, the 0.25% servicing fee is
used to reimburse the distributor for its payments to the Service Organization
for providing continuing shareholder services. The payment of service fees to
the distributor is limited to amounts the distributor actually paid to Service
Organizations at the time of sale as service fees.
Option 2 - Service Organization does not opt for time of sale payment. The
entire 12b-1 fee attributable to the sale of the Class R shares, along with any
CDSC proceeds, is used to (1) reimburse the distributor for its on-going
payment of the entire 12b-1 fees attributable to such Class R shares to the
Service Organization for providing continuing shareholder services and
distribution assistance in respect of the Fund and (2) pay for other
distribution expenses, including paying for the preparation of advertising and
sales literature and the printing and distribution of such promotional
materials and Prospectuses to prospective investors and other marketing costs
of the distributor.
The total amount paid by each Fund to the distributor in respect of Class R
shares for the fiscal year ended October 31, 2008 was equal to 0.50% per annum
of the Class R shares' average daily net assets, as follows:
Total
Fund Fees Paid
---- ---------
Emerging Markets Fund......... $50,182
Global Growth Fund............ 597
Global Smaller Companies Fund. 3,269
Global Technology Fund........ 9,095
International Growth Fund..... 2,810
The amounts expended by the distributor in any one year with respect to Class R
shares of each Fund may exceed the 12b-1 fees paid by a Fund in that year. Each
Fund's 12b-1 Plan permits expenses incurred by the distributor in respect of
Class R shares in one fiscal year to be paid from Class R 12b-1 fees in any
other fiscal year; however, in any fiscal year the Funds are not obligated to
pay any 12b-1 fees in excess of the fees described above.
As of September 30, 2008 (the most recent date such information was available),
the distributor incurred the following amounts of expenses in respect of each
Fund's Class R shares that were not reimbursed from the amounts received from
each Fund's 12b-1 Plan. Also shown are the amounts of percentages of each
Fund's net assets:
Amount of % of the
Unreimbursed Expenses Net Assets of
Incurred with Respect to Class R at
Fund Class R Shares September 30, 2008
---- ------------------------ ------------------
Emerging Markets Fund......... $158,910 1.70%
Global Growth Fund............ 2,597 1.69
Global Smaller Companies Fund. 19,703 3.15
Global Technology Fund........ 53,410 2.17
International Growth Fund..... 12,979 2.46
33
If the 12b-1 Plan is terminated in respect of Class R shares of a Fund, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to the distributor with respect to Class R shares.
Payments made by each Fund under its 12b-1 Plan in respect of Class A, Class B,
Class C and Class R shares for the fiscal year ended October 31, 2008, were
spent on the following activities in the following amounts:
Compensation Compensation
to to Other
Fund/Class Underwriters Broker/Dealers Compensation*
- ---------- ------------ -------------- -------------
Emerging Markets Fund/Class A........... $ 0 $165,246 0
Emerging Markets Fund/Class B*.......... 93 15,175 40,308
Emerging Markets Fund/Class C**......... 33,816 157,011 0
Emerging Markets Fund/Class R........... 2,257 47,925 0
Global Growth Fund/Class A.............. $ 0 $ 56,368 $ 0
Global Growth Fund/Class B*............. 10 6,267 16,974
Global Growth Fund/Class C**............ 6,804 53,451 0
Global Growth Fund/Class R.............. 109 488 0
Global Smaller Companies Fund/Class A... $ 0 $230,850 $ 0
Global Smaller Companies Fund/Class B*.. 112 12,201 32,345
Global Smaller Companies Fund/Class C**. 29,394 165,219 0
Global Smaller Companies Fund/Class R... 629 2,640 0
Global Technology Fund/Class A.......... $ 0 $623,168 $ 0
Global Technology Fund/Class B*......... 0 44,398 114,195
Global Technology Fund/Class C**........ 106,168 379,607 0
Global Technology Fund/Class R.......... 1,512 7,583 0
International Growth Fund/Class A....... $ 0 $ 99,447 $ 0
International Growth Fund/Class B*...... 258 15,320 40,406
International Growth Fund/Class C**..... 20,351 105,964 0
International Growth Fund/Class R....... 164 2,646 0
- --------
* Payment is made to the Purchasers to compensate them for having funded, at
the time of sale, payments to broker/dealers and underwriters.
** Includes payments with respect to Class C shares and Class D shares, which
converted to Class C shares on May 16, 2008.
The 12b-1 Plan with respect to the International Growth Fund was initially
approved on July 15, 1993 by the Board of Directors, including a majority of
the Directors who are not "interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the Fund
("Qualified Directors") and by the shareholders of such Fund on September 21,
1993. The 12b-1 Plan with respect to the Emerging Markets Fund was originally
approved on March 21, 1996 by the Board of Directors, including a majority of
the Qualified Directors, and by the sole shareholder of each Class of shares of
the Fund on May 10, 1996. The 12b-1 Plan with respect to the Global Growth Fund
was originally approved on September 21, 1995 by the Board of Directors,
including a majority of the Qualified Directors, and by the sole shareholder of
such Fund on October 30, 1995. The 12b-1 Plan with respect to the Global
Smaller Companies Fund was originally approved on July 16, 1992 by the Board of
Directors, including a majority of the Qualified Directors. Amendments to the
12b-1 Plan of Global Smaller
34
Companies Fund were approved by the Board of Directors of the Fund, including a
majority of the Qualified Directors, on March 18, 1993 and the amended 12b-1
Plan was approved by the shareholders of the Global Smaller Companies Fund on
May 20, 1993. The 12b-1 Plan with respect to the Global Technology Fund was
originally approved on March 17, 1994 by the Board of Directors, including a
majority of the Qualified Directors, and by the sole shareholder of such Fund
on that date. The 12b-1 Plans were approved in respect of the Class B shares of
each Fund other than the Emerging Markets Fund on March 21, 1996 by the Board
of Directors, including a majority of the Qualified Directors, and by the sole
shareholder of each such Fund's Class B shares on that date, and became
effective in respect of such Class B shares on April 22, 1996. In addition, the
12b-1 Plans were approved with respect of Class C shares of each Fund on
May 20, 1999 by the Directors, including a majority of the Qualified Directors,
and became effective in respect of each Fund's Class C shares on June 1, 1999.
The 12b-1 Plans were approved in respect of Class R shares of each Fund on
March 20, 2003 by the Board of Directors, including a majority of Qualified
Directors, and became effective in respect of each Fund's Class R shares on
April 30, 2003.
The 12b-1 Plans will continue in effect through December 31 of each year so
long as such continuance is approved annually by a majority vote of both the
Directors and the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. No material amendment to the 12b-1
Plans may be made except by a majority of both the Directors and Qualified
Directors. The 12b-1 Plans may not be amended to increase materially the
amounts payable to Service Organizations with respect to a Class without the
approval of a majority of the outstanding voting securities of such Class. If
the amount payable in respect of Class A shares under a Fund's 12b-1 Plan is
proposed to be increased materially, the Fund will either (i) permit holders of
Class B shares to vote as a separate class on the proposed increase or
(ii) establish a new class of shares subject to the same payment under the
12b-1 Plan as existing Class A shares, in which case Class B shares will
thereafter convert into the new class instead of into Class A shares.
The 12b-1 Plans require that the Treasurer of the Series shall provide to the
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plans. Rule
12b-1 also requires that the selection and nomination of Directors who are not
"interested persons" of the Series be made by such disinterested Directors. The
12b-1 Plans are reviewed annually by the Directors.
RiverSource Services, Inc., formerly known as Seligman Services, Inc.
("RiverSource Services") acts as a broker/dealer of record for shareholder
accounts that do not have a designated financial advisor. As such, it receives
compensation pursuant to each Fund's 12b-1 Plan for providing personal services
and account maintenance to such accounts. For the fiscal year ended October 31,
2008, RiverSource Services received service fees pursuant to each Fund's 12b-1
Plan as follows:
Service Fees
Paid to
RiverSource
Services
Fund 2008
---- ------------
Emerging Markets Fund......... $ 6,947
Global Growth Fund............ 3,729
Global Smaller Companies Fund. 9,125
Global Technology Fund........ 28,362
International Growth Fund..... 4,186
Other Service Providers
The Seligman funds have entered into an agreement with Board Services
Corporation ("Board Services") located at 901 Marquette Avenue South, Suite
2810, Minneapolis, MN 55402. This agreement sets forth the terms of Board
Services' responsibility to serve as an agent of the funds for purposes of
administering the payment of compensation to each independent Board member, to
provide office space for use by the funds and their boards, and to provide any
other services to the boards or the independent members, as may be reasonably
requested.
35
SDC, which is owned by certain other Seligman funds, is the shareholder
servicing agent and dividend paying agent for the Funds through May 8, 2009.
SDC charges the Funds at cost for its services. These costs may include amounts
paid by SDC to financial intermediaries and other third parties who provide
subtransfer-agency services. Certain officers and directors of the Funds are
also officers and directors of SDC. SDC's address is 100 Park Avenue, New York,
New York 10017.
Effective May 9, 2009, RiverSource Service Corporation ("RSC") will become the
Seligman funds' transfer and shareholder service agent (RSC already serves as
transfer and shareholder service agent for the other funds in the RiverSource
Group of Funds). RSC provides or compensates others to provide transfer agency
services to the RiverSource Group of Funds.
Portfolio Managers
For purposes of this discussion, each member of a Fund's portfolio team is
referred to as a "portfolio manager". The following table sets forth certain
additional information with respect to the portfolio managers of each Fund.
Unless noted otherwise, all information is provided as of October 31, 2008.
Other Accounts Managed by Portfolio Managers. Table A below identifies, for
each of the portfolio managers, the number of accounts managed (other than the
Fund managed by its portfolio manager) and the total assets in such accounts,
within each of the following categories: other registered investment companies,
other pooled investment vehicles, and other accounts. Table B identifies, for
each of the portfolio managers of each Fund, only those accounts that have an
advisory fee based on performance of the account. For purposes of these tables,
each series or portfolio of a registered investment company will be counted as
a separate registered investment company.
Table A:
Registered Investment Other Pooled Investment
Portfolio Manager/Fund Companies Vehicles Other Accounts
- ---------------------- ------------------------------ --------------------------- ------------------------------
Vera M. Trojan, Emerging 2 Other Registered Investment 10 Pooled Investment 10 Other Accounts with
Markets Fund Companies with Vehicles with approximately $842.5
approximately $76.3 million approximately $1.4 billion million in total assets under
in total assets under in total assets under management.
management. management.
Matthew D. Hudson, Global 12 Other Registered 16 Pooled Investment 19 Other Accounts with
Growth Fund Investment Companies with Vehicles with approximately $2.6 billion
approximately $2.8 billion in approximately $2.5 billion in total assets under
total assets under in total assets under management.
management. management.
Andrew S. Offit, Global Growth 13 Other Registered 16 Pooled Investment 19 Other Accounts with
Fund Investment Companies with Vehicles with approximately $2.6 billion
approximately $2.8 billion in approximately $2.5 billion in total assets under
total assets under in total assets under management.
management. management.
Table A continued:
Registered Investment Other Pooled Investment
Portfolio Manager/Fund Companies Vehicles Other Accounts
- ---------------------- ------------------------------ --------------------------- ---------------------------
Jean-Marc Berteaux, Global 12 Other Registered 16 Pooled Investment 19 Other Accounts with
Growth Fund Investment Companies with Vehicles with approximately $2.6 billion
approximately $2.7 billion in approximately $2.5 billion in total assets under
total assets under in total assets under management.
management. management.
Andrew S. Offit, International 13 Other Registered 17 Pooled Investment 19 Other Accounts with
Growth Fund Investment Companies with Vehicles with approximately $2.6 billion
approximately $2.7 billion in approximately $2.5 billion in total assets under
total assets under in total assets under management.
management. management.
36
Jean-Marc Berteaux, 12 Other Registered 16 Pooled Investment 19 Other Accounts with
International Growth Fund Investment Companies with Vehicles with approximately approximately $2.6 billion in
approximately $2.7 billion in $2.5 billion in total assets total assets under
total assets under under management. management.
management.
Matthew D. Hudson, 12 Other Registered 12 Pooled Investment 19 Other Accounts with
International Growth Fund Investment Companies with Vehicles with approximately approximately $2.6 billion in
approximately $2.7 billion in $2.5 billion in total assets total assets under
total assets under under management. management.
management.
Jamie A. Rome, Global Smaller 5 Other Registered Investment 12 Pooled Investment 16 Other Accounts with
Companies Fund Companies with Vehicles with approximately approximately $1.5 billion in
approximately $286.6 million $638.8 million in total assets total assets under
in total assets under under management. management.
management.
Simon H. Thomas, Global 2 Other Registered Investment 10 Pooled Investment 6 Other Accounts with
Smaller Companies Fund Companies with Vehicles with approximately approximately $237.4 million
approximately $286.6 million $241.5 million in total assets in total assets under
in total assets under under management. management.
management.
Richard M. Parower, Global 3 Other Registered Investment 5 Pooled Investment Vehicles 5 Other Accounts with
Technology Fund Companies with with approximately $1.6 approximately $175.3 million
approximately $2.4 billion in billion in total assets under in total assets under
total assets under management. management.
management.
Paul H. Wick, Global 3 Other Registered Investment 5 Pooled Investment Vehicles 4 Other Accounts with
Technology Fund Companies with with approximately $1.6 approximately $175.7 million
approximately $2.4 billion in billion in total assets under in total assets under
total assets under management. management.
management.
Reema D. Shah, Global 3 Other Registered Investment 5 Pooled Investment Vehicles 5 Other Accounts with
Technology Fund Companies with with approximately $1.6 approximately $176.4 million
approximately $2.4 billion in billion in total assets under in total assets under
total assets under management. management.
management.
37
Table A continued:
Registered Investment Other Pooled Investment
Portfolio Manager/Fund Companies Vehicles Other Accounts
- ---------------------- ------------------------------ ---------------------------- ------------------------------
Ajay Diwan, Global Technology 3 Other Registered Investment 5 Pooled Investment 6 Other Accounts with
Fund Companies with Vehicles with approximately $179.2
approximately $2.4 billion in approximately $1.6 billion million in total assets under
total assets under in total assets under management.
management. management.
Benjamin Lu, Global 1 Other Registered Investment 2 Pooled Investment 1 Other Accounts with
Technology Fund Company with approximately Vehicles with approximately $6,000 in
$4.3 million in total assets approximately $30.7 million total assets under
under management. in total assets under management.
management.
Table B:
Registered Investment Other Pooled Investment
Portfolio Manager/Fund Companies Vehicles Other Accounts
- ---------------------- ------------------------ ----------------------- ----------------------------
Vera M. Trojan, Emerging 0 Registered Investment 0 Pooled Investment 1 Other Account with
Markets Fund Companies. Vehicles. approximately $30.5 million
in total assets under
management.
Matthew D. Hudson, Global 0 Registered Investment 0 Pooled Investment 1 Other Account with
Growth Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
Andrew S. Offit, Global Growth 0 Registered Investment 0 Pooled Investment 1 Other Account with
Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
Jean-Marc Berteaux, Global 0 Registered Investment 0 Pooled Investment 1 Other Account with
Growth Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
Andrew S. Offit, International 0 Registered Investment 0 Pooled Investment 1 Other Account with
Growth Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
Jean-Marc Berteaux, 0 Registered Investment 0 Pooled Investment 1 Other Account with
International Growth Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
38
Table B continued:
Registered Investment Other Pooled Investment
Portfolio Manager/Fund Companies Vehicles Other Accounts
- ---------------------- ------------------------------ --------------------------- ------------------------------
Matthew D. Hudson, 0 Registered Investment 0 Pooled Investment 1 Other Account with
International Growth Fund Companies. Vehicles. approximately $94.5 million
in total assets under
management.
Jamie A. Rome, Global Smaller 0 Registered Investment 0 Pooled Investment 0 Other Accounts.
Companies Fund Companies. Vehicles.
Simon H. Thomas, Global 0 Registered Investment 0 Pooled Investment 0 Other Accounts.
Smaller Companies Fund Companies. Vehicles.
Richard M. Parower, Global 0 Registered Investment 2 Pooled Investment 1 Other Account with
Technology Fund Companies. Vehicles with approximately $173.7
approximately $1.6 billion million in total assets under
in total assets under management.
management.
Paul H. Wick, Global 0 Registered Investment 2 Pooled Investment 1 Other Account with
Technology Fund Companies. Vehicles with approximately $173.7
approximately $1.6 billion million in total assets under
in total assets under management.
management.
Reema D. Shah, Global 0 Registered Investment 2 Pooled Investment 1 Other Account with
Technology Fund Companies. Vehicles with approximately $173.7
approximately $1.6 billion million in total assets under
in total assets under management.
management.
Ajay Diwan, Global Technology 0 Registered Investment 2 Pooled Investment 1 Other Account with
Fund Companies. Vehicles with approximately $173.7
approximately $1.6 billion million in total assets under
in total assets under management.
management.
Benjamin Lu, Global 0 Other Registered Investment 0 Pooled Investment 0 Other Accounts.
Technology Fund Companies. Vehicles.
39
Compensation/Material Conflicts of Interest. Set forth below is an explanation
of the structure of, and method(s) used to determine, portfolio manager
compensation. Also set forth below is an explanation of material conflicts of
interest that may arise between the portfolio managers' management of each
Fund's investments and investments in other accounts.
Compensation:
Compensation of Portfolio Managers of Global Technology Fund. As compensation
for their responsibilities, each of Messrs. Parower, Wick, Diwan and Lu and
Ms. Shah received a base salary and bonus for the year ended December 31, 2008,
which was determined by Seligman, the Fund's predecessor investment manager.
For the year ended December 31, 2008, the bonuses were allocated (as described
below) from a bonus pool which is based upon (i) the weighted-average pre-tax
investment performance of the Seligman funds and institutional accounts managed
by Seligman's Technology Group (other than those attributable to funds in or
contemplating liquidation) as compared with the investment results of a group
of competitor funds over a rolling three-year period (ending November 30th);
(ii) the annual revenues generated from such Seligman funds and accounts, and
(iii) a portion of the management and performance fees generated for Seligman's
privately offered pooled investment vehicles.
The allocation of bonuses from the pool to each portfolio manager was based on
numerous qualitative and quantitative factors relating to the particular
portfolio manager, which included, among other things, an evaluation of: skills
as a research analyst (i.e., quality of research); particular contributions to
their investment team (as well as their contributions to other Seligman
investment teams); ability to take initiative with respect to new
roles/responsibilities; leadership abilities and potential for growth as a
portfolio manager; ability to assimilate new concepts and ideas; ability to
work within a team structure; and the competitive environment for the portfolio
manager's services. Mr. Wick retained the balance of the pool, after allocating
to each of the above portfolio managers and other members of Seligman's
Technology Group.
For 2009, as determined by RiverSource Investments, portfolio manager
compensation is typically comprised of (i) a base salary, (ii) an annual cash
bonus, a portion of which may be subject to a mandatory deferral program, and
may include (iii) an equity incentive award in the form of stock options and/or
restricted stock. The annual bonus is paid from a team bonus pool that is based
on the performance of the accounts managed by the portfolio management team,
which might include mutual funds, wrap accounts, institutional portfolios and
hedge funds. With respect to hedge funds and separately managed accounts that
follow a hedge fund mandate, funding for the bonus pool is a percentage of
performance fees earned on the hedge funds or accounts managed by the portfolio
managers.
Senior management of RiverSource Investments has the discretion to increase or
decrease the size of the part of the bonus pool and to determine the exact
amount of each portfolio manager's bonus paid from this portion of the bonus
pool based on his/her performance as an employee. The investment management
fees charged on their hedge fund investments are waived or reimbursed.
RiverSource Investments portfolio managers are provided with a benefits
package, including life insurance, health insurance, and participation in a
company 401(k) plan, comparable to that received by other RiverSource
Investments employees. Certain investment personnel are also eligible to defer
a portion of their compensation. An individual making this type of election can
allocate the deferral to the returns associated with one or more products they
manage or support or to certain other products managed by their investment
team. Depending upon their job level, RiverSource Investments portfolio
managers may also be eligible for other benefits or perquisites that are
available to all RiverSource Investments employees at the same job level.
Compensation of Portfolio Managers of Subadvised Funds. Wellington Management
receives a fee based on the assets under management of each Subadvised Fund as
set forth in the Subadvisory Agreement between Wellington Management and
RiverSource Investments on behalf of the Subadvised Funds. Wellington
Management pays its investment professionals out of its total revenues and
other resources, including the advisory fees earned with respect to each
Subadvised Fund. The following information relates to the fiscal year ended
October 31, 2008.
Wellington Management's compensation structure is designed to attract and
retain high-caliber investment professionals necessary to deliver high quality
investment management services to its clients. Wellington Management's
compensation of the Subadvised Funds' managers listed in the Prospectus who are
primarily responsible for the day-to-day management of the Subadvised Funds
("Investment Professionals") includes a base
40
salary and incentive components. The base salary for each Investment
Professional who is a partner of Wellington Management is determined by the
Managing Partners of the firm. A partner's base salary is generally a fixed
amount that may change as a result of an annual review. The base salaries for
the other Investment Professionals are determined by the Investment
Professionals' experience and performance in their roles as Investment
Professionals. Base salaries for Wellington Management employees are reviewed
annually and may be adjusted based on the recommendation of an Investment
Professional's manager, using guidelines established by Wellington Management's
Compensation Committee, which has final oversight responsibility for base
salaries of employees of the firm. Each Investment Professional is eligible to
receive an incentive payment based on the revenues earned by Wellington
Management from the relevant Subadvised Fund managed by the Investment
Professional and generally each other accounts managed by such Investment
Professional. Each Investment Professional's incentive payment relating to the
relevant Subadvised Fund is linked to the gross pre-tax performance of the
portion of the relevant Subadvised Fund managed by the Investment Professional
compared to the benchmark index and/or peer group identified below over one and
three year periods, with an emphasis on three year results. Wellington
Management applies similar incentive compensation structures (although the
benchmarks or peer groups, time periods and rates may differ) to other accounts
managed by the Investment Professionals, including accounts with performance
fees. With respect to the non-North American portion of the Global Smaller
Companies Fund, the Investment Professional's incentive payment was a flat rate
which was not linked to benchmark performance prior to January 1, 2006.
Portfolio-based incentives across all accounts managed by an investment
professional can, and typically do, represent a significant portion of an
investment professional's overall compensation; incentive compensation varies
significantly by individual and can vary significantly from year to year. The
Investment Professionals may also be eligible for bonus payments based on their
overall contribution to Wellington Management's business operations. Senior
management at Wellington Management may reward individuals as it deems
appropriate based on factors other than account performance. Each partner of
Wellington Management is eligible to participate in a partner-funded tax
qualified retirement plan, the contributions to which are made pursuant to an
actuarial formula. Messrs. Berteaux, Offit and Rome and Ms. Trojan are partners
of the firm.
Subadvised Fund Benchmark Index and/or Peer for the Incentive Period
- --------------- ---------------------------------------------------------
Seligman Emerging Markets Fund MSCI Emerging Markets Index
Seligman Global Growth Fund MSCI World Growth Index (prior to 3/1/06 MSCI World
Index)
Seligman International Growth Fund MSCI EAFE Growth Index (prior to 3/1/06 MSCI EAFE Index)
Seligman Global Smaller Companies Fund S&P North America under USD $2 billion (Mr. Rome)
S&P EPAC under USD $2 billion (Mr. Thomas) (prior to
January 1, 2006 not linked to a benchmark)
Conflicts of Interest:
RiverSource Investments portfolio managers may manage one or more mutual funds
as well as other types of accounts, including hedge funds, proprietary
accounts, separate accounts for institutions and individuals, and other pooled
investment vehicles. Portfolio managers make investment decisions for an
account or portfolio based on its investment objectives and policies, and other
relevant investment considerations. A portfolio manager may manage another
account whose fees may be materially greater than the management fees paid by
the Series and may include a performance based fee. Management of multiple
funds and accounts may create potential conflicts of interest relating to the
allocation of investment opportunities, competing investment decisions made for
different accounts and the aggregation and allocation of trades. In addition,
RiverSource Investments monitors a variety of areas (e.g., allocation of
investment opportunities) and compliance with the firm's Code of Ethics, and
places additional investment restrictions on portfolio managers who manage
hedge funds and certain other accounts.
RiverSource Investments has a fiduciary responsibility to all of the clients
for which it manages accounts. RiverSource Investments seeks to provide best
execution of all securities transactions and to aggregate securities
transactions and then allocate securities to client accounts in a fair and
equitable basis over time. RiverSource Investments has developed policies and
procedures, including brokerage and trade allocation policies and procedures,
designed to mitigate and manage the potential conflicts of interest that may
arise from the management of multiple types of accounts for multiple clients.
In addition to the accounts above, portfolio managers may manage accounts in a
personal capacity that may include holdings that are similar to, or the same
as, those of the fund. The investment manager's Code of Ethics is designed to
address conflicts and, among other things, imposes restrictions on the ability
of the portfolio managers and other "investment access persons" to invest in
securities that may be recommended or traded in the fund and other client
accounts.
41
Wellington Management. Individual investment professionals at Wellington
Management manage multiple accounts for multiple clients. These accounts may
include mutual funds, separate accounts (assets managed on behalf of
institutions, such as pension funds, insurance companies, foundations, or
separately managed account programs sponsored by financial intermediaries),
bank common trust accounts, and hedge funds. The Investment Professionals
generally manage accounts in several different investment styles. These
accounts may have investment objectives, strategies, time horizons, tax
considerations and risk profiles that differ from those of the relevant
Subadvised Fund. The Investment Professionals make investment decisions for
each account, including the relevant Subadvised Fund, based on the investment
objectives, policies, practices, benchmarks, cash flows, tax and other relevant
investment considerations applicable to that account. Consequently, the
Investment Professionals may purchase or sell securities, including IPOs, for
one account and not another account, and the performance of securities
purchased for one account may vary from the performance of securities purchased
for other accounts. Alternatively, these accounts may be managed in a similar
fashion to the relevant Subadvised Fund and thus the accounts may have similar,
and in some cases nearly identical, objectives, strategies and/or holdings to
that of the relevant Subadvised Fund.
An Investment Professionals or other investment professionals at Wellington
Management may place transactions on behalf of other accounts that are directly
or indirectly contrary to investment decisions made on behalf of the relevant
Subadvised Fund, or make investment decisions that are similar to those made
for the relevant Subadvised Fund, both of which have the potential to adversely
impact the relevant Subadvised Fund depending on market conditions. For
example, an investment professional may purchase a security in one account
while appropriately selling that same security in another account. Similarly,
an Investment Professional may purchase the same security for the relevant
Subadvised Fund and one or more other accounts at or about the same time, and
in those instances the other accounts will have access to their respective
holdings prior to the public disclosure of the relevant Subadvised Fund's
holdings. In addition, some of these accounts have fee structures, including
performance fees, which are or have the potential to be higher, in some cases
significantly higher, than the fees Wellington Management receives for managing
the Subadvised Funds. Because incentive payments paid by Wellington Management
to the Investment Professionals are tied to revenues earned by Wellington
Management and, where noted, to the performance achieved by the manager in each
account, the incentives associated with any given account may be significantly
higher or lower than those associated with other accounts managed by a given
Investment Professional. Finally, the Investment Professionals may hold shares
or investments in the other pooled investment vehicles and/or other accounts
identified above.
Wellington Management's goal is to meet its fiduciary obligation to treat all
clients fairly and provide high quality investment services to all of its
clients. Wellington Management has adopted and implemented policies and
procedures, including brokerage and trade allocation policies and procedures,
which it believes address the conflicts associated with managing multiple
accounts for multiple clients. In addition, Wellington Management monitors a
variety of areas, including compliance with primary account guidelines, the
allocation of IPOs, and compliance with the firm's Code of Ethics, and places
additional investment restrictions on investment professionals who manage hedge
funds and certain other accounts. Furthermore, senior investment and business
personnel at Wellington Management periodically review the performance of
Wellington Management's investment professionals. Although Wellington
Management does not track the time an investment professional spends on a
single account, Wellington Management does periodically assess whether an
investment professional has adequate time and resources to effectively manage
the investment professional's various client mandates.
Securities Ownership. As of October 31, 2008, Mr. Parower owned over $100,000
and Mr. Lu owned between $1-$10,000 of shares of the Global Technology Fund.
Mr. Thomas owned between $10,001-$50,000 of shares of the Global Smaller
Companies Fund and Mr. Offit owned between $10,001-$50,000 of shares of each of
the Global Growth Fund and the International Growth Fund. Other than as
described above, the portfolio managers do not own shares of the Fund(s) to
which he/she provides portfolio management services.
Brokerage Allocation and Other Practices
Brokerage Transactions
Both RiverSource Investments and Wellington Management (with respect to the
Subadvised Funds) will seek the most favorable price and execution in the
purchase and sale of portfolio securities of each Fund. When two or more
42
investment companies in the Seligman Funds or other investment advisory clients
of RiverSource Investments or Wellington Management, as the case may be, desire
to buy or sell the same security at the same time and the order is placed with
same trading desk of RiverSource Investments, the securities purchased or sold
are allocated by RiverSource Investments or Wellington Management, as the case
may be, in a manner believed to be equitable. There may be possible advantages
or disadvantages of such transactions with respect to price or the size of
positions readily obtainable or saleable.
The Funds, RiverSource Investments and the distributor have a strict Code of
Ethics that prohibits affiliated personnel from engaging in personal investment
activities that attempt to take advantage of planned portfolio transactions for
each Fund.
In over-the-counter markets, the Funds deal with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
Each Fund may buy securities from or sell securities to dealers acting as
principal in accordance with applicable law.
For the fiscal years ended October 31, 2008, 2007 and 2006, the Funds paid
total brokerage commissions to others for execution, research and statistical
services in the following amounts:
Total Brokerage
Commissions Paid
--------------------------------
Fund 2008 2007 2006
---- ---------- ---------- ----------
Emerging Markets Fund......... $ 586,513 $ 431,401 $ 504,450
Global Growth Fund............ 54,857 76,680 136,373
Global Smaller Companies Fund. 497,581 475,552 453,346
Global Technology Fund........ 1,747,855 2,082,502 2,625,504
International Growth Fund..... 634,696 589,465 382,448
Commissions
For the fiscal years ended October 31, 2008, 2007 and 2006, the Funds did not
execute any portfolio transactions with, and therefore did not pay any
commissions to, any broker affiliated with the Funds, Seligman (the Fund's
investment manager prior to November 7, 2008), Wellington Management or the
distributor.
Brokerage Selection
With respect to the Funds, RiverSource Investments and Wellington Management
(in the case of the Subadvised Funds) select broker dealers with the goal of
obtaining "best execution". RiverSource Investments and Wellington Management
will consider a full range and quality of a broker-dealer's services, such as
price, market familiarity, reliability, integrity, commission rates, execution
and settlement capabilities, ability to handle large orders, financial
condition, technological infrastructure and operational capabilities,
willingness to commit capital and the brokerage and research services provided
or made available by the broker-dealer. These brokerage and research services,
including supplemental investment research, analysis, and reports concerning
issuers, industries, and securities, may be useful to RiverSource Investments
and Wellington Management in connection with services to clients other than the
Funds. The relative weighting given to any of the criteria mentioned above
depends on a variety of factors including the nature of the transaction, the
market on which a particular trade is being executed and the number of
broker-dealers making a market in the security to be traded. While RiverSource
Investments and Wellington Management seek reasonably competitive spreads or
commissions, the Funds do not necessarily pay the lowest possible spread or
commission.
Although sales of investment company shares will not be considered in selecting
broker-dealers to effect securities transactions, RiverSource Investments
offers its services through the broker-dealer selling networks and expects that
nearly all broker-dealers that effect securities transactions for the Seligman
funds will have a relationship with RiverSource Investments or its affiliates
to distribute shares of the investment companies or other investment products
offered by RiverSource Investments. With respect to the Funds, RiverSource
Investments and Wellington Management rank broker-dealers through an internal
voting process which considers the services provided by broker-dealers
excluding investment company or product sales by that broker-dealer.
With respect to the Funds, in connection with any agency trades, RiverSource
Investments determines the reasonableness of the commissions to be paid to a
broker-dealer based upon the quality of the brokerage and research services
provided, or arranged for, and as a result, may select a broker-dealer whose
commission costs may be higher than another would have charged.
43
With respect to the Funds, RiverSource Investments and Wellington Management
monitor and evaluate the performance and execution capabilities of
broker-dealers through which they place orders and periodically review their
policies with regard to negotiating commissions or mark-ups for the Funds in
light of current market conditions, statistical studies and other available
information.
Regular Broker-Dealers
During the Funds' fiscal year ended October 31, 2008, the Funds did not acquire
securities of any of their regular brokers or dealers (as defined in Rule 10b-1
under the 1940 Act) or of their parents, with the exception of the Global
Growth Fund. At October 31, 2008, the Global Growth Fund held securities of
Goldman Sachs Group and JPMorgan Chase, with a value of $360,750 and $420,750,
respectively.
Capital Stock and Other Securities
Capital Stock
The Series is authorized to issue 2,000,000,000 shares of common stock, each
with a par value of $0.001 each, divided into five different series, which
represents each of the Funds. The Global Technology Fund has four classes,
designated Class A common stock, Class B common stock, Class C common stock and
Class R common stock. Each of the other Funds has five classes, designated
Class A common stock, Class B common stock, Class C common stock, Class I
common stock and Class R common stock. Each share of a Fund's Class A, Class B,
Class C, Class I and Class R common stock is equal as to earnings, assets, and
voting privileges, except that each Class bears its own separate distribution
and, potentially, certain other class expenses and has exclusive voting rights
with respect to any matter to which a separate vote of any class is required by
the 1940 Act or applicable state law. The Series has adopted a Plan
("Multiclass Plan") pursuant to Rule 18f-3 under the 1940 Act permitting the
issuance and sale of multiple classes of common stock. In accordance with the
Series' Articles of Incorporation, the Board of Directors may authorize the
creation of additional classes of common stock with such characteristics as are
permitted by the Multiclass Plan and Rule 18f-3. The 1940 Act requires that
where more than one class exists, each class must be preferred over all other
classes in respect of assets specifically allocated to such class. All shares
have noncumulative voting rights for the election of directors. Each
outstanding share is fully paid and non-assessable, and each is freely
transferable. There are no liquidation, conversion, or preemptive rights.
Other Securities
The Series has no authorized securities other than common stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Purchase Price. Class A shares may be purchased at a price equal to the next
determined net asset value per share, plus an initial sales charge.
Employee and Family Members. Class A shares of the Funds may be issued without
a sales charge to present and former directors, trustees, officers, employees
(and their respective family members) of the Funds, the other Seligman funds,
and RiverSource Investments and its affiliates. Family members are defined to
include lineal descendants and lineal ancestors, siblings (and their spouses
and children) and any company or organization controlled by any of the
foregoing. Such sales may also be made to employee benefit plans and thrift
plans for such persons and to any investment advisory, custodial, trust or
other fiduciary account managed or advised by RiverSource Investments or any
affiliate. The sales may be made for investment purposes only, and shares may
be resold only to the Funds. Class A shares may be sold at net asset value to
these persons since such sales require less sales effort and lower sales
related expenses as compared with sales to the general public.
44
If you are eligible to purchase Class A shares without a sales charge or
qualify for volume discounts, you should inform your financial advisor,
financial intermediary or SDC of such eligibility and be prepared to provide
proof thereof.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
Discounts and Rights of Accumulation. Reduced sales charges will apply if the
sum of (i) the current amount being invested by a "single person" in Class A
shares of a Fund and in Class A shares of other Seligman mutual funds
(excluding Class A shares of the Seligman Cash Management Fund), (ii) the
current net asset value of the Class A shares and Class B shares of other
Seligman mutual funds already owned by the "single person" other than Seligman
Cash Management Fund (except as provided in (iii)) and (iii) the current net
asset value of Class A shares of Seligman Cash Management Fund which were
acquired by a "single person" through an exchange of Class A shares of another
Seligman mutual fund, exceeds the breakpoint discount thresholds for Class A
shares described in the Prospectus (the "Breakpoint Discounts).
The value the shares contemplated by items (ii) and (iii) above (collectively,
the "Prior Owned Shares") will be taken into account only if SDC or the
financial intermediary (if you are purchasing through a financial intermediary)
is notified that there are holdings eligible for aggregation to meet the
applicable Breakpoint Discount thresholds. If you are purchasing shares through
a financial intermediary, you should consult with your intermediary to
determine what information you will need to provide them in order to receive
the Breakpoint Discounts to which you may be entitled. This information may
include account records regarding shares eligible for aggregation that are held
at any financial intermediary, as well as a social security or tax
identification number. You may need to provide this information each time you
purchase shares. In addition, certain financial intermediaries may prohibit you
from aggregating investments in the Seligman mutual funds if those investments
are held in your accounts with a different intermediary or with SDC.
Discounts and rights of accumulation apply with respect to your investments in
the Seligman mutual funds only. Any investment that you may have in shares of a
RiverSource fund, RiverSource Partners fund or Threadneedle fund will not be
aggregated with your investments in the Seligman mutual funds for the purpose
of determining eligibility for any Breakpoint Discount or reduced sales charge
(this same policy also applies in connection with a letter of intent, as
described below).
If you are dealing directly with SDC, you should provide SDC with account
information for any shares eligible for aggregation. This information includes
account records and a social security or tax identification number. You may
need to provide this information each time you purchase shares.
Letter of Intent. A letter of intent allows an investor to purchase Class A
shares over a 13-month period with the benefit of the Breakpoint Discounts
discussed in the Prospectus, based on the total amount of Class A shares of a
Fund that the letter states the investor intends to purchase plus the total net
asset value of the Prior Owned Shares. Reduced sales charges may be applied to
purchases made within a 13-month period starting from the date of receipt from
you of a letter of intent. In connection with such arrangement, a portion of
the shares you initially purchase under the letter of intent will be held in
escrow to provide for any sales charges that might result if you fail to
purchase the amount of shares contemplated by the letter of intent assuming
your purchases would not otherwise be eligible for Breakpoint Discounts. These
shares will be released upon completion of the purchases contemplated by the
letter of intent. In the event that you do not fulfill your obligations and the
amount of any outstanding sales charge is greater than the value of the shares
in escrow, you will be required to pay the difference. If the amount of the
outstanding sales charge is less than the value of the shares in escrow, you
will receive any shares remaining in the escrow after shares, with a value
equal to the amount of the outstanding sales charge, are redeemed by the
transfer agent.
Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares in an account held by a "single person". A "single
person" includes an individual; members of a family unit comprising husband,
wife and minor children; or a trustee or other fiduciary purchasing for a
single fiduciary account. Employee benefit plans qualified under Section 401 of
the Internal Revenue Code of 1986, as amended, organizations tax exempt under
Section 501(c)(3) or (13) of the Internal Revenue Code, and non-qualified
employee benefit plans that satisfy uniform criteria are also considered
"single persons" for this purpose. The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by a Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
Prospectuses, reports, and other shareholder communications.
45
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event,
the dropped participant would lose the discount on share purchases to which the
plan might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least $2 million in plan assets at the time of investment in the Funds, but,
in the event of plan termination, will be subject to a CDSC of 1% on shares
purchased within 18 months prior to plan termination. "Eligible employee
benefit plan" means any plan or arrangement, whether or not tax qualified,
which provides for the purchase of Fund shares. Sales to eligible employee
benefit plans are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. However, Section 403(b)
Plans sponsored by public educational institutions are not eligible for net
asset value purchases based on the aggregate investment made by the plan or
number of eligible employees.
Sales to eligible employee benefit plans must be made in connection with a
payroll deduction system of plan funding or other systems acceptable to SDC.
Contributions or account information for plan participation also should be
transmitted to SDC by methods which it accepts. Additional information about
"eligible employee benefit plans" is available from financial advisors or the
distributor.
Ascensus (formerly, BISYS) Plans. Plans that (i) own Class B shares of any
Seligman mutual fund and (ii) participate in Seligman Growth 401(k) through
Ascensus' third-party administration platform may, with new contributions,
purchase Class A shares at net asset value. Class A shares purchased at net
asset value are subject to a CDSC of 1% on shares purchased within 18 months
prior to plan termination.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1)to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
(2)to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3)to registered representatives and employees (and their spouses and minor
children) of any dealer or bank that has a sales agreement with the
distributor;
(4)to financial institution trust departments;
(5)to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6)to accounts of financial institutions or authorized dealers or investment
advisors that charge account management fees, provided RiverSource
Investments or one of its affiliates has entered into an agreement with
respect to such accounts;
(7)pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees, members
or participants in connection with the purchase of shares of the Fund;
46
(8)to other Seligman funds in connection with a deferred fee arrangement for
outside directors, or pursuant to a "fund of funds" in the Seligman funds;
(9)to certain "eligible employee benefit plans" as discussed above;
(10)to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by RiverSource Investments, or to their
directors or trustees; and
(11)in connection with sales pursuant to a retirement plan alliance program
which has a written agreement with the distributor; and
(12)to participants in retirement and deferred compensation plans and trusts
used to fund those plans, including, but not limited to, those defined in
Section 401(a), 401(k), 403(b), or 457 of the Internal Revenue Code and
"rabbi trusts", for which Charles Schwab & Co., Inc. or an affiliate acts a
broker-dealer, trustee, or record keeper.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more, either alone or through a
volume discount, Right of Accumulation or letter of intent, are subject to a
CDSC of 1% on redemptions of such shares within 18 months of purchase. Employee
benefit plans eligible for net asset value sales may be subject to a CDSC of 1%
for terminations at the plan level only, on redemptions of shares purchased
within 18 months prior to plan termination, except that any such plan that is
or was a separate account client of the investment manager at the time of
initial investment in a Seligman mutual fund (or within the prior 30 days) will
not be subject to a CDSC on redemption of any shares. Other available
reductions will not be subject to a 1% CDSC. The 1% CDSC will be waived on
shares that were purchased through Morgan Stanley Dean Witter & Co. by certain
Chilean institutional investors (i.e. pension plans, insurance companies, and
mutual funds). Upon redemption of such shares within an 18-month period, Morgan
Stanley Dean Witter will reimburse the distributor a pro rata portion of the
fee it received from the distributor at the time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares are
subject to a CDSC if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
Years Since Purchase CDSC
-------------------- ----
Less than 1 year...................... 5%
1 year or more but less than 2 years.. 4%
2 years or more but less than 3 years. 3%
3 years or more but less than 4 years. 3%
4 years or more but less than 5 years. 2%
5 years or more but less than 6 years. 1%
6 years or more....................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically to Class A shares. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically
to Class A shares along with the underlying shares on which they were earned.
Conversion occurs during the month which precedes the eighth anniversary of the
purchase date. If Class B shares of the Fund are exchanged for Class B shares
of another Seligman mutual fund, the conversion period applicable to the Class
B shares acquired in the exchange will apply, and the holding period of the
shares exchanged will be tacked onto the holding period of the shares acquired.
Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSC schedule if such schedule is higher
or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of the Fund acquired by exchange will be subject to
the Fund's CDSC schedule if such schedule is higher or longer than the CDSC
schedule relating to the Class B shares of the Seligman mutual fund from which
the exchange has been made.
47
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class C shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less. Unlike Class B shares, Class C shares do not convert
to Class A shares.
Class I
Class I shares may be purchased at a price equal to the next determined net
asset value. Class I shares are not subject to any initial or contingent
deferred sales charges or distribution expense. This Class, however, is only
offered to certain types of investors. Persons who are eligible to purchase
Class I shares of the Fund are described in the Prospectus for the Class I
shares. Unlike Class B shares, Class I shares do not convert to Class A shares.
Class R
Class R shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class R shares are
subject to a CDSC of 1% if the shares are redeemed within one year of the
plan's initial purchase of Class R shares, charged as a percentage of the
current net asset value or the original purchase price, whichever is less.
Unlike Class B shares, Class R shares do not convert to Class A shares.
Systematic Withdrawals. Class B, Class C and Class R shareholders of a Fund may
use the Systematic Withdrawal Plan to withdraw up to 12%, 10% and 10%,
respectively, of the value of their accounts per year without the imposition of
a CDSC. Account value is determined as of the date the systematic withdrawals
begin.
CDSC Waivers. The CDSC on Class B, Class C and Class R shares (and certain
Class A shares, as discussed above) will be waived or reduced in the following
instances:
(1)on redemptions following the death or disability (as defined in
Section 72(m)(7) of the Internal Revenue Code) of a shareholder or
beneficial owner;
(2)in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments include,
but are not limited to, death, disability, loans, retirement, or separation
of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, or minimum distribution requirements after attainment of age
70 1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3)in whole or in part, in connection with shares sold to current and retired
Directors of the Funds;
(4)in whole or in part, in connection with shares sold to any state, county, or
city or any instrumentality, department, authority, or agency thereof, which
is prohibited by applicable investment laws from paying a sales load or
commission in connection with the purchase of any registered investment
management company;
(5)in whole or in part, in connection with systematic withdrawals;
(6)in connection with participation in the Merrill Lynch Small Market 401(k)
Program, retirement programs administered or serviced by the Princeton
Retirement Group, Paychex, ADP Retirement Services, Hartford Securities
Distribution Company, Inc., or NYLIM Service Company LLC, or retirement
programs or accounts administered or serviced by Mercer HR Services, LLC or
its affiliates, or retirement programs or accounts administered or serviced
by firms that have a written agreement with the distributor that
contemplates a waiver of CDSCs;
(7)on incidental redemptions to cover administrative expenses (such expenses
include, but are not limited to, trustee fees, wire fees or courier fees)
not to exceed $25.00 per occurrence;
(8)on redemptions of shares initially purchased by an eligible employee benefit
plan that are not in connection with a plan-level termination; and
48
(9)on any redemption of Class A shares that are purchased by an eligible
employee benefit plan that is a separate account client of the investment
manager at the time of initial investment (or within the prior 30 days) in a
Seligman mutual fund.
If, with respect to a redemption of any Class A, Class B, Class C or Class R
shares sold by a dealer, the CDSC is waived because the redemption qualifies
for a waiver as set forth above, the dealer shall remit to the distributor
promptly upon notice, an amount equal to the payment or a portion of the
payment made by the distributor at the time of sale of such shares.
Payment in Securities. In addition to cash, the Funds may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge). Generally, a Fund will only
consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if RiverSource Investments determines that the offered
securities are a suitable investment for the Fund and in a sufficient amount
for efficient management. Although no minimum has been established, it is
expected that a Fund would not accept securities with a value of less than
$100,000 per issue in payment for shares. A Fund may reject in whole or in part
offers to pay for Fund shares with securities, may require partial payment in
cash for applicable sales charges, and may discontinue accepting securities as
payment for Fund shares at any time without notice. The Funds will not accept
restricted securities in payment for shares. The Funds will value accepted
securities in the manner provided for valuing portfolio securities. Any
securities accepted by a Fund in payment for the Fund's shares will have an
active and substantial market and have a value which is readily ascertainable.
Fund Reorganizations
Class A shares may be issued without an initial sales charge in connection with
the acquisition of cash and securities owned by other investment companies. Any
CDSC will be waived in connection with the redemption of shares of a Fund if
the Fund is combined with another Seligman mutual fund, or in connection with a
similar reorganization transaction.
Offering Price
When you buy or sell Fund shares, you do so at the Class's net asset value
("NAV") next calculated after the distributor or SDC accepts your request.
However, in some cases, the Funds have authorized certain financial
intermediaries (and other persons designated by such financial intermediaries)
to receive purchase and redemption orders on behalf of the Funds. In such
instances, customer orders will be priced at the Class's NAV next calculated
after the authorized financial intermediary (or other persons designated by
such financial intermediary) receives the request. Any applicable sales charge
will be added to the purchase price for Class A shares.
NAV per share of each class of a Fund is determined as of the close of regular
trading on the New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern
time), on each day that the NYSE is open for business. The NYSE is currently
closed on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. NAV per share for a class is computed by dividing such class's
share of the value of the net assets of the Fund (i.e., the value of its assets
less liabilities) by the total number of outstanding shares of such class. All
expenses of the Fund, including the management fee, are accrued daily and taken
into account for the purpose of determining NAV. The NAV of Class B, Class C
and Class R shares will generally be lower than the NAV of Class A shares as a
result of the higher 12b-1 fees with respect to such shares, which in turn will
be lower than the NAV of Class I shares, which have no 12b-1 fee and which may
have lower expenses.
Each Fund's portfolio securities, including open short positions and options
written, are generally valued at the last sale price on the securities exchange
or securities market on which such securities primarily are traded. Securities
traded on over-the-counter market are valued at the last sales price on the
primary exchange or market on which they are traded. Based on policies approved
by the Board, securities not listed on an exchange or securities market, or
securities in which there were no transactions, are valued at the average of
the most recent bid and asked price, except in the case of open short positions
where the asked price is available. In addition, trading in most foreign
securities markets, as well as US Government securities, money market
instruments and repurchase agreements, is substantially completed each day at
various times prior to the close of regular trading on the NYSE. The values of
the securities used in computing the net asset value of the shares of each Fund
are generally determined as of such times. However, since the closing prices
for securities traded on markets and exchanges outside the US may not fully
reflect events that occur after the local markets close but before the close of
the NYSE, the Board of Directors
49
of the Series has authorized the use of a third party pricing service on a
regular basis to recommend adjustments to the local closing prices of certain
foreign equity securities in order to determine the fair value of such
securities. The adjustments are based on a statistical analysis of the
historical relationships between the price movements of a security and
independent variables such as US market movements, sector movements, movements
in the ADR of a security (if any) and movements in country or regional ETFs or
future contracts. The factors used vary with each security, depending on which
factors have been most important historically.
In addition, if RiverSource Investments concludes that the most recently
reported (or closing) price of a security held by a Fund is no longer valid or
reliable, or such price is otherwise unavailable, RiverSource Investments will
value such security based upon its fair value as determined in accordance with
procedures approved by the Board of Directors. In addition, fair value pricing
may also be utilized, in accordance with procedures approved by the Board of
Directors, in the event of, among other things, natural disasters, acts of
terrorism, market disruptions, intra-day trading halts, or extreme market
volatility. Foreign currency exchange rates are also generally determined in
accordance with procedures approved by the Board of Directors. Any other assets
for which recent market quotations are not readily available are valued at fair
value as determined in accordance with procedures approved by the Board of
Directors.
Short-term holdings maturing in 60 days or less are valued at current market
quotations or amortized cost if RiverSource Investments believes it
approximates fair value. Short-term obligations with more than 60 days
remaining to maturity will be valued at current market value until the sixtieth
day prior to maturity, and will then be valued as described above for
short-term holdings maturing in 60 days or less. Foreign currency exchange
rates are also determined in accordance with procedures approved by the Board
of Directors.
For purposes of determining the net asset value per share of a Fund, all assets
and liabilities initially expressed in foreign currencies will be converted
into US dollars on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks.
Specimen Price Make-Up
Under the current distribution arrangements between the Funds and the
distributor, Class A shares are sold with a maximum initial sales charge of
5.75% and Class B, Class C, Class I and Class R shares are sold at NAV/(1)/.
Using each Class's NAV at October 31, 2008, the maximum offering price of each
Fund's shares is as follows:
Class A
Global
Emerging Global Smaller Global International
Markets Growth Companies Technology Growth
Fund Fund Fund Fund Fund
-------- ------ --------- ---------- -------------
Net asset value per share...................... $7.40 $5.46 $8.25 $11.77 $7.81
Maximum sales charge (5.75% of Offering price). 0.45 0.33 0.50 0.72 0.48
----- ----- ----- ------ -----
Offering price to public....................... $7.85 $5.79 $8.75 $12.49 $8.29
===== ===== ===== ====== =====
Class B
Global
Emerging Global Smaller Global International
Markets Growth Companies Technology Growth
Fund Fund Fund Fund Fund
-------- ------ --------- ---------- -------------
Net asset value and Offering price per share/(1)/. $6.50 $4.90 $6.92 $10.24 $6.75
===== ===== ===== ====== =====
Class C
Global
Emerging Global Smaller Global International
Markets Growth Companies Technology Growth
Fund Fund Fund Fund Fund
-------- ------ --------- ---------- -------------
Net asset value and Offering price per share/(1)/. $6.52 $4.90 $6.95 $10.25 $6.77
50
Class I
Global
Emerging Global Smaller International
Markets Growth Companies Growth
Fund Fund Fund Fund
-------- ------ --------- -------------
Net asset value and Offering price per share. $7.99 $5.70 $8.68 $8.38
===== ===== ===== =====
Class R
Global
Emerging Global Smaller Global International
Markets Growth Companies Technology Growth
Fund Fund Fund Fund Fund
-------- ------ --------- ---------- -------------
Net asset value and Offering price per share/(1)/. $7.36 $5.40 $8.13 $11.62 $7.72
===== ===== ===== ====== =====
- --------
(1)Class B shares are subject to a CDSC, declining from 5% in the first year
after purchase to 0% after six years. Class C shares are subject to a 1%
CDSC if you redeem your shares within one year of purchase. Class R shares
are subject to a 1% CDSC on shares redeemed within one year of a retirement
plan's initial purchase.
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectuses. In unusual circumstances, payment may be postponed,
or the right of redemption postponed for more than seven days, if: (i) the
orderly liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE; (ii) during periods of emergency which made
the disposal by the Funds of their shares impracticable or it is not reasonably
practicable for the Funds to fairly determine the value of their respective net
assets; or (iii) such other periods as ordered by the SEC for the protection of
the Funds' shareholders. Under these circumstances, redemption proceeds may be
made in securities. If payment is made in securities, a shareholder may incur
brokerage expenses in converting these securities to cash.
The Global Smaller Companies Fund reserves the right to satisfy redemption
requests, in whole or in part, with an in-kind transfer of that Fund's
portfolio securities. Shareholders receiving a payment in the form of
securities may incur expenses, including brokerage expenses, in converting
these securities into cash. No shareholder will have the right to require any
distribution of any assets of the Fund (or any other Fund in the Series) in
kind.
Anti-Money Laundering
As part of the Series' responsibility for the prevention of money laundering,
you may be required by the Series, RiverSource Investments, the distributor or
SDC or their respective service providers to provide additional information,
including information needed to verify the source of funds used to purchase
shares and your identity or the identity of any underlying beneficial owners of
your shares. In the event of delay or failure by you to produce any requested
information, the Series, the distributor or SDC or their service providers may
refuse to accept a subscription or, to the extent permitted or required by
applicable law, cause a complete redemption of your shares from the Series. The
Series, by written notice to you, may suspend payment to you of any proceeds or
distributions if the Series, the distributor or SDC or their service providers
reasonably deem it necessary to do so in order to comply with applicable laws
and regulations, including any anti-money laundering laws and regulations
applicable to the Series, RiverSource Investments, the distributor or SDC or
their respective service providers.
51
Arrangements Permitting Frequent Trading of Fund Shares
The Funds have no arrangements with any person to permit frequent trading of
Fund shares.
Taxation of the Series
US Federal Income Taxes. Each Fund is qualified and intends to continue to
qualify for each taxable year for tax treatment as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. For each year so
qualified, each Fund will not be subject to federal income taxes on its
investment company taxable income and net capital gains, if any, realized
during any taxable year, which it distributes to shareholders, provided that at
least 90% of its investment company taxable income (which includes net
short-term capital gains) is distributed to shareholders each year.
Qualification does not, of course, involve governmental supervision of
management or investment practices or policies. Investors should consult their
own counsel for a complete understanding of the requirements a Fund must meet
to qualify for such treatment. The information set forth in the Prospectuses
and the following discussion relate solely to the US Federal income taxes on
dividends and distributions by a Fund and assumes that each Fund qualifies as a
regulated investment company. Investors should consult their own counsel for
further details, including their possible entitlement to foreign tax credits
that might be "passed through" to them under the rules described below, and the
application of state and local tax laws to each of their particular situations.
Dividends from net investment income (other than "qualified dividend income")
and distributions from the excess of net short-term capital gains over net
long-term capital losses are taxable as ordinary income to shareholders,
whether received in cash or reinvested in additional shares. For taxable years
beginning before January 1, 2011 qualified dividend income will be taxed at a
reduced rate to individuals of generally 15% (5% for individuals in lower tax
brackets). Qualified dividend income is, in general, dividend income from
taxable domestic corporations and certain foreign corporations (e.g., generally
foreign corporations incorporated in a possession of the United States or in
certain countries with a comprehensive tax treaty with the United States, or
the stock of which is readily tradeable on an established securities market in
the United States). The amount of dividend income that may be designated as
"qualified dividend income" by a Fund will generally be limited to the
aggregate of the eligible dividends received by a Fund. In addition, each Fund
must meet certain holding period requirements with respect to the shares on
which the Fund received the eligible dividends, and the non-corporate US
shareholder must meet certain holding period requirements with respect to the
Fund shares.
If for any year a Fund does not qualify as a regulated investment company, all
of its taxable income (including its net capital gain) will be subject to tax
at regular corporate rates without any deduction for distributions to
shareholders. Such distributions will generally be taxable to the shareholders
as qualified dividend income and generally will be eligible for the dividends
received deduction in the case of corporate shareholders.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term capital losses) are taxable as long-term capital
gain, whether received in cash or invested in additional shares, regardless of
how long the shares have been held by a shareholder. Individual shareholders
will be subject to federal income tax on distributions of net capital gains at
a maximum rate of 15% if designated as derived from each Fund's capital gains
from property held for more than one year and recognized in taxable years
beginning before January 1, 2011. Net capital gain of a corporate shareholder
is taxed at the same rate as ordinary income. Such distributions are not
eligible for the dividends received deduction allowed to corporate
shareholders. Shareholders receiving distributions in the form of additional
shares issued by a Fund will be treated for federal income tax purposes as
having received a distribution in an amount equal to the cash that could have
been elected to be received instead of the additional shares.
As of October 31, 2008, the Global Growth Fund, Global Smaller Companies Fund,
Global Technology Fund and International Growth Fund had net capital loss
carryforwards for federal income tax purposes of $45,810,332, $12,733,602,
$376,499,822 and $$26,719,082, respectively, which are available for offset
against future taxable net capital gains, expiring in various amounts through
2016. Accordingly, no capital gain distributions are expected to be paid to
shareholders of these Funds until net capital gains have been realized in
excess of the available capital loss carryforwards.
52
Dividends and distributions declared in October, November or December, payable
to shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may
be taxed in one year on dividends or distributions actually received in January
of the following year.
Any gain or loss realized upon a sale or redemption of shares in a Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Capital gain of a
non-corporate US shareholder that is recognized in a taxable year beginning
before January 1, 2011 is generally taxed at a maximum rate of 15% in respect
of shares that are held for more than one year. Net capital gain of a corporate
shareholder is taxed at the same rate as ordinary income. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less (after
taking into account certain hedging transactions), any loss realized will be
treated as long-term capital loss to the extent of the long-term capital gain
distribution. In addition, no loss will be allowed on the sale or other
disposition of shares of a Fund if, within a period beginning 30 days before
the date of such sale or disposition and ending 30 days after such date, the
holder acquires (including shares acquired through dividend reinvestment)
securities that are substantially identical to the shares of the Fund.
In determining gain or loss on shares of a Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the exchange or reinstatement options offered by
a Fund. Any sales charge not taken into account in determining the tax basis of
shares sold or exchanged within 90 days after acquisition will be added to the
shareholder's tax basis in the shares acquired pursuant to the exchange or
reinstatement options.
Each Fund is subject to a 4% nondeductible excise tax on amounts required to be
but not distributed under a prescribed formula. The formula requires payment to
shareholders during a calendar year of distributions representing at least 98%
of the Fund's ordinary income for the calendar year, at least 98% of its
capital gain net income realized during the one-year period ending October 31
during such year, and all ordinary income and capital gain net income for prior
years that was not previously distributed. Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary income and capital gain
net income prior to the end of each calendar year to avoid liability for the
excise tax.
Income received by a Fund from sources within various foreign countries may be
subject to foreign income tax. Each Fund also may be subject to foreign taxes
on capital gains realized from the sale of securities in certain countries. If
more than 50% of the value of a Fund's total assets at the close of its taxable
year consists of the stock or securities of foreign corporations, such Fund may
elect to "pass through" to its shareholders the amount of foreign income taxes
paid by such Fund. Pursuant to such election, shareholders would be required:
(i) to include in gross income, even though not actually received, their
respective pro-rata shares of a Fund's gross income from foreign sources; and
(ii) either to deduct their pro-rata share of foreign taxes in computing their
taxable income, or to use such share as a foreign tax credit against Federal
income tax (but not both). No deduction for foreign taxes could be claimed by a
shareholder who does not itemize deductions.
Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to the limitation that the credit may not exceed
the shareholder's US tax (determined without regard to the availability of the
credit) attributable to his or her total foreign source taxable income. For
this purpose, the portion of dividends and distributions paid by a Fund from
its foreign source income will be treated as foreign source income. Each Fund's
gains from the sale of securities will generally be treated as derived from US
sources, and certain foreign currency gains and losses likewise will be treated
as derived from US sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income," such as the portion of dividends
received from a Fund, which qualifies as foreign source income. Because of
these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by a Fund.
Each Fund intends for each taxable year to meet the requirements of the
Internal Revenue Code to "pass through" to its shareholders foreign income
taxes paid, but there can be no assurance that a Fund will be able to do so.
Each shareholder will be notified within 60 days after the close of each
taxable year of each Fund if the foreign taxes paid by such Fund will be
"passed through" for that year, and, if so, the amount of each shareholder's
pro-rata share (by country) of (i) the foreign taxes paid, and (ii) such Fund's
gross income from foreign sources. Of course, shareholders who are not liable
for Federal income taxes, such as retirement plans qualified under Section 401
of the Internal Revenue Code, will not be affected by any such "pass through"
of foreign tax credits.
53
Investments in Passive Foreign Investment Companies. If a Fund purchases shares
in certain foreign investment entities, referred to as "passive foreign
investment companies" (PFICs under the Internal Revenue Code), the Fund itself
may be subject to US Federal income tax, and an additional charge in the nature
of interest, on a portion of any "excess distribution" from such company or
gain from the disposition of such shares, even if the distribution or gain is
paid by such Fund as a dividend to its shareholders. If the Fund were to invest
in an eligible PFIC and elected to treat the PFIC as a qualified electing fund
(a "QEF"), in lieu of the foregoing requirements, the Fund would be required to
include each year in its income and distribute to shareholders in accordance
with the distribution requirements of the Internal Revenue Code, a pro rata
portion of the QEF's ordinary earnings and net capital gain, whether or not
distributed by the QEF to the Fund. Alternatively, the Fund could elect to
"mark to market" at the end of each taxable year all shares that it holds in
PFICs. If it made this election, the Fund would be required to include in
income each year and distribute to shareholders in accordance with the
distribution requirements of the Internal Revenue Code, an amount equal to the
excess, if any, of the fair market value of the PFIC stock as of the close of
the taxable year over the adjusted basis of such stock at that time. The Fund
would be allowed a deduction for the excess, if any, of the adjusted basis of
the PFIC stock over its fair market value as of the close of the taxable year,
but only to the extent of any net mark-to-market gains with respect to the
stock included by the Fund for prior taxable years. The Fund will make
appropriate basis adjustments in the PFIC stock to take into account the
mark-to-market amounts.
Certain Foreign Currency Transactions. Gains or losses attributable to foreign
currency contracts, or to fluctuations in exchange rates that occur between the
time a Fund accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables or pays such liabilities may be treated as ordinary
income or ordinary loss. Similarly, gains or losses on disposition of debt
securities denominated in a foreign currency attributable to fluctuations in
the value of the foreign currency between the date of acquisition of the
security and the date of disposition also may be treated as ordinary gain or
loss. To the extent treated as ordinary gains or losses, these gains or losses
increase or decrease the amount of a Fund's net investment income available to
be distributed to its shareholders as ordinary income.
Options Transactions. A special "marked-to-market" system governs the taxation
of "section 1256 contracts," which include certain listed options. Each Fund
may invest in such section 1256 contracts. In general, gain or loss on section
1256 contracts will be taken into account for tax purposes when actually
realized. In addition, any section 1256 contracts held at the end of a taxable
year will be treated as sold at fair market value (that is, marked-to-market),
and the resulting gain or loss will be recognized for tax purposes. In general,
gain or loss recognized by a Fund on the actual or deemed disposition of a
section 1256 contract will be treated as 60% long-term and 40% short-term
capital gain or loss, regardless of the period of time the section 1256
contract is actually held by such Fund. Each Fund can elect to exempt its
section 1256 contracts which are part of a "mixed" straddle from the
application of section 1256.
Unless a shareholder includes a certified taxpayer identification number
(social security number for individuals) on the account application and
certifies that the shareholder is not subject to backup withholding, the Funds
are required to withhold and remit to the US Treasury Department a portion of
distributions and other reportable payments to the shareholder. Shareholders
should be aware that, under regulations promulgated by the US Treasury
Department, a Fund may be fined on an annual basis for each account for which a
certified taxpayer identification number (social security number for
individuals) is not provided. In the event that such a fine is imposed, the
Fund may charge a service fee equal to such fine that may be deducted from the
shareholder's account and offset against any undistributed dividends and
capital gain distributions. The Funds also reserve the right to close any
account which does not have a certified taxpayer identification number or
social security number, as applicable.
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder") depends on whether the income from a Fund
is "effectively connected" with a US trade or business carried on by such
shareholder. If the income from a Fund is not effectively connected with a US
trade or business carried on by a foreign shareholder, ordinary income
dividends paid to such foreign shareholder generally will be subject to a 30%
US withholding tax under existing provisions of the Internal Revenue Code
applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty or
law. Nonresident shareholders are urged to consult their own tax advisers
concerning the applicability of the US withholding tax.
54
If the income from a Fund is effectively connected with a US trade or business
carried on by a foreign shareholder, then ordinary income dividends, capital
gain dividends, undistributed capital gains credited to such shareholder and
any gains realized upon the sale of shares of that Fund will be subject to US
federal income tax at the graduated rates applicable to US citizens or domestic
corporations. In the case of foreign non-corporate shareholders, a Fund may be
required to backup withhold US federal income tax on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish that Fund with proper notification of their
foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Fund, the procedure
for claiming the benefit of a lower treaty rate and the applicability of
foreign taxes. Transfers by gift of shares of a Fund by an individual foreign
shareholder will not be subject to US federal gift tax, but the value of shares
of a Fund held by such a shareholder at his death will generally be includible
in his gross estate for US federal estate tax purposes, subject to any
applicable estate tax treaty.
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
Underwriters
Distribution of Securities
The Series and the distributor are parties to a Distributing Agreement, dated
January 1, 1993, under which the distributor acts as the exclusive agent for
distribution of shares of the Funds. The distributor accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Funds' capital stock, the distributor allows reallowances to all dealers
on sales of Class A shares, as set forth above under "Dealer Reallowances" and,
prior to June 4, 2007, Class C shares. The distributor retains the balance of
sales charges and any CDSC paid by investors. Any sales charges paid on Class C
shares would relate to purchases prior to June 4, 2007.
Total sales charges paid by shareholders of Class A shares of the Funds for the
fiscal years ended October 31, 2008, 2007 and 2006, and (only through June 3,
2007) Class C shares of the Funds for the fiscal years ended October 31, 2007
and 2006, are shown below. Also shown below are the amounts of Class A and
Class C sales charges that were retained by the distributor. Effective June 4,
2007, there is no initial sales charge on purchases of Class C shares. Any
initial sales charges paid on Class C shares would relate to purchases prior to
June 4, 2007.
2008
Total Sales Charges Paid Amount of Class A Sales
by Shareholders on Charges Retained by
Fund Class A Shares the distributor
- ---- ------------------------ -----------------------
Emerging Markets Fund......... $ 69,941 $ 61,509
Global Growth Fund............ 9,365 8,257
Global Smaller Companies Fund. 11,710 10,247
Global Technology Fund........ 265,528 233,685
International Growth Fund..... 15,558 13,670
2007
Total Sales Charges Paid Amount of Class A and Class
by Shareholders on C Sales Charges Retained by
Fund Class A and Class C Shares the distributor
- ---- -------------------------- ---------------------------
Emerging Markets Fund......... $ 96,065 $ 85,406
Global Growth Fund............ 12,554 11,195
Global Smaller Companies Fund. 43,351 38,776
Global Technology Fund........ 309,290 274,719
International Growth Fund..... 48,664 43,412
55
2006
Total Sales Charges Paid Amount of Class A and Class
by Shareholders on C Sales Charges Retained by
Fund Class A and Class C Shares the distributor
- ---- -------------------------- ---------------------------
Emerging Markets Fund......... $165,557 $147,949
Global Growth Fund............ 11,589 10,331
Global Smaller Companies Fund. 70,076 63,244
Global Technology Fund........ 179,514 159,632
International Growth Fund..... 48,229 43,063
Compensation
The distributor, which is an affiliated person of RiverSource Investments,
which is an affiliated person of the Funds, received the following commissions
and other compensation from the Funds during the fiscal year ended October 31,
2008:
Compensation on
Net Underwriting Redemptions and
Discounts and Repurchases
Commissions (CDSC Retained
(Class A and Class on Class A, Class
C Front-end Sales C and Class R Brokerage Other
Fund Charges Retained) Shares) (1)(3) Commissions Compensation(2)
- ---- ------------------ ----------------- ----------- ---------------
Emerging Markets Fund $ 8,432 $15,659 $0 $ 36,166
Global Growth Fund 1,108 8,713 0 6,923
Global Smaller Companies Fund 1,463 16,970 0 30,135
Global Technology Fund 31,843 70,148 0 107,680
International Growth Fund 1,888 43,348 0 20,773
- --------
(1)The distributor has sold its rights to collect a substantial portion of the
distribution fees paid by each Fund in respect of Class B shares and any
CDSC imposed on redemptions of Class B shares to the Purchasers in
connection with an arrangement discussed above under "Rule 12b-1 Plans."
(2)During the fiscal year ended October 31, 2008, the distributor received
distribution and service fees in respect of Class B, Class C and Class R
shares pursuant to the Fund's Rule 12b-1 Plan. These amounts and the
arrangements pursuant to which such compensation is paid are detailed above
under the discussion "Rule 12b-1 Plan."
(3)Includes CDSC retained in respect of Class D shares which converted to Class
C shares.
Other Payments
The distributor pays authorized dealers or investment advisors, from its own
resources, a fee on purchases of Class A shares of the Seligman mutual funds
(other than Seligman TargetHorizon ETF Portfolios, Inc. (the "TargETFunds") and
Seligman Cash Management Fund, Inc. (the "Cash Fund")) of $1,000,000 or more
("NAV sales"), calculated as follows:
Amount of Purchase Payment to Dealer (as a % of NAV Sales)
------------------ ---------------------------------------
$1,000,000 - $3,999,999.. 1.00%
$4,000,000 - $24,999,999. 0.50%
$25,000,000 or more...... 0.25%
With respect to purchases of Class A shares of the TargETFunds, the distributor
shall pay authorized dealers or investment advisors 0.25% on NAV sales
attributable to such funds. Assets exchanged from the TargETFunds to another
Seligman mutual fund are not eligible for the fees described above. Class A
shares representing only an
56
initial purchase of the Cash Fund are not eligible for the fees described
above; however, such shares will become eligible for the applicable fee
described above once they are exchanged for Class A shares of another Seligman
mutual fund. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities for their own account,
or a trustee or other fiduciary purchasing for a single fiduciary account or
single trust. Purchases made by a trustee or other fiduciary for a fiduciary
account may not be aggregated with purchases made on behalf of any other
fiduciary or individual account.
The distributor also pays authorized dealers or investment advisors, from its
own resources, a fee on assets of certain investments in Class A shares of the
Seligman mutual funds participating in an "eligible employee benefit plan" that
are attributable to the particular authorized dealer or investment advisor. The
shares eligible for the applicable fee described below are those on which an
initial sales charge was not paid because either the participating eligible
employee benefit plan has, for accounts opened prior to January 7, 2008, at
least (1) $500,000 invested in the Seligman mutual funds or (2) 50 eligible
employees to whom such plan is made available or, for accounts opened on or
after January 7, 2008, at least $2 million in plan assets at the time of
investment in the Fund. The payment schedule, for each calendar year, in
respect of the Seligman mutual funds (other than the TargETFunds and the Cash
Fund) is as follows:
Amount of Purchase Payment to Dealer (as a % of NAV Sales)
- ------------------ ---------------------------------------
Sales up to but not including $4,000,000. 1.00%
$4,000,000 - $24,999,999................. 0.50%
$25,000,000 or more...................... 0.25%
The payment is based on cumulative sales for each plan during a single calendar
year, or portion thereof. Assets exchanged from the TargETFunds to another
Seligman mutual fund are not eligible for the fees described above. Class A
shares representing only an initial purchase of the Cash Fund are not eligible
for the fees described above; however, such shares will become eligible for the
applicable fee once they are exchanged for Class A shares of another Seligman
mutual fund. The payment schedule, for each calendar year, in respect of the
TargETFunds is 0.25% of sales. These fees in respect of eligible employee
benefit plans and the fees on NAV sales described above are not duplicative
(i.e., the fee is paid one time to authorized dealers or investment advisors
for each purchase of Class A shares of $1,000,000 or more participating in an
eligible employee benefit plan).
With respect to the fees relating to eligible employee benefit plans and NAV
sales (each as described above), no fees shall be payable on any assets
invested in a Fund by an eligible employee benefit plan that is a separate
account client of the investment manager at the time of initial investment (or
within the prior 30 days) in a Fund.
The fees described above under "Other Payments" relate only to purchases of
Class A shares of the Seligman mutual funds. Purchases of shares of RiverSource
funds, RiverSource Partners funds and Threadneedle funds will not be aggregated
with purchases of shares of the Seligman mutual funds for purposes of the fees
described above.
PAYMENTS TO FINANCIAL INSTITUTIONS
The distributor and its affiliates make or support additional cash payments out
of their own resources (including profits earned from providing services to the
funds) to financial institutions, including inter-company allocation of
resources or payment to affiliated broker-dealers, in connection with
agreements between the distributor and financial institutions pursuant to which
these financial institutions sell fund shares and provide services to their
clients who are shareholders of the funds. These payments and intercompany
allocations (collectively, "payments") do not change the price paid by
investors and fund shareholders for the purchase or ownership of shares of the
funds, and these payments are not reflected in the fees and expenses of the
funds, as they are not paid by the funds. These payments are in addition to
fees paid by the funds to the distributor under 12b-1 plans, which fees may be
used to compensate financial institutions for the distribution of fund shares
and the servicing of fund shareholders, or paid by the funds to the transfer
agent under the transfer agent agreement or plan administration agreement,
which fees may be used to support networking or servicing fees to compensate
financial institutions for supporting shareholder account maintenance,
sub-accounting, plan recordkeeping or other services provided directly by the
financial institution to shareholders or plans and plan participants, including
retirement plans, 529 plans, Health Savings Account plans, or other plans,
where participants beneficially own shares of the funds.
57
These payments are typically made pursuant to an agreement between the
distributor and the financial institution, and are typically made in support of
marketing and sales support efforts or program and shareholder servicing, as
further described below. These payments are usually calculated based on a
percentage of fund assets owned through the financial institution and/or as a
percentage of fund sales attributable to the financial institution. Certain
financial institutions require flat fees instead of or in addition to these
asset-based fees as compensation for including or maintaining funds on their
platforms, and, in certain situations, may require the reimbursement of ticket
or operational charges -- fees that a financial institution charges its
representatives for effecting transactions in the funds. The amount of payment
varies by financial institution, and often is significant. In addition, the
amount of payments may differ based upon the type of fund sold or maintained;
for instance, the amount of payments for an equity fund may differ from
payments for a money-market or fixed income fund. Asset-based payments
generally will be made in a range of up to 0.25% of assets or 0.25% of sales or
some combination thereof. Exceptions to these general ranges will be considered
on a case-by-case basis. Flat fees or annual minimum fees required by a
financial institution in addition to such asset-based fees, are considered on a
case-by-case basis.
Program and Shareholder Servicing
Payments may be made in support of recordkeeping, reporting, transaction
processing, and other plan administration services provided by a financial
institution to or through retirement plans, 529 plans, Health Savings Account
plans, or other plans or fee-based advisory programs but may also be made in
support of certain retail advisory programs, including wrap programs. A
financial institution may perform program services itself or may arrange with a
third party to perform program services. These payments may also include
services rendered in connection with fund selection and monitoring, employee
enrollment and education, plan balance rollover or separation, or other similar
services.
Other Payments
The distributor and its affiliates may separately pay financial institutions in
order to participate in and/or present at conferences or seminars, sales or
training programs for invited registered representatives and other financial
institution employees, client and investor events and other financial
institution-sponsored events, and for travel expenses, including lodging
incurred by registered representatives and other employees in connection with
prospecting, asset retention and due diligence trips. The amount of these
payments varies depending upon the nature of the event. The distributor and its
affiliates make payments for such events as they deem appropriate, subject to
internal guidelines and applicable law. From time to time, to the extent
permitted by SEC and NASD rules and by other applicable laws and regulations,
the distributor and its affiliates may make other reimbursements or payment to
financial institutions or their registered representatives, including non-cash
compensation, in the form of gifts of nominal value, occasional meals, tickets,
or other entertainment, support for due diligence trips, training and
educational meetings or conference sponsorships, support for recognition
programs, and other forms of non-cash compensation permissible under
regulations to which these financial institutions and their representatives are
subject. To the extent these are made as payments instead of reimbursement,
they may provide profit to the financial institution to the extent the cost of
such services was less than the actual expense of the service.
Financial Institution Arrangements
The financial institution through which you are purchasing or own shares of
funds has been authorized directly or indirectly by the distributor to sell
funds and/or to provide services to you as a shareholder of funds. Investors
and current shareholders may wish to take such payment arrangements into
account when considering and evaluating any recommendations they receive
relating to fund shares.
If you have questions regarding the specific details regarding the payments
your financial institution may receive from the distributor or its affiliates
related to your purchase or ownership of funds, please contact your financial
institution.
Calculation of Performance Data
The Funds may quote performance data in various ways. All performance
information supplied by the Funds in advertising is historical and past
performance is not indicative of future investment results. The rate of return
will vary and the principal value of an investment will fluctuate. Shares, if
redeemed, may be worth more or less than their original cost.
Performance Calculations
Performance quoted in advertising reflects any change in price per share,
assumes the reinvestment of dividends and capital gain distributions, if any,
and may or may not include the effect of a Class's maximum initial sales charge
58
and/or contingent deferred sales charge (CDSC), as applicable. Such performance
may be quoted as a percentage or as a dollar amount, may be calculated over any
time period and may be presented in a table, graph or similar illustration.
Excluding applicable sales charges from a performance calculation produces a
higher performance figure than if such sales charges were included in the
calculation.
Effective January 7, 2008, the maximum initial sales charge on investments in
Class A shares of less than $50,000 is 5.75%. Effective June 4, 2007, there is
no initial sales charge on purchases of Class C shares. Although for all
periods presented the Funds' Class C share returns do not reflect an initial
sales charge, the actual returns for periods prior to June 4, 2007 would have
been lower if a 1.00% maximum initial sales charge then in effect was incurred.
Average annual total returns are calculated by determining the growth or
decline in the value of a hypothetical $1,000 investment in a Fund over a
stated period, and then calculating the annual rate required for this
hypothetical investment to grow to the amount that would have been received
upon a redemption at the end of such period (i.e., the average annual compound
rate of return). Average annual total returns include any applicable maximum
initial sales charge or CDSC.
Cumulative total returns reflect the simple change in the value of a
hypothetical investment in a Fund over a stated period. The cumulative total
return for each Class of shares of a Fund shown below is calculated by assuming
a hypothetical initial investment of $1,000 at the beginning of the period;
subtracting the maximum initial sales charge for Class A shares; determining
the total value of all dividends and distributions, if any, that would have
been paid during the period on such shares assuming that each dividend or
distribution was invested in additional shares at net asset value; calculating
the total value of the investment at the end of the period; subtracting the
CDSC on Class B, Class C and Class R shares, if applicable; and finally, by
dividing the difference between the amount of the hypothetical initial
investment at the beginning of the period and its total value at the end of the
period by the amount of the hypothetical initial investment.
No adjustments have been made for any income taxes payable by investors on
dividends or gain distributions or on the redemption of shares. Seligman (the
predecessor investment manager) and/or the prior subadviser waived its fees and
reimbursed certain expenses during some of the periods above, which positively
affected the performance results presented.
Historical Investment Results
Class A
The average annual total returns for the one-, five- and ten-year periods ended
October 31, 2008 for the Class A shares of the Emerging Markets Fund were
57.17%, 8.61% and 6.55%, respectively. The average annual total returns for the
one-, five- and ten-year periods ended October 31, 2008 for the Class A shares
of the Global Growth Fund were (55.68)%, (3.69)% and (3.16)%, respectively. The
average annual total returns for the one-, five- and ten-year periods ended
October 31, 2008 for the Class A shares of the Global Smaller Companies Fund
were (55.20)%, (2.04)% and (1.90)%, respectively. The average annual total
returns for the one-, five- and ten-year periods ended October 31, 2008 for the
Class A shares of the Global Technology Fund were (44.03)%, (1.24)% and 2.17%,
respectively. The average annual total returns for the one-, five- and ten-year
periods ended October 31, 2008 for the Class A shares of the International
Growth Fund were (60.47)%, (2.71)% and (6.22)%, respectively. The average
annual total returns for each Fund's Class A shares were computed by assuming a
hypothetical initial investment of $1,000 in Class A shares of each Fund,
subtracting the maximum initial sales charge of 5.75% of the public offering
price, and assuming that all of the dividends and capital gain distributions
paid by the Fund's Class A shares, if any, were reinvested over the relevant
time periods. It was then assumed that at the end of the one-, five- and
ten-year periods, the entire amounts were redeemed. The average annual total
return was then calculated by calculating the annual rate required for the
initial payment to grow to the amount which would have been received upon such
redemption (i.e., the average annual compound rate of return).
Class B
The average annual total returns for the one-, five- and ten-year periods ended
October 31, 2008 for the Class B shares of the Emerging Markets Fund were
(56.74)%, 8.79% and 6.52%, respectively. The average annual total returns for
the one-, five- and ten-year periods ended October 31, 2008 for the Class B
shares of the Global Growth Fund were (55.62)%, (3.64)% and (3.15)%,
respectively. The average annual total returns for the one-, five- and ten-year
periods ended October 31, 2008 for the Class B shares of the Global Smaller
Companies Fund were
59
(54.87)%, (1.90)% and (1.92)%, respectively. The average annual total returns
for the one-, five- and ten-year periods ended October 31, 2008 for the Class B
shares of the Global Technology Fund were (44.03)%, (1.22)% and 2.14%,
respectively. The average annual total returns for the one-, five- and ten-year
periods ended October 31, 2008 for the Class B shares of the International
Growth Fund were (60.15%, (2.63)% and (6.19)%, respectively. The average annual
total returns for each Fund's Class B shares were computed by assuming a
hypothetical initial investment of $1,000 in Class B shares of the Fund, and
assuming that all of the dividends and capital gain distributions paid by the
Fund's Class B shares, if any, were reinvested over the relevant time periods.
Return for the ten-year period reflects automatic conversion to Class A shares
approximately eight years after the purchase date. It was then assumed that at
the end of the one-, five-, and ten-year periods, the entire amounts were
redeemed, subtracting the applicable CDSC. The average annual total return was
then calculated by calculating the annual rate required for the initial payment
to grow to the amount which would have been received upon such redemption
(i.e., the average annual compound rate of return).
Class C
The average annual total returns for the one- and five-year periods ended
October 31, 2008 and for the period from May 27, 1999 (inception) to
October 31, 2008 for the Class C shares of the Emerging Markets Fund were
(55.30)%, 9.07% and 4.67%, respectively. The average annual total returns for
the one- and five-year periods ended October 31, 2008 and for the period from
May 27, 1999 (inception) to October 31, 2008 for the Class C shares of the
Global Growth Fund were (53.76)%, (3.28)% and (5.07)%, respectively. The
average annual total returns for the one- and five-year periods ended
October 31, 2008 and for the period from May 27, 1999 (inception) to
October 31, 2008 for the Class C shares of the Global Smaller Companies Fund
were (53.22)%, (1.60)% and (2.46)%, respectively. The average annual total
returns for the one- and five-year periods ended October 31, 2008 and for the
period from May 27, 1999 (inception) to October 31, 2008 for the Class C shares
of the Global Technology Fund were (41.65)%, (0.80)% and (1.23)%, respectively.
The average annual total returns for the one- and five-year periods ended
October 31, 2008 and for the period from May 27, 1999 (inception) to
October 31, 2008 for the Class C shares of the International Growth Fund were
(58.71)%, (2.27)% and (7.49)%, respectively. The average annual total returns
for each Fund's Class C shares were computed by assuming a hypothetical initial
investment of $1,000 in Class C shares of each Fund and assuming that all of
the dividends and capital gain distributions paid by the Fund's Class C shares,
if any, were reinvested over the relevant time periods. It was then assumed
that at the end of the one- and five-year periods and the periods since
inception of each Fund's Class C shares, the entire amount was redeemed,
subtracting the 1% CDSC, if applicable. The average annual total return was
then calculated by calculating the annual rate required for the initial payment
to grow to the amount which would have been received upon such redemption
(i.e., the average annual compound rate of return).
Class I
The average annual total returns for the one- and five-year periods ended
October 31, 2008 and for the period from November 30, 2001 (commencement of
offering of shares) through October 31, 2008 for the Class I shares of Emerging
Markets Fund were (54.25)%, 10.71% and 13.73%, respectively. The average annual
total returns for the one- and five-year periods ended October 31, 2008 and for
the period from November 30, 2001 (commencement of offering of shares) through
October 31, 2008 for the Class I shares of Global Growth Fund were (52.62)%,
(1.95)% and (3.83)%, respectively. The average annual total returns for the
one- and five-year periods ended October 31, 2008 and for the period from
November 30, 2001 (commencement of offering of shares) through October 31, 2008
for the Class I shares of Global Smaller Companies Fund were (52.20)%, (0.29)%
and 0.10%, respectively. The average annual total returns for the one- and
five-year periods ended October 31, 2008 and for the period from November 30,
2001 (commencement of offering of shares) through October 31, 2008 for the
Class I shares of International Growth Fund were (57.77)%, (0.80)% and (0.58)%,
respectively. The average annual total returns for each Fund's Class I shares
were computed by assuming a hypothetical initial investment of $1,000 in Class
I shares of the Funds, and assuming that all of the dividends and capital gain
distributions paid by the Fund's Class I shares, if any, were reinvested over
the relevant period. It was then assumed that at the end of the one- and
five-year periods and the period since inception of each Fund's Class I shares,
the entire amounts were redeemed. The average annual total return was then
calculated by calculating the annual rate required for the initial payment to
grow to the amount which would have been received upon such redemption (i.e.,
the average annual compound rate of return).
60
Class R
The average annual returns for the one-and five-year periods ended October 31,
2008 and for the period from April 30, 2003 (commencement of offering of
shares) through October 31, 2008 for the Class R shares of the Emerging Markets
Fund were (54.86)%, 9.81% and 15.91%, respectively. The average annual returns
for the one-and five-year periods ended October 31, 2008 and for the period
from April 30, 2003 (commencement of offering of shares) through October 31,
2008 for the Class R shares of the Global Growth Fund were (53.51)%, (2.76)%
and 0.17%, respectively. The average annual returns for the one-and five-year
periods ended October 31, 2008 and for the period from April 30, 2003
(commencement of offering of shares) through October 31, 2008 for the Class R
shares of the Global Smaller Companies Fund were (53.04)%, (1.11)% and 4.08%,
respectively. The average annual returns for the one-and five-year periods
ended October 31, 2008 and for the period from April 30, 2003 (commencement of
offering of shares) through October 31, 2008 for the Class R shares of the
Global Technology Fund were (41.37)%, (0.31)% and 4.68%, respectively. The
average annual returns for the one-and five-year periods ended October 31, 2008
and for the period from April 30, 2003 (commencement of offering of shares)
through October 31, 2008 for the Class R shares of the International Growth
Fund were (58.52)%, (1.76)% and 1.82%, respectively. The total returns for each
Fund's Class R shares were computed by assuming a hypothetical initial
investment of $1,000 in Class R shares of the Funds, and assuming that all of
the dividends and capital gain distributions paid by the Fund's Class R shares,
if any, were reinvested over the relevant period. It was then assumed that at
the end of the one- and five-year periods and the period since inception of
each Fund's Class R shares, the entire amounts were redeemed. The average
annual total return was then calculated by calculating the annual rate required
for the initial payment to grow to the amount which would have been received
upon such redemption (i.e., the average annual compound rate of return).
Cumulative Total Returns
Class A
Total Return through Value of Initial $1,000
Fund 10/31/08 (1) Investment
---- -------------------- -----------------------
Emerging Markets Fund......... 100.15% $2,002
Global Growth Fund............ (23.03) 770
Global Smaller Companies Fund. (12.41) 876
Global Technology Fund........ 31.44 1,314
International Growth Fund..... (44.17) 558
61
Class B*
Total Return through Value of Initial $1,000
Fund 10/31/08 (1) Investment
---- -------------------- -----------------------
Emerging Markets Fund......... 88.08% $1,881
Global Growth Fund............ (27.42) 726
Global Smaller Companies Fund. (17.66) 823
Global Technology Fund........ 23.65 1,237
International Growth Fund..... (47.23) 528
Class C
Total Return through Value of Initial $1,000
Fund 10/31/08 (1) Investment
---- -------------------- -----------------------
Emerging Markets Fund......... 53.88% $1,539
Global Growth Fund............ (38.78) 612
Global Smaller Companies Fund. (20.96) 790
Global Technology Fund........ (11.06) 889
International Growth Fund..... (52.06) 479
Class I
Total Return through Value of Initial $1,000
Fund 10/31/08 (1) Investment
---- -------------------- -----------------------
Emerging Markets Fund......... 143.74% $2,437
Global Growth Fund............ (23.69) 763
Global Smaller Companies Fund. 0.66 1,007
International Growth Fund..... (3.95) 961
Class R
Total Return through Value of Initial $1,000
Fund 10/31/08 (1) Investment
---- -------------------- -----------------------
Emerging Markets Fund......... 125.54% $2,255
Global Growth Fund............ 0.93 1,009
Global Smaller Companies Fund. 24.62 1,246
Global Technology Fund........ 28.68 1,287
International Growth Fund..... 10.47 1,105
- --------
* Reflects automatic conversion to Class A shares approximately eight years
after purchase, as applicable.
(1)From commencement of operations on:
Fund Class A Shares Class B Shares Class C Shares Class I Shares Class R Shares
- ---- -------------- -------------- -------------- -------------- --------------
Emerging Markets Fund......... 5/28/96 5/28/96 5/27/99 11/30/01 4/30/03
Global Growth Fund............ 11/1/95 4/22/96 5/27/99 11/30/01 4/30/03
Global Smaller Companies Fund. -- 4/22/96 5/27/99 11/30/01 4/30/03
Global Technology Fund........ 5/23/94 4/22/96 5/27/99 not offered 4/30/03
International Growth Fund..... -- 4/22/96 5/27/99 11/30/01 4/30/03
62
Financial Statements
The Annual Report to shareholders for the fiscal year ended October 31, 2008
contains a portfolio of the investments of each of the Funds as of October 31,
2008, as well as certain other financial information as of that date. The
financial statements and notes included in the Annual Report, which includes
the Report of Independent Registered Public Accounting Firm thereon, are
incorporated herein by reference. The Annual Report will be furnished without
charge to investors who request copies of this SAI.
Information Regarding Pending and Settled Legal Proceedings
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company mutual funds and
they purport to bring the action 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. In response to defendant's motion to dismiss the
complaint, the 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 on August 8, 2007.
In December 2005, without admitting or denying the allegations, American
Express Financial Corporation (AEFC, which is now known as Ameriprise
Financial, Inc. (Ameriprise Financial)), entered into settlement agreements
with the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. As a result, AEFC was
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal
proceedings, and have made regular reports to the RiverSource Funds' Board of
Directors/Trustees.
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 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 then 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 2005, the New York staff of the SEC indicated that it was
considering recommending to the Commissioners of the SEC the instituting of a
formal action against Seligman and Seligman Advisors, Inc. (now known as
RiverSource Fund Distributors, 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.
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Seligman Data Corp. and Brian T.
Zino (collectively, the "Seligman Parties"), alleging, in substance, that, in
addition to the four arrangements noted above, the Seligman Parties permitted
other persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
is and has been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
63
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 will pay $11.3 million to four Seligman Funds as follows:
$150,000 to Seligman Global Growth Fund, $550,000 to Seligman Global Smaller
Companies Fund, $7.7 million to Seligman Communications and Information Fund
and $2.9 million to Seligman Global Technology Fund. This settlement resolves
all outstanding matters between the Seligman Parties and the NYAG.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings,
including routine litigation, class actions, and governmental actions,
concerning matters arising in connection with the conduct of their business
activities. Ameriprise Financial believes that the Funds are not currently the
subject of, and that neither Ameriprise Financial nor any of its affiliates are
the subject of, any pending legal, arbitration or regulatory proceedings that
are likely to have a material adverse effect on the Funds or the ability of
Ameriprise Financial or its affiliates to perform under their contracts with
the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as
necessary, 8-K filings with the Securities and Exchange Commission on legal and
regulatory matters that relate to Ameriprise Financial and its affiliates.
Copies of these filings may be obtained by accessing the SEC website at
www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse
effect on the Funds or the ability of 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.
64
General Information
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
by the provisions of the 1940 Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment company such as
the Series shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each class
or Fund affected by such matter. Rule 18f-2 further provides that a class or
Fund shall be deemed to be affected by a matter unless it is clear that the
interests of each class or Fund in the matter are substantially identical or
that the matter does not affect any interest of such class or Fund. However,
the Rule exempts the selection of independent public accountants, the approval
of principal distributing contracts and the election of directors from the
separate voting requirements of the Rule.
Custodian and Recordkeeping Agents. JP Morgan Chase Bank N.A., One Chase
Manhattan Plaza, New York, NY 10005-1401, serves as custodian for the Funds.
State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City,
Missouri 64105, maintains, under the general supervision of RiverSource
Investments, certain accounting records and determines the net asset value for
the Funds.
Administration Services. Ameriprise Financial, Inc., 200 Ameriprise Financial
Center, Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the Seligman funds, as well as the other funds in
the RiverSource Group of Funds. These services include administrative,
accounting, treasury, and other services.
Board Services Corporation. The funds have an agreement with Board Services
Corporation (Board Services) located at 901 Marquette Avenue South, Suite 2810,
Minneapolis, MN 55402. This agreement sets forth the terms of Board Services'
responsibility to serve as an agent of the funds for purposes of administering
the payment of compensation to each independent Board member, to provide office
space for use by the funds and their boards, and to provide any other services
to the boards or the independent members, as may be reasonably requested.
Independent Registered Public Accounting Firm. Deloitte & Touche LLP,
Independent Registered Public Accounting Firm, have been selected as auditors
of the Funds. Their address is Two World Financial Center, New York, NY 10281.
65
The Seligman Funds* Appendix A
- --------------------------------------------------------------------------------
Seligman Asset Allocation Series, Inc.
Seligman Asset Allocation Aggressive Growth Fund
Seligman Asset Allocation Balanced Fund
Seligman Asset Allocation Growth Fund
Seligman Asset Allocation Moderate Growth Fund
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Core Fixed Income Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Global Fund Series, Inc.
Seligman Emerging Markets Fund
Seligman Global Smaller Companies Fund
Seligman Global Growth Fund
Seligman Global Technology Fund
Seligman International Growth Fund
Seligman Growth Fund, Inc.
Seligman High Income Fund Series
Seligman U.S. Government Securities Fund
Seligman High-Yield Fund
Seligman Income and Growth Fund, Inc.
Seligman LaSalle International Real Estate Fund, Inc.
Seligman LaSalle Real Estate Fund Series, Inc.
Seligman LaSalle Global Real Estate Fund
Seligman LaSalle Monthly Dividend Real Estate Fund
Seligman Municipal Fund Series, Inc.
Seligman National Municipal Class
Seligman Colorado Municipal Class
Seligman Georgia Municipal Class
Seligman Louisiana Municipal Class
Seligman Maryland Municipal Class
Seligman Massachusetts Municipal Class
Seligman Michigan Municipal Class
Seligman Minnesota Municipal Class
Seligman Missouri Municipal Class
Seligman New York Municipal Class
Seligman Ohio Municipal Class
Seligman Oregon Municipal Class
Seligman South Carolina Municipal Class
Seligman Municipal Series Trust
Seligman California Municipal High Yield Series
Seligman California Municipal Quality Series
Seligman Florida Municipal Series
Seligman North Carolina Municipal Series
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
Seligman Capital Portfolio
Seligman Cash Management Portfolio
Seligman Common Stock Portfolio
Seligman Communications and Information Portfolio
Seligman Global Technology Portfolio
Seligman International Growth Portfolio
Seligman Investment Grade Fixed Income Portfolio
Seligman Large-Cap Value Portfolio
Seligman Smaller-Cap Value Portfolio
Seligman TargetHorizon ETF Portfolios, Inc.
Seligman TargETFund 2045
Seligman TargETFund 2035
Seligman TargETFund 2025
Seligman TargETFund 2015
Seligman TargETFund Core
Seligman Value Fund Series, Inc.
Seligman Large-Cap Value Fund
Seligman Smaller-Cap Value Fund
Tri-Continental Corporation
- --------
* Cannot be exchanged with any RiverSource fund, RiverSource Partners fund or
Threadneedle fund.
66
The RiverSource Group of Appendix B
Funds*
- --------------------------------------------------------------------------------
RiverSource Bond Series, Inc.
RiverSource Floating Rate Fund
RiverSource Income Opportunities Fund
RiverSource Inflation Protected Securities Fund
RiverSource Limited Duration Bond Fund
RiverSource California Tax-Exempt Trust
RiverSource California Tax-Exempt Fund
RiverSource Dimensions Series, Inc.
RiverSource Disciplined Small and Mid Cap Equity Fund
RiverSource Disciplined Small Cap Value Fund
RiverSource Diversified Income Series, Inc.
RiverSource Diversified Bond Fund
RiverSource Equity Series, Inc.
RiverSource Mid Cap Growth Fund
RiverSource Global Series, Inc.
RiverSource Absolute Return Currency and Income Fund
RiverSource Emerging Markets Bond Fund
RiverSource Global Bond Fund
RiverSource Global Technology Fund
Threadneedle Emerging Markets Fund
Threadneedle Global Equity Fund
RiverSource Government Income Series, Inc.
RiverSource Short Duration U.S. Government Fund
RiverSource U.S. Government Mortgage Fund
RiverSource High Yield Income Series, Inc.
RiverSource High Yield Bond Fund
RiverSource Income Series, Inc.
RiverSource Income Builder Basic Income Fund
RiverSource Income Builder Enhanced Income Fund
RiverSource Income Builder Moderate Income Fund
RiverSource International Managers Series, Inc.
RiverSource Partners International Select Growth Fund
RiverSource Partners International Select Value Fund
RiverSource Partners International Small Cap Fund
RiverSource International Series, Inc.
RiverSource Disciplined International Equity Fund
Threadneedle European Equity Fund
Threadneedle Global Equity Income Fund
Threadneedle Global Extended Alpha Fund
Threadneedle International Opportunity Fund
RiverSource Investment Series, Inc.
RiverSource Balanced Fund
RiverSource Disciplined Large Cap Growth Fund
RiverSource Diversified Equity Income Fund
RiverSource Disciplined Large Cap Value Fund
RiverSource Mid Cap Value Fund
RiverSource Large Cap Series, Inc.
RiverSource Disciplined Equity Fund
RiverSource Growth Fund
RiverSource Large Cap Equity Fund
RiverSource Large Cap Value Fund
RiverSource Managers Series, Inc.
RiverSource Partners Aggressive Growth Fund
RiverSource Partners Fundamental Value Fund
RiverSource Partners Select Value Fund
RiverSource Partners Small Cap Equity Fund
RiverSource Partners Small Cap Value Fund
RiverSource Market Advantage Series, Inc.
RiverSource Portfolio Builder Aggressive Fund
RiverSource Portfolio Builder Conservative Fund
RiverSource Portfolio Builder Moderate Aggressive Fund
RiverSource Portfolio Builder Moderate Conservative Fund
RiverSource Portfolio Builder Moderate Fund
RiverSource Portfolio Builder Total Equity Fund
RiverSource S&P 500 Index Fund
RiverSource Small Company Index Fund
RiverSource Money Market Series, Inc.
RiverSource Cash Management Fund
RiverSource Recovery and Infrastructure Fund
RiverSource Sector Series, Inc.
RiverSource Dividend Opportunity Fund
RiverSource Real Estate Fund
RiverSource Selected Series, Inc.
RiverSource Precious Metals and Mining Fund
RiverSource Series Trust
RiverSource 120/20 Contrarian Equity Fund
RiverSource Retirement Plus 2010 Fund
RiverSource Retirement Plus 2015 Fund
RiverSource Retirement Plus 2020 Fund
RiverSource Retirement Plus 2025 Fund
RiverSource Retirement Plus 2030 Fund
RiverSource Retirement Plus 2035 Fund
RiverSource Retirement Plus 2040 Fund
RiverSource Retirement Plus 2045 Fund
RiverSource Short Term Investments Series, Inc.
RiverSource Short-Term Cash Fund
RiverSource Special Tax-Exempt Series Trust
RiverSource Minnesota Tax-Exempt Fund
RiverSource New York Tax-Exempt Fund
RiverSource Strategic Allocation Series, Inc.
RiverSource Strategic Allocation Fund
RiverSource Strategic Income Allocation Fund
RiverSource Strategy Series, Inc.
RiverSource Equity Value Fund
RiverSource Partners Small Cap Growth Fund
RiverSource Small Cap Advantage Fund
RiverSource Tax-Exempt Income Series, Inc.
RiverSource Tax-Exempt High Income Fund
RiverSource Tax-Exempt Money Market Series, Inc.
RiverSource Tax-Exempt Money Market Fund
RiverSource Tax-Exempt Series, Inc.
RiverSource Intermediate Tax-Exempt Fund
RiverSource Tax-Exempt Bond Fund
RiverSource Variable Series Trust
Disciplined Asset Allocation Portfolios - Aggressive
Disciplined Asset Allocation Portfolios - Conservative
Disciplined Asset Allocation Portfolios - Moderate
Disciplined Asset Allocation Portfolios - Moderately Aggressive
Disciplined Asset Allocation Portfolios - Moderately Conservative
RiverSource Partners Variable Portfolio - Fundamental Value Fund
RiverSource Partners Variable Portfolio - Select Value Fund
RiverSource Partners Variable Portfolio - Small Cap Value Fund
RiverSource Variable Portfolio - Balanced Fund
RiverSource Variable Portfolio - Cash Management Fund
RiverSource Variable Portfolio - Core Equity Fund
RiverSource Variable Portfolio - Diversified Bond Fund
RiverSource Variable Portfolio - Diversified Equity Income Fund
RiverSource Variable Portfolio - Global Bond Fund
RiverSource Variable Portfolio - Global Inflation Protected Securities Fund
RiverSource Variable Portfolio - Growth Fund
RiverSource Variable Portfolio - High Yield Bond Fund
RiverSource Variable Portfolio - Income Opportunities Fund
RiverSource Variable Portfolio - Large Cap Equity Fund
RiverSource Variable Portfolio - Large Cap Value Fund
RiverSource Variable Portfolio - Mid Cap Growth Fund
RiverSource Variable Portfolio - Mid Cap Value Fund
RiverSource Variable Portfolio - S&P 500 Index Fund
RiverSource Variable Portfolio - Short Duration U.S. Government Fund
RiverSource Variable Portfolio - Small Cap Advantage Fund
Threadneedle Variable Portfolio - Emerging Markets Fund
Threadneedle Variable Portfolio - International Opportunity Fund
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* Cannot be exchanged with any Seligman fund.
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