UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] Pre-Effective Amendment No. 1 (File No. 333-157592)
[ ] Post-Effective Amendment No. [ ]
(Check Appropriate Box or Boxes)
RiverSource Government Income Series, Inc.
(Exact Name of Registrant as Specified in Charter)
(612) 671-1947
(Area Code and Telephone Number)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Scott R. Plummer
(Name and Address of Agent for Service)
5228 Ameriprise Financial Center Minneapolis MN 55474
(Number and Street) (City) State) (Zip Code)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Title of Securities Being Registered: Common Stock
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.
This Registration Statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933. It is proposed that this filing will
become effective on April 17, 2009.
SELIGMAN FUNDS
734 Ameriprise Financial Center
Minneapolis, Minnesota 55474
NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS
SELIGMAN CORE FIXED INCOME FUND, INC.
SELIGMAN GLOBAL FUND SERIES, INC.
Seligman Emerging Markets Fund
Seligman Global Growth Fund
Seligman International Growth Fund
SELIGMAN INCOME AND GROWTH FUND, INC.
SELIGMAN HIGH INCOME FUND SERIES
Seligman High-Yield Fund
Seligman U.S. Government Securities Fund
TO BE HELD JUNE 2, 2009
A Joint Special Meeting of Shareholders (the "Meeting") of each of the Seligman
Funds listed above will be held at 10:00 a.m. CDT on June 2, 2009, at The
Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota 55402 in the
Minnesota River Room on the Third floor. At the Meeting, shareholders will
consider the following proposals with respect to their Selling Fund:
THE REORGANIZATION PROPOSALS:
Shareholders of each Selling Fund will vote separately to approve an Agreement
and Plan of Reorganization by and among each Selling Fund, its corresponding
Buying Fund and RiverSource Investments, LLC (each an "Agreement and Plan of
Reorganization"), as shown below:
<Table>
<Caption>
PROPOSAL SELLING FUND BUYING FUND
1. Seligman Core Fixed Income Fund, Inc. RiverSource Diversified Bond Fund
2. Seligman Emerging Markets Fund Threadneedle Emerging Markets Fund
3. Seligman Global Growth Fund Threadneedle Global Equity Fund
4. Seligman High-Yield Fund RiverSource High Yield Bond Fund
5. Seligman Income and Growth Fund, Inc. RiverSource Balanced Fund
6. Seligman International Growth Fund RiverSource Partners International Select
Growth Fund
7. Seligman U.S. Government Securities Fund RiverSource Short Duration U.S. Government
Fund
</Table>
Pursuant to each Agreement and Plan of Reorganization, each Selling Fund will
transfer all of its assets attributable to each class of its shares to the
corresponding Buying Fund in exchange for shares of the corresponding class of
the Buying Fund and the assumption by the Buying Fund of all of the liabilities
of the Selling Fund. The Buying Fund shares will be distributed proportionately
to shareholders of the relevant class of the Selling Fund.
THE MANAGER OF MANAGERS PROPOSALS:
Shareholders of each Seligman Subadvised Fund, as listed below, will consider
the following proposal with respect to their Seligman Subadvised Fund:
<Table>
<Caption>
PROPOSAL SELIGMAN SUBADVISED FUND
8. Seligman Emerging Markets Fund To approve a policy authorizing RiverSource
- ----------------------------------------------------- Investments, LLC, with the approval of the
9. Seligman Global Growth Fund Board of Directors, to retain and to
replace subadvisers, or to modify
subadvisory agreements, without obtaining
shareholder approval.
- -----------------------------------------------------
10. Seligman International Growth Fund
</Table>
Please take some time to read the combined proxy statement/prospectus. It
discusses these proposals in more detail. If you were a shareholder on April 3,
2009, you may vote at the Meeting or at any adjournment or postponement of the
Meeting. We hope you can attend the Meeting. Even if you plan to attend the
Meeting, please vote by telephone, internet or mail. Just follow the
instructions on the enclosed proxy card. If you have questions, please call toll
free at (866) 438-8932. It is important that you vote. The Board of
Directors/Trustees of each Selling Fund and Seligman Subadvised Fund recommends
that you vote FOR the proposal(s) applicable to it. The combined proxy
statement/prospectus is expected to be mailed to shareholders on or about April
17, 2009.
By order of the Boards of Directors/Trustees
-s- Scott R. Plummer
Scott R. Plummer, Secretary
April 17, 2009
THIS PAGE LEFT BLANK INTENTIONALLY
SELIGMAN CORE FIXED INCOME FUND, INC.
SELIGMAN GLOBAL FUND SERIES, INC.
Seligman Emerging Markets Fund
Seligman Global Growth Fund
Seligman International Growth Fund
SELIGMAN INCOME AND GROWTH FUND, INC.
SELIGMAN HIGH INCOME FUND SERIES
Seligman High-Yield Fund
Seligman U.S. Government Securities Fund
COMBINED PROXY STATEMENT/PROSPECTUS
DATED APRIL 17, 2009
This document is a proxy statement for each Selling Fund and each Seligman
Subadvised Fund (each as defined below), and a prospectus for each Buying Fund
(as defined below). The address and telephone number of each Selling Fund and
Buying Fund is 734 Ameriprise Financial Center, Minneapolis, Minnesota 55474 and
(888) 791-3380. This combined proxy statement/prospectus and the enclosed proxy
card are expected to be mailed to shareholders ("shareholders" or
"stockholders") beginning on or about April 17, 2009. This combined proxy
statement/prospectus contains information you should know before voting on the
following proposal(s) with respect to your Fund (as indicated below):
<Table>
<Caption>
TO BE VOTED ON
PROPOSAL BY SHAREHOLDERS OF:
- ---------------------------------------------------------------------------------------------------------------------------
1. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Core Fixed Income Fund, Inc.
and among Seligman Core Fixed Income Fund, Inc. ("Seligman Core Fixed
Income Fund" or the "Selling Fund"), RiverSource Diversified Bond Fund (the
"Buying Fund"), a series of RiverSource Diversified Income Series, Inc.,
and RiverSource Investments, LLC ("RiverSource Investments"). Under this
Agreement, the Selling Fund will transfer all of its assets attributable to
each class of its shares to the corresponding Buying Fund, as indicated
below, in exchange for shares of the corresponding class of the Buying Fund
and the assumption by the Buying Fund of all of the liabilities of the
Selling Fund. The Buying Fund shares will be distributed proportionately to
shareholders of the relevant class of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
2. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Emerging Markets Fund
and among Seligman Emerging Markets Fund (the "Selling Fund"), a series of
Seligman Global Fund Series, Inc., Threadneedle Emerging Markets Fund (the
"Buying Fund"), a series of RiverSource Global Series, Inc., and
RiverSource Investments, LLC. Under this Agreement, the Selling Fund will
transfer all of its assets attributable to each class of its shares to the
corresponding Buying Fund, as indicated below, in exchange for shares of
the corresponding class of the Buying Fund and the assumption by the Buying
Fund of all of the liabilities of the Selling Fund. The Buying Fund shares
will be distributed proportionately to shareholders of the relevant class
of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1
<Table>
<Caption>
TO BE VOTED ON
PROPOSAL BY SHAREHOLDERS OF:
- ---------------------------------------------------------------------------------------------------------------------------
3. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Global Growth Fund
and among Seligman Global Growth Fund (the "Selling Fund"), a series of
Seligman Global Fund Series, Inc., Threadneedle Global Equity Fund (the
"Buying Fund"), a series of RiverSource Global Series, Inc., and
RiverSource Investments, LLC. Under this Agreement, the Selling Fund will
transfer all of its assets attributable to each class of its shares to the
corresponding Buying Fund, as indicated below, in exchange for shares of
the corresponding class of the Buying Fund and the assumption by the Buying
Fund of all of the liabilities of the Selling Fund. The Buying Fund shares
will be distributed proportionately to shareholders of the relevant class
of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
4. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman High-Yield Fund
and among Seligman High-Yield Fund (the "Selling Fund"), a series of
Seligman High Income Fund Series, RiverSource High Yield Bond Fund (the
"Buying Fund"), a series of RiverSource High Yield Income Series, Inc., and
RiverSource Investments, LLC. Under this Agreement, the Selling Fund will
transfer all of its assets attributable to each class of its shares to the
corresponding Buying Fund, as indicated below, in exchange for shares of
the corresponding class of the Buying Fund and the assumption by the Buying
Fund of all of the liabilities of the Selling Fund. The Buying Fund shares
will be distributed proportionately to shareholders of the relevant class
of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
5. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Income and Growth Fund, Inc.
and among Seligman Income and Growth Fund, Inc. ("Seligman Income and
Growth Fund" or the "Selling Fund"), RiverSource Balanced Fund (the "Buying
Fund"), a series of RiverSource Investment Series, Inc., and RiverSource
Investments, LLC. Under this Agreement, the Selling Fund will transfer all
of its assets attributable to each class of its shares to the corresponding
Buying Fund, as indicated below, in exchange for shares of the
corresponding class of the Buying Fund and the assumption by the Buying
Fund of all of the liabilities of the Selling Fund. The Buying Fund shares
will be distributed proportionately to shareholders of the relevant class
of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
2
<Table>
<Caption>
TO BE VOTED ON
PROPOSAL BY SHAREHOLDERS OF:
- ---------------------------------------------------------------------------------------------------------------------------
6. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman International Growth Fund
and among Seligman International Growth Fund (the "Selling Fund"), a series
of Seligman Global Fund Series, Inc., RiverSource Partners International
Select Growth Fund (the "Buying Fund"), a series of RiverSource
International Managers Series, Inc., and RiverSource Investments, LLC.
Under this Agreement, the Selling Fund will transfer all of its assets
attributable to each class of its shares to the corresponding Buying Fund,
as indicated below, in exchange for shares of the corresponding class of
the Buying Fund and the assumption by the Buying Fund of all of the
liabilities of the Selling Fund. The Buying Fund shares will be distributed
proportionately to shareholders of the relevant class of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
Class I* Class R5
- ---------------------------------------------------------------------------------------------------------------------------
7. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman U.S. Government Securities Fund
and among Seligman U.S. Government Securities Fund (the "Selling Fund"), a
series of Seligman High Income Fund Series, RiverSource Short Duration U.S.
Government Fund (the "Buying Fund"), a series of RiverSource Government
Income Series, Inc., and RiverSource Investments, LLC. Under this
Agreement, the Selling Fund will transfer all of its assets attributable to
each class of its shares to the corresponding Buying Fund, as indicated
below, in exchange for shares of the corresponding class of the Buying Fund
and the assumption by the Buying Fund of all of the liabilities of the
Selling Fund. The Buying Fund shares will be distributed proportionately to
shareholders of the relevant class of the Selling Fund.
Selling Fund Buying Fund
Class A Class A
Class B Class B
Class C Class C
Class R* Class R2
- ---------------------------------------------------------------------------------------------------------------------------
8. To approve a policy authorizing RiverSource Investments, LLC, the Seligman Emerging Markets Fund
investment adviser to Seligman Emerging Markets Fund (a "Seligman
Subadvised Fund" and a "Seligman Fund"), with the approval of the Board of
Directors (the "Board") to enter into and materially amend a subadvisory
agreement, without obtaining shareholder approval (the "Manager of Managers
Proposal").
- ---------------------------------------------------------------------------------------------------------------------------
9. To approve a policy authorizing RiverSource Investments, LLC, the Seligman Global Growth Fund
investment adviser to Seligman Global Growth Fund (a "Seligman Subadvised
Fund" and a "Seligman Fund"), with the approval of the Board of Directors
(the "Board") to enter into and materially amend a subadvisory agreement,
without obtaining shareholder approval (the "Manager of Managers
Proposal").
- ---------------------------------------------------------------------------------------------------------------------------
10. To approve a policy authorizing RiverSource Investments, LLC, the Seligman International Growth Fund
investment adviser to Seligman International Growth Fund (a "Seligman
Subadvised Fund" and a "Seligman Fund"), with the approval of the Board of
Directors (the "Board") to enter into and materially amend a subadvisory
agreement, without obtaining shareholder approval (the "Manager of Managers
Proposal").
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
* Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman Funds will be redesignated as Class R2 and Class R5 shares,
respectively. However, for convenience of reference, this combined proxy
statement/prospectus refers to each class of shares by its designation as of
the date of this proxy statement/prospectus.
These proposals will be considered by shareholders of the Selling Funds
(including the Seligman Subadvised Funds) at a joint special meeting of such
shareholders (the "Meeting") that will be held at 10:00 a.m. CDT on June 2,
2009, at The Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota 55402
in the Minnesota River Room on the Third floor. Each of the Selling Funds and
the Buying Funds (collectively, the "Funds") is a registered open-end management
investment company (or a series thereof) and is part of the RiverSource Family
of Funds, which includes funds branded "RiverSource," "RiverSource Partners,"
"Threadneedle" and "Seligman." Please read this combined proxy
statement/prospectus and keep it for future reference.
The Board of Directors/Trustees of each Selling Fund (including the Seligman
Subadvised Funds) (the "Board" or the "Board of Directors/Trustees") has
reviewed these proposals and recommends that you approve them.
3
Although the Board of each Selling Fund recommends that shareholders approve the
reorganization of each Selling Fund with the corresponding Buying Fund (each a
"Reorganization"), the Reorganization of each Selling Fund is not conditioned
upon the Reorganization of any other Selling Fund (or upon approval of the
Manager of Managers Proposal by any Seligman Subadvised Fund). Accordingly, if
shareholders of one Selling Fund approve its Reorganization, but shareholders of
another Selling Fund do not approve that Selling Fund's Reorganization, it is
expected that the Reorganization of the first Selling Fund will take place as
described in this combined proxy statement/prospectus.
Similarly, although the Board recommends that shareholders of each Seligman
Subadvised Fund approve the Manager of Managers Proposal, each Manager of
Managers Proposal is not conditioned upon the approval of the Manager of
Managers Proposal for any other Seligman Subadvised Fund (or upon approval of
the Reorganization of the Seligman Subadvised Fund).
HOW EACH REORGANIZATION WILL WORK
- - Each Selling Fund will transfer all of its assets to the corresponding Buying
Fund in exchange for shares of the corresponding Buying Fund ("Reorganization
Shares") and the assumption by the corresponding Buying Fund of all of the
Selling Fund's liabilities.
- - Each Buying Fund will issue Reorganization Shares with an aggregate net asset
value equal to the aggregate value of the assets that it receives from the
corresponding Selling Fund, less the liabilities it assumes from the
corresponding Selling Fund. The Reorganization Shares of each class of each
Buying Fund will be distributed to the shareholders of the corresponding class
of the corresponding Selling Fund in proportion to their holdings of such
class of such Selling Fund. For example, holders of Class A shares of a
Selling Fund will receive Class A shares of the corresponding Buying Fund with
the same aggregate net asset value as the aggregate net asset value of the
corresponding Selling Fund Class A shares at the time of the Reorganization.
You will not pay any sales charge in connection with this distribution of
Reorganization Shares. If you already have a Buying Fund account with the
exact registration as the Selling Fund account, shares distributed in the
Reorganization are typically added to that account. As a result, when average
cost is calculated for federal income tax purposes, the cost of the shares in
the two accounts you owned will be combined.
WHERE TO GET MORE INFORMATION
The following documents have been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated into this combined proxy
statement/prospectus by reference:
- - the prospectus of Seligman Core Fixed Income Fund, dated Feb. 2, 2009, as
supplemented to date;
- - the prospectuses of Seligman Global Growth Fund, Seligman Emerging Markets
Fund and Seligman International Growth Fund, each dated March 2, 2009, as
supplemented to date;
- - the prospectuses of Seligman U.S. Government Securities Fund, Seligman High-
Yield Fund and Seligman Income and Growth Fund, each dated May 1, 2008, as
supplemented to date;
- - the Statement of Additional Information of Seligman Core Fixed Income Fund,
dated Feb. 2, 2009, as supplemented to date;
- - the Statement of Additional Information of Seligman Global Growth Fund,
Seligman Emerging Markets Fund and Seligman International Growth Fund, each
dated March 2, 2009, as supplemented to date;
- - the Statement of Additional Information of Seligman U.S. Government Securities
Fund and Seligman High-Yield Fund, dated May 1, 2008, as supplemented to date;
- - the Statement of Additional Information of Seligman Income and Growth Fund,
dated May 1, 2008, as supplemented to date;
- - the Statement of Additional Information relating to the Reorganizations, dated
April 17, 2009 (the "Reorganization SAI");
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
Seligman Core Fixed Income Fund, for the period ended Sept. 30, 2008;
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
Seligman Global Growth Fund, Seligman Emerging Markets Fund and Seligman
International Growth Fund, for the period ended Oct. 31, 2008;
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
Seligman High-Yield Fund for the period ended Dec. 31, 2008;
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
Seligman Income and Growth Fund, for the period ended Dec. 31, 2008;
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
Seligman U.S. Government Securities Fund for the period ended Dec. 31, 2008.
4
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
RiverSource Diversified Bond Fund, for the period ended Aug. 31, 2008;
- - the Reports of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Reports to Shareholders of
Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund and
RiverSource Partners International Select Growth Fund, each for the period
ended Oct. 31, 2008;
- - the Reports of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Reports to Shareholders of
RiverSource High Yield Bond Fund and RiverSource Short Duration U.S.
Government Fund each for the period ended May 31, 2008 and the unaudited
financial statements included in the Semiannual Reports to Shareholders of
RiverSource High Yield Bond Fund and RiverSource Short Duration U.S.
Government Fund, each for the period ended Nov. 30, 2008; and
- - the Report of the Independent Registered Public Accounting Firm and the
audited financial statements included in the Annual Report to Shareholders of
RiverSource Balanced Fund, for the period ended Sept. 30, 2008.
For a copy, at no charge, of any of the documents listed above and/or to ask
questions about this combined proxy statement/prospectus, please call your
Fund's proxy solicitor toll free at (866) 438-8932.
If the Reorganization is approved by shareholders at the meeting scheduled to be
held on June 2, 2009, and occurs prior to the required mailing date of the
shareholder report, any shareholder may request a copy free of charge of the
semiannual report for Seligman Income and Growth Fund, Seligman High-Yield Fund
and/or Seligman U.S. Government Securities Fund for the period ended June 30,
2008, by calling toll free at (888) 791-3380.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials and other information with the SEC. These
reports, proxy materials and other information can be inspected and copied at
the Public Reference Room maintained by the SEC. Copies may be obtained, after
paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by
writing to the Public Reference Section of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549-0102. In addition, copies of these documents may be
viewed on-line or downloaded from the SEC's website at www.sec.gov.
PLEASE NOTE THAT THE FUNDS ARE NOT BANK DEPOSITS, ARE NOT FEDERALLY INSURED, ARE
NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY AND ARE NOT GUARANTEED TO ACHIEVE
THEIR INVESTMENT OBJECTIVES.
As with all mutual funds, the SEC has not approved or disapproved these
securities or passed on the adequacy of this combined proxy
statement/prospectus. Any representation to the contrary is a criminal offense.
5
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SECTION A -- REORGANIZATION PROPOSALS............................................ 9
SUMMARY........................................................................ 9
How Each Reorganization Will Work............................................ 9
Tax Consequences............................................................. 9
Fees and Expenses............................................................ 10
Proposal 1. Reorganization of Seligman Core Fixed Income Fund into
RiverSource Diversified Bond Fund........................................ 10
Proposal 2. Reorganization of Seligman Emerging Markets Fund into
Threadneedle Emerging Markets Fund....................................... 13
Proposal 3. Reorganization of Seligman Global Growth Fund into Threadneedle
Global Equity Fund....................................................... 15
Proposal 4. Reorganization of Seligman High-Yield Fund into RiverSource
High Yield Bond Fund..................................................... 17
Proposal 5. Reorganization of Seligman Income and Growth Fund into
RiverSource Balanced Fund................................................ 19
Proposal 6. Reorganization of Seligman International Growth Fund into
RiverSource Partners International Select Growth Fund.................... 21
Proposal 7. Reorganization of Seligman U.S. Government Securities Fund into
RiverSource Short Duration U.S. Government Fund.......................... 24
PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE
DIVERSIFIED BOND FUND........................................................ 26
Comparison of Investment Objectives.......................................... 26
Comparison of Principal Investment Strategies................................ 26
Comparison of Fundamental Policies........................................... 29
Comparison of Nonfundamental Policies and Related Investment Strategies...... 30
Comparison of Principal Risk Factors......................................... 31
Performance.................................................................. 32
PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE
EMERGING MARKETS FUND........................................................ 36
Comparison of Investment Objectives.......................................... 36
Comparison of Principal Investment Strategies................................ 36
Comparison of Fundamental Policies........................................... 38
Comparison of Nonfundamental Policies and Related Investment Strategies...... 39
Comparison of Principal Risk Factors......................................... 40
Performance.................................................................. 43
PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE
GLOBAL EQUITY FUND........................................................... 47
Comparison of Investment Objectives.......................................... 47
Comparison of Principal Investment Strategies................................ 47
Comparison of Fundamental Policies........................................... 49
Comparison of Nonfundamental Policies and Related Investment Strategies...... 50
Comparison of Principal Risk Factors......................................... 51
Performance.................................................................. 53
</Table>
6
<Table>
<Caption>
PAGE
----
PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH
YIELD BOND FUND.............................................................. 58
Comparison of Investment Objectives.......................................... 58
Comparison of Principal Investment Strategies................................ 58
Comparison of Fundamental Policies........................................... 60
Comparison of Nonfundamental Policies and Related Investment Strategies...... 61
Comparison of Principal Risk Factors......................................... 62
Performance.................................................................. 64
PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE
BALANCED FUND................................................................ 69
Comparison of Investment Objectives.......................................... 69
Comparison of Principal Investment Strategies................................ 69
Comparison of Fundamental Policies........................................... 72
Comparison of Nonfundamental Policies and Related Investment Strategies...... 74
Comparison of Principal Risk Factors......................................... 74
Performance.................................................................. 76
PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND........................ 80
Comparison of Investment Objectives.......................................... 80
Comparison of Principal Investment Strategies................................ 80
Comparison of Fundamental Policies........................................... 82
Comparison of Nonfundamental Policies and Related Investment Strategies...... 84
Comparison of Principal Risk Factors......................................... 85
Performance.................................................................. 87
PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND.............................. 91
Comparison of Investment Objectives.......................................... 91
Comparison of Principal Investment Strategies................................ 91
Comparison of Fundamental Policies........................................... 92
Comparison of Nonfundamental Policies and Related Investment Strategies...... 94
Comparison of Principal Risk Factors......................................... 94
Performance.................................................................. 96
ADDITIONAL INFORMATION ABOUT EACH REORGANIZATION............................... 99
Terms of the Reorganizations................................................. 99
Conditions to Closing Each Reorganization.................................... 99
Termination of the Agreement................................................. 99
Tax Status of the Reorganizations............................................ 99
Reasons for the Proposed Reorganizations and Board Deliberations............. 103
Board Determinations......................................................... 106
Board Recommendation and Required Vote....................................... 106
SECTION B -- MANAGER OF MANAGERS PROPOSALS....................................... 108
PROPOSAL 8. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN EMERGING MARKETS FUND.... 108
PROPOSAL 9. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN GLOBAL GROWTH FUND....... 108
</Table>
7
<Table>
<Caption>
PAGE
----
PROPOSAL 10. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN INTERNATIONAL GROWTH
FUND......................................................................... 108
Additional Information About Each Manager of Managers Proposal............... 108
Comparison of Present and Proposed Selection Process for Subadvisers......... 109
Board Recommendation and Required Vote....................................... 110
SECTION C -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION.................... 111
SECTION D -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND FINANCIAL HIGHLIGHTS... 114
Capitalization of Selling Funds and Buying Funds............................. 114
Ownership of Shares of Selling Funds, including Seligman Subadvised Funds,
and Buying Funds........................................................... 119
Financial Highlights......................................................... 125
EXHIBITS
A. Form of Agreement and Plan of Reorganization.................................. A.1
B. Additional Information Applicable to the Buying Funds......................... B.1
C. Summary of Integration Related Changes........................................ C.1
D. Massachusetts Appraisal Rights................................................ D.1
E. Comparison of Organizational Documents........................................ E.1
F. RiverSource Family of Funds Private Notice.................................... F.1
</Table>
8
SECTION A -- REORGANIZATION PROPOSALS
The following information describes each proposed Reorganization.
SUMMARY
This combined proxy statement/prospectus is being used by each Selling Fund to
solicit proxies to vote at a joint special meeting of shareholders. Shareholders
of each Selling Fund will consider a proposal to approve the Agreement and Plan
of Reorganization (the "Agreement") providing for the Reorganization of their
Selling Fund into the corresponding Buying Fund. The form of the Agreement is
attached as Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire combined proxy
statement/prospectus and the exhibits because they contain details that are not
included in the summary.
HOW EACH REORGANIZATION WILL WORK
- - Each Selling Fund will transfer all of its assets to the corresponding Buying
Fund in exchange for shares of the corresponding Buying Fund ("Reorganization
Shares") and the assumption by the corresponding Buying Fund of all of the
Selling Fund's liabilities.
- - Each Buying Fund will issue Reorganization Shares with an aggregate net asset
value equal to the aggregate value of the assets that it receives from the
corresponding Selling Fund, less the liabilities it assumes from the
corresponding Selling Fund. The Reorganization Shares of each class of each
Buying Fund will be distributed to the shareholders of the corresponding class
of the corresponding Selling Fund in proportion to their holdings of such
class of such Selling Fund. For example, holders of Class A shares of a
Selling Fund will receive Class A shares of the corresponding Buying Fund with
the same aggregate net asset value as the aggregate net asset value of the
corresponding Selling Fund Class A shares at the time of the Reorganization.
If you already have a Buying Fund account with the exact registration as the
Selling Fund account, shares distributed in the Reorganization are typically
added to that account. As a result, when average cost is calculated for
federal income tax purposes, the cost of the shares in the two accounts you
owned will be combined.
- - As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Selling Fund
account may be transferred to your new Buying Fund account. Please contact
your financial institution for additional details.
- - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any
sales charge in connection with its Reorganization.
- - After a Reorganization is completed, Selling Fund shareholders will be
shareholders of the corresponding Buying Fund, and the Selling Fund will be
dissolved.
TAX CONSEQUENCES
Each Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the corresponding Buying
Fund receive a satisfactory opinion of tax counsel substantially to that effect.
Accordingly, no gain or loss is expected to be recognized by the Selling Fund or
its shareholders as a direct result of a Reorganization. Some or all of the
portfolio assets of a Selling Fund may be sold in connection with its
Reorganization. The actual tax impact of such sales will depend on the
difference between the price at which such portfolio assets are sold and the
Selling Fund's tax basis in such assets. Any net capital gains recognized in
these sales will be distributed to shareholders as capital-gain dividends (to
the extent of net realized long-term capital gains over net realized short-term
capital losses) and/or ordinary dividends (to the extent of net realized short-
term capital gains over net realized long-term capital losses) during or with
respect to the year of sale, and such distributions will be taxable to
shareholders. Additionally, because each Reorganization will end the tax year of
the applicable Selling Fund, it will accelerate distributions to shareholders
from the Selling Fund for its short tax year ending on the date of the
Reorganization. Those tax year-end distributions will be taxable and will
include any capital gains resulting from portfolio turnover prior to the
Reorganization that were not previously distributed. At any time prior to a
Reorganization, a shareholder may redeem shares of a Selling Fund. This would
likely result in the recognition of gain or loss to the shareholder for federal
income tax purposes if the shareholder holds the shares in a taxable account.
The tax basis and holding period of the shareholders' Selling Fund shares are
expected to carry over to the shareholders' Reorganization Shares in the Buying
Fund.
For more information about the federal income tax consequences of the
Reorganizations, see the section entitled "Tax Status of the Reorganizations."
9
FEES AND EXPENSES
The following tables describe the fees and expenses that you pay if you buy and
hold shares of a Selling Fund or shares of a Buying Fund. The tables also show
pro forma fees and expenses of each Buying Fund assuming the proposed
Reorganization relating to such Buying Fund had been effective at the beginning
of the most recent fiscal year. The tables reflect adjustments to fees and
expenses that were approved by the Board Jan. 8, 2009, a summary of which is
included in Exhibit C. The expenses shown in the tables do not include any one
time costs, including any expenses related to the Reorganizations that may be
borne by the Funds. See "Reasons for the Proposed Reorganizations and Board
Deliberations" for more information.
The tables have not been adjusted based on current net assets of the Funds,
which will vary throughout the year and from year to year. In general, the
annual operating expenses of a Fund will increase as the Fund's assets decrease.
Due to recent unprecedented market volatility, the current total annual fund
operating expenses listed for the Funds in the tables may be higher than the
expense information presented, which are as of the most recent fiscal year. To
the extent the investment manager and its affiliates have agreed to waive fees
or cap (reimburse) expenses, the impact of the market volatility on the total
annual (net) operating expenses in the current fiscal year will be limited.
PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE
DIVERSIFIED BOND FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN
FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(a)(b) None None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None(d) None
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING CLASS R2 AND
FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(b) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA CLASS R2 AND
COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(b) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None
</Table>
(a) Effective on or about June 13, 2009, prior to the Reorganization, the
maximum front-end sales charge for Class A shares will increase from 4.50%
to 4.75%. This change is not due to the Reorganization.
(b) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(d) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
10
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS
(SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 0.50% 0.50% 0.50% 0.50% 0.50%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 0.98% 0.50% 0.00%
Other expenses(a)(b) 1.26% 1.27% 1.27% 1.34% 1.09%
Total annual fund operating expenses 2.01% 2.77% 2.75% 2.34% 1.59%
Fee waiver/expense reimbursement 0.76% 0.77% 0.77% 0.84% 0.59%
Total annual (net) fund operating
expenses(a) 1.25% 2.00% 1.98% 1.50% 1.00%
RIVERSOURCE DIVERSIFIED BOND FUND
(ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees 0.45% 0.45% 0.45% 0.45% 0.45%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(c) 0.25% 0.26% 0.25% 0.39% 0.14%
Total annual fund operating expenses 0.95% 1.71% 1.70% 1.34% 0.59%
Fee waiver/expense reimbursement 0.12% 0.12% 0.12% 0.07% 0.07%
Total annual (net) fund operating
expenses(d) 0.83% 1.59% 1.58% 1.27% 0.52%
</Table>
<Table>
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (PRO
FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees 0.45% 0.45% 0.45% 0.45% 0.45%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(c) 0.23% 0.24% 0.24% 0.40% 0.15%
Total annual fund operating expenses 0.93% 1.69% 1.69% 1.35% 0.60%
Fee waiver/expense reimbursement 0.10% 0.10% 0.11% 0.08% 0.08%
Total annual (net) fund operating
expenses(d) 0.83% 1.59% 1.58% 1.27% 0.52%
</Table>
(a) Through at least Jan. 31, 2010, RiverSource Investments has contractually
agreed to waive its management fee and/or to reimburse Seligman Core Fixed
Income Fund's expenses to the extent that the Fund's "other expenses" (i.e.,
those expenses other than management fees, 12b-1 fees, interest on
borrowings, and extraordinary expenses, including litigation expenses)
exceed 0.50% per annum of the Fund's average daily net assets.
(b) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only).
(c) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
(d) The investment manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Aug. 31, 2009, unless
sooner terminated at the discretion of the RiverSource Diversified Bond
Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under
this agreement, net fund expenses (excluding fees and expenses of acquired
funds), will not exceed 0.83% for Class A, 1.59% for Class B, 1.58% for
Class C, 1.27% for Class R2 and 0.52% for Class R5.
11
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $596 $1,006 $1,441 $2,649
Class B $703(b) $1,087(b) $1,597(b) $2,864(c)
Class C $301(b) $ 781 $1,387 $3,028
Class R $153 $ 650 $1,175 $2,617
Class I $102 $ 444 $ 811 $1,845
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $556 $ 752 $ 965 $1,580
Class B $662(b) $ 827(b) $1,118(b) $1,812(c)
Class C $261(b) $ 524 $ 913 $2,004
Class R2 $129 $ 418 $ 728 $1,612
Class R5 $ 53 $ 182 $ 323 $ 734
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $556 $ 748 $ 957 $1,559
Class B $662(b) $ 823(b) $1,109(b) $1,792(c)
Class C $261(b) $ 522 $ 908 $1,994
Class R2 $129 $ 420 $ 733 $1,622
Class R5 $ 53 $ 184 $ 328 $ 746
</Table>
(a) Includes a 4.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $203 $787 $1,397 $2,864(a)
Class C $201 $781 $1,387 $3,028
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $162 $527 $ 918 $1,812(a)
Class C $161 $524 $ 913 $2,004
<Caption>
RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $162 $523 $ 909 $1,792(a)
Class C $161 $522 $ 908 $1,994
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
12
PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE
EMERGING MARKETS FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN
FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None(c) None
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (ACTUAL)(BUYING CLASS R2 AND
FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA CLASS R2 AND
COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
</Table>
(a) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(c) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS
(SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 1.25% 1.25% 1.25% 1.25% 1.25%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(a)(b) 0.88% 0.89% 0.91% 0.81% 0.56%
Total annual fund operating expenses 2.38% 3.14% 3.16% 2.56% 1.81%
Fee waiver/expense reimbursement 0.03% 0.04% 0.06% 0.00% 0.00%
Total annual (net) fund operating
expenses(a) 2.35% 3.10% 3.10% 2.56% 1.81%
</Table>
<Table>
<Caption>
THREADNEEDLE EMERGING MARKETS FUND
(ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 1.16% 1.16% 1.16% 1.16% 1.16%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.46% 0.46% 0.47% 0.57% 0.31%
Total annual fund operating expenses 1.87% 2.62% 2.63% 2.23% 1.47%
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (PRO
FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 1.16% 1.16% 1.16% 1.16% 1.16%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.48% 0.49% 0.49% 0.56% 0.31%
Total annual fund operating expenses 1.89% 2.65% 2.65% 2.22% 1.47%
</Table>
(a) Through at least Feb. 28, 2010, RiverSource Investments has contractually
agreed to waive its management fee and/or to reimburse Seligman Emerging
Market Fund's expenses to the extent that the Fund's "other expenses" (i.e.,
those expenses other than management fees, 12b-1 fees, interest on
borrowings, and extraordinary expenses, including litigation expenses)
exceed 0.85% per annum of the Fund's average daily net assets.
(b) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5 and a new transfer agent agreement and
a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only). Other expenses may also include fees and
expenses of affiliated and unaffiliated funds (acquired funds) which the
Fund indirectly bears when it invests in the acquired funds. The impact of
these acquired fund fees and expenses for the most recent fiscal period was
less than 0.01%. Because acquired funds will have varied expense and fee
levels and the Fund may own different proportions of acquired funds at
different times, the amount of fees and expenses incurred by the Fund with
respect to such investments will vary.
13
(c) Includes the impact of a performance incentive adjustment fee that increased
the management fee by 0.08% for the most recent fiscal year. The adjustment
is computed by measuring the percentage differences over a rolling 12-month
period between the performance of the Fund and the performance of an index
of comparable funds published by Lipper Inc. The index against which the
Threadneedle Emerging Market Fund's performance is measured for purposes of
determining the performance incentive adjustment is the Lipper Emerging
Markets Funds Index. In certain circumstances, the Fund's Board may approve
a change in the index. The maximum adjustment (increase or decrease) is
0.12% of the Fund's average net assets on an annual basis. See Fund
Management and Compensation in Exhibit B for more information. Additional
information on the calculation methodology is set forth in the
Reorganization SAI.
(d) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
Other expenses for Class R2 are based on estimated amounts for the current
fiscal year.
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $799 $1,272 $1,771 $3,137
Class B $813(b) $1,265(b)$1,842(b)$3,273(c)
Class C $413(b) $ 969 $1,650 $3,465
Class R (to be known as R2) $259 $ 797 $1,361 $2,899
Class I (to be known as R5) $184 $ 570 $ 981 $2,132
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $754 $1,129 $1,529 $2,644
Class B $765(b) $1,115(b)$1,591(b)$2,775(c)
Class C $366(b) $ 818 $1,396 $2,967
Class R2 $226 $ 697 $1,196 $2,569
Class R5 $150 $ 465 $ 804 $1,762
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $756 $1,135 $1,538 $2,664
Class B $768(b) $1,124(b)$1,606(b)$2,803(c)
Class C $368(b) $ 824 $1,406 $2,987
Class R2 $225 $ 694 $1,191 $2,559
Class R5 $150 $ 465 $ 804 $1,762
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $313 $965 $1,642 $3,273(a)
Class C $313 $969 $1,650 $3,465
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $265 $815 $1,391 $2,775(a)
Class C $266 $818 $1,396 $2,967
<Caption>
THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $268 $824 $1,406 $2,803(a)
Class C $268 $824 $1,406 $2,987
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
14
PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE
GLOBAL EQUITY FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
(TO BE KNOWN (TO BE KNOWN
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None(c) None
<Caption>
THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING CLASS R2 AND
FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
<Caption>
CLASS R2 AND
THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
</Table>
(a) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(c) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
(TO BE KNOWN (TO BE KNOWN
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) AS AS
(SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(a)(b) 0.84% 0.85% 0.84% 0.84% 0.59%
Total annual fund operating expenses 2.09% 2.85% 2.84% 2.34% 1.59%
THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL)
(BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 0.83% 0.83% 0.83% 0.83% 0.83%
Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.38% 0.40% 0.39% 0.46% 0.21%
Total annual fund operating expenses 1.46% 2.23% 2.22% 1.79% 1.04%
THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA
COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 0.83% 0.83% 0.83% 0.83% 0.83%
Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.37% 0.39% 0.38% 0.46% 0.21%
Total annual fund operating expenses 1.45% 2.22% 2.21% 1.79% 1.04%
</Table>
(a) Through at least Feb. 28, 2010, RiverSource Investments has contractually
agreed to waive its management fee and/or to reimburse Seligman Global
Growth Fund's expenses to the extent that the Fund's "other expenses" (i.e.,
those expenses other than management fees, 12b-1 fees, interest on
borrowings, and extraordinary expenses, including litigation expenses)
exceed 0.85% per annum of the Fund's average daily net assets.
(b) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only).
(c) Includes the impact of a performance incentive adjustment fee that increased
the management fee by 0.06% for the most recent fiscal year. The adjustment
is computed by measuring the percentage differences over a rolling 12-month
period between the performance of the Fund and the performance of an index
of comparable funds published by Lipper Inc. The index against which the
Threadneedle Global Equity Fund's performance is measured for purposes of
determining the performance incentive adjustment is the Lipper Global Funds
Index. In certain circumstances, the Fund's Board may approve a change in
the index. The maximum adjustment (increase or
15
decrease) is 0.12% of the Fund's average net assets on an annual basis. See
Fund Management and Compensation in Exhibit B for more information.
Additional information on the calculation methodology is set forth in the
Reorganization SAI.
(d) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B, and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $775 $1,192 $1,635 $2,861
Class B $788(b) $1,183(b)$1,704(b)$2,999(c)
Class C $387(b) $ 880 $1,499 $3,170
Class R (to be known as R2) $237 $ 731 $1,251 $2,680
Class I (to be known as R5) $162 $ 502 $ 867 $1,894
<Caption>
THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $715 $1,010 $1,328 $2,226
Class B $726(b) $ 997(b)$1,396(b)$2,374(c)
Class C $325(b) $ 694 $1,191 $2,559
Class R2 $182 $ 564 $ 971 $2,110
Class R5 $106 $ 331 $ 575 $1,276
<Caption>
THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $714 $1,008 $1,323 $2,215
Class B $725(b) $ 994(b)$1,391(b)$2,364(c)
Class C $324(b) $ 691 $1,186 $2,549
Class R2 $182 $ 564 $ 971 $2,110
Class R5 $106 $ 331 $ 575 $1,276
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $288 $883 $1,504 $2,999(a)
Class C $287 $880 $1,499 $3,170
<Caption>
THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $226 $697 $1,196 $2,374(a)
Class C $225 $694 $1,191 $2,559
<Caption>
THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $225 $694 $1,191 $2,364(a)
Class C $224 $691 $1,186 $2,549
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
16
PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH
YIELD BOND FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
(TO BE KNOWN (TO BE KNOWN
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(a)(b) None None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None(d) None
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING CLASS R2 AND
FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(b) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None
<Caption>
CLASS R2 AND
RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(b) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(c) 5% 1% None
</Table>
(a) Effective on or about June 13, 2009, prior to the Reorganization, the
maximum front-end sales charge for Class A shares will increase from 4.50%
to 4.75%. This change is not due to the Reorganization.
(b) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(d) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN HIGH-YIELD FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS
(SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 0.65% 0.65% 0.65% 0.65% 0.65%
Distribution and/or service (12b-1)
fees 0.24% 1.00% 0.96% 0.49% 0.00%
Other expenses(a) 0.41% 0.42% 0.42% 0.46% 0.21%
Total annual fund operating expenses 1.30% 2.07% 2.03% 1.60% 0.86%
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND
(ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees 0.58% 0.58% 0.58% 0.58% 0.58%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(b) 0.30% 0.31% 0.30% 0.43% 0.20%
Total annual fund operating expenses 1.13% 1.89% 1.88% 1.51% 0.78%
Fee waiver/expense reimbursement 0.11% 0.11% 0.11% 0.06% 0.08%
Total annual (net) fund operating
expenses(c) 1.02% 1.78% 1.77% 1.45% 0.70%
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (PRO
FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees 0.58% 0.58% 0.58% 0.58% 0.58%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(b) 0.27% 0.28% 0.28% 0.44% 0.19%
Total annual fund operating expenses 1.10% 1.86% 1.86% 1.52% 0.77%
Fee waiver/expense reimbursement 0.08% 0.08% 0.09% 0.07% 0.07%
Total annual (net) fund operating
expenses(c) 1.02% 1.78% 1.77% 1.45% 0.70%
</Table>
(a) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only). Other expenses may also include fees and
expenses of affiliated and unaffiliated funds (acquired funds) which the
Fund indirectly bears when it invests in the acquired funds. The impact of
these acquired fund fees and expenses for the most recent fiscal period was
less
17
than 0.01%. Because acquired funds will have varied expense and fee levels
and the Fund may own different proportions of acquired funds at different
times, the amount of fees and expenses incurred by the Fund with respect to
such investments will vary.
(b) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B, and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
(c) The investment manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until May 31, 2009, unless
sooner terminated at the discretion of the RiverSource High Yield Bond
Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under
this agreement, net fund expenses (excluding fees and expenses of acquired
funds), will not exceed 1.02% for Class A, 1.78% for Class B, 1.77% for
Class C, 1.45% for Class R2 and 0.70% for Class R5.
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $601 $868 $1,155 $1,973
Class B $710(b) $949(b) $1,314(b) $2,207(c)
Class C $306(b) $637 $1,094 $2,363
Class R (to be known as R2) $163 $505 $ 872 $1,905
Class I (to be known as R5) $ 88 $275 $ 478 $1,065
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $574 $807 $1,059 $1,780
Class B $681(b) $884(b) $1,212(b) $2,009(c)
Class C $280(b) $581 $1,007 $2,197
Class R2 $148 $472 $ 819 $1,802
Class R5 $ 72 $241 $ 426 $ 963
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $574 $801 $1,046 $1,749
Class B $681(b) $877(b) $1,199(b) $1,979(c)
Class C $280(b) $576 $ 998 $2,177
Class R2 $148 $474 $ 823 $1,812
Class R5 $ 72 $239 $ 422 $ 952
</Table>
(a) Includes a 4.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $210 $649 $1,114 $2,207(a)
Class C $206 $637 $1,094 $2,363
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $181 $584 $1,012 $2,009(a)
Class C $180 $581 $1,007 $2,197
<Caption>
RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $181 $577 $ 999 $1,979(a)
Class C $180 $576 $ 998 $2,177
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
18
PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE
BALANCED FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN
FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None(c) None
<Caption>
CLASS R2 AND
RIVERSOURCE BALANCED FUND (ACTUAL)(BUYING FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
<Caption>
CLASS R2 AND
RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on
sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
</Table>
(a) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(c) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS
(SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 0.60% 0.60% 0.60% 0.60% 0.60%
Distribution and/or service (12b-1)
fees 0.24% 1.00% 1.00% 0.50% 0.00%
Other expenses(a) 0.60% 0.61% 0.60% 0.72% 0.47%
Total annual fund operating expenses 1.44% 2.21% 2.20% 1.82% 1.07%
<Caption>
RIVERSOURCE BALANCED FUND (ACTUAL)
(BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(b) 0.44% 0.44% 0.44% 0.44% 0.44%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(c) 0.26% 0.27% 0.27% 0.42% 0.17%
Total annual fund operating expenses 0.95% 1.71% 1.71% 1.36% 0.61%
<Caption>
RIVERSOURCE BALANCED FUND (PRO FORMA
COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(b) 0.44% 0.44% 0.44% 0.44% 0.44%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(c) 0.25% 0.26% 0.25% 0.42% 0.17%
Total annual fund operating expenses 0.94% 1.70% 1.69% 1.36% 0.61%
</Table>
(a) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only). Other expenses may also include fees and
expenses of affiliated and unaffiliated funds (acquired funds) which the
Fund indirectly bears when it invests in the acquired funds. The impact of
these acquired fund fees and expenses for the most recent fiscal period was
less than 0.01%. Because acquired funds will have varied expense and fee
levels and the Fund may own different proportions of acquired funds at
different times, the amount of fees and expenses incurred by the Fund with
respect to such investments will vary.
(b) Includes the impact of a performance incentive adjustment fee that decreased
the management fee by 0.09% for the most recent fiscal year. The adjustment
is computed by measuring the percentage differences over a rolling 12-month
period between the performance of the Fund and the performance of an index
of comparable funds published by Lipper Inc. The index against which the
RiverSource Balanced Fund's performance is measured for purposes of
determining the performance incentive adjustment is the Lipper Balanced
Funds Index. In certain circumstances, the Fund's Board may approve a change
in the index. The maximum adjustment (increase or decrease) is 0.08% of the
Fund's average net assets on an annual basis. See Fund Management and
Compensation in Exhibit B for more information. Additional information on
the calculation methodology is set forth in the Reorganization SAI.
19
(c) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B, and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
Other expenses for Class R2 and Class R5 are based on estimated amounts for
the current fiscal year.
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $713 $1,005 $1,318 $2,205
Class B $724(b) $ 991(b) $1,386(b) $2,354(c)
Class C $323(b) $ 688 $1,181 $2,539
Class R (to be known as R2) $185 $ 573 $ 986 $2,142
Class I (to be known as R5) $109 $ 341 $ 591 $1,310
<Caption>
RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $666 $ 861 $1,071 $1,679
Class B $674(b) $ 839(b) $1,129(b) $1,822(c)
Class C $274(b) $ 539 $ 929 $2,024
Class R2 $138 $ 431 $ 746 $1,640
Class R5 $ 62 $ 196 $ 341 $ 766
<Caption>
RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $665 $ 858 $1,066 $1,667
Class B $673(b) $ 836(b) $1,124(b) $1,811(c)
Class C $272(b) $ 533 $ 919 $2,003
Class R2 $138 $ 431 $ 746 $1,640
Class R5 $ 62 $ 196 $ 341 $ 766
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $224 $691 $1,186 $2,354(a)
Class C $223 $688 $1,181 $2,539
<Caption>
RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $174 $539 $ 929 $1,822(a)
Class C $174 $539 $ 929 $2,024
<Caption>
RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $173 $536 $ 924 $1,811(a)
Class C $172 $533 $ 919 $2,003
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
20
PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN
FUND) CLASS A CLASS B CLASS C AS R2) AS R5)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None(c) None
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND CLASS R2 AND
(ACTUAL)(BUYING FUND) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND CLASS R2 AND
(PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(a) None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of
purchase) None(b) 5% 1% None
</Table>
(a) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(c) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
21
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R CLASS I
SELIGMAN INTERNATIONAL GROWTH FUND (TO BE KNOWN AS (TO BE KNOWN AS
(ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5)
Management fees 0.98% 0.98% 0.98% 0.98% 0.98%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(a)(b) 0.72% 0.73% 0.73% 0.73% 0.48%
Total annual fund operating expenses 1.95% 2.71% 2.71% 2.21% 1.46%
</Table>
<Table>
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL
SELECT GROWTH FUND (ACTUAL) (BUYING
FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 0.92% 0.92% 0.92% 0.92% 0.92%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.39% 0.40% 0.40% 0.47% 0.22%
Total annual fund operating expenses 1.56% 2.32% 2.32% 1.89% 1.14%
Fee waiver/expense reimbursement 0.18% 0.17% 0.18% 0.15% 0.15%
Total annual (net) fund operating
expenses(e) 1.38% 2.15% 2.14% 1.74% 0.99%
</Table>
<Table>
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL
SELECT GROWTH FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5
Management fees(c) 0.92% 0.92% 0.92% 0.92% 0.92%
Distribution and/or service (12b-1)
fees 0.25% 1.00% 1.00% 0.50% 0.00%
Other expenses(d) 0.39% 0.41% 0.40% 0.47% 0.22%
Total annual fund operating expenses 1.56% 2.33% 2.32% 1.89% 1.14%
Fee waiver/expense reimbursement 0.18% 0.18% 0.18% 0.15% 0.15%
Total annual (net) fund operating
expenses(e) 1.38% 2.15% 2.14% 1.74% 0.99%
</Table>
(a) Through at least Feb 28, 2010, RiverSource Investments has contractually
agreed to waive its management fee and/or to reimburse Seligman
International Growth Fund's expenses to the extent that the Fund's "other
expenses" (i.e., those expenses other than management fees, 12b-1 fees,
interest on borrowings, and extraordinary expenses, including litigation
expenses) exceed 0.85% per annum of the Fund's average daily net assets.
(b) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only).
(c) Includes the impact of a performance incentive adjustment fee that decreased
the management fee by 0.06% for the most recent fiscal year. The adjustment
is computed by measuring the percentage differences over a rolling 12-month
period between the performance of the Fund and the performance of an index
of comparable funds published by Lipper Inc. The index against which the
RiverSource Partners International Select Growth Fund's performance is
measured for purposes of determining the performance incentive adjustment is
the Lipper International Multi-Cap Growth Funds Index. In certain
circumstances, the Fund's Board may approve a change in the index. The
maximum adjustment (increase or decrease) is 0.12% of the Fund's average net
assets on an annual basis. See Fund Management and Compensation in Exhibit B
for more information. Additional information on the calculation methodology
is set forth in the Reorganization SAI.
(d) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B, and Class C direct
at fund accounts only), effective on or about June 13, 2009. Other expenses
may also include fees and expenses of affiliated and unaffiliated funds
(acquired funds) which the Fund indirectly bears when it invests in the
acquired funds. The impact of these acquired fund fees and expenses for the
most recent fiscal period was less than 0.01%. Because acquired funds will
have varied expense and fee levels and the Fund may own different
proportions of acquired funds at different times, the amount of fees and
expenses incurred by the Fund with respect to such investments will vary.
Other expenses for Class R2 and Class R5 are based on estimated amounts for
the current fiscal year.
(e) The investment manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until Oct. 31, 2009, unless
sooner terminated at the discretion of the RiverSource Partners
International Select Growth Fund's Board. Any amounts waived will not be
reimbursed by the Fund. Under this agreement, net fund expenses (excluding
fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment, will not exceed 1.44% for Class A, 2.21%
for Class B, 2.20% for Class C, 1.80% for Class R2 and 1.05% for Class R5.
22
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $762 $1,152 $1,568 $2,724
Class B $774(b) $1,142(b) $1,635(b) $2,862(c)
Class C $374(b) $ 842 $1,435 $3,045
Class R (to be known as R2) $224 $ 691 $1,186 $2,549
Class I (to be known as R5) $149 $ 462 $ 798 $1,751
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL)
(BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $707 $1,023 $1,361 $2,315
Class B $718(b) $1,008(b) $1,426(b) $2,457(c)
Class C $317(b) $ 707 $1,225 $2,647
Class R2 $177 $ 580 $1,008 $2,204
Class R5 $101 $ 348 $ 614 $1,378
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA
COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $707 $1,023 $1,361 $2,315
Class B $718(b) $1,011(b) $1,430(b) $2,464(c)
Class C $317(b) $ 707 $1,225 $2,647
Class R2 $177 $ 580 $1,008 $2,204
Class R5 $101 $ 348 $ 614 $1,378
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $274 $842 $1,435 $2,862(a)
Class C $274 $842 $1,435 $3,045
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL)
(BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $218 $708 $1,226 $2,457(a)
Class C $217 $707 $1,225 $2,647
<Caption>
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA
COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $218 $711 $1,230 $2,464(a)
Class C $217 $707 $1,225 $2,647
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
23
PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS R
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING (TO BE KNOWN
FUND) CLASS A CLASS B CLASS C AS R2)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.75%(a)(b) None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) None(c) 5% 1% None(d)
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL)
(BUYING FUND) CLASS A CLASS B CLASS C CLASS R2
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 3.00%(b) None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) None(c) 5% 1% None
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA
COMBINED) CLASS A CLASS B CLASS C CLASS R2
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 3.00%(b) None None None
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) None(c) 5% 1% None
</Table>
(a) Effective on or about June 13, 2009, Prior to the Reorganization, the
maximum front-end sales charge for Class A shares will increase from 4.50%
to 4.75%. This change is not due to the Reorganization.
(b) This charge may be reduced depending on the total value of your investments
in the RiverSource Family of Funds. See Exhibit B "Sales Charges."
(c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A
shares purchased without an initial sales charge and sold within 18 months
after purchase. See Exhibit B "Sales Charges."
(d) Effective on or about June 13, 2009, the 1% CDSC will be eliminated on Class
R (to be known as Class R2).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS R
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING (TO BE KNOWN AS
FUND) CLASS A CLASS B CLASS C CLASS R2)
Management fees 0.50% 0.50% 0.50% 0.50%
Distribution and/or service (12b-1) fees 0.24% 1.00% 1.00% 0.50%
Other expenses(a) 0.56% 0.57% 0.57% 0.55%
Total annual fund operating expenses 1.30% 2.07% 2.07% 1.55%
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL)
(BUYING FUND) CLASS A CLASS B CLASS C CLASS R2
Management fees 0.48% 0.48% 0.48% 0.48%
Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50%
Other expenses(b) 0.31% 0.32% 0.32% 0.42%
Total annual fund operating expenses 1.04% 1.80% 1.80% 1.40%
Fee waiver/expense reimbursement 0.15% 0.15% 0.15% 0.09%
Total annual (net) fund operating expenses(c) 0.89% 1.65% 1.65% 1.31%
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA
COMBINED) CLASS A CLASS B CLASS C CLASS R2
Management fees 0.48% 0.48% 0.48% 0.48%
Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50%
Other expenses(b) 0.31% 0.32% 0.32% 0.42%
Total annual fund operating expenses 1.04% 1.80% 1.80% 1.40%
Fee waiver/expense reimbursement 0.15% 0.15% 0.15% 0.09%
Total annual (net) fund operating expenses(c) 0.89% 1.65% 1.65% 1.31%
</Table>
(a) Effective on or about June 13, 2009, Class R will be redesignated Class R2,
Class I will be redesignated Class R5, and a new transfer agent agreement
and a new plan administration services agreement (Class R2 only) will be in
effect with new fee structures. Other expenses include the transfer agency
fee, custody fee, other nonadvisory expenses and a plan administrative
services fee (Class R2 only).
(b) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee, other nonadvisory expenses, and a plan administration
services fee (for Class R2), and have been adjusted to reflect the impact of
a new per account transfer agency fee (Class A, Class B, and Class C direct
at fund accounts only), effective
24
on or about June 13, 2009. Other expenses may also include fees and expenses
of affiliated and unaffiliated funds (acquired funds) which the Fund
indirectly bears when it invests in the acquired funds. The impact of these
acquired fund fees and expenses for the most recent fiscal period was less
than 0.01%. Because acquired funds will have varied expense and fee levels
and the Fund may own different proportions of acquired funds at different
times, the amount of fees and expenses incurred by the Fund with respect to
such investments will vary. Other expenses for Class R2 are based on
estimated amounts for the current fiscal year.
(c) The investment manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until May 31, 2009, unless
sooner terminated at the discretion of the RiverSource Short Duration U.S.
Government Fund's Board. Any amounts waived will not be reimbursed by the
Fund. Under this agreement, net fund expenses (excluding fees and expenses
of acquired funds), will not exceed 0.89% for Class A, 1.65% for Class B,
1.65% for Class C and 1.31% for Class R2.
EXPENSE EXAMPLES: These examples are intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds. These
examples assume that you invest $10,000 in the applicable Fund for the time
periods indicated and then redeem all of your shares at the end of those periods
both under the current arrangements and, for the Buying Fund, assuming the
proposed Reorganization had been in effect. These examples also assume that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<Table>
<Caption>
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $601 $868 $1,155 $1,973
Class B $710(b) $949(b) $1,314(b) $2,207(c)
Class C $310(b) $649 $1,114 $2,405
Class R (to be known as R2) $158 $490 $ 846 $1,851
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING
FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $388 $607 $ 844 $1,524
Class B $668(b) $852(b) $1,162(b) $1,908(c)
Class C $268(b) $552 $ 962 $2,109
Class R2 $133 $435 $ 758 $1,677
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA
COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $388 $607 $ 844 $1,524
Class B $668(b) $852(b) $1,162(b) $1,908(c)
Class C $268(b) $552 $ 962 $2,109
Class R2 $133 $435 $ 758 $1,677
</Table>
(a) Includes a 4.75% sales charge for the Selling Fund and a 3.00% sales charge
for the Buying Fund (Actual and Pro Forma Combined).
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
If you owned or will own any class of shares other than Class B or Class C, you
would pay the same costs shown in the tables above if you did not redeem your
shares at the end of the periods indicated. If you owned or will own Class B or
Class C shares, you would pay the following costs if you did not redeem your
shares at the end of the periods indicated, which may be different than the
costs shown in the tables above.
<Table>
<Caption>
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $210 $649 $1,114 $2,207(a)
Class C $210 $649 $1,114 $2,405
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING
FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $168 $552 $ 962 $1,908(a)
Class C $168 $552 $ 962 $2,109
<Caption>
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA
COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class B $168 $552 $ 962 $1,908(a)
Class C $168 $552 $ 962 $2,109
</Table>
(a) Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
25
PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE
DIVERSIFIED BOND FUND
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks a high level of current income consistent with prudent exposure
to risk or conservation of investment value. Seligman Core Fixed Income Fund
also seeks capital appreciation as a secondary objective.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman Core Fixed Income Fund seeks to produce a high
level of current income consistent with prudent exposure
to risk. Capital appreciation is a secondary objective.
BUYING FUND: RiverSource Diversified Bond Fund seeks to provide
shareholders with a high level of current income while
conserving the value of the investment for the longest
period of time.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests predominantly in U.S. dollar-denominated fixed-income
securities of U.S. issuers. Under normal market conditions, the Selling Fund
intends to maintain at least 70% of its net assets in investment grade fixed-
income securities and may invest up to 30% of its net assets in non-investment
grade, high yield securities. The Buying Fund invests at least 50% of its assets
in securities like those in its benchmark index (the Barclays Capital U.S.
Aggregate Bond Index), which are exclusively investment grade securities, and
may therefore invest up to 50% of its assets in non-investment grade securities.
The Selling Fund may invest up to 20% of its net assets in non-U.S. dollar-
denominated fixed-income securities of U.S. or foreign issuers. The Buying Fund
may invest up to 25% of its net assets in foreign investments. The Buying Fund
targets an average portfolio duration within one year of that of its benchmark
index but is not restricted with regards to duration. The Selling Fund, which
may invest in securities of any duration, is currently targeting the same
average portfolio duration as the Buying Fund. The Selling Fund does not have
any portfolio maturation limitations on its investments and, therefore, may
invest in securities with short, medium or long maturities. The Selling Fund and
the Buying Fund seek to maintain an effective dollar-weighted average maturity
of ten years or less on their portfolios of fixed-income securities but are not
restricted to such limit.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN CORE FIXED INCOME FUND (SELLING FUND)
The Fund will invest at least 80% of its net assets in fixed-income securities.
Under normal market conditions, the Fund intends to maintain at least 70% of its
net assets in investment grade fixed-income securities ("Investment Grade
Securities") and may invest up to 30% of its net assets in non-investment grade,
high yield securities ("High Yield Securities"). The proportion of the Fund's
assets invested in each type of security will vary from time to time based on
the investment manager's assessment of general market and economic conditions.
The Fund may invest in securities of any duration. The Fund does not have any
portfolio maturation limitations on its investments and, therefore, may invest
in securities with short, medium or long maturities. However, the Fund expects
to maintain an effective dollar-weighted average maturity of ten years or less
on its portfolio of fixed-income securities. Although the Fund expects the
maturity of its portfolio of fixed-income securities to be within the above
limit, the Fund is not restricted to such limit.
The Fund will invest its net assets primarily in U.S. dollar-denominated fixed-
income securities of U.S. issuers. However, the Fund may also invest in U.S.
dollar-denominated fixed-income securities of foreign issuers, including foreign
governments or their agencies or instrumentalities, foreign banks and foreign
corporations. The Fund may also invest up to 20% of its net assets in non-U.S.
dollar-denominated fixed-income securities of U.S. or foreign issuers.
The Fund's investment limitations and credit ratings restrictions (e.g., those
of Fitch Ratings ("Fitch"), Moody's Investors Service ("Moody's") and Standard &
Poor's Ratings Services ("S&P")) will apply at the time securities are
purchased. The Fund is not required to sell a security if it no longer complies
with these limitations or restrictions as a result of a change in rating or
other event.
INVESTMENT GRADE SECURITIES
Investment Grade Securities are those rated within the four highest rating
categories by Moody's or S&P, or, if unrated, deemed by the Fund's investment
manager to be of comparable quality.
26
HIGH-YIELD SECURITIES
High-Yield Securities (many of which are commonly known as "junk bonds") carry
noninvestment grade ratings (Ba or below by Moody's or BB or below by Fitch or
S&P) or are securities deemed to be below investment grade by the Fund's
investment manager. Although High-Yield Securities have the potential to offer
higher yields than higher rated fixed-income securities with similar maturities,
High-Yield Securities are subject to greater risk of loss of principal and
interest than higher rated Investment Grade Securities.
INVESTMENTS IN INVESTMENT GRADE SECURITIES AND HIGH-YIELD SECURITIES
The Fund may invest in all types of Investment Grade Securities and High Yield
Securities, including, but not limited to:
- - Senior and subordinated corporate debt obligations of both U.S. and non-U.S.
issuers (including, for example, debentures, loan participations and floating
rate notes);
- - Mortgage-backed and other asset-backed securities (mortgage backed securities
include collateralized mortgage obligations, mortgage pass-through securities
and stripped mortgage backed securities);
- - Convertible securities, preferred stock, capital securities, structured
securities and loan participations of U.S. and non-U.S. issuers;
- - Obligations of non-U.S. governments and their agencies, and non-U.S. private
institutions;
- - Municipal securities;
- - Repurchase agreements;
- - Capital appreciation bonds, including zero coupon (interest payments accrue
until maturity) and pay-in-kind securities (interest payments are made in
additional securities);
- - Restricted securities that may be offered and sold only to "qualified
institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule
144A Securities"); and
- - Eurodollar bonds.
Investment Grade Securities also include, but are not limited to:
- - Obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities;
- - Obligations of government sponsored enterprises (e.g., the Federal Home Loan
Mortgage Corporation (Freddie Mac) and the Federal National Mortgage
Association (Fannie Mae));
- - Income-producing cash equivalents (e.g., certificates of deposit, commercial
paper, discount notes and treasury bills); and
- - Other securities deemed by the investment manager to be of investment grade
quality.
High Yield Securities also include, but are not limited to:
- - Securities that are rated in default by a nationally recognized statistical
rating organization;
- - Warrants, rights and other equity securities that are acquired in connection
with the Fund's investments in High Yield Securities; and
- - Other securities deemed by the investment manager to be of non-investment
grade quality.
INVESTMENT PROCESS
Investment Grade Securities. In pursuit of the Fund's objective, the investment
manager chooses Investment Grade Securities by:
- - Evaluating the Investment Grade Securities portion of the portfolio's exposure
to sectors, industries and securities relative to the Barclays Capital U.S.
Aggregate Bond Index (the "Index").
- - Analyzing factors such as credit quality, interest rate outlook and price in
seeking to select the most attractive securities within each sector.
- - Targeting an average portfolio duration within one year of the duration of the
Index which, as of Jan. 31, 2009, was 4.18 years.
In evaluating whether to sell an Investment Grade Security, the investment
manager considers, among other factors:
- - Identification of more attractive investments based on relative value.
- - The portfolio's total exposure to sectors, industries and securities relative
to the Index.
- - Whether a security's rating has changed or is vulnerable to a change.
27
- - Whether a sector or industry is experiencing change.
- - Changes in the interest rate or economic outlook.
High Yield Securities. In pursuit of the Fund's objective, the investment
manager chooses High Yield Securities by:
- - Reviewing interest rate and economic forecasts.
- - Reviewing credit characteristics and capital structures of companies,
including an evaluation of any outstanding bank loans or corporate debt
securities a company has issued, its relative position in its industry, and
its management team's capabilities.
- - Identifying companies that:
- have medium and low quality ratings or, in the investment manager's opinion,
have similar qualities to companies with medium or low quality ratings, even
though they are not rated, or have been given a different rating by a rating
agency,
- have growth potential, or
- have the potential to increase in value as their credit ratings improve.
- - Buying debt instruments that are expected to outperform other debt
instruments.
In evaluating whether to sell High Yield Securities, the investment manager
considers, among other factors, whether:
- - The interest rate or economic outlook changes.
- - A sector or industry is experiencing change.
- - A security's rating is changed.
- - The security is overvalued relative to alternative investments.
- - The company no longer meets the investment manager's performance expectations.
- - The investment manager wishes to lock in profits.
- - The investment manager identifies a more attractive opportunity.
- - The issuer or the security continues to meet the other standards described
above.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold within seven days at approximately the
Fund's value of the securities) including funding agreements issued by domestic
insurance companies. Rule 144A Securities deemed to be liquid by the Fund's
investment manager are not included in this limitation. The Fund may purchase
securities on a when issued or forward commitment basis (delivery of securities
and payment of the purchase price takes place after the commitment to purchase
the securities).
RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND)
Under normal market conditions, the Fund invests at least 80% of its net assets
in bonds and other debt securities. At least 50% of the Fund's net assets will
be invested in securities like those included in the Barclays Capital U.S.
Aggregate Bond Index (the "Index"), which are investment grade and denominated
in U.S. dollars. The Index includes securities issued by the U.S. government,
corporate bonds, and mortgage- and asset-backed securities. Although the Fund
emphasizes high- and medium-quality debt securities, it will assume some credit
risk in an effort to achieve higher yield and/or capital appreciation by buying
lower-quality (junk) bonds. Up to 25% of the Fund's net assets may be invested
in foreign investments, which may include investments in emerging markets. The
Fund will provide shareholders with at least 60 days' notice of any change in
the 80% policy.
The selection of debt obligations is the primary decision in building the
investment portfolio. In pursuit of the Fund's objective, the investment manager
chooses investments by:
- - Evaluating the portfolio's total exposure to sectors, industries and
securities relative to the Index.
- - Analyzing factors such as credit quality, interest rate outlook and price in
seeking to select the most attractive securities within each sector.
- - Investing in lower-quality (junk) bonds and foreign investments as attractive
opportunities arise.
- - Targeting an average portfolio duration within one year of the duration of the
Index which, as of Jan. 31, 2009, was 4.18 years. Duration measures the
sensitivity of bond prices to changes in interest rates. The longer the
duration of a bond, the longer it will take to repay the principal and
interest obligations and the more sensitive it will be to changes in interest
rates. For example, a five-year duration means a bond is expected to decrease
in value by 5% if interest rates rise 1% and increase in value by 5% if
interest rates fall 1%.
28
In evaluating whether to sell a security, the investment manager considers,
among other factors:
- - Identification of more attractive investments based on relative value.
- - The portfolio's total exposure to sectors, industries and securities relative
to the Index.
- - Whether a security's rating has changed or is vulnerable to a change.
- - Whether a sector or industry is experiencing change.
- - Changes in the interest rate or economic outlook.
The investment manager may use derivatives such as futures, options, forward
contracts and swaps, including credit default swaps, in an effort to produce
incremental earnings, to hedge existing positions, to increase market exposure
and investment flexibility, or to obtain or reduce credit exposure.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- --------------------------------------------------------------------------------------------------------
SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND
FUNDAMENTAL POLICY (SELLING FUND) (BUYING FUND)
- --------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite securities The Fund may not act as an underwriter
of other issuers except insofar as the (sell securities for others). However,
Fund technically may be deemed an under the securities laws, the Fund may
underwriter under the Securities Act of be deemed to be an underwriter when it
1933 (the "1933 Act"), as amended, in purchases securities directly from the
selling portfolio securities. issuer and later resells them.
- --------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except The Fund may not lend securities or
that the acquisition of bonds, participate in an interfund lending
debentures or other corporate fixed- program if the total of all such loans
income securities and investment in would exceed 33 1/3% of the Fund's
government obligations, commercial total assets except this fundamental
paper, pass-through instruments, investment policy shall not prohibit
certificates of deposit, bankers the Fund from purchasing money market
acceptances, repurchase agreements or securities, loans, loan participation
any similar instruments shall not be or other debt securities, or from
deemed to be the making of a loan, and entering into repurchase agreements.
except further that the Fund may lend
its portfolio securities; and except
that the Fund may lend cash to any
other mutual fund (or series thereof)
in the Seligman Group to the extent
permitted by applicable law or
regulation, or any order that may be
obtained from the SEC relating to
borrowing and lending among Seligman-
branded mutual funds.
- --------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except
that the Fund may (i) borrow from banks for temporary purposes (not for
(as defined in the 1940 Act)) in leveraging or investment) in an amount
amounts up to 33 1/3% of its total not exceeding 33 1/3% of its total
assets (including the amount borrowed), assets (including the amount borrowed)
(ii) borrow up to an additional 5% of less liabilities (other than
its total assets for temporary purposes borrowings) immediately after the
(iii) obtain such short-term credit as borrowings.
may be necessary for the clearance of
purchases and sales of portfolio
securities, (iv) purchase securities on
margin to the extent permitted by
applicable law and (v) borrow cash from
any other mutual fund (or series
thereof) in the Seligman Group to the
extent permitted by any order that may
be obtained from the SEC relating to
borrowing and lending among mutual
funds in the Seligman Group. The Fund
may not pledge its assets other than to
secure such borrowings or, to the
extent permitted by the Fund's
investment policies as set forth in the
Prospectuses and the SAI, as they may
be amended from time to time, in
connection with hedging transactions,
short sales, when-issued and forward
commitment transactions and similar
investment strategies.
- --------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior
SECURITIES securities. securities, except as permitted under
the 1940 Act, the rules and regulations
thereunder and any applicable exemptive
relief.
- --------------------------------------------------------------------------------------------------------
</Table>
29
- --------------------------------------------------------------------------------------------------------
SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND
FUNDAMENTAL POLICY (SELLING FUND) (BUYING FUND)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or sell real The Fund will not buy or sell real
estate, except that the Fund may invest estate, unless acquired as a result of
in securities directly or indirectly ownership of securities or other
secured by real estate or interests instruments, except this shall not
therein or issued by companies which prevent the Fund from investing in
invest in real estate or interests securities or other instruments backed
therein. by real estate or securities of
companies engaged in the real estate
business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- --------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and the Fund's instruments, except this shall not
prospectuses and SAI, as they may be prevent the Fund from buying or selling
amended from time to time, and without options and futures contracts or from
registering as a commodity pool investing in securities or other
operator under the Commodity Exchange instruments backed by, or whose value
Act. is derived from, physical commodities.
- --------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, taken at market one industry. According to the present
value, in the securities of issuers in interpretation by the SEC, this means
any particular industry, except that up to 25% of the Fund's total
securities issued or guaranteed by the assets, based on current market value
U.S. government and its agencies and at time of purchase, can be invested in
instrumentalities. any one industry.
- --------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation.
The Fund will not purchase more than
10% of the outstanding voting
securities of an issuer, except that up
to 25% of the Fund's assets may be
invested without regard to this 10%
limitation.
- --------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its net
assets would be so invested.
- --------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND
POLICY (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES The Fund may invest up to 20% of its The Fund may invest up to 25% of its
net assets in non-U.S. dollar- net assets in foreign investments.
denominated fixed-income securities of
U.S. or foreign issuers.
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12(d)(1)
of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
</Table>
30
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND
POLICY (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
RIGHTS AND The Fund may invest in common stock The Fund does not intend to invest
WARRANTS rights and warrants that are acquired directly in common stock rights and
in connection with its investments in warrants but is not restricted from
High-Yield Securities, as defined in acquiring them in connection with its
the Fund's Prospectuses. The Fund may investments in convertible securities.
not invest in rights and warrants if,
at the time of acquisition, the
investment in rights and warrants would
exceed 5% of the Fund's net assets,
valued at the lower of cost or market.
In addition, no more than 2% of net
assets 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 the Fund as part of a unit
or attached to securities may be deemed
to have been purchased without cost.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. With regards to investment policies, the Buying Fund may
expose shareholders to greater credit risk and liquidity risk due to the Buying
Fund's greater ability to invest in, and greater current exposure to, high yield
(junk) bonds. Also, the Buying Fund may expose shareholders to greater foreign
risk due to the Buying Fund's greater ability to invest in foreign securities.
The actual risks of investing in each Fund depend on the securities held in each
Fund's portfolio and on market conditions, both of which change over time. Both
Funds are subject to the principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable or
unwilling to honor a financial obligation, such as payments due on a bond or a
note. If the Fund purchases unrated securities, or if the rating of a security
is reduced after purchase, the Fund will depend on the investment manager's
analysis of credit risk more heavily than usual. Non-investment grade
securities, commonly called high yield or junk bonds, may react more to
perceived changes in the ability of the issuing entity to pay interest and
principal when due than to changes in interest rates. Non-investment grade
securities have greater price fluctuations and are more likely to experience a
default than investment grade bonds.
- - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based
outside the United States. An issuer is deemed to be based outside the United
States if it is organized under the laws of another country. Foreign
securities are primarily denominated in foreign currencies. In addition to the
risks normally associated with domestic securities of the same type, foreign
securities are subject to the following foreign risks:
Country risk includes the political, economic and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may be
more limited than for most U.S. investments, which means that, at times it may
be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic, social
and political) in these countries as well as the other considerations listed
above. These markets are in early stages of development and are extremely
volatile. They can be marked by extreme inflation, devaluation of currencies,
dependence on trade partners and hostile relations with neighboring countries.
31
- - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to
changes in interest rates. Interest rate risk is generally associated with
bond prices: when interest rates rise, bond prices fall. In general, the
longer the maturity or duration of a bond, the greater its sensitivity to
changes in interest rates.
- - LIQUIDITY RISK. The risk associated from a lack of marketability of securities
which may make it difficult or impossible to sell at desirable prices in order
to minimize loss. The Fund may have to lower the selling price, sell other
investments, or forego another, more appealing investment opportunity.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably.
- - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that
a bond or other security might be called or otherwise converted, prepaid, or
redeemed before maturity. This risk is primarily associated with asset-backed
securities, including mortgage-backed securities. If a security is converted,
prepaid, or redeemed before maturity, particularly during a time of declining
interest rates, the investment manager may not be able to reinvest in
securities providing as high a level of income, resulting in a reduced yield
to the Fund. Conversely, as interest rates rise, the likelihood of prepayment
decreases. The investment manager may be unable to capitalize on securities
with higher interest rates because the Fund's investments are locked in at a
lower rate for a longer period of time.
In addition to the risks described above, the Buying Fund is subject to the
additional principal investment risk set forth below. While this additional risk
may also be a risk of the Selling Fund, it is not stated as a principal
investment risk of the Selling Fund. For more information regarding the Selling
Fund's principal investment risks, see "Principal Risks" in the Selling Fund's
prospectus.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to principal risks to which it is
otherwise exposed, and may expose the Fund to additional risks, including
counterparty credit risk, hedging risk, correlation risk, liquidity risk and
leverage risk.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging Risk is the risk that derivative instruments used to hedge against an
opposite position, may offset losses, but they may also offset gains.
Correlation Risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Liquidity Risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
Leverage Risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument. Certain
derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
32
Tables. The first tables show total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman Core Fixed
Income Fund. The second table shows total returns from hypothetical investments
in Class A, Class B, Class C, Class R2 and Class R5 shares of the RiverSource
Diversified Bond Fund. These returns are compared to the indexes shown for the
same periods. For purposes of the performance calculation in the table we
assumed:
- - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and
4.75% for Class A shares of the Buying Fund;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class R2, Class R5 and Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge in Class A shares
of the Selling Fund is 4.50%. Although for all periods presented the Selling
Fund's Class A share returns reflect the 4.50% maximum initial sales charge,
the actual returns for periods prior to Jan. 7, 2008 would have been lower
if a 4.75% maximum initial sales charge then in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented the
Selling Fund's 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.
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
SELIGMAN CORE FIXED INCOME FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+8.55% +4.13% +2.34% +0.92% +3.34% +4.79% -3.43%
2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +5.45% (quarter ended Sept. 30, 2002) and the lowest return for a
calendar quarter was -2.74% (quarter ended Sept. 30, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
-0.22% +7.03% +7.33% +5.63% +4.61% +4.41% +2.09% +5.37% +5.08% -6.42%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +3.49% (quarter ended Sept. 30, 2006) and the lowest return for a
calendar quarter was -3.30% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
33
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE SINCE
INCEPTION INCEPTION INCEPTION
1 YEAR 5 YEARS (CLASSES A, B, C) (CLASS R*) (CLASS I*)
SELIGMAN CORE FIXED INCOME FUND (SELLING FUND):
Class A
Return before taxes -7.74% +0.63% +2.06%(a) N/A N/A
Return after taxes on distributions -9.07% -0.69% +0.66%(a) N/A N/A
Return after taxes on distributions and sale
of Fund shares -5.01% -0.21% +0.94%(a) N/A N/A
Class B
Return before taxes -8.78% +0.45% +1.96%(a) N/A N/A
Class C
Return before taxes -5.05% +0.80% +1.96%(a) N/A N/A
Class R*
Return before taxes -4.45% +1.35% N/A +1.48%(b) N/A
Class I*
Return before taxes -3.18% +1.80% N/A N/A +2.97%(c)
Barclays Capital U.S. Aggregate Bond Index** +5.24% +4.65% +5.15%(d) +4.43%(e) +5.20%(f)
Barclays Capital U.S. Universal Index** +2.38% +4.30% +5.11%(d) +4.28%(e) +5.14%(f)
Lipper Intermediate Investment-Grade Debt Funds
Average -4.42% +1.74% +3.03%(g) +1.92%(e) +2.96%(f)
<Caption>
SINCE
SINCE INCEPTION
INCEPTION (CLASSES R2
1 YEAR 5 YEARS 10 YEARS (CLASS C) AND R5)
RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND):
Class A
Return before taxes -10.82% +1.03% +2.88% N/A N/A
Return after taxes on distributions -12.20% -0.45% +1.01% N/A N/A
Return after taxes on distributions and sale
of Fund shares -7.00% +0.04% +1.31% N/A N/A
Class B
Return before taxes -11.61% +0.89% +2.63% N/A N/A
Class C
Return before taxes -7.82% +1.24% N/A +3.20%(h) N/A
Class R2
Return before taxes -6.40% N/A N/A N/A -0.60%(j)
Class R5
Return before taxes -5.94% N/A N/A N/A -0.09%(j)
Barclays Capital U.S. Aggregate Bond Index +5.24% +4.65% +5.63% +6.33%(i) +5.68%(k)
Lipper Intermediate Investment Grade Index -4.71% +2.28% +4.24% +4.78%(i) +0.03%(k)
</Table>
(a) Inception date is Oct. 1, 2001.
(b) Inception date is April 30, 2003.
(c) Inception date is Nov. 30, 2001.
(d) Measurement period started Oct. 1, 2001.
(e) Measurement period started April 30, 2003.
(f) Measurement period started Nov. 30, 2001.
(g) Measurement period started Sept. 30, 2001.
(h) Inception date is June 26, 2000.
(i) Measurement period started June 26, 2000.
(j) Inception date is Dec. 11, 2006.
(k) Measurement period started Dec. 11, 2006.
* Class R and Class I of the Selling Fund are to be redesignated Class R2
and Class R5, respectively, in connection with the Reorganization.
** Effective Nov. 7, 2008, to better align the primary benchmark index with
the investment strategy of the Fund, the Barclays Capital U.S. Universal
Index was replaced with the Barclays Capital U.S. Aggregate Bond Index,
which will be used as the primary benchmark for the Fund.
The Barclays Capital U.S. Aggregate Bond Index, an unmanaged index, is made up
of a representative list of government, corporate, asset backed and mortgage-
backed securities. The index is frequently used as a general measure of bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices and reflects no deduction for fees, expenses or taxes.
34
The Barclays Capital U.S. Universal Index, an unmanaged index, measures the
performance of U.S. dollar-denominated, taxable bonds that are rated either
investment grade or below investment grade. The index reflects reinvestment of
all distributions and changes in market prices and reflects no deduction for
fees, expenses or taxes.
The Lipper Intermediate Investment-Grade Debt Funds Average measures the
performance of mutual funds that invest at least 65% of their assets in
investment-grade debt issues rated in the top four grades with dollar-weighted
average maturities of five to ten years. The average is an unmanaged benchmark
that assumes the reinvestment of all distributions and does not reflect any
sales charges or taxes.
The Lipper Intermediate Investment Grade Index includes the 30 largest
investment grade funds tracked by Lipper Inc. The index's returns include net
reinvested dividends.
Investors cannot invest directly in an average or index.
35
PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE
EMERGING MARKETS FUND
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks long-term capital appreciation and invests predominantly in
equity securities of emerging markets companies.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman Emerging Markets Fund seeks long-term capital
appreciation.
BUYING FUND: Threadneedle Emerging Markets Fund seeks to provide
shareholders with long-term capital growth.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests primarily in equity securities of emerging markets companies.
Each Fund may enter into forward foreign currency exchange contracts as part of
its principal investment strategy.
The Selling Fund defines an emerging market as a market in a developing country
or a market represented in the Morgan Stanley Capital International Emerging
Markets Index. The Selling Fund defines developing countries as those classified
by the World Bank as low-income or middle-income economies, regardless of their
particular stage of development. The Buying Fund defines emerging markets as
countries characterized as developing or emerging by either the World Bank or
the United Nations. The Buying Fund may also invest in securities of companies
that earn 50% or more of their total revenues from goods or services produced in
emerging market countries or from sales made in emerging markets countries.
RiverSource Investments serves as the investment manager for each Fund and is
responsible for the oversight of each Fund's subadviser, which provides day-to-
day management of the Fund. The Selling Fund is subadvised by Wellington
Management Company, LLP ("Wellington") and the Buying Fund is subadvised by
Threadneedle International Limited ("Threadneedle"), an indirect wholly-owned
subsidiary of Ameriprise Financial, Inc.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
The Fund generally invests at least 80% of its net assets in equity securities
of companies that conduct their principal business activities in emerging
markets, are organized under the laws of or maintain their principal place of
business in emerging markets, or whose securities are traded principally on
exchanges in emerging markets. The Fund will focus its investments in those
emerging markets in which the investment manager believes the economies are
developing strongly and markets are becoming more liquid, or other emerging
markets that meet the portfolio manager's criteria for investability. The Fund
seeks to benefit from policies of economic development being adopted in many
emerging markets. These policies include domestic price reform, reducing
internal budget deficits, privatization, encouraging foreign investments, and
developing capital markets.
The Fund combines a bottom-up investment style with top-down analysis of
regions, countries and sectors. This means the portfolio manager incorporates
analysis of individual companies along with analysis of individual sectors,
countries and regions.
In selecting individual securities, the portfolio manager looks to identify
companies that it believes display one or more of the following:
- - Operate in growing markets
- - Attractive valuations relative to cash earnings forecasts or other valuation
criteria
- - Unique sustainable competitive advantages (e.g., market share, proprietary
products)
- - Improving industry or country fundamentals
Following stock selection, the portfolio manager then focuses on portfolio
construction that considers top-down risk control based on such factors as:
- - Relative economic growth potential of the various economies and securities
markets
- - Political, financial, and social conditions influencing investment
opportunities
- - Relative rates of earnings growth
- - Interest rate outlook and expected levels of inflation
- - Market prices relative to historic averages
36
The Fund generally sells a stock if the portfolio manager believes its target
price has been reached, its earnings are disappointing, its revenue growth has
slowed, its underlying fundamentals have deteriorated, or there are
deteriorating industry or country fundamentals. The Fund may also sell or trim a
stock if the portfolio manager believes, from a risk control perspective, the
stock's position size is inappropriate for the portfolio. Also, stocks may be
sold when negative country, currency, or general industry factors affect a
company's outlook, or to meet cash requirements.
The Fund may invest in all types of securities, many of which will be
denominated in currencies other than the U.S. dollar. The securities may be
listed on a U.S. or foreign stock exchange or traded in U.S. or foreign over-
the-counter markets. The Fund normally concentrates its investments in common
stocks; however, it may invest in other types of equity securities, including
securities convertible into or exchangeable for common stock, depositary
receipts, and rights and warrants to purchase common stock. The Fund also may
invest up to 20% of its assets in preferred stock and investment-grade or
comparable quality debt securities.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Fund may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Fund the right to sell an underlying security
at a particular price during a fixed period of time. Forward foreign currency
exchange contracts and put options on securities may not be available to the
Fund on reasonable terms in many situations, and the Fund may frequently choose
not to enter into such contracts or purchase such options even when they are
available.
The Fund may invest in futures contracts. The Fund intends to comply with Rule
4.5 of the Commodity Futures Trading Commission (CFTC), under which a mutual
fund is exempt from the definition of a "commodity pool operator." The Fund,
therefore, is not subject to registration or regulation as a pool operator,
meaning that the Fund may invest in futures contracts without registering with
the CFTC.
The Fund may also invest up to 10% of its assets in exchange-traded funds
("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they
represent baskets of securities that seek to track the performance of certain
indices. The indices include not only broad-market indices but more specific
indices as well, including those relating to particular sectors, countries and
regions. The Fund may invest in ETFs for short-term cash management purposes or
as part of its overall investment strategy.
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
The Fund's assets are primarily invested in equity securities of emerging
markets companies. Emerging markets are countries characterized as developing or
emerging by either the World Bank or the United Nations. Under normal market
conditions, at least 80% of the Fund's net assets will be invested in securities
of companies that are located in emerging markets countries, or that earn 50% or
more of their total revenues from goods or services produced in emerging markets
countries or from sales made in emerging markets countries. The Fund will
provide shareholders with at least 60 days' notice of any change in the 80%
policy.
RiverSource Investments serves as the investment manager to the Fund and is
responsible for oversight of Threadneedle, the Fund's subadviser.
Threadneedle chooses investments by:
- - Deploying an integrated approach to equity research that incorporates regional
analyses, a global sector strategy, and stock specific perspectives.
- - Conducting detailed research on companies in a consistent strategic and
macroeconomic framework.
- - Looking for catalysts of change and identifying the factors driving markets,
which will vary over economic and market cycles.
- - Implementing rigorous risk control processes that seek to ensure that the risk
and return characteristics of the Fund's portfolio are consistent with
established portfolio management parameters.
The Fund's portfolio management team constructs the portfolio by selecting what
it considers to be the best stocks in each industry sector, based on return on
invested capital analysis, growth and valuation. The Fund's sector exposure
generally reflects the global macroeconomic environment, the outlook for each
sector and the relative valuation of the stocks among the sectors.
The Fund's portfolio management team constructs the portfolio by investing in
most of the stocks on two core lists of holdings: the Largest Companies List and
the Preferred List. In addition, the portfolio will hold other securities
selected by the portfolio management team. These discretionary holdings will
typically make up a much smaller portion of the Fund.
37
- - The Largest Companies List includes the largest stocks in the Fund's
benchmark, the Morgan Stanley Capital International ("MSCI") Emerging Markets
Index. Threadneedle's research on sectors and specific companies is used to
determine recommended weightings for each stock.
- - The Preferred List includes the stocks not included in the Largest Companies
List that represent the best ideas generated by Threadneedle's research
analysts.
Stocks on the Preferred List are selected by:
- Analyzing returns on invested capital for the largest companies within
each sector;
- Assessing valuations; and
- Evaluating one or more of the following: balance sheets and cash flows,
the demand for a company's products or services, its competitive
position, or its management.
The Fund will normally be overweight in the stocks on the Preferred List
compared to the benchmark.
- - Discretionary holdings are selected by the individual portfolio management
team based on the same criteria used to generate the Preferred List. These
stocks are assigned ratings based on their perceived ability to outperform
within their sector. The team typically selects the highest rated stocks
outside the core category.
A number of factors may prompt the portfolio management team to sell securities.
A sale may result from a change in the composition of the Fund's benchmark or a
change in sector strategy. A sale may also be prompted by factors specific to a
stock, such as valuation or company fundamentals.
The Fund will normally have exposure to foreign currencies. The portfolio
management team closely monitors the Fund's exposure to foreign currency. From
time to time the team may use forward currency transactions or other derivative
instruments to hedge against currency fluctuations.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- ---------------------------------------------------------------------------------------------------------
SELIGMAN EMERGING MARKETS FUND (SELLING THREADNEEDLE EMERGING MARKETS FUND
FUNDAMENTAL POLICY FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund will not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- ---------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund will not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's
exemptions therefrom which may be total assets except this fundamental
granted by the SEC. investment policy shall not prohibit
the Fund from purchasing money market
securities, loans, loan participation
or other debt securities, or from
entering into repurchase agreements.
- ---------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except The Fund will not borrow money, except
as permitted by the 1940 Act or any for temporary purposes (not for
rule thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act less liabilities (other than
permits a fund to borrow up to 33 1/3% borrowings) immediately after the
of its total assets (including the borrowings.
amounts borrowed) from banks, plus an
additional 5% of its total assets for
temporary purposes, which may be
borrowed from banks or other sources.
- ---------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund will not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations
SEC or SEC staff interpretations thereunder and any applicable exemptive
thereof or any exemptions therefrom relief.
which may be granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
</Table>
38
- ---------------------------------------------------------------------------------------------------------
SELIGMAN EMERGING MARKETS FUND (SELLING THREADNEEDLE EMERGING MARKETS FUND
FUNDAMENTAL POLICY FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate, except the Fund may invest estate, unless acquired as a result of
in securities secured by real estate or ownership of securities or other
interests therein or issued by persons instruments, except this shall not
(including real estate investment prevent the Fund from investing in
trusts) which deal in real estate or securities or other instruments backed
interests therein. by real estate or securities of
companies engaged in the real estate
business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options and futures contracts or from
Commodities below. investing in securities or other
instruments backed by, or whose value
is derived from, physical commodities.
- ---------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, at market value, in one industry. According to the present
the securities of issuers in any interpretation by the SEC, this means
particular industry, provided that this that up to 25% of the Fund's total
limitation shall exclude securities assets, based on current market value
issued or guaranteed by the U.S. at time of purchase, can be invested in
government or any of its agencies or any one industry.
instrumentalities.
- ---------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation.
The Fund will not purchase more than
10% of the outstanding voting
securities of an issuer, except that up
to 25% of the Fund's assets may be
invested without regard to this 10%
limitation.
- ---------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin, except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or
any exemptions therefrom which may be
granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its total
assets would be invested in such
agreements and in restricted and other
illiquid securities.
- ---------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or retain the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer (other than
AND TRUSTEES the shares of the Fund), if to the
Fund's knowledge, those directors and
officers of Seligman Global Fund
Series, Inc. (of which the Fund is a
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
issuer, together own beneficially more
than 5% of such outstanding securities.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN EMERGING MARKETS FUND THREADNEEDLE EMERGING MARKETS FUND
POLICY (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
BORROWING The Fund may not borrow more than 15% Not applicable. See the fundamental
RESTRICTIONS of the value of its total assets. investment policy on Borrowing Money
Borrowings may be secured by a above.
mortgage or pledge of the Fund's
assets. See also the fundamental
investment policy on Borrowing Money
above.
- ---------------------------------------------------------------------------------------------------------
</Table>
39
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN EMERGING MARKETS FUND THREADNEEDLE EMERGING MARKETS FUND
POLICY (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF The Fund may not acquire any Not applicable.
OPEN-END securities of a registered open-end
INVESTMENT investment company or a registered
COMPANIES unit investment trust in reliance on
subparagraph (F) or subparagraph (G)
of Section 12(d)(1) of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such
activities do not result in the 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. See also
fundamental investment policy on
Commodities above.
- ---------------------------------------------------------------------------------------------------------
EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable
TRADED FUNDS assets in ETFs. investment strategy for the Fund,
however, the Fund does not have a
stated policy limiting these types of
investments, other than as otherwise
permitted by the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
PREFERRED STOCK The Fund may invest up to 20% of its The Fund may invest in preferred stock
AND DEBT net assets in preferred stock and debt and debt securities to the extent
SECURITIES securities, including investment grade permitted by its investment strategy.
debt securities and high-yield bonds.
For capital appreciation, the 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 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.
- ---------------------------------------------------------------------------------------------------------
DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to
only for hedging or investment the extent permitted by its investment
purposes. The Fund will not invest in strategy.
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.
- ---------------------------------------------------------------------------------------------------------
WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable
Fund may be invested in warrants not investment strategy for the Fund.
listed on the New York or American
Stock Exchanges.
- ---------------------------------------------------------------------------------------------------------
ACCESS TRADES The Fund may participate in access The Fund may invest in access trades
trades, but its exposure is limited to and other derivative instruments to
5% of total assets of the Fund at the the extent permitted by its investment
time of purchase and to dealing with strategy.
counterparties believed to be
reputable.
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the Not applicable, other than as
PURPOSES OF purpose of controlling or managing any otherwise permitted by the 1940 Act.
MANAGEMENT company.
OR CONTROL
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. With regards to investment policies, the Buying Fund may
expose shareholders to greater liquidity risk due to the Buying Fund's greater
ability to invest in illiquid securities. The actual risks of investing in each
Fund depend on the securities held in each Fund's portfolio and on market
conditions, both of which change over time. Both Funds are subject to the
principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains
40
or losses involving derivative instruments may be substantial, because a
relatively small price movement in the underlying security(ies), instrument,
currency or index may result in a substantial gain or loss for the Fund.
Derivative instruments in which the Fund invests will typically increase the
Fund's exposure to principal risks to which it is otherwise exposed, and may
expose the Fund to additional risks, including counterparty credit risk,
hedging risk, correlation risk, liquidity risk and leverage risk.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Liquidity risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument. Certain
derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
- - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based
outside the United States. An issuer is deemed to be based outside the United
States if it is organized under the laws of another country. Foreign
securities are primarily denominated in foreign currencies. In addition to the
risks normally associated with domestic securities of the same type, foreign
securities are subject to the following foreign risks:
Country risk includes the political, economic and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may
be more limited than for most U.S. investments, which means that at times it
may be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic, social
and political) in these countries as well as the other considerations listed
above. These markets are in early stages of development and are extremely
volatile. They can be marked by extreme inflation, devaluation of currencies,
dependence on trade partners, and hostile relations with neighboring
countries.
- - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures or other factors.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and mid-
sized companies, which tend to be more vulnerable to adverse developments. In
addition, focus on a particular style, for example, investment in growth or
value securities, may cause the Fund to underperform other mutual funds if
that style falls out of favor with the market.
- - SECTOR RISK. Investments that are concentrated in a particular issuer,
geographic region or sector will be more susceptible to changes in price. The
more a fund diversifies across sectors, the more it spreads risk and
potentially reduces the risks of loss and volatility.
- - SMALL AND MID-SIZED COMPANY RISK. Investments in small and medium companies
often involve greater risks than investments in larger, more established
companies because small and medium companies may lack the management
41
experience, financial resources, product diversification, experience and
competitive strengths of larger companies. Additionally, in many instances the
securities of small and medium companies are traded only over-the-counter or
on regional securities exchanges and the frequency and volume of their trading
is substantially less and may be more volatile than is typical of larger
companies.
In addition to the risks described above, the Buying Fund is subject to the
additional principal investment risk set forth below. While this additional risk
may also be a risk of the Selling Fund, it is not stated as a principal
investment risk of the Selling Fund. For more information regarding the Selling
Fund's principal investment risks, see "Principal Risks" in the Selling Fund's
prospectus.
- - GEOGRAPHIC CONCENTRATION RISK. The Fund may be particularly susceptible to
economic, political or regulatory events affecting companies and countries
within the specific geographic region in which the Fund focuses its
investments. Currency devaluations could occur in countries that have not yet
experienced currency devaluation to date, or could continue to occur in
countries that have already experienced such devaluations. As a result, the
Fund may be more volatile than a more geographically diversified fund.
In addition to the risks described above, the Selling Fund is subject to the
risks associated with investing in debt securities, including high-yield bonds
(junk bonds), including the risks set forth below. While these additional risks
may also be risks of the Buying Fund, they are not stated as principal
investment risks of the Buying Fund. For more information regarding the Buying
Fund's principal investment risks, see "Principal Risks" in the Buying Fund's
prospectus.
- - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable or
unwilling to honor a financial obligation, such as payments due on a bond or a
note. If the Fund purchases unrated securities, or if the rating of a security
is reduced after purchase, the Fund will depend on the investment manager's
analysis of credit risk more heavily than usual. Non-investment grade
securities, commonly called high yield or junk bonds, may react more to
perceived changes in the ability of the issuing entity to pay interest and
principal when due than to changes in interest rates. Non-investment grade
securities have greater price fluctuations and are more likely to experience a
default than investment grade bonds.
- - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to
changes in interest rates. Interest rate risk is generally associated with
bond prices: when interest rates rise, bond prices fall. In general, the
longer the maturity or duration of a bond, the greater its sensitivity to
changes in interest rates.
42
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman Emerging
Markets Fund. The second table shows total returns from hypothetical investments
in Class A, Class B and Class C shares of the Threadneedle Emerging Markets
Fund. The inception date for Class R2 of the Buying Fund is expected to be in
the third quarter of 2009 and therefore performance information for that class
is not shown. Class R5 of the Buying Fund has not been in existence for a full
calendar year and therefore performance for that class is not shown. These
returns are compared to the indexes shown for the same periods. For purposes of
the performance calculation in the table we assumed:
- - the maximum sales charge of 5.75%* for Class A shares;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge on investments in
Class A shares of the Selling Fund is 5.75%. Although for all periods
presented, the Selling Fund's Class A share returns reflect the 5.75%
maximum initial sales charge, the actual returns for periods prior to Jan.
7, 2008 would have been higher if a 4.75% maximum initial sales charge then
in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented in
the tables the Selling 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.
43
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+60.69% -44.60% -1.44% -6.46% +57.68% +22.88% +32.37% +30.94% +42.16% -51.62%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +33.99% (quarter ended Dec. 31, 1999) and the lowest return for a
calendar quarter was -26.57% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
44
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+79.03% -33.03% -3.85% -3.06% +40.60% +24.44% +34.10% +34.25% +37.23% -54.91%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +37.49% (quarter ended Dec. 31, 1999) and the lowest return for a
calendar quarter was -29.68% (quarter ended Sept. 30, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement
where the Buying Fund invested all of its assets in a corresponding "master"
fund with an identical investment objective and investment strategies. As of
Nov. 8, 2005, the Buying Fund became a stand-alone fund that invests directly in
a portfolio of securities. The information shown in the table and in the
financial highlights for the Buying Fund includes the activity of the Buying
Fund when it was a feeder in a master/feeder arrangement.
45
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE SINCE
INCEPTION INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**)
SELIGMAN EMERGING MARKETS FUND (SELLING FUND):
Class A
Return before taxes -54.39% +6.67% +5.98% N/A N/A N/A
Return after taxes on distributions -55.20% +4.80% +5.05% N/A N/A N/A
Return after taxes on distributions and
sale of Fund shares -34.43% +5.75% +5.25% N/A N/A N/A
Class B
Return before taxes -54.03% +6.86% +5.96%* N/A N/A N/A
Class C
Return before taxes -52.18% +7.26% N/A +4.63%(a) N/A N/A
Class R**
Return before taxes -51.82% +8.02% N/A N/A +15.54%(b) N/A
Class I**
Return before taxes -51.42% +8.69% N/A N/A N/A +13.37%(c)
Morgan Stanley Capital International (MSCI)
Emerging Markets Index -53.18% +8.01% +9.30% +7.14%(d) +15.28%(e) +12.68%(f)
Lipper Emerging Markets Funds Average -55.41% +6.20% +9.38% +7.23%(g) +13.65%(e) +11.47%(f)
</Table>
Prior to March 31, 2000, J. & W. Seligman & Co. Incorporated (the predecessor
investment manager) employed subadvisers that were responsible for providing
certain portfolio management services with respect to the investments of the
Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund were
managed exclusively by Seligman. Since Sept. 15, 2003, Wellington Management
Company, LLP has been employed as subadviser to provide portfolio management
services to the Fund.
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C)
THREADNEEDLE EMERGING MARKETS FUND (BUYING
FUND):
Class A
Return before taxes -57.50% +5.49% +7.54% N/A
Return after taxes on distributions -57.50% +3.10% +6.29% N/A
Return after taxes on distributions and
sale of Fund shares -37.38% +4.62% +6.60% N/A
Class B
Return before taxes -57.48% +5.66% +7.26% N/A
Class C
Return before taxes -55.68% +5.95% N/A +3.16%(h)
MSCI Emerging Markets Index -53.18% +8.02% +9.31% +5.78%(i)
Lipper Emerging Markets Funds Index -54.76% +6.30% +8.64% +5.08%(i)
</Table>
(a) Inception date is May 27, 1999.
(b) Inception date is April 30, 2003.
(c) Inception date is Nov. 30, 2001.
(d) Measurement period started May 31, 1999.
(e) Measurement period started April 30, 2003.
(f) Measurement period started Nov. 30, 2001.
(g) Measurement period started May 27, 1999.
(h) Inception date is June 26, 2000.
(i) Measurement period started June 26, 2000.
* The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
** Class R and Class I of the Selling Fund are to be redesignated Class R2
and Class R5, respectively, in connection with the Reorganization.
The MSCI Emerging Markets Index, an unmanaged market capitalization weighted
index, is designed to measure equity market performance in the global emerging
markets. The index reflects reinvestment of all distributions and changes in
market prices and reflects no deduction for fees, expenses or taxes.
The Lipper Emerging Markets Funds Average comprises mutual funds which seek
long-term capital appreciation by investing at least 65% of total assets in
emerging market equity securities, where "emerging market" is defined by a
country's gross national product (GNP) per capita or other economic measures.
The average is an unmanaged benchmark that assumes the reinvestment of all
distributions, if any, and excludes the effect of fees, sales charges and taxes.
The Lipper Emerging Markets Funds Index includes the 30 largest emerging markets
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends. The Buying Fund's performance is currently measured against this
index for purposes of determining the performance incentive adjustment. See Fund
Management and Compensation in Exhibit B for more information.
Investors cannot invest directly in an average or index.
The inception date for Class R2 of the Buying Fund is expected to be in the
third quarter of 2009 and therefore performance information for that class is
not shown. Class R5 of the Buying Fund has not been in existence for a full
calendar year and therefore performance for that class is not shown.
46
PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE
GLOBAL EQUITY FUND
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks long-term capital appreciation and invests predominantly in
equity securities. The investment objectives for the Funds are as follows:
SELLING FUND: Seligman Global Growth Fund seeks long-term capital
appreciation.
BUYING FUND: Threadneedle Global Equity Fund seeks to provide
shareholders with long-term capital growth.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Selling Fund invests at least 40% of its net
assets in the securities of non-U.S. companies (as described below), while the
Buying Fund has no similar restrictions. The Selling Fund may invest up to 15%
of its assets in emerging market equities and up to 25% of its assets in
preferred stock and investment grade or comparable quality debt securities,
while the Buying Fund has no comparable restrictions. Each Fund may enter into
forward foreign currency exchange contracts or use derivatives as part of its
principal investment strategies.
RiverSource Investments serves as the investment manager for each Fund and is
responsible for the oversight of each Fund's subadviser, which provides day-to-
day management of the Fund. The Selling Fund is subadvised by Wellington
Wellington and the Buying Fund is subadvised by Threadneedle, an indirect
wholly-owned subsidiary of Ameriprise Financial, Inc.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN GLOBAL GROWTH FUND (SELLING FUND)
The Fund invests primarily in equity securities of non-U.S. and U.S. growth
companies that have the potential to benefit from global economic or social
trends. The Fund may invest in high quality, large and mid-capitalization
companies that are considered leaders in their industries, emphasizing those
industries that are growing on a global basis. Typically, the Fund will invest
in several countries in different geographic regions. Additionally, the Fund may
invest up to 15% in emerging market equities.
Under normal market conditions, the Fund generally will invest at least 40% of
its net assets in companies that maintain their principal place of business or
conduct their principal business activities outside the U.S., have their
securities traded on non-U.S. exchanges or have been formed under the laws of
non-U.S. countries. The portfolio manager may reduce this 40% minimum investment
amount to 30% if it believes that market conditions for these types of companies
or specific foreign markets are unfavorable. The Fund considers a company to
conduct its principal business activities outside the U.S. if it derives at
least 50% of its revenue from business outside the U.S. or has at least 50% of
its assets outside the U.S.
The Fund uses an investment process that emphasizes bottom-up research with a
focus on companies with improving fundamentals exemplified by identifiable
catalysts and strong earnings growth.
In selecting individual securities, the portfolio manager looks to identify
companies that it believes display one or more of the following:
- - Accelerating fundamentals or earnings growth with consideration paid to
valuations
- - Quality management
- - Strong possibility of multiple expansion
- - Unique competitive advantages (e.g., market share, proprietary products)
- - Potential for improvement in overall operations
The Fund generally sells a stock if the portfolio manager believes its target
price has been reached, its earnings are disappointing, its revenue or earnings
growth has slowed, or the stock's or industry's underlying fundamentals have
deteriorated. The Fund may also sell a stock if the portfolio manager believes
that negative country or regional factors or shifts in global trends may
negatively affect a company's outlook, or to meet cash requirements.
The Fund may invest in all types of securities, many of which will be
denominated in currencies other than the U.S. dollar. The Fund normally
concentrates its investments in common stocks; however, it may invest in other
types of equity securities, including securities convertible into or
exchangeable for common stock, depositary receipts, and rights and warrants to
purchase common stock. The Fund also may invest up to 25% of its assets in
preferred stock and investment grade or comparable quality debt securities.
47
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Fund may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Fund the right to sell an underlying security
at a particular price during a fixed period of time. Forward foreign currency
exchange contracts and put options on securities may not be available to the
Fund on reasonable terms in many situations, and the Fund may frequently choose
not to enter into such contracts or purchase such options even when they are
available.
The Fund may invest in futures contracts. The Fund intends to comply with Rule
4.5 of the Commodity Futures Trading Commission (CFTC), under which a mutual
fund is exempt from the definition of a "commodity pool operator." The Fund,
therefore, is not subject to registration or regulation as a pool operator,
meaning that the Fund may invest in futures contracts without registering with
the CFTC.
The Fund may also invest up to 10% of its assets in exchange-traded funds
("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they
represent baskets of securities that seek to track the performance of certain
indices. The indices include not only broad-market indices but more specific
indices as well, including those relating to particular sectors, countries and
regions. The Fund may invest in ETFs for short-term cash management purposes or
as part of its overall investment strategy.
THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND)
Under normal market conditions, at least 80% of the Fund's net assets will be
invested in equity securities, including companies located in developed and
emerging countries. The Fund will provide shareholders with at least 60 days'
notice of any change in the 80% policy.
RiverSource Investments serves as the investment manager to the Fund and is
responsible for oversight of Threadneedle, the Fund's subadviser.
Threadneedle chooses investments by:
- - Deploying an integrated approach to equity research that incorporates regional
analyses, a global sector strategy, and stock specific perspectives.
- - Conducting detailed research on companies in a consistent strategic and
macroeconomic framework.
- - Looking for catalysts of change and identifying the factors driving markets,
which will vary over economic and market cycles.
- - Implementing rigorous risk control processes that seek to ensure that the risk
and return characteristics of the Fund's portfolio are consistent with
established portfolio management parameters.
Using the global sector strategy, Threadneedle constructs the portfolio by
investing in most of the stocks on two core lists of holdings: the Largest
Companies List and the Preferred List. In addition, the portfolio will hold
other securities selected by the portfolio management team. These discretionary
holdings will typically make up a much smaller portion of the Fund.
- - The Largest Companies List includes the largest stocks in the Fund's
benchmark, the Morgan Stanley Capital International (MSCI) All Country World
Index. Threadneedle's research on regions, sectors, and specific companies is
used to determine recommended weightings for each stock.
- - The Preferred List includes the stocks not included in the Largest Companies
List that represent the best ideas generated by Threadneedle's research area.
Stocks on the Preferred List are selected by:
- - Evaluating the opportunities and risks within regions and sectors;
- - Assessing valuations; and
- - Evaluating one or more of the following: balance sheets and cash flows, the
demand for a company's products or services, its competitive position, or its
management. The Fund will normally be overweight in the stocks on the
Preferred List compared to the benchmark.
- - Discretionary holdings are selected by the individual portfolio management
team based on the same criteria used to generate the Preferred List. These
stocks are assigned ratings based on their perceived ability to outperform
within their sector. The team typically selects the highest rated stocks
outside the core category.
A number of factors may prompt Threadneedle to sell securities. A sale may
result from a change in the composition of the Fund's benchmark or a change in
sector strategy. A sale may also be prompted by factors specific to a stock,
such as valuation or company fundamentals.
48
The Fund will normally have exposure to foreign currencies. Threadneedle closely
monitors the Fund's exposure to foreign currency. From time to time the team may
use forward currency transactions or other derivative instruments to hedge
against currency fluctuations.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- --------------------------------------------------------------------------------------------------------
SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING
FUNDAMENTAL POLICY FUND) FUND)
- --------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund will not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- --------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund will not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's total
exemptions therefrom which may be assets except this fundamental
granted by the SEC. investment policy shall not prohibit the
Fund from purchasing money market
securities, loans, loan participation or
other debt securities, or from entering
into repurchase agreements.
- --------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except as The Fund will not borrow money, except
permitted by the 1940 Act or any rule for temporary purposes (not for
thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act permits less liabilities (other than borrowings)
a fund to borrow up to 33 1/3% of its immediately after the borrowings.
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.
- --------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund will not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any SEC the 1940 Act, the rules and regulations
or SEC staff interpretations thereof or thereunder and any applicable exemptive
any exemptions therefrom which may be relief.
granted by the SEC.
- --------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate, except the Fund may invest estate, unless acquired as a result of
in securities secured by real estate or ownership of securities or other
interests therein or issued by persons instruments, except this shall not
(including real estate investment prevent the Fund from investing in
trusts) which deal in real estate or securities or other instruments backed
interests therein. by real estate or securities of
companies engaged in the real estate
business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate limited
partnerships.
- --------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options and futures contracts or from
Commodities below. investing in securities or other
instruments backed by, or whose value is
derived from, physical commodities.
- --------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any one
CONCENTRATION its total assets, at market value, in industry. According to the present
the securities of issuers in any interpretation by the SEC, this means
particular industry, provided that this that up to 25% of the Fund's total
limitation shall exclude securities assets, based on current market value at
issued or guaranteed by the U.S. time of purchase, can be invested in any
government or any of its agencies or one industry.
instrumentalities.
- --------------------------------------------------------------------------------------------------------
</Table>
49
- --------------------------------------------------------------------------------------------------------
SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING
FUNDAMENTAL POLICY FUND) FUND)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% of
inconsistent with the Fund's its total assets in securities of any
classification as a diversified company company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to investments
in securities issued or guaranteed by
the U.S. government, its agencies, or
instrumentalities, or other investment
companies, and except that up to 25% of
the Fund's total assets may be invested
without regard to this 5% limitation.
The Fund will not purchase more than 10%
of the outstanding voting securities of
an issuer, except that up to 25% of the
Fund's assets may be invested without
regard to this 10% limitation.
- --------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin, except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or any
exemptions therefrom which may be
granted by the SEC.
- --------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its total
assets would be invested in such
agreements and in restricted and other
illiquid securities.
- --------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or retain the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer (other than the
AND TRUSTEES shares of the Fund), if to the Fund's
knowledge, those directors and officers
of Seligman Global Fund Series, Inc. (of
which the Fund is a 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
issuer, together own beneficially more
than 5% of such outstanding securities.
- --------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING
POLICY FUND) FUND)
- ------------------------------------------------------------------------------------------------------
BORROWING The Fund may not borrow more than 15% Not applicable. See the fundamental
RESTRICTIONS of the value of its total assets. investment policy above on Borrowing
Borrowings may be secured by a mortgage Money above.
or pledge of the Fund's assets. See
also the fundamental investment policy
on Borrowing Money above.
- ------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12
(d)(1) of the 1940 Act.
- ------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such activities
do not result in the 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. See also
fundamental investment policy on
Commodities above.
- ------------------------------------------------------------------------------------------------------
EXCHANGE TRADED The Fund may invest up to 10% of its Investing in ETFs is an allowable
FUNDS assets in ETFs. investment strategy for the Fund,
however, the Fund does not have a
stated policy limiting these types of
investments, other than as otherwise
permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------
</Table>
50
- ------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING
POLICY FUND) FUND)
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PREFERRED STOCK The Fund may invest up to 25% of its The Fund may invest in preferred stock
AND DEBT net assets in preferred stock and debt and debt securities to the extent
SECURITIES securities. The Fund will invest only permitted by its investment strategy.
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 or S&P.
- ------------------------------------------------------------------------------------------------------
DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to
only for hedging or investment the extent permitted by its investment
purposes. The Fund will not invest in strategy.
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.
- ------------------------------------------------------------------------------------------------------
WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable
Fund may be invested in warrants not investment strategy for the Fund.
listed on the New York or American
Stock Exchanges.
- ------------------------------------------------------------------------------------------------------
ACCESS TRADES The Fund may participate in access The Fund may invest in access trades
trades, but its exposure is limited to and other derivative instruments to the
5% of total assets of the Fund at the extent permitted by its investment
time of purchase and to dealing with strategy.
counterparties believed to be
reputable.
- ------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise
PURPOSES OF of controlling or managing any company. permitted by the 1940 Act.
MANAGEMENT OR
CONTROL
- ------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. With regards to investment policies, the Buying Fund may
expose shareholders to greater emerging markets risk due to the Buying Fund's
greater ability to invest in emerging market equities. The Buying Fund may also
expose shareholders to greater liquidity risk due to the Buying Fund's greater
ability to invest in illiquid securities. The actual risks of investing in each
Fund depend on the securities held in each Fund's portfolio and on market
conditions, both of which change over time. Both Funds are subject to the
principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to principal risks to which it is
otherwise exposed, and may expose the Fund to additional risks, including
correlation risk, counterparty credit risk, hedging risk, leverage risk and
liquidity risk.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument. Certain
derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
51
Liquidity risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
- - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based
outside the United States. An issuer is deemed to be based outside the United
States if it is organized under the laws of another country. Foreign
securities are primarily denominated in foreign currencies. In addition to the
risks normally associated with domestic securities of the same type, foreign
securities are subject to the following foreign risks:
Country risk includes the political, economic and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may be
more limited than for most U.S. investments, which means that, at times it may
be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic, social
and political) in these countries as well as the other considerations listed
above. These markets are in early stages of development and are extremely
volatile. They can be marked by extreme inflation, devaluation of currencies,
dependence on trade partners, and hostile relations with neighboring countries.
- - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures or other factors.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and mid-
sized companies, which tend to be more vulnerable to adverse developments. In
addition, focus on a particular style, for example, investment in growth or
value securities, may cause the Fund to underperform other mutual funds if
that style falls out of favor with the market.
In addition to the risks described above, the Buying Fund is subject to the
additional principal investment risk set forth below. While this additional risk
may also be a risk of the Selling Fund, it is not stated as a principal
investment risk of the Selling Fund. For more information regarding the Selling
Fund's principal investment risks, see "Principal Risks" in the Selling Fund's
prospectus.
- - GEOGRAPHIC CONCENTRATION RISK. The Fund may be particularly susceptible to
economic, political or regulatory events affecting companies and countries
within the specific geographic region in which the Fund focuses its
investments. Currency devaluations could occur in countries that have not yet
experienced currency devaluation to date, or could continue to occur in
countries that have already experienced such devaluations. As a result, the
Fund may be more volatile than a more geographically diversified fund.
52
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman Global Growth
Fund. The second table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R2 and Class R5 shares of the Threadneedle
Global Equity Fund. These returns are compared to the indexes shown for the same
periods. For purposes of the performance calculation in the table we assumed:
- - the maximum sales charge of 5.75%* for Class A shares;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class R2, Class R5 and Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge on investments in
Class A shares of the Selling Fund is 5.75%. Although for all periods
presented, the Selling Fund's Class A share returns reflect the 5.75%
maximum initial sales charge, the actual returns for periods prior to Jan.
7, 2008 would have been higher if a 4.75% maximum initial sales charge then
in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented in
the tables the Selling 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.
53
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
SELIGMAN GLOBAL GROWTH FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+42.80% -17.17% -21.53% -31.10% +29.96% +17.52% +1.15% +12.85% +23.77% -53.11%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +24.43% (quarter ended Dec. 31, 1999) and the lowest return for a
calendar quarter was -27.07% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
54
THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+37.02% -23.37% -22.29% -23.38% +25.16% +16.08% +18.41% +19.15% +13.60% -42.15%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +32.17% (quarter ended Dec. 31, 1999) and the lowest return for a
calendar quarter was -19.76% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement
where the Buying Fund invested all of its assets in a corresponding "master"
fund with an identical investment objective and investment strategies. As of
Nov. 8, 2005, the Buying Fund became a stand-alone fund that invests directly in
a portfolio of securities. The information shown in the table and in the
financial highlights for the Buying Fund includes the activity of the Buying
Fund when it was a feeder in a master/feeder arrangement.
55
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE SINCE
INCEPTION INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**)
SELIGMAN GLOBAL GROWTH FUND (SELLING FUND):
Class A
Return before taxes -55.82% -6.01% -4.82% N/A N/A N/A
Return after taxes on distributions -55.82% -6.01% -5.36% N/A N/A N/A
Return after taxes on distributions and
sale of Fund shares -36.28% -5.01% -3.78% N/A N/A N/A
Class B
Return before taxes -55.77% -5.96% -4.81%* N/A N/A N/A
Class C
Return before taxes -53.91% -5.61% N/A -5.48%(a) N/A N/A
Class R**
Return before taxes -53.70% -5.11% N/A N/A -0.70%(b) N/A
Class I**
Return before taxes -52.91% -4.35% N/A N/A N/A -4.42%(c)
Morgan Stanley Capital International (MSCI)
World Index -40.33% +0.00% -0.19% -0.59%(d) +4.62%(e) +1.13%(f)
MSCI World Growth Index -40.90% -0.84% -2.29% -2.32%(d) +3.17%(e) -0.06%(f)
Lipper Global Large-Cap Growth Funds Average -44.46% -1.73% +0.35% -0.10%(g) +3.01%(e) -0.31%(f)
Lipper Global Funds Average -41.06% -0.49% +0.88% +0.51%(g) +4.38%(e) +0.97%(f)
</Table>
Prior to March 31, 2000, J. & W. Seligman & Co. Incorporated (the predecessor
investment manager) employed subadvisers that were responsible for providing
certain portfolio management services with respect to the investments of the
Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund were
managed exclusively by Seligman. Since Sept. 15, 2003, Wellington Management
Company LLP has been employed as subadviser to provide portfolio management
services to the Fund.
<Table>
<Caption>
SINCE
SINCE INCEPTION
INCEPTION (CLASSES R2
1 YEAR 5 YEARS 10 YEARS (CLASS C) & R5)
THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND):
Class A
Return before taxes -45.46% +0.28% -2.21% N/A N/A
Return after taxes on distributions -45.62% +0.07% -2.91% N/A N/A
Return after taxes on distributions and
sale of Fund shares -29.55% +0.13% -1.99% N/A N/A
Class B
Return before taxes -45.52% +0.30% -2.46% N/A N/A
Class C
Return before taxes -43.16% +0.73% N/A -5.62%(h) N/A
Class R2
Return before taxes -42.08% N/A N/A N/A -18.02%(j)
Class R5
Return before taxes -41.82% N/A N/A N/A -17.60%(j)
MSCI All Country World Index -41.85% +0.44% +0.23% -2.10%(i) -18.26%(k)
Lipper Global Funds Index -38.78% +0.42% +1.23% -1.93%(i) -17.35%(k)
</Table>
(a) Inception date is May 27, 1999.
(b) Inception date is April 30, 2003.
(c) Inception date is Nov. 30, 2001.
(d) Measurement period started May 31, 1999.
(e) Measurement period started April 30, 2003.
(f) Measurement period started Nov. 30, 2001.
(g) Measurement period started May 27, 1999.
(h) Inception date is June 26, 2000.
(i) Measurement period started June 26, 2000.
(j) Inception date is Dec. 11, 2006.
(k) Measurement period started Dec. 11, 2006.
* The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
** Class R and Class I of the Selling Fund are to be redesignated Class R2
and Class R5, respectively, in connection with the Reorganization.
56
The MSCI World Index, an unmanaged index, is a free float-adjusted market
capitalization index that is designed to measure global developed market equity
performance. The index reflects reinvestment of all distributions and changes in
market prices and reflects no deduction for fees, expenses or taxes.
The MSCI World Growth Index, an unmanaged index, is a free float-adjusted market
capitalization-weighted equity index representing "growth" (high price to book
value) securities in the world's developed stock markets. The index reflects
reinvestment of all distributions and changes in market prices and reflects no
deduction for fees, expenses or taxes.
The Lipper Global Large-Cap Growth Funds Average comprises mutual funds that, by
portfolio practice, invest at least 75% of their equity assets in companies both
inside and outside of the United States with market capitalizations (on a three-
year weighted basis) above Lipper's global large-cap floor. Global large-cap
growth funds typically have an above-average price-to-cash flow ratio, price-to-
book ratio, and three-year sales-per-share growth value compared to their large-
cap-specific subset of the S&P/Citigroup World Broad Market Index (BMI). Lipper
currently classifies the Selling Fund as a Global Large-Cap Growth Fund. The
average is an unmanaged benchmark that assumes reinvestment of all
distributions, if any, and excludes the effect of fees, sales charges and taxes.
The Lipper Global Funds Average comprises mutual funds which invest at least 25%
of their portfolio in securities traded outside the United States, and may own
U.S. securities as well. The average is an unmanaged benchmark that assumes
reinvestment of all distributions, if any, and excludes the effect of fees,
sales charges and taxes.
The MSCI All Country World Index, an unmanaged index of equity securities, is
designed to measure equity market performance in the global developed and
emerging markets. The index reflects reinvestment of all distributions and
changes in market prices and reflects no deduction for fees, expenses or taxes.
The Lipper Global Funds Index includes the 30 largest global funds tracked by
Lipper Inc. The index's returns include net reinvested dividends. The Buying
Fund's performance is currently measured against this index for purposes of
determining the performance incentive adjustment. See Fund Management and
Compensation in Exhibit B for more information.
Investors cannot invest directly in an average or index.
57
PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH
YIELD BOND FUND
Shareholders of both the Buying Fund and the Selling Fund may be entitled to
assert appraisal rights (also known as dissenters' rights of appraisal) under
provisions of Minnesota and Massachusetts state law, respectively. Please see
the discussion under the caption Appraisal Rights in Section C of this proxy
statement/prospectus for more information, including a comparison of appraisal
rights under Minnesota and Massachusetts state law. A copy of the appraisal
rights under the Massachusetts Business Corporation Act is also included as
Appendix D in this proxy statement/prospectus.
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks a high level of current income, with capital appreciation as a
secondary objective.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman High-Yield Fund seeks a high level of current
income and may also consider the potential for capital
appreciation consistent with prudent investment
management.
BUYING FUND: RiverSource High Yield Bond Fund seeks to provide
shareholders with high current income as its primary
objective and, as its secondary objective, capital
growth.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests predominantly in non-investment grade, high yield securities.
The Selling Fund may invest up to 10% of its assets in equity-linked securities
(each, an "ELS"), while the Buying Fund has no similar limitation. The Buying
Fund may invest up to 25% of its assets in high yield debt instruments of
foreign issuers. Although the Selling Fund does not include it as a principal
investment strategy, the Selling Fund may invest up to 10% of its net assets in
debt securities of foreign issuers. The Buying Fund counts American Depositary
Receipts ("ADRs") toward its 25% limit, but ADRs are excluded from the Selling
Fund's 10% limitation.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
The Fund invests 80% of its net assets in non-investment grade, high yield
securities ("High Yield Securities"). High Yield Securities (many of which are
commonly known as junk bonds) carry non-investment grade ratings (Ba or below by
Moody's or BB or below by Fitch or S&P) or are securities deemed to be below
investment grade by the investment manager. High Yield Securities have the
potential to offer higher yields than investment grade securities with higher
ratings and similar maturities. High Yield Securities are subject to greater
risk of loss of principal and interest than higher rated investment grade
securities. The Fund may invest in all types of High Yield Securities including:
- - Senior and subordinated corporate debt obligations of both U.S. and non-U.S.
issuers (including, for example debentures, loan participations and floating
rate notes);
- - Mortgage and other asset-backed securities;
- - Capital appreciation bonds, including zero coupon and pay-in-kind securities;
- - Convertible securities, preferred stock, structured securities and loan
participations;
- - Municipal securities;
- - Obligations of foreign governments;
- - Securities that are rated in default by a nationally recognized statistical
rating organization;
- - Repurchase agreements relating to the above instruments;
- - Warrants, rights and other equity securities that are acquired in connection
with the Fund's investments in High Yield Securities; and
- - Restricted securities that may be offered and sold only to "qualified
institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule
144A Securities").
In addition, the Fund may invest up to 20% of its net assets in (i) securities
of higher quality, including: short-term money market instruments, including
certificates of deposit of FDIC member banks having total assets of $1 billion
or more; bankers' acceptances and interest-bearing savings or time deposits of
such banks; commercial paper; investment grade fixed-income securities;
securities issued, guaranteed or insured by the U.S. government, its agencies or
instrumentalities as well as any government sponsored enterprise; and other
income-producing cash items and (ii) warrants, rights and other equity
securities
58
that are not acquired in connection with the Fund's investments in High Yield
Securities. The Fund may invest up to 15% of its net assets in illiquid
securities (i.e., securities that cannot be readily sold). Rule 144A Securities
deemed to be liquid by the investment manager are not included in this
limitation. The Fund does not have any portfolio maturity limitation, and may
invest its assets in instruments with short, medium or long maturities.
In pursuit of the Fund's objectives, the investment manager chooses investments
by:
- - Reviewing interest rate and economic forecasts.
- - Reviewing credit characteristics and capital structures of companies,
including an evaluation of any outstanding bank loans or corporate debt
securities a company has issued, its relative position in its industry, and
its management team's capabilities.
- - Identifying companies that:
- have medium and low quality ratings or, in the investment manager's opinion,
have similar qualities to companies with medium or low quality ratings, even
though they are not rated, or have been given a different rating by a rating
agency,
- have growth potential, or
- have the potential to increase in value as their credit ratings improve.
- - Buying debt instruments that are expected to outperform other debt
instruments.
In evaluating whether to sell an investment, the investment manager considers,
among other factors, whether:
- - The interest rate or economic outlook changes.
- - A sector or industry is experiencing change.
- - A security's rating is changed.
- - The security is overvalued relative to alternative investments.
- - The company no longer meets the investment manager's performance expectations.
- - The investment manager wishes to lock in profits.
- - The investment manager identifies a more attractive opportunity.
- - The issuer or the security continues to meet the other standards described
above.
The Fund may also invest up to 10% of its assets in ELSs as part of its overall
investment strategy. An ELS is a debt instrument whose value is based on the
value of a single equity security, basket of equity securities or an index of
equity securities (each, an "Underlying Equity"). An ELS typically provides
interest income, thereby offering a yield advantage over investing directly in
an Underlying Equity. However, the holder of an ELS may have limited or no
benefit from any appreciation in the Underlying Equity, but is exposed to
downside market risk. The Fund may purchase ELSs that trade on a securities
exchange or those that trade on the over-the-counter markets, including Rule
144A Securities. The Fund may also purchase an ELS in a privately negotiated
transaction with the issuer of the ELS (or its broker-dealer affiliate).
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
Under normal market conditions, the Fund will invest at least 80% of its net
assets in high yield debt instruments (commonly referred to as junk bonds).
These high yield debt instruments include corporate debt securities as well as
bank loans rated below investment grade by a nationally recognized statistical
rating organization, or if unrated, determined to be of comparable quality. Up
to 25% of the Fund may be invested in high yield debt instruments of foreign
issuers. The Fund will provide shareholders with at least 60 days' notice of any
change in the 80% policy.
Corporate debt securities in which the Fund invests are typically unsecured,
with a fixed-rate of interest, and are usually issued by companies or similar
entities to provide financing for their operations, or other activities. Bank
loans (which may commonly be referred to as "floating rate loans"), which are
another form of financing, are typically secured, with interest rates that
adjust or "float" periodically (normally on a daily, monthly, quarterly or
semiannual basis by reference to a base lending rate, such as LIBOR (London
Interbank Offered Rate), plus a premium). Secured debt instruments are
ordinarily secured by specific collateral or assets of the issuer or borrower
such that holders of these instruments will have claims senior to the claims of
other parties who hold unsecured instruments.
In pursuit of the Fund's objectives, the investment manager chooses investments
by:
- - Reviewing interest rate and economic forecasts.
- - Reviewing credit characteristics and capital structures of companies,
including an evaluation of any outstanding bank loans or corporate debt
securities a company has issued, its relative position in its industry, and
its management team's capabilities.
59
- - Identifying companies that:
- have medium and low quality ratings or, in the investment manager's opinion,
have similar qualities to companies with medium or low quality ratings, even
though they are not rated, or have been given a different rating by a rating
agency,
- have growth potential, or
- have the potential to increase in value as their credit ratings improve.
- - Buying debt instruments that are expected to outperform other debt
instruments.
In evaluating whether to sell an investment, the investment manager considers,
among other factors, whether:
- - The interest rate or economic outlook changes.
- - A sector or industry is experiencing change.
- - A security's rating is changed.
- - The security is overvalued relative to alternative investments.
- - The company no longer meets the investment manager's performance expectations.
- - The investment manager wishes to lock in profits.
- - The investment manager identifies a more attractive opportunity.
- - The issuer or the security continues to meet the other standards described
above.
For bank loans, the investment manager's process includes a review of the legal
documentation supporting the loan, including an analysis of the covenants and
the rights and remedies of the lender.
The investment manager may use derivatives such as futures, options, forward
contracts and swaps, including credit default swaps, in an effort to produce
incremental earnings, to hedge existing positions, to increase market exposure
and investment flexibility, or to obtain or reduce credit exposure.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- ---------------------------------------------------------------------------------------------------------
RIVERSOURCE HIGH YIELD BOND FUND
FUNDAMENTAL POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- ---------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund may not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's
exemptions therefrom which may be total assets except this fundamental
granted by the SEC. investment policy shall not prohibit
the Fund from purchasing money market
securities, loans, loan participation
or other debt securities, or from
entering into repurchase agreements.
Under current Board policy, the Fund
has no current intention to lend to a
material extent.
- ---------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except
as permitted by the 1940 Act or any for temporary purposes (not for
rule thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act less liabilities (other than
permits a fund to borrow up to 33 1/3% borrowings) immediately after the
of its total assets (including the borrowings.
amounts borrowed) from banks, plus an
additional 5% of its total assets for
temporary purposes, which may be
borrowed from banks or other sources.
- ---------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations
SEC or SEC staff interpretations thereunder and any applicable exemptive
thereof or any exemptions therefrom relief.
which may be granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
</Table>
60
- ---------------------------------------------------------------------------------------------------------
RIVERSOURCE HIGH YIELD BOND FUND
FUNDAMENTAL POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate including limited estate, unless acquired as a result of
partnership interests in real property, ownership of securities or other
except that the Fund may invest in debt instruments, except this shall not
securities secured by real estate or prevent the Fund from investing in
interests therein or issued by securities or other instruments backed
companies which invest in real estate by real estate or securities of
or interests therein, including real companies engaged in the real estate
estate investment trusts ("REITs"). business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options and futures contracts or from
Commodities below. investing in securities or other
instruments backed by, or whose value
is derived from, physical commodities.
- ---------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, at market value, in one industry. According to the present
any one industry, except that 25% interpretation by the SEC, this means
limitation on industry concentration that up to 25% of the Fund's total
does not apply to securities issued or assets, based on current market value
guaranteed by the U.S. government or at time of purchase, can be invested in
any of its agencies or any one industry.
instrumentalities (which may include
mortgage-related securities).
- ---------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation.
The Fund will not purchase more than
10% of the outstanding voting
securities of an issuer, except that up
to 25% of the Fund's assets may be
invested without regard to this 10%
limitation.
- ---------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin, except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or
any exemptions therefrom which may be
granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its total
assets would be invested in such
agreements and in restricted and other
illiquid securities.
- ---------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or hold the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer, if to its
AND TRUSTEES knowledge, Trustees or officers of
Seligman High Income Fund Series (of
which the Fund is a series)
individually owning beneficially more
than 0.5% of the securities of that
other company own in the aggregate more
than 5% of such securities. The Fund
may not engage in transactions with its
Trustees and officers, or firms they
are associated with, in connection with
the purchase or sale of securities,
except as broker.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
61
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL RIVERSOURCE HIGH YIELD BOND FUND
POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
COMMODITIES Each Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such activities
do not result in a Fund being a
"commodity pool" as defined in the
Commodity Exchange Act and the
Commodity Futures Trading Commission's
regulations and interpretations
thereunder. The investment manager must
seek Board approval to invest in any
type of commodity or commodity contract
if it is of the type a Fund has not
previously utilized. See also
fundamental investment policy on
Commodities above.
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12(d)(1)
of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
EQUITY LINKED The Fund may invest up to 10% of its The Fund may invest in equity-linked
SECURITIES assets in equity-linked securities as securities to the extent permitted by
part of its overall investment its investment strategy.
strategy.
- ---------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES The Fund may invest up to 10% of its The Fund may invest up to 25% of its
net assets in debt securities of net assets in foreign investments
foreign issuers (not including ADRs). (including ADRs).
- ---------------------------------------------------------------------------------------------------------
PREFERRED STOCK The Fund may invest up to 10% of its The Fund may invest in preferred stock
total assets in preferred stock, to the extent permitted by its
including non-investment grade investment strategy.
preferred stock.
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise
PURPOSES OF of controlling or managing any company. permitted by the 1940 Act.
MANAGEMENT OR
CONTROL
- ---------------------------------------------------------------------------------------------------------
SHORT SALES The Fund may not sell securities short The Fund is not prohibited from
or maintain a short position. engaging in short sales, however, the
Fund will seek Board approval prior to
utilizing short sales as an active part
of its investment strategy.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives and principal investment strategies.
The actual risks of investing in each Fund depend on the securities held in each
Fund's portfolio and on market conditions, both of which change over time. Both
Funds are subject to the principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objectives. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - CREDIT RISK. Credit risk is the risk that the borrower of a loan or the issuer
of another debt instrument will default or otherwise become unable or
unwilling to honor a financial obligation, such as payments due on a loan.
Rating agencies assign credit ratings to certain loans and other debt
securities to indicate their credit risk. The price of a loan or other debt
security generally will fall if the borrower or the issuer defaults on its
obligation to pay principal or interest, the rating agencies downgrade the
borrower's or the issuer's credit rating or other news affects the market's
perception of the borrower's or the issuer's credit risk. If the borrower of a
floating rate loan declares or is declared bankrupt, there may be a delay
before the Fund can act on the collateral securing the loan, which may
adversely affect the Fund. Further, here is a risk that a court could take
action with respect to a floating rate loan adverse to the holders of the
loan, such as invalidating the loan, the lien on the collateral, the priority
status of the loan, or ordering the refund of interest previously paid by the
borrower. Any such actions by a court could adversely affect the Fund's
performance. If the Fund purchases unrated loans or other debt securities, or
if the rating of a loan or security is reduced after purchase, the Fund will
depend on the investment manager's analysis of credit risk more heavily than
usual. Non-investment grade loans or securities, commonly called high yield or
junk, may react more to perceived changes in the ability of the borrower or
issuing entity to pay interest and
62
principal when due than to changes in interest rates. Non-investment grade
loans or securities have greater price fluctuations and are more likely to
experience a default than investment grade loans or securities. A default or
expected default of a floating rate loan could also make it difficult for the
Fund to sell the loan at a price approximating the value previously placed on
it.
- - HIGHLY LEVERAGED TRANSACTIONS RISK. The high yield debt instruments in which
the Fund invests substantially consist of transactions involving refinancings,
recapitalizations, mergers and acquisitions and other financings for general
corporate purposes. The Fund's investments also may include senior obligations
of a borrower issued in connection with a restructuring pursuant to Chapter 11
of the U.S. Bankruptcy Code (commonly known as "debtor-in-possession"
financings), provided that such senior obligations are determined by the
Fund's investment manager upon its credit analysis to be a suitable investment
by the Fund. In such highly leveraged transactions, the borrower assumes large
amounts of debt in order to have the financial resources to attempt to achieve
its business objectives. Such business objectives may include but are not
limited to: management's taking over control of a company (leveraged buy-out);
reorganizing the assets and liabilities of a company (leveraged
recapitalization); or acquiring another company. Loans or securities that are
part of highly leveraged transactions involve a greater risk (including
default and bankruptcy) than other investments.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to principal risks to which it is
otherwise exposed, and may expose the Fund to additional risks, including
hedging risk, correlation risk, liquidity risk and leverage risk.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Liquidity risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument. Certain
derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
- - INTEREST RATE RISK. The securities in the Fund are subject to the risk of
losses attributable to changes in interest rates. Interest rate risk is
generally associated with the fixed-income securities in the Fund: when
interest rates rise, the prices of fixed-income securities generally fall. In
general, the longer the maturity or duration of a fixed-income security, the
greater its sensitivity to changes in interest rates. Securities with floating
interest rates can be less sensitive to interest rate changes, but may decline
in value if their interest rates do not rise as much as interest rates in
general. Because rates on certain floating rate loans and other debt
securities reset only periodically, changes in prevailing interest rates (and
particularly sudden and significant changes) can be expected to cause
fluctuations in the Fund's net asset value. Interest rate changes also may
increase prepayments of debt obligations, which in turn would increase
prepayment risk.
- - LIQUIDITY RISK. Liquidity risk is the risk associated from a lack of
marketability of securities which may make it difficult or impossible to sell
the security at desirable prices in order to minimize loss. The Fund may have
to lower the selling price, sell other investments, or forego another, more
appealing investment opportunity. Floating rate loans generally are subject to
legal or contractual restrictions on resale. Floating rate loans also may
trade infrequently on the secondary market. The value of the loan to the Fund
may be impaired in the event that the Fund needs to liquidate such loans.
Other debt securities in which the Fund invests may be traded in the over-the
counter market rather than on an organized exchange and therefore may be more
difficult to purchase or sell at a fair price. The inability to purchase or
sell floating rate loans and other debt securities at a fair price may have a
negative impact on the Fund's performance.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably.
- - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that
a loan, bond or other security might be called or otherwise converted, prepaid
or redeemed before maturity. This risk is primarily associated with asset-
backed securities, including mortgage backed securities and floating rate
loans. If a loan or security is converted, prepaid or redeemed before
maturity, particularly during a time of declining interest rates or declining
spreads, the portfolio managers
63
may not be able to reinvest the prepayment proceeds in securities or loans
providing as high a level of income, resulting in a reduced yield to the Fund.
Conversely, as interest rates rise or spreads widen, the likelihood of
prepayment decreases. The portfolio managers may be unable to capitalize on
securities with higher interest rates or wider spreads because the Fund's
investments are locked in at a lower rate for a longer period of time.
- - FOREIGN/EMERGING MARKETS RISK. The following are all components of
foreign/emerging markets risk:
Country risk includes the political, economic and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may
be more limited than for most U.S. investments, which means that, at times it
may be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic, social
and political) in these countries as well as the other considerations listed
above. These markets are in early stages of development and are extremely
volatile. They can be marked by extreme inflation, devaluation of currencies,
dependence on trade partners and hostile relations with neighboring countries.
- - COUNTERPARTY RISK. Counterparty risk is the risk that a counterparty to a
financial instrument entered into by the Fund or held by a special purpose or
structured vehicle becomes bankrupt or otherwise fails to perform its
obligations due to financial difficulties. The Fund may experience significant
delays in obtaining any recovery in a bankruptcy or other reorganization
proceeding. The Fund may obtain only limited recovery or may obtain no
recovery in such circumstances. The Fund will typically enter into financial
instrument transactions with counterparties whose credit rating is investment
grade, or, if unrated, determined to be of comparable quality by the
investment manager.
- - IMPAIRMENT OF COLLATERAL RISK. The value of collateral, if any, securing a
floating rate loan can decline, and may be insufficient to meet the borrower's
obligations or difficult to liquidate. In addition, the Fund's access to
collateral may be limited by bankruptcy or other insolvency laws. Further,
certain floating rate loans may not be fully collateralized and may decline in
value.
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How the Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
64
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman High-Yield
Fund. The second table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R2 and Class R5 shares of the RiverSource High
Yield Bond Fund. These returns are compared to the indexes shown for the same
periods. For purposes of the performance calculation in the table we assumed:
- - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and
4.75% for Class A shares of the Buying Fund;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class R2, Class R5 and Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge in Class A
shares of the Selling Fund is 4.50%. Although for all periods presented
the Selling Fund's Class A share returns reflect the 4.50% maximum
initial sales charge, the actual returns for periods prior to Jan. 7,
2008 would have been lower if a 4.75% maximum initial sales charge then
in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented
the Selling Fund's 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.
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+0.09% -10.02% -15.91% -5.35% +21.84% +7.03% +1.57% +9.74% +0.81% -32.24%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +6.84% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -22.00% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
65
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+7.06% -10.31% +4.80% -7.04% +25.81% +11.76% +4.36% +10.76% +2.07% -24.59%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +9.41% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -18.37% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement
where the Buying Fund invested all of its assets in a corresponding "master"
fund with an identical investment objective and investment strategies. As of
Oct. 18, 2005, the Buying Fund became a stand-alone fund that invests directly
in a portfolio of securities. The information shown in the table and in the
financial highlights for the Buying Fund includes the activity of the Buying
Fund when it was a feeder in a master/feeder arrangement.
66
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE SINCE
INCEPTION INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**)
SELIGMAN HIGH-YIELD FUND (SELLING FUND):
Class A
Return before taxes -35.30% -4.91% -3.78% N/A N/A N/A
Return after taxes on distributions -37.56% -7.51% -6.78% N/A N/A N/A
Return after taxes on distributions and sale
of Fund shares -22.55% -5.18% -4.41% N/A N/A N/A
Class B
Return before taxes -35.84% -4.99% -3.91%* N/A N/A N/A
Class C
Return before taxes -33.63% -4.80% N/A -4.35%(a) N/A N/A
Class R**
Return before taxes -33.03% -4.25% N/A N/A -1.97%(b) N/A
Class I**
Return before taxes -31.99% -3.62% N/A N/A N/A -0.62%(c)
JP Morgan Global High Yield Index***
Barclays Capital U.S. Corporate High-Yield 2%
Issuer Capped Index*** -25.88% -0.84% +2.28% +2.12%(d) +1.44%(e) +2.93%(f)
Lipper High Current Yield Funds Average -26.01% -1.53% +1.19% +0.89%(g) +0.73%(e) +1.81%(f)
<Caption>
SINCE
SINCE INCEPTION
INCEPTION (CLASSES R2
1 YEAR 5 YEARS 10 YEARS (CLASS C) & R5)
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND):
Class A
Return before taxes -28.19% -1.08% +1.06% N/A N/A
Return after taxes on distributions -30.32% -3.62% -2.11% N/A N/A
Return after taxes on distributions and sale
of Fund shares -18.08% -2.14% -0.88% N/A N/A
Class B
Return before taxes -28.99% -1.26% +0.76% N/A N/A
Class C
Return before taxes -26.09% -1.00% N/A +0.60%(h) N/A
Class R2
Return before taxes -25.11% N/A N/A N/A -12.11%(i)
Class R5
Return before taxes -24.33% N/A N/A N/A -11.47%(i)
JP Morgan Global High Yield Index -26.83% -0.72% +2.58% +2.79%(j) -12.73%(k)
Lipper High Current Yield Bond Funds Index -28.84% -1.87% +0.49% +0.26%(j) -14.23%(k)
</Table>
(a)Inception date is May 27, 1999.
(b)Inception date is April 30, 2003.
(c)Inception date is Nov. 30, 2001.
(d)Measurement period started May 28, 1999.
(e)Measurement period started April 30, 2003.
(f)Measurement period started Nov. 30, 2001.
(g)Measurement period started May 27, 1999.
(h)Inception date is June 26, 2000.
(i)Inception date is Dec. 11, 2006.
(j)Measurement period started June 26, 2000.
(k)Measurement period started Dec. 11, 2006.
*The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
**Class R and Class I of the Selling Fund are to be redesignated Class R2 and
Class R5, respectively, in connection with the Reorganization.
***Effective Nov. 7, 2008, to better align the primary benchmark index with
the investment strategy of the Fund, the Barclays Capital U.S. High-Yield
2% Issuer Capped Index was replaced with the JP Morgan Global High Yield
Index, which will be used as the primary benchmark for the Fund going
forward.
The JP Morgan Global High Yield Index is an unmanaged index used to mirror the
investable universe of the U.S. dollar global high yield corporate debt market
of both developed and emerging markets. The index reflects reinvestment of all
distributions and changes in market prices and reflects no deduction for fees,
expenses or taxes.
67
The Barclays Capital U.S. Corporate High-Yield 2% Issuer Capped Index, an
unmanaged index, covers the U.S. corporate bond market of high-yield bonds
denominated in U.S. dollars, and is constrained from having greater than 2% of
the securities of a single issuer. The index reflects reinvestment of all
distributions and changes in market prices and reflects no deduction for fees,
expenses or taxes.
The Lipper High Current Yield Funds Average is an average of funds that aim at
high (relative) current yield from fixed income securities, have no quality or
maturity restrictions, and tend to invest in lower-grade debt instruments. The
average is an unmanaged benchmark that assumes reinvestment of all
distributions, if any, and excludes the effect of fees, taxes and sales charges.
The Lipper High Current Yield Bond Funds Index includes the 30 largest high
yield bond funds tracked by Lipper Inc. The index's returns include net
reinvested dividends.
Investors cannot invest directly in an average or index.
68
PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE
BALANCED FUND
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund generally seeks a combination of capital appreciation and current
income.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman Income and Growth Fund seeks total return
through a combination of capital appreciation and income
consistent with what is believed to be a prudent
allocation between equity and fixed-income securities.
BUYING FUND: RiverSource Balanced Fund seeks to provide shareholders
with a balance of growth of capital and current income.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests predominantly in a combination of equity and fixed-income
securities. The Selling Fund may invest 10% of its assets in equity-linked
securities (each, an "ELS"). The Buying Fund has no similar restriction with
respect to investments in ELSs. The Selling Fund may invest up to 10% of total
assets in foreign securities; the Buying Fund may invest up to 25% of the Fund's
net assets in foreign investments. The Buying Fund counts American Depositary
Receipts ("ADRs") toward its 25% limit, but ADRs are excluded from the Selling
Fund's 10% limitation.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN INCOME AND GROWTH FUND (SELLING FUND)
The Fund allocates its assets between equity securities and fixed-income
securities. Securities are carefully selected in light of the Fund's investment
objective and are diversified among many different types of securities and
market sectors. As of Dec. 31, 2008, approximately 67% of the Fund's portfolio
was invested in equity securities and approximately 33% was invested in fixed-
income securities. However, the proportion of the Fund's assets invested in each
type of security will vary from time to time based on the investment manager's
assessment of general market and economic conditions.
EQUITY SECURITIES
Equity securities in which the Fund may invest include: common stocks, including
real estate investment trusts ("REITs"); securities convertible into common
stocks; preferred stocks; and ADRs. The Fund usually invests in the common stock
of larger U.S. companies; however, it may invest in companies of any size. REITs
are companies that invest primarily in income-producing real estate or real
estate related loans or interests. ADRs are publicly traded instruments
generally issued by domestic banks or trust companies that represent securities
of foreign issuers.
Equity securities are chosen using an investment philosophy rooted in the belief
that a disciplined, systematic, value-oriented approach to investing primarily
in large-cap companies provides investors with an excellent opportunity for
long-term growth of capital.
In pursuit of the Fund's objective, RiverSource Investments chooses equity
investments by seeking to:
- - Select companies that are undervalued based on a variety of measures,
including, but not limited to price-to-earnings ratios, price-to-book ratios,
price-to-free cash flow, current and projected dividends, sum-of-the parts or
breakup value and historic relative price valuations.
- - Identify companies with moderate growth potential based on:
- effective management, as demonstrated by overall performance;
- financial strength; and
- underappreciated potential for improvement in industry and thematic trends.
In evaluating whether to sell an equity security, the investment manager
considers, among other factors, whether:
- - The security is overvalued relative to alternative investments.
- - The security has reached the investment manager's price objective.
- - The company has met the investment manager's earnings and/or growth
expectations.
- - The security exhibits unacceptable correlation characteristics with other
portfolio holdings.
- - The company or the security continues to meet the other standards described
above.
69
FIXED-INCOME SECURITIES
Investment grade fixed-income securities are those rated within the four highest
rating categories by Moody's Investors Service ("Moody's"), Standard & Poor's
Rating Services ("S&P") or Fitch Ratings, or are securities deemed by the
investment manager to be of comparable quality (collectively, "Investment Grade
Securities"). They include obligations issued and guaranteed by the U.S.
government or its agencies or instrumentalities, corporate bonds and other
obligations, mortgage-backed and other asset-backed securities, obligations of
non-U.S. government agencies and private institutions, and income-producing cash
equivalents, including repurchase agreements. Mortgage-backed securities include
collateralized mortgage obligations, mortgage pass-through securities and
stripped mortgage-backed securities.
Although the Fund emphasizes high- and medium-quality debt securities, it may
assume some credit risk in an effort to achieve higher yield and/or capital
appreciation by buying lower-quality (junk) bonds which carry non-investment
grade ratings (Ba or below by Moody's or BB or below by Fitch Ratings or S&P) or
are securities deemed to be below investment grade by the investment manager
("High-Yield Securities"). Although High Yield Securities have the potential to
offer higher yields than Investment Grade Securities with higher ratings and
similar maturities, High Yield Securities are subject to greater risk of loss of
principal and interest than Investment Grade Securities. The Fund may invest in
all types of High Yield Securities including:
- - Senior and subordinated corporate debt obligations of both U.S. and non-U.S.
issuers (including, for example, debentures, loan participations and floating
rate loans);
- - Mortgage and other asset-backed securities;
- - Capital appreciation bonds, including zero coupon and pay-in-kind securities;
- - Convertible securities, preferred stock, structured securities and loan
participations;
- - Municipal securities;
- - Obligations of foreign governments;
- - Securities that are rated in default by a nationally recognized statistical
rating organization;
- - Repurchase agreements relating to the above instruments;
- - Warrants, rights and other equity securities that are acquired in connection
with the Fund's investments in High Yield Securities; and
- - Restricted securities that may be offered and sold only to "qualified
institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule
144A Securities").
The Fund does not have any portfolio maturation limitation, and may invest its
assets in High Yield Securities of short, medium or long maturities.
Investment Grade Securities. In pursuit of the Fund's objective, the investment
manager chooses Investment Grade Securities by:
- - Evaluating the Investment Grade Securities portion of the portfolio's total
exposure to sectors, industries and securities relative to the Barclays
Capital U.S. Aggregate Bond Index (the "Barclays Index").
- - Analyzing factors such as credit quality, interest rate outlook and price in
seeking to select the most attractive securities within each sector.
- - Targeting an average portfolio duration within one year of the duration of the
Barclays Index which, as of Jan. 31, 2009, was 4.18 years. Duration measures
the sensitivity of bond prices to changes in interest rates. The longer the
duration of a bond, the longer it will take to repay the principal and
interest obligations and the more sensitive it will be to changes in interest
rates. For example, a five-year duration means a bond is expected to decrease
in value by 5% if interest rates rise 1% and increase in value by 5% if
interest rates fall 1%.
In evaluating whether to sell Investment Grade Securities, the investment
manager considers, among other factors:
- - Identification of more attractive investments based on relative value.
- - The portfolio's total Investment Grade Securities exposure to sectors,
industries and securities relative to the Barclays Index.
- - Whether a security's rating has changed or is vulnerable to a change.
- - Whether a sector or industry is experiencing change.
- - Changes in the interest rate or economic outlook.
High-Yield Securities. In pursuit of the Fund's objective, the investment
manager chooses High Yield Securities by:
- - Reviewing interest rate and economic forecasts.
70
- - Reviewing credit characteristics and capital structures of companies,
including an evaluation of any outstanding bank loans or corporate debt
securities a company has issued, its relative position in its industry, and
its management team's capabilities.
- - Identifying companies that:
- have medium and low quality ratings or, in the investment manager's opinion,
have similar qualities to companies with medium or low quality ratings, even
though they are not rated, or have been given a different rating by a rating
agency,
- have growth potential, or
- have the potential to increase in value as their credit ratings improve.
- - Buying debt instruments that are expected to outperform other debt
instruments.
In evaluating whether to sell High Yield Securities, the investment manager
considers, among other factors, whether:
- - The interest rate or economic outlook changes.
- - A sector or industry is experiencing change.
- - A security's rating is changed.
- - The security is overvalued relative to alternative investments.
- - The company no longer meets the investment manager's performance expectations.
- - The investment manager wishes to lock in profits.
- - The investment manager identifies a more attractive opportunity.
- - The issuer or the security continues to meet the other standards described
above.
OTHER STRATEGIES
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold) including funding agreements issued by
domestic insurance companies and may invest up to 10% of its total assets
directly in foreign securities. The limit on foreign securities does not apply
to ADRs or commercial paper and certificates of deposit issued by foreign banks.
The Fund may also invest up to 10% of its assets in exchange-traded funds
("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they
represent baskets of securities that seek to track the performance of certain
indices. The indices include not only broad-market indices but more specific
indices as well, including those relating to particular sectors, countries and
regions. The Fund may invest in ETFs for short-term cash management purposes or
as part of its overall investment strategy.
The Fund may also invest up to 10% of its assets in ELSs as part of its overall
investment strategy. An ELS is a debt instrument whose value is based on the
value of a single equity security, basket of equity securities or an index of
equity securities (each, an "Underlying Equity"). An ELS typically provides
interest income, thereby offering a yield advantage over investing directly in
an Underlying Equity. However, the holder of an ELS may have limited or no
benefit from any appreciation in the Underlying Equity, but is exposed to
downside market risk. The Fund may purchase ELSs that trade on a securities
exchange or those that trade on the over-the-counter markets, including Rule
144A Securities. The Fund may also purchase an ELS in a privately negotiated
transaction with the issuer of the ELS (or its broker-dealer affiliate).
RIVERSOURCE BALANCED FUND (BUYING FUND)
The Fund invests primarily in a combination of common and preferred stocks,
bonds and other debt securities. Under normal market conditions, at least 40% of
the Fund's total assets are invested in common stocks and no less than 25% of
the Fund's total assets are invested in debt securities. Equity securities may
provide income, offer the opportunity for long-term capital appreciation, or
both. The Fund can invest in any economic sector and, at times, it may emphasize
one or more particular sectors. Although the Fund emphasizes high- and medium-
quality securities for the debt portion of its portfolio, it may buy lower-
quality bonds (junk bonds). The Fund may invest up to 25% of its net assets in
foreign investments.
The Fund's equity investment philosophy is rooted in the belief that a
disciplined, systematic, value-oriented approach to investing primarily in
large-cap companies provides investors with an excellent opportunity for long-
term growth of capital.
In pursuit of the Fund's objective, RiverSource Investments chooses equity
investments by seeking to:
- - Select companies that are undervalued based on a variety of measures,
including, but not limited to price-to-earnings ratios, price-to-book ratios,
price-to-free cash flow, current and projected dividends, sum-of-the parts or
breakup value and historic relative price valuations.
71
- - Identify companies with moderate growth potential based on:
- effective management, as demonstrated by overall performance;
- financial strength; and
- underappreciated potential for improvement in industry and thematic trends.
In evaluating whether to sell an equity security, the investment manager
considers, among other factors, whether:
- - The security is overvalued relative to alternative investments.
- - The security has reached the investment manager's price objective.
- - The company has met the investment manager's earnings and/or growth
expectations.
- - The security exhibits unacceptable correlation characteristics with other
portfolio holdings.
- - The company or the security continues to meet the other standards described
above.
In pursuit of the Fund's objective, the investment manager chooses debt
investments by:
- - Evaluating the debt portion of the portfolio's total exposure to sectors,
industries and securities relative to the Barclays Capital U.S. Aggregate Bond
Index (the "Index").
- - Analyzing factors such as credit quality, interest rate outlook and price to
select the most attractive securities within each sector.
- - Targeting an average duration for the debt portion of the portfolio within one
year of the duration of the Index which, as of Jan. 31, 2009 was 4.18 years.
Duration measures the sensitivity of bond prices to changes in interest rates.
The longer the duration of a bond, the longer it will take to repay the
principal and interest obligations and the more sensitive it will be to
changes in interest rates. For example, a five-year duration means a bond is
expected to decrease in value by 5% if interest rates rise 1% and increase in
value by 5% if interest rates fall 1%.
In evaluating whether to sell a debt security, the investment manager considers,
among other factors:
- - The debt portion of the portfolio's total exposure to sectors, industries and
securities relative to the Index.
- - Whether a security's rating is changed or is vulnerable to a change.
- - Whether a sector or industry is experiencing change.
- - Changes in the interest rate or economic outlook.
- - Whether the investment manager identifies a more attractive opportunity.
The investment manager may use derivatives such as futures, options, forward
contracts and swaps, including credit default swaps, in an effort to produce
incremental earnings, to hedge existing positions, to increase market exposure
and investment flexibility, or to obtain or reduce credit exposure.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- ---------------------------------------------------------------------------------------------------------
SELIGMAN INCOME AND GROWTH FUND
FUNDAMENTAL POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- ---------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund may not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's
exemptions therefrom which may be total assets except this fundamental
granted by the SEC. investment policy shall not prohibit
the Fund from purchasing money market
securities, loans, loan participation
or other debt securities, or from
entering into repurchase agreements.
- ---------------------------------------------------------------------------------------------------------
</Table>
72
- ---------------------------------------------------------------------------------------------------------
SELIGMAN INCOME AND GROWTH FUND
FUNDAMENTAL POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except
as permitted by the 1940 Act or any for temporary purposes (not for
rule thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act less liabilities (other than
permits a fund to borrow up to 33 1/3% borrowings) immediately after the
of its total assets (including the borrowings.
amounts borrowed) from banks, plus an
additional 5% of its total assets for
temporary purposes, which may be
borrowed from banks or other sources.
- ---------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations
SEC or SEC staff interpretations thereunder and any applicable exemptive
thereof or any exemptions therefrom relief.
which may be granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate, except the Fund may invest estate, unless acquired as a result of
in securities secured by real estate or ownership of securities or other
interests therein or issued by persons instruments, except this shall not
(including real estate investment prevent the Fund from investing in
trusts) which deal in real estate or securities or other instruments backed
interests therein. by real estate or securities of
companies engaged in the real estate
business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options and futures contracts or from
Commodities below. investing in securities or other
instruments backed by, or whose value
is derived from, physical commodities.
- ---------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, at market value, in one industry. According to the present
the securities of issuers in any interpretation by the SEC, this means
particular industry, provided that this that up to 25% of the Fund's total
limitation shall exclude securities assets, based on current market value
issued or guaranteed by the U.S. at time of purchase, can be invested in
government or any of its agencies or any one industry.
instrumentalities.
- ---------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation.
The Fund will not purchase more than
10% of the outstanding voting
securities of an issuer, except that up
to 25% of the Fund's assets may be
invested without regard to this 10%
limitation.
- ---------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or
any exemptions therefrom which may be
granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its net
assets would be so invested.
- ---------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or retain the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer (other than
AND TRUSTEES the shares of a Fund), if to the Fund's
knowledge, those directors and officers
of the Fund individually own
beneficially more than 1/2 of 1% of
the outstanding securities of such
issuer, together own beneficially more
than 5% of such outstanding securities.
The Fund may not deal with its
directors or officers, or firms they
are associated with, in the purchase or
sale of securities of other issuers,
except as broker.
- ---------------------------------------------------------------------------------------------------------
73
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN INCOME AND GROWTH FUND
POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
FOREIGN The Fund may invest up to 10% of total Up to 25% of the Fund's net assets may
INVESTMENTS assets in foreign securities. The limit be invested in foreign investments.
on foreign securities does not apply to
ADRs or commercial paper and
certificates of deposit issued by
foreign banks.
- ---------------------------------------------------------------------------------------------------------
BORROWING The Fund may not borrow more than 15% See the fundamental investment policy
RESTRICTIONS of the value of its total assets. on Borrowing Money above.
Borrowings may be secured by a mortgage
or pledge of the Fund's assets. See
also the fundamental investment policy
on Borrowing Money above.
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12(d)(1)
of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such activities
do not result in the Fund being a
"commodity pool" as defined in the
Commodity Exchange Act and the
Commodity Futures Trading Commission's
regulations and interpretations
thereunder. The investment manager must
seek Board approval to invest in any
type of commodity or commodity contract
if it is of the type the Fund has not
previously utilized. See also
fundamental investment policy on
Commodities above.
- ---------------------------------------------------------------------------------------------------------
SHORT SALES The Fund may not sell "short" or The Fund is not prohibited from
maintain a "short position". engaging in short sales, however, the
Fund will seek Board approval prior to
utilizing short sales as an active part
of its investment strategy.
- ---------------------------------------------------------------------------------------------------------
EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable
TRADED FUNDS assets in ETFs. investment strategy for the Fund,
however, the Fund does not have a
stated policy limiting these types of
investments, other than as otherwise
permitted by the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
EQUITY LINKED The Fund may invest up to 10% of its The Fund may invest in equity linked
SECURITIES assets in equity-linked securities securities to the extent permitted by
(ELS) as part of its overall investment its investment strategy.
strategy.
- ---------------------------------------------------------------------------------------------------------
PREFERRED The Fund may invest in preferred The Fund may invest in preferred stock
SECURITIES securities believed by the investment to the extent permitted by its
manager to offer capital appreciation investment strategy.
opportunities.
- ---------------------------------------------------------------------------------------------------------
ACCESS TRADES The Fund may participate in access The Fund may invest in access trades
trades, but its exposure is limited to and other derivative instruments to the
5% of total assets of the Fund at the extent permitted by its investment
time of purchase and to dealing with strategy.
counterparties believed to be
reputable.
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise
PURPOSES OF of controlling or managing any company. permitted by the 1940 Act.
MANAGEMENT
OR CONTROL
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. With regards to investment policies, although the
investment policies of the Buying Fund and the Selling Fund are similar with
regards to high yield (junk) bonds, the Buying Fund currently has greater
exposure to high yield (junk) bonds than the Selling Fund resulting in greater
current credit and liquidity risk to its shareholders. The actual risks of
investing in each Fund depend on the securities held in each Fund's portfolio
and on market conditions, both of which change over time. Both Funds are subject
to the principal investment risks described below.
74
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable or
unwilling to honor a financial obligation, such as payments due on a bond or a
note. If the Fund purchases unrated securities, or if the rating of a security
is reduced after purchase, the Fund will depend on the investment manager's
analysis of credit risk more heavily than usual. Non-investment grade
securities, commonly called high yield or junk bonds, may react more to
perceived changes in the ability of the issuing entity to pay interest and
principal when due than to changes in interest rates. Non-investment grade
securities have greater price fluctuations and are more likely to experience a
default than investment grade bonds.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to principal risks to which it is
otherwise exposed, and may expose the Fund to additional risks, including
correlation risk, counterparty credit risk, hedging risk and leverage risk.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument.
- - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based
outside the United States. An issuer is deemed to be based outside the United
States if it is organized under the laws of another country. Foreign
securities are primarily denominated in foreign currencies. In addition to the
risks normally associated with domestic securities of the same type, foreign
securities are subject to the following foreign risks:
Country risk includes the political, economic, and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may
be more limited than for most U.S. investments, which means that, at times it
may be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
- - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to
changes in interest rates. Interest rate risk is generally associated with
bond prices: when interest rates rise, bond prices fall. In general, the
longer the maturity or duration of a bond, the greater its sensitivity to
changes in interest rates.
- - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures or other factors.
- - LIQUIDITY RISK. The risk associated from a lack of marketability of securities
which may make it difficult or impossible to sell at desirable prices in order
to minimize loss. The Fund may have to lower the selling price, sell other
investments, or forego another, more appealing investment opportunity.
75
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and mid-
sized companies, which tend to be more vulnerable to adverse developments. In
addition, focus on a particular style, for example, investment in growth or
value securities, may cause the Fund to underperform other mutual funds if
that style falls out of favor with the market.
- - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that
a bond or other security might be called or otherwise converted, prepaid, or
redeemed before maturity. This risk is primarily associated with asset-backed
securities, including mortgage-backed securities. If a security is converted,
prepaid, or redeemed before maturity, particularly during a time of declining
interest rates, the investment manager may not be able to reinvest in
securities providing as high a level of income, resulting in a reduced yield
to the Fund. Conversely, as interest rates rise, the likelihood of prepayment
decreases. The investment manager may be unable to capitalize on securities
with higher interest rates because the Fund's investments are locked in at a
lower rate for a longer period of time.
- - SECTOR RISK. If a fund emphasizes one or more economic sectors, it may be more
susceptible to the financial, market or economic events affecting the
particular issuers and industries in which it invests than funds that do not
emphasize particular sectors. The more a fund diversifies, the more it spreads
risk and potentially reduces the risks of loss and volatility.
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman Income and
Growth Fund. The second table shows total returns from hypothetical investments
in Class A, Class B and Class C shares of the RiverSource Balanced Fund. The
inception date for Class R2 and Class R5 of the Buying Fund is expected to be in
the third quarter of 2009 and therefore performance information for those
classes is not shown. These returns are compared to the indexes shown for the
same periods. For purposes of the performance calculation in the table we
assumed:
- - the maximum sales charge of 5.75%* for Class A shares;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge on investments in
Class A shares of the Selling Fund is 5.75%. Although for all periods
presented, the Selling Fund's Class A share returns reflect the 5.75%
maximum initial sales charge, the actual returns for periods prior to Jan.
7, 2008 would have been higher if a 4.75% maximum initial sales charge then
in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented in
the tables the Selling 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.
76
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
SELIGMAN INCOME AND GROWTH FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
-1.76% -3.09% -3.90% -11.96% +16.24% +8.18% +1.07% +15.80% -2.43% -37.84%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +9.39% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -19.41% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
RIVERSOURCE BALANCED FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+7.36% -11.03% -12.70% -15.34% +19.51% +9.32% +3.56% +14.97% +1.64% -29.64%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +12.28% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -16.19% (quarter ended Dec. 31, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement
where the Buying Fund invested all of its assets in a corresponding "master"
fund with an identical investment objective and investment strategies. As of
Jan. 12, 2006, the Buying Fund became a stand-alone fund that invests directly
in a portfolio of securities. The information shown in the table and in the
financial highlights for the Buying Fund includes the activity of the Buying
Fund when it was a feeder in a master/feeder arrangement.
77
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R AND I**)
SELIGMAN INCOME AND GROWTH FUND (SELLING FUND):
Class A
Return before taxes -41.41% -6.26% -3.82% N/A N/A
Return after taxes on distributions -42.19% -6.97% -4.60% N/A N/A
Return after taxes on distributions and sale of
Fund shares -26.76% -5.28% -3.39% N/A N/A
Class B
Return before taxes -41.28% -6.18% -3.81%* N/A N/A
Class C
Return before taxes -38.84% -5.84% N/A -4.09%(a) N/A
Class R**
Return before taxes -38.53% -5.33% N/A N/A -2.72%(b)
Class I**
Return before taxes -37.62% -5.04% N/A N/A -2.42%(b)
Russell 1000 Value Index*** -36.85% -0.79% +1.36% +0.58% +3.38%(d)
Standard & Poor's 500 Composite Stock Price (S&P
500 Index)*** -36.99% -2.19% -1.38% -1.92%(c) +1.67%(d)
Barclays Capital U.S. Aggregate Bond Index*** +5.24% +4.65% +5.63% +5.98%(c) +4.43%(d)
Barclays Capital U.S. Government/Credit Index*** +5.70% +4.64% +5.64% +6.09%(c) +4.43%(d)
Blended Index*** -20.01% +1.39% +3.07% +2.74%(c) +3.80%(d)
Blended Index (Selling Fund old)*** -22.17% -1.30% -0.81% -1.13%(c) +1.02%(d)
Lipper Mixed-Asset Target Allocation Growth Funds
Average -29.75% -0.66% +0.85% +0.55%(c) +2.35%(d)
</Table>
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C)
RIVERSOURCE BALANCED FUND (BUYING FUND):
Class A
Return before taxes -33.68% -2.59% -2.89% N/A
Return after taxes on distributions -34.43% -3.44% -3.86% N/A
Return after taxes on distributions and sale of
Fund shares -21.81% -2.59% -2.82% N/A
Class B
Return before taxes -33.57% -2.57% -3.14% N/A
Class C
Return before taxes -30.84% -2.18% N/A -3.97%(e)
Russell 1000 Index -36.85% -0.79% +1.36% +0.91%(f)
Barclays Capital U.S. Aggregate Bond Index +5.24% +4.65% +5.63% +6.33%(f)
Blended Index -21.96% +1.57% +3.34% +3.34%(f)
Lipper Balanced Funds Index -26.18% +0.12% +1.53% +0.58%(f)
</Table>
(a)Inception date is May 27, 1999.
(b)Inception date is April 30, 2003.
(c)Measurement period started May 27, 1999.
(d)Measurement period started April 30, 2003.
(e)Inception date is June 26, 2000.
(f)Measurement period started June 26, 2000.
*The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
**Class R and Class I of the Selling Fund are to be redesignated Class R2 and
Class R5, respectively, in connection with the Reorganization.
***Effective Nov. 7, 2008, to better align the primary benchmark index with
the investment strategy of the Fund, the S&P 500 Index was replaced with
the Russell 1000 Value Index. In addition, the Barclays Capital U.S.
Government/Credit Index was replaced with the Barclays Capital U.S.
Aggregate Bond Index and the Blended Index (Selling Fund old), comprised of
a 60% weighting in the S&P 500 Index and a 40% weighting in the Barclays
Capital U.S. Government/Credit Index, was replaced with the Blended Index,
comprised of a 60% weighting in the Russell 1000 Value Index and 40% in the
Barclays Capital U.S. Aggregate Bond Index.
The Russell 1000 Value Index, an unmanaged index, measures the performance of
those stocks in the Russell 1000 Index with lower price-to book ratios and lower
forecasted growth values. The index reflects reinvestment of all distributions
and changes in market prices and reflects no deduction for fees, expenses or
taxes.
78
The S&P 500 Index, an unmanaged index, measures the performance of 500 of the
largest U.S. companies based on market capitalization. The index reflects
reinvestment of all distributions and changes in market prices and reflects no
deduction for fees, expenses or taxes.
The Barclays Capital U.S. Aggregate Bond Index, an unmanaged index, is made up
of a representative list of government, corporate, asset-backed and mortgage
backed securities. The index is frequently used as a general measure of bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices and reflects no deduction for fees, expenses or taxes.
The Barclays Capital U.S. Government/Credit Index, an unmanaged index, is
comprised of all bonds that are investment grade (rated Baa or higher by Moody's
or BBB or higher by S&P, if unrated by Moody's) with at least one year to
maturity. The index reflects reinvestment of all distributions and changes in
market prices and reflects no deduction for fees, expenses or taxes.
The Blended Index is comprised of a 60% weighting in the Russell 1000 Value
Index and 40% in the Barclays Capital U.S. Aggregate Bond Index. The index is an
unmanaged benchmark that reflects reinvestment of all distributions and changes
in market prices and reflects no deduction for fees, expenses or taxes.
The Blended Index (Selling Fund old) is comprised of a 60% weighting in the S&P
500 Index and a 40% weighting in the Barclays Capital U.S. Government/Credit
Index. The index is an unmanaged benchmark that reflects reinvestment of all
distributions and changes in market prices and reflects no deduction for fees,
expenses or taxes.
The Lipper Mixed-Asset Target Allocation Growth Funds Average measures the
performance of funds, that by portfolio practice, maintain a mix of between 60%-
80% equity securities, with the remainder invested in bonds, cash and cash
equivalents. The average is an unmanaged benchmark that assumes the reinvestment
of all distributions, if any, and does not reflect any fees, sales charges or
taxes.
The Lipper Balanced Funds Index includes the 30 largest balanced funds tracked
by Lipper Inc. The index's returns include net reinvested dividends. The Buying
Fund's performance is currently measured against this index for purposes of
determining the performance incentive adjustment. See Fund Management and
Compensation in Exhibit B for more information.
Investors cannot invest directly in an average or index.
The inception date for Class R2 and Class R5 of the Buying Fund is expected to
be in the third quarter of 2009 and therefore performance information for those
classes is not shown.
79
PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks long-term capital appreciation and invests predominantly in
equity securities of foreign issuers that are believed to be growth companies.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman International Growth Fund seeks long-term
capital appreciation.
BUYING FUND: RiverSource Partners International Select Growth Fund
seeks to provide shareholders with long-term capital
growth.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund may invest in common stock of companies in any country. However, the
Selling Fund typically will not invest in companies located in the United
States. The Buying Fund's assets are primarily invested in equity securities of
foreign issuers. The Selling Fund may invest up to 25% of its assets in
preferred stock and investment-grade or comparable quality debt securities and
generally invests less than 25% of its assets in emerging markets, while the
Buying Fund has no similar restrictions. Both Funds may use forward foreign
currency exchange contracts or purchase put options as part of their principal
investment strategies.
RiverSource Investments serves as the investment manager for each Fund and is
responsible for the oversight of each Fund's subadviser(s) which provide day-to-
day management of the Fund. The Selling Fund is subadvised by Wellington and the
Buying Fund is subadvised by Columbia Wanger Asset Management, L.P. ("Columbia
WAM") and Principal Global Investors, LLC ("Principal Global") (collectively,
the "Subadvisers").
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
The Fund invests primarily in high quality, large- and mid capitalization growth
companies ($1 billion or more at the time of initial purchase by the Fund) that
are considered leaders in their industries, emphasizing those industries that
are growing on a global basis. The Fund may invest in any country; however, it
typically will not invest in the United States. It generally invests in several
countries in different geographic regions.
The Fund generally invests in the common stock of medium- to large- sized
companies in the principal international markets. However, it may also invest in
companies with a lower market capitalization or in smaller regional or emerging
markets (representation in the emerging markets will generally be less than 25%
of assets).
In selecting individual securities, the portfolio manager looks to identify
companies that it believes display one or more of the following:
- - Attractive valuations relative to earnings and revenue forecasts or other
valuation criteria (e.g., return on equity)
- - Quality management
- - Unique competitive advantages (e.g., market share, proprietary products)
- - Strong possibility of multiple expansion
- - Potential for improvement in overall operations (hidden/unappreciated value)
The Fund generally sells a stock if the portfolio manager believes its target
price has been reached, there is a decelerating trend of earnings growth,
deteriorating industry fundamentals, management change or failure, its revenue
growth has slowed, or its underlying fundamentals have deteriorated.
The Fund may invest in all types of securities, many of which will be
denominated in currencies other than the U.S. dollar. The securities may be
listed on a U.S. or foreign stock exchange or traded in U.S. or foreign over-
the-counter markets. The Fund normally concentrates its investments in common
stocks; however, it may invest in other types of equity securities, including
securities convertible into or exchangeable for common stock, depositary
receipts, and rights and warrants to purchase common stock. The Fund also may
invest up to 25% of its assets in preferred stock and investment-grade or
comparable quality debt securities. The Fund may invest up to 15% of its net
assets in illiquid securities (i.e., securities that cannot be readily sold),
and may from time to time enter into forward foreign currency exchange contracts
in an attempt to manage the risk of adverse changes in currencies. The Fund may
also purchase put options in an attempt to hedge against a
80
decline in the price of securities it holds in its portfolio. A put option gives
the Fund the right to sell an underlying security at a particular price during a
fixed period of time. Forward foreign currency exchange contracts and put
options on securities may not be available to the Fund on reasonable terms in
many situations, and the Fund may frequently choose not to enter into such
contracts or purchase such options even when they are available.
The Fund may invest in futures contracts. The Fund intends to comply with Rule
4.5 of the Commodity Futures Trading Commission (CFTC), under which a mutual
fund is exempt from the definition of a "commodity pool operator." The Fund,
therefore, is not subject to registration or regulation as a pool operator,
meaning that the Fund may invest in futures contracts without registering with
the CFTC.
The Fund may also invest up to 10% of its assets in exchange-traded funds
("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they
represent baskets of securities that seek to track the performance of certain
indices. The indices include not only broad-market indices but more specific
indices as well, including those relating to particular sectors, countries and
regions. The Fund may invest in ETFs for short-term cash management purposes or
as part of its overall investment strategy.
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)
The Fund's assets are primarily invested in equity securities of foreign issuers
that are believed to offer strong growth potential. The Fund may invest in both
developed and emerging markets.
RiverSource Investments serves as the investment manager to the Fund and is
responsible for the oversight of the Fund's Subadvisers, who provide day-to-day
management for the Fund. Each of the Subadvisers acts independently of the other
and uses its own methodology for selecting investments. RiverSource Investments,
subject to the oversight of the Fund's Board of Directors (Board), decides the
proportion of the Fund assets to be managed by each subadviser, and may change
these proportions at any time. RiverSource Investments currently intends to
allocate a majority of the Fund's assets to Principal Global, although this
could change. Each of the Subadvisers employs an active investment strategy that
focuses on companies that the Subadvisers believe will increase in value over
time.
COLUMBIA WAM
Columbia WAM invests primarily in stocks of small- and medium sized companies
based both outside and in the U.S. with capitalizations of less than $5 billion
at the time of purchase. As long as the stock continues to meet the Fund's other
investment criteria, Columbia WAM may choose to hold the stock even if it grows
beyond that capitalization limit. Columbia WAM believes that smaller
companies -- particularly outside the U.S. -- which are not as well known by
financial analysts and which dominate a part of the market may offer higher
return potential than the stocks of larger companies. Columbia WAM invests in
the stocks of foreign companies based in developed markets and also emerging
markets.
In making investments for the Fund, Columbia WAM typically looks for companies
with:
- - A strong business franchise that offers growth potential.
- - Products and services that give a company a competitive advantage.
- - A stock price that Columbia WAM believes is reasonable relative to the assets
and earning power of the company.
Columbia WAM relies primarily on independent, internally generated research to
uncover companies that may be less well known than the more popular names. To
find these companies, Columbia WAM looks for growth potential, financial
strength, and fundamental value. Columbia WAM may identify what it believes are
important economic, social, or technological trends (for example, the growth of
outsourcing as a business strategy, or the productivity gains from the
increasing use of technology) and try to identify companies it thinks will
benefit from these trends.
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------
GROWTH POTENTIAL FINANCIAL STRENGTH FUNDAMENTAL VALUE
- -----------------------------------------------------------------------------------------------------
superior technology low debt reasonable stock price relative
to growth potential
- -----------------------------------------------------------------------------------------------------
innovative marketing adequate working capital valuable assets
- -----------------------------------------------------------------------------------------------------
managerial skill conservative accounting
practices
- -----------------------------------------------------------------------------------------------------
market niche adequate profit margin
- -----------------------------------------------------------------------------------------------------
good earnings prospects
- -------------------------------------------------------------------
strong demand for product
- -------------------------------------------------------------------
</Table>
Columbia WAM believes that if the growth potential is realized, it may provide a
basis for the company to outperform its peers. A strong balance sheet gives
management greater flexibility to pursue strategic objectives and is essential
to maintaining
81
a competitive advantage. Once Columbia WAM uncovers an attractive company, it
identifies a price that it believes would also make the stock a good value.
Columbia WAM may use foreign currency futures contracts or foreign currency
forward contracts, with terms of up to one year in an effort to hedge existing
positions, interest rate fluctuations or currency fluctuations. Columbia WAM
also may purchase foreign currency for immediate settlement in order to purchase
foreign securities.
PRINCIPAL GLOBAL
Principal Global's equity investment philosophy is based on the belief that
superior stock selection and disciplined risk management provide consistent
outperformance. Principal Global focuses on companies with improving and
sustainable business fundamentals, rising investor expectations and attractive
relative valuations. To support their stock selection skills, which are believed
to be the primary drivers of relative performance, Principal Global seeks to
leverage technology in a research-driven approach and neutralize unintended
portfolio risks.
Principal Global selects securities for the Fund based on its own global
investment research. The research process is comprised of the following
components:
- - A proprietary and customized information management and screening framework,
providing high-quality, real-time breadth of research coverage and peer
rankings encompassing more than 10,000 companies worldwide.
- - A systematic evaluation of companies based on objective measures such as
accelerating profitability, discounted cash flow valuation and market
confirmation.
- - The portfolio managers and research analysts team working together to build
systematic quantitative fundamental models that reflect the critical drivers
of performance.
These models produce relative rankings for each stock within their appropriate
peer group that differentiate the most attractive from the least attractive
stocks. Stocks that appear to be attractive based on initial screening and
analysis are subjected to more rigorous examination by the research analysts.
The analysts then seek to validate or confirm the attractive characteristics
identified by the research process, as well as apply more qualitative analysis
to issues such as evaluating the sustainability of fundamental changes. As part
of the research process, the research analysts meet with company management,
conduct on-site due diligence visits, attend industry conferences, as well as
interact with sell-side equity analysts on a daily basis.
Principal Global's stock selection process is complemented by disciplined
portfolio risk controls. The portfolio risk management ensures any excess
returns come from stock selection skills and not from influences such as large
sector or country exposures. This is designed to enhance the consistency of
Principal Global's investment process and to minimize the risk of unexpected
negative surprises.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- ---------------------------------------------------------------------------------------------------------
SELIGMAN INTERNATIONAL GROWTH FUND RIVERSOURCE PARTNERS INTERNATIONAL
FUNDAMENTAL POLICY (SELLING FUND) SELECT GROWTH FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- ---------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund may not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's
exemptions therefrom which may be total assets except this fundamental
granted by the SEC. investment policy shall not prohibit
the Fund from purchasing money market
securities, loans, loan participation
or other debt securities, or from
entering into repurchase agreements.
- ---------------------------------------------------------------------------------------------------------
</Table>
82
- ---------------------------------------------------------------------------------------------------------
SELIGMAN INTERNATIONAL GROWTH FUND RIVERSOURCE PARTNERS INTERNATIONAL
FUNDAMENTAL POLICY (SELLING FUND) SELECT GROWTH FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
BORROWING The Fund may not borrow money, except The Fund may not borrow money, except
MONEY as permitted by the 1940 Act or any for temporary purposes (not for
rule thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act less liabilities (other than
permits a fund to borrow up to 33 1/3% borrowings) immediately after the
of its total assets (including the borrowings.
amounts borrowed) from banks, plus an
additional 5% of its total assets for
temporary purposes, which may be
borrowed from banks or other sources.
- ---------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations
SEC or SEC staff interpretations thereunder and any applicable exemptive
thereof or any exemptions therefrom relief.
which may be granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate, except the Fund may invest estate, unless acquired as a result of
in securities secured by real estate or ownership of securities or other
interests therein or issued by persons instruments, except this shall not
(including real estate investment prevent the Fund from investing in
trusts) which deal in real estate or securities or other instruments backed
interests therein. by real estate or securities of
companies engaged in the real estate
business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options, futures contracts and foreign
Commodities below. currency or from investing in
securities or other instruments backed
by, or whose value is derived from,
physical commodities.
- ---------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, at market value, in one industry. According to the present
the securities of issuers in any interpretation by the SEC, this means
particular industry, provided that this that up to 25% of the Fund's total
limitation shall exclude securities assets, based on current market value
issued or guaranteed by the U.S. at time of purchase, can be invested in
government or any of its agencies or any one industry.
instrumentalities.
- ---------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation.
The Fund will not purchase more than
10% of the outstanding voting
securities of an issuer, except that up
to 25% of the Fund's assets may be
invested without regard to this 10%
limitation.
- ---------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or
any exemptions therefrom which may be
granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its total
assets would be invested in such
agreements and in restricted and other
illiquid securities.
- ---------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or retain the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer (other than
AND TRUSTEES the shares of the Fund), if to the
Fund's knowledge, those directors and
officers of Seligman Global Fund
Series, Inc. (of which the Fund is a
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
issuer, together own beneficially more
than 5% of such outstanding securities.
- ---------------------------------------------------------------------------------------------------------
83
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
RIVERSOURCE PARTNERS INTERNATIONAL
NONFUNDAMENTAL SELIGMAN INTERNATIONAL GROWTH FUND SELECT GROWTH FUND
POLICY (SELLING FUND) (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
BORROWING The Fund may not borrow more than 15% See the fundamental investment policy
RESTRICTIONS of the value of its total assets. on Borrowing Money above.
Borrowings may be secured by a mortgage
or pledge of the Fund's assets. See
also the fundamental investment policy
on Borrowing Money above.
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12(d)(1)
of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such activities
do not result in the 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 the Fund
to invest in any new type of commodity
if it is of a type the Fund has not
previously utilized. See also
fundamental investment policy on
Commodities above.
- ---------------------------------------------------------------------------------------------------------
EMERGING MARKET The Fund will generally invest less The Fund may invest in both developed
SECURITIES than 25% of its assets in securities of and emerging markets.
emerging markets.
- ---------------------------------------------------------------------------------------------------------
EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable
TRADED FUNDS assets in ETFs. investment strategy for the Fund,
however, the Fund does not have a
stated policy limiting these types of
investments, other than as otherwise
permitted by the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
PREFERRED The Fund may invest up to 25% of its The Fund may invest in preferred stock
STOCK AND DEBT net assets in preferred stock and debt and debt securities to the extent
SECURITIES securities. The Fund will invest only permitted by its investment strategy.
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 or S&P.
- ---------------------------------------------------------------------------------------------------------
DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to
only for hedging or investment the extent permitted by its investment
purposes. The Fund will not invest in strategy.
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.
- ---------------------------------------------------------------------------------------------------------
WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable
Fund may be invested in warrants not investment strategy for the Fund.
listed on the New York or American
Stock Exchanges.
- ---------------------------------------------------------------------------------------------------------
ACCESS TRADES The Fund may participate in access The Fund may invest in access trades
trades, but its exposure is limited to and other derivative instruments to the
5% of total assets of the Fund at the extent permitted by its investment
time of purchase and to dealing with strategy.
counterparties believed to be
reputable.
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise
PURPOSES OF of controlling or managing any company. permitted by the 1940 Act.
MANAGEMENT OR
CONTROL
- ---------------------------------------------------------------------------------------------------------
84
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. Because the Buying Fund invests primarily in small- and
medium-sized companies whereas the Selling Fund invests primarily in medium- to
large-sized companies, the Buying Fund is subject to greater small-sized company
risk. With regards to investment policies, the Buying Fund may expose
shareholders to greater emerging markets risk due to the Buying Fund's greater
ability to invest in emerging market securities. The Buying Fund may also expose
shareholders to greater issuer risk and market risk due to the Buying Fund's
greater ability to invest in preferred stock and debt securities. The actual
risks of investing in each Fund depend on the securities held in each Fund's
portfolio and on market conditions, both of which change over time. Both Funds
are subject to the principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based
outside the United States. An issuer is deemed to be based outside the United
States if it is organized under the laws of another country. Foreign
securities are primarily denominated in foreign currencies. In addition to the
risks normally associated with domestic securities of the same type, foreign
securities are subject to the following foreign risks:
Country risk includes the political, economic and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets. The liquidity of foreign investments may be
more limited than for most U.S. investments, which means that, at times, it may
be difficult to sell foreign securities at desirable prices.
Currency risk results from the constantly changing exchange rate between local
currency and the U.S. dollar. Whenever the Fund holds securities valued in a
foreign currency or holds the currency, changes in the exchange rate add to or
subtract from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater
the likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic, social
and political) in these countries as well as the other considerations listed
above. These markets are in early stages of development and are extremely
volatile. They can be marked by extreme inflation, devaluation of currencies,
dependence on trade partners, and hostile relations with neighboring countries.
- - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures, or other factors.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and mid-
sized companies, which tend to be more vulnerable to adverse developments. In
addition, focus on a particular style, for example, investment in growth or
value securities, may cause the Fund to underperform other mutual funds if
that style falls out of favor with the market.
- - SECTOR RISK. Companies that operate in different but closely related
industries are sometimes described as being in the same broad economic sector.
The values of stocks of many different companies in a market sector may be
similarly affected by particular economic or market events. Although the
Fund's principal investment strategies do not involve focusing on any
particular sector, at times the investment manager's asset management strategy
may cause the Fund to invest a large portion of its assets in a particular
sector.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to Principal Risks to which it is
otherwise
85
exposed, and may expose the Fund to additional risks, including counterparty
credit risk, leverage risk, hedging risk, correlation risk, and liquidity
risk.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Liquidity risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument.
In addition to the risks described above, the Buying Fund is subject to the
additional principal investment risks set forth below. While these additional
risks may also be risks of the Selling Fund, they are not stated as principal
investment risks of the Selling Fund. For more information regarding the Selling
Fund's principal investment risks, see "Principal Risks" in the Selling Fund's
prospectus.
- - SMALL AND MID-SIZED COMPANY RISK. Investments in small and medium companies
often involve greater risks than investments in larger, more established
companies because small and medium companies may lack the management
experience, financial resources, product diversification, experience and
competitive strengths of larger companies. Additionally, in many instances the
securities of small and medium companies are traded only over-the-counter or
on regional securities exchanges and the frequency and volume of their trading
is substantially less and may be more volatile than is typical of larger
companies.
- - QUANTITATIVE MODEL RISK. Securities selected using quantitative methods may
perform differently from the market as a whole for many reasons, including the
factors used in building the quantitative analytical framework, the weights
placed on each factor, and changing sources of market returns, among others.
There can be no assurance that these methodologies will enable the Fund to
achieve its objective.
Quantitative model risk relates to the portion of the Buying Fund's portfolio
that is managed by Principal Global.
86
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C, Class R and Class I shares of Seligman International
Growth Fund. The second table shows total returns from hypothetical investments
in Class A, Class B and Class C shares of the RiverSource Partners International
Select Growth Fund. The inception date for Class R2 and Class R5 of the Buying
Fund is expected to be in the third quarter of 2009 and therefore performance
information for those classes is not shown. These returns are compared to the
indexes shown for the same periods. For purposes of the performance calculation
in the table we assumed:
- - the maximum sales charge of 5.75%* for Class A shares;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C** and Class R shares;
- - no sales charge for Class I shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge on investments in
Class A shares of the Selling Fund is 5.75%. Although for all periods
presented, the Selling Fund's Class A share returns reflect the 5.75%
maximum initial sales charge, the actual returns for periods prior to Jan.
7, 2008 would have been higher if a 4.75% maximum initial sales charge then
in effect was incurred.
** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented in
the tables the Selling 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.
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
87
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+25.29% -36.49% -28.09% -20.41% +29.57% +23.39% +5.53% +22.47% +22.04% -57.92%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +16.96% (quarter ended Dec. 31, 1999) and the lowest return for a
calendar quarter was -27.75% (quarter ended Sept. 30, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH
FUND (BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
-16.62% +35.92% +21.93% +16.56% +26.22% +13.77% -45.64%
2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +18.31% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -24.78% (quarter ended Sept. 30, 2008).
The performance of other classes may vary from that shown because of differences
in expenses.
88
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE SINCE
INCEPTION INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**)
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING
FUND):
Class A
Return before taxes -60.34% -5.04% -7.56% N/A N/A N/A
Return after taxes on distributions -60.34% -5.70% -8.03% N/A N/A N/A
Return after taxes on distributions and sale
of Fund shares -39.22% -4.01% -5.86% N/A N/A N/A
Class B
Return before taxes -60.37% -4.96% -7.52%* N/A N/A N/A
Class C
Return before taxes -58.63% -4.60% N/A -7.92%(a) N/A N/A
Class R**
Return before taxes -58.48% -4.13% N/A N/A +0.75%(b) N/A
Class I**
Return before taxes -57.62% -3.19% N/A N/A N/A -1.34%(c)
Morgan Stanley Capital International (MSCI) EAFE
(Europe, Australasia, Far East) Index -43.06% +2.10% +1.18% +1.21%(d) +7.77%(e) +3.89%(f)
MSCI EAFE Growth Index -42.46% +1.77% -1.01% -0.56%(d) +6.68%(e) +2.91%(f)
Lipper International Multi-Cap Growth Funds
Average -46.85% +1.14% +1.46% +0.99%(g) +6.69%(e) +2.55%(f)
Lipper International Funds Average -44.23% +1.27% +1.74% +1.40%(g) +6.62%(e) +3.08%(f)
</Table>
Prior to March 31, 2000, Seligman employed subadvisers that were responsible for
providing certain portfolio management services with respect to the investments
of the Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund
were managed exclusively by Seligman. Since Sept. 15, 2003, Wellington
Management Company LLP has been employed as subadviser to provide portfolio
management services to the Fund.
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS (CLASS C)
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH
FUND (BUYING FUND):
Class A
Return before taxes -48.77% +0.90% +3.39%(h)
Return after taxes on distributions -48.80% -0.70% +2.25%(h)
Return after taxes on distributions and sale
of Fund shares -31.70% +0.76% +2.91%(h)
Class B
Return before taxes -48.81% +1.02% +3.42%(h)
Class C
Return before taxes -46.65% +1.31% +3.42%(h)
MSCI EAFE Growth Index -42.46% +1.77% +4.11%(i)
Lipper International Multi-Cap Growth Funds
Index -46.54% +2.13% +4.05%(i)
</Table>
(a) Inception date is May 27, 1999.
(b) Inception date is April 30, 2003.
(c) Inception date is Nov. 30, 2001.
(d) Measurement period started May 31, 1999.
(e) Measurement period started April 30, 2003
(f) Measurement period started Nov. 30, 2001
(g) Measurement period started May 27, 1999.
(h) Inception date is Sept. 28, 2001.
(i) Measurement period started Sept. 28, 2001.
* The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
** Class R and Class I of the Selling Fund are to be redesignated Class R2
and Class R5, respectively, in connection with the Reorganization.
The MSCI EAFE Index, an unmanaged index, is a free float-adjusted market
capitalization index that is designed to measure developed market equity
performance, excluding the United States and Canada. The index reflects
reinvestment of all distributions and changes in market prices and reflects no
deduction for fees, expenses or taxes.
The MSCI EAFE Growth Index, an unmanaged index, is compiled from a composite of
securities markets in Europe, Australia and the Far East. The index represents
the growth half of the market capitalizations of each country index, determined
by price/book value, from the standard MSCI country indices. The index covers
the full range of developed, emerging and MSCI All Country indices, including
Free indices where applicable. The Country Growth indices are aggregated into
regional Growth indices to create the composite. The index reflects reinvestment
of all distributions and changes in market prices and reflects no deduction for
fees, expenses or taxes.
89
The Lipper International Multi-Cap Growth Funds Average measures the performance
of mutual funds that, by portfolio practice, invest in a variety of market
capitalization ranges without concentrating 75% of their equity assets in any
one market capitalization range over an extended period of time. Multi-cap funds
typically have 25% to 75% of their assets invested in companies strictly outside
of the U.S. with market capitalizations (on a three-year weighted basis) greater
than the 250th-largest company in the S&P/Citigroup World ex-U.S. Broad Market
Index ("BMI"). Multi-cap growth funds typically have an above-average price-to-
cash flow ratio, price-to-book ratio, and three-year sales-per-share growth
value compared to the S&P/Citigroup World ex-U.S. BMI. The average is an
unmanaged benchmark that assumes reinvestment of all distributions, if any, and
excludes the effect of fees, sales charges and taxes.
The Lipper International Funds Average measures the performance of mutual funds
which invest in equity securities whose primary trading markets are outside the
U.S. Lipper currently classifies the Fund as an International Multi-Cap Growth
Fund. The average is an unmanaged benchmark that assumes reinvestment of all
distributions, if any, and excludes the effect of fees, sales charges and taxes.
The Lipper International Multi-Cap Growth Funds Index includes the 10 largest
international multi-cap growth funds tracked by Lipper Inc. The index's returns
include net reinvested dividends. The Buying Fund's performance is currently
measured against this index for purposes of determining the performance
incentive adjustment. See Fund Management and Compensation in Exhibit B for more
information.
Investors cannot invest directly in an average or index.
The inception date for Class R2 and Class R5 of the Buying Fund is expected to
be in the third quarter of 2009 and therefore performance information for those
classes is not shown.
90
PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND
Shareholders of both the Buying Fund and the Selling Fund may be entitled to
assert appraisal rights (also known as dissenters' rights of appraisal) under
provisions of Minnesota and Massachusetts state law, respectively. Please see
the discussion under the caption Appraisal Rights in Section C of this proxy
statement/prospectus for more information, including a comparison of appraisal
rights under Minnesota and Massachusetts state law. A copy of the appraisal
rights under the Massachusetts Business Corporation Act is also included as
Appendix D in this proxy statement/prospectus.
COMPARISON OF INVESTMENT OBJECTIVES
Each Fund seeks to provide a high level of current income consistent with
prudent risk or safety of principal and, in the case of the RiverSource Short
Duration U.S. Government Fund, consistent with investment in U.S. government and
agency securities.
The investment objectives for the Funds are as follows:
SELLING FUND: Seligman U.S. Government Securities Fund seeks to
provide a high level of current income consistent with
prudent investment risk.
BUYING FUND: RiverSource Short Duration U.S. Government Fund seeks to
provide shareholders with a high level of current income
and safety of principal consistent with investment in
U.S. government and government agency securities.
Because any investment involves risk, there is no assurance the Fund's objective
can be achieved. Only shareholders can change the Fund's objective.
COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests predominantly in debt securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, or government-sponsored
enterprises. In favorable market conditions, the Buying Fund may also invest in
debt securities that are not issued by the U.S. government, its agencies or
instrumentalities, or that are denominated in currencies other than the U.S.
dollar. Under normal market conditions the Buying Fund will maintain an average
portfolio duration of one to three years while the Selling Fund's strategy does
not specify an average duration target range. At Jan. 31, 2009, the average
portfolio duration was 4.19 years for the Selling Fund and 1.76 years for the
Buying Fund.
DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH
BELOW:
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
The Fund will invest at least 80% of its net assets in U.S. government
securities which are debt securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or government sponsored
enterprises. Although certain of the securities in which the Fund may invest are
backed by the full faith and credit of the U.S. government (and thus involve
minimal credit risk), other securities in which the Fund may invest are backed
only by the credit of a U.S. federal agency, instrumentality or government
sponsored enterprise that issued the security (and thus may have increased
credit risk). Securities backed by the full faith and credit of the U.S.
government include direct obligations of the U.S. Treasury (including bills,
notes, and bonds) and mortgage-backed securities guaranteed by the Government
National Mortgage Association (GNMA). Examples of securities not backed by the
full faith and credit of the U.S. government include securities issued by the
Student Loan Marketing Association (Sallie Mae), the Federal Home Loan Banks
(FHLBs), Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal
National Mortgage Association (Fannie Mae).
In pursuit of the Fund's objectives, the investment manager chooses investments
by:
- - Reviewing credit characteristics and the interest rate outlook.
- - Identifying and buying securities that are high quality or have similar
qualities, in the investment manager's opinion, even though they are not rated
or have been given a lower rating by a rating agency.
In evaluating whether to sell a security, the investment manager considers,
among other factors, whether:
- - The security is overvalued relative to alternative investments.
- - The investment manager wishes to lock-in profits.
- - Changes in the interest rate or economic outlook.
- - The investment manager identifies a more attractive opportunity.
91
The Fund intends to comply with Rule 4.5 of the Commodity Futures Trading
Commission (CFTC), under which a mutual fund is exempt from the definition of a
"commodity pool operator." The Fund, therefore, is not subject to registration
or regulation as a pool operator, meaning that the Fund may invest in futures
contracts without registering with the CFTC.
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
Under normal market conditions, at least 80% of the Fund's net assets are
invested in debt securities issued or guaranteed as to principal and interest by
the U.S. government, or its agencies or instrumentalities. Shareholders will be
given at least 60 days' notice of any change in the 80% policy. The Fund invests
in direct obligations of the U.S. government, such as Treasury bonds, bills, and
notes, and of its agencies and instrumentalities. The Fund may invest to a
substantial degree in securities issued by various entities sponsored by the
U.S. government, such as Fannie Mae and Freddie Mac. These issuers are chartered
or sponsored by acts of Congress; however, their securities are neither issued
nor guaranteed by the United States Treasury.
When market conditions are favorable, the Fund may also invest in debt
securities that are not issued by the U.S. government, its agencies or
instrumentalities, or that are denominated in currencies other than the U.S.
dollar.
In pursuit of the Fund's objectives, the investment manager chooses investments
by:
- - Reviewing credit characteristics and the interest rate outlook.
- - Identifying and buying securities that are high quality or have similar
qualities, in the investment manager's opinion, even though they are not rated
or have been given a lower rating by a rating agency.
Under normal market conditions, the Fund will seek to maintain an average
portfolio duration of one to three years. Duration measures the sensitivity of
bond prices to changes in interest rates. The longer the duration of a bond, the
longer it will take to repay the principal and interest obligations and the more
sensitive it will be to changes in interest rates. For example, a three year
duration means a bond is expected to decrease in value by 3% if interest rates
rise 1% and increase in value by 3% if interest rates fall 1%.
In evaluating whether to sell a security, the investment manager considers,
among other factors, whether:
- - The security is overvalued relative to alternative investments.
- - The investment manager wishes to lock-in profits.
- - Changes in the interest rate or economic outlook.
- - The investment manager identifies a more attractive opportunity.
The investment manager may use derivatives such as futures, options, forward
contracts and swaps, including credit default swaps, in an effort to produce
incremental earnings, to hedge existing positions, to increase market exposure
and investment flexibility, or to obtain or reduce credit exposure.
COMPARISON OF FUNDAMENTAL POLICIES
If the Reorganization occurs, the combined Fund will be subject to the
fundamental investment policies of the Buying Fund. RiverSource Investments does
not believe that the differences between the fundamental investment policies of
the Funds result in any material difference in the way the Funds have been
managed or in the way the combined Fund will be managed.
For purposes of this discussion, a "fundamental" investment policy is one that
may not be changed without a shareholder vote. The Funds' fundamental investment
policies are set forth below:
- ---------------------------------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S.
FUNDAMENTAL POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter
securities of other issuers, except (sell securities for others). However,
insofar as the Fund may be deemed an under the securities laws, the Fund may
underwriter under the 1933 Act in be deemed to be an underwriter when it
disposing of a portfolio security or in purchases securities directly from the
connection with investments in other issuer and later resells them.
investment companies.
- ---------------------------------------------------------------------------------------------------------
LENDING The Fund may not make loans, except as The Fund may not lend securities or
permitted by the 1940 Act or any rule participate in an interfund lending
thereunder, any SEC or SEC staff program if the total of all such loans
interpretations thereof or any would exceed 33 1/3% of the Fund's
exemptions therefrom which may be total assets except this fundamental
granted by the SEC. investment policy shall not prohibit
the Fund from purchasing money market
securities, loans, loan participation
or other debt securities, or from
entering into repurchase agreements.
- ---------------------------------------------------------------------------------------------------------
</Table>
92
- ---------------------------------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S.
FUNDAMENTAL POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except
as permitted by the 1940 Act or any for temporary purposes (not for
rule thereunder, any SEC or SEC staff leveraging or investment) in an amount
interpretations thereof or any not exceeding 33 1/3% of its total
exemptions therefrom which may be assets (including the amount borrowed)
granted by the SEC. The 1940 Act less liabilities (other than
permits a fund to borrow up to 33 1/3% borrowings) immediately after the
of its total assets (including the borrowings.
amounts borrowed) from banks, plus an
additional 5% of its total assets for
temporary purposes, which may be
borrowed from banks or other sources.
- ---------------------------------------------------------------------------------------------------------
ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior
SECURITIES securities, except as permitted by the securities, except as permitted under
1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations
SEC or SEC staff interpretations thereunder and any applicable exemptive
thereof or any exemptions therefrom relief.
which may be granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real
real estate including limited estate, unless acquired as a result of
partnership interests in real property, ownership of securities or other
except the Fund may invest in debt instruments, except this shall not
securities secured by real estate or prevent the Fund from investing in
interests therein or issued by securities or other instruments backed
companies which invest in real estate by real estate or securities of
or interests therein, including real companies engaged in the real estate
estate investment trusts ("REITs"). business or real estate investment
trusts. For purposes of this policy,
real estate includes real estate
limited partnerships.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical
commodities or commodity contracts, commodities unless acquired as a result
except to the extent permissible under of ownership of securities or other
applicable law and interpretations, as instruments, except this shall not
they may be amended from time to time. prevent the Fund from buying or selling
See also nonfundamental policy on options and futures contracts or from
Commodities below. investing in securities or other
instruments backed by, or whose value
is derived from, physical commodities.
- ---------------------------------------------------------------------------------------------------------
INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any
CONCENTRATION its total assets, at market value, in one industry. According to the present
any one industry, except that this 25% interpretation by the SEC, this means
limitation on industry concentration that up to 25% of the Fund's total
does not apply to securities issued or assets, based on current market value
guaranteed by the U.S. government or at time of purchase, can be invested in
any of its agencies or any one industry.
instrumentalities (which may include
mortgage-related securities).
- ---------------------------------------------------------------------------------------------------------
DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5%
inconsistent with the Fund's of its total assets in securities of
classification as a diversified company any company, government, or political
under the 1940 Act. subdivision thereof, except the
limitation will not apply to
investments in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities, or
other investment companies, and except
that up to 25% of the Fund's total
assets may be invested without regard
to this 5% limitation. The Fund will
not purchase more than 10% of the
outstanding voting securities of an
issuer, except that up to 25% of the
Fund's assets may be invested without
regard to this 10% limitation.
- ---------------------------------------------------------------------------------------------------------
MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental
margin, except as permitted by the 1940 policy on Lending above.
Act or any rule thereunder, any SEC or
SEC staff interpretations thereof or
any exemptions therefrom which may be
granted by the SEC.
- ---------------------------------------------------------------------------------------------------------
REPURCHASE The Fund will not enter into repurchase No fundamental policy.
AGREEMENTS agreements of more than one week's
duration if more than 10% of its total
assets would be invested in such
agreements and in restricted and other
illiquid securities.
- ---------------------------------------------------------------------------------------------------------
</Table>
93
- ---------------------------------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S.
FUNDAMENTAL POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
DEALINGS WITH The Fund may not purchase or hold the No fundamental policy.
DIRECTORS, OFFICERS securities of any issuer, if to its
AND TRUSTEES knowledge, Trustees or officers of
Seligman High Income Fund Series (of
which the Fund is a series)
individually owning beneficially more
than 0.5% of the securities of that
other company own in the aggregate more
than 5% of such securities. The Fund
may not engage in transactions with its
Trustees and officers, or firms they
are associated with, in connection with
the purchase or sale of securities,
except as broker.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES
If the Reorganization occurs, the combined Fund will be subject to the
nonfundamental investment policies of the Buying Fund. RiverSource Investments
does not believe that the differences between the nonfundamental policies of the
Funds result in any material differences in the way the Funds have been managed
or in the way the combined Fund will be managed.
The following highlights the differences in the Funds' nonfundamental investment
policies (policies that may be changed without a shareholder vote):
- ---------------------------------------------------------------------------------------------------------
NONFUNDAMENTAL SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S.
POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND)
- ---------------------------------------------------------------------------------------------------------
SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable.
END INVESTMENT of a registered open-end investment
COMPANIES company or a registered unit investment
trust in reliance on subparagraph (F)
or subparagraph (G) of Section 12(d)(1)
of the 1940 Act.
- ---------------------------------------------------------------------------------------------------------
COMMODITIES The Fund may purchase and sell See fundamental investment policy on
commodities and commodity contracts Commodities above.
only to the extent that such activities
do not result in the Fund being a
"commodity pool" as defined in the
Commodity Exchange Act and the
Commodity Futures Trading Commission's
regulations and interpretations
thereunder. The investment manager must
seek Board approval to invest in any
type of commodity or commodity contract
if it is of a type the Fund has not
previously utilized. See also
fundamental investment policy on
Commodities above.
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise
PURPOSES OF of controlling or managing any company. permitted by the 1940 Act.
MANAGEMENT OR
CONTROL
- ---------------------------------------------------------------------------------------------------------
SHORT SALES The Fund may not sell securities short The Fund is not prohibited from
or maintain a short position. engaging in short sales, however, the
Fund will seek Board approval prior to
utilizing short sales as an active part
of its investment strategy.
- ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS
Although the Funds describe them differently, the principal investment risks
associated with the Buying Fund and the Selling Fund are similar because the
Funds have similar investment objectives, principal investment strategies and
investment policies. Because the Buying Fund will generally maintain a shorter
average portfolio duration than the Selling Fund, the Buying Fund will generally
be subject to less interest rate risk than the Buying Fund. The actual risks of
investing in each Fund depend on the securities held in each Fund's portfolio
and on market conditions, both of which change over time. Both Funds are subject
to the principal investment risks described below.
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to select
securities and to make investment decisions that are suited to achieving the
Fund's investment objectives. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
- - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable or
unwilling to honor a financial obligation, such as payments due on a bond or a
note. If the Fund
94
purchases unrated securities, or if the rating of a security is reduced after
purchase, the Fund will depend on the investment manager's analysis of credit
risk more heavily than usual.
- - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to
changes in interest rates. Interest rate risk is generally associated with
bond prices: when interest rates rise, bond prices fall. In general, the
longer the maturity or duration of a bond, the greater its sensitivity to
changes in interest rates.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably.
- - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that
a bond or other security might be called or otherwise converted, prepaid, or
redeemed before maturity. This risk is primarily associated with asset-backed
securities, including mortgage-backed securities. If a security is converted,
prepaid, or redeemed before maturity, particularly during a time of declining
interest rates, the investment managers may not be able to reinvest in
securities providing as high a level of income, resulting in a reduced yield
to the Fund. Conversely, as interest rates rise, the likelihood of prepayment
decreases. The investment managers may be unable to capitalize on securities
with higher interest rates because the Fund's investments are locked in at a
lower rate for a longer period of time.
In addition to the risks described above, the Buying Fund is subject to the
additional principal investment risk set forth below. While this additional risk
may also be a risk of the Selling Fund, it is not stated as a principal
investment risk of the Selling Fund. For more information regarding the Selling
Fund's principal investment risks, see "Principal Risks" in the Selling Fund's
prospectus.
- - DERIVATIVES RISK. Derivatives are financial instruments that have a value
which depends upon, or is derived from, the value of something else, such as
one or more underlying securities, pools of securities, options, futures,
indexes or currencies. Gains or losses involving derivative instruments may be
substantial, because a relatively small price movement in the underlying
security(ies), instrument, currency or index may result in a substantial gain
or loss for the Fund. Derivative instruments in which the Fund invests will
typically increase the Fund's exposure to principal risks to which it is
otherwise exposed, and may expose the Fund to additional risks, including
counterparty credit risk, hedging risk, correlation risk, liquidity risk and
leverage risk.
Counterparty credit risk is the risk that a counterparty to the derivative
instrument becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, and the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed.
Hedging risk is the risk that derivative instruments used to hedge against an
opposite position may offset losses, but they may also offset gains.
Correlation risk is related to hedging risk and is the risk that there may be
an incomplete correlation between the hedge and the opposite position, which
may result in increased or unanticipated losses.
Liquidity risk is the risk that the derivative instrument may be difficult or
impossible to sell or terminate, which may cause the Fund to be in a position
to do something the investment manager would not otherwise choose, including
accepting a lower price for the derivative instrument, selling other
investments or foregoing another, more appealing investment opportunity.
Leverage risk is the risk that losses from the derivative instrument may be
greater than the amount invested in the derivative instrument. Certain
derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
95
PERFORMANCE
The following bar charts and tables provide some illustration of the risks of
investing in the Funds by showing, respectively:
- - how each Fund's performance has varied for each full calendar year shown in
the bar chart; and
- - how each Fund's average annual total returns compare to indexes shown in the
table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How a Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower.
Bar Charts. Class A share information is shown in the bar charts; the sales
charge for Class A shares is not reflected in the bar charts. If sales charges
were included, the returns would be lower.
Tables. The first table shows total returns from hypothetical investments in
Class A, Class B, Class C and Class R shares of Seligman U.S. Government
Securities Fund. The second table shows total returns from hypothetical
investments in Class A, Class B and Class C shares of the RiverSource Short
Duration U.S. Government Fund. The inception date for Class R2 of the Buying
Fund is expected to be in the third quarter of 2009 and therefore performance
information for that class is not shown. These returns are compared to the
indexes shown for the same periods. For purposes of the performance calculation
in the table we assumed:
- - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and
the maximum sales charge for Class A shares of the Buying Fund** at the
beginning of each period;
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge ("CDSC") for Class B, Class C*** and Class R shares; and
- - with the exception of Class A shares, no adjustments for taxes paid by an
investor on the reinvested income and capital gains.
* Effective Jan. 7, 2008, the maximum initial sales charge in Class A shares
of the Selling Fund is 4.50%. Although for all periods presented the
Selling Fund's Class A share returns reflect the 4.50% maximum initial
sales charge, the actual returns for periods prior to Jan. 7, 2008 would
have been lower if a 4.75% maximum initial sales charge then in effect was
incurred.
** On March 3, 2008, the maximum sales charge for Class A shares of the
Buying Fund changed from 4.75% to 3.00%. Class A share performance for the
Buying Fund for each period of five years, ten years and since inception
reflects the maximum sales charge of 4.75%, which was in effect at the
beginning of each of those periods. Class A share performance for the
Buying Fund for the one year period reflects the maximum sales charge of
3.00%, which was in effect at the beginning of that period.
*** Effective June 4, 2007, there is no initial sales charge on purchases of
Class C shares of the Selling Fund. Although for all periods presented the
Selling Fund's 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.
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
96
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING
FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
-3.63% +12.26% +5.95% +10.45% +0.55% +1.09% +0.00% +2.33% +6.10% +8.76%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +6.54% (quarter ended Sept. 30, 2002) and the lowest return for a
calendar quarter was -2.87% (quarter ended June 30, 2004).
The performance of other classes may vary from that shown because of differences
in expenses.
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND
(BUYING FUND)
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
(BAR CHART)
<Table>
+1.13% +5.90% +6.77% +5.94% +1.03% +0.82% +1.33% +3.95% +5.28% -1.53%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar
quarter was +3.53% (quarter ended Sept. 30, 2001) and the lowest return for a
calendar quarter was -1.49% (quarter ended March 31, 2000).
The performance of other classes may vary from that shown because of differences
in expenses.
The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement
where the Buying Fund invested all of its assets in a corresponding "master"
fund with an identical investment objective and investment strategies. As of
Oct. 18, 2005, the Buying Fund became a stand-alone fund that invests directly
in a portfolio of securities. The information shown in the table and in the
financial highlights for the Buying Fund includes the activity of the Buying
Fund when it was a feeder in a master/feeder arrangement.
97
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
<Table>
<Caption>
SINCE SINCE
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**)
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING
FUND):
Class A
Return before taxes +3.82% +2.66% +3.80% N/A N/A
Return after taxes on distributions +2.77% +1.50% +2.33% N/A N/A
Return after taxes on distributions and sale of
Fund shares +2.45% +1.57% +2.33% N/A N/A
Class B
Return before taxes +3.08% +2.47% +3.66%* N/A N/A
Class C
Return before taxes +6.94% +2.83% N/A +3.98%(a) N/A
Class R**
Return before taxes +7.50% +3.33% N/A N/A +2.92%(b)
Barclays Capital U.S. Government Bond Index +12.39% +6.06% +6.16% +6.67%(c) +5.48%(d)
Blended Index +10.46% +5.83% +6.12% +6.46%(c) +5.36%(d)
Lipper General U.S. Government Funds Average +7.27% +4.18% +4.68% +5.12%(c) +3.63%(d)
</Table>
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (CLASS C)
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND
(BUYING FUND):
Class A
Return before taxes -6.24% +0.97% +2.50% N/A
Return after taxes on distributions -7.34% -0.20% +0.99% N/A
Return after taxes on distributions and sale of
Fund shares -4.05% +0.15% +1.20% N/A
Class B
Return before taxes -7.04% +0.82% +2.25% N/A
Class C
Return before taxes -3.22% +1.18% N/A +2.64%(e)
Barclays Capital 1-3 Year Government Index +6.66% +4.11% +4.81% +4.97%(f)
Lipper Short U.S. Government Funds Index +3.46% +3.13% +3.98% +4.05%(f)
</Table>
(a) Inception date is May 27, 1999.
(b) Inception date is April 30, 2003.
(c) Measurement period started May 27, 1999.
(d) Measurement period started April 30, 2003.
(e) Inception date is June 26, 2000.
(f) Measurement period started June 26, 2000.
* The ten-year return for Class B shares reflects automatic conversion to
Class A shares approximately eight years after their date of purchase.
** Class R of the Selling Fund is to be redesignated Class R2 in connection
with the Reorganization.
The Barclays Capital U.S. Government Bond Index, an unmanaged index, is a
benchmark index made up of the Barclays Capital U.S. Treasury Bond Index and the
Barclays Capital U.S. Agency Bond Index as well as the Barclays Capital U.S. 1-3
Year Government Index and Barclays Capital U.S. 20+ Year Treasury Index. The
index reflects reinvestment of all distributions and changes in market prices
and reflects no deduction for fees, expenses or taxes.
The Blended Index is an unmanaged index consists of a fifty percent equal
weighting in the Barclays Capital U.S. Government Bond Index and the Barclays
Capital Fixed-Rate Mortgage Backed Securities Index (the "MBS Index"), which
covers the fixed-rate agency mortgage-backed pass-through securities of the
GNMA, Fannie Mae and Freddie Mac. The Selling Fund is actively managed and its
holdings are subject to change. The index reflects reinvestment of all
distributions and changes in market prices and reflects no deduction for fees,
expenses or taxes.
The Lipper General U.S. Government Funds Average includes funds that invest at
least 65% of their assets in U.S. government and government agency issues. The
average is an unmanaged benchmark that assumes reinvestment of dividends, if
any, and excludes the effect of fees, taxes and sales charges.
The Barclays Capital U.S. 1-3 Year Government Index, an unmanaged index, is made
up of all publicly issued, nonconvertible domestic debt of the U.S. government,
or agency thereof, or any quasi-federal corporation. The index also includes
corporate debt guaranteed by the U.S. government. Only notes and bonds with a
minimum maturity of one year up to a maximum maturity of 2.9 years are included.
The index reflects reinvestment of all distributions and changes in market
prices and reflects no deduction for fees, expenses or taxes.
The Lipper Short U.S. Government Funds Index includes the 30 largest short U.S.
government funds tracked by Lipper Inc. The index's returns include net
reinvested dividends.
Investors cannot invest directly in an average or index.
The inception date for Class R2 of the Buying Fund is expected to be in the
third quarter of 2009 and therefore performance information for that class is
not shown.
98
ADDITIONAL INFORMATION ABOUT EACH REORGANIZATION
TERMS OF THE REORGANIZATIONS
The Board has approved the Agreement, the form of which is attached as Exhibit
A. The Agreement provides for Reorganizations on the following terms:
- - Each Reorganization is expected to occur before the end of the third quarter
of 2009, pending shareholder approval, receipt of any necessary regulatory
approvals and satisfaction of any other conditions to closing. However,
following shareholder approval, each Reorganization may happen at any time
agreed to by the applicable Selling Fund and the corresponding Buying Fund.
- - Each Selling Fund will transfer all of its assets to the corresponding Buying
Fund and, in exchange, the corresponding Buying Fund will assume all the
Selling Fund's liabilities and will issue to the Selling Fund, as applicable,
Class A, Class B, Class C, Class R2, and Class R5 shares with an aggregate net
asset value on the business day immediately preceding the closing of the
Reorganization equal to the value of the assets that it receives from the
Selling Fund, less the liabilities assumed by the corresponding Buying Fund in
the transaction. The Reorganization Shares will immediately be distributed to
the Selling Fund shareholders in proportion to their holdings of shares of the
Selling Fund. As a result, shareholders of the Selling Fund will become, as
applicable, Class A, Class B, Class C, Class R2, and/or Class R5 shareholders
of the corresponding Buying Fund.
- - No Selling Fund and no shareholders of any Selling Fund will pay any sales
charge in connection with its Reorganization.
- - The net asset value of each Selling Fund and the corresponding Buying Fund
will be computed as of 3:00 p.m., Central time, or close of business, on the
business day immediately preceding the closing date of the applicable
Reorganization.
- - After its Reorganization, each Selling Fund will be dissolved.
CONDITIONS TO CLOSING EACH REORGANIZATION
The completion of each Reorganization is subject to certain conditions described
in the Agreement, including:
- - The Selling Fund will have declared and paid a dividend that will distribute
all of the Selling Fund's net investment income and net capital gains, if any,
to the shareholders of the Selling Fund for the taxable years ending on or
prior to the closing date of the Reorganization.
- - The Funds will have received any approvals, consents or exemptions from the
SEC or any other regulatory body necessary to carry out the Reorganization.
- - A registration statement on Form N-14 relating to the Reorganization will have
been filed with the SEC and declared effective.
- - The shareholders of the Selling Fund will have approved the Agreement.
- - The Selling Fund will have received an opinion of tax counsel to the effect
that, although not entirely free from doubt, the shareholders of the Selling
Fund will not recognize gain or loss for federal income tax purposes upon the
exchange of their Selling Fund shares for the corresponding Buying Fund shares
in connection with the Reorganization.
TERMINATION OF THE AGREEMENT
The Agreement and the transactions contemplated by it may be terminated and
abandoned with respect to any Reorganization by resolution of the Board at any
time prior to the closing date thereof. In the event of a termination,
RiverSource will bear all costs associated with the Reorganization.
TAX STATUS OF THE REORGANIZATIONS
Each Reorganization is intended to qualify for federal income tax purposes as a
tax-free reorganization under section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). As a condition to the closing of each
Reorganization, each Selling Fund and Buying Fund will receive an opinion from
Ropes & Gray LLP to the effect that, although not free from doubt, on the basis
of existing provisions of the Code, U.S. Treasury regulations issued thereunder,
current administrative rules, pronouncements and court decisions, for federal
income tax purposes:
- - The transfer of the Selling Fund's assets to the Buying Fund in exchange for
Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of
the Buying Fund and the assumption by the Buying Fund of the Selling Fund's
liabilities, followed by the distribution of those Class A, Class B, Class C,
Class R2 and/or Class R5 shares, as applicable, to the Selling Fund's
shareholders and the termination of the Selling Fund, will be a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Selling Fund and the Buying Fund will each be a "party to the reorganization"
within the meaning of Section 368(b) of the Code.
99
- - Under Section 361 of the Code, no gain or loss will be recognized by the
Selling Fund upon the transfer of all of its assets to the Buying Fund or on
the distribution by the Selling Fund of Class A, Class B, Class C, Class R2
and/or Class R5 shares, as applicable, of the Buying Fund to Selling Fund
shareholders in liquidation.
- - Under Section 354 of the Code, the shareholders of the Selling Fund will not
recognize gain or loss upon the exchange of their Class A, Class B, Class C,
Class R and/or Class I shares, as applicable, of the Selling Fund solely for
Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of
the Buying Fund as part of the Reorganization.
- - Under Section 358 of the Code, the aggregate tax basis of the Class A, Class
B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund
that a Selling Fund shareholder receives in the Reorganization will be the
same as the aggregate tax basis of the Class A, Class B, Class C, Class R
and/or Class I shares, as applicable, of the Selling Fund exchanged therefor.
- - Under Section 1223(1) of the Code, the holding period for the Class A, Class
B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund
that a Selling Fund shareholder receives in the Reorganization will include
the period for which he or she held the Class A, Class B, Class C, Class R
and/or Class I shares, as applicable, of the Selling Fund exchanged therefor,
provided that on the date of the exchange he or she held such Selling Fund
shares as capital assets.
- - Under Section 1032 of the Code, no gain or loss will be recognized by the
Buying Fund upon the receipt of the Selling Fund's assets solely in exchange
for the issuance of the Buying Fund's Class A, Class B, Class C, Class R2
and/or Class R5 shares, as applicable, to the Selling Fund and the assumption
of all of the Selling Fund's liabilities by the Buying Fund.
- - Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets
that the Buying Fund received from the Selling Fund will be the same as the
Selling Fund's tax basis in those assets immediately prior to the transfer.
- - Under Section 1223(2) of the Code, the Buying Fund's holding periods in the
assets received from the Selling Fund will include the Selling Fund's holding
periods in such assets.
- - The Buying Fund will succeed to and take into account the items of the Selling
Fund described in Section 381(c) of the Code, subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code and the
regulations thereunder.
Ropes & Gray LLP will express no view with respect to the effect of a
Reorganization on any transferred asset as to which any unrealized gain or loss
is required to be recognized under federal income tax principles (i) at the end
of a taxable year or upon the termination thereof, or (ii) upon the transfer of
such asset regardless of whether such a transfer would otherwise be a non-
taxable transaction.
The opinion will be based on certain factual certifications made by the officers
of the Selling Fund and the Buying Fund and will also be based on customary
assumptions. The opinion will note and distinguish certain published precedent,
and it is possible that the Internal Revenue Service (the "IRS") could disagree
with Ropes & Gray LLP's opinion.
Opinions of counsel are not binding upon the IRS or the courts. If a
Reorganization is consummated but does not qualify as a tax-free reorganization
under the Code, a shareholder of the Selling Fund would recognize a taxable gain
or loss equal to the difference between his or her tax basis in his or her
Selling Fund shares and the fair market value of the shares of the Buying Fund
he or she received. Shareholders of a Selling Fund should consult their tax
advisors regarding the effect, if any, of the Reorganization in light of their
individual circumstances.
In the case of some of the Selling Funds, portfolio manager substitutions
independent of the Reorganizations have occurred and resulted in substantial
portfolio turnover. In addition, a portion or all of the portfolio assets of any
Selling Fund may be sold in connection with its Reorganization. The actual tax
impact of such sales depends on the difference between the price at which such
portfolio assets are sold and the Selling Fund's tax basis in such assets. Any
net capital gains recognized in these sales will be distributed to Selling Fund
shareholders as capital gain dividends (to the extent of net realized long-term
capital gains over net realized short-term capital losses) and/or ordinary
dividends (to the extent of net realized short-term capital gains over net
realized long-term capital losses) during or with respect to the year of sale,
and such distributions will be taxable to shareholders. Because each
Reorganization will end the tax year of the applicable Selling Fund, it will
accelerate distributions to shareholders from the Selling Fund for its short tax
year ending on the date of the Reorganization. Those tax year-end distributions
will be taxable and will include any capital gains resulting from portfolio
turnover prior to the Reorganization.
Prior to the closing of each Reorganization, the Selling Fund will, and the
Buying Fund may, declare a distribution to shareholders, which, together with
all previous distributions, will have the effect of distributing to shareholders
all of its investment company taxable income (computed without regard to the
deduction for dividends paid), net tax-exempt income, if any, and net realized
capital gains, if any, through the closing of the Reorganization. These
distributions will be taxable to shareholders.
100
A Fund's ability to carry forward capital losses and to use them to offset
future gains may be limited. First, a Fund's "pre-acquisition losses" (including
capital loss carryforwards, net current-year capital losses, and unrealized
losses that exceed certain thresholds) may become unavailable to offset gains of
the combined Fund. Second, one Fund's pre-acquisition losses cannot be used to
offset unrealized gains in another Fund that are "built in" at the time of the
Reorganization and that exceed certain thresholds ("non-de minimis built-in
gains") for five tax years. Third, a Selling Fund's loss carryforwards, as
limited under the previous two rules, are permitted to offset only that portion
of the income of the Buying Fund for the taxable year of the Reorganization that
is equal to the portion of the Buying Fund's taxable year that follows the date
of the Reorganization (prorated according to number of days). Therefore, in
certain circumstances, shareholders of a Fund may pay taxes sooner, or pay more
taxes, than they would have had a Reorganization not occurred.
In addition, the combined Fund resulting from each Reorganization will have tax
attributes that reflect a blending of the tax attributes of the two Funds at the
time of the Reorganization (including as affected by the rules set forth above).
Therefore, the shareholders of the Selling Fund will in each case receive a
proportionate share of any "built-in" (unrealized) gains in the Buying Fund's
assets, as well as any taxable gains realized by the Buying Fund but not
distributed to its shareholders prior to the Reorganization, when such gains are
eventually distributed by the Buying Fund. As a result, shareholders of a
Selling Fund may receive a greater amount of taxable distributions than they
would have had the Reorganization not occurred. And any pre-acquisition losses
of the Selling Fund (whether realized or unrealized) remaining after the
operation of the limitation rules described above will become available to
offset capital gains realized after the Reorganization and thus may reduce
subsequent capital gain distributions to a broader group of shareholders than
would have been the case absent such Reorganization, such that the benefit of
those losses to Selling Fund shareholders may be further reduced relative to
what the benefit would have been had the Reorganization not occurred.
The impact of the rules described above will depend on the relative sizes of,
and the losses and gains (both realized and unrealized) in, each Fund at the
time of its Reorganization and thus cannot be calculated precisely prior to the
Reorganization.
The realized and unrealized gains and losses of each Fund at the time of its
Reorganization will determine the extent to which the combining Funds'
respective losses, both realized and unrealized, will be available to reduce
gains realized by the combined Fund following the Reorganization, and
consequently the extent to which the combined Fund may be required to distribute
gains to its shareholders earlier than would have been the case absent the
Reorganization. The following paragraphs provide a brief summary of the tax
impact of each Reorganization had it occurred on October 31, 2008. As noted
above, the tax impact of a Reorganization depends on each Fund's relative tax
situation at the time of the Reorganization, which situation will be different
than the tax situation on October 31, 2008, and cannot be calculated precisely
prior to the Reorganization. Due to the significant portfolio turnover of
certain of the Funds resulting from RiverSource Investments' purchase of
Seligman and portfolio manager substitutions made independent of the
Reorganizations, and the substantial volatility in the marketplace, the actual
tax impacts of the Reorganizations could differ substantially from those
described below.
Proposal 1; Reorganization of Seligman Core Fixed Income Fund into RiverSource
Diversified Bond Fund. As of October 31, 2008, Seligman Core Fixed Income Fund
(Selling Fund) and RiverSource Diversified Bond Fund (Buying Fund) had net
realized losses (including capital loss carryforwards) equal to approximately
5.7% and 3.9% of net assets, respectively. If the Reorganization had occurred on
October 31, 2008, the loss limitation rules would not have affected the combined
Fund's ability to use Selling Fund losses to offset gains recognized by the
combined Fund. Selling Fund's losses would thus have been available to reduce
subsequent capital gain distributions to shareholders of the combined Fund,
spreading the tax benefit of such losses over a larger group of shareholders
than if the Reorganization had not occurred.
Subsequent to October 31, 2008, Selling Fund experienced significant portfolio
turnover. The recognition of gain and loss resulting from such portfolio
turnover could increase the potential tax cost of the Reorganization to Selling
Fund shareholders relative to the costs described above.
Proposal 2; Reorganization of Seligman Emerging Markets Fund into Threadneedle
Emerging Markets Fund. As of October 31, 2008, Seligman Emerging Markets Fund
(Selling Fund) had a very small amount of net realized gain (0.06% of its net
assets) and no capital loss carryforwards but had net unrealized losses equal to
approximately 48.3% of its net assets. Threadneedle Emerging Markets Fund
(Buying Fund) had no capital loss carryforwards and net realized losses equal to
approximately 3.7% of its net assets and unrealized losses equal to
approximately 57.1% of its net assets. If the Reorganization had occurred on
that date, Selling Fund shareholders might have benefited from the use of Buying
Fund's losses to offset gains of the combined Fund. However, to the extent
Selling Fund realizes its unrealized losses, such losses will be subject to the
loss limitation rules and might cause Selling Fund shareholders to experience a
greater tax cost than if the Reorganization had not occurred.
Proposal 3; Reorganization of Seligman Global Growth Fund into Threadneedle
Global Equity Fund. As of October 31, 2008, Seligman Global Growth Fund (Selling
Fund) and Threadneedle Global Equity Fund (Buying Fund) had net realized losses
(including capital loss carryforwards) equal to approximately 237.4% and 94.2%
of net assets, respectively, and had net unrealized losses equal to
approximately 36.6% and 37.3% of net assets, respectively. If the Reorganization
had occurred on
101
October 31, 2008, the limitation on the use of Selling Fund's realized losses to
offset gains of the combined Fund would not have had a significant negative
impact on Selling Fund shareholders because most of Selling Fund's realized
losses likely would have expired unused had the Reorganization not occurred.
However, to the extent Selling Fund realizes its unrealized losses, such losses
will be subject to the loss limitation rules and might cause Selling Fund
shareholders to experience a greater tax cost than if the Reorganization had not
occurred.
Proposal 4; Reorganization of Seligman High-Yield Fund into RiverSource High
Yield Bond Fund. As of October 31, 2008, Seligman High-Yield Fund (Selling Fund)
and RiverSource High Yield Bond Fund (Buying Fund) had net realized losses
(including capital loss carryforwards) equal to approximately 760.8% and 126.2%
of net assets, respectively, and had net unrealized losses equal to
approximately 52.2% and 35.9% of net assets, respectively. If the Reorganization
had occurred on October 31, 2008, the limitation on the use of Selling Fund's
realized losses to offset gains of the combined Fund would not have had a
significant negative impact on Selling Fund shareholders because nearly all of
Selling Fund's realized losses likely would have expired unused had the
Reorganization not occurred.
Subsequent to October 31, 2008, Selling Fund experienced significant portfolio
turnover, causing the recognition of additional losses subject to the loss
limitation rules, which could result in an increase of the potential tax cost
due to the Reorganization relative to the costs described above. Additionally,
to the extent Selling Fund further realizes its unrealized losses, the
application of the loss limitation rules to such losses might cause a further
increase in the potential tax cost to Selling Fund shareholders.
Proposal 5; Reorganization of Seligman Income and Growth Fund into RiverSource
Balanced Fund. As of October 31, 2008, Seligman Income and Growth Fund (Selling
Fund) and RiverSource Balanced Fund (Buying Fund) had net realized losses
(including capital loss carryforwards) equal to approximately 31.0% and 119.6%
of net assets, respectively, and had net unrealized losses equal to
approximately 59.2% and 21.7% of net assets, respectively. If the Reorganization
had occurred on October 31, 2008, the loss limitation rules would have
significantly limited the ability to use Selling Fund losses to offset gain of
the combined Fund. However, Selling Fund shareholders might have benefited from
the use of Buying Fund's losses to offset gains of the combined Fund.,
Subsequent to October 31, 2008, Selling Fund experienced significant portfolio
turnover, causing the recognition of additional losses subject to the loss
limitation rules, which could result in an increase of the potential tax cost
due to the Reorganization relative to the costs described above. Additionally,
to the extent Selling Fund further realizes its unrealized losses, the
application of the loss limitation rules to such losses might cause a further
increase in the potential tax cost to Selling Fund shareholders.
Proposal 6; Reorganization of Seligman International Growth Fund into
RiverSource Partners International Select Growth Fund. As of October 31, 2008,
Seligman International Growth Fund (Selling Fund) and RiverSource Partners
International Select Growth Fund (Buying Fund) had net realized losses
(including capital loss carryforwards) equal to 33.3% and 15.3% of net assets,
respectively, and had net unrealized losses equal to approximately 14.5% and
40.5% of net assets, respectively. If the Reorganization had occurred on October
31, 2008, the loss limitation rules would not likely have prevented the use of
Selling Fund's losses to offset gains of the combined Fund. However, to the
extent Selling Fund realizes its unrealized losses, based on the amount of
unrealized losses as of October 31, 2008, prior to the Reorganization, such
losses will be subject to the loss limitation rules and might cause Selling Fund
shareholders to experience a greater tax cost than if the Reorganization had not
occurred.
Proposal 7; Reorganization of Seligman U.S. Government Securities Fund into
RiverSource Short Duration U.S. Government Fund. As of October 31, 2008,
Seligman U.S. Government Securities Fund (Selling Fund) and RiverSource Short
Duration U.S. Government Fund (Buying Fund) had net realized losses (including
capital loss carryforwards) equal to approximately 8.8% and 8.1% of net assets,
respectively. If the Reorganization had occurred on October 31, 2008, the loss
limitation rules would not have affected the combined Fund's ability to use
Selling Fund losses to offset gains recognized by the combined Fund. Selling
Fund's losses would thus have been available to reduce subsequent capital gain
distributions to shareholders of the combined Fund, spreading the tax benefit of
such losses over a larger group of shareholders than if the Reorganization had
not occurred.
Subsequent to October 31, 2008, Selling Fund experienced significant portfolio
turnover. The recognition of gain and loss resulting from such portfolio
turnover could increase the potential tax cost of the Reorganization to Selling
Fund shareholders relative to the costs described above.
The tax principles described above are not expected to change. However, their
application and, at a minimum, the specific percentages noted above will change
prior to each Reorganization because of market developments and the substantial
volatility in the marketplace, any pre-Reorganization realignments or other
sales of portfolio securities that might occur or that already have occurred,
and shareholder activity in the Funds, among other changes.
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Shareholders of a Selling Fund should consult their tax advisors regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Because the foregoing discussion relates only to the federal
income tax consequences of the Reorganizations, shareholders of a Selling Fund
should also consult their tax advisors as to the state, local and foreign tax
consequences, if any, of the Reorganizations.
REASONS FOR THE PROPOSED REORGANIZATIONS AND BOARD DELIBERATIONS
The Board believes that each proposed Reorganization will be advantageous to
Selling Fund and Buying Fund shareholders based on its consideration of the
following matters:
- - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of each Reorganization as described in the previous paragraphs.
- - TAX CONSEQUENCES. The Board considered the tax-free nature of each
Reorganization. The Board also considered the relative tax situations of each
Fund and the resulting tax impact of the Reorganization to Selling Fund
shareholders, and believes that the benefits of each Reorganization should
outweigh any resulting tax cost to shareholders.
- - CONTINUITY OF INVESTMENT. The Board took into account the fact that each
Selling Fund and the corresponding Buying Fund have similar or identical
investment objectives and, except as noted below and as discussed in more
detail under each proposal, similar investment strategies. In particular, for
each Reorganization:
Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond
Fund: The Board considered that the Funds have similar investment objectives of
providing a high level of current income consistent with prudent risk or
conservation of investment value. The Board considered that Seligman Core Fixed
Income Fund seeks capital appreciation as a secondary objective. The Board
noted the similarity of the Funds' investment strategies: Seligman Core Fixed
Income Fund invests 80% of its net assets in fixed-income securities, while
RiverSource Diversified Bond Fund invests 80% of its net assets in bonds and
other debt securities. The Board observed that the Funds share a common
benchmark, the Barclays Capital U.S. Aggregate Bond Index.
Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets
Fund: The Board considered that the Funds have a virtually identical objective
of seeking long-term growth of capital. The Board considered that each of the
Funds invests at least 80% of its net assets in securities of companies that
are located in emerging markets countries. The Board also considered that
RiverSource Investments serves as the investment manager for each Fund and is
responsible for the oversight of each Fund's subadviser which provides day-to-
day management of the Fund, and that Seligman Emerging Markets Fund is
subadvised by Wellington and Threadneedle Emerging Markets Fund is subadvised
by Threadneedle. The Board further observed that the Funds share a common
benchmark, the Morgan Stanley Capital International ("MSCI") Emerging Markets
Index.
Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund:
The Board considered that the Funds have a virtually identical objective of
seeking long-term growth of capital. The Board considered that Seligman Global
Growth Fund may invest up to 15% of its assets in emerging market equities,
while Threadneedle Global Equity Fund has no similar restrictions. The Board
also considered that under normal market conditions, Seligman Global Growth
Fund invests at least 40% of its net assets in the securities of non-U.S.
companies, while Threadneedle Global Equity Fund has no similar restrictions.
The Board also noted that RiverSource Investments serves as the investment
manager for each Fund and is responsible for the oversight of each Fund's
subadviser which provides day-to-day management of the Fund, and that Seligman
Global Growth Fund is subadvised by Wellington and Threadneedle Global Equity
Fund is subadvised by Threadneedle. The Board observed that the Funds use
similar benchmarks with the Selling Fund using the MSCI World Index, which is
designed to measure global developed market equity performance and the Buying
Fund using the MSCI All Country World Index, which is intended to measure
equity market performance in the global developed and emerging markets.
Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The
Board considered that the Funds have similar investment objectives of seeking a
high level of current income, with capital appreciation as a secondary
objective. The Board considered the similarity in the Funds' investment
strategies of investing at least 80% of their net assets in high-yield debt
instruments. The Board further observed that the Funds share a common
benchmark, the JP Morgan Global High Yield Index.
Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The
Board considered that the Funds have a virtually identical objective of seeking
a combination of capital appreciation and current income. The Board considered
that each Fund invests predominantly in a combination of equity and fixed-
income securities. Also, Seligman Income and Growth Fund may invest up to 10%
of total assets in foreign securities (excluding ADRs); RiverSource Balanced
Fund may invest up to 25% of the Fund's net assets in foreign investments
(including ADRs). The Board further observed that the Funds share two
benchmarks, the Barclays Capital U.S. Aggregate Bond Index and the Blended
Index.
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Proposal 6. Seligman International Growth Fund into RiverSource Partners
International Select Growth Fund: The Board considered that the Funds have a
virtually identical objective of seeking long-term capital growth and invest
predominantly in equity securities of foreign issuers that are believed to be
growth companies. The Board considered that Seligman International Growth Fund
primarily invests in common stocks of medium- to large-sized companies outside
of the United States, whereas RiverSource Partners International Select Growth
Fund invests primarily in stocks of small- and medium-sized companies, based
both outside and in the United States. The Board considered that Seligman
International Growth Fund generally invests less than 25% of its assets in
emerging markets, while RiverSource Partners International Select Growth Fund
has no similar restrictions. The Board also noted that RiverSource Investments
serves as the investment manager for each Fund and is responsible for the
oversight of each Fund's subadviser which provides day-to-day management of the
Fund, and that Seligman International Growth Fund is subadvised by Wellington
and RiverSource Partners International Select Growth Fund is subadvised by
Columbia WAM and Principal Global. The Board observed that the Funds share a
common benchmark, the MSCI Europe, Australasia, Far East Growth Index.
Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short
Duration U.S. Government Fund: The Board considered that the Funds share
similar investment objectives with Seligman U.S. Government Securities Fund
seeking to provide a high level of current income consistent with prudent
investment risk and RiverSource Short Duration U.S. Government Fund seeking to
provide a high level of current income and safety of principal consistent with
investment in U.S. government and government agency securities. The Board
considered the similarity in the Funds' investment strategies of investing at
least 80% of their net assets in U.S. government securities, which include debt
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Board also noted that the RiverSource Short Duration
U.S. Government Fund normally seeks to maintain an average portfolio duration
of one to three years while the Seligman U.S. Government Securities Fund has no
similar stated intention. Although the Funds use different benchmarks, the
Board observed that the Barclays Capital U.S. Government Bond Index, which
Seligman U.S. Government Securities Fund uses, is a blended index that
incorporates the Barclays Capital U.S. 1-3 Year Government Index, which
RiverSource Short Duration U.S. Government Fund uses.
- - EXPENSE RATIOS. The Board considered the relative expenses of the Funds.
Specifically, the Board considered that, as of the end of each Fund's most
recent fiscal year, the gross expense ratio and net expense ratio (reflecting
any fee waiver or expense reimbursement because of voluntary or contractual
expense caps) for each Selling Fund's Class A, Class B, Class C, Class R (to
be known as Class R2), and Class I (to be known as Class R5) shares (before
giving effect to any applicable performance incentive adjustment and excluding
certain other fees and expenses) was higher than the gross expense ratio and
net expense ratio for the corresponding Buying Fund's Class A, Class B, Class
C, Class R2 and Class R5 shares (before giving effect to any applicable
performance incentive adjustment and excluding certain other fees and expenses
adjustment). The Board also evaluated the anticipated expense ratio impacts to
other share classes of the Buying Funds not involved in the Reorganization.
The Board determined that there would be a decrease in expense ratio for each
share class of each Selling Fund as a result of its respective Reorganization,
but noted that the level of this reduction would vary by share class. In
particular, for each Reorganization (unless otherwise specified), expense
impacts, with respect to a Fund's Class A shares are discussed below:
Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond
Fund: The Board considered that the expenses of Seligman Core Fixed Income Fund
are expected to decline by approximately 1.08% on a gross expense basis and by
0.42% on a net expense basis (based on current commitments of the investment
manager and its affiliates to waive fees and cap expenses), as a result of the
Reorganization.
Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets
Fund: The Board considered that Seligman Emerging Markets Fund is currently
subject to a commitment by the investment manager and its affiliates to waive
fees or cap expenses, and that the expenses of the Fund are expected to decline
by approximately 0.57% on a gross expense basis and by 0.54% on a net expense
basis (before giving effect to any applicable performance incentive adjustment
and excluding certain other fees and expenses), as a result of the
Reorganization.
Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund:
The Board considered that the expenses of Seligman Global Growth Fund are
expected to decline by approximately 0.70% (before giving effect to any
applicable performance incentive adjustment and excluding certain other fees
and expenses), as a result of the Reorganization.
Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The
Board considered that the expenses of Seligman High-Yield Fund are expected to
decline by approximately 0.20% on a gross expense basis and by 0.28% on a net
expense basis (based on current commitments of the investment manager and its
affiliates to waive fees and cap expenses), as a result of the Reorganization.
Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The
Board considered that the expenses of Seligman Income and Growth Fund are
expected to decline by approximately 0.41% (before giving effect to any
applicable performance incentive adjustment and excluding certain other fees
and expenses), as a result of the Reorganization.
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Proposal 6. Seligman International Growth Fund into RiverSource Partners
International Select Growth Fund: The Board considered that the expenses of
Seligman International Growth Fund are expected to decline by approximately
0.33% on a gross expense basis and by 0.51% on a net expense basis (based on
current commitments of the investment manager and its affiliates to waive fees
and cap expenses, and before giving effect to any applicable performance
incentive adjustment and excluding certain other fees and expenses), as a
result of the Reorganization.
Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short
Duration U.S. Government Fund: The Board considered that the expenses of
Seligman U.S. Government Securities Fund are expected to decline by
approximately 0.26% on a gross expense basis and by 0.41% on a net expense
basis (based on current commitments of the investment manager and its
affiliates to waive fees and cap expenses), as a result of the Reorganization.
- - ECONOMIES OF SCALE. The Board observed that by combining the Funds, in
addition to potential immediate economies of scale of a larger fund, the
combined Fund would be able take advantage of other economies of scale
associated with a larger fund. For example, a larger fund may realize
breakpoints more quickly, it may have an enhanced ability to effect portfolio
transactions on more favorable terms and may have greater investment
flexibility. Furthermore, the Board also considered that higher aggregate net
assets resulting from each Reorganization and the opportunity for net cash
inflows (or reduced outflows) may reduce the risk that, if net assets of the
Selling Fund fail to grow, or diminish, its total expense ratio could rise
from current levels as fixed expenses, such as audit expenses and accounting
expenses that are charged on a per Fund basis, become a larger percentage of
net assets.
- - COSTS. The Board considered the fact that a portion of the expenses of
effecting each Reorganization (including professional fees and expenses
related to printing and mailing proxy/prospectus materials and solicitation of
shareholders) may be allocated to and borne by the Selling Fund, to the extent
that such expenses are specifically allocable to the Selling Fund. Expenses of
the Reorganization that are not allocated to and borne by the Selling Fund
will be paid by RiverSource Investments. The investment manager has agreed to
limit the expenses borne by a Selling Fund to its anticipated reductions in
expenses over the first year following the Reorganization, less the expenses
borne by the Selling Fund related to other integration-related activity. Any
expenses not borne by a Selling Fund as a result of these limitations will be
borne by the investment manager.
- - DILUTION. The Board considered the fact that the Reorganizations will not
dilute the interests of the current shareholders because it would be effected
on the basis of the relative net asset value per share of the Selling Fund and
Buying Fund, respectively. Thus, for example, a Class A shareholder of a
Selling Fund will receive Class A shares of the corresponding Buying Fund
equal in value to his or her Class A shares in the Selling Fund at the time of
the Reorganizations.
- - PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of each of the Funds, noting, however, that past performance is no
guarantee of future results. The Board also considered the fact that the
Reorganizations should allow for a more concentrated selling effort by the
Funds' underwriter, thereby potentially benefiting each of the Funds, and that
reduced outflows or increased inflows could help the Buying Fund shareholders
achieve further economies of scale (see "Economies of Scale" above). The Board
further took into account the investment manager's belief that each Selling
Fund, as a stand-alone fund, was less likely to experience any growth in
assets from investor inflows in the near term. In particular, for each
Reorganization:
Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond
Fund: The Board noted that the performance of RiverSource Diversified Bond Fund
was generally stronger than the performance of Seligman Core Fixed Income Fund.
The Board noted the weak asset level of Seligman Core Fixed Income Fund and its
relatively weak prospects for asset growth, particularly compared to
RiverSource Diversified Bond Fund. The Board accorded particular weight to the
fact that RiverSource Diversified Bond Fund has substantially greater assets
than Seligman Core Fixed Income Fund, noting that RiverSource Diversified Bond
Fund was more than 150 times the size of Seligman Core Fixed Income Fund.
Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets
Fund: The Board observed that the performance of Threadneedle Emerging Markets
Fund was competitive (top half of the Lipper peer group), though not as good as
the performance of Seligman Emerging Markets Fund. The Board noted the
Threadneedle Emerging Markets Fund's stronger 10 year track record. The Board
also noted Seligman Emerging Markets Fund's relatively weak prospects for asset
growth, particularly compared to Threadneedle Emerging Markets Fund. The Board
observed that the Threadneedle Emerging Markets Fund was more than four times
the size of the Seligman Emerging Markets Fund.
Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund:
The Board noted that the performance of Threadneedle Global Equity Fund was
generally stronger than the performance of Seligman Global Growth Fund (both on
a relative basis and when compared to their respective peer groups). The Board
noted the weak asset level of Seligman Global Growth Fund and its relatively
weak prospects for asset growth, particularly compared to Threadneedle Global
Equity Fund. The Board accorded particular weight to the fact that Threadneedle
Global Equity Fund has substantially greater assets than
105
Seligman Global Growth Fund, noting that Threadneedle Global Equity Fund was
more than 20 times the size of Seligman Global Growth Fund.
Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The
Board noted that the performance of RiverSource High Yield Bond Fund was
generally stronger than the performance of Seligman High-Yield Fund (both on a
relative basis and when compared to their respective peer groups). The Board
noted the weak asset level of Seligman High-Yield Fund and its relatively weak
prospects for asset growth, particularly compared to RiverSource High Yield
Bond Fund. The Board accorded particular weight to the fact that RiverSource
High Yield Bond Fund has substantially greater assets than Seligman High-Yield
Fund, noting that RiverSource High Yield Bond Fund was more than five times the
size of Seligman High-Yield Fund.
Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The
Board noted that the performance of RiverSource Balanced Fund was generally
stronger than the performance of Seligman Income and Growth Fund (both on a
relative basis and when compared to their respective peer groups). The Board
noted the weak asset level of Seligman Income and Growth Fund and its
relatively weak prospects for asset growth, particularly compared to
RiverSource Balanced Fund. The Board accorded particular weight to the fact
that RiverSource Balanced Fund has substantially greater assets than Seligman
Income and Growth Fund, noting that RiverSource Balanced Fund was more than 13
times the size of Seligman Income and Growth Fund.
Proposal 6. Seligman International Growth Fund into RiverSource Partners
International Select Growth Fund: The Board noted that the performance of
RiverSource Partners International Select Growth Fund was generally stronger
than the performance of Seligman International Growth Fund (both on a relative
basis and when compared to their respective peer groups). The Board noted the
weak asset level of Seligman International Growth Fund and its relatively weak
prospects for asset growth, particularly compared to RiverSource Partners
International Select Growth Fund. The Board accorded particular weight to the
fact that RiverSource Partners International Select Growth Fund has
substantially greater assets than Seligman International Growth Fund, noting
that RiverSource Partners International Select Growth Fund was more than eight
times the size of Seligman International Growth Fund.
Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short
Duration U.S. Government Fund: The Board observed the generally stronger track
record of Seligman U.S. Government Securities Fund, but noted that both
Seligman U.S. Government Securities Fund and RiverSource Short Duration U.S.
Government Fund are currently run by the same management team and, thus, their
respective performance, going forward, absent the Reorganization, would be
substantially similar. The Board also noted the weak asset level of Seligman
U.S. Government Securities Fund and its relatively weak prospects for asset
growth, particularly compared to RiverSource Short Duration U.S. Government
Fund. The Board accorded particular weight to the fact that RiverSource Short
Duration U.S. Government Fund has substantially greater assets than Seligman
U.S. Government Securities Fund, noting that RiverSource Short Duration U.S.
Government Fund was more than nine times the size of Seligman U.S. Government
Securities Fund.
- - POTENTIAL BENEFITS TO THE INVESTMENT MANAGER AND ITS AFFILIATES. The Board
considered the potential benefits from the Reorganizations that could be
realized by the investment manager and its affiliates, including the
elimination of expenses incurred in duplicative efforts to administer separate
Funds. The Board also noted, however, that shareholders of each Selling Fund
are expected to benefit over time from the decrease in overall operating
expense ratios resulting from the proposed Reorganizations as well as the
other benefits discussed above.
BOARD DETERMINATIONS
After considering the factors described above and other relevant information, at
a meeting held on Jan. 8, 2009, the Board of each Selling Fund, including a
majority of the independent Board members, determined that participation in the
relevant Reorganization is in the best interests of each Fund and that the
interests of existing shareholders of the Fund will not be diluted as a result
of the Reorganization.
The Board of Directors of each Buying Fund approved the Agreement at a meeting
held on Jan. 8, 2009. Among other factors, the Board members considered the
terms of the Agreement, the provisions intended to avoid the dilution of
shareholder interests and the anticipated tax consequences of the
Reorganization. The Board found that participation in each Reorganization is in
the best interest of the Buying Fund and that the interest of the existing
shareholders of the Buying Fund will not be diluted as a result of the
Reorganization.
BOARD RECOMMENDATION AND REQUIRED VOTE
The Board recommends that shareholders of each Selling Fund approve the proposed
Agreement. The Agreement must be approved by the affirmative vote of a majority
of the outstanding voting securities of each Selling Fund. A vote of a majority
of the outstanding voting securities of a Selling Fund is defined in the 1940
Act, as the affirmative vote of the lesser of (a) 67% or more of the shares of
the Selling Fund that are present or represented by proxy at the Meeting, if the
holders of
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more than 50% of the outstanding shares of the Selling Fund are present in
person or by proxy at the Meeting; or (b) more than 50% of the outstanding
shares of the Selling Fund. If the Agreement is not approved for any Selling
Fund, the Board will consider what further action should be taken with respect
to such Selling Fund. The approval of the Reorganization of one Selling Fund is
not conditioned upon the approval of the Reorganization of any other Selling
Fund.
If shareholders approve the Reorganization of their Selling Fund, it is
anticipated to occur before the end of the third quarter of 2009.
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SECTION B -- MANAGER OF MANAGERS PROPOSALS
PROPOSAL 8. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN EMERGING MARKETS FUND
The Board has approved, and recommends that shareholders approve, a policy
authorizing RiverSource Investments, the investment adviser to Seligman Emerging
Markets Fund (a "Seligman Subadvised Fund"), with the approval of the Board to
enter into and materially amend a subadvisory agreement, without obtaining
shareholder approval (the "Manager of Managers Proposal").
PROPOSAL 9. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN GLOBAL GROWTH FUND
The Board has approved, and recommends that shareholders approve, a policy
authorizing RiverSource Investments, the investment adviser to Seligman Global
Growth Fund (a "Seligman Subadvised Fund"), with the approval of the Board to
enter into and materially amend a subadvisory agreement, without obtaining
shareholder approval (the "Manager of Managers Proposal").
PROPOSAL 10. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN INTERNATIONAL GROWTH FUND
The Board has approved, and recommends that shareholders approve, a policy
authorizing RiverSource Investments, the investment adviser to Seligman
International Growth Fund (a "Seligman Subadvised Fund"), with the approval of
the Board to enter into and materially amend a subadvisory agreement, without
obtaining shareholder approval (the "Manager of Managers Proposal").
ADDITIONAL INFORMATION ABOUT EACH MANAGER OF MANAGERS PROPOSAL
RiverSource Investments serves as the investment adviser to the Seligman
Subadvised Funds. However, RiverSource Investments does not make the day-to-day
investment decisions for the Seligman Subadvised Funds. Instead, RiverSource
Investments establishes an investment program for the Seligman Subadvised Funds,
and selects, compensates and evaluates the Seligman Subadvised Funds'
subadvisers. The subadvisers, in turn, make the day-to-day investment decisions
for the Seligman Subadvised Funds. For each of the Seligman Subadvised Funds,
RiverSource Investments, with the approval of the Board, may wish to hire, add
or change a subadviser to handle the day-to-day investment decisions.
Shareholder Approval of Subadvisory Agreements. Federal securities laws
generally require that shareholders approve agreements with a fund's subadviser,
as well as with the investment adviser. Shareholder action also is required if
the terms of existing agreements are changed materially or if there is a change
in control of the subadviser. In order to obtain shareholder approval, the
Seligman Subadvised Funds must call and conduct shareholder meetings, prepare
and distribute proxy materials and solicit votes from shareholders. The process
is costly and time-consuming. The Board believes that it is in shareholders'
best interests if the Board represents their interests in approving or rejecting
recommendations made by RiverSource Investments regarding subadvisers. This
approach will avoid the cost and delay associated with holding shareholder
meetings to obtain approval for the changes.
SEC Exemptive Order. On July 16, 2002, the SEC granted RiverSource Investments
an order exempting it from the federal securities law requirements to obtain
shareholder approval regarding unaffiliated subadvisers (the "SEC Order"). The
SEC Order permits RiverSource Investments to hire new subadvisers, to rehire
existing subadvisers that have experienced a change in control and to modify
subadvisory agreements, without the approval of shareholders, provided
shareholders adopt a policy authorizing RiverSource Investments, with the
approval of the Board, to take such action.
Under the SEC Order, the Seligman Subadvised Funds and RiverSource Investments
are subject to several conditions imposed by the SEC to ensure that the
interests of the Seligman Subadvised Funds' shareholders are adequately
protected. In addition, within 90 days of hiring a new subadviser, RiverSource
Investments will provide you with an information statement that contains
substantially the same information about the subadviser, the subadvisory
agreement and the subadvisory fee that the Seligman Subadvised Fund would be
required to send to you in a proxy statement.
Shareholder approval of this proposal will not result in an increase or decrease
in the total amount of investment advisory fees paid by the Seligman Subadvised
Funds to RiverSource Investments. RiverSource Investments, directly or through
subadvisers, will continue to provide the same level of advisory and
administrative services to the Seligman Subadvised Funds as it currently
provides.
The SEC Order applies to at least the following situations:
- - RiverSource Investments recommends that a Seligman Subadvised Fund's day-to-
day management be diversified by adding another subadviser;
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- - RiverSource Investments recommends that a subadviser be removed for
substandard performance and replaced with a different subadviser; or
- - There is a change of control of a subadviser.
COMPARISON OF PRESENT AND PROPOSED SELECTION PROCESS FOR SUBADVISERS
Under both the current process for approval of subadvisory agreements and under
the proposed process, any change in a subadvisory agreement requires approval by
the Board. In considering whether to appoint a subadviser for any Seligman
Subadvised Fund, the Board will analyze the factors it considers relevant,
including:
- - The nature, extent and quality of services provided by a subadviser to
investment companies comparable to the Seligman Subadvised Fund, including:
- a subadviser's organization,
- a subadviser's history, reputation, qualification and background, as well as
the qualifications of its personnel,
- a subadviser's expertise in providing portfolio management services to other
similar portfolios and the performance history of those portfolios,
- a subadviser's proposed investment strategy for the Seligman Subadvised
Fund, and
- a subadviser's compliance program;
- - A subadviser's long- and short-term performance relative to comparable mutual
funds, other managed accounts and unmanaged indexes;
- - A subadviser's costs of services provided with respect to mutual funds or
other managed accounts that are comparable to the Seligman Subadvised Fund;
and
- - Other factors that the Board considers relevant to the subadviser's
performance as an investment adviser.
The Board believes that it is in the best interest of the Seligman Subadvised
Funds and their shareholders to allow RiverSource Investments the flexibility to
provide investment advisory services to each Fund through one or more
subadvisers that have particular expertise in the type of investments on which a
Fund focuses.
Without the ability to utilize the SEC Order, in order for RiverSource
Investments to appoint a new subadviser or modify a subadvisory agreement
materially, the Board must call and hold a shareholder meeting of that Seligman
Subadvised Fund, create and distribute proxy materials and solicit votes from
the Seligman Subadvised Fund's shareholders. This process is time consuming and
costly. Without the delay inherent in holding shareholder meetings, RiverSource
Investments would be able to act more quickly to appoint a new subadviser if and
when the Board and RiverSource Investments feel that the appointment would
benefit the Seligman Subadvised Fund. The Board believes that granting
RiverSource Investments, subject to the review and approval of the Board,
maximum flexibility to select, to supervise and to evaluate subadvisers, without
incurring the otherwise necessary delay or expense of obtaining further
shareholder approval, is in the best interest of the shareholders because it
will allow each Fund to operate more efficiently.
In addition, the Board believes that it is appropriate to vest the selection,
supervision and evaluation of the subadvisers in RiverSource Investments
(subject to review by the Board) in light of RiverSource Investments' investment
advisory expertise and its ability to select the most appropriate subadviser(s).
RiverSource Investments believes that if in the future it becomes appropriate to
change a subadviser to your Seligman Subadvised Fund, it can use this experience
and expertise in evaluating and choosing subadvisers that can add the most value
to your investment in the Seligman Subadvised Fund.
Finally, the Board provides oversight of each Seligman Subadvised Fund's
subadvisory arrangements to seek to ensure that shareholders' interests are
protected whenever RiverSource Investments seeks to select a subadviser or
modify a subadvisory agreement. The Board will continue to evaluate and to
approve all new subadvisory agreements (as well as any modification to existing
subadvisory agreements.) Members of the Board will analyze such factors that
they consider to be relevant to the determination, including the nature, quality
and scope of services provided by the subadvisers. The Board will also evaluate
the subadviser's investment performance with other accounts with similar
investment objectives and will consider the subadviser's code of ethics as well
as its compliance program. As with each Fund's Investment Management Services
Agreement, the terms of each subadvisory agreement will include those required
by applicable provisions of the 1940 Act, except for the specific provisions of
the 1940 Act from which the SEC Order provides relief.
109
BOARD RECOMMENDATION AND REQUIRED VOTE
The Board recommends that shareholders of each Seligman Subadvised Fund approve
their respective Manager of Managers Proposal. The Manager of Managers Proposal
must be approved by the affirmative vote of a majority of the outstanding voting
securities of each Seligman Subadvised Fund. A vote of a majority of the
outstanding voting securities of a Selling Fund is defined in the 1940 Act as
the affirmative vote of the lesser of (a) 67% or more of the shares of the
Seligman Subadvised Fund that are present or represented by proxy at the
Meeting, if the holders of more than 50% of the outstanding shares of the
Seligman Subadvised Fund are present in person or by proxy at the Meeting; or
(b) more than 50% of the outstanding shares of the Seligman Subadvised Fund. The
approval of the Manager of Managers Proposal of one Seligman Subadvised Fund is
not conditioned upon the approval of the Manager of Managers Proposal of any
other Seligman Subadvised Fund or the Reorganization of that Fund.
If shareholders approve the Manager of Managers Proposal, it will take effect
shortly after the Meeting. If the Manager of Managers Proposal is not approved
for any Seligman Subadvised Fund changes in subadvisory relationships (other
than the termination of an existing subadviser) of that Seligman Subadvised Fund
will continue to require shareholder approval.
110
SECTION C -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
Reference to the "Fund" in this section is a reference to each Selling Fund,
including the Seligman Subadvised Funds.
VOTING. Shareholders of record on April 3, 2009 are entitled to vote based on
the number of shares they own in the Fund irrespective of which class they own.
Unless otherwise restricted by the 1940 Act or by applicable state law, all
share classes of a Fund will vote together as a class on its proposal(s).
A quorum is required to take action at the Meeting. Except with respect to
Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, the
presence at the Meeting, in person or by proxy, of shareholders entitled to cast
one-third of all shares outstanding and entitled to be cast at the Meeting shall
constitute a quorum. With respect to each of Seligman U.S. Government Securities
Fund and Seligman High-Yield Fund, the presence at the Meeting, in person or by
proxy, of shareholders of record holding a majority of the shares outstanding
and entitled to vote shall constitute a quorum.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Broker non-votes will be counted toward a quorum, but not toward
the approval of any proposal. (Broker non-votes are shares for which the
underlying owner has not voted and the broker holding the shares does not have
the authority to vote.)
PROXY SOLICITATION. If you properly authorize your proxy by internet, telephone
or facsimile, or by executing and returning the enclosed proxy card by mail, and
your proxy is not subsequently revoked, your votes will be cast at the Meeting,
and at any postponement or adjournment thereof. If you give instructions, your
votes will be cast in accordance with your instructions. If you return your
signed proxy card without instructions, your votes will be cast in favor of the
proposal(s) of your Fund.
PROXY STATEMENT DELIVERY. "Householding" is the term used to describe the
practice of delivering one copy of a document to a household of shareholders
instead of delivering one copy of a document to each shareholder in the
household. Certain shareholders of the Fund who share a common address and who
have not opted out of the householding process may receive a single copy of the
proxy statement along with the proxy card(s). If you received more than one copy
of the proxy statement, you may elect to household in the future if permitted by
your financial intermediary/financial institution. Contact the financial
intermediary/financial institution through which you purchased the Fund to
determine whether householding is an option for your account. If you received a
single copy of the proxy statement, you may opt out of householding in the
future by contacting your financial intermediary/financial institution.
An additional copy of this proxy statement may be obtained by writing to the
following address: Computershare Fund Services, c/o Operation Department, 280
Oser Ave., Hauppauge, NY 11788 or calling Computershare Fund Services, toll free
at (866) 438-8932.
REVOKING YOUR PROXY. If you execute, date and submit a proxy card with respect
to your Selling Fund, you may revoke your proxy by providing written notice to
your Fund (Attention: Secretary) at 50606 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, or change your instructions by submitting a
subsequently executed and dated proxy card, by authorizing your proxy by
internet, telephone or facsimile on a later date or by attending the Meeting and
casting your vote in person. If you authorize your proxy by internet, telephone
or facsimile, you may change your instructions by authorizing a subsequent proxy
by internet, telephone or facsimile or by completing, signing and returning a
proxy card dated as of a date that is later than your last internet, telephone
or facsimile proxy authorization or by attending the Meeting and casting your
vote in person. Merely attending the Meeting without voting will not revoke your
prior proxy.
SIMULTANEOUS MEETINGS. The meeting for each Fund will be held simultaneously
with the meeting for each other Fund, with each proposal being voted on
separately by the shareholders of the relevant Fund. If any shareholder objects
to the holding of simultaneous meetings, the shareholder may move for an
adjournment of his or her Fund's meeting to a time after the Meeting so that a
meeting of that Fund may be held separately. If a shareholder makes this motion,
the persons named as proxies will take into consideration the reasons for the
objection in deciding whether to vote in favor of the adjournment, and may vote
for or against the adjournment in their discretion.
SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote
as promptly as possible. The expenses of the solicitation will be paid by
RiverSource Investments and by certain Selling Funds (see discussion of Costs
under "Reasons for the Proposed Reorganizations and Board Deliberations").
Supplementary solicitations may be made by Internet, telephone or facsimile, or
by personal contact. Computershare Fund Services has been engaged to assist in
the solicitation of proxies, at an aggregate estimated cost of $38,375.
SHAREHOLDER PROPOSALS. No proposals were received from shareholders. The Funds
do not hold annual meetings of shareholders. Shareholders who wish to make a
proposal at a Fund's next special meeting, which may not be included in the
Fund's proxy materials, must notify the relevant Fund a reasonable amount of
time before the Fund begins to print and mail its proxy materials. The fact that
a Fund receives a shareholder proposal in a timely manner does not ensure
inclusion of the proposal in the proxy materials, as there are other
requirements in the proxy rules relating to such inclusion.
111
APPRAISAL RIGHTS. Shareholders of Seligman U.S. Government Securities Fund and
Seligman High-Yield Fund may be entitled to assert appraisal rights under the
Massachusetts Business Corporation Act (the "MBCA"), applicable to such Selling
Funds due to a provision in the Declaration of Trust for such funds, in
connection with each such Selling Fund's Reorganization and obtain payment of
the "fair value" of their shares, provided that they comply with the
requirements of Massachusetts law. A copy of the relevant provisions of the MBCA
is attached as Exhibit D.
Under Minnesota law, dissenting shareholders are entitled to appraisal rights
and payment for the fair value of their shares if an amendment to a Minnesota
fund's articles of incorporation materially and adversely affects a preferential
right of the shares; whereas, Massachusetts law is more limited, in that
dissenting shareholders are not so entitled unless an amendment to a
Massachusetts fund's declaration of trust affects the rights or preferences of
the shares in connection with distributions or dissolution. Under Minnesota law,
a shareholder may dissent from, and obtain fair value payment for his shares in
the event of, the fund's board of directors adoption of a plan of conversion
(e.g., changing its status to non-profit); whereas, under Massachusetts law, a
plan of conversion must be consummated for such rights to take effect. Unlike
Minnesota law, Massachusetts law provides for dissenter's rights in the event of
an amendment to a Massachusetts fund's declaration of trust or bylaws or the
entering into by the Massachusetts fund of any agreement that adds restrictions
on the transfer or registration or any outstanding shares held by the
shareholder or amends any pre-existing restrictions on the transfer or
registration of his shares in a manner which is materially adverse to the
ability of the shareholder to transfer his assets. Unlike Massachusetts law,
other than in connection with certain mergers, Minnesota law provides that the
right to obtain payment is not available to holders of shares of any class or
series of shares that is listed on the New York Stock Exchange or the American
Stock Exchange or designated as a national market security on Nasdaq Stock
Market, unless shareholders are required to accept for their shares anything
other than shares (or cash in lieu of fractional shares) of any class or series
of a domestic or foreign corporation or any other ownership interest of any
other organization. Under Minnesota law, in order to receive fair value of
shares, a dissenting shareholder must demand payment and deposit certificated
shares (if any), or comply with any restrictions on transfer of uncertificated
shares, within 30 days of the Minnesota fund's appraisal notice (which includes
the procedure to obtain payment); whereas, under Massachusetts law, the deposit
of certificates (and any required forms) must be received by the Massachusetts
fund not fewer than 40 nor more than 60 days after the fund's appraisal notice
is sent (MA Send Date). Massachusetts law specifically provides that a
shareholder may decline to exercise his appraisal rights and withdraw from the
appraisal process provided that the Massachusetts fund receives the
shareholder's notice of withdrawal within 20 days after the MA Send Date. Under
Minnesota law, a dissenter who is dissatisfied with the fair value payment
received from the Minnesota fund must provide written notice to the fund within
30 days after the fund mails the payment; whereas, under Massachusetts law, a
shareholder must provide written notice of dissatisfaction within 30 days of
shareholder's receipt of payment from the Massachusetts fund.
Notwithstanding the provisions of Massachusetts law, the SEC has taken the
position that the use of state appraisal procedures by a mutual fund would be a
violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule
states that no mutual fund may redeem its shares other than at net asset value
next computed after receipt of a request for redemption. It is the SEC's
position that Rule 22c-1 supersedes appraisal provisions in state statutes.
In the interest of ensuring equal valuation for all shareholders, appraisal
rights will be determined in accordance with the SEC's interpretation. As a
result, if any shareholder of either Seligman U.S. Government Securities Fund or
Seligman High-Yield Fund elects to exercise appraisal rights under Massachusetts
law, the relevant Selling Fund intends to submit this question to a court of
competent jurisdiction. In that event, a dissenting shareholder would not
receive any payment until the end of the court proceeding.
In addition, Section 13.02(a)(3) of the MBCA provides for an exception to
appraisal rights for which we believe, in light of the rationale expressed in
the Comments of The Task Force on the Revision of the Massachusetts Business
Corporation Law accompanying the MBCA, a reasonable argument exists for applying
such exception to a transaction involving an open-end mutual fund. If any
shareholder of either Seligman U.S. Government Securities Fund or Seligman High-
Yield Fund elects to exercise appraisal rights under Massachusetts law, the
relevant Selling Fund, in connection with submitting the question of the
supremacy of Rule 22c-1 to a court of competent jurisdiction, may also argue
that appraisal rights under Massachusetts law do not apply.
OTHER BUSINESS. The Board does not know of any matters to be presented at the
Meeting other than the Reorganization proposals and the Manager of Managers
proposals. If other business should properly come before the Meeting, the
persons named as proxies will vote thereon in their discretion.
ADJOURNMENT. With respect to each Selling Fund, including the Seligman
Subadvised Funds, other than Seligman U.S. Government Securities Fund and
Seligman High-Yield Fund, in the event that not enough votes are received by the
time scheduled for the Meeting, or, even if a quorum is present, if sufficient
votes in favor of any proposal(s) are not received and tabulated prior to the
time scheduled for the Meeting, the chairman of the Meeting may adjourn the
Meeting, with no notice
112
other than an announcement at the Meeting, to a date not later than the 120th
day after the original record date for the Meeting to allow further solicitation
of shareholders on the proposal(s).
For each of Seligman U.S. Government Securities Fund and Seligman High-Yield
Fund, if a quorum is not present or represented at the Meeting, the holders of a
majority of the shares of a Selling Fund present at the Meeting, in person or by
proxy, shall have power to adjourn the Meeting, without notice other than
announcement at the Meeting, until the requisite number of shares entitled to
vote at the Meeting is present.
The persons named as proxies will vote in favor of adjournment those shares they
have been instructed to vote in favor of a proposal, or for which they have
received a proxy but no voting instructions. They will vote against any
adjournment those shares they have been instructed to vote against a proposal. A
shareholder vote may be taken on one or more proposals discussed in this
combined proxy statement/prospectus prior to adjournment of the Meeting if
sufficient votes have been received with respect to that particular proposal(s),
and may adjourn with respect to those proposals for which sufficient votes have
not yet been received.
113
SECTION D -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND FINANCIAL HIGHLIGHTS
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the last fiscal year unless noted otherwise)
D-1 Actual and pro forma capitalization of each Selling Fund and each Buying
Fund
D-2 Actual and pro forma ownership of Fund shares
D-3 Financial Highlights of each Buying Fund
THE FUNDS' INVESTMENT MANAGER AND DISTRIBUTORS. RiverSource Investments, LLC,
200 Ameriprise Financial Center, Minneapolis, MN 55474, a wholly-owned
subsidiary of Ameriprise Financial, Inc., is the investment manager for each
Fund. RiverSource Distributors, Inc., a wholly-owned subsidiary of Ameriprise
Financial, Inc., and RiverSource Fund Distributors, Inc., an indirect wholly-
owned subsidiary of RiverSource Investments, LLC, each at 50611 Ameriprise
Financial Center, Minneapolis, MN 55474, are the distributors for each
RiverSource Fund. RiverSource Fund Distributors, Inc. is also the distributor
for each Seligman Fund.
CAPITALIZATION OF SELLING FUNDS AND BUYING FUNDS
The following table shows the capitalization of the Funds as of April 3, 2009
and on a pro forma basis, assuming the proposed Reorganization had taken place.
The pro forma combined table includes the impact of non-recurring estimated
Reorganization costs expected to be borne by certain Selling Funds, based on the
following factors. If the Reorganization is expected to result in reduction in
the expense ratio for the Selling Fund, an amount of the proxy-related eligible
expenses will be borne by the Selling Fund. This amount will not exceed the
expected one-year benefit to the Selling Fund resulting from the reduced expense
ratio, less the cost borne by the Selling Fund related to other integration-
related activity. If the Reorganization is not expected to result in a reduction
in the expense ratio for the Selling Fund, proxy-related eligible expenses will
not be borne by the Selling Fund. Proxy-related eligible expenses not borne by
the Selling Fund will be paid for by RiverSource Investments. Proxy-related
eligible expenses include auditor fees and external legal fees ("Professional
Fees"), and printing, postage, and solicitor expenses ("Proxy Vendor Expenses").
Professional Fees have been allocated among the Selling Funds on an equal
weighted basis regardless of asset size or number of accounts. Proxy Vendor
Expenses have been allocated among the Selling Funds based on number of
accounts. The amount of proxy-related eligible expenses actually borne by the
Selling Fund is limited, as described above.
The pro forma combined shares outstanding are determined by dividing the net
assets, less any Reorganization costs, of the Selling Fund by the net asset
value per share of the Buying Fund and adding the actual shares outstanding of
the Buying Fund. For the Reorganization of Seligman High-Yield Fund into
RiverSource High Yield Bond Fund, the Reorganization costs reduced pro forma
combined net assets by $113,228 for Class A, $12,793 for Class B, $6,553 for
Class C, $484 for Class R2 and $651 for Class R5. For the Reorganization of
Seligman Income and Growth Fund into RiverSource Balanced Fund, the
Reorganization costs reduced pro forma combined net assets by $56,655 for Class
A, $2,238 for Class B, $964 for Class C, $11 for Class R2 and $31 for Class R5.
For the Reorganization of Seligman U.S. Government Securities Fund into
RiverSource Short Duration U.S. Government Fund, the Reorganization costs
reduced pro forma combined net assets by $63,336 for Class A, $13,461 for Class
B, $3,589 for Class C and $531 for Class R2.
114
TABLE D-1. ACTUAL AND PRO FORMA CAPITALIZATION OF EACH SELLING FUND AND EACH
BUYING FUND
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- ---------------------------------------------------------------------------------------------------------
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND)
Class A $ 6,161,569 $6.51 947,085
Class B 1,244,667 6.51 191,239
Class C 3,015,875 6.51 463,472
Class R (to be known as Class R2) 133,419 6.51 20,493
Class I (to be known as Class R5) 7,410,648 6.51 1,138,795
RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND)
Class A $1,936,385,473 $4.43 437,479,870
Class B 235,903,168 4.43 53,307,586
Class C 38,658,168 4.43 8,732,471
Class R2 12,995 4.43 2,933
Class R5 9,131 4.42 2,066
RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED)
Class A $1,942,547,042 $4.43 438,870,743
Class B 237,147,835 4.43 53,588,549
Class C 41,674,043 4.43 9,413,255
Class R2 146,414 4.43 33,050
Class R5 7,419,779 4.42 1,678,683
</Table>
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- --------------------------------------------------------------------------------------------------------
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND)
Class A $ 32,729,455 $7.05 4,642,090
Class B 1,852,763 6.05 306,103
Class C 18,561,070 6.11 3,039,967
Class R (to be known as Class R2) 8,951,262 7.04 1,270,778
Class I (to be known as Class R5) 4,816,437 7.68 626,869
THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND)
Class A $234,895,625 $5.22 45,022,502
Class B 26,418,557 4.65 5,678,591
Class C 3,518,641 4.66 754,735
Class R5 2,898 5.42 535
THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED)
Class A $267,625,080 $5.22 51,292,513
Class B 28,271,320 4.65 6,077,035
Class C 22,079,711 4.66 4,737,797
Class R2* 8,951,262 5.22 1,714,801
Class R5 4,819,335 5.42 889,177
</Table>
*The inception date for Class R2 is expected to be in the third quarter of
2009.
115
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- --------------------------------------------------------------------------------------------------------
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND)
Class A $ 10,288,568 $5.21 1,975,453
Class B 902,441 4.65 193,877
Class C 4,593,015 4.66 986,239
Class R (to be known as Class R2) 105,011 5.14 20,426
Class I (to be known as Class R5) 527,350 5.44 96,983
THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND)
Class A $326,315,961 $4.89 66,733,817
Class B 35,570,541 4.60 7,737,572
Class C 4,203,502 4.55 923,230
Class R2 7,229 4.90 1,474
Class R5 3,114 4.91 634
THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED)
Class A $336,604,529 $4.89 68,837,819
Class B 36,472,982 4.60 7,933,755
Class C 8,796,517 4.55 1,932,684
Class R2 112,240 4.90 22,905
Class R5 530,464 4.91 108,037
</Table>
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- -------------------------------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND)
Class A $ 92,809,044 $2.04 45,506,784
Class B 6,759,302 2.04 3,312,154
Class C 34,915,906 2.05 17,046,471
Class R (to be known as Class R2) 3,766,605 2.04 1,844,641
Class I (to be known as Class R5) 5,074,195 2.04 2,482,188
RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND)
Class A $790,568,437 $1.98 399,571,362
Class B 93,051,901 1.98 47,055,314
Class C 16,207,019 1.97 8,244,740
Class R2 11,722 1.98 5,907
Class R5 3,356 1.98 1,695
RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED)*
Class A $883,264,253 $1.98 446,387,431
Class B 99,798,410 1.98 50,462,642
Class C 51,116,372 1.97 25,965,224
Class R2 3,777,843 1.98 1,907,988
Class R5 5,076,900 1.98 2,564,091
</Table>
*RiverSource High Yield Bond Fund (Pro Forma Combined) includes
Reorganization costs which reduced net assets.
116
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- --------------------------------------------------------------------------------------------------------
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND)
Class A $ 29,378,154 $7.74 3,797,301
Class B 1,054,355 7.69 137,112
Class C 5,811,573 7.69 755,609
Class R (to be known as Class R2) 93,198 7.76 12,012
Class I (to be known as Class R5) 269,735 7.80 34,576
RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND)
Class A $464,001,424 $7.27 63,808,680
Class B 18,435,175 7.23 2,550,329
Class C 2,583,759 7.22 357,939
RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) *
Class A $493,322,923 $7.27 67,841,899
Class B 19,487,292 7.23 2,695,850
Class C 8,394,368 7.22 1,162,732
Class R2** 93,187 7.27 12,818
Class R5** 269,704 7.27 37,098
</Table>
*RiverSource Balanced Fund (Pro Forma Combined) includes Reorganization
costs which reduced net assets.
**The inception date for Class R2 and Class R5 is expected to be in the third
quarter of 2009.
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- --------------------------------------------------------------------------------------------------------
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND)
Class A $ 14,835,323 $6.93 2,139,248
Class B 1,501,539 5.98 251,239
Class C 9,584,276 5.99 1,600,648
Class R (to be known as Class R2) 592,592 6.85 86,545
Class I (to be known as Class R5) 8,846,696 7.45 1,187,550
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND
(ACTUAL) (BUYING FUND)
Class A $148,164,573 $4.32 34,271,352
Class B 23,233,402 4.14 5,605,447
Class C 2,590,318 4.13 626,607
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO
FORMA COMBINED)
Class A $162,999,896 $4.32 37,705,455
Class B 24,734,941 4.14 5,968,138
Class C 12,174,594 4.13 2,947,255
Class R2* 592,592 4.32 137,174
Class R5* 8,846,696 4.37 2,024,416
</Table>
*The inception date for Class R2 and Class R5 is expected to be in the third
quarter of 2009.
117
<Table>
<Caption>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- -------------------------------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING
FUND)
Class A $ 44,329,528 $7.30 6,072,489
Class B 7,979,404 7.32 1,090,806
Class C 21,389,955 7.31 2,925,798
Class R (to be known as Class R2) 5,011,154 7.30 686,178
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL)
(BUYING FUND)
Class A $552,926,442 $4.60 120,211,009
Class B 118,959,576 4.60 25,862,729
Class C 12,458,949 4.60 2,708,647
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA
COMBINED)*
Class A $597,192,634 $4.60 129,834,094
Class B 126,925,519 4.60 27,594,456
Class C 33,845,315 4.60 7,357,857
Class R2** 5,010,623 4.60 1,089,266
</Table>
*RiverSource Short Duration U.S. Government Fund (Pro Forma Combined)
includes Reorganization costs which reduced net assets.
**The inception date for Class R2 is expected to be in the third quarter of
2009.
118
OWNERSHIP OF SHARES OF SELLING FUNDS, INCLUDING SELIGMAN SUBADVISED FUNDS, AND
BUYING FUNDS
The following table provides information on shareholders who owned more than 5%
of any class of each Fund's outstanding shares as of Jan. 31, 2009. As of Jan.
31, 2009, officers and directors/trustees of each Fund, as a group, owned less
than 1% of the outstanding shares of any class of any Fund.
TABLE D-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ----------------------------------------------------------------------------------------------------------------------
SELIGMAN CORE FIXED INCOME FUND (SELLING FUND)
Class A Merrill Lynch, Pierce Fenner & Smith Inc. (MLPF&S),
Jacksonville, FL 17.69% N/A
State Street Bank & Trust Co. -- Seligman Asset
Allocation Balanced Fund, Kansas City, MO 15.24% N/A
Class B CitiGroup Global House Account, New York, NY 27.01% N/A
MLPF&S 13.59% N/A
Pershing LLC, Jersey City, NJ 8.18% N/A
Class C MLPF&S 16.84% N/A
UBS Financial Services Inc. FBO UBS-FINSVC CDN FBO
Mr. George V. Butcher, Weehawken, NY 11.69% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) State Street Bank & Trust Co. FBO North Carolina
College Savings Program -- NCBG, Westwood, MA 34.98% N/A
State Street Bank & Trust Co. FBO North Carolina
College Savings Program -- NCBF, Westwood, MA 24.02% N/A
State Street Bank & Trust Co. FBO North Carolina
College Savings Program -- NCBE, Westwood, MA 17.86% N/A
State Street Bank & Trust Co. FBO North Carolina
College Savings Program -- NCBH, Westwood, MA 8.31% N/A
RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND)
Class A Charles Schwab & Co., Inc. (Charles Schwab) a
brokerage firm in San Francisco, CA 8.08% 8.04%
MLPF&S N/A 0.06%
State Street Bank & Trust -- Seligman Asset
Allocation Balanced Fund Kansas City, KA N/A 0.05%
Class B CitiGroup Global House Account, New York, NY N/A 0.15%
MLPF&S N/A 0.07%
Pershing LLC, Jersey City, NJ N/A 0.04%
Class C Citigroup Global Markets, Owings Mills, MD 25.29% 23.20%
MLPF&S N/A 1.32%
UBS Financial Services Inc. FBO UBS-FINSVC CDN FBO
Mr. George V. Butcher, Weehawken, NJ N/A 0.91%
Class R2 RiverSource Investments LLC (RiverSource
Investments), Minneapolis, MN 83.88% 8.33%
Applied Reliability Engineering, Denver, CO 16.12% 1.60%
Class R5 RiverSource Investments 100.00% 0.11%
State Street Bank & Trust Co FBO North Carolina
College Savings Program -- NCBG, Westwood, MA N/A 34.96%
State Street Bank & Trust Co FBO North Carolina
College Savings Program -- NCB, Westwood, MA N/A 24.01%
State Street Bank & Trust Co FBO North Carolina
College Savings Program -- NCBE, Westwood, MA N/A 17.85%
State Street Bank & Trust Co FBO North Carolina
College Savings Program -- NCBH, Westwood, MA N/A 8.30%
</Table>
119
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ---------------------------------------------------------------------------------------------------------------------
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
Class A Morgan Stanley & Co (Morgan Stanley), Jersey City,
NJ 24.94% N/A
MLPF&S 7.68% N/A
State Street Bank & Trust Co -- Seligman Asset
Allocation Growth Fund, Kansas City, MO 5.71% N/A
Class B Morgan Stanley 6.08% N/A
MLPF&S 5.12% N/A
Class C MLPF&S 51.23% N/A
CitiGroup Global House Account, New York, NY 5.09% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBE, Westwood,
MA 36.76% N/A
State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBD, Westwood,
MA 22.13% N/A
Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC 14.90% N/A
Patterson & Co. FBO Seligman Data Corp 401(K)
Thrift Plan, Charlotte, NC 13.09% N/A
State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBF, Westwood,
MA 9.45% N/A
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
Class A Charles Schwab 13.68% 11.98%
Morgan Stanley N/A 3.10%
MLPF&S N/A 0.96%
State Street Bank & Trust Co -- Seligman Asset
Allocation Growth Fund, Kansas City, MO N/A 0.71%
Class B Morgan Stanley N/A 0.42%
MLPF&S N/A 0.35%
Class C MLPF&S N/A 43.19%
CitiGroup Global House Account, New York, NY N/A 4.29%
Class R2 None N/A N/A
Class R5 RiverSource Investments 100.00% 0.05%
State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBE, Westwood,
MA N/A 36.76%
State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBD, Westwood,
MA N/A 22.12%
Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC N/A 14.89%
Patterson & Co. FBO Seligman Data Corp 401(K)
Thrift Plan, Charlotte, NC N/A 13.08%
State Street Bank & Trust Company FBO North
Carolina College Savings Program -- NCBF, Westwood,
MA N/A 9.45%
</Table>
Note: Class R2 is being added to Threadneedle Emerging Markets Fund in
connection with the Reorganization.
120
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ----------------------------------------------------------------------------------------------------------------------
SELIGMAN GLOBAL GROWTH FUND (SELLING FUND)
Class A MLPF&S 16.15% N/A
Class B MLPF&S 15.28% N/A
Morgan Stanley 8.62% N/A
Class C MLPF&S 16.82% N/A
CitiGroup Global House Account, New York, NY 6.26% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC 89.33% N/A
Patterson & Co. FBO Seligman Data Corp 401(K) Thrift
Plan, Charlotte, NC 10.56% N/A
THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND)
Class A Charles Schwab 12.43% 12.06%
MLPF&S N/A 0.48%
Class B MLPF&S N/A 0.37%
Morgan Stanley N/A 0.21%
Class C MLPF&S N/A 8.70%
CitiGroup Global House Account, New York, NY N/A 3.24%
Class R2 RiverSource Investments 64.55% 3.06%
Applied Reliability Engineering, Fargo, ND 35.45% 1.68%
Class R5 RiverSource Investments 100.00% 0.47%
Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC N/A 88.90%
Patterson & Co. FBO Seligman Data Corp 401(K) Thrift
Plan, Charlotte, NC N/A 10.51%
</Table>
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- -----------------------------------------------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
Class A MLPF&S 10.24% N/A
CitiGroup Global House Account, New York, NY 5.20% N/A
Class B MLPF&S 13.21% N/A
Morgan Stanley 10.64% N/A
CitiGroup Global House Account, New York, NY 8.31% N/A
Class C MLPF&S 22.54% N/A
CitiGroup Global House Account, New York, NY 6.76% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBE, Westwood, MA 26.18% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBF, Westwood, MA 21.53% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBG, Westwood, MA 20.01% N/A
Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC 10.90% N/A
Patterson & Co. FBO Seligman Data Corp 401(K) Thrift
Plan, Charlotte, NC 8.89% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBH, Westwood, MA 5.84% N/A
</Table>
121
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- -----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
Class A Charles Schwab 10.00% 8.99%
MLPF&S N/A 1.04%
CitiGroup Global House Account, New York, NY N/A 0.53%
Class B MLPF&S N/A 0.93%
Morgan Stanley N/A 0.75%
CitiGroup Global House Account, New York, NY N/A 0.59%
Class C MLPF&S N/A 16.15%
CitiGroup Global House Account, New York, NY N/A 4.84%
Class R2 RiverSource Investments 57.38% 0.09%
Applied Reliability Engineering, Fargo, ND 42.58% 0.06%
Class R5 RiverSource Investments 100.00% 0.06%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBE, Westwood, MA N/A 26.16%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBF, Westwood, MA N/A 21.52%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBG, Westwood, MA N/A 19.99%
Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC N/A 10.89%
Patterson & Co. FBO Seligman Data Corp 401(K) Thrift
Plan, Charlotte, NC N/A 8.88%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBH, Westwood, MA N/A 5.84%
</Table>
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ---------------------------------------------------------------------------------------------------------------------
SELIGMAN INCOME AND GROWTH FUND (SELLING FUND)
Class A None N/A N/A
Class B MLPF&S 8.88% N/A
Class C MLPF&S 9.52% N/A
CitiGroup Global House Account, New York, NY 8.24% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC 77.21% N/A
Patterson & Co. FBO Seligman Data Corp 401(K)
Thrift Plan, Charlotte, NC 22.54% N/A
RIVERSOURCE BALANCED FUND (BUYING FUND)
Class A None N/A N/A
Class B MLPF&S N/A 0.48%
Class C MLPF&S 11.80% 10.25%
CitiGroup Global House Account, New York, NY N/A 5.58%
Class R2 None N/A N/A
Class R5 Patterson & Co. FBO J. & W. Seligman Matched
Accumulation Plan, Charlotte, NC N/A 77.23%
Patterson & Co. FBO Seligman Data Corp 401(K)
Thrift Plan, Charlotte, NC N/A 22.54%
</Table>
Note: Class R2 and Class R5 are being added to RiverSource Balanced Fund in
connection with the Reorganization.
122
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ----------------------------------------------------------------------------------------------------------------------
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
Class A State Street Bank & Trust Co -- Seligman Asset
Allocation Moderate Growth Fund, Kansas City, MO 11.41% N/A
State Street Bank & Trust Co -- Seligman Asset
Allocation Balanced Fund, Kansas City, MO 5.85% N/A
State Street Bank & Trust Co -- Seligman Asset
Allocation Growth Fund, Kansas City, MO 5.39% N/A
Class B Morgan Stanley 23.28% N/A
CitiGroup Global House Account, New York, NY 10.03% N/A
MLPF&S 5.81% N/A
Class C MLPF&S 10.10% N/A
CitiGroup Global House Account, New York, NY 5.06% N/A
Class R (to be known as Class R2) None N/A N/A
Class I (to be known as Class R5) State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBE, Westwood, MA 34.20% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBF, Westwood, MA 17.58% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBG, Westwood, MA 17.44% N/A
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBD, Westwood, MA 11.71% N/A
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)*
Class A Charles Schwab 14.39% 13.09%
State Street Bank & Trust Co -- Seligman Asset
Allocation Moderate Growth Fund, Kansas City, MO N/A 1.03%
State Street Bank & Trust Co -- Seligman Asset
Allocation Balanced Fund, Kansas City, MO N/A 0.53%
State Street Bank & Trust Co -- Seligman Asset
Allocation Growth Fund, Kansas City, MO N/A 0.48%
Class B Morgan Stanley N/A 1.44%
CitiGroup Global House Account, New York, NY N/A 0.62%
MLPF&S N/A 0.36%
Class C MLPF&S N/A 7.92%
CitiGroup Global House Account, New York, NY N/A 3.97%
Class R2 None N/A N/A
Class R5 State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBE, Westwood, MA N/A 34.21%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBF, Westwood, MA N/A 17.59%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBG, Westwood, MA N/A 17.45%
State Street Bank & Trust Company FBO North Carolina
College Savings Program -- NCBD, Westwood, MA N/A 11.71%
</Table>
*The combination of RiverSource Investments' initial capital investment
(seed accounts) and RiverSource Portfolio Builder Funds (affiliated "funds-
of-funds"), investment in Class I shares of RiverSource Partners
International Select Growth Fund, represents aggregate ownership of 41.54%
of the Fund. RiverSource Investments (investment manager of RiverSource
Partners International Select Growth Fund and the funds-of-funds) do not
invest in the Fund for the purposes of exercising control. However, since
these ownership interests may be significant, in excess of 25% of the Fund,
such that these entities may be deemed to control the Fund, procedures have
been put in place to assure that public shareholders determine the outcome
of all actions taken at shareholder meetings. Specifically, RiverSource
Investments (which votes proxies for the seed accounts) and the funds-of-
funds' Boards of Directors (which votes proxies for the funds-of-funds)
vote on each proposal in the same proportion that other shareholders vote
on the proposal. If the Reorganization is approved, RiverSource Investments
and the funds-of-funds will own 38.73% of RiverSource Partners
International Select Growth Fund.
Note: Class R2 and Class R5 are being added to RiverSource Partners
International Select Growth Fund in connection with the Reorganization.
123
<Table>
<Caption>
PERCENT PERCENT OF SHARES
OF SHARES HELD FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
- ----------------------------------------------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
Class A MLPF&S 8.57% N/A
Class B MLPF&S 9.88% N/A
Morgan Stanley 5.38% N/A
Class C MLPF&S 26.54% N/A
Class R (to be known as Class R2) None N/A N/A
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
Class A Charles Schwab 13.74% 12.66%
MLPF&S N/A 0.67%
Class B MLPF&S N/A 0.67%
Morgan Stanley N/A 0.37%
Class C MLPF&S N/A 16.82%
Class R2 None N/A N/A
</Table>
Note: Class R2 is being added to RiverSource Short Duration U.S. Government Fund
in connection with the Reorganization.
124
FINANCIAL HIGHLIGHTS
THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE BUYING
FUNDS' FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR
A SINGLE BUYING FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE
THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN A BUYING FUND
(ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THE INFORMATION FOR
THE RIVERSOURCE BUYING FUNDS' FISCAL PERIODS ENDING IN 2007 OR 2008, AS
APPLICABLE, HAS BEEN AUDITED BY ERNST & YOUNG LLP, WHOSE REPORT, ALONG WITH SUCH
BUYING FUND'S FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS, IS INCLUDED IN SUCH
BUYING FUND'S MOST RECENT ANNUAL REPORT. THE INFORMATION FOR CERTAIN PRIOR
PERIODS HAS BEEN AUDITED BY OTHER AUDITORS, AS INDICATED IN THE TABLES BELOW.
UNAUDITED INFORMATION FOR THE MOST RECENT FISCAL HALF-YEAR FOR RIVERSOURCE HIGH
YIELD BOND FUND AND RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND IS ALSO
PROVIDED. THE AUDITORS' REPORTS, FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS
FOR EACH BUYING FUND ARE AVAILABLE UPON REQUEST.
TABLE C-3. FINANCIAL HIGHLIGHTS OF EACH BUYING FUND
RiverSource Diversified Bond Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $4.81 $4.77 $4.89 $4.87 $4.78
- ----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(b) .21(b) .19 .18 .18
Net gains (losses) (both realized and
unrealized) (.17) .05 (.11) .03 .08
- ----------------------------------------------------------------------------------------------------
Total from investment operations .05 .26 .08 .21 .26
- ----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.21) (.21) (.20) (.19) (.17)
Tax return of capital -- (.01) -- -- --
- ----------------------------------------------------------------------------------------------------
Total distributions (.21) (.22) (.20) (.19) (.17)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $4.65 $4.81 $4.77 $4.89 $4.87
- ----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA
Net assets, end of period (in millions) $1,920 $1,937 $2,013 $1,774 $1,933
- ----------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .95% .97% .99% 1.02% 1.00%
- ----------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .89% .89% .89% .94% .98%
- ----------------------------------------------------------------------------------------------------
Net investment income (loss) 4.68% 4.43% 4.09% 3.67% 3.55%
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(g) 226% 295% 281% 300% 279%
- ----------------------------------------------------------------------------------------------------
Total return(h) .93% 5.54% 1.64% 4.38% 5.54%
- ----------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(f) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Aug. 31, 2008
were less than 0.01% of average net assets.
(g) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were
excluded, the portfolio turnover would have been 122% for the year ended
Aug. 31, 2008.
(h) Total return does not reflect payment of a sales charge.
125
RiverSource Diversified Bond Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $4.81 $4.77 $4.89 $4.88 $4.78
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .19(b) .18(b) .16 .15 .14
Net gains (losses) (both realized and unrealized) (.18) .04 (.12) .01 .09
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .01 .22 .04 .16 .23
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.18) (.16) (.15) (.13)
Tax return of capital -- (.00)(c) -- -- --
- ------------------------------------------------------------------------------------------------------------
Total distributions (.17) (.18) (.16) (.15) (.13)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.65 $4.81 $4.77 $4.89 $4.88
- ------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $254 $304 $402 $484 $628
- ------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.71% 1.73% 1.76% 1.78% 1.75%
- ------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 1.65% 1.65% 1.65% 1.70% 1.73%
- ------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.91% 3.66% 3.31% 2.92% 2.78%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h) 226% 295% 281% 300% 279%
- ------------------------------------------------------------------------------------------------------------
Total return(i) .16% 4.74% .88% 3.39% 4.95%
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Aug. 31, 2008
were less than 0.01% of average net assets.
(h) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were
excluded, the portfolio turnover would have been 122% for the year ended
Aug. 31, 2008.
(i) Total return does not reflect payment of a sales charge.
126
RiverSource Diversified Bond Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $4.81 $4.77 $4.90 $4.88 $4.78
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .19(b) .18(b) .16 .15 .14
Net gains (losses) (both realized and
unrealized) (.18) .04 (.13) .02 .09
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .01 .22 .03 .17 .23
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.18) (.16) (.15) (.13)
Tax return of capital -- (.00)(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.17) (.18) (.16) (.15) (.13)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.65 $4.81 $4.77 $4.90 $4.88
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA
Net assets, end of period (in millions) $32 $17 $17 $18 $21
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.70% 1.73% 1.76% 1.79% 1.75%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 1.65% 1.65% 1.66% 1.70% 1.73%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.93% 3.67% 3.31% 2.93% 2.79%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h) 226% 295% 281% 300% 279%
- --------------------------------------------------------------------------------------------------------------
Total return(i) .16% 4.73% .66% 3.60% 4.95%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Aug. 31, 2008
were less than 0.01% of average net assets.
(h) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were
excluded, the portfolio turnover would have been 122% for the year ended
Aug. 31, 2008.
(i) Total return does not reflect payment of a sales charge.
127
RiverSource Diversified Bond Fund - Class R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Aug. 31, 2008 2007(b)
Net asset value, beginning of period $4.80 $4.81
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .21 .14
Net gains (losses) (both realized and
unrealized) (.16) (.02)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .05 .12
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.20) (.13)
Total return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.13)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.65 $4.80
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e),(f) 1.34% 1.32%(g)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(f),(h),(i) 1.08% 1.32%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 4.53% 4.06%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(j) 226% 295%
- --------------------------------------------------------------------------------------------------------------
Total return .84% 2.70%(k)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Aug. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(f) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(g) Adjusted to an annual basis.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(i) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Aug. 31, 2008
were less than 0.01% of average net assets.
(j) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were
excluded, the portfolio turnover would have been 122% for the year ended
Aug. 31, 2008.
(k) Not annualized.
128
RiverSource Diversified Bond Fund - Class R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Aug. 31, 2008 2007(b)
Net asset value, beginning of period $4.80 $4.81
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .24 .17
Net gains (losses) (both realized and
unrealized) (.18) (.02)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .06 .15
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.16)
Total return of capital -- (.00)(d)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.16)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.64 $4.80
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(e),(f) .59% .59%(g)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(f),(h),(i) .58% .57%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 5.02% 4.81%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(j) 226% 295%
- --------------------------------------------------------------------------------------------------------------
Total return 1.22% 3.25%(k)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Aug. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Rounds to zero.
(e) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(f) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(g) Adjusted to an annual basis.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(i) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Aug. 31, 2008
were less than 0.01% of average net assets.
(j) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were
excluded, the portfolio turnover would have been 122% for the year ended
Aug. 31, 2008.
(k) Not annualized.
129
Threadneedle Emerging Markets Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $14.99 $11.32 $8.23 $6.27 $5.46
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08(b) .04(b) .01 .04 .03
Net gains (losses) (both realized and
unrealized) (7.24) 6.27 3.10 1.95 .84
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (7.16) 6.31 3.11 1.99 .87
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.18) -- (.02) (.03) (.06)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.87) (2.64) (.02) (.03) (.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.96 $14.99 $11.32 $8.23 $6.27
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $250 $661 $425 $295 $191
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.87% 1.83% 1.81% 1.79% 1.83%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.87% 1.83% 1.81% 1.79% 1.83%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .78% .31% .19% .54% .41%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (57.79%) 68.21% 37.85% 31.83% 16.09%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
130
Threadneedle Emerging Markets Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $13.73 $10.63 $7.77 $5.95 $5.19
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .00(b),(c) (.05)(b) (.05) (.01) (.02)
Net gains (losses) (both realized and
unrealized) (6.53) 5.79 2.91 1.83 .81
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.53) 5.74 2.86 1.82 .79
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) -- -- -- (.03)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.77) (2.64) -- -- (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.43 $13.73 $10.63 $7.77 $5.95
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $28 $94 $77 $74 $73
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.62% 2.58% 2.57% 2.55% 2.59%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 2.62% 2.58% 2.57% 2.55% 2.59%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02% (.48%) (.55%) (.24%) (.32%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (58.08%) 66.95% 36.81% 30.59% 15.18%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
131
Threadneedle Emerging Markets Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $13.78 $10.66 $7.79 $5.97 $5.20
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .00(b),(c) (.05)(b) (.06) -- (.01)
Net gains (losses) (both realized and
unrealized) (6.54) 5.81 2.93 1.82 .81
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (6.54) 5.76 2.87 1.82 .80
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) -- -- -- (.03)
Distributions from realized gains (2.69) (2.64) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (2.80) (2.64) -- -- (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.44 $13.78 $10.66 $7.79 $5.97
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $8 $5 $3 $1
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 2.63% 2.59% 2.58% 2.56% 2.60%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(f),(g) 2.63% 2.59% 2.58% 2.56% 2.60%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .03% (.48%) (.57%) (.19%) (.34%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 125% 145% 124% 128%
- --------------------------------------------------------------------------------------------------------------
Total return(h) (58.15%) 67.03% 36.84% 30.54% 15.37%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(h) Total return does not reflect payment of a sales charge.
132
Threadneedle Emerging Markets Fund - Class R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008(b)
Net asset value, beginning of period $9.32
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .03
Net gains (losses) (both realized and
unrealized) (4.22)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.13
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e),(f) 1.47%(g)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.57%(g)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133%
- --------------------------------------------------------------------------------------------------------------
Total return (44.96%)(h)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Aug. 1, 2008 (when shares became publicly available) to
Oct. 31, 2008.
(c) Per share amount has been calculated using the average shares outstanding
method.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Adjusted to an annual basis.
(h) Not annualized.
133
Threadneedle Global Equity Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $9.61 $7.52 $6.23 $5.16 $4.62
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05(b) .02(b) .01 .02 --
Net gains (losses) (both realized and
unrealized) (4.41) 2.13 1.30 1.08 .54
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.36) 2.15 1.31 1.10 .54
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.06) (.02) (.03) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.21 $9.61 $7.52 $6.23 $5.16
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $380 $737 $608 $446 $364
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.46% 1.39% 1.51% 1.57% 1.41%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .65% .28% .23% .33% .07%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (45.55%) 28.82% 21.01% 21.48% 11.72%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
134
Threadneedle Global Equity Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $9.02 $7.06 $5.88 $4.87 $4.40
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.03)
Net gains (losses) (both realized and
unrealized) (4.14) 2.00 1.19 1.03 .50
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.15) 1.96 1.18 1.01 .47
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- .00(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.87 $9.02 $7.06 $5.88 $4.87
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $42 $104 $110 $102 $104
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 2.23% 2.15% 2.28% 2.34% 2.18%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.11%) (.45%) (.54%) (.41%) (.66%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (46.01%) 27.81% 20.07% 20.74% 10.68%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Total return does not reflect payment of a sales charge.
135
Threadneedle Global Equity Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $8.93 $7.02 $5.85 $4.85 $4.38
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.02)
Net gains (losses) (both realized and unrealized) (4.09) 1.98 1.18 1.03 .49
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (4.10) 1.94 1.17 1.01 .47
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.03) -- (.01) --
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.83 $8.93 $7.02 $5.85 $4.85
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $5 $8 $6 $2 $1
- -----------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.22% 2.15% 2.27% 2.33% 2.19%
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.09%) (.48%) (.50%) (.53%) (.69%)
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100% 112% 93% 104%
- -----------------------------------------------------------------------------------------------------------------
Total return(e) (45.91%) 27.76% 20.03% 20.89% 10.73%
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
136
Threadneedle Global Equity Fund - Class R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Oct. 31, 2008 2007(B)
Net asset value, beginning of period $9.62 $7.89
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .05 (.01)
Net gains (losses) (both realized and unrealized) (4.42) 1.84
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (4.37) 1.83
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.10)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.23 $9.62
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -----------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.79% 1.74%(f)
- -----------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.54% 1.74%(f)
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) .57% (.13%)(f)
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- -----------------------------------------------------------------------------------------------------------------
Total return (45.48%) 23.41%(i)
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
137
Threadneedle Global Equity Fund - Class R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended Oct. 31, 2008 2007(B)
Net asset value, beginning of period $9.69 $7.89
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .05
Net gains (losses) (both realized and unrealized) (4.45) 1.85
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (4.37) 1.90
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.10)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.25 $9.69
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -----------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.04% .99%(f)
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.07% .62%(f)
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 100%
- -----------------------------------------------------------------------------------------------------------------
Total return (45.40%) 24.33%(g)
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
138
RiverSource High Yield Bond Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended May 31, 2008(L) 2008 2007 2006 2005
Net asset value, beginning of period $2.74 $3.02 $2.89 $2.86 $2.74
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(b) .22(b) .20 .20 .19
Net gains (losses) (both realized and unrealized) (.82) (.29) .15 .03 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.71) (.07) .35 .23 .31
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) (.21) (.22) (.20) (.19)
Tax return of capital -- (.00)(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.11) (.21) (.22) (.20) (.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.92 $2.74 $3.02 $2.89 $2.86
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $713 $1,134 $1,463 $1,535 $1,735
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.14%(f) 1.13% 1.08% 1.08% 1.04%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.02%(f) 1.10% 1.08% 1.08% 1.04%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 8.75%(f) 7.71% 6.94% 6.78% 6.67%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 64% 95% 93% 105%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (26.68%)(j) (2.40%) 12.77%(k) 8.27% 11.56%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Nov. 30, 2008 and for the year ended May 31,
2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund
for a loss on a trading error. Had the Fund not received this reimbursement,
total return would have been lower by 0.01%.
(l) Six months ended Nov. 30, 2008 (Unaudited).
139
RiverSource High Yield Bond Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended May 31, 2008(L) 2008 2007 2006 2005
Net asset value, beginning of period $2.74 $3.02 $2.89 $2.86 $2.74
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .19(b) .18 .18 .17
Net gains (losses) (both realized and unrealized) (.82) (.29) .15 .03 .12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.72) (.10) .33 .21 .29
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.18) (.20) (.18) (.17)
Tax return of capital -- (.00)(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.10) (.18) (.20) (.18) (.17)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.92 $2.74 $3.02 $2.89 $2.86
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $90 $174 $321 $433 $629
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.89%(f) 1.89% 1.84% 1.83% 1.79%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.78%(f) 1.86% 1.84% 1.83% 1.79%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 7.90%(f) 6.92% 6.18% 6.00% 5.92%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 64% 95% 93% 105%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (27.06%)(j) (3.17%) 11.91%(k) 7.45% 10.72%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the six months ended Nov. 30,
2008 were less than 0.01% of average net assets. The ratio of net expenses
after expense waiver/reimbursement and after reduction for earnings and bank
fee credits was 1.85% for the year ended May 31, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund
for a loss on a trading error. Had the Fund not received this reimbursement,
total return would have been lower by 0.01%.
(l) Six months ended Nov. 30, 2008 (Unaudited).
140
RiverSource High Yield Bond Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended May 31, 2008(L) 2008 2007 2006 2005
Net asset value, beginning of period $2.72 $3.00 $2.87 $2.84 $2.73
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .19(b) .18 .18 .17
Net gains (losses) (both realized and unrealized) (.81) (.29) .15 .03 .11
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.71) (.10) .33 .21 .28
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.18) (.20) (.18) (.17)
Tax return of capital -- (.00)(c) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.10) (.18) (.20) (.18) (.17)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.91 $2.72 $3.00 $2.87 $2.84
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $12 $19 $26 $28 $36
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.89%(f) 1.88% 1.83% 1.83% 1.79%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.77%(f) 1.86% 1.83% 1.83% 1.79%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 7.99%(f) 6.95% 6.18% 6.02% 5.92%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 64% 95% 93% 105%
- --------------------------------------------------------------------------------------------------------------
Total return(i) (26.81%)(j) (3.21%) 11.95%(k) 7.47% 10.35%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the six months ended Nov. 30,
2008 were less than 0.01% of average net assets. The ratio of net expenses
after expense waiver/reimbursement and after reduction for earnings and bank
fee credits was 1.85% for the year ended May 31, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund
for a loss on a trading error. Had the Fund not received this reimbursement,
total return would have been lower by 0.01%.
(l) Six months ended Nov. 30, 2008 (Unaudited).
141
RiverSource High Yield Bond Fund - Class R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31, 2008(j) 2008 2007(b)
Net asset value, beginning of period $2.74 $3.02 $2.95
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(c) .21(c) .11
Net gains (losses) (both realized and
unrealized) (.82) (.29) .05
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.72) (.08) .16
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.20) (.09)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.92 $2.74 $3.02
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.55%(f) 1.51% 1.45%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.37%(f) 1.25% 1.45%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 8.68%(f) 7.63% 6.58%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 64% 95%
- --------------------------------------------------------------------------------------------------------------
Total return (26.85%)(i) (2.75%) 5.72%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to May 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Nov. 30, 2008 and for the year ended May 31,
2008.
(i) Not annualized.
(j) Six months ended Nov. 30, 2008 (Unaudited).
142
RiverSource High Yield Bond Fund - Class R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31, 2008(j) 2008 2007(b)
Net asset value, beginning of period $2.74 $3.02 $2.95
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(c) .22(c) .12
Net gains (losses) (both realized and
unrealized) (.82) (.28) .05
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.71) (.06) .17
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) (.22) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.92 $2.74 $3.02
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA
Net assets, end of period (in millions) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .78%(f) .78% .71%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .70%(f) .75% .71%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 9.12%(f) 8.06% 7.33%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 64% 95%
- --------------------------------------------------------------------------------------------------------------
Total return (26.56%)(i) (2.06%) 6.09%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to May 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(h) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Nov. 30, 2008 and for the year ended May 31,
2008.
(i) Not annualized.
(j) Six months ended Nov. 30, 2008 (Unaudited).
143
RiverSource Balanced Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004
Net asset value, beginning of period $11.46 $10.52 $9.84 $9.25 $8.47
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .30(b) .26(b) .24 .21 .19
Net gains (losses) (both realized and
unrealized) (2.42) .95 .68 .61 .77
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.12) 1.21 .92 .82 .96
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.28) (.27) (.24) (.23) (.18)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.06 $11.46 $10.52 $9.84 $9.25
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $634 $929 $959 $990 $1,077
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) .95% 1.07% 1.01% 1.03% 1.01%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.86% 2.31% 2.42% 2.13% 2.01%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(e) 105% 124% 126% 130% 131%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (18.73%) 11.57% 9.46% 8.86% 11.32%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Sept. 30, 2008
were less than 0.01% of average daily net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 86% for the year ended
Sept. 30, 2008.
(f) Total return does not reflect payment of a sales charge.
144
RiverSource Balanced Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004
Net asset value, beginning of period $11.39 $10.45 $9.78 $9.19 $8.41
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(b) .17(b) .16 .14 .11
Net gains (losses) (both realized and
unrealized) (2.40) .95 .67 .59 .77
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.18) 1.12 .83 .73 .88
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.20) (.18) (.16) (.14) (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.01 $11.39 $10.45 $9.78 $9.19
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $26 $52 $70 $81 $113
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.71% 1.84% 1.78% 1.81% 1.78%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.10% 1.53% 1.63% 1.35% 1.23%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(e) 105% 124% 126% 130% 131%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (19.35%) 10.78% 8.54% 8.02% 10.51%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Sept. 30, 2008
were less than 0.01% of average daily net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 86% for the year ended
Sept. 30, 2008.
(f) Total return does not reflect payment of a sales charge.
145
RiverSource Balanced Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004
Net asset value, beginning of period $11.38 $10.44 $9.77 $9.19 $8.41
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(b) .17(b) .16 .14 .12
Net gains (losses) (both realized and
unrealized) (2.41) .96 .67 .59 .77
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (2.19) 1.13 .83 .73 .89
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.20) (.19) (.16) (.15) (.11)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.99 $11.38 $10.44 $9.77 $9.19
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $5 $4 $3 $3
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.71% 1.82% 1.78% 1.81% 1.78%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.11% 1.57% 1.61% 1.35% 1.25%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(e) 105% 124% 126% 130% 131%
- --------------------------------------------------------------------------------------------------------------
Total return(f) (19.41%) 10.86% 8.58% 7.97% 10.57%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Sept. 30, 2008
were less than 0.01% of average daily net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 86% for the year ended
Sept. 30, 2008.
(f) Total return does not reflect payment of a sales charge.
146
RiverSource Partners International Select Growth Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $10.54 $9.42 $8.05 $6.85 $5.80
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .04(b) .02 .02 --
Net gains (losses) (both realized and
unrealized) (5.00) 2.70 2.04 1.33 1.05
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.93) 2.74 2.06 1.35 1.05
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.13) (.17) (.06) (.01) --
Distributions from realized gains (.81) (1.45) (.63) (.14) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.94) (1.62) (.69) (.15) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.67 $10.54 $9.42 $8.05 $6.85
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $190 $418 $294 $216 $151
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.56% 1.61% 1.61% 1.79% 1.85%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.49% 1.61% 1.61% 1.74% 1.75%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .91% .45% .23% .37% .17%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 104% 124% 67% 87%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (50.70%)(h) 33.56% 27.21% 19.89% 18.15%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
(h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return would have been lower.
147
Partners International Select Growth Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $10.15 $9.12 $7.82 $6.69 $5.71
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(b) (.03)(b) (.05) (.02) (.02)
Net gains (losses) (both realized and
unrealized) (4.80) 2.61 1.99 1.29 1.00
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.79) 2.58 1.94 1.27 .98
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.10) (.01) -- --
Distributions from realized gains (.81) (1.45) (.63) (.14) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.87) (1.55) (.64) (.14) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.49 $10.15 $9.12 $7.82 $6.69
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $30 $75 $67 $58 $44
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.32% 2.37% 2.37% 2.56% 2.62%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.25% 2.37% 2.37% 2.51% 2.51%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .15% (.30%) (.53%) (.39%) (.59%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 104% 124% 67% 87%
- --------------------------------------------------------------------------------------------------------------
Total return(g) (51.01%)(h) 32.54% 26.19% 19.13% 17.16%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
(h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return would have been lower.
148
Partners International Select Growth Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $10.14 $9.12 $7.81 $6.69 $5.71
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01(b) (.03)(b) (.04) (.02) (.02)
Net gains (losses) (both realized and unrealized) (4.79) 2.61 1.99 1.28 1.00
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (4.78) 2.58 1.95 1.26 .98
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.11) (.01) -- --
Distributions from realized gains (.81) (1.45) (.63) (.14) --
- -----------------------------------------------------------------------------------------------------------------
Total distributions (.88) (1.56) (.64) (.14) --
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.48 $10.14 $9.12 $7.81 $6.69
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $7 $4 $3 $3
- -----------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.32% 2.36% 2.37% 2.55% 2.61%
- -----------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.25% 2.36% 2.37% 2.51% 2.51%
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) .18% (.31%) (.53%) (.41%) (.60%)
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 104% 124% 67% 87%
- -----------------------------------------------------------------------------------------------------------------
Total return(g) (50.99%)(h) 32.56% 26.34% 18.98% 17.16%
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended Oct. 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
(h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the
Fund for a loss on a trading error. Had the Fund not received this
reimbursement, total return would have been lower.
149
RiverSource Short Duration U.S. Government Fund - Class A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005
Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08(b) .19(b) .19 .15 .12
Net gains (losses) (both realized and unrealized) (.19) .01 .05 (.10) (.03)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (.11) .20 .24 .05 .09
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.19) (.19) (.16) (.12)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $586 $539 $514 $641 $894
- -----------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.03%(e) 1.04% 1.03% 1.06% 1.01%
- -----------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) .89%(e) .89% .89% .89% .93%
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.47%(e) 3.93% 3.99% 3.27% 2.49%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h) 118% 209% 168% 194% 169%
- -----------------------------------------------------------------------------------------------------------------
Total return(i) (2.30%)(j) 4.27% 5.12% 1.00% 1.92%
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the six months ended Nov. 30,
2008 were less than 0.01% of average net assets. The ratio of net expenses
after expense waiver/reimbursement and after reduction for earnings and bank
fee credits was 0.88% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 42% for the six months
ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).
150
RiverSource Short Duration U.S. Government Fund - Class B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005
Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(b) .15(b) .15 .12 .08
Net gains (losses) (both realized and unrealized) (.19) .01 .05 (.11) (.03)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (.13) .16 .20 .01 .05
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.15) (.15) (.12) (.08)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $130 $159 $216 $338 $588
- -----------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.79%(e) 1.80% 1.79% 1.82% 1.76%
- -----------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.65%(e) 1.65% 1.64% 1.64% 1.68%
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.72%(e) 3.18% 3.23% 2.50% 1.73%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h) 118% 209% 168% 194% 169%
- -----------------------------------------------------------------------------------------------------------------
Total return(i) (2.67%)(j) 3.48% 4.34% .26% 1.16%
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the six months ended Nov. 30,
2008 were less than 0.01% of average net assets. The ratio of net expenses
after expense waiver/reimbursement and after reduction for earnings and bank
fee credits was 1.64% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 42% for the six months
ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).
151
RiverSource Short Duration U.S. Government Fund - Class C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005
Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(b) .15(b) .15 .12 .08
Net gains (losses) (both realized and unrealized) (.19) .02 .05 (.11) (.03)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations (.13) .17 .20 .01 .05
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.16) (.15) (.12) (.08)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $12 $10 $10 $15 $24
- -----------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.79%(e) 1.80% 1.80% 1.83% 1.77%
- -----------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(f),(g) 1.65%(e) 1.65% 1.64% 1.64% 1.68%
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.70%(e) 3.18% 3.24% 2.51% 1.73%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(h) 118% 209% 168% 194% 169%
- -----------------------------------------------------------------------------------------------------------------
Total return(i) (2.67%)(j) 3.49% 4.34% .26% 1.16%
- -----------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Expense ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds).
(g) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the six months ended Nov. 30,
2008 were less than 0.01% of average net assets. The ratio of net expenses
after expense waiver/reimbursement and after reduction for earnings and bank
fee credits was 1.64% for the year ended May 31, 2008.
(h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were
excluded, the portfolio turnover would have been 42% for the six months
ended Nov. 30, 2008.
(i) Total return does not reflect payment of a sales charge.
(j) Not annualized.
(k) Six months ended Nov. 30, 2008 (Unaudited).
152
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of , 2009 (the
"Agreement") is between each selling entity identified in Schedule A hereto
(each a "Selling Corporation")(1), on behalf of each series thereof identified
in Schedule A hereto as a Selling Fund (each a "Selling Fund"), each
corresponding buying entity identified in Schedule A hereto (each a "Buying
Corporation")(2), on behalf of each series thereof identified in Schedule A
hereto as the corresponding Buying Fund (each a "Buying Fund"), and RiverSource
Investments, LLC (solely for the purposes of Sections 3c and 11 of the
Agreement).
This Agreement shall be treated for all purposes as if each reorganization
between a Selling Fund and its corresponding Buying Fund contemplated hereby had
been the subject of a separate agreement. As context requires a Buying
Corporation or Selling Corporation that is not organized as a series fund and
that may not be considered or meet the definition of "Buying Fund" and "Selling
Fund" as set forth above, may be referred to as a "Buying Fund" or a "Selling
Fund," respectively, for purposes of this Agreement.
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. Each Selling Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates (each a "Reorganization"). Each Buying Fund agrees to
furnish data and information, as reasonably requested, for the proxy
statement to be furnished to shareholders of the corresponding Selling Fund.
2. REORGANIZATION.
a. Plan of Reorganization. Each Reorganization will be a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). At the Closing, each Selling Corporation
will convey all of the assets of each Selling Fund to the corresponding
Buying Fund. Each Buying Fund will assume all liabilities of the
corresponding Selling Fund. At the Closing, each Buying Corporation will
deliver shares of each Buying Fund, including fractional shares, to the
corresponding Selling Corporation on behalf of the corresponding Selling
Fund. The number of shares will be determined by dividing the value of
the net assets attributable to each class of shares of each Selling Fund,
computed as described in paragraph 3(a), by the net asset value of one
share of the corresponding class of the corresponding Buying Fund,
computed as described in paragraph 3(b). Each Selling Fund will not pay a
sales charge on the receipt of the corresponding Buying Fund's shares in
exchange for the assets of such Selling Fund. In addition, the
shareholders of each Selling Fund will not pay a sales charge on
distribution to them of shares of the corresponding Buying Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of shareholders of each
Selling Fund and receipt of all necessary regulatory approvals, or such
later date as the officers of the Selling Corporation and Buying
Corporation may agree.
3. VALUATION OF NET ASSETS.
a. The net asset value of each Selling Fund will be computed as of the close
of regular trading on the NYSE on the business day immediately preceding
the day of Closing (the "Valuation Date") using the valuation procedures
set forth in the corresponding Buying Fund's then current prospectus.
b. The net asset value per share of shares of each Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in each Buying Fund's then
current prospectus.
c. At the Closing, each Selling Fund will provide the corresponding Buying
Fund with a copy of the computation showing the valuation of the net
asset value per share of such Selling Fund on the Valuation Date, and
each Buying Fund will provide the corresponding Selling Fund with a copy
of the computation showing the determination of the net asset value per
share of such Buying Fund on the Valuation Date. Both computations will
be certified by an officer of RiverSource Investments, LLC, the
investment manager.
- ----------
(1) The Selling Corporation for the Reorganization of Seligman Emerging Markets
Fund, Seligman Global Growth Fund and Seligman International Growth Fund is
a Maryland corporation. The Selling Corporation for the Reorganization of
Seligman High-Yield Fund and Seligman U.S. Government Securities Fund is a
Massachusetts business trust. Seligman Core Fixed Income Fund, Inc. and
Seligman Income and Growth Fund, Inc. are each Maryland Corporations.
(2) The Buying Corporation for each Buying Fund, RiverSource Diversified Bond
Fund, Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund,
RiverSource High Yield Bond Fund, RiverSource Balanced Fund, RiverSource
Partners International Select Growth Fund and RiverSource Short Duration
U.S. Government Fund, is a Minnesota corporation.
A.1
4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND.
a. On the date of the Closing, each Selling Corporation will liquidate each
Selling Fund and distribute shares of each class of the corresponding
Buying Fund to the shareholders of record of such Selling Fund's
corresponding class. Each Buying Fund will establish shareholder accounts
in the names of each corresponding Selling Fund shareholder, representing
the respective pro rata number of full and fractional shares of such
class of the Buying Fund due to each such shareholder. All issued and
outstanding shares of each Selling Fund will simultaneously be cancelled
on the books of each Selling Corporation. Each Buying Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the corresponding Selling Corporation.
b. Immediately after the close of business on the Valuation Date, the share
transfer books of each Selling Corporation relating to each Selling Fund
will be closed and no further transfer of shares will be made.
c. Promptly after the Closing, each Buying Fund or its transfer agent will
notify each shareholder of the corresponding Selling Fund of the number
of shares distributed to the shareholder and confirm the registration in
the shareholder's name.
d. As promptly as practicable after the Closing, and in no event later than
twelve months from the date of the Closing, each Selling Fund will be
dissolved.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION.
With respect to each Reorganization, the Buying Corporation represents and
warrants to the Selling Fund as follows:
a. Organization, Existence, etc. The Buying Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Minnesota and has the power to carry on its business as it
is now being conducted.
b. Registration as Investment Company. The Buying Corporation, or in the
case of separate series funds, the buying Corporation, of which the
Buying Fund is a series, is registered under the Investment Company Act
of 1940 (the "1940 Act") as an open-end, management investment company.
c. Capitalization. The Buying Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All of
the outstanding shares of the Buying Corporation have been duly
authorized and are validly issued, fully paid and non-assessable. Since
the Buying Fund is engaged in the continuous offering and redemption of
its shares, the number of outstanding shares may vary daily.
d. Financial Statements. The Buying Fund's audited financial statements as
of the end of the last fiscal year, and the subsequent unaudited semi-
annual financial statements, if any (the "Buying Fund Financial
Statements"), fairly present the financial position of the Buying Fund
and the results of its operations and changes in its net assets for the
periods shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at the
time of the Closing, will be validly issued, fully paid and non-
assessable.
f. Authority Relative to the Agreement. The Buying Corporation has the power
to enter into and carry out the obligations described in this Agreement.
The Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Buying Corporation and no
other proceedings by the Buying Corporation or the Buying Fund are
necessary.
g. No Violation. The Buying Corporation is not in violation of its Articles
of Incorporation or By-Laws (the "Articles") or in default in the
performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Buying Fund is
subject. The transactions will not result in any violation of the
provisions of the Articles or any law, administrative regulation or
administrative or court decree applicable to the Buying Fund.
h. Liabilities. The Buying Fund has no known liabilities of a material
amount, contingent or otherwise, other than liabilities disclosed in the
Buying Fund Financial Statements, liabilities incurred in the ordinary
course of business subsequent to the date of the latest annual or semi-
annual financial statements, or liabilities previously disclosed to the
Selling Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending or,
to the knowledge of the Buying Fund, threatened, that would materially
and adversely affect the Buying Fund, its financial condition or the
conduct of its business, or that would prevent or hinder completion of
the transactions contemplated by this Agreement. The Buying Fund knows of
no facts that might form the basis for the
A.2
institution of any such litigation, proceeding or investigation and the
Buying Fund is not a party to or subject to the provisions of any order,
decree or judgment.
j. Contracts. Except for contracts and agreements previously disclosed to
the Selling Corporation, the Buying Fund is not a party to or subject to
any material contract, debt instrument, plan, lease, franchise, license
or permit.
k. Regulated Investment Company Qualification. The Buying Fund has qualified
and met the requirements for treatment as a "regulated investment
company" within the meaning of Section 851 of the Code with respect to
each taxable year since commencement of its operations and will continue
to meet such requirements and to so qualify at all times through the
Closing.
l. Taxes. As of the Closing, the Buying Fund will (i) have filed all
federal and other tax returns and reports that have been required to be
filed, (ii) have paid or provided for payment of all federal and other
taxes shown to be due on such returns or on any assessments received,
(iii) have adequately provided for all tax liabilities on its books,
(iv) except as disclosed to the Selling Fund, not have had any tax
deficiency or liability asserted against it or question with respect
thereto raised, and (v) except as disclosed to the Selling Fund, not be
under audit by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
m. Registration Statement. The Buying Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares to be issued in the Reorganization. At the time
the Registration Statement becomes effective, at the time of the
shareholders' meeting described in paragraph 1 and at the Closing, the
Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein not misleading. However, none of the representations and
warranties in this subsection apply to statements in, or omissions from,
the Registration Statement made in reliance on information furnished by
the Selling Fund for use in the Registration Statement.
n. Business Activities. The Buying Fund will operate its business in the
ordinary course between the date hereof and the date of the Closing, it
being understood that such ordinary course of business will include
regular and customary periodic dividends and distributions and any other
distribution that may be advisable.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION.
With respect to each Reorganization, the Selling Corporation represents and
warrants to the Buying Fund as follows:
a. Organization, Existence, etc. For Seligman Core Fixed Income Fund, Inc.,
Seligman Income and Growth Fund, Inc., Seligman Emerging Markets Fund,
Seligman Global Growth Fund and Seligman International Growth Fund, the
Selling Corporation is a corporation duly organized, validly existing and
in good standing under the laws of the state of Maryland and has the
power to carry on its business as it is now being conducted. For Seligman
High-Yield Fund and Seligman U.S. Government Securities Fund, the Selling
Corporation is a business trust duly organized, validly existing and in
good standing under the laws of the commonwealth of Massachusetts and has
the power to carry on its business as it is now being conducted.
b. Registration as Investment Company. The Selling Corporation, or in the
case of a separate series funds, the Selling Corporation, of which the
Selling Fund is a series, is registered under the 1940 Act as an open-
end, management investment company.
c. Capitalization. The Selling Corporation has authorized capital as
follows: Seligman Core Fixed Income Fund, Inc. has 1,000,000,000 shares
of common stock, par value $0.001 per share; Seligman Global Fund Series,
Inc. has 2,000,000,000 shares of common stock, par value $0.001, of which
400,000,000 shares are authorized for each of Seligman Emerging Markets
Fund, Seligman Global Growth Fund and Seligman International Growth Fund;
Seligman Income and Growth Fund, Inc. has 500,000,000 shares of common
stock, par value $1.00; and Seligman High-Yield Fund and Seligman U.S.
Government Securities Fund each have an unlimited number of shares of
common stock, par value $0.001. All of the outstanding shares have been
duly authorized and are validly issued, fully paid and non-assessable.
Since the Selling Fund is engaged in the continuous offering and
redemption of its shares, the number of outstanding shares may vary
daily.
d. Financial Statements. The Selling Fund's audited financial statements as
of the end of the last fiscal year, and the subsequent unaudited semi-
annual financial statements, if any (the "Selling Fund Financial
Statements"), fairly present the financial position of the Selling Fund,
and the results of its operations and changes in its net assets for the
periods shown.
e. Authority Relative to the Agreement. The Selling Corporation has the
power to enter into and to carry out its obligations under this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized
A.3
by the Board of Directors of the Selling Corporation and no other
proceedings by the Selling Corporation or the Selling Fund are necessary,
other than the approval of shareholders contemplated in paragraph 1.
f. No Violation. The Selling Corporation is not in violation of its Articles
or Declaration of Trust, as applicable, or in default in the performance
of any material agreement to which it is a party or in default in the
performance of any material agreement to which it is a party). The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with or constitute a breach of, any
material contract to which the Selling Fund is subject. The transactions
will not result in any violation of the provisions of the Articles or
Declaration of Trust, as the case may be, or any law, administrative
regulation or administrative or court decree applicable to the Selling
Fund.
g. Liabilities. The Selling Fund has no known liabilities of a material
amount, contingent or otherwise, other than liabilities disclosed in the
Selling Fund Financial Statements, liabilities incurred in the ordinary
course of business subsequent to the date of the latest annual or semi-
annual financial statements, or liabilities previously disclosed to the
Buying Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending or,
to the knowledge of the Selling Fund, threatened, that would materially
and adversely affect the Selling Fund, its financial condition or the
conduct of its business, or that would prevent or hinder completion of
the transactions contemplated by this Agreement. The Selling Fund knows
of no facts that might form the basis for the institution of any such
litigation, proceeding or investigation and is not a party to or subject
to the provisions of any order, decree or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to
the Buying Corporation, the Selling Fund is not a party to or subject to
any material contract, debt instrument, plan, lease, franchise, license
or permit.
j. Regulated Investment Company Qualification. The Selling Fund has
qualified and met the requirements for treatment as a "regulated
investment company" within the meaning of Section 851 of the Code with
respect to each taxable year since commencement of its operations and
will continue to meet such requirements and to so qualify at all times
through the Closing.
k. Taxes. As of the Closing, the Selling Fund will (i) have filed all
federal and other tax returns and reports that have been required to be
filed, (ii) have paid or provided for payment of all federal and other
taxes shown to be due on such returns or on any assessments received,
(iii) have adequately provided for all tax liabilities on its books, (iv)
except as disclosed to the Buying Fund, not have had any tax deficiency
or liability asserted against it or question with respect thereto raised,
and (v) except as disclosed to the Buying Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
l. Fund Securities. All securities listed in the schedule of investments of
the Selling Fund as of the Closing will be owned by the Selling Fund free
and clear of any encumbrances, except as indicated in the schedule.
m. Registration Statement. The Selling Fund will cooperate with the Buying
Fund and will furnish information relating to the Selling Corporation and
the Selling Fund required in the Registration Statement. At the time the
Registration Statement becomes effective, at the time of the
shareholders' meeting described in paragraph 1 and at the Closing, the
Registration Statement, as it relates to the Selling Corporation or the
Selling Fund, will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling
Corporation or the Selling Fund for use in the Registration Statement.
n. Provision of Books and Records. The Selling Fund will provide its books
and records to the corresponding Buying Fund for purposes of preparing
any tax returns required by law to be filed after the Closing date,
including (1) the tax return for the period ending on the Closing date,
and (2) the tax return for the period beginning the day after the Closing
and ending the earlier of the current fiscal year-end of the
corresponding Buying Fund and the taxable year end chosen by the
corresponding Buying Fund following the Reorganization.
o. Business Activities. The Selling Fund will operate its business in the
ordinary course between the date hereof and the date of the Closing, it
being understood that such ordinary course of business will include
regular and customary periodic dividends and distributions and any other
distribution that may be advisable.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of the
Buying Corporation with respect to each Reorganization are subject to the
satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
A.4
b. Representations, Warranties and Agreements. The Selling Corporation and
the Selling Fund will have complied with this Agreement and each of the
representations and warranties in this Agreement will be true in all
material respects as of the date of the Closing. An officer of the
Selling Corporation will provide a certificate to each Buying Fund
confirming that, as of the Closing, the representations and warranties
set forth in Section 6 are true and correct and that there have been no
material adverse changes in the financial condition, results of
operations, business, properties or assets of the corresponding Selling
Fund since the date of its last financial statement, except as otherwise
indicated in any financial statements, certified by an officer of the
Selling Corporation, and delivered to such Buying Fund on the date of the
Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Sections 5(m) and 6(m) will
be effective and no stop orders under the 1933 Act will have been
issued.
- All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Corporation will have received an opinion
of counsel for the Selling Corporation, dated as of the date of the
Closing, to the effect that: (i) the Selling Corporation is a corporation
duly organized and validly existing under the laws of the state of
Maryland; (ii) each Selling Fund is a series of the Selling Corporation,
an open-end management investment company registered under the 1940 Act,
as applicable; (iii) this Agreement and the Reorganization has been duly
authorized and approved by all requisite action of the Selling
Corporation and each Selling Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Selling
Corporation.
e. Declaration of Dividend. The Selling Fund will have declared, prior to
the Closing, a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the Selling Fund
shareholders (i) all of the excess of (x) the Selling Fund's investment
income excludable from gross income under Section 103 of the Code over
(y) the Selling Fund's deductions disallowed under Sections 265 and 171
of the Code, (ii) all of the Selling Fund's investment company taxable
income as defined in Section 852 of the Code (in each case computed
without regard to any deduction for dividends paid) and (iii) all of the
Selling Fund's net capital gain realized (after reduction for any capital
loss carryover), in each case for the current taxable year (which will
end on the Closing date) and any preceding taxable years for which such a
dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations of the
Selling Corporation with respect to each Reorganization are subject to the
satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Buying Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the date of the Closing. An officer of the Buying Corporation will
provide a certificate to each Selling Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 5 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties or
assets of the corresponding Buying Fund since the date of its last
financial statement, except as otherwise indicated in any financial
statements, certified by an officer of the Buying Corporation, and
delivered to such Selling Fund on or prior to the last business day
before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Sections 5(m) and 6(m) will
be effective and no stop orders under the 1933 Act will have been
issued.
- All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Corporation, dated as of the date of
the Closing, to the effect that: (i) the Buying Corporation is a
corporation duly organized and validly existing under the laws of the
state of Minnesota; (ii) each Buying Fund is a series of the Buying
Corporation, an open-end management investment company registered under
the 1940 Act; (iii) this Agreement and the Reorganization has been
authorized and approved by all requisite action of the Buying Corporation
and each Buying Fund and this Agreement has been duly executed by, and is
a valid and binding obligation of, the Buying Corporation; and (iv) the
shares to be issued in the Reorganization are duly authorized and upon
issuance in accordance with this Agreement will be validly issued, fully
paid and non-assessable shares of each Buying Fund.
A.5
9. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION AND THE BUYING
CORPORATION. The obligations of each of the Selling Corporation and the
Buying Corporation with respect to each Reorganization are subject to the
satisfaction of the following conditions:
Tax Opinion. With respect to the Reorganization between a Selling Fund and
its corresponding Buying Fund, the Selling Fund shall have received an
opinion of Ropes & Gray LLP satisfactory to such Selling Fund, and the
Buying Fund shall have received an opinion of Ropes & Gray LLP satisfactory
to such Buying Fund, each substantially to the effect that, on the basis of
existing provisions of the Code, Treasury regulations promulgated
thereunder, current administrative rules, pronouncements and court
decisions, although the matter is not free from doubt, generally for federal
income tax purposes:
a. The acquisition by the Buying Fund of the assets of the Selling Fund in
exchange for the Buying Fund's assumption of all liabilities of the
Selling Fund and delivery to the Selling Fund of the acquisition shares,
followed by the distribution by the Selling Fund of the acquisition
shares to the shareholders of the Selling Fund in exchange for their
Selling Fund shares, all as provided in paragraph 2(a) and 4(a) hereof,
will constitute a reorganization within the meaning of Section 368(a) of
the Code, and the Selling Fund and the Buying Fund will each be "a party
to a reorganization" within the meaning of Section 368(b) of the Code;
b. No gain or loss will be recognized by the Selling Fund upon (i) the
transfer of its assets to the Buying Fund in exchange for the acquisition
shares and the assumption by the Buying Fund of all liabilities of the
Selling Fund or (ii) the distribution of the acquisition shares by the
Selling Fund to its shareholders in liquidation, as contemplated in
paragraph 4(a) hereof;
c. No gain or loss will be recognized by the Buying Fund upon receipt of the
assets of the Selling Fund in exchange for acquisition shares and the
assumption by the Buying Fund of all liabilities of the Selling Fund as
contemplated in paragraph 2(a) hereof;
d. The tax basis in the hands of the Buying Fund of the assets of the
Selling Fund transferred to the Buying Fund in the Reorganization will be
the same as the tax basis of such assets in the hands of the Selling Fund
immediately prior to the transfer;
e. The holding periods of the assets of the Selling Fund in the hands of the
Buying Fund will include the periods during which such assets were held
by the Selling Fund;
f. No gain or loss will be recognized by the Selling Fund's shareholders
upon the exchange of their shares of the Selling Fund for the acquisition
shares;
g. The aggregate tax basis of the acquisition shares the Selling Fund
shareholder receives in the Reorganization will be the same as the
aggregate tax basis of his or her Selling Fund's shares exchanged
therefor;
h. The Selling Fund shareholder's holding period for the acquisition shares
will include the period for which he or she held the Selling Fund's
shares exchanged therefor, provided that the shareholder held such
Selling Fund's shares as capital assets on the date of the exchange; and
i. The Buying Fund will succeed to and take into account the items of the
Selling Fund described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381, 382, 383 and 384 of
the Code and the regulations thereunder.
Ropes & Gray LLP will express no view with respect to the effect of the
Reorganization on any transferred asset as to which any unrealized gain or
loss is required to be recognized under federal income tax principles (i) at
the end of a taxable year or upon the termination thereof or (ii) upon the
transfer of such asset regardless of whether such a transfer would otherwise
be a non-taxable transaction.
Each opinion will be based on certain factual certifications made by officers
of the Selling Fund and the Buying Fund, and will also be based on customary
assumptions. The opinions are not guarantees that the tax consequences of the
Reorganizations will be as described above. The opinions will note and
distinguish certain published precedent. There is no assurance that the
Internal Revenue Service or a court would agree with the opinions.
10. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the respective
Boards of Directors. The Agreement may be so amended at any time before
or after the shareholder approval contemplated by paragraph 1 is
obtained.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit.
A.6
c. Each party hereto may terminate this Agreement at any time prior to the
Closing by notice to the other party if a material condition to its
performance or a material covenant of the other party is not fulfilled on
or before the date specified for its fulfillment or a material breach of
this Agreement is made by the other party and is not cured.
d. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of each
Selling Fund, without any liability on the part of any party or its
respective directors, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on , , or a later date agreed upon by the
officers of the Selling Corporation and the Buying Corporation, if the
Closing is not effected on or prior to that date.
e. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
11. EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the acquisition shares and all transfer agency costs
related to the acquisition shares shall be borne by the relevant Buying
Fund. Certain non-recurring Reorganization costs and related Reorganization
expenses may be borne by a Selling Fund to the extent the Reorganization is
expected to result in a reduction to the expense ratio for such Selling
Fund. Reorganization costs and related Reorganization expenses include (i)
legal and auditor or accounting fees ("Professional Fees") associated with
the preparation and filing of the proxy statement/prospectus and (ii)
expenses associated with the printing and mailing of any shareholder
communications, including the proxy statement/prospectus that forms a part
of the Registration Statement, and fees and expenses of any proxy
solicitation firm retained in connection with the Reorganization ("Proxy
Vendor Expenses"). Professional Fees shall be allocated among each Selling
Fund on an equal weighted basis regardless of asset size or number of
accounts. Proxy Vendor Expenses shall be allocated among the Selling Funds
based on number of shareholder accounts. Notwithstanding the foregoing, the
fees and expenses borne by any Selling Fund will not exceed the excess of
(i) the total anticipated reduction in fees and expenses expected to be
borne by such Selling Fund over the first twelve months following its
Reorganization over (ii) the cost expected to be borne by such Selling Fund
related to the discontinuance of operations of Seligman Data Corp. Any fees
and expenses that would have been eligible to be borne by a Selling Fund but
for the preceding sentence and all other Reorganization related costs and
expenses will be borne by RiverSource Investments, LLC. Each Selling Fund
will bear the full cost of any brokerage or other transaction costs
associated with the sale or purchase of portfolio securities in connection
with its Reorganization. Should any Reorganization fail to occur,
RiverSource Investments, LLC will bear all costs associated with the
Reorganization.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state
of Minnesota.
IN WITNESS WHEREOF, each of the parties, individually and not jointly, has
caused this Agreement to be signed.
SELIGMAN CORE FIXED INCOME FUND, INC.
SELIGMAN GLOBAL FUND SERIES, INC., on behalf of
Seligman Emerging Markets Fund
Seligman Global Growth Fund
Seligman International Growth Fund
SELIGMAN HIGH INCOME FUND SERIES, on behalf of
Seligman High-Yield Fund
Seligman U.S. Government Securities Fund
SELIGMAN INCOME AND GROWTH FUND, INC.
By: --------------------------
Name: --------------------------
Title: --------------------------
A.7
RIVERSOURCE DIVERSIFIED INCOME SERIES, INC., on behalf of
RiverSource Diversified Bond Fund
RIVERSOURCE GLOBAL SERIES, INC., on behalf of
Threadneedle Emerging Markets Fund
Threadneedle Global Equity Fund
RIVERSOURCE HIGH YIELD INCOME SERIES, INC., on behalf of
RiverSource High Yield Bond Fund
RIVERSOURCE INVESTMENT SERIES, INC., on behalf of
RiverSource Balanced Fund
RIVERSOURCE INTERNATIONAL MANAGERS SERIES, INC., on behalf of
RiverSource Partners International Select Growth Fund
RIVERSOURCE GOVERNMENT INCOME SERIES, INC., on behalf of
RiverSource Short Duration U.S. Government Fund
By: --------------------------
Name: --------------------------
Title: --------------------------
The undersigned is a party to this Agreement for the purposes of Section 3c and
11 only.
RIVERSOURCE INVESTMENTS, LLC
By: --------------------------
Name: --------------------------
Title: --------------------------
A.8
SCHEDULE A
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------
SELLING ENTITY SELLING FUND BUYING ENTITY BUYING FUND
- ----------------------------------------------------------------------------------------------------------
Seligman Core Seligman Core Fixed Income RiverSource Diversified RiverSource Diversified
Fixed Income Fund, Inc. Income Series, Inc. Bond Fund
Fund, Inc.
- ----------------------------------------------------------------------------------------------------------
Seligman Global Seligman Emerging Markets RiverSource Global Series, Threadneedle Emerging
Fund Series, Fund Inc. Markets Fund
Inc.
- ----------------------------------------------------------------------------------------------------------
Seligman Global Seligman Global Growth RiverSource Global Series, Threadneedle Global Equity
Fund Series, Fund Inc. Fund
Inc.
- ----------------------------------------------------------------------------------------------------------
Seligman High Seligman High-Yield Fund RiverSource High Income RiverSource High Yield
Income Fund Series, Inc. Bond Fund
Series (a
Massachusetts
business trust)
- ----------------------------------------------------------------------------------------------------------
Seligman Income Seligman Income and Growth RiverSource Investment RiverSource Balanced Fund
and Growth Fund, Fund, Inc. Series, Inc.
Inc.
- ----------------------------------------------------------------------------------------------------------
Seligman Global Seligman International RiverSource International RiverSource Partners
Fund Series, Growth Fund Managers Series, Inc. International Select
Inc. Growth Fund
- ----------------------------------------------------------------------------------------------------------
Seligman High Seligman U.S. Government RiverSource Government RiverSource Short Duration
Income Fund Securities Fund Income Series, Inc. U.S. Government Fund
Series
(a Massachusetts
business trust)
- ----------------------------------------------------------------------------------------------------------
</Table>
A.9
THIS PAGE LEFT BLANK INTENTIONALLY
EXHIBIT B
Supplemental Information
The information in the service section in this Exhibit B includes revised
shareholder service policy information as it pertains to your Fund effective on
or about June 13, 2009. This information supersedes the "Shareholder
Information" section of, and should be maintained with, your current Fund
prospectus. Please retain this supplemental information as your record for
future reference. Please contact (888) 791-3380 to confirm the final effective
date of this supplemental information.
ADDITIONAL INFORMATION APPLICABLE TO THE BUYING FUNDS
Below is information regarding the Buying Funds. All references to a Fund or the
Funds refer to a Buying Fund or the Buying Funds, respectively.
OTHER INVESTMENT STRATEGIES AND RISKS
Other Investment Strategies. In addition to the principal investment strategies
previously described, the Fund may utilize investment strategies that are not
principal investment strategies, including investment in affiliated and
nonaffiliated pooled investment vehicles (including mutual funds and exchange
traded funds ("ETFs"), also referred to as "acquired funds") ownership of which
results in the Fund bearing its proportionate share of the acquired funds' fees
and expenses. Although ETFs are designed to replicate the price and yield of a
specified market index, there is no guarantee that an ETF will track its
specified market index, which may result in a loss. For more information on
strategies and holdings, and the risks of such strategies, including derivative
instruments that the Fund may use, see the Fund's annual and semiannual reports
and the Reorganization SAI.
Unusual Market Conditions. During unusual market conditions, the Fund may
temporarily invest more of its assets in money market securities than during
normal market conditions. Although investing in these securities would serve
primarily to attempt to avoid losses, this type of investing also could prevent
the Fund from achieving its investment objective. During these times, the
portfolio managers may make frequent securities trades that could result in
increased fees, expenses and taxes, and decreased performance. Instead of
investing in money market securities directly, the Fund may invest in shares of
an affiliated money market fund. See "Cash Reserves" under the section "General
Information" for more information.
For RiverSource Partners International Select Growth Fund:
Change in Subadviser(s). From time to time, the investment manager may add or
change unaffiliated subadvisers. See "Additional Management Information,
Manager of Managers Exemption." The date the current Subadviser(s) began
serving the Fund is set forth under "Fund Management and Compensation,
Investment Manager." When applicable, performance of the Fund prior to the
date the current Subadviser(s) began serving was achieved by different
subadviser(s). Similarly, the portfolio turnover rate shown in the "Financial
Highlights" applies to the subadviser(s) serving during the relevant time-
period. A change in subadviser(s) may result in increased portfolio turnover,
as noted under "Portfolio Turnover."
Multi-Manager Risk. While RiverSource Investments, as the Fund's investment
manager, monitors each subadviser and the overall management of the Fund, to
the extent the Fund has multiple subadvisers, each subadviser makes investment
decisions independently from the other subadvisers. It is possible that the
security selection process of one subadviser will not complement that of the
other subadvisers. As a result, the Fund's exposure to a given security,
industry, sector or market capitalization could be smaller or larger than if
the Fund were managed by a single subadviser, which could affect the Fund's
performance.
Securities Transaction Commissions. Securities transactions involve the payment
by the Fund of brokerage commissions to broker-dealers, on occasion as
compensation for research or brokerage services (commonly referred to as "soft
dollars"), as the portfolio managers buy and sell securities for the Fund in
pursuit of its objective. A description of the policies governing the Fund's
securities transactions and the dollar value of brokerage commissions paid by
the Fund are set forth in the Reorganization SAI. Funds that invest primarily in
fixed income securities, including RiverSource Diversified Bond Fund,
RiverSource High Yield Bond Fund and RiverSource Short Duration U.S. Government
Fund, do not typically generate brokerage commissions that are used to pay for
research or brokerage services. The brokerage commissions set forth in the
Reorganization SAI do not include implied commissions or mark-ups (implied
commissions) paid by the Fund for principal transactions (transactions made
directly with a dealer or other counterparty), including most fixed income
securities (and certain other instruments, including derivatives). Brokerage
commissions do not reflect other elements of transaction costs, including the
extent to which the Fund's purchase and sale transactions may cause the market
to move and change the market price for an investment.
Although brokerage commissions and implied commissions are not reflected in the
expense table under "Fees and Expenses," they are reflected in the total return
of the Fund.
B.1
Portfolio Turnover. Trading of securities may produce capital gains, which are
taxable to shareholders when distributed. Active trading may also increase the
amount of brokerage commissions paid or mark-ups to broker-dealers that the Fund
pays when it buys and sells securities. For RiverSource Partners International
Select Growth Fund, a change in a subadviser may result in increased portfolio
turnover, which increase may be substantial, as the new subadviser realigns the
portfolio, or if the subadviser(s) trades portfolio securities more frequently.
A realignment or more active strategy could produce higher than expected capital
gains. Capital gains and increased brokerage commissions or mark-ups paid to
broker-dealers may adversely affect a fund's performance. The Fund's historical
portfolio turnover rate, which measures how frequently the Fund buys and sells
investments from year-to-year, is shown in the "Financial Highlights."
Directed Brokerage. The Fund's Board has adopted a policy prohibiting the
investment manager, or any subadviser, from considering sales of shares of the
Fund as a factor in the selection of broker-dealers through which to execute
securities transactions.
Additional information regarding securities transactions can be found in the
Reorganization SAI.
FUND MANAGEMENT AND COMPENSATION
INVESTMENT MANAGER
RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis, Minnesota
55474, is the investment manager to the RiverSource funds, and is a wholly-owned
subsidiary of Ameriprise Financial, Inc. (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 all of the RiverSource 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. For all of its clients,
RiverSource Investments seeks to allocate investment opportunities in an
equitable manner over time. See the Reorganization SAI for more information.
The Fund pays RiverSource Investments a fee for managing its assets. Under the
Investment Management Services Agreement ("IMS Agreement"), the fee for the most
recent fiscal year was the following percentage of the Fund's average daily net
assets:
<Table>
<Caption>
PERCENTAGE OF FUND'S
FUND AVERAGE DAILY NET ASSETS
RiverSource Diversified Bond Fund 0.45%
Threadneedle Emerging Markets Fund 1.16%
Threadneedle Global Equity Fund 0.83%
RiverSource High Yield Bond Fund 0.58%
RiverSource Balanced Fund 0.44%
RiverSource Partners International Select Growth Fund 0.92%
RiverSource Short Duration U.S. Government Fund 0.48%
</Table>
For Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund,
RiverSource Balanced Fund and RiverSource Partners International Select Growth
Fund, the fee includes an adjustment under the terms of a performance incentive
arrangement. The adjustment is computed by comparing the Fund's performance to
the performance of an index of comparable funds published by Lipper Inc. The
index against which the Funds' performance is currently measured for purposes of
the performance incentive adjustment is the Lipper Emerging Markets Funds Index
for Threadneedle Emerging Markets Fund, Lipper Global Funds Index for
Threadneedle Global Equity Fund, Lipper Balanced Funds Index for RiverSource
Balanced Fund and Lipper International Multi-Cap Growth Funds Index for
RiverSource Partners International Select Growth Fund. In certain circumstances,
the Fund's Board may approve a change in the index. The maximum adjustment
(increase or decrease) is 0.08% of the Fund's average net assets on an annual
basis for RiverSource Balanced Fund and 0.12% for Threadneedle Emerging Markets
Fund, Threadneedle Global Equity Fund and RiverSource Partners International
Select Growth Fund.
Under the IMS Agreement, the Fund also pays taxes, brokerage commissions, and
nonadvisory expenses. A discussion regarding the basis for the Board approving
the IMS Agreement is available in the Fund's most recent annual or semiannual
shareholder report.
For Threadneedle Emerging Markets Fund and Threadneedle Global Equity Fund,
RiverSource Investments contracts with and compensates Threadneedle
International Limited (the "Subadviser" or "Threadneedle") to manage the
investment of the Fund's assets. RiverSource Investments monitors the compliance
of Threadneedle with the investment objectives and related policies of the Fund,
reviews the performance of Threadneedle, and reports periodically to the Board.
Threadneedle manages the
B.2
Fund's assets based upon its experience managing funds with investment goals and
strategies substantially similar to those of the Fund.
For RiverSource Partners International Select Growth Fund, RiverSource
Investments selects, contracts with and compensates Columbia Wanger Asset
Management, L.P. ("Columbia WAM") and Principal Global Investors, LLC
("Principal Global") (each a "Subadviser" and together, the "Subadvisers") to
manage the investment of the Fund's assets. RiverSource Investments monitors the
compliance of Subadvisers with the investment objectives and related policies of
the Fund, reviews the performance of Subadvisers, and reports periodically to
the Board. Each Subadviser manages the Fund's assets based upon its experience
in managing funds with investment goals and strategies substantially similar to
those of the Fund. Columbia WAM, which has served as subadviser to the Fund
since September 2001, is located at 227 West Monroe, Suite 3000, Chicago,
Illinois. Columbia WAM, subject to the supervision of RiverSource Investments,
provides day-to-day management of a portion of the Fund's portfolio, as well as
investment research and statistical information under a Subadvisory Agreement
with RiverSource Investments. Principal Global, which has served as subadviser
to the Fund since April 2006, is located at 801 Grand Avenue, Des Moines, Iowa.
Principal Global, subject to the supervision of RiverSource Investments,
provides day-to-day management of a portion of the Fund's portfolio, as well as
investment research and statistical information under a Subadvisory Agreement
with RiverSource Investments.
RiverSource Diversified Bond Fund portfolio managers: The portfolio managers
responsible for the day-to-day management of the Fund are:
Tom Murphy, CFA, Portfolio Manager
- - Managed the Fund since 2003.
- - Leader of the investment grade credit sector team.
- - Joined RiverSource Investments in 2002.
- - Managing Director and Portfolio Manager, BlackRock Financial Management, 2002;
various positions, Zurich Scudder, 1992 to 2002.
- - Began investment career in 1986.
- - MBA, University of Michigan.
Scott Schroepfer, CFA, Portfolio Manager
- - Managed the Fund since 2008.
- - Member of the high yield fixed income sector team.
- - Joined RiverSource Investments in 1990.
- - Began investment career in 1986.
- - MBA, University of Minnesota.
Todd White, Portfolio Manager
- - Managed the Fund since 2008.
- - Leader of the liquid assets sector team.
- - Joined RiverSource Investments in 2008.
- - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed
Securities businesses, and North American Head of the Interest Rate business,
HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass-
Through and Options, Lehman Brothers, 2000 to 2004.
- - Began investment career in 1986.
- - BS, Indiana University.
The fixed income department of RiverSource Investments is divided into six
specialized teams (sector teams), each focused on a specific sector of the fixed
income market: leveraged debt group, liquid assets, high yield fixed income,
investment grade credit, municipal bonds, and global fixed income. Each sector
team includes a portfolio manager or portfolio managers and several analysts
that select securities and other fixed income instruments within the sector. The
Fund's portfolio managers lead or are members of one of these sector teams and
also serve on a strategy committee responsible for implementation of the Fund's
overall investment strategy, including determination of the Fund's sector
allocation and portfolio duration.
B.3
Threadneedle Emerging Markets Fund portfolio managers: The portfolio managers
who lead the team responsible for the day-to-day management of the Fund are:
Julian A.S. Thompson, Portfolio Manager
- - Managed the Fund since 2000.
- - Joined Threadneedle in 2003.
- - Began investment career in 1993 as an Investment Manager for Stewart Ivory, a
Scottish investment company, 1993 to 1999. Portfolio Manager, American Express
Asset Management International, 1999 to 2003.
- - BA and Ph.D., Magdalene College, Cambridge University.
Jules Mort, Deputy Portfolio Manager
- - Deputy managed the Fund since 2003.
- - Joined Threadneedle in 2001 as a fund manager.
- - Began investment career in 1997 as an Analyst and Portfolio Manager, Baillie
Gifford & Co., 1997 to 2001.
- - BA (Hons), Oxford University 1996.
Threadneedle Global Equity Fund portfolio managers: The portfolio managers who
lead the team responsible for the day-to-day management of the Fund are:
Stephen Thornber, Portfolio Manager
- - Head of global oil sector.
- - Managed the Fund since 2003.
- - Joined Threadneedle in 1993 as a fund manager.
- - Began investment career in 1987.
- - BA, Plymouth Polytechnic.
Andrew Holliman, CFA, Deputy Portfolio Manager
- - Deputy managed the Fund since 2008.
- - Joined Threadneedle in 2004 as a fund manager.
- - Began investment career in 1997 as an investment analyst and portfolio
manager, Baillie Gifford & Co., 1997 to 2004.
- - BCom (Hons), University of Edinburgh; MSc, University of Stirling.
RiverSource High Yield Bond Fund portfolio managers: The portfolio manager
responsible for the day-to-day management of the Fund is:
Scott Schroepfer, CFA, Portfolio Manager
- - Managed the Fund since 1999.
- - Member of the high yield sector team.
- - Joined RiverSource Investments in 1990.
- - Began investment career in 1986.
- - MBA, University of Minnesota.
The fixed income department of RiverSource Investments is divided into six
sector teams, each of which includes a portfolio manager or portfolio managers
and several analysts, and each of which specializes in a specific sector of the
fixed income market. Mr. Schroepfer is a member of the team that specializes in
the sector in which the Fund primarily invests. The team, led by Jennifer Ponce
de Leon, collectively determines portfolio strategy. Ms. Ponce de Leon, who
holds an MBA from DePaul University, began her investment career in 1989 and
joined RiverSource Investments in 1997. She has been leader of the high yield
sector team since 2003.
B.4
RiverSource Balanced Fund portfolio managers: The Fund is allocated among equity
and fixed income asset classes. The portfolio managers responsible for the day-
to-day management of the equity portion of the Fund are:
Warren Spitz, Senior Portfolio Manager
- - Managed the Fund since 2008.
- - Joined RiverSource Investments in 2000 as a Senior Portfolio Manager.
- - Portfolio Manager, Prudential Global Asset Management, 1987 to 2000.
- - Began investment career in 1984.
- - MBA, Wharton School, University of Pennsylvania.
Steve Schroll, Portfolio Manager
- - Managed the Fund since 2008.
- - Joined RiverSource Investments in 1998 as a Senior Security Analyst.
- - Senior Equity Analyst, Piper Jaffray, 1988 to 1998; Equity Analyst, First
Asset Management, 1985 to 1988; Equity Analyst, Dain Rauscher, 1981 to 1985.
- - Began investment career in 1981.
- - MBA, University of Minnesota.
Laton Spahr, CFA, Portfolio Manager
- - Managed the Fund since 2008.
- - Joined RiverSource Investments in 2001 as a Security Analyst.
- - Sector Analyst, Holland Capital Management, 2000 to 2001; Statistical Research
Intern, Friess Associates, 1998 to 1999.
- - Began investment career in 1998.
- - MS, University of Wisconsin, Applied Security Analysis Program.
Paul Stocking, Portfolio Manager
- - Managed the Fund since 2008.
- - Joined RiverSource Investments in 1995 as a Senior Equity Analyst.
- - Vice President, JP Morgan Securities, 1987 to 1995; Investment Banking.
- - Began investment career in 1987.
- - MBA, University of Chicago.
The portfolio managers responsible for the day-to-day management of the fixed
income portion of the Fund are:
Tom Murphy, CFA, Portfolio Manager
- - Managed the Fund since 2003.
- - Leader of the investment grade credit sector team.
- - Joined RiverSource Investments in 2002.
- - Managing Director and Portfolio Manager, BlackRock Financial Management, in
2002, and various positions at Zurich Scudder from 1992 to 2002.
- - Began investment career in 1986.
- - MBA, University of Michigan.
Scott Schroepfer, CFA, Portfolio Manager
- - Managed the Fund since 2008.
- - Member of the high yield fixed income sector team.
- - Joined RiverSource Investments in 1990.
- - Began investment career in 1986.
- - MBA, University of Minnesota.
B.5
Todd White, Portfolio Manager
- - Managed the Fund since 2008.
- - Leader of the liquid assets sector team.
- - Joined RiverSource Investments in 2008.
- - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed
Securities businesses, and North American Head of the Interest Rate business,
HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass-
Through and Options, Lehman Brothers, 2000 to 2004.
- - Began investment career in 1986.
- - BS, Indiana University.
The fixed income department of RiverSource Investments is divided into six
specialized teams (sector teams), each focused on a specific sector of the fixed
income market: leveraged debt group, liquid assets, high yield fixed income,
investment grade credit, municipal bonds, and global fixed income. Each sector
team includes a portfolio manager or portfolio managers and several analysts
that select securities and other fixed income instruments within the sector. The
Fund's portfolio managers lead or are members of one of these sector teams and
also serve on a strategy committee responsible for implementation of the Fund's
overall investment strategy, including determination of the Fund's sector
allocation and portfolio duration.
RiverSource Partners International Select Growth Fund portfolio managers: The
portfolio managers responsible for the day-to-day management of the portion of
the Fund allocated to Columbia WAM are:
- - P. Zachary Egan, co-portfolio manager, is a vice president of Columbia Acorn
Trust. Mr. Egan is also the Director of International Research of Columbia WAM
since December 2004. Mr. Egan has been a member of the international team
since 1999 and a research fellow with the Robert Bosch Foundation in
Stuttgart, Germany prior to that time. Mr. Egan is a CFA and earned his MA
degree from the University of Chicago and his BA degree from Middlebury
College.
- - Louis J. Mendes, co-portfolio manager, is a vice president of Columbia Acorn
Trust. Mr. Mendes has been a member of the international team since 2001 and
an analyst and portfolio manager with Merrill Lynch Investment Managers
specializing in Asian equity markets prior to that time. Mr. Mendes is a CFA
and earned his MA degree in International Management from the American
Graduate School of International Management in Phoenix and BA degree from
Columbia University.
The portfolio managers responsible for the day-to-day management of the portion
of the Fund allocated to Principal Global are:
- - John Pihlblad, CFA -- Portfolio Manager. Mr. Pihlblad is a portfolio manager
at Principal Global Investors. He joined the firm in 2000 and led the
development of Principal Global Investors' Global Research Platform. Mr.
Pihlblad has over 29 years investment experience, including 17 years of
experience in managing international equities. Previously, he was a partner
and co-founder of GlobeFlex Capital in San Diego where he was responsible for
developing and implementing the investment process for both domestic and
international equity products. Prior to that, Mr. Pihlblad was a portfolio
manager at Nicholas Applegate in San Diego, where he developed one of the
first global systematic investment processes in the industry. Mr. Pihlblad was
also director of equity research at Boatmen's Trust Company, Kansas City, Mo.,
where he developed a comprehensive quantitative portfolio management platform.
Mr. Pihlblad received a bachelor's degree from Westminster College. He holds
the Chartered Financial Analyst designation and is a member of the CFA
Institute.
- - Steven Larson, CFA -- Portfolio Manager. Mr. Larson is a portfolio manager at
Principal Global Investors. He is responsible for co-managing Principal's
international growth and value equity portfolios. He is also active in company
research with an emphasis on the utilities sector. Mr. Larson joined the firm
in 2001 and participated in the early integration of the systematic
(quantitative fundamental) and traditional fundamental (analyst-driven)
research efforts, as well as the initial phase of backtesting research to
determine which factors drive stock prices within each region and sector.
Previously, Mr. Larson led the investment management oversight and sub-advisor
selection process for the $80 billion Wells Fargo mutual fund family. Prior to
joining Wells Fargo, he was vice president and manager of the Investment
Analytics Group at First American Asset Management, U.S. Bancorp's
institutional asset manager. Mr. Larson received an MBA in finance from the
University of Minnesota's Carlson School of Management and a bachelor's degree
in finance from Drake University. He holds the Chartered Financial Analyst
designation and is a member of the CFA Institute.
B.6
RiverSource Short Duration U.S. Government Fund portfolio managers: The
portfolio managers responsible for the day-to-day management of the Fund are:
Todd White, Portfolio Manager
- - Managed the Fund since 2008.
- - Leader of the liquid assets sector team.
- - Joined RiverSource Investments in 2008.
- - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed
Securities businesses, and North American Head of the Interest Rate business,
HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass-
Through and Options, Lehman Brothers, 2000 to 2004.
- - Began investment career in 1986.
- - BS, Indiana University.
The Reorganization SAI provides additional information about portfolio manager
compensation, management of other accounts and ownership of shares in the Fund.
B.7
THIS SERVICE SECTION IS EFFECTIVE ON OR ABOUT JUNE 13, 2009.
RIVERSOURCE FAMILY OF FUNDS
THE RIVERSOURCE FAMILY OF FUNDS (EACH INDIVIDUALLY A "FUND" AND, COLLECTIVELY,
THE "FUNDS") INCLUDES "RIVERSOURCE" FUNDS, "RIVERSOURCE PARTNERS" FUNDS,
"SELIGMAN" FUNDS AND "THREADNEEDLE" FUNDS. (THE RIVERSOURCE FUNDS, RIVERSOURCE
PARTNERS FUNDS AND THREADNEEDLE FUNDS MAY BE COLLECTIVELY REFERRED TO AS THE
"RIVERSOURCE FUNDS".) THE FUNDS SHARE THE SAME BOARD OF DIRECTORS/TRUSTEES (THE
"BOARD") AND THE SAME POLICIES AND PROCEDURES INCLUDING THOSE SET FORTH IN THE
SERVICE SECTION OF THIS PROSPECTUS. FOR EXAMPLE, FOR PURPOSES OF CALCULATING THE
INITIAL SALES CHARGE ON THE PURCHASE OF CLASS A SHARES OF A FUND, AN INVESTOR OR
FINANCIAL ADVISOR SHOULD CONSIDER THE COMBINED MARKET VALUE OF ALL FUNDS IN THE
RIVERSOURCE FAMILY OF FUNDS OWNED BY THE INVESTOR AS DEFINED UNDER "INITIAL
SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA)."
BUYING AND SELLING SHARES
The funds are available directly and through broker-dealers, banks and other
financial intermediaries or institutions (financial intermediaries), and through
certain qualified and non-qualified plans, wrap fee products or other investment
products sponsored by financial intermediaries. NOT ALL FINANCIAL INTERMEDIARIES
OFFER THE FUNDS. FINANCIAL INTERMEDIARIES THAT OFFER THE FUNDS MAY CHARGE YOU
ADDITIONAL FEES FOR THE SERVICES THEY PROVIDE AND THEY MAY HAVE DIFFERENT
POLICIES NOT DESCRIBED IN THIS PROSPECTUS. Some policy differences may include
different minimum investment amounts, exchange privileges, fund choices and
cutoff times for investments. Additionally, recordkeeping, transaction
processing and payments of distributions relating to your account may be
performed by the financial intermediaries through which your shares of the fund
are held. Since the fund (and its service providers) may not have a record of
your account transactions, you should always contact the financial intermediary
through which you purchased or at which you maintain your shares of the fund to
make changes to your account or to give instructions concerning your account, or
to obtain information about your account. The fund and its service providers,
including the distributor and the transfer agent, are not responsible for the
failure of one of these financial intermediaries to carry out its obligations to
its customers.
DESCRIPTION OF SHARE CLASSES
INVESTMENT OPTIONS -- CLASSES OF SHARES
The funds offer different classes of shares. There are differences among the
fees and expenses for each share class. See the "Fees and Expenses" table for
more information. Not everyone is eligible to buy every share class. After
determining which share classes you are eligible to buy, decide which share
class best suits your needs. Your financial advisor can help you with this
decision. The following table shows the key features of each share class.
INVESTMENT OPTIONS SUMMARY
<Table>
<Caption>
Contingent Deferred Plan
Sales Distribution and/or Administration
AVAILABILITY(a) Initial Sales Charge Charge (CDSC) Service Fee(b) Services Fee
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Available to Yes. Payable at time No.(c) Yes. No.
all investors. of purchase. Lower or 0.25%
no sales charge for
larger investments.
- ---------------------------------------------------------------------------------------------------------------------------------
Class Available to No. Entire purchase Maximum 5% CDSC during Yes. No.
B(d)(e)(f) all investors. price is invested in the first year 1.00%
shares of the fund. decreasing to 0% after
six years.
- ---------------------------------------------------------------------------------------------------------------------------------
Class C(f) Available to No. Entire purchase 1% CDSC may apply if Yes. No.
all investors. price is invested in you sell shares within 1.00%
shares of the fund. one year after
purchase.
- ---------------------------------------------------------------------------------------------------------------------------------
Class I Limited to qualifying No. No. No. No.
institutional
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
Class R2 Limited to qualifying No. No. Yes. Yes.
institutional 0.50% 0.25%
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
Class R3 Limited to qualifying No. No. Yes. Yes.
institutional 0.25% 0.25%
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
Class R4 Limited to qualifying No. No. No. Yes.
institutional 0.25%
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
B.8
INVESTMENT OPTIONS SUMMARY (CONTINUED)
<Table>
<Caption>
Contingent Deferred Plan
Sales Distribution and/or Administration
AVAILABILITY(a) Initial Sales Charge Charge (CDSC) Service Fee(b) Services Fee
- ---------------------------------------------------------------------------------------------------------------------------------
Class R5 Limited to qualifying No. No. No. No.
institutional
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
Class W Limited to qualifying No. No. Yes. No.
discretionary managed 0.25%
accounts.
- ---------------------------------------------------------------------------------------------------------------------------------
Class Y Limited to qualifying No. No. No. Yes.
institutional 0.15%
investors.
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) See "Buying and Selling Shares, Determining which class of shares to
purchase" for more information on availability of share classes and eligible
investors. See "Buying and Selling Shares, Opening an Account" for
information on minimum investment and account balance requirements.
(b) For each of Class A, Class B, Class C, Class R2, Class R3 and Class W
shares, as applicable, each fund has adopted a plan under Rule 12b-1 of the
Investment Company Act of 1940, as amended, that allows it to pay
distribution and shareholder servicing-related expenses for the sale of
shares and the servicing of shareholders. This plan has been reviewed and
approved by the Board. Because these fees are paid out of fund assets on an
on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of distribution
(sales) or servicing charges.
(c) A 1% CDSC may be assessed on Class A shares sold within 18 months after
purchase. See "Buying and Selling Shares, Sales Charges, Class
A -- contingent deferred sales charge" for more information. For all funds
except money market funds.
(d) Class B shares automatically convert to Class A hares. See "Buying and
Selling Shares, Sales Charges, Class B and Class C -- CDSC alternative" for
more information on the timing of conversion of Class B shares to Class A
shares. Timing of conversion will vary depending on the date of your
original purchase of the Class B shares.
(e) Class B shares of RiverSource Short Duration U.S. Government Fund is closed
to new investors and new purchases. Existing shareholders in this fund may
continue to own Class B shares and make exchanges into and out of existing
accounts where Class B shares of this fund are maintained.
(f) The money market funds may offer Class B and Class C shares, but only to
facilitate exchanges with other funds offering Class B and Class C shares,
respectively.
DISTRIBUTION AND SERVICE FEES
The distribution and shareholder servicing fees for Class A, Class B, Class C,
Class R2, Class R3 and Class W shares, as applicable, are subject to the
requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended,
and are used to reimburse the distributor for certain expenses it incurs in
connection with distributing the fund's shares and directly or indirectly
providing services to fund shareholders. These expenses include payment of
distribution and/or shareholder servicing fees to financial intermediaries that
sell shares of the fund or provide services to fund shareholders, up to 0.50% of
the average daily net assets of Class R2 shares sold and held through them and
up to 0.25% of the average daily net assets of Class A, Class B*, Class C, Class
R3 and Class W shares sold and held through them. For Class A, Class B, Class
R2, Class R3 and Class W shares, the distributor begins to pay these fees
immediately after purchase. For Class C shares, the distributor pays these fees
in advance for the first 12 months. Financial intermediaries also receive
distribution fees up to 0.75% of the average daily net assets of Class C shares
sold and held through them, which the distributor begins to pay 12 months after
purchase. For Class B shares, and, for the first 12 months following the sale of
Class C shares, the fund's distributor retains the distribution fee of up to
0.75% in order to finance the payment of sales commissions to financial
intermediaries, and to pay for other distribution related expenses. Financial
intermediaries may compensate their financial advisors with the shareholder
servicing and distribution fees paid to them by the distributor. IF YOU MAINTAIN
SHARES OF THE FUND DIRECTLY WITH THE FUND, WITHOUT WORKING DIRECTLY WITH A
FINANCIAL INTERMEDIARY OR FINANCIAL ADVISOR, DISTRIBUTION AND SERVICE FEES MAY
BE RETAINED BY THE DISTRIBUTOR AS REIMBURSEMENT FOR INCURRING CERTAIN
DISTRIBUTION AND SHAREHOLDER SERVICING RELATED EXPENSES.
* For money market funds that offer Class B shares, the distributor has
currently agreed not to be reimbursed by the fund for distribution (12b-1)
fees equal to 0.10% of the stated amount for Class B shares.
PLAN ADMINISTRATION FEE
Class R2, Class R3, Class R4 and Class Y shares pay an annual plan
administration services fee for the provision of various administrative,
recordkeeping, communication and educational services. The fee for Class R2,
Class R3 and Class R4 shares is equal on an annual basis to 0.25% of average
daily net assets attributable to the respective class. The fee for Class Y
shares is equal on an annual basis to 0.15% of average daily net assets
attributable to the class.
DETERMINING WHICH CLASS OF SHARES TO PURCHASE
Each of the fund's classes represent an interest in the same portfolio of
investments. However, as set forth above, each class has its own sales charge
schedule, and its ongoing distribution and shareholder service fees may differ
from other classes. When deciding which class of shares to buy, you should
consider, among other things:
- - The amount you plan to invest.
- - How long you intend to remain invested in the fund or another fund in the
RiverSource Family of Funds.
- - Whether you may be eligible for reduced or no sales charges when you buy or
sell shares.
B.9
Your authorized financial intermediary or financial advisor will be able to help
you decide which class of shares best meets your needs.
CLASS A, CLASS B AND CLASS C SHARES*
New purchases of Class B shares will not be permitted if your rights of
accumulation are $50,000 or higher, and new purchases of Class C shares will not
be permitted if your rights of accumulation are $1,000,000 or higher. See "Sales
Charges, Initial Sales Charge -- Rights of Accumulation" for information on
rights of accumulation.
Class B shares have a higher annual distribution fee than Class A shares and a
contingent deferred sales charge (CDSC) for six years. Class B shares convert to
Class A shares. Class B shares purchased through reinvested dividends and
distributions will convert to Class A shares in the same proportion as the other
Class B shares. See "Class B and Class C -- CDSC alternative" for information on
timing of Class B share conversion to Class A shares.
Class C shares have a higher annual distribution fee than Class A shares and a
CDSC for one year. Class C shares have no sales charge if you hold the shares
for longer than one year. Unlike Class B shares, Class C shares do not convert
to Class A shares. As a result, you will pay a distribution fee for as long as
you hold Class C shares.
If you choose a share class with a CDSC (Class B or Class C), you should
consider the length of time you intend to hold your shares. To help you
determine which investment is best for you, consult your financial intermediary
or financial advisor.
* For money market funds, new investments must be made in Class A shares of
the fund. The fund offers Class B and Class C shares only to facilitate
exchanges between classes of these shares in other funds.
CLASS I SHARES.
The following eligible investors may purchase Class I shares:
- - Any fund distributed by the distributor, if the fund seeks to achieve its
investment objective by investing primarily in shares of funds in the
RiverSource Family of Funds.
Class I shares may be purchased, sold or exchanged only through the distributor
or an authorized financial intermediary.
CLASS R SHARES.
The following eligible institutional investors may purchase Class R2, Class R3,
Class R4 and Class R5 shares:
- - Qualified employee benefit plans.
- - Trust companies or similar institutions, and charitable organizations that
meet the definition in Section 501(c)(3) of the Internal Revenue Code.
- - Non-qualified deferred compensation plans whose participants are included in a
qualified employee benefit plan described above.
- - State sponsored college savings plans established under Section 529 of the
Internal Revenue Code.
- - Health Savings Accounts created pursuant to public law 108-173.
Additionally, if approved by the distributor, the following eligible
institutional investors may purchase Class R5 shares:
- - Institutional or corporate accounts above a threshold established by the
distributor (currently $1 million per fund or $10 million in all funds in the
RiverSource Family of Funds).
- - Bank trust departments.
Class R shares generally are not available to retail non-retirement accounts,
traditional and Roth IRAs, Coverdell Educational Savings Accounts, SEPs,
SARSEPs, SIMPLE IRAs and individual 403(b) plans.
Class R shares may be purchased, sold or exchanged only through the distributor
or an authorized financial intermediary.
CLASS W SHARES.
The following eligible investors may purchase Class W shares:
- - Investors purchasing through authorized investment programs managed by
investment professionals, including discretionary managed account programs.
Class W shares may be purchased, sold or exchanged only through the distributor
or an authorized financial intermediary.
Shares originally purchased in a discretionary managed account may continue to
be held in Class W outside of a discretionary managed account, but no additional
Class W purchases may be made and no exchanges to Class W shares of another fund
may be made outside of a discretionary managed account.
B.10
IN ADDITION, FOR CLASS I, CLASS R AND CLASS W SHARES, THE DISTRIBUTOR, IN ITS
SOLE DISCRETION, MAY ACCEPT OR AUTHORIZE FINANCIAL INTERMEDIARIES TO ACCEPT
INVESTMENTS FROM OTHER PURCHASERS NOT LISTED ABOVE.
Please consult your financial advisor for assistance in selecting the
appropriate class of shares. For more information, see the SAI.
SALES CHARGES
CLASS A -- INITIAL SALES CHARGE ALTERNATIVE:
Your purchase price for Class A shares is generally the net asset value (NAV)
plus a front-end sales charge. The distributor receives the sales charge and re-
allows a portion of the sales charge to the financial intermediary through which
you purchased the shares. The distributor retains the balance of the sales
charge. The distributor retains the full sales charge you pay when you purchase
shares of the fund directly from the fund (not through an authorized financial
intermediary). Sales charges vary depending on the amount of your purchase.
INITIAL SALES CHARGE(A) FOR CLASS A SHARES
For equity funds and funds-of-funds (equity)
<Table>
<Caption>
Maximum reallowance
AS A % OF As a % of as a % of
TOTAL MARKET VALUE PURCHASE PRICE(b) net amount invested purchase price
- ---------------------------------------------------------------------------------------------------------------
Up to $49,999 5.75% 6.10% 5.00%
$50,000--$99,999 4.75 4.99 4.00
$100,000--$249,999 3.50 3.63 3.00
$250,000--$499,999 2.50 2.56 2.15
$500,000--$999,999 2.00 2.04 1.75
$1,000,000 or more 0.00 0.00 0.00(c),(d)
</Table>
For fixed income funds except those listed below and funds-of-funds (fixed
income)
<Table>
<Caption>
Maximum reallowance
AS A % OF As a % of as a % of
TOTAL MARKET VALUE PURCHASE PRICE(b) net amount invested purchase price
- ---------------------------------------------------------------------------------------------------------------
Up to $49,999 4.75% 4.99% 4.00%
$50,000--$99,999 4.25 4.44 3.50
$100,000--$249,999 3.50 3.63 3.00
$250,000--$499,999 2.50 2.56 2.15
$500,000--$999,999 2.00 2.04 1.75
$1,000,000 or more 0.00 0.00 0.00(c),(d)
</Table>
For RiverSource Short Duration U.S. Government Fund
<Table>
<Caption>
Maximum reallowance
AS A % OF As a % of as a % of
TOTAL MARKET VALUE PURCHASE PRICE(b) net amount invested purchase price
- ---------------------------------------------------------------------------------------------------------------
Up to $49,999 3.00% 3.09% 2.50%
$50,000--$99,999 3.00 3.09 2.50
$100,000--$249,999 2.50 2.56 2.15
$250,000--$499,999 2.00 2.04 1.75
$500,000--$999,999 1.50 1.52 1.25
$1,000,000 or more 0.00 0.00 0.00(c),(d)
</Table>
(a) Because of rounding in the calculation of the offering price, the portion of
the sales charge retained by the distributor may vary and the actual sales
charge you pay may be more or less than the sales charge calculated using
these percentages.
(b) Purchase price includes the sales charge.
(c) Although there is no sales charge for purchases with a total market value
over $1,000,000, and therefore no re-allowance, the distributor may pay a
financial intermediary the following out of its own resources: a sales
commission of up to 1.00% for a sale of $1,000,000 to $3,999,999; a sales
commission up to 0.50% for a sale of $4,000,000 to $49,999,999; and a sales
commission up to 0.25% for a sale of $50,000,000 or more.
(d) For certain eligible employee benefit plans defined under section 401(a),
401(k), 457 and 403(b) which meet eligibility rules for the waiver of
applicable sales charges, the distributor may pay the following out of its
own resources: a sales commission of 1.00% for a sale of $1 to $3,999,999
received in eligible employee benefit plans; a sales commission up to 0.50%
for a sale of $4,000,000 to $49,999,999; and a sales commission up to 0.25%
for a sale of $50,000,000 or more. See "Initial Sales Charge -- Waivers of
the sales charge for Class A shares" for employee benefit plan eligibility
rules.
There is no initial sales charge on reinvested dividends or capital gain
distributions.
B.11
INITIAL SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA). You may be able to reduce
the sales charge on Class A shares, based on the combined market value of
accounts in your ROA group. Your ROA group includes the current market values of
the following investments which are eligible to be added together for purposes
of determining the sales charge on your next purchase:
- - Your current investment in a fund; and
- - Previous investments you and members of your household have made in Class A,
Class B or Class C shares in the fund and other funds in the RiverSource
Family of Funds, provided your investment was subject to a sales charge. Your
household consists of you, your spouse or domestic partner and your unmarried
children under age 21, all of whom share a mailing address.
The following accounts are eligible to be included in your ROA group in order to
determine the sales charge on your purchase:
- - Individual or joint accounts;
- - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are invested
in Class A, Class B or Class C shares that were subject to a sales charge;
- - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is
parent or guardian of the minor child;
- - Revocable trust accounts for which you or a member of your household,
individually, is the beneficial owner/grantor;
- - Accounts held in the name of your, your spouse's, or your domestic partner's
sole proprietorship or single owner limited liability company or S
corporation; and
- - Qualified retirement plan assets, provided that you are the sole owner of the
business sponsoring the plan, are the sole participant (other than a spouse)
in the plan, and have no intention of adding participants to the plan.
The following accounts are NOT eligible to be included in your ROA group in
order to determine the sales charge on your purchase:
- - Accounts of pension and retirement plans with multiple participants, such as
401(k) plans (which are combined to reduce the sales charge for the entire
pension or retirement plan and therefore are not used to reduce the sales
charge for your individual accounts);
- - Investments in Class A shares where the sales charge is waived, for example,
purchases through wrap accounts;
- - Investments in Class I, Class R2, Class R3, Class R4, Class R5, Class W or
Class Y shares;
- - Investments in 529 plans, donor advised funds, variable annuities, variable
life insurance products, wrap accounts or managed separate accounts; and
- - Charitable and irrevocable trust accounts.
If you purchase fund shares through different financial intermediaries, and you
want to include those assets toward a reduced sales charge, you must inform your
financial intermediary in writing about the other accounts when placing your
purchase order. Contact your financial intermediary to determine what
information is required.
Unless you provide your financial intermediary in writing with information about
all of the accounts that may count toward a sales charge reduction, there can be
no assurance that you will receive all of the reductions for which you may be
eligible. You should request that your financial intermediary provide this
information to the fund when placing your purchase order.
For more information on ROA, please see the SAI.
INITIAL SALES CHARGE -- LETTER OF INTENT (LOI). Generally, if you intend to
invest $50,000 or more (including any existing ROA) over a period of up to 13
months, you may be able to reduce the front-end sales charge(s) for investments
in Class A shares by completing and filing an LOI. The required form of LOI may
vary by financial intermediary. Existing ROA can be included in your LOI. Each
purchase of fund shares normally subject to an initial sales charge made during
the 13-month period will be made at the public offering price applicable to a
single transaction of the total dollar amount indicated by the LOI. Five percent
of the commitment amount will be placed in escrow. At the end of the 13-month
period, the LOI will end and the shares will be released from escrow. If you do
not invest the commitment amount by the end of the 13 months, the remaining
amount of the unpaid sales charge will be redeemed from the escrowed shares and
the remaining balance released from escrow.
Existing ROA Example. Shareholder currently has $60,000 ROA in the funds.
Shareholder completes an LOI to invest $100,000 in the funds (ROA eligible
accounts). Shareholder only needs to invest an additional $40,000 in the funds'
Class A shares (any non-money market fund in the RiverSource Family of Funds) in
order to fulfill the LOI commitment and receive reduced front-end sales
charge(s) over the next 13 months.
B.12
Notification Obligation. You must request the reduced sales charge when you buy
shares. If you do not complete and file an LOI, or do not request the reduced
sales charge at the time of purchase, you will not be eligible for the reduced
sales charge. You should request that your financial intermediary provide this
information to the fund when placing your purchase order. For more detail on
LOIs, please contact your financial intermediary or see the SAI.
INITIAL SALES CHARGE -- WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES. Sales
charges do not apply to:
- - current or retired Board members, officers or employees of the funds or
RiverSource Investments or its affiliates, their spouses or domestic partners,
children, parents and their spouse's or domestic partner's parents.
- - current or retired Ameriprise Financial Services, Inc. financial advisors,
employees of financial advisors, their spouses or domestic partners, children,
parents and their spouse's or domestic partner's parents.
- - registered representatives and other employees of affiliated or unaffiliated
financial intermediaries having a selling agreement with the distributor,
including their spouses, domestic partners, children, parents and their
spouse's or domestic partner's parents.
- - portfolio managers employed by subadvisers of the funds, including their
spouses or domestic partners, children, parents and their spouse's or domestic
partner's parents.
- - partners and employees of outside legal counsel to the funds or the funds'
directors or trustees who regularly provide advice and services to the funds,
or to their directors or trustees.
- - direct rollovers from qualified employee benefit plans, provided that the
rollover involves a transfer to Class A shares in the same fund.
- - purchases made:
- with dividend or capital gain distributions from a fund or from the same
class of another fund in the RiverSource Family of Funds;
- through or under a wrap fee product or other investment product sponsored by
a financial intermediary that charges an account management fee that has, or
that clear trades through a financial intermediary that has, a selling
agreement with the distributor;
- through state sponsored college savings plans established under Section 529
of the Internal Revenue Code; or
- through bank trust departments.
- - separate accounts established and maintained by an insurance company which are
exempt from registration under Section 3(c)(11).
- - purchases made through "employee benefit plans" created under section 401(a),
401(k), 457 and 403(b) which:
- have at least $1 million in plan assets at the time of investment; and
- have a plan level or omnibus account that is maintained with the fund or its
transfer agent; and
- transact directly with the fund or its transfer agent through a third party
administrator or third party recordkeeper.
For more information regarding waivers of sales charge for Class A purchases,
please see the SAI.
The distributor may, in its sole discretion, authorize the waiver of sales
charges for additional classes of investors. Policies related to reducing or
waiving the sales charge may be modified or withdrawn at any time.
Unless you provide your financial intermediary with information in writing about
all of the factors that may count toward a waiver of the sales charge, there can
be no assurance that you will receive all of the waivers for which you may be
eligible. You should request that your financial intermediary provide this
information to the fund when placing your purchase order.
Because the current prospectus is available on the funds' website at
riversource.com or seligman.com free of charge, information regarding breakpoint
discounts is not separately disclosed on the website.
CLASS A -- CONTINGENT DEFERRED SALES CHARGE
For Class A shares purchased without a sales charge where a commission was
separately paid by the distributor to an authorized financial intermediary
effecting the purchase, a 1% CDSC may be charged if you sell your shares within
18 months after purchase. A CDSC will be based on the original purchase cost or
the current market value of the shares being sold, whichever is less.
CDSC -- WAIVERS OF THE CDSC FOR CLASS A SHARES. The CDSC will be waived on sales
of shares:
- - to which no sales commission or transaction fee was paid to an authorized
financial intermediary at the time of purchase.
- - purchased through reinvestment of dividends and capital gain distributions.
B.13
- - in the event of the shareholder's death.
- - from a monthly, quarterly or annual systematic redemption plan of up to an
annual amount of 12% of the account value on a per fund basis.
- - in an account that has been closed because it falls below the minimum account
balance.
- - that result from required minimum distributions taken from retirement accounts
upon the shareholders attainment of
age 70 1/2.
- - that result from returns of excess contributions or excess deferral amounts
made to a retirement plan participant.
- - of RiverSource funds purchased prior to Dec. 1, 2008.
- - initially purchased by an employee benefit plan that is not connected with a
plan level termination.
The distributor may, in its sole discretion, authorize the waiver of the CDSC
for additional classes of investors. Policies relating to waiving the CDSC may
be modified or withdrawn at any time.
CLASS B AND CLASS C -- CDSC ALTERNATIVE
The money market funds (except RiverSource Tax-Exempt Money Market Fund) offer
Class B and Class C shares, but only to facilitate exchanges with other funds
offering Class B and Class C shares, respectively. For example, if you own Class
B or Class C shares of another fund, but want to hold your money in a money
market fund, you may exchange into Class B or Class C shares of a money market
fund. Funds that offer Class B and Class C shares have limitations on the amount
you may invest in those share classes. If you are considering purchasing Class B
or Class C shares of a fund, please see the prospectus for that fund for any
effective purchase limitations.
Although you may not purchase Class B and Class C shares of the money market
funds directly, if you exchange into Class B or Class C shares of a money market
fund from another fund, you will be subject to the rules governing CDSC set
forth in this section.
To minimize the amount of CDSC you may pay when you sell your shares, the fund
assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to CDSC) are sold first. Shares that have
been in your account long enough so that they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (earliest to latest).
FOR CLASS B, the CDSC is based on the sale amount and the number of years
between purchase and sale. The following table shows how CDSC percentages on
sales decline over time:
<Table>
<Caption>
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:*
First year 5%
Second year 4%
Third year 3%**
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh or eighth year 0%
</Table>
* Because of rounding in the calculation, the portion of the CDSC retained by
the distributor may vary and the actual CDSC you pay may be more or less
than the CDSC calculated using these percentages.
** For shares purchased in a RiverSource fund prior to June 12, 2009, the CDSC
percentage for the third year is 4%.
Although there is no front-end sales charge when you buy Class B shares, the
distributor pays a sales commission of 4% to financial intermediaries that sell
Class B shares. A portion of this commission may, in turn, be paid to your
financial advisor. The distributor receives any CDSC imposed when you sell your
Class B shares.
You may not make additional purchases of Class B shares if your ROA exceeds
$49,999.99.
Class B shares purchased in a RiverSource fund prior to May 21, 2005 age on a
calendar year basis. Class B shares purchases made in a RiverSource fund
beginning May 21, 2005 age on a daily basis. For example, a purchase made on
Nov. 12, 2004 completed its first year on Dec. 31, 2004 under calendar year
aging. However, a purchase made on Nov. 12, 2005 completed its first year on
Nov. 11, 2006 under daily aging.
Class B shares originally purchased in a RiverSource fund prior to May 21, 2005
will convert to Class A shares in the ninth calendar year of ownership. Class B
shares originally purchased in a Seligman fund on or prior to June 12, 2009 will
convert to Class A shares in the month prior to the ninth year of ownership.
Class B shares purchased in a RiverSource fund
B.14
beginning May 21, 2005 and Class B shares purchased in a Seligman fund beginning
June 13, 2009 will convert to Class A shares one month after the completion of
the eighth year of ownership.
FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year
after purchase. Although there is no front-end sales charge when you buy Class C
shares, the distributor pays a total amount up to 1% (including sales commission
and advance of service fees) to financial intermediaries that sell Class C
shares. See "Buying and Selling Shares -- Distribution and Service Fees." A
portion of this commission may, in turn, be paid to your financial advisor. The
distributor receives any CDSC imposed when you sell your Class C shares. You may
not make additional purchases of Class C shares if your ROA exceeds $999,999.99.
For both Class B and Class C shares, the amount of any CDSC you pay will be
based on the lower of the original purchase price of those shares or current net
asset value. Because the CDSC is imposed only on sales that reduce your total
purchase payments, you do not have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains. In addition, the CDSC on your sale, if any, will be based on your
oldest purchase payment. The CDSC on the next amount sold will be based on the
next oldest purchase payment.
EXAMPLE
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 3 1/2 years, including reinvested
dividends and capital gain distributions. You could sell up to $2,000 worth of
shares without paying a CDSC ($12,000 current value less $10,000 purchase
amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500
representing part of your original purchase price. The CDSC rate would be 3%
because the sale was made during the fourth year after the purchase.
CDSC -- WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on sales
of shares:
- - in the event of the shareholder's death.
- - that result from required minimum distributions taken from retirement accounts
upon the shareholders' attainment of age 70 1/2.
- - sold under an approved substantially equal periodic payment arrangement.
- - by certain other investors, including certain institutions as set forth in
more detail in the SAI.
The distributor may, in its sole discretion, authorize the waiver of the CDSC
for additional classes of investors. Policies relating to waiving the CDSC may
be modified or withdrawn at any time.
CDSC -- WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on sales
of shares:
- - in the event of the shareholder's death.
- - to which no sales commission or transaction fee was paid to an authorized
financial intermediary at the time of purchase.
- - that result from required minimum distributions taken from retirement accounts
upon the shareholders' attainment of
age 70 1/2.
- - initially purchased by an eligible employee benefit plan that are not
connected with a plan level termination.
- - by certain other investors, including certain institutions as set forth in
more detail in the SAI.
The distributor may, in its sole discretion, authorize the waiver of the CDSC
for additional classes of investors. Policies relating to waiving the CDSC may
be modified or withdrawn at any time.
CLASS I, CLASS R2, CLASS R3, CLASS R4, CLASS R5 AND CLASS W -- NO SALES CHARGE.
For each of Class I, Class R2, Class R3, Class R4, Class R5 and Class W there is
no initial sales charge or CDSC.
The fund's Board believes that no conflict of interest currently exists between
the fund's classes of shares. On an ongoing basis, the Board, in the exercise of
its fiduciary duties, seeks to ensure that no such conflicts arise.
OPENING AN ACCOUNT
Financial institutions are required by law to obtain certain personal
information from each person who opens an account in order to verify the
identity of the person. As a result, when you open an account you will be asked
to provide your name, permanent street address, date of birth, and Social
Security or Employer Identification number. You may also be asked for other
identifying documents or information. If you do not provide this information,
the fund or the financial intermediary through which you are investing in the
fund may not be able to open an account for you. If the fund or the financial
intermediary through which you are investing in the fund is unable to verify
your identity, your account may be closed, or other steps may be taken, as
deemed appropriate.
B.15
When you buy shares, your order will be priced at the next NAV calculated after
your order is accepted by the fund or an authorized financial intermediary. Any
applicable sales charge will be added to the purchase price for Class A shares.
You may establish and maintain your account with an authorized financial
intermediary or directly with the fund. The fund may appoint servicing agents to
accept purchase orders and to accept exchange (and sale) orders on its behalf.
Accounts established with the fund will be supported by the fund's transfer
agent.
METHODS OF PURCHASING SHARES
These methods of purchasing shares generally apply to Class A, Class B, and
Class C shares.
CLASS B SHARES OF RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND ARE CLOSED TO
NEW INVESTORS AND NEW PURCHASES. EXISTING SHAREHOLDERS IN THIS FUND MAY CONTINUE
TO OWN CLASS B SHARES AND MAKE EXCHANGES INTO AND OUT OF EXISTING ACCOUNTS WHERE
CLASS B SHARES OF THIS FUND ARE MAINTAINED.
ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INTERMEDIARY
ALL REQUESTS The financial intermediary through which you buy shares may
have different policies not described in this prospectus,
including different minimum investment amounts and minimum
account balances.
- --------------------------------------------------------------------------------
ACCOUNT ESTABLISHED WITH THE FUND
BY MAIL You or the financial intermediary through which you buy
shares may establish an account with the fund. To establish
an account in this fashion, complete a fund account
application with your financial advisor or investment
professional, and mail the account application to the address
below. Account applications may be obtained at
riversource.com or seligman.com or may be requested by
calling (800) 221-2450. Make your check payable to the fund.
The fund does not accept cash, credit card convenience
checks, money orders, traveler's checks, starter checks,
third or fourth party checks, or other cash equivalents.
Mail your check and completed application to:
REGULAR MAIL RIVERSOURCE FAMILY OF FUNDS
C/O BOSTON FINANCIAL
P.O. BOX 8041
BOSTON, MA 02266-8041
EXPRESS MAIL RIVERSOURCE FAMILY OF FUNDS
C/O BOSTON FINANCIAL
30 DAN ROAD
CANTON, MA 02021-2809
If you already have an account, include your name, account
number, and the name of the fund and class of shares you wish
to purchase along with your check. You can make scheduled
investments in the fund by moving money from your checking
account or savings account. See the Minimum Investment and
Account Balance chart below for more information regarding
scheduled investment plans.
- --------------------------------------------------------------------------------
BY WIRE OR ACH Fund shares purchased in an account established and
maintained with the fund may be paid for by federal funds
wire. Before sending a wire, call (800) 221-2450 to notify
the fund's transfer agent of the wire and to receive further
instructions.
If you are establishing an account with a wire purchase, you
are required to send a signed account application to the
address above. Please include the wire control number or your
new account number on the application. Your bank or financial
intermediary may charge additional fees for wire
transactions.
- --------------------------------------------------------------------------------
BY EXCHANGE Call (800) 221-2450 or send signed written instructions to
the address above.
- --------------------------------------------------------------------------------
B.16
METHODS OF PURCHASING SHARES (CONTINUED)
ACCOUNT ESTABLISHED WITH THE FUND (CONT.)
MINIMUM INVESTMENT AND ACCOUNT BALANCE
FOR ALL FUNDS, CLASSES AND ACCOUNTS EXCEPT THOSE
LISTED TO THE RIGHT (NONQUALIFIED) TAX QUALIFIED ACCOUNTS CLASS W
- ---------------------------------------------------------------------------------------------------------------------------------
INITIAL INVESTMENT $2,000 $1,000 $500
- ---------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INVESTMENTS $100 $100 None
- ---------------------------------------------------------------------------------------------------------------------------------
ACCOUNT BALANCE* $1,000 None $500
*If your fund account balance falls below the minimum account balance for
any reason, including a market decline, you may be asked to increase it to
the minimum account balance or establish a scheduled investment plan. If
you do not do so within 30 days, your shares may be automatically redeemed
and the proceeds mailed to you.
-------------------------------------------------------------------------------
MINIMUM INVESTMENT AND ACCOUNT BALANCE -- SCHEDULED INVESTMENT PLANS
FOR ALL FUNDS, CLASSES AND ACCOUNTS EXCEPT THOSE
LISTED TO THE RIGHT (NONQUALIFIED) TAX QUALIFIED ACCOUNTS CLASS W
- ---------------------------------------------------------------------------------------------------------------------------------
INITIAL INVESTMENT $100(a) $100(b) $500
- ---------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INVESTMENTS $100 $50 None
- ---------------------------------------------------------------------------------------------------------------------------------
ACCOUNT BALANCE** None(b) None $500
**If your fund account balance is below the minimum initial investment
described above, you must make payments at least monthly.
(a)Money Market Funds -- $2,000
(b)Money Market Funds -- $1,000
-------------------------------------------------------------------------------
These minimums may be waived for accounts that are managed by an investment
professional, for accounts held in approved discretionary or non-discretionary
wrap programs, for accounts that are a part of an employer-sponsored retirement
plan, or for other account types if approved by the distributor.
The fund reserves the right to modify its minimum account requirements at any
time, with or without prior notice.
Please contact your financial intermediary for information regarding wire or
electronic funds transfer.
IMPORTANT: Payments sent by electronic fund transfers (ACH), a bank
authorization or check that are not guaranteed may take up to 14 days to clear.
If you request a sale within 14 days of purchase, this may cause your sale
request to fail to process if the requested amount includes unguaranteed funds.
EXCHANGING OR SELLING SHARES
You may exchange or sell shares by having your financial intermediary process
your transaction. If you maintain your account directly with your financial
intermediary, you must contact that financial intermediary to exchange or sell
shares of the fund. If your account was established with the fund, there are a
variety of methods you may use to exchange or sell shares of the fund.
WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INTERMEDIARY
ALL REQUESTS You can exchange or sell shares by having your financial
intermediary process your transaction. The financial
intermediary through which you purchased shares may have
different policies not described in this prospectus,
including different transaction limits, exchange policies and
sale procedures.
- --------------------------------------------------------------------------------
ACCOUNT ESTABLISHED WITH THE FUND
BY MAIL Mail your exchange or sale request to:
REGULAR MAIL RIVERSOURCE FAMILY OF FUNDS
C/O BOSTON FINANCIAL
P.O. BOX 8041
BOSTON, MA 02266-8041
-------------------------------------------------------------------------------
B.17
WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED)
ACCOUNT ESTABLISHED WITH THE FUND (CONT.)
BY MAIL (CONT.)
EXPRESS MAIL RIVERSOURCE FAMILY OF FUNDS
C/O BOSTON FINANCIAL
30 DAN ROAD
CANTON, MA 02021-2809
Include in your letter:
- your name
- the name of the fund(s)
- your account number
- the class of shares to be exchanged or sold
- your Social Security number or Employer Identification
number
- the dollar amount or number of shares you want to exchange
or sell
- specific instructions regarding delivery or exchange
destination
- signature(s) of registered account owner(s)
- any special documents the transfer agent may require in
order to process your order
Corporate, trust or partnership accounts may need to send
additional documents.
Payment will be mailed to the address of record and made
payable to the names listed on the account, unless your
request specifies differently and is signed by all owners.
A Medallion Signature Guarantee is required if:
- Amount is over $50,000.
- You want your check made payable to someone other than the
registered account owner(s).
- Your address of record has changed within the last 30 days.
- You want the check mailed to an address other than the
address of record.
- You want the proceeds sent to a bank account not on file.
- You are the beneficiary of the account and the account
owner is deceased (additional documents may be required).
A Medallion Signature Guarantee assures that a signature is
genuine and not a forgery. The financial intermediary
providing the Guarantee is financially liable for the
transaction if the signature is a forgery. Eligible
guarantors include commercial banks, trust companies, savings
associations, and credit unions as defined by the Federal
Deposit Insurance Act. Note: A guarantee from a notary public
is not acceptable.
NOTE: Any express mail delivery charges you pay will vary
depending on domestic or international delivery instructions.
- --------------------------------------------------------------------------------
BY TELEPHONE Call (800) 221-2450. Unless you elect not to have telephone
exchange and sale privileges, they will automatically be
available to you. Reasonable procedures will be used to
confirm authenticity of telephone exchange or sale requests.
Telephone privileges may be modified or discontinued at any
time. Telephone exchange and sale privileges automatically
apply to all accounts except custodial, corporate, qualified
retirement accounts and trust accounts which the current
trustee is not listed. You may request that these privileges
NOT apply by writing to the address above.
Payment will be mailed to the address of record and made
payable to the names listed on the account.
Telephone sale requests are limited to $50,000 per day.
- --------------------------------------------------------------------------------
BY WIRE OR ACH You can wire money from your fund account to your bank
account. Make sure we have your bank account information on
file. If we do not have this information, you will need to
send written instructions with your bank's name and a voided
check or savings account deposit slip.
Call (800) 221-2450 or send a letter of instruction, with a
Medallion Signature Guarantee if required, to the address
above.
A service fee may be charged against your account for each
wire sent.
-------------------------------------------------------------------------------
B.18
WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED)
ACCOUNT ESTABLISHED WITH THE FUND (CONT.)
BY WIRE OR
ACH (CONT.)
Minimum amount:
by ACH: $100
by wire: $500
Your bank or financial intermediary may charge additional
fees for wire transactions.
- --------------------------------------------------------------------------------
BY SCHEDULED You may elect to receive regular periodic payments through an
PAYOUT PLAN automatic sale of shares. See the SAI for more information.
- --------------------------------------------------------------------------------
CHECK REDEMPTION SERVICE
Class A shares of the money market funds offer check writing privileges. If you
have $2000 in a money market fund, you may request checks which may be drawn
against your account. You can elect this service on your initial application,
or, thereafter. Call (800) 221-2450 for the appropriate forms to establish this
service. If you own Class A shares that were both in another fund at NAV because
of the size of the purchase, and then exchanged into a money market fund, check
redemptions may be subject to a CDSC.
EXCHANGES
Generally, you may exchange your fund shares for shares of the same class of any
other publicly offered fund in the RiverSource Family of Funds without a sales
charge. For complete information on the fund you are exchanging into, including
fees and expenses, read that fund's prospectus carefully. Your exchange will be
priced at the next NAV calculated after your transaction request is received in
good order. You may be subject to a sales charge if you exchange from a money
market fund into an equity or fixed income fund.
IF YOU HOLD YOUR FUND SHARES IN AN ACCOUNT WITH AMERIPRISE FINANCIAL SERVICES,
YOU MAY HAVE LIMITED EXCHANGEABILITY WITHIN THE RIVERSOURCE FAMILY OF FUNDS.
MARKET TIMING
SHORT-TERM TRADING AND OTHER SO-CALLED MARKET TIMING PRACTICES ARE FREQUENT
TRADING PRACTICES BY CERTAIN SHAREHOLDERS INTENDED TO PROFIT AT THE EXPENSE OF
OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND SHORTLY AFTER PURCHASE. MARKET
TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE BY PREVENTING THE INVESTMENT
MANAGER FROM FULLY INVESTING THE ASSETS OF THE FUND, DILUTING THE VALUE OF
SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING THE FUND'S TRANSACTION
COSTS.
FOR A FUND ORGANIZED AS A FUND-OF-FUND, ITS ASSETS CONSIST PRIMARILY OF SHARES
OF THE UNDERLYING FUNDS IN WHICH IT INVESTS. THE UNDERLYING FUNDS MAY BE MORE
SUSCEPTIBLE TO THE RISKS OF MARKET TIMING. FUNDS THAT INVEST DIRECTLY IN
SECURITIES THAT TRADE INFREQUENTLY MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK
TO TAKE ADVANTAGE OF INEFFICIENCIES IN THE SECURITIES MARKETS. FUNDS AND THE
UNDERLYING FUNDS THAT INVEST IN SECURITIES THAT TRADE ON OVERSEAS SECURITIES
MARKETS MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF CHANGES
IN THE VALUES OF SECURITIES BETWEEN THE CLOSE OF OVERSEAS MARKETS AND THE CLOSE
OF U.S. MARKETS, WHICH IS GENERALLY THE TIME AT WHICH A FUND'S NAV IS
CALCULATED. TO THE EXTENT THAT A FUND OR UNDERLYING FUND HAS SIGNIFICANT
HOLDINGS OF SMALL CAP STOCKS, FLOATING RATE LOANS, HIGH YIELD BONDS, TAX-EXEMPT
SECURITIES OR FOREIGN SECURITIES, THE RISKS OF MARKET TIMING MAY BE GREATER FOR
THE FUND THAN FOR OTHER FUNDS. SEE "PRINCIPAL INVESTMENT STRATEGIES" FOR A
DISCUSSION OF THE TYPES OF SECURITIES IN WHICH YOUR FUND INVESTS. SEE "PRICING
AND VALUING OF FUND SHARES" FOR A DISCUSSION OF THE FUNDS' POLICY ON FAIR VALUE
PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE FREQUENCY AND EFFECT OF
MARKET TIMING.
THE FUNDS' BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER
MARKET TIMING THAT MAY BE HARMFUL TO THE FUNDS. EACH FUND SEEKS TO ENFORCE THIS
POLICY THROUGH ITS SERVICE PROVIDERS AS FOLLOWS:
- - The fund tries to distinguish market timing from trading that it believes is
not harmful, such as periodic rebalancing for purposes of asset allocation or
dollar cost averaging or other purchase and exchange transactions not believed
to be inconsistent with the best interest of fund shareholders or the Board's
policy. The fund uses a variety of techniques to monitor for and detect
abusive trading practices. These techniques may vary depending on the type of
fund, the class of shares and where the shares are maintained. Under the
fund's procedures, there is no set number of transactions in the fund that
constitutes market timing. Even one purchase and subsequent sale by related
accounts may be market timing. Generally, the fund seeks to restrict the
exchange privilege of an investor who makes more than three exchanges into or
out of the fund in any 90-day period. Accounts held by a retirement plan or a
financial intermediary for the benefit of its participants or
B.19
clients, which typically engage in daily transactions, are not subject to this
limit, although the fund may seek the assistance of financial intermediaries
in applying similar restrictions on their participants or clients. The fund's
ability to monitor and discourage abusive trading practices in omnibus
accounts is more limited.
- - The fund may rely on the monitoring policy of a financial intermediary, for
example, a retirement plan administrator or similar financial intermediary
authorized to distribute the funds, if it determines the policy and procedures
of such financial intermediaries are sufficient to protect the fund and its
shareholders.
- - If an investor's trading activity is determined to be market timing or
otherwise harmful to existing shareholders, the fund reserves the right to
modify or discontinue the investor's exchange privilege or reject the
investor's purchases or exchanges, including purchases or exchanges accepted
by a financial intermediary. The fund may treat accounts it believes to be
under common control as a single account for these purposes, although it may
not be able to identify all such accounts.
- - Although the fund does not knowingly permit market timing, it cannot guarantee
that it will be able to identify and restrict all short-term trading activity.
The fund receives purchase and sale orders through financial intermediaries
where market timing activity may not always be successfully detected.
B.20
Other exchange policies:
- - Exchanges must be made into the same class of shares of the share class being
exchanged out of.
- - Exchanges into RiverSource Tax-Exempt Money Market Fund may be made only from
Class A shares.
- - If your exchange creates a new account, it must satisfy the minimum investment
amount for new purchases.
- - Once the fund receives your exchange request, you cannot cancel it after the
market closes.
- - Shares of the purchased fund may not be used on the same day for another
exchange or sale.
- - New investments in Class A shares of a money market fund may be exchanged for
either Class A, Class B or Class C shares of any other publicly offered fund
in the RiverSource Family of Funds.
- - If you exchange shares from Class A shares of a money market fund to another
fund in the RiverSource Family of Funds, any further exchanges must be between
shares of the same class. For example, if you exchange from Class A shares of
a money market fund into Class B shares of another fund in the RiverSource
Family of funds, you may not exchange from Class B shares of that fund back to
Class A shares of a money market fund. Exchange rules for money market funds
are illustrated in the following tables.
- - Shares of Class W originally purchased, but no longer held in a discretionary
managed account, may not be exchanged for Class W shares of another fund. You
may continue to hold these shares in the fund. Changing your investment to a
different fund will be treated as a sale and purchase, and you will be subject
to applicable taxes on the sale and sales charges on the purchase of the new
fund.
- - If your shares are subject to a CDSC, you will not be charged a CDSC upon the
exchange of those shares. Any CDSC will be deducted when you sell the shares
you received from the exchange. The CDSC imposed at that time will be based on
the period that begins when you bought shares of the original fund and ends
when you sell the shares of the fund you exchanged to.
<Table>
<Caption>
TO OTHER FUNDS
FROM A MONEY MARKET FUND -----------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
Class A Yes Yes Yes
Class B No Yes No
Class C No No Yes
</Table>
<Table>
<Caption>
TO A MONEY MARKET FUND
FROM OTHER FUNDS -----------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
Class A Yes No No
Class B No Yes No
Class C No No Yes
</Table>
If your initial investment was in a money market fund and you exchange into an
equity or fixed income fund, you will pay an initial sales charge if you
exchange into Class A and be subject to a CDSC if you exchange into Class B or
Class C.
If your initial investment was in Class A shares of an equity or fixed income
fund and you exchange shares into a money market fund, you may exchange that
amount to another fund, including dividends earned on that amount, without
paying a sales charge.
SELLING SHARES
You may sell your shares at any time. The payment will be sent within seven days
after your request is received in good order.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is received in good order, minus any applicable CDSC.
REPURCHASES. You can change your mind after requesting a sale of shares and use
all or part of the sale proceeds to purchase new shares of a fund in the
RiverSource Family of Funds. If your original purchase was in Class A or Class
B, you may use all or part of the sale proceeds to purchase new Class A shares
in any fund account linked together for ROA purposes. Your repurchase will be in
Class A shares at NAV, up to the amount of the sale proceeds. For a Class A
repurchase on shares that were originally charged a CDSC, the amount of the CDSC
will be reinvested at the NAV on the date the repurchase is processed.
Repurchases of Class B shares will also be in Class A shares at NAV. Any CDSC
paid upon redemption of your Class B shares will not be reimbursed. If your
original purchase was in Class C, you will be allowed to reinvest in the same
Class C account and fund you originally purchased. In a Class C repurchase, the
CDSC you paid will be reinvested and the shares will be deemed to have the
original cost and purchase date for purposes of applying the CDSC (if any) to
subsequent redemptions. Systematic withdrawals and purchases will be excluded
from this policy.
B.21
In order for you to take advantage of this repurchase waiver, you must notify
your financial intermediary or the fund's transfer agent if your account is held
at the fund within 90 days of the date your sale request was processed. Contact
your financial intermediary for information on required documentation. The
repurchase privilege may be modified or discontinued at any time and use of this
option may have tax consequences.
If you sold shares of a Seligman fund on or before February 3, 2009 and wish to
repurchase shares, you have the option of taking advantage of the current
repurchase policy (described above) within 90 days of the date your sale request
was processed, or you may use all or part of your sale proceeds to purchase
shares of the fund you sold or any other fund in the RiverSource Family of Funds
without paying an initial sales charge or, if you paid a CDSC when you sold your
shares, receiving a credit for the applicable CDSC, within 120 days of the date
your sale request was processed. Contact your financial intermediary or, if you
opened an account directly with the fund, the transfer agent, for more
information on the required documentation to complete a repurchase transaction.
The fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
PRICING AND VALUING OF FUND SHARES
For classes of shares sold with an initial sales charge, the public offering or
purchase price is the net asset value plus the sales charge. For funds or
classes of shares sold without an initial sales charge, the public offering
price is the NAV.
Orders in good form are priced at the NAV next determined after you place your
order. Good form or good order means that your instructions have been received
in the form required by the fund. This may include, for example, providing the
fund name and account number, the amount of the transaction and all required
signatures.
The NAV is the value of a single share of the fund. The NAV is determined by
dividing the value of the fund's assets, minus any liabilities, by the number of
shares outstanding. The NAV is calculated as of the close of business on the New
York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that
the NYSE is open. For a fund organized as a fund-of-fund, the assets will
consist primarily of shares of the underlying funds, which are valued at their
NAVs. Securities are valued primarily on the basis of market quotations and
floating rate loans are valued primarily on the basis of indicative bids. Both
market quotations and indicative bids are obtained from outside pricing services
approved and monitored under procedures adopted by the Board. Certain short-term
securities with maturities of 60 days or less are valued at amortized cost.
When reliable market quotations or indicative bids are not readily available,
investments are priced at fair value based on procedures adopted by the Board.
These procedures are also used when the value of an investment held by a fund or
underlying fund is materially affected by events that occur after the close of a
securities market but prior to the time as of which the fund's or underlying
fund's NAV is determined. Valuing investments at fair value involves reliance on
judgment. The fair value of an investment is likely to differ from any available
quoted or published price. To the extent that a fund or an underlying fund has
significant holdings of small cap stocks, high yield bonds, floating rate loans,
tax-exempt securities or foreign securities that may trade infrequently, fair
valuation may be used more frequently than for other funds. The funds use an
unaffiliated service provider to assist in determining fair values for foreign
securities.
Foreign investments are valued in U.S. dollars. Some of a fund's or an
underlying fund's securities may be listed on foreign exchanges that trade on
weekends or other days when the fund does not price its shares. In that event,
the NAV of the fund's or underlying fund's shares may change on days when
shareholders will not be able to purchase or sell the fund's or underlying
fund's shares.
For money markets funds -- The fund's investments are valued at amortized cost,
which approximates market value, as explained in the SAI. Although the fund
cannot guarantee it will always be able to maintain a constant net asset value
of $1 per share, it will use its best efforts to do so.
DISTRIBUTIONS AND TAXES
As a shareholder you are entitled to your share of your fund's net income and
net gains. Each fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Your fund's net investment income is distributed to you as dividends. Dividends
may be composed of qualified dividend income, which is eligible for preferential
tax rates under current tax law, as well as other ordinary dividend income,
which may include dividends which are non-qualified dividends, interest income
and short-term capital gains. Because of the types of income earned by fixed
income funds, it is unlikely the funds will distribute qualified dividend
income. Generally, capital gains are realized when a security is sold for a
higher price than was paid for it. Generally, capital losses are realized when a
B.22
security is sold for a lower price than was paid for it. Typically, each
realized capital gain or loss is long-term or short-term depending on the length
of time the fund held the security. Realized capital gains and losses offset
each other. The fund offsets any net realized capital gains by any available
capital loss carryovers. Net short-term capital gains, if any, are included in
net investment income and are taxable as ordinary income when distributed to the
shareholder. Net realized long-term capital gains, if any, are distributed by
the end of the calendar year as capital gain distributions. If the fund's
distributions exceed its current and accumulated earnings and profits, that
portion of the fund's distributions will be treated as a return of capital to
the shareholders to the extent of their basis in their shares. A return of
capital will generally not be taxable; however, any amounts received in excess
of basis are treated as capital gain. Forms 1099 sent to shareholders report any
return of capital.
Certain derivative instruments subject the fund to special tax rules, the effect
of which may be to accelerate income to the fund, defer fund losses, cause
adjustments in the holding periods of fund securities, convert capital gains
into ordinary income and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the fund unless you request distributions
in cash. The financial intermediary through which you purchased shares may have
different policies.
Distributions are reinvested at the next calculated NAV after the distribution
is paid. If you choose cash distributions, you will receive cash only for
distributions declared after your request has been processed.
TAXES
If you buy shares shortly before the record date of a distribution, you may pay
taxes on money earned by the fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. Generally, if you sell
shares for less than their cost, the difference is a capital loss or if you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be short term (for shares held for one year or less) or long term (for shares
held for more than one year).
You may not create a tax loss or reduce a tax gain, based on paying a sales
charge, by exchanging shares before the 91st day after the day of purchase. If
you buy Class A shares and exchange into another fund before the 91st day after
the day of purchase, you may not be able to include the sales charge in your
calculation of tax gain or loss on the sale of the first fund you purchased. The
sales charge may be included in the calculation of your tax gain or loss on a
subsequent sale of the second fund you purchased. For more information, see the
SAI.
FOR TAXABLE FUNDS. Distributions related to shares not held in IRAs or other
retirement accounts are subject to federal income tax and may be subject to
state and local taxes in the year they are declared. You must report
distributions on your tax returns, even if they are reinvested in additional
shares.
Shares held in an IRA or qualified retirement account are generally subject to
different tax rules. Taking a distribution from your IRA or qualified retirement
plan may subject you to federal taxes, withholding, penalties and reporting
requirements. Please consult your tax advisor.
Income received by a fund may be subject to foreign tax and withholding. Tax
conventions between certain countries and the U.S. may reduce or eliminate these
taxes.
FOR TAX-EXEMPT FUNDS. Dividends distributed from interest earned on tax-exempt
securities (exempt-interest dividends) are exempt from federal income taxes but
may be subject to state and local taxes and potentially the alternative minimum
tax. Dividends distributed from net capital gains, if any, and other income
earned are not exempt from federal income taxes. Any taxable distributions are
taxable in the year the fund declares them regardless of whether you take them
in cash or reinvest them.
Interest on certain private activity bonds is a preference item for purposes of
the individual and corporate alternative minimum tax. To the extent the fund
earns such income, it will flow through to its shareholders and may affect those
shareholders who are subject to the alternative minimum tax. See the SAI for
more information.
Because interest on municipal bonds and notes is tax-exempt for federal income
tax purposes, any interest on money you borrow that is used directly or
indirectly to purchase fund shares is not deductible on your federal income tax
return. You should consult a tax advisor regarding its deductibility for state
and local income tax purposes.
For a fund organized as a fund-of-fund, because most of the fund's investments
are shares of underlying funds, the tax treatment of the fund's gains, losses,
and distributions may differ from the tax treatment that would apply if either
the fund
B.23
invested directly in the types of securities held by the underlying funds or the
fund shareholders invested directly in the underlying funds. As a result, fund
shareholders may recognize higher amounts of capital gain distributions or
ordinary income dividends than they otherwise would.
IMPORTANT: This information is a brief and selective summary of some of the tax
rules that apply to an investment in a fund. Because tax matters are highly
individual and complex, you should consult a qualified tax advisor.
GENERAL INFORMATION
AVAILABILITY AND TRANSFERABILITY OF FUND SHARES
Please consult with your financial intermediary to determine the availability of
the funds. The funds may only be purchased or sold directly or through financial
intermediaries authorized by the distributor to offer the funds. NOT ALL
FINANCIAL INSTITUTIONS ARE AUTHORIZED TO SELL THE RIVERSOURCE FAMILY OF FUNDS
AND CERTAIN FINANCIAL INTERMEDIARIES THAT OFFER THE RIVERSOURCE FAMILY OF FUNDS
MAY NOT OFFER ALL FUNDS ON ALL INVESTMENT PLATFORMS. If you set up an account at
a financial intermediary that does not have, and is unable to obtain, a selling
agreement with the distributor, you will not be able to transfer fund holdings
to that account. In that event, you must either maintain your fund holdings with
your current financial intermediary, find another financial intermediary with a
selling agreement, or sell your shares, paying any applicable CDSC. Please be
aware that transactions in taxable accounts are taxable events and may result in
income tax liability.
ADDITIONAL SERVICES AND COMPENSATION
In addition to acting as the fund's investment manager, RiverSource Investments
and its affiliates also receive compensation for providing other services to the
funds.
Administration Services. Ameriprise Financial, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the funds. These services include administrative,
accounting, treasury, and other services. Fees paid by a fund for these services
are included under "Other expenses" in the expense table under "Fees and
Expenses."
Distribution and Shareholder Services. RiverSource Fund Distributors, Inc.,
50611 Ameriprise Financial Center, Minneapolis, Minnesota 55474, (the
distributor), provides underwriting and distribution services to the funds.
Under the Distribution Agreement and related distribution and shareholder
servicing plans, the distributor receives distribution and shareholder servicing
fees. The distributor may retain a portion of these fees to support its
distribution and shareholder servicing activity. The distributor reallows the
remainder of these fees (or the full fee) to the financial intermediaries that
sell fund shares and provide services to shareholders. Fees paid by a fund for
these services are set forth under "Distribution and/or service (12b-1) fees" in
the expense table under "Fees and Expenses." More information on how these fees
are used is set forth under "Investment Options -- Classes of Shares" and in the
SAI. The distributor also administers any sales charges paid by an investor at
the time of purchase or at the time of sale. See "Shareholder Fees (fees paid
directly from your investment)" under "Fees and Expenses" for the scheduled
sales charge of each share class. See "Buying and Selling Shares, Sales Charges"
for variations in the scheduled sales charges, and for how these sales charges
are used by the distributor. See "Other Investment Strategies and Risks" for the
funds' policy regarding directed brokerage.
Transfer Agency Services. RiverSource Service Corporation, 734 Ameriprise
Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or
RiverSource Service Corporation), provides or compensates others to provide
transfer agency services to the funds. The funds pay the transfer agent a fee
that varies by class, as set forth in the SAI, and reimburses the transfer agent
for its out-of-pocket expenses incurred while providing these transfer agency
services to the funds. Fees paid by a fund for these services are included under
"Other expenses" in the expense table under "Fees and Expenses." RiverSource
Service Corporation pays a portion of these fees to financial intermediaries
that provide sub-recordkeeping and other services to fund shareholders. The SAI
provides additional information about the services provided and the fee
schedules for the transfer agent agreements.
Plan Administration Services. Under a Plan Administration Services Agreement,
the fund pays for plan administration services, including services such as
implementation and conversion services, account set-up and maintenance,
reconciliation and account recordkeeping, education services and administration
to various plan types, including 529 plans, retirement plans and Health Savings
Accounts. Fees paid by a fund for these services are included under "Other
expenses" in the expense table under "Fees and Expenses."
PAYMENTS TO FINANCIAL INTERMEDIARIES
The distributor and its affiliates make or support additional cash payments out
of their own resources (including profits earned from providing services to the
fund) to financial intermediaries, in connection with agreements between the
distributor and financial intermediaries pursuant to which these financial
intermediaries sell fund shares and provide services to their clients
B.24
who are shareholders of the fund. These payments and intercompany allocations
(collectively, "payments") do not change the price paid by investors in the fund
or fund shareholders for the purchase or ownership of fund shares of the fund,
and these payments are not reflected in the fees and expenses of the fund, as
they are not paid by the fund.
In exchange for these payments, a financial intermediary may elevate the
prominence or profile of the fund within the financial intermediary's
organization, and may provide the distributor and its affiliates with preferred
access to the financial intermediary's registered representatives or preferred
access to the financial intermediary's customers. These arrangements are
sometimes referred to as marketing and/or sales support payments, program and/or
shareholder servicing payments, or revenue sharing payments. These arrangements
create potential conflicts of interest between a financial intermediary's
pecuniary interest and its duties to its customers, for example, if the
financial intermediary receives higher payments from the sale of a certain fund
than it receives from the sale of other funds, the financial intermediary or its
representatives may be incented to recommend or sell shares of the fund where it
receives or anticipates receiving the higher payment instead of other investment
options that may be more appropriate for the customer. Employees of Ameriprise
Financial and its affiliates, including employees of affiliated broker-dealers,
may be separately incented to recommend or sell shares of the fund, as employee
compensation and business unit operating goals at all levels are tied to the
company's success. Certain employees, directly or indirectly, may receive higher
compensation and other benefits as investment in the fund increases. In
addition, management, sales leaders and other employees may spend more of their
time and resources promoting Ameriprise Financial and its subsidiary companies,
including RiverSource Investments and the distributor, and the products they
offer, including the fund.
These payments are typically negotiated based on various factors including, but
not limited to, the scope and quality of the services provided by the financial
intermediary, its reputation in the industry, its ability to attract and retain
assets, its access to target markets, its customer relationships, the profile
the fund may obtain within the financial intermediary, and the access the
distributor or other representatives of the fund may have within the financial
intermediary for advertisement, training or education, including opportunities
to present at or sponsor conferences for the registered representatives of the
financial intermediary and its customers.
These payments are usually calculated based on a percentage of fund assets owned
through the financial intermediary and/or as a percentage of fund sales
attributable to the financial intermediary. Certain financial intermediaries
require flat fees instead of, or in addition to, these asset-based fees as
compensation for including or maintaining a fund on their platforms, and, in
certain situations, may require the reimbursement of ticket or operational
charges -- fees that a financial intermediary charges its registered
representatives for effecting transactions in the fund. The amount of payment
varies by financial intermediary (e.g., initial platform set-up fees, ongoing
maintenance or service fees, or asset or sales based fees). The amount of
payments also varies by the type of sale. For instance, purchases of one fund
may warrant a greater or lesser amount of payments than purchases of another
fund. Additionally, sale and maintenance of shares on a stand alone basis may
result in a greater or lesser amount of payments than the sale and maintenance
of shares made through a plan, wrap or other fee-based program. Payments to
affiliates may include payments as compensation to employees of RiverSource
Investments who are licensed by the distributor in respect of certain sales and
solicitation activity on behalf of the fund. These payments may be and often are
significant. Additional information concerning the amount and calculation of
these payments is available in the fund's SAI.
Payments to affiliated broker-dealers are within the range of the payments the
distributor pays to similarly-situated third party financial intermediaries and
the payments such affiliated broker-dealers receive from third party fund
sponsors related to the sale of their sponsored funds. However, because of the
large amount of fund assets (from the RiverSource Family of Funds, in aggregate)
currently held in customer accounts of the affiliated broker-dealers, the
distributor and its affiliates, in the aggregate, pay significantly more in
absolute dollars than other third-party fund sponsors pay to the affiliated
broker-dealers for the sale and servicing of their sponsored funds. This level
of payment creates potential conflicts of interest which the affiliated broker-
dealers seek to mitigate by disclosure and implementation of internal controls,
as well as the rules and regulations of applicable regulators.
From time to time, to the extent permitted by SEC and FINRA rules and by other
applicable laws and regulations, the distributor and its affiliates may make
other reimbursements or payments to financial intermediaries or their registered
representatives, including non-cash compensation, in the form of gifts of
nominal value, occasional meals, tickets, or other entertainment, support for
due diligence trips, training and educational meetings or conference
sponsorships, support for recognition programs, and other forms of non-cash
compensation permissible under regulations to which these financial
intermediaries and their representatives are subject. To the extent these are
made as payments instead of reimbursement, they may provide profit to the
financial intermediary to the extent the cost of such services was less than the
actual expense of the service.
The financial intermediary through which you are purchasing or own shares of the
fund has been authorized directly or indirectly by the distributor to sell the
fund and/or to provide services to you as a shareholder of the fund. 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
B.25
payments your financial intermediary may receive from the distributor or its
affiliates related to your purchase or ownership of the fund, please contact
your financial intermediary. The SAI contains additional detail regarding
payments made by the distributor to financial intermediaries.
The payments described in this section are in addition to fees paid by the fund
to the distributor under 12b-1 plans, which fees may be used to compensate
financial intermediaries for the distribution of fund shares and the servicing
of fund shareholders, or paid by the fund to the transfer agent under the
transfer agent agreement or plan administration agreement, which fees may be
used to support networking or servicing fees to compensate financial
intermediaries for supporting shareholder account maintenance, sub-accounting,
plan recordkeeping or other services provided directly by the financial
intermediary to shareholders or plans and plan participants, including
retirement plans, 529 plans, Health Savings Account plans, or other plans, where
participants beneficially own shares of the fund.
Financial institutions may separately charge you additional fees. See "Buying
and Selling Shares."
ADDITIONAL MANAGEMENT INFORMATION
AFFILIATED PRODUCTS. RiverSource Investments serves as investment manager to all
funds in the RiverSource Family of Funds, including those that are structured to
provide asset-allocation services to shareholders of those funds by investing in
shares of other funds (funds of funds) in the RiverSource Family of Funds
(collectively referred to as underlying funds) and to discretionary managed
accounts (collectively referred to as affiliated products) that invest
exclusively in underlying funds. These affiliated products, individually or
collectively, may own a significant percentage of the outstanding shares of the
underlying funds, and RiverSource Investments seeks to balance potential
conflicts between the affiliated products and the underlying funds in which they
invest. The affiliated products investment in the underlying funds may also have
the effect of creating economies of scale (including lower expense ratios)
because the affiliated products may own substantial portions of the shares of
underlying funds and, comparatively, a redemption of underling fund shares by
one or more affiliated products could cause the expense ratio of an underlying
fund to increase as its fixed costs would be spread over a smaller asset base.
Because of these large positions of the affiliated products, the underlying
funds may experience relatively large purchases or redemptions. Although
RiverSource Investments may seek to minimize the impact of these transactions,
for example, by structuring them over a reasonable period of time or through
other measures, underlying funds may experience increased expenses as they buy
and sell securities to manage these transactions. When RiverSource Investments
structures transactions over a reasonable period of time in order to manage the
potential impact of the buy and sell decisions for the affiliated products,
these affiliated products, including funds of funds, may pay more or less for
shares of the underlying funds than if the transactions were executed in one
transaction. In addition, RiverSource Investments has an economic conflict of
interest in determining the allocation of the affiliated products' assets among
the underlying funds as it earns different fees from the underlying funds.
RiverSource Investments monitors expense levels of the funds and is committed to
offering funds that are competitively priced. RiverSource Investments reports to
the Board on the steps it has taken to manage any potential conflicts. See the
SAI for information on the percent of the fund owned by affiliated products.
CASH RESERVES. A fund may invest its daily cash balance in a money market fund
selected by RiverSource Investments, including but not limited to RiverSource
Short-Term Cash Fund (Short-Term Cash Fund), a money market fund established for
the exclusive use of funds in the RiverSource Family of Funds and other
institutional clients of RiverSource Investments. While Short-Term Cash Fund
does not pay an advisory fee to RiverSource Investments, it does incur other
expenses, and is expected to operate at a very low expense ratio. A fund will
invest in Short-Term Cash Fund or any other money market fund selected by
RiverSource Investments only to the extent it is consistent with the fund's
investment objectives and policies. Short-Term Cash Fund is not insured or
guaranteed by the FDIC or any other government agency.
FUND HOLDINGS DISCLOSURE. The Board has adopted policies and procedures that
govern the timing and circumstances of disclosure to shareholders and third
parties of information regarding the securities owned by a fund. A description
of these policies and procedures is included in the SAI.
LEGAL PROCEEDINGS. 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 fund is 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 fund or the
ability of Ameriprise Financial or its affiliates to perform under their
contracts with the fund. Information regarding certain pending and settled legal
proceedings may be found in the fund's shareholder reports and in the SAI.
Additionally, 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.
B.26
EXHIBIT C
SUMMARY OF INTEGRATION RELATED CHANGES
At its Jan. 8, 2009 meeting, the Board approved certain changes to the Seligman
Funds' share class structure, service provider arrangements and shareholder
service policies, including:
SHARE CLASS STRUCTURE. Approval of the redesignation of each Seligman Fund's
Class R shares as Class R2 shares and Class I shares as Class R5 shares, as
applicable, with a shareholder servicing and pricing structure consistent with
Class R2 and Class R5 shares offered by other funds in the RiverSource Family of
Funds, discussed below.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Approval of changes to each Seligman
Fund that is a Buying Fund's (i) Administrative Services Agreement to add a fee
schedule consistent with the fee schedules for other, comparable funds in the
RiverSource Family of Funds, and (ii) Investment Management Services ("IMS")
Agreement to reduce the fee by an amount at least equal to the amount of the
increase in the fee under the Administrative Services Agreement. (IMS and
Administration Agreements for Seligman Funds that are Selling Funds were not
considered at this time.)
TRANSFER AGENCY AND SHAREHOLDER SERVICING, AND PLAN ADMINISTRATION. Approval of
a transition to RiverSource Service Corporation ("RSC") as the Seligman Funds'
transfer and shareholder servicing agent, including adoption of the fee
structure paid by other funds in the RiverSource Family of Funds. The Seligman
Funds' previous transfer and shareholder servicing agent allocated 100% of its
expenses to the Seligman Funds that benefited from the services it provided.
Under the new pricing structure, fees are either asset based (Class R2 and Class
R5) or account based (Class A, Class B and Class C). See the Reorganization SAI
for more information. For Seligman Funds' Class R shares (to be redesignated as
Class R2 shares), approval of this pricing structure included adoption of a Plan
Administration Agreement, which includes an asset based fee.
CUSTODY AND SECURITIES LENDING. Approval of a transition from State Street Bank
& Trust, Co. to JPMorgan Bank, N.A. ("JPMorgan") as custodian, and approval of
JPMorgan as securities lending agent. (The Seligman Funds did not previously
have securities lending arrangements.)
SHAREHOLDER SERVICE POLICIES. Approval of changes to certain shareholder service
policies establishing a consistent shareholder experience across the combined
RiverSource Family of Funds. Certain of these changes are described below (newly
applicable shareholder service policies are set forth in Exhibit B):
Class A at Net Asset Value. Adopt a uniform set of investor classes eligible
for waiver of Class A share front-end sales load across RiverSource Family of
Funds.
Class A Front-End Sales Load and Breakpoint Structure. Adopt (i) a uniform
breakpoint schedule for fixed-income and equity funds, increasing the first and
second breakpoint from fixed-income and equity funds, respectively, from 4.50%
to 4.75%, and (ii) a uniform dealer reallowance structure, paying out to
financial intermediaries a maximum of 2.15% instead of 2.25% at the fourth
breakpoint (no impact to shareholders).
Class B Contingent Deferred Sales Charge Waivers. Adopt a uniform set of
investor class waivers of CDSC on Class B shares across RiverSource Family of
Funds.
Class B Conversion to Class A. Adopt a uniform time horizon for automatic
conversion from Class B shares to Class A shares in the month after the eighth
year of ownership. For Class B shares sold prior to the change, previous
conversion rules apply.
Class C Contingent Deferred Sale Charge Waivers. Adopt a uniform set of
investor class waivers of CDSC on Class C shares across RiverSource Family of
Funds.
Class R (redesignated Class R2) Contingent Deferred Sales Charge. Eliminate
the CDSC on Class R (redesignated Class R2) shares.
Repurchase Policy. Adopt repurchase policy of 90 days and require that, for
Class B shares sold, repurchases will be put into Class A shares at net asset
value.
C.1
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EXHIBIT D
MASSACHUSETTS APPRAISAL RIGHTS
Massachusetts law requires that we provide shareholders of Seligman U.S.
Government Securities Fund and Seligman High-Yield Fund with a copy of the state
law on appraisal rights. Notwithstanding the provisions of the law set out
below, the SEC has taken the position that use of state appraisal procedures by
a registered mutual fund such as either such Fund would be a violation of Rule
22c-1, the forward pricing rule, under the 1940 Act. As a result, if any
shareholder elects to exercise appraisal rights under Massachusetts law, the
relevant Fund intends to submit this question to a court of competent
jurisdiction. In that event, a dissenting shareholder would not receive any
payment until the end of the court proceeding.
In addition, Section 13.02(a)(3) of the MBCA provides for an exception to
appraisal rights for which we believe, in light of the rationale expressed in
the Comments of The Task Force on the Revision of the Massachusetts Business
Corporation Law accompanying the MBCA, a reasonable argument exists for applying
such exception to a transaction involving an open-end mutual fund. If any
shareholder of either Seligman U.S. Government Securities Fund or Seligman High-
Yield Fund elects to exercise appraisal rights under Massachusetts law, the
relevant Selling Fund, in connection with submitting the question of the
supremacy of Rule 22c-1 to a court of competent jurisdiction, may also argue
that appraisal rights under Massachusetts law do not apply.
CHAPTER 156D. BUSINESS CORPORATIONS
PART 13
SUBDIVISION A -- RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SECTION 13.01. DEFINITIONS
In this part the following words shall have the following meanings unless the
context requires otherwise:
"Affiliate", any person that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control of or with
another person.
"Beneficial shareholder", the person who is a beneficial owner of shares held in
a voting trust or by a nominee as the record shareholder.
"Corporation", the issuer of the shares held by a shareholder demanding
appraisal and, for matters covered in sections 13.22 to 13.31, inclusive,
includes the surviving entity in a merger.
"Fair value", with respect to shares being appraised, the value of the shares
immediately before the effective date of the corporate action to which the
shareholder demanding appraisal objects, excluding any element of value arising
from the expectation or accomplishment of the proposed corporate action unless
exclusion would be inequitable.
"Interest", interest from the effective date of the corporate action until the
date of payment, at the average rate currently paid by the corporation on its
principal bank loans or, if none, at a rate that is fair and equitable under all
the circumstances.
"Marketable securities", securities held of record by, or by financial
intermediaries or depositories on behalf of, at least 1,000 persons and which
were
(a) listed on a national securities exchange,
(b) designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.,
or
(c) listed on a regional securities exchange or traded in an interdealer
quotation system or other trading system and had at least 250,000
outstanding shares, exclusive of shares held by officers, directors and
affiliates, which have a market value of at least $5,000,000.
"Officer", the chief executive officer, president, chief operating officer,
chief financial officer, and any vice president in charge of a principal
business unit or function of the issuer.
"Person", any individual, corporation, partnership, unincorporated association
or other entity.
"Record shareholder", the person in whose name shares are registered in the
records of a corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee certificate on file with a corporation.
"Shareholder", the record shareholder or the beneficial shareholder.
D.1
SECTION 13.02. RIGHT TO APPRAISAL
(a) A shareholder is entitled to appraisal rights, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
or other actions:
(1) consummation of a plan of merger to which the corporation is a
party if shareholder approval is required for the merger by
section 11.04 or the articles of organization or if the
corporation is a subsidiary that is merged with its parent under
section 11.05, unless, in either case, (A) all shareholders are to
receive only cash for their shares in amounts equal to what they
would receive upon a dissolution of the corporation or, in the
case of shareholders already holding marketable securities in the
merging corporation, only marketable securities of the surviving
corporation and/or cash and (B) no director, officer or
controlling shareholder has a direct or indirect material
financial interest in the merger other than in his capacity as (i)
a shareholder of the corporation, (ii) a director, officer,
employee or consultant of either the merging or the surviving
corporation or of any affiliate of the surviving corporation if
his financial interest is pursuant to bona fide arrangements with
either corporation or any such affiliate, or (iii) in any other
capacity so long as the shareholder owns not more than five
percent of the voting shares of all classes and series of the
corporation in the aggregate;
(2) consummation of a plan of share exchange in which his shares are
included unless: (A) both his existing shares and the shares,
obligations or other securities to be acquired are marketable
securities; and (B) no director, officer or controlling
shareholder has a direct or indirect material financial interest
in the share exchange other than in his capacity as (i) a
shareholder of the corporation whose shares are to be exchanged,
(ii) a director, officer, employee or consultant of either the
corporation whose shares are to be exchanged or the acquiring
corporation or of any affiliate of the acquiring corporation if
his financial interest is pursuant to bona fide arrangements with
either corporation or any such affiliate, or (iii) in any other
capacity so long as the shareholder owns not more than five
percent of the voting shares of all classes and series of the
corporation whose shares are to be exchanged in the aggregate;
(3) consummation of a sale or exchange of all, or substantially all,
of the property of the corporation if the sale or exchange is
subject to section 12.02, or a sale or exchange of all, or
substantially all, of the property of a corporation in
dissolution, unless:
(i) his shares are then redeemable by the corporation at a price
not greater than the cash to be received in exchange for his
shares; or
(ii) the sale or exchange is pursuant to court order; or
(iii) in the case of a sale or exchange of all or substantially
all the property of the corporation subject to section
12.02, approval of shareholders for the sale or exchange is
conditioned upon the dissolution of the corporation and the
distribution in cash or, if his shares are marketable
securities, in marketable securities and/or cash, of
substantially all of its net assets, in excess of a
reasonable amount reserved to meet unknown claims under
section 14.07, to the shareholders in accordance with their
respective interests within one year after the sale or
exchange and no director, officer or controlling
shareholder has a direct or indirect material financial
interest in the sale or exchange other than in his capacity
as (i) a shareholder of the corporation, (ii) a director,
officer, employee or consultant of either the corporation
or the acquiring corporation or of any affiliate of the
acquiring corporation if his financial interest is pursuant
to bona fide arrangements with either corporation or any
such affiliate, or (iii) in any other capacity so long as
the shareholder owns not more than five percent of the
voting shares of all classes and series of the corporation
in the aggregate;
(4) an amendment of the articles of organization that materially and
adversely affects rights in respect of a shareholder's shares
because it:
(i) creates, alters or abolishes the stated rights or preferences
of the shares with respect to distributions or to
dissolution, including making non-cumulative in whole or in
part a dividend theretofore stated as cumulative;
(ii) creates, alters or abolishes a stated right in respect of
conversion or redemption, including any provision relating
to any sinking fund or purchase, of the shares;
(iii) alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) excludes or limits the right of the holder of the shares to
vote on any matter, or to cumulate votes, except as such
right may be limited by voting rights given to new shares
then being authorized of an existing or new class; or
D.2
(v) reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to
be acquired for cash under section 6.04;
(5) the articles of organization or of the bylaws or the entering into
by the corporation of any agreement to which the shareholder is
not a party that adds restrictions on the transfer or registration
or any outstanding shares held by the shareholder or amends any
pre-existing restrictions on the transfer or registration of his
shares in a manner which is materially adverse to the ability of
the shareholder to transfer his shares;
(6) any corporate action taken pursuant to a shareholder vote to the
extent the articles of organization, bylaws or a resolution of the
board of directors provides that voting or nonvoting shareholders
are entitled to appraisal;
(7) consummation of a conversion of the corporation to nonprofit
status pursuant to subdivision B of PART 9; or
(8) consummation of a conversion of the corporation into a form of
other entity pursuant to subdivision D of PART 9.
(b) Except as otherwise provided in subsection (a) of section 13.03, in the
event of corporate action specified in clauses (1), (2), (3), (7) or (8)
of subsection (a), a shareholder may assert appraisal rights only if he
seeks them with respect to all of his shares of whatever class or series.
(c) Except as otherwise provided in subsection (a) of section 13.03, in the
event of an amendment to the articles of organization specified in clause
(4) of subsection (a) or in the event of an amendment of the articles of
organization or the bylaws or an agreement to which the shareholder is not
a party specified in clause (5) of subsection (a), a shareholder may
assert appraisal rights with respect to those shares adversely affected by
the amendment or agreement only if he seeks them as to all of such shares
and, in the case of an amendment to the articles of organization or the
bylaws, has not voted any of his shares of any class or series in favor of
the proposed amendment.
(d) The shareholder's right to obtain payment of the fair value of his shares
shall terminate upon the occurrence of any of the following events:
(i) the proposed action is abandoned or rescinded; or
(ii) a court having jurisdiction permanently enjoins or sets aside the
action; or
(iii) the shareholder's demand for payment is withdrawn with the
written consent of the corporation.
(e) A shareholder entitled to appraisal rights under this chapter may not
challenge the action creating his entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the corporation.
SECTION 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert appraisal rights as to fewer than all the
shares registered in the record shareholder's name but owned by a
beneficial shareholder only if the record shareholder objects with respect
to all shares of the class or series owned by the beneficial shareholder
and notifies the corporation in writing of the name and address of each
beneficial shareholder on whose behalf appraisal rights are being
asserted. The rights of a record shareholder who asserts appraisal rights
for only part of the shares held of record in the record shareholder's
name under this subsection shall be determined as if the shares as to
which the record shareholder objects and the record shareholder's other
shares were registered in the names of different record shareholders.
(b) A beneficial shareholder may assert appraisal rights as to shares of any
class or series held on behalf of the shareholder only if such
shareholder:
(1) submits to the corporation the record shareholder's written
consent to the assertion of such rights no later than the date
referred to in subclause (ii) of clause (2) of subsection (b) of
section 13.22; and
(2) does so with respect to all shares of the class or series that are
beneficially owned by the beneficial shareholder.
SUBDIVISION B. -- PROCEDURE FOR EXERCISE OF APPRAISAL RIGHTS
SECTION 13.20. NOTICE OF APPRAISAL RIGHTS
(a) If proposed corporate action described in subsection (a) of section 13.02
is to be submitted to a vote at a shareholders' meeting or through the
solicitation of written consents, the meeting notice or solicitation of
consents shall state that the corporation has concluded that shareholders
are, are not or may be entitled to assert appraisal rights under this
chapter and refer to the necessity of the shareholder delivering, before
the vote is taken, written notice of his intent to demand payment and to
the requirement that he not vote his shares in favor of the proposed
action. If the corporation concludes that appraisal rights are or may be
available, a copy of this chapter shall accompany the meeting notice sent
to those record shareholders entitled to exercise appraisal rights.
D.3
(b) In a merger pursuant to section 11.05, the parent corporation shall notify
in writing all record shareholders of the subsidiary who are entitled to
assert appraisal rights that the corporate action became effective. Such
notice shall be sent within 10 days after the corporate action became
effective and include the materials described in section 13.22.
SECTION 13.21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action requiring appraisal rights under section
13.02 is submitted to vote at a shareholders' meeting, a shareholder who
wishes to assert appraisal rights with respect to any class or series of
shares:
(1) shall deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment if the
proposed action is effectuated; and
(2) shall not vote, or cause or permit to be voted, any shares of such
class or series in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment under this chapter.
SECTION 13.22. APPRAISAL NOTICE AND FORM
(a) If proposed corporate action requiring appraisal rights under subsection
(a) of section 13.02 becomes effective, the corporation shall deliver a
written appraisal notice and form required by clause (1) of subsection (b)
to all shareholders who satisfied the requirements of section 13.21 or, if
the action was taken by written consent, did not consent. In the case of a
merger under section 11.05, the parent shall deliver a written appraisal
notice and form to all record shareholders who may be entitled to assert
appraisal rights.
(b) The appraisal notice shall be sent no earlier than the date the corporate
action became effective and no later than 10 days after such date and
must:
(1) supply a form that specifies the date of the first announcement to
shareholders of the principal terms of the proposed corporate
action and requires the shareholder asserting appraisal rights to
certify (A) whether or not beneficial ownership of those shares
for which appraisal rights are asserted was acquired before that
date and (B) that the shareholder did not vote for the
transaction;
(2) state:
(i) where the form shall be sent and where certificates for
certificated shares shall be deposited and the date by which
those certificates shall be deposited, which date may not be
earlier than the date for receiving the required form under
subclause (ii);
(ii) a date by which the corporation shall receive the form which
date may not be fewer than 40 nor more than 60 days after
the date the subsection (a) appraisal notice and form are
sent, and state that the shareholder shall have waived the
right to demand appraisal with respect to the shares unless
the form is received by the corporation by such specified
date;
(iii) the corporation's estimate of the fair value of the shares;
(iv) that, if requested in writing, the corporation will provide,
to the shareholder so requesting, within 10 days after the
date specified in clause (ii) the number of shareholders who
return the forms by the specified date and the total number
of shares owned by them; and
(v) the date by which the notice to withdraw under section 13.23
shall be received, which date shall be within 20 days after
the date specified in subclause (ii) of this subsection; and
(3) be accompanied by a copy of this chapter.
SECTION 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW
(a) A shareholder who receives notice pursuant to section 13.22 and who wishes
to exercise appraisal rights shall certify on the form sent by the
corporation whether the beneficial owner of the shares acquired beneficial
ownership of the shares before the date required to be set forth in the
notice pursuant to clause (1) of subsection (b) of section 13.22. If a
shareholder fails to make this certification, the corporation may elect to
treat the shareholder's shares as after-acquired shares under section
13.25. In addition, a shareholder who wishes to exercise appraisal rights
shall execute and return the form and, in the case of certificated shares,
deposit the shareholder's certificates in accordance with the terms of the
notice by the date referred to in the notice pursuant to subclause (ii) of
clause (2) of subsection (b) of section 13.22. Once a shareholder deposits
that shareholder's certificates or, in the case of uncertificated shares,
returns the executed forms, that shareholder loses all rights as a
shareholder, unless the shareholder withdraws pursuant to said subsection
(b).
(b) A shareholder who has complied with subsection (a) may nevertheless
decline to exercise appraisal rights and withdraw from the appraisal
process by so notifying the corporation in writing by the date set forth
in the appraisal
D.4
notice pursuant to subclause (v) of clause (2) of subsection (b) of
section 13.22. A shareholder who fails to so withdraw from the appraisal
process may not thereafter withdraw without the corporation's written
consent.
(c) A shareholder who does not execute and return the form and, in the case of
certificated shares, deposit that shareholder's share certificates where
required, each by the date set forth in the notice described in subsection
(b) of section 13.22, shall not be entitled to payment under this chapter.
SECTION 13.24. PAYMENT
(a) Except as provided in section 13.25, within 30 days after the form
required by subclause (ii) of clause (2) of subsection (b) of section
13.22 is due, the corporation shall pay in cash to those shareholders who
complied with subsection (a) of section 13.23 the amount the corporation
estimates to be the fair value of their shares, plus interest.
(b) The payment to each shareholder pursuant to subsection (a) shall be
accompanied by:
(1) financial statements of the corporation that issued the shares to
be appraised,0 consisting of a balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of changes
in shareholders' equity for that year, and the latest available
interim financial statements, if any;
(2) a statement of the corporation's estimate of the fair value of the
shares, which estimate shall equal or exceed the corporation's
estimate given pursuant to subclause (iii) of clause (2) of
subsection (b) of section 13.22; and
(3) a statement that shareholders described in subsection (a) have the
right to demand further payment under section 13.26 and that if
any such shareholder does not do so within the time period
specified therein, such shareholder shall be deemed to have
accepted the payment in full satisfaction of the corporation's
obligations under this chapter.
SECTION 13.25. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by section 13.24 from
any shareholder who did not certify that beneficial ownership of all of
the shareholder's shares for which appraisal rights are asserted was
acquired before the date set forth in the appraisal notice sent pursuant
to clause (1) of subsection (b) of section 13.22.
(b) If the corporation elected to withhold payment under subsection (a), it
must, within 30 days after the form required by subclause (ii) of clause
(2) of subsection (b) of section 13.22 is due, notify all shareholders who
are described in subsection (a):
(1) of the information required by clause (1) of subsection (b) of
section 13.24;
(2) of the corporation's estimate of fair value pursuant to clause (2)
of subsection (b) of said section 13.24;
(3) that they may accept the corporation's estimate of fair value,
plus interest, in full satisfaction of their demands or demand
appraisal under section 13.26;
(4) that those shareholders who wish to accept the offer shall so
notify the corporation of their acceptance of the corporation's
offer within 30 days after receiving the offer; and
(5) that those shareholders who do not satisfy the requirements for
demanding appraisal under section 13.26 shall be deemed to have
accepted the corporation's offer.
(c) Within 10 days after receiving the shareholder's acceptance pursuant to
subsection(b), the corporation shall pay in cash the amount it offered
under clause (2) of subsection (b) to each shareholder who agreed to
accept the corporation's offer in full satisfaction of the shareholder's
demand.
(d) Within 40 days after sending the notice described in subsection (b), the
corporation must pay in cash the amount if offered to pay under clause (2)
of subsection (b) to each shareholder deserved in clause (5) of subsection
(b).
SECTION 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A shareholder paid pursuant to section 13.24 who is dissatisfied with the
amount of the payment shall notify the corporation in writing of that
shareholder's estimate of the fair value of the shares and demand payment
of that estimate plus interest, less any payment under section 13.24. A
shareholder offered payment under section 13.25 who is dissatisfied with
that offer shall reject the offer and demand payment of the shareholder's
stated estimate of the fair value of the shares plus interest.
(b) A shareholder who fails to notify the corporation in writing of that
shareholder's demand to be paid the shareholder's stated estimate of the
fair value plus interest under subsection (a) within 30 days after
receiving the corporation's payment or offer of payment under section
13.24 or section 13.25, respectively, waives the right to demand payment
under this section and shall be entitled only to the payment made or
offered pursuant to those respective sections.
D.5
SUBDIVISION C. -- JUDICIAL APPRAISAL OF SHARES
SECTION 13.30. COURT ACTION
(a) If a shareholder makes demand for payment under section 13.26 which
remains unsettled, the corporation shall commence an equitable proceeding
within 60 days after receiving the payment demand and petition the court
to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60-day period, it
shall pay in cash to each shareholder the amount the shareholder demanded
pursuant to section 13.26 plus interest.
(b) The corporation shall commence the proceeding in the appropriate court of
the county where the corporation's principal office, or, if none, its
registered office, in the commonwealth is located. If the corporation is a
foreign corporation without a registered office in the commonwealth, it
shall commence the proceeding in the county in the commonwealth where the
principal office or registered office of the domestic corporation merged
with the foreign corporation was located at the time of the transaction.
(c) The corporation shall make all shareholders, whether or not residents of
the commonwealth, whose demands remain unsettled parties to the proceeding
as an action against their shares, and all parties shall be served with a
copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law or otherwise as
ordered by the court.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint 1 or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have the powers described in
the order appointing them, or in any amendment to it. The shareholders
demanding appraisal rights are entitled to the same discovery rights as
parties in other civil proceedings.
(e) Each shareholder made a party to the proceeding is entitled to judgment
(i) for the amount, if any, by which the court finds the fair value of the
shareholder's shares, plus interest, exceeds the amount paid by the
corporation to the shareholder for such shares or (ii) for the fair value,
plus interest, of the shareholder's shares for which the corporation
elected to withhold payment under section 13.25.
SECTION 13.31. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under section 13.30 shall
determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court
shall assess the costs against the corporation, except that the court may
assess cost against all or some of the shareholders demanding appraisal,
in amounts the court finds equitable, to the extent the court finds such
shareholders acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(b) The court in an appraisal proceeding may also assess the fees and expenses
of counsel and experts for the respective parties, in amounts the court
finds equitable:
(1) against the corporation and in favor of any or all shareholders
demanding appraisal if the court finds the corporation did not
substantially comply with the requirements of sections 13.20,
13.22, 13.24 or 13.25; or
(2) against either the corporation or a shareholder demanding
appraisal, in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this chapter.
(c) If the court in an appraisal proceeding finds that the services of counsel
for any shareholder were of substantial benefit to other shareholders
similarly situated, and that the fees for those services should not be
assessed against the corporation, the court may award to such counsel
reasonable fees to be paid out of the amounts awarded the shareholders who
were benefited.
(d) To the extent the corporation fails to make a required payment pursuant to
sections 13.24, 13.25, or 13.26, the shareholder may sue directly for the
amount owed and, to the extent successful, shall be entitled to recover
from the corporation all costs and expenses of the suit, including counsel
fees.
D.6
EXHIBIT E
COMPARISON OF ORGANIZATIONAL DOCUMENTS
This chart highlights material differences between the terms of the Declarations
of Trust/ Articles of Incorporation and By-Laws of: RiverSource Diversified
Income Series, Inc. (a "RiverSource Minnesota Corporation"), of which
RiverSource Diversified Bond Fund is a series, RiverSource Global Series (a
"RiverSource Minnesota Corporation"), of which each of Threadneedle Emerging
Markets Fund and Threadneedle Global Equity Fund is a series, RiverSource High
Income Series, Inc. (a "RiverSource Minnesota Corporation"), of which
RiverSource High Yield Bond Fund is a series, RiverSource Government Income
Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource Short
Duration U.S. Government Securities Fund is a series, RiverSource International
Managers Series, Inc. (a "RiverSource Minnesota Corporation"), of which
RiverSource Partners International Select Growth Fund is a series, and
RiverSource Investment Series, Inc. (a "RiverSource Minnesota Corporation"), of
which RiverSource Balanced Fund is a series; Seligman Core Fixed Income Fund,
Inc. (a "Seligman Maryland Corporation"); Seligman Global Fund Series, Inc. (a
"Seligman Maryland Corporation"), of which each of Seligman Emerging Markets
Fund, Seligman Global Growth Fund and Seligman International Growth Fund is a
series; Seligman High Income Fund Series (a "Seligman Massachusetts Business
Trust"), of which each of Seligman High-Yield Fund and Seligman U.S. Government
Securities Fund is a series; and Seligman Income and Growth Fund, Inc. (a
"Seligman Maryland Corporation").
<Table>
<Caption>
- -------------------------------------------------------
SHAREHOLDER LIABILITY
- -------------------------------------------------------
SELIGMAN The shareholders of a Massachusetts
MASSACHUSET- business trust could, under certain
TS BUSINESS circumstances, be held personally
TRUSTS liable as partners for its obligations.
However, the declaration of trust
contains express disclaimers of
shareholder liability for acts,
obligations or affairs of the trust.
The declaration of trust also provides
for indemnification and reimbursement
of expenses out of a series' assets for
any shareholder held personally liable
for obligations of such series.
Therefore, the possibility that a
shareholder could be held liable would
be limited to a situation in which the
assets of the applicable series had
been exhausted.
- -------------------------------------------------------
SELIGMAN Under the Maryland General Corporation
MARYLAND Law ("MGCL"), a stockholder of a
CORPORATIONS corporation is not obligated to the
corporation or its creditors with
respect to the stock, except to the
extent that the subscription price or
other agreed upon price for the stock
has not been paid or liability is
otherwise imposed under the MGCL.
- -------------------------------------------------------
RIVERSOURCE Under Minnesota law, a shareholder's
MINNESOTA liability to the corporation or its
CORPORATIONS creditors is limited to paying the
amount agreed to be paid for the shares
which the shareholder holds or has
agreed to purchase.
- -------------------------------------------------------
SHAREHOLDER VOTING RIGHTS
- -------------------------------------------------------
SELIGMAN At all meetings, shareholders of record
MASSACHUSET- entitled to vote have one vote for each
TS BUSINESS share (and each fractional share shall
TRUSTS be entitled to a proportionate
fractional vote) standing in his name
on the books of the trust on the record
date, either in person or by proxy.
The shareholders have the power to vote
(i) for the election of trustees, (ii)
with respect to any investment advisory
contract, (iii) with respect to
termination of the trust, (iv) with
respect to any amendment of the
declaration of trust, (v) with respect
to any merger, consolidation or sale of
assets, (vi) with respect to
incorporation of the trust, (vii) to
the same extent as stockholders of a
Massachusetts business corporation as
to whether or not a court action,
proceeding or claim should or should
not be brought or maintained
derivatively or as a class action on
behalf of the trust or shareholder, and
(viii) with respect to such additional
matters relating to the trust as
required by law, the declaration of
trust, the bylaws or any registration
of the trust with the SEC (or any
successor agency) or any state, or as
and when the trustees may consider
necessary or desirable.
There is no cumulative voting in the
election of trustees.
On any matter submitted to a vote of
shareholders of the trust, all shares
entitled to vote will be voted by
individual shares, except that (1) when
required by the 1940 Act, shares will
be voted in the aggregate and not by
individual series, and (2) when the
trustees have determined that the
matter affects only the interests of
shareholders of a limited number of
series, then only the shareholders of
such series will be entitled to vote on
the matter. Classes within a series
shall vote with all other shares of the
series except that the trustees may
provide that any class shall vote
separately as a class as to any matter
when (i) required by law, rule or
exemptive order, (ii) they determine
that such matter affects only the
interests of shares of such class or
affects the interests of shares of such
class in a manner different from that
of the other classes or (iii) they
otherwise determine that to do so is
desirable and in the best interests of
the shareholders of such class under
the circumstances.
- -------------------------------------------------------
</Table>
E.1
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN On each matter submitted to vote of the
MARYLAND stockholders, each holder of a share of
CORPORATIONS any series or class issued by the
corporation ("Common Stock") is
entitled to one vote for each share
standing held irrespective of the
series of Common Stock ("Series") and
all shares of all Series will vote as a
single class ("Single Class Voting");
except, that (a) as to any matter
requiring a separate vote of any Series
by the 1940 Act or would be required
under the MGCL, the requirements as to
a separate vote by that Series apply in
lieu of Single Class Voting as
described above; (b) in the event that
the separate vote requirements referred
to in (a) above apply with respect to
one or more Series, then, subject to
(c) below, the shares of all other
Series will vote as a single class; and
(c) as to any matter which does not
affect the interest of a particular
Series, only the holders of shares of
the one or more affected Series will be
entitled to vote.
Holders of shares of Common Stock of
the corporation are not be entitled to
cumulative voting in the election of
directors or on any other matter.
As to any matter with respect to which
a separate vote of any class is
required by the 1940 Act or by MGCL
(including, without limitation,
approval of any plan, agreement or
other arrangement relating to
expenses), such requirement as to a
separate vote by the class applies in
lieu of single class voting, and, if
permitted by the 1940 Act or any rules,
regulations or orders thereunder and
MGCL, all classes of a particular
Series vote together as a single class
on any matter that has the same effect
on each class of that Series. As to any
matter that does not affect the
interest of a particular class, only
the holders of shares of the affected
class are entitled to vote.
- -------------------------------------------------------
RIVERSOURCE At all meetings of the shareholders,
MINNESOTA each shareholder of record entitled to
CORPORATIONS vote is entitled to one vote for each
dollar of net asset value (number of
shares owned times net asset value per
share) and each fractional dollar
amount is entitled to a proportionate
fractional vote.
Shareholders have the power to vote (i)
for the election of directors; (ii) on
most amendments to the corporation's
Articles of Incorporation and on
certain amendments to the corporation's
By-Laws; (iii) on certain proposed
mergers and exchanges to which the
corporation is a party; (iv) on the
proposed sale of all or substantially
all of the corporation's property and
assets not in the usual and regular
course of its business; and (v) on the
proposed dissolution of the
corporation.
At all elections of directors, each
shareholder is entitled to as many
votes equal to the number of dollars of
net asset value of shares owned
multiplied by the number of directors
to be elected and may cast all of such
votes for a single director or may
distribute them among the number to be
voted for, or any two or more of them.
The standard form of certifying
resolution creating rights and
preferences for series of capital stock
provides that each share may be voted
by series (i) as required by the
provisions of the 1940 Act and all
rules and regulations promulgated
thereunder; (ii) when the Board of
Directors ("board of directors")
determines that a matter affects series
in a materially different way; or (iii)
when the board of directors determines
a matter affects only one or some of
the series. In addition, under
Minnesota law, shareholders are
entitled to vote as separate series or
classes with respect to certain
amendments to the corporation's
Articles of Incorporation and on
certain mergers and exchanges to which
the corporation is a party.
- -------------------------------------------------------
SHAREHOLDER MEETINGS
- -------------------------------------------------------
SELIGMAN The declaration of trust and bylaws do
MASSACHUSET- not address annual shareholder
TS BUSINESS meetings. Regular shareholder meetings
TRUSTS are not required for business trusts
under the General Laws of
Massachusetts.
Special or extraordinary meetings of
the shareholders may be called by the
chairman or a majority of the trustees,
and will be called by the secretary
upon receipt of the request signed by
shareholders holding not less than 25%
of the shares issued and outstanding
and entitled to vote. The shareholders
must send written notice to the
secretary and other procedural
requirements must be met. The secretary
shall inform such shareholders of the
reasonably estimated costs of preparing
and mailing such notice of meeting and
upon payment to the trust of such
costs, the secretary shall give notice
stating the purpose or purposes of the
meeting as required in the declaration
of trust and bylaws to all shareholders
entitled to notice of such meeting. A
special meeting may not be called by
the request of the holders of shares
entitled to cast less than a majority
of all votes entitled to be cast at
such meeting to consider any matter
which is substantially the same as a
matter voted upon at any special
meeting of shareholders held during the
preceding twelve months.
- -------------------------------------------------------
</Table>
E.2
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN Regular stockholder meetings are not
MARYLAND required, unless stockholders are
CORPORATIONS required to meet for the purposes of
electing directors pursuant to the 1940
Act.
The chairman of the board, president,
chief executive officer or Board of
Directors may call a special meeting of
the stockholders.
In addition, a special meeting of
stockholders shall be called by the
secretary of the corporation on the
written request of stockholders holding
at least a majority of the voting power
of all shares entitled to vote. The
stockholders must send written notice
to the secretary and other procedural
requirements must be met.
The secretary of the Corporation will
also call a special meeting of the
stockholders on the written request of
stockholders entitled to cast not less
than a majority of all the votes
entitled to be cast at such meeting.
Any stockholder of record seeking to
have stockholders request a special
meeting must send written notice to the
secretary (the "Record Date Request
Notice") requesting the Board of
Directors to fix a record date to
determine the stockholders entitled to
request a special meeting (the "Request
Record Date"). The Record Date Request
Notice must state the purpose of the
meeting and the matters proposed to be
acted on it, signed by one or more
stockholders of record as of the date
of signature, bear the date of
signature of each such stockholder (or
their agent) and state all information
that must be disclosed in solicitations
of proxies for election of directors in
an election contest (even if an
election contest is not involved), or
is otherwise required, pursuant to
Regulation 14A (or any successor
provision) under the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"). Upon receiving the
Record Date Request Notice, the Board
of Directors may fix a Request Record
Date that may not precede and also not
be more than ten days after the close
of business on the date on which the
resolution fixing the Request Record
Date is adopted by the Board of
Directors. If the Board of Directors,
within ten days after the date on which
a valid Record Date Request Notice is
received, fails to adopt a resolution
fixing the Request Record Date, the
Request Record Date shall be the close
of business on the tenth day after the
first date on which the Record Date
Request Notice is received by the
secretary.
In order for any stockholder to request
a special meeting, one or more written
requests for a special meeting signed
by stockholders of record (or their
agents) as of the Request Record Date
entitled to cast not less than a
majority (the "Special Meeting
Percentage") of all of the votes
entitled to be cast at such meeting
(the "Special Meeting Request") must be
delivered to the secretary.
Additionally, the Special Meeting
Request (a) shall set forth the purpose
of the meeting and the matters proposed
to be acted on at it (which is limited
to the lawful matters set forth in the
Record Date Request Notice received by
the secretary), (b) shall bear the date
of signature of each such stockholder
(or such agent) signing the Special
Meeting Request, (c) shall set forth
the name and address, as they appear in
the Corporation's books, of each
stockholder signing such request (or on
whose behalf the Special Meeting
Request is signed) and the class,
series and number of all shares of
stock of the Corporation which are
owned by each such stockholder, and the
nominee holder for, and number of,
shares owned by such stockholder
beneficially but not of record, (d)
shall be sent to the secretary by
registered mail, return receipt
requested, and (e) shall be received by
the secretary within 60 days after the
Request Record Date. Any stockholder
requesting a special stock holder
meeting may revoke his, her or its
request for a special meeting at any
time by written revocation delivered to
the secretary.
The secretary will inform the
requesting stockholders of the
reasonably estimated cost of preparing
and mailing the notice of meeting
(including the corporation's proxy
materials). The secretary shall not be
required to call a special meeting upon
stockholder request and such meeting
shall not be held unless, in addition
to the aforementioned documents, the
secretary receives payment of such
reasonably estimated cost prior to the
mailing of any notice of the meeting.
Any special meeting to be held pursuant
to stockholders' request may not be
held more than 90 days after the record
date for the meeting.
.
- -------------------------------------------------------
RIVERSOURCE Regular shareholder meetings are not
MINNESOTA required; however, a majority of
CORPORATIONS directors present at a duly held
meeting may call a regular meeting of
shareholders by fixing the date, time
and place for a meeting.
If a regular meeting of shareholders
has not been held during the
immediately preceding 15 months, a
shareholder or shareholders holding
three percent or more of the voting
power of all shares entitled to vote
may demand a regular meeting of
shareholders by written notice of
demand given to the chief executive
officer or chief financial officer.
Within 30 days after receipt of the
demand by one of those officers, the
board of directors must cause a regular
meeting of shareholders to be called
and held on notice no later than 90
days after receipt of the demand, all
at the expense of the Fund.
Special meetings of the shareholders
may be called at any time as provided
for by the laws of the State of
Minnesota.
In addition, a special meeting of
shareholders may be called at any time
by a shareholder or shareholders
holding 10% or more of the voting power
of all shares entitled to vote, except
that a special meeting for the purpose
of considering any action to directly
or indirectly facilitate or effect a
business combination must be called by
25% or more of the voting power of all
shares entitled to vote.
- -------------------------------------------------------
</Table>
E.3
<Table>
<Caption>
- -------------------------------------------------------
SHAREHOLDER QUORUM
- -------------------------------------------------------
SELIGMAN The presence in person or by proxy of
MASSACHUSET- the holders of record of a majority of
TS BUSINESS the shares of the trust issued and
TRUSTS outstanding and entitled to vote
constitutes a quorum at all meetings of
the shareholders.
- -------------------------------------------------------
SELIGMAN The presence in person or by proxy of
MARYLAND the holders of record of one-third of
CORPORATIONS the shares of all Series and classes
issued and outstanding and entitled to
vote at a meeting constitute a quorum
except as otherwise provided by law or
the articles of incorporation. Where
the holders of shares of any Series or
class are entitled to vote separately
as a class, the presence in person or
by proxy of the holders of one-third of
the shares of that separate class
issued and outstanding and entitled to
vote at the meeting constitutes a
quorum for that vote.
If a quorum is not present or
represented at the meeting, the holders
of a majority of the shares present in
person or by proxy and entitled to vote
have the power to adjourn the meeting
without notice other than announcement
at the meeting, until a quorum is
present. If, however, such quorum shall
not be present at any meeting of the
stockholders, the stockholders or the
chairman of the meeting shall have the
power to adjourn the meeting from time
to time to a date not more than 120
days after the original record date
without notice other than announcement
at the meeting. At any adjourned
meeting at which a quorum may be
present, any business may be transacted
which might have been transacted at the
meeting as originally called.
The absence from any meeting of
stockholders of the number of shares in
excess of one-third of the shares of
all Series and classes, or of the
affected Series, class or classes, as
the case may be, which may be required
by the laws of the State of Maryland,
the 1940 Act or any other applicable
law or the Articles of Incorporation,
for action upon any given matter will
not prevent action of such meeting upon
any other matter or matters which may
properly come before the meeting, if
there shall be present thereat, in
person or by proxy, holders of the
number of shares required for action in
respect of such other matter or
matters. Notwithstanding any provision
of law requiring any action to be taken
or authorized by the holders of a
greater proportion than a majority of
the shares of all Series and classes or
of the shares of a particular Series,
class or classes, as the case may be,
entitled to vote thereon, such action
will be valid and effective if taken or
authorized by the affirmative vote of
the holders of a majority of the shares
of all Series and classes or of such
particular Series, Class or classes, as
the case may be, outstanding and
entitled to vote thereon.
The stockholders present either in
person or by proxy, at a meeting which
has been duly called and convened, may
continue to transact business until
adjournment, notwithstanding the
withdrawal of enough stockholders to
leave less than a quorum.
- -------------------------------------------------------
RIVERSOURCE The holders of at least 10% of the
MINNESOTA shares outstanding and entitled to
CORPORATIONS vote, present in person or by proxy,
constitute a quorum, but the holders of
a smaller amount may adjourn without
further notice, other than by notice at
the time, until a quorum is secured at
any such adjourned meeting. In case a
quorum is not present, the meeting may
be adjourned without notice other than
by notice at the meeting. At any
adjourned meeting at which a quorum may
be present, any business may be
transacted which might have been
transacted at the meeting as originally
called.
- -------------------------------------------------------
SHAREHOLDER CONSENT
- -------------------------------------------------------
SELIGMAN Except as otherwise provided by law,
MASSACHUSET- the declaration of trust and the
TS BUSINESS bylaws, any action required or
TRUSTS permitted to be taken at any meeting of
shareholders may be taken without a
meeting if a majority of the
shareholders entitled to vote consent
to the action in writing and the
consents are filed with the records of
the trust. The consent will be treated
for all purposes as a vote taken at a
meeting of shareholders.
- -------------------------------------------------------
SELIGMAN Under the MGCL, if authorized by the
MARYLAND charter of the corporation, the holders
CORPORATIONS of common stock entitled to vote
generally in the election of directors
may take action or consent to any
action by delivering a consent in
writing or by electronic transmission
of the stockholders entitled to cast
not less than the minimum number of
votes that would be necessary to
authorize or take the action at a
stockholders meeting. The corporation's
charter does not authorize such action;
therefore, any action required or
permitted of stockholders must be taken
at a meeting.
- -------------------------------------------------------
RIVERSOURCE An action required or permitted to be
MINNESOTA taken at a shareholder meeting may be
CORPORATIONS taken by written action signed, or
consented to by authorized electronic
communication, by all of the
shareholders entitled to vote on that
action. Such a written action is not
effective if it is signed or consented
to by fewer than all the shareholders
entitled to vote on the action.
- -------------------------------------------------------
NOTICE TO SHAREHOLDERS OF RECORD DATE
- -------------------------------------------------------
SELIGMAN In general, stockholders entitled to
MASSACHUSET- vote at or notice of a stockholder
TS BUSINESS meeting must be given written notice of
TRUSTS at least 10 days and not more than 90
days before the meeting.
The trustees may set a record date for
the purpose of determining the
shareholders entitled to notice of or
to vote at a stockholder meeting. The
record date cannot be more than 90 days
or less than 10 days before the date of
the meeting.
- -------------------------------------------------------
</Table>
E.4
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN In general, stockholders entitled to
MARYLAND vote at or notice of a stockholder
CORPORATIONS meeting must be given written notice of
at least 10 days and not more than 90
days before the meeting. Unless
otherwise required by statute, any
business may be conducted at the annual
meeting without being designated in the
notice. No business may be transacted
at a special meeting of stockholders
except as specifically designated in
the notice.
The directors may set a record date for
the purpose of determining the
stockholders entitled to notice of or
to vote at a stockholder meeting. The
record date cannot be more than 90 days
or less than 10 days before the date of
the meeting. Instead of fixing a record
date, the Board of Directors may close
the stock transfer books for not more
than 20 days. If the stock transfer
books are closed for this purpose, they
must be closed for at least 10 days
before the date of the meeting.
- -------------------------------------------------------
RIVERSOURCE In general, shareholders who are
MINNESOTA entitled to vote at a shareholder
CORPORATIONS meeting must be given notice of the
meeting at least ten and not more than
60 days before the meeting. In certain
cases, the notice of meeting must
include specified information required
by Minnesota law.
The board of directors can establish a
record date for determining the
shareholders who are entitled to vote
at a shareholder meeting. The record
date cannot be more than 60 days before
the date of the meeting.
- -------------------------------------------------------
SHAREHOLDER PROXIES
- -------------------------------------------------------
SELIGMAN Shareholders may vote in person or by
MASSACHUSET- proxy.
TS BUSINESS
TRUSTS No proxy is valid eleven months after
its date. Pursuant to a resolution of a
majority of the trustees, proxies may
be solicited in the name of one or more
trustees or officers of the trust.
- -------------------------------------------------------
SELIGMAN A stockholder may cast the votes by the
MARYLAND stockholder in person or by proxy
CORPORATIONS executed by the stockholder or by the
stockholder's duly authorized agent in
any manner permitted or not prohibited
by law. The proxy or evidence of
authorization of the proxy must be
filed with the secretary of the
corporation before or at the meeting.
No proxy is valid more than eleven
months after its date unless otherwise
provided in the proxy.
- -------------------------------------------------------
RIVERSOURCE At each shareholder meeting, the polls
MINNESOTA may be opened and closed, the proxies
CORPORATIONS and ballots may be received and taken
in charge, and all questions touching
the qualification of voters, the
validity of proxies, and acceptances or
rejections of votes may be decided by
two (2) inspectors of election.
Minnesota law provides that
shareholders can submit proxies in
writing or by telephonic transmission
or authenticated electronic
communication. It also provides that
the board of directors can establish
procedures whereby a record holder can
certify in writing that another person
is the beneficial owner of shares, and
the beneficial owner then can vote the
shares or appoint a proxy.
- -------------------------------------------------------
DIRECTORS' POWER TO AMEND ARTICLES OF INCORPORATION /
TRUSTEES' POWER TO AMEND DECLARATION OF TRUST
- -------------------------------------------------------
SELIGMAN The trustees may amend the declaration
MASSACHUSET- of trust without the vote or consent of
TS BUSINESS shareholders to change the name of the
TRUSTS trust, to supply any omission, to cure,
correct or supplement any ambiguous,
defective or inconsistent provision of
the declaration of trust, to conform
the declaration of trust to the
requirements of, or to reduce or
eliminate the payment of taxes by the
trust or any series thereof under,
applicable federal or state laws or
regulations or the requirements of the
regulated investment company provisions
of the Internal Revenue Code of 1986,
as amended, but the trustees will not
be liable for failing to do so.
- -------------------------------------------------------
SELIGMAN The corporation may amend the articles
MARYLAND of incorporation if a majority of all
CORPORATIONS the shares at the time issued and
outstanding entitled to vote, vote in
favor of the amendment, or consent in
writing to such amendment.
- -------------------------------------------------------
RIVERSOURCE The Articles of Incorporation, or any
MINNESOTA provision hereof, may be amended,
CORPORATIONS altered, changed or repealed in a
manner prescribed by the laws of the
State of Minnesota.
With respect to RiverSource Global
Series, Inc., the directors, acting
without shareholder approval, can amend
the corporation's Articles of
Incorporation to (i) change the name of
the corporation; (ii) increase or
decrease, but not below the number of
then-outstanding shares, the aggregate
number of shares the corporation has
authority to issue, including shares of
any class or series; and (iii) amend or
cancel a certificate fixing the rights
and preferences of a class or series of
shares, but only when no shares of that
class or series are outstanding.
In all other cases, the corporation's
Articles of Incorporation only can be
amended with the approval of the
requisite shareholders.
- -------------------------------------------------------
TERMINATION OF CORPORATION / TRUST
- -------------------------------------------------------
SELIGMAN The trust may be terminated: (i) by the
MASSACHUSET- affirmative vote of the holders of at
TS BUSINESS least two-thirds of the shares
TRUSTS outstanding and entitled to vote at any
shareholder meeting, or (ii) by a
written instrument, without a meeting,
signed by a majority of the trustees
and consented to by at least two-thirds
of the shares outstanding and entitled
to vote, or by another vote established
by the trustees with respect to any
class or series of shares, or (iii) by
the trustees by notice to the
shareholders of the trust.
- -------------------------------------------------------
</Table>
E.5
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN Under the MGCL, a majority of the
MARYLAND entire board of directors of the
CORPORATIONS corporation proposing to dissolve the
corporation shall (1) adopt a
resolution which declares that
dissolution of the corporation is
advisable; and (2) direct that the
proposed dissolution be submitted for
consideration at either an annual or a
special meeting of the stockholders.
Under the MGCL, unless the
corporation's charter provides a lesser
proportion of votes, but in no case
less than a majority of all votes
entitled to be cast on the proposal,
the proposed dissolution shall be
approved by the stockholders of the
corporation by the affirmative vote of
two-thirds of all the votes entitled to
be cast on the matter. Each Seligman
Fund's charter provides that
notwithstanding any provision of law
requiring any action to be taken or
authorized by the holders of a greater
proportion than a majority of the
shares of all series and classes or of
the shares of a particular series,
class or classes, as the case may be,
entitled to vote thereon, such action
shall be valid and effective if taken
or authorized by the affirmative vote
of the holders of a majority of the
shares of all series and classes or of
such particular series, class or
classes, as the case may be,
outstanding and entitled to vote
thereon.
- -------------------------------------------------------
RIVERSOURCE In order to dissolve a Minnesota
MINNESOTA corporation, the affirmative vote of a
CORPORATIONS majority of the voting power of all
shares entitled to vote is required. In
order to discontinue an individual
class or series of shares without
dissolving the corporation, an
amendment to the corporation's Articles
of Incorporation is required. In order
to adopt such an amendment,
shareholders must approve the amendment
by the affirmative vote of the greater
of (i) a majority of the voting power
of the shares of that class or series
present and entitled to vote or (ii) a
majority of the voting power of the
minimum number of shares of such class
or series entitled to vote that would
constitute a quorum for the transaction
of business at the meeting (a
"Minnesota Statutory Vote").
The board of directors, acting without
a shareholder vote, does not have the
power to dissolve the corporation or to
discontinue an individual class or
series of shares.
- -------------------------------------------------------
MERGER OR CONSOLIDATION OF TRUST / CORPORATION
- -------------------------------------------------------
SELIGMAN Any merger, consolidation or sale or
MASSACHUSET- exchange of assets of the trust
TS BUSINESS requires the affirmative vote of at
TRUSTS least two-thirds of shares outstanding
and entitled to vote, or by an
instrument(s) in writing without a
meeting, consented to by the holders of
not less than two-thirds of shares
outstanding and entitled to vote, or by
such other vote as may be established
by the trustees with respect to any
series or class of shares; provided,
however, that, if such merger or
consolidation is recommended by the
trustees, then a majority shareholder
vote shall be sufficient authorization.
With respect to any merger or
consolidation, all shareholders are
entitled to the same appraisal rights
as a stockholder of a Massachusetts
business corporation. In the event of a
merger, consolidation, sale or exchange
of assets, appraisal rights will be the
exclusive remedy for any dissenting
shareholder.
- -------------------------------------------------------
SELIGMAN Under the MGCL, unless the
MARYLAND corporation's charter provides a lesser
CORPORATIONS proportion of votes, but in no case
less than a majority of all votes
entitled to be cast on the proposal,
any consolidation, merger, share
exchange, or transfer requires the
affirmative vote of two-thirds of all
the votes entitled to be cast on the
matter. Each Seligman Fund's charter
provides that notwithstanding any
provision of law requiring any action
to be taken or authorized by the
holders of a greater proportion than a
majority of the shares of all series
and classes or of the shares of a
particular series, class or classes, as
the case may be, entitled to vote
thereon, such action shall be valid and
effective if taken or authorized by the
affirmative vote of the holders of a
majority of the shares of all series
and classes or of such particular
series, class or classes, as the case
may be, outstanding and entitled to
vote thereon. A stockholder who has not
received payment for his stock in
connection with a merger,
consolidation, share exchange or
transfer may petition a court of equity
in the county where the principal
office of the corporation is located or
where the resident agent of the
successor is located, for an appraisal
to determine the fair value of the
stock.
- -------------------------------------------------------
RIVERSOURCE In most cases, any merger or exchange
MINNESOTA in which a Minnesota corporation is not
CORPORATIONS the continuing entity, and any sale of
all or substantially all of the
corporation's property and assets not
in the usual and regular course of its
business, requires the affirmative vote
of a majority of the voting power of
all shares entitled to vote.
Any sale of the assets belonging to an
individual series of shares of a
Minnesota corporation in exchange for
shares of another corporation or trust
or shares of another series of the
corporation, while leaving other series
of the corporation outstanding, would
require an amendment to the
corporation's Articles of
Incorporation. In order to adopt such
an amendment, shareholders of that
series would have to approve the
amendment by a Minnesota Statutory
Vote.
- -------------------------------------------------------
REMOVAL OF DIRECTORS / TRUSTEES
- -------------------------------------------------------
SELIGMAN Any of the trustees may be removed
MASSACHUSET- (provided the aggregate number of
TS BUSINESS trustees after removal is not less than
TRUSTS two) with cause, by the consent of two-
thirds of the remaining trustees.
Upon the incapacity or death of any
trustee, his legal representative must
execute and deliver on his behalf all
documents demanded by the remaining
trustees.
- -------------------------------------------------------
SELIGMAN Under the MGCL, stockholders of the
MARYLAND corporation may remove any director,
CORPORATIONS with or without cause, by the
affirmative vote of a majority of all
the votes entitled to be cast generally
for the election of directors.
- -------------------------------------------------------
</Table>
E.6
<Table>
<Caption>
- -------------------------------------------------------
RIVERSOURCE Under Minnesota law, the board of
MINNESOTA directors can remove a director by a
CORPORATIONS majority vote of the remaining
directors, but only if the director was
appointed by the board of directors to
fill a vacancy and has not subsequently
been elected by shareholders.
In all other cases, a director can only
be removed by shareholder vote. In
general, such removal requires the
affirmative vote of the holders of a
majority of the voting power of all
shares entitled to vote at an election
of directors. However, where a
corporation has cumulative voting (as
do the Funds), unless the entire board
of directors is removed simultaneously,
a director is not removed from the
board of directors if there are cast
against removal of the director the
votes of a proportion of the voting
power sufficient to elect the director
at an election of the entire board of
directors under cumulative voting.
- -------------------------------------------------------
DIRECTOR / TRUSTEE COMMITTEES
- -------------------------------------------------------
SELIGMAN The trustees, by the majority vote of
MASSACHUSET- all the trustees, may appoint from the
TS BUSINESS trustees committees which must consist
TRUSTS of at least two trustees and will have
and may exercise powers as the trustees
may determine in the resolution
appointing them.
A majority of all the members of any
committee may determine its action and
fix the time and place of its meetings,
unless the trustees otherwise provide.
The trustees have power at any time to
change the members and powers of any
such committee, to fill vacancies and
to discharge any such committee.
- -------------------------------------------------------
SELIGMAN The Board of Directors may appoint from
MARYLAND among its members an Executive
CORPORATIONS Committee, an Audit Committee, a Board
Operations Committee, a Nominating
Committee and other committees,
composed of one or more directors, to
serve at the pleasure of the Board of
Directors. Any director may give notice
to the Board of Directors at any time
of his or her resignation from any
committee on which he or she serves.
The Board of Directors may delegate to
committees appointed pursuant to the
articles of incorporation any of the
powers of the Board of Directors,
except as prohibited by law.
Any action required or permitted to be
taken at any meeting of a committee of
the Board of Directors may be taken
without a meeting, if a consent to such
action in writing or by electronic
transmission is given by each member of
the committee and filed with the
minutes of proceedings of such
committee.
Subject to the previous sections, the
Board of Directors has the power at any
time to change the membership of any
committee, to fill all vacancies, to
designate alternate members to replace
any absent or disqualified member or to
dissolve any such committee. Subject to
the power of the Board of Directors,
the members of a committee have the
power to fill any vacancies on such
committee.
- -------------------------------------------------------
RIVERSOURCE From time to time the board of
MINNESOTA directors may, by resolution passed by
CORPORATIONS a majority of the whole board of
directors, appoint any other committee
or committees for any purpose or
purposes, which committee or committees
will have such powers as specified in
the resolution of appointment.
The corporation's By-Laws provide that
the board of directors may, by
resolution passed by a majority of the
whole board of directors, designate an
Executive Committee of two or more
directors, which may meet at stated
times or on notice to all by any of
their number during intervals between
meetings of the board of directors. The
Executive Committee will advise with
and aid the officers of the Fund in all
matters concerning its interests and
the management of its business, and
generally perform such duties and
exercise such powers as may be
delegated to it from time to time by
the board of directors.
The board of directors also may, by
resolution passed by a majority of the
whole board of directors, appoint any
other committee or committees for any
purpose or purposes, which committee or
committees will have such powers as
specified in the resolution of
appointment. The quorum for such
committee established by the board of
directors is two members regardless of
the number of members serving on the
committee. Under Minnesota law, the
members of such other committees do not
need to be directors.
- -------------------------------------------------------
DIRECTOR / TRUSTEE LIABILITY
- -------------------------------------------------------
SELIGMAN No trustee will be subject to any
MASSACHUSET- personal liability, other than to the
TS BUSINESS trust or its shareholders in connection
TRUSTS with the trust property or the affairs
of the trust, except for conduct
involving bad faith, wilful
misfeasance, gross negligence or
reckless disregard for his duties.
Additionally, no trustee will be liable
for any action or failure to act,
including the failure to compel a
present or former trustee to redress
any breach of trust. All persons must
look solely to the trust property for
satisfaction of claims of any nature
arising in connection with the affairs
of the trust.
- -------------------------------------------------------
</Table>
E.7
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN The Fund's Articles of Incorporation
MARYLAND provide that a director or officer of
CORPORATIONS the corporation will not be liable to
the corporation or its stockholders for
monetary damages for breach of
fiduciary duty as a director or
officer, except to the extent such
exemption from liability or limitation
thereof is not permitted by law
(including the 1940 Act).
Under the MGCL, the foregoing provision
is not effective to eliminate a
director's personal liability to the
Funds or its shareholders for, among
other things, any act or omission of
the director that was material to the
matter giving rise to a threatened,
pending or completed action, suit or
proceeding, whether civil, criminal,
administrative, or investigative
("Proceeding"), and (1) was committed
in bad faith; or (2) was the result of
active and deliberate dishonesty; or
(ii) the director actually received an
improper personal benefit in money,
property, or services; or (iii) in the
case of any criminal proceeding, the
director had reasonable cause to
believe that the act or omission was
unlawful.
Under the MGCL, the charter of a
Maryland corporation may include any
provision expanding or limiting the
liability of its directors to the
corporation or its stockholders for
money damages, but may not include any
provision that restricts or limits the
liability of its directors to the
corporation or its stockholders: (A) to
the extent that it is proved that the
person actually received an improper
benefit or profit in money, property,
or services for the amount of the
benefit or profit in money, property,
or services actually received; or (B)
to the extent that a judgment or other
final adjudication adverse to the
person is entered in a proceeding based
on a finding in the proceeding that the
person's action, or failure to act, was
the result of active and deliberate
dishonesty and was material to the
cause of action adjudicated in the
proceeding.
- -------------------------------------------------------
RIVERSOURCE To the full extent permitted by the
MINNESOTA laws of the State of Minnesota, no
CORPORATIONS director of the Fund will be liable to
the Fund or to its shareholders for
monetary damages for breach of
fiduciary duty as a director but such
limit on liability will be permitted
only to the extent allowable under the
provisions of the 1940 Act.
Under Minnesota law, the foregoing
provision is not effective to eliminate
a director's personal liability to the
Funds or its shareholders for, among
other things, (i) any breach of the
director's duty of loyalty to the
corporation or its shareholders; (ii)
acts or omissions not in good faith or
that involve intentional misconduct or
knowing violation of law; or (iii) any
transaction from which the director
derived an improper personal benefit.
- -------------------------------------------------------
</Table>
E.8
<Table>
<Caption>
- -------------------------------------------------------
DIRECTOR / TRUSTEE INDEMNIFICATION
- -------------------------------------------------------
SELIGMAN A representative of the trust will be
MASSACHUSET- indemnified by the trust with respect
TS BUSINESS to each proceeding against him or her,
TRUSTS except for a proceeding brought by or
on behalf of the trust, against
expenses (including attorneys' fees),
judgments, fines and amounts paid in
settlement actually and reasonably
incurred by the representative in
connection with the proceeding,
provided that the representative acted
in good faith and in a manner he
reasonably believed to be in or not
opposed to the best interests of the
trust and, with respect to any criminal
proceeding, had no reasonable cause to
believe his conduct was unlawful. The
termination of any proceeding by
judgment, order, settlement, conviction
or upon a plea of nolo contendere or
its equivalent, does not, of itself,
create a presumption that the person
did not act in good faith and in a
manner in which he reasonably believed
to be in or not opposed to the best
interests of the trust and, with
respect to any criminal proceeding, had
reasonable cause to believe that his
conduct was unlawful.
A representative of the trust will be
indemnified by the trust, with respect
to each proceeding brought by or on
behalf of the trust to obtain a
judgment or decree in its favor,
against expenses (including attorneys'
fees) actually and reasonable incurred
by him in connection with the defense
or settlement of such proceeding, if he
acted in good faith and in a manner he
reasonably believed to be in or not
opposed to the best interests of the
trust; except that no indemnification
will be made in respect of any claim,
issue, or matter as to which such
representative has been adjudged to be
liable for negligence or misconduct in
the performance of his duty to the
trust, unless and only to the extent
that the court in which the proceeding
was brought, or a court of equity in
the county in which the trust has its
principal office, despite the
adjudication of liability but in view
of all circumstances of the case, the
representative is fairly and reasonably
entitled to indemnity for the expenses
which the court considers proper.
To the extent that the representative
of the trust has been successful on the
merits or otherwise in defense of any
proceeding referred to in the preceding
two paragraphs, or in defense of any
claim, issue or matter therein, the
trust will indemnify him against all
expenses (including attorneys' fees)
actually and reasonably incurred by him
in connection with the proceeding.
Except as provided above, any
indemnification under the first two
provisions of this section (unless
ordered by a court) will be made by the
trust only as authorized in the
specific case upon a determination that
indemnification of the representative
of the trust is proper in the
circumstances because he has met the
applicable standard of conduct set
forth in the paragraphs. The
determination will be made (1) by the
trustees by a majority vote of a quorum
consisting of trustees who were not
parties to the proceeding, or (2) if a
quorum is not obtainable or if a quorum
of disinterested trustees so directs,
by independent legal counsel in a
written opinion, or (3) by the
shareholders.
Expenses (including attorneys' fees)
incurred in defending a proceeding may
be paid by the trust in advance of the
final disposition if (1) authorized by
the trustees in the specific case, and
(2) the trust receives and undertaking
by or on behalf of the representative
of the trust to repay the advance if it
is not ultimately determined that he is
entitled to the indemnified by the
trust as authorized by the above.
The indemnification provided above is
not exclusive of any other rights that
a representative of the trust or other
person may be entitled under any
agreement, vote of shareholders or
disinterested trustees or otherwise,
both as to action in his official
capacity and as to action in another
capacity while holding the office, and
will continue as to a person who has
ceased to be a trustee, officer,
employee or agent and inure to the
benefit of his heirs and personal
representatives.
- -------------------------------------------------------
</Table>
E.9
<Table>
<Caption>
- -------------------------------------------------------
SELIGMAN The corporation will indemnify to the
MARYLAND fullest extent permitted by law any
CORPORATIONS person made or threatened to be made a
party to any action, suit or
proceeding, whether criminal, civil,
administrative or investigative, by
reason of the fact that such person is
or was a director, officer or employee
of the corporation or serves or served
at the request of the corporation any
other enterprise as a director, officer
or employee. To the fullest extent
permitted by law, expenses incurred by
any such person in defending any such
action, suit or proceeding will be paid
or reimbursed by the corporation
promptly, provided that such person
agrees to repay such expenses if it is
ultimately determined that such person
is not entitled to be indemnified by
the corporation. The articles of
incorporation may not be amended to
adversely affect this protection. These
provisions do not waive compliance with
the Securities Act of 1933 or the 1940
Act or other valid rule, regulation or
order of the SEC.
Under the MGCL, a corporation may
indemnify a director made a party to
any Proceeding by reason of service in
that capacity unless found liable under
provisions (1) and (2) under "Director/
Trustee Liability". Indemnification may
be against judgments, penalties, fines,
settlements, and reasonable expenses
actually incurred by the director in
connection with the proceeding.
However, if the proceeding was one by
or in the right of the corporation,
indemnification may not be made in
respect of any proceeding in which the
director shall have been adjudged to be
liable to the corporation.
The Corporation's By-Laws provide to
the maximum extent permitted by
Maryland law, as in effect from time to
time, the Corporation shall indemnify
and, without requiring a preliminary
determination of the ultimate
entitlement to indemnification, shall
pay or reimburse reasonable expenses in
advance of final disposition of a
proceeding to (a) any individual who is
a present or former director or officer
of the Corporation and who is made, or
threatened to be made, a party to the
proceeding by reason of his or her
service in any such capacity or (b) any
individual who, while a director or
officer of the Corporation and at the
request of the Corporation, serves or
has served as a director, officer,
partner or trustee of another
corporation, or a real estate
investment trust, partnership, joint
venture, trust, employee benefit plan
or other enterprise and who is made, or
threatened to be made, a party to the
proceeding by reason of his or her
service in any such capacity. The
Corporation may, with the approval of
its Board of Directors or any duly
authorized committee thereof, provide
such indemnification and advance for
expenses to a person who served a
predecessor of the Corporation in any
of the capacities described in (a) or
(b) above and to any employee or agent
of the Corporation or a predecessor of
the Corporation. The termination of any
claim, action, suit or other proceeding
involving any person, by judgment,
settlement (whether with or without
court approval) or conviction or upon a
plea of guilty or nolo contendere, or
its equivalent, shall not create a
presumption that such person did not
meet the standards of conduct required
for indemnification or payment of
expenses to be required or permitted
under Maryland law, the By-laws or the
charter of the Corporation. Any
indemnification or advance of expenses
made pursuant to the By-laws shall be
subject to applicable requirements of
the 1940 Act. The indemnification and
payment of expenses provided in the
Bylaws shall not be deemed exclusive of
or limit in any way other rights to
which any person seeking
indemnification or payment of expenses
may be or may become entitled under any
bylaw, regulation, insurance, agreement
or otherwise.
- -------------------------------------------------------
</Table>
E.10
<Table>
<Caption>
- -------------------------------------------------------
RIVERSOURCE The Fund will indemnify any person who
MINNESOTA was or is a party and is threatened to
CORPORATIONS be made a party, by reason of the fact
that she or he is or was a director,
officer, employee or agent of the Fund,
or is or was serving at the request of
the Fund as a director, officer,
employee or agent of another company,
partnership, joint venture, trust or
other enterprise, to any threatened,
pending or completed action, suit or
proceeding, wherever brought, and the
Fund may purchase liability insurance
and advance legal expenses, all to the
fullest extent permitted by the laws of
the State of Minnesota. Any
indemnification hereunder will not be
exclusive of any other rights of
indemnification to which the directors,
officers, employees or agents might
otherwise be entitled. No
indemnification will be made in
violation of the 1940 Act.
Under Minnesota law, a corporation is
required to indemnify and advance
expenses to present and former
directors against judgments, penalties,
fines, settlements and reasonable
expenses, including attorneys' fees and
disbursements, if they are made parties
to a legal proceeding by virtue of
their position as directors. However,
indemnification and advances are not
required or permitted if a director
engaged in specified disabling conduct.
The corporation's Articles of
Incorporation and By-Laws provide that
each person made or threatened to be
made a party to or who is involved
(including, without limitation, as a
witness) in any actual or threatened
action, suit or proceeding whether
civil, criminal, administrative,
arbitration, or investigative,
including a proceeding by or in the
right of the Fund by reason of the
former or present capacity as a
director or officer of the Fund or who,
while a director or officer of the
Fund, is or was serving at the request
of the Fund or whose duties as a
director or officer involve or involved
service as a director, officer,
partner, trustee or agent of another
organization or employee benefit plan,
whether the basis of any proceeding is
alleged action in an official capacity
or in any capacity while serving as a
director, officer, partner, trustee or
agent, will be indemnified and held
harmless by the Fund to the full extent
authorized by laws of the State of
Minnesota, as the same or may hereafter
be amended (but, in the case of any
such amendment, only to the extent that
such amendment permits the Fund to
provide broader indemnification rights
than the law permitted the Fund to
provide prior to such amendment), or by
any other applicable law as then in
effect, against judgments, penalties,
fines including, without limitation,
excise taxes assessed against the
person with respect to an employee
benefit plan, settlements and
reasonable expenses, including
attorneys' fees and disbursements,
incurred in connection therewith and
the indemnification will continue as to
any person who has ceased to be a
director or officer and will inure to
the benefit of the person's heirs,
executors and administrators provided,
however, in an action brought against
the Fund to enforce rights to
indemnification, the director or
officer will be indemnified only if the
action was authorized by the board of
directors of the Fund. The right to
indemnification conferred by these
provisions is a contract right and
includes the right to be paid by the
Fund in advance of the final
disposition of a proceeding for
expenses incurred in connection
therewith provided, however, such
payment of expenses will be made only
upon receipt of a written undertaking
by the director or officer to repay all
amounts so paid if it is ultimately
determined that the director or officer
is not entitled to indemnification.
Each person who upon written request to
the Funds has not received payment
within thirty days may at any time
thereafter bring suit against the Funds
to recover any unpaid amount and, to
the extent successful, in whole or in
part, will be entitled to be paid the
expenses of prosecuting such suit. Each
person will be presumed to be entitled
to indemnification upon filing a
written request for payment and the
Fund will have the burden of proof to
overcome the presumption that the
director or officer is not so entitled.
Neither the determination by the Fund,
whether by the board of directors,
special legal counsel or by
shareholder, nor the failure of the
Fund to have made any determination
will be a defense or create the
presumption that the director or
officer is not entitled to
indemnification.
The right to indemnification and to the
payment of expenses prior to any final
determination will not be exclusive of
any other right which any person may
have or hereinafter acquire under any
statute, provision of the Articles of
Incorporation, By-Law, agreement, vote
of shareholders or otherwise and
notwithstanding any provisions in the
Funds' By-Laws, the Funds are not
obligated to make any payment with
respect to any claim for which payment
is required to be made to or on behalf
of the director or officer under any
insurance policy, except with respect
to any excess beyond the amount of
required payment under such insurance
and no indemnification will be made in
violation of the provisions of the 1940
Act.
- -------------------------------------------------------
DIVIDENDS
- -------------------------------------------------------
SELIGMAN The trustees, in their discretion, may
MASSACHUSET- distribute proportionately among the
TS BUSINESS shareholders any share of the profits,
TRUSTS surplus (including paid-in surplus)
capital or assets held by the trustees.
- -------------------------------------------------------
SELIGMAN The Board of Directors may declare and
MARYLAND pay dividends and distributions from
CORPORATIONS income and capital gains, accrued or
unrealized, from the assets belonging
to a Series, at such times and in such
manner as they may determine in their
discretion.
Dividends and distributions on shares
of a particular class may be paid to
the holders of shares of that class at
such times, in such manner and from
such of the income and capital gains,
accrued or realized, from the assets
belonging to that class, after
providing for actual and accrued
liabilities belonging to that class, as
the Board of Directors may determine.
Dividends and other distributions upon
the stock of the corporation may be
authorized by the Board of Directors,
subject to the provisions of law and
the charter of the corporation.
Dividends and other distributions may
be paid in cash, property or stock of
the corporation, subject to the
provisions of law and the charter.
- -------------------------------------------------------
</Table>
E.11
<Table>
<Caption>
- -------------------------------------------------------
RIVERSOURCE The corporation's Articles of
MINNESOTA Incorporation provide that the
CORPORATIONS directors may declare and pay dividends
in their discretion at any time and
from time to time to the extent and
from such sources as permitted by the
laws of the State of Minnesota. Under
Minnesota law, the board of directors
can authorize a dividend if it
determines that the corporation will be
able to pay its debts in the ordinary
course of business after paying the
dividend.
- -------------------------------------------------------
CAPITALIZATION
- -------------------------------------------------------
SELIGMAN The interest of the beneficiaries will
MASSACHUSET- be divided into transferrable shares of
TS BUSINESS beneficial interest of $.001 par value.
TRUSTS The number of shares of beneficial
interest authorized is unlimited.
- -------------------------------------------------------
SELIGMAN The Board of Directors has power and
MARYLAND authority to increase or decrease the
CORPORATIONS number of shares of stock, series or
class of stock, that the corporation
has the authority to issue.
With respect to Seligman Core Fixed
Income Fund, Inc., the total number of
shares of capital stock of all classes
which the corporation has authority to
issue is 1,000,000,000 shares of the
par value of $.001 per share, having an
aggregate par value of $1,000,000.
With respect to Seligman Global Fund
Series, Inc., the total number of
shares of all classes of stock which
the Corporation has authority to issue
is 2,000,000,000 shares of common stock
of the par value of $.001 each having
an aggregate par value of
$2,000,000.00.
With respect to Seligman Income and
Growth Fund, Inc., the total number of
shares of capital stock of all classes
which the corporation has authority to
issue is 500,000,000 shares of capital
stock (par value $1.00 per share),
amounting to an aggregate par value of
$500,000,000.
- -------------------------------------------------------
RIVERSOURCE The Corporation's articles of
MINNESOTA incorporation authorize the issuance of
CORPORATIONS up to 10,000,000,000 shares of stock
with a par value of $.01 per share. The
Board of Directors can authorize the
issuance of shares in such classes or
series with such designations,
preferences and relative,
participating, optional or other
special rights, or qualifications,
limitations or restrictions thereof, as
are stated in the Board resolution
establishing the class or series. The
Board of Directors can, without
shareholder approval, increase or
decrease the total number of authorized
shares, or the authorized shares of a
class or series, in the manner and to
the extent set forth under "Directors'
Power to Amend Articles of
Incorporation/Trustees' Power to Amend
Declaration of Trust" above.
- -------------------------------------------------------
NUMBER OF DIRECTORS / TRUSTEES AND VACANCIES
- -------------------------------------------------------
SELIGMAN There may be no less than two nor more
MASSACHUSET- than twenty trustees.
TS BUSINESS
TRUSTS The term of office of a trustee will
terminate and a vacancy will occur in
the event of the death, resignation,
removal, bankruptcy, adjudicated
incompetence, or other incapacity to
perform the duties of the office of a
trustee.
In the case of any vacancy of a trustee
for any reason other than an increase
in the number of trustees, a majority
of the remaining trustees, although a
majority is less than a quorum, by an
affirmative vote, or the sole remaining
trustee, may elect a successor to hold
office.
- -------------------------------------------------------
SELIGMAN The number of directors will never be
MARYLAND less than the greater of three and the
CORPORATIONS minimum number required by the MGCL
(one), nor more than 20, and the tenure
of a directorship will not be affected
by any decrease in the number of
directors.
Any vacancy occurring in the Board of
Directors for any cause other than by
reason of an increase in the number of
directors may be filled by a majority
of the remaining members of the Board
of Directors, even if such majority is
less than a quorum. Any vacancy
occurring by reason of an increase in
the number of directors may be filled
by a majority of the entire Board of
Directors then in office. A director
elected by the Board of Directors to
fill a vacancy will be elected to hold
office until the next annual meeting of
stockholders and until his or her
successor is elected and qualifies.
- -------------------------------------------------------
RIVERSOURCE There may be no less than two or more
MINNESOTA than 15 directors. If a vacancy occurs
CORPORATIONS in the board of directors by reason of
death, resignation or otherwise, such
vacancy may be filled for the unexpired
term by a majority vote of the
remaining directors, even if the
remaining number of directors is less
than a quorum.
- -------------------------------------------------------
INDEPENDENT CHAIR OF THE BOARD
- -------------------------------------------------------
SELIGMAN The declaration of trust and bylaws do
MASSACHUSET- not require an independent chair of the
TS BUSINESS Board of Trustees.
TRUSTS
- -------------------------------------------------------
SELIGMAN The articles of incorporation and
MARYLAND bylaws do not require an independent
CORPORATIONS chair of the Board of Directors.
- -------------------------------------------------------
RIVERSOURCE The corporation's Bylaws require the
MINNESOTA board of directors to elect one
CORPORATIONS independent member to serve as Chair of
the Board of Directors whose duties
include serving as the lead independent
director.
- -------------------------------------------------------
</Table>
E.12
<Table>
<Caption>
- -------------------------------------------------------
INSPECTION OF BOOKS AND RECORDS
- -------------------------------------------------------
SELIGMAN The declaration of trust and bylaws do
MASSACHUSET- not give shareholders any right to
TS BUSINESS inspect the books and records of the
TRUSTS trust.
- -------------------------------------------------------
SELIGMAN Under the MGCL, any stockholder or his
MARYLAND agent may inspect and copy during usual
CORPORATIONS business hours the corporation's By-
laws, minutes of the proceedings of the
stockholders, annual statements of
affairs, and voting trust agreements on
file at the corporation's principal
office.
In addition, one or more persons who
together are and for at least six
months have been stockholders of record
of at least 5 percent of the
outstanding stock of any class of the
corporation may, in person or by agent,
on written request, inspect and copy
during usual business hours the
corporation's books of account and its
stock ledger, present to any officer or
resident agent of the corporation a
written request for a statement of its
affairs, and in the case of any
corporation which does not maintain the
original or a duplicate stock ledger at
its principal office, present to any
officer or resident agent of the
corporation a written request for a
list of its stockholders.
A stockholder with the right, under
applicable law, to inspect the
corporation's books of account, stock
ledger, or other specified documents of
the corporation has no right to make an
inspection if the Board of Directors
determines that the stockholder has an
improper purpose for requesting the
inspection.
- -------------------------------------------------------
RIVERSOURCE Minnesota law requires the corporation
MINNESOTA (each Fund) to keep (i) a share
CORPORATIONS register containing the names and
addresses of its shareholders and the
number and classes of shares held by
each; (ii) records of all proceedings
of shareholders for the last three
years; (iii) records of all proceedings
of the board of directors for the last
three years; (iv) its Articles of
Incorporation and Bylaws, as amended;
(v) certain financial statements which
Minnesota law requires the corporation
(each Fund) to prepare; (vi) all
reports to shareholders generally
within the last three years; and (vii)
a statement of the names and usual
business addresses of its directors and
principal officers. The Fund's
shareholders and beneficial owners have
the right, upon written demand stating
the purpose, at any reasonable time to
examine and copy those records which
are reasonably related to the stated
purpose, provided that the stated
purpose is reasonably related to the
person's interest as a shareholder or
beneficial owner.
- -------------------------------------------------------
</Table>
E.13
EXHIBIT F
RIVERSOURCE FAMILY OF FUNDS PRIVACY NOTICE
The RiverSource Family of Funds, which includes RiverSource, Seligman, and
Threadneedle, branded funds (collectively, the "funds"), are committed to
respecting shareholders' rights of privacy and we have adopted the following
policy to maintain the confidentiality of the information you share with us:
INFORMATION WE COLLECT
We know that you expect us to conduct and process your business in a manner that
is both accurate and efficient. To do so, we may collect information about you
such as your name, address, Social Security number and the names of your
beneficiaries. This information is collected from applications or other forms
that you provide to us or the financial intermediaries that distribute the
funds. We also collect information about your transactions in the funds. In
addition, we may obtain information about you from third parties in order to
service your account. Financial intermediaries which distribute the funds and
service your account, whether or not affiliated with us, may have a customer
relationship with you and may independently collect information from you. This
Privacy Notice does not apply to their independent collection or use of
information about you.
INFORMATION WE DISCLOSE
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except in two circumstances. We disclose information
to companies, whether or not affiliated with us, that help us by providing
services to you including companies that market funds on our behalf. We also
disclose information when we are permitted or required by law to do so, such as
when information is provided to the IRS for tax purposes.
SECURITY
We maintain physical, electronic, and procedural safeguards to protect your
personal information. In addition, we insist that the distributors and other
companies that perform services for us limit access to your personal information
to authorized employees and agents, and maintain appropriate physical,
electronic and procedural safeguards.
This privacy notice applies to each fund in the RiverSource Family of Funds and
to Tri-Continental Corporation. It also applies to RiverSource Investments, LLC,
RiverSource Fund Distributors, Inc. and RiverSource Service Corporation with
respect to the investment advisory, distribution and shareholder services each
may provide to the funds.
F.1
PROXY SELIGMAN FUNDS PROXY
NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS/TRUSTEES OF THE
SELIGMAN FUND(S) LISTED BELOW.
The undersigned hereby constitutes and appoints Stephen R. Lewis, Jr., Scott R.
Plummer and Christopher O. Petersen, and each of them, as proxies for the
undersigned, with full power of substitution and resubstitution, and hereby
authorizes said proxies, and each of them, to represent and vote, as designated
on the reverse side, all shares of the Seligman Fund(s) listed below held of
record by the undersigned on April 3, 2009 at the Joint Special Meeting of
Shareholders to be held on June 2, 2009 (the Meeting), and at any adjournment
thereof. The undersigned hereby revokes any previous proxies with respect to
such shares of the undersigned.
THIS PROXY CARD, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S), AND, IN THE DISCRETION OF SUCH
PROXIES, UPON ANY AND ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF, INCLUDING, BUT NOT LIMITED TO, PROPOSING AND/OR
VOTING ON ADJOURNMENT OF THE MEETING WITH RESPECT TO THE PROPOSAL(S), INCLUDING,
BUT NOT LIMITED TO, IN THE EVENT THAT SUFFICIENT VOTES IN FAVOR OF ANY PROPOSAL
ARE NOT RECEIVED. IF THIS PROXY CARD IS SIGNED, DATED AND RETURNED WITH NO
VOTING INSTRUCTION INDICATED AS TO THE PROPOSAL(S) ON WHICH SHARES REPRESENTED
BY THE UNDERSIGNED ARE ENTITLED TO VOTE, SUCH SHARES SHALL BE VOTED FOR THE
PROPOSAL(S).
VOTE VIA TELEPHONE: 1-866-241-6192
VOTE VIA THE INTERNET: WWW.PROXY-DIRECT.COM
----------------- -----------------------
999 9999 9999 999
----------------- -----------------------
NOTE: Please sign exactly as your name
appears on this Proxy Card and date it. If
signing for estates, trusts or
corporations, title or capacity should be
stated. If shares are held jointly, each
holder must sign.
-------------------------------------------
Signature
-------------------------------------------
Additional Signature (if held jointly)
-------------------------------------------
Date RSF_19833_040609
FUND FUND
- ---- ----
Seligman Core Fixed Income Fund, Inc. Seligman Emerging Markets Fund
Seligman Global Growth Fund Seligman High-Yield Fund
Seligman Income and Growth Fund, Inc. Seligman International Growth Fund
Seligman U.S. Government Securities Fund
VOTING OPTIONS
READ YOUR PROXY STATEMENT AND HAVE IT AT HAND WHEN VOTING.
(GRAPHIC) (GRAPHIC) (GRAPHIC) (GRAPHIC)
VOTE ON THE INTERNET VOTE BY PHONE VOTE BY MAIL VOTE IN PERSON
LOG ON TO: CALL 1-866-241-6192 VOTE, SIGN AND DATE THIS PROXY ATTEND SHAREHOLDER MEETING
WWW.PROXY-DIRECT.COM FOLLOW THE RECORDED CARD AND RETURN IN THE MARQUETTE HOTEL
FOLLOW THE ON-SCREEN INSTRUCTIONS INSTRUCTIONS POSTAGE-PAID ENVELOPE 710 MARQUETTE AVENUE
AVAILABLE 24 HOURS AVAILABLE 24 HOURS MINNEAPOLIS, MN 55402
ON JUNE 2, 2009
# var, , page 1 of 2
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW. THIS PROXY CARD CONTAINS
PROPOSALS RELATING TO MULTIPLE FUNDS. IF YOU DO NOT OWN SHARES OF A FUND, "NOT
APPLICABLE" IS NOTED UNDER THAT PROPOSAL. YOU ARE ONLY PERMITTED TO VOTE ON
PROPOSALS OF FUND(S) FOR WHICH YOU OWN SHARES. IF YOU DO NOT INDICATE YOUR
VOTING INSTRUCTION FOR THE PROPOSALS THAT YOU ARE ENTITLED TO VOTE, YOUR PROXY
WILL BE VOTED FOR EACH SUCH PROPOSAL THAT YOU ARE ENTITLED TO VOTE.
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [x]
- --------------------------------------------------------------------------------
[ ] Mark this box to vote FOR all proposals of fund(s) for which you own
shares. (No other vote is necessary.)
- --------------------------------------------------------------------------------
1. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN CORE
FIXED INCOME FUND, INC. AND RIVERSOURCE DIVERSIFIED BOND FUND.
FOR AGAINST ABSTAIN
Seligman Core Fixed Income Fund, Inc. [ ] [ ] [ ]
2. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN
EMERGING MARKETS FUND AND THREADNEEDLE EMERGING MARKETS FUND.
FOR AGAINST ABSTAIN
Seligman Emerging Markets Fund [ ] [ ] [ ]
3. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN GLOBAL
GROWTH FUND AND THREADNEEDLE GLOBAL EQUITY FUND.
FOR AGAINST ABSTAIN
Seligman Global Growth Fund [ ] [ ] [ ]
4. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN
HIGH-YIELD FUND AND RIVERSOURCE HIGH YIELD BOND FUND.
FOR AGAINST ABSTAIN
Seligman High-Yield Fund [ ] [ ] [ ]
5. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN INCOME
AND GROWTH FUND, INC. AND RIVERSOURCE BALANCED FUND.
FOR AGAINST ABSTAIN
Seligman Income and Growth Fund, Inc. [ ] [ ] [ ]
6. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN
INTERNATIONAL GROWTH FUND AND RIVERSOURCE PARTNERS INTERNATIONAL SELECT
GROWTH FUND.
FOR AGAINST ABSTAIN
Seligman International Growth Fund [ ] [ ] [ ]
7. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN U.S.
GOVERNMENT SECURITIES FUND AND RIVERSOURCE SHORT DURATION U.S. GOVERNMENT
FUND.
FOR AGAINST ABSTAIN
Seligman U.S. Government Securities Fund [ ] [ ] [ ]
8. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE
APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A
SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL.
FOR AGAINST ABSTAIN
Seligman Emerging Markets Fund [ ] [ ] [ ]
9. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE
APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A
SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL.
FOR AGAINST ABSTAIN
Seligman Global Growth Fund [ ] [ ] [ ]
10. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE
APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A
SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL.
FOR AGAINST ABSTAIN
Seligman International Growth Fund [ ] [ ] [ ]
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SELIGMAN FUNDS SHAREHOLDER MEETING TO BE HELD ON JUNE 2, 2009.
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT
HTTPS://WWW.PROXY-DIRECT.COM/RFS19833
EVERY VOTE IS IMPORTANT! PLEASE VOTE TODAY USING ONE OF THE FOUR
AVAILABLE OPTIONS!
RSF_19833_040609
SELIGMAN CORE FIXED INCOME FUND, INC.
SELIGMAN GLOBAL FUND SERIES, INC.
Seligman Emerging Markets Fund
Seligman Global Growth Fund
Seligman International Growth Fund
SELIGMAN INCOME AND GROWTH FUND, INC.
SELIGMAN HIGH INCOME FUND SERIES
Seligman High-Yield Fund
Seligman U.S. Government Securities Fund
Combined Proxy Statement/Prospectus
April 17, 2009
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR YOUR FUND. WE
ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED COMBINED PROXY
STATEMENT/PROSPECTUS.
Q: WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to get shareholders' approval for certain kinds of
changes, like the proposals in this combined proxy statement/prospectus.
Q: IS MY VOTE IMPORTANT?
Absolutely! While the Board of Directors/Trustees (the "Board" or the "Board of
Directors/Trustees") of each Fund listed above has reviewed these proposals and
recommends that you approve them, you have the right to voice your opinion.
Until a Fund is sure that a quorum has been reached, it will continue to contact
shareholders asking them to vote.
Q: WHAT AM I BEING ASKED TO VOTE ON?
Shareholders are being asked to vote on:
THE REORGANIZATION PROPOSALS:
The reorganization (each a "Reorganization") of each Selling Fund (each a
"Selling Fund" and together, the "Selling Funds") into its corresponding Buying
Fund (each a "Buying Fund" and together, the "Buying Funds"), as noted in the
table below:
<Table>
<Caption>
SELLING FUND BUYING FUND
Seligman Core Fixed Income Fund, Inc. RiverSource Diversified Bond Fund
Seligman Emerging Markets Fund Threadneedle Emerging Markets Fund
Seligman Global Growth Fund Threadneedle Global Equity Fund
Seligman High-Yield Fund RiverSource High Yield Bond Fund
Seligman Income and Growth Fund, Inc. RiverSource Balanced Fund
Seligman International Growth Fund RiverSource Partners International Select
Growth Fund
Seligman U.S. Government Securities Fund RiverSource Short Duration U.S. Government
Fund
</Table>
If the Reorganization of your Selling Fund is approved by shareholders and the
other closing conditions are met, your shares of the Selling Fund will, in
effect, be converted into shares of the corresponding Buying Fund with the same
aggregate net asset value as your Selling Fund shares at the time of the
Reorganization. (Selling Funds and Buying Funds may be individually or
collectively referred to as a "Fund" or the "Funds.")
THE MANAGER OF MANAGERS PROPOSALS:
Shareholders of each of Seligman Emerging Markets Fund, Seligman Global Growth
Fund and Seligman International Growth Fund (each a "Seligman Subadvised Fund"
and together the "Seligman Subadvised Funds") are being asked to consider a
proposal to approve a policy authorizing RiverSource Investments, LLC
("RiverSource Investments" or the "investment manager"), the Seligman Subadvised
Funds' investment adviser, with the approval of the Board, to retain and to
replace subadvisers, or to modify subadvisory agreements, without obtaining
shareholder approval (each a "Manager of Managers Proposal" and together the
"Manager of Managers Proposals"). The approval of each Manager of Managers
Proposal will eliminate the need for shareholder meetings and related proxy
solicitation if the Board determines that such retention, replacement or
modification is appropriate, thereby reducing associated delays and costs.
We encourage you to read the full text of the combined proxy
statement/prospectus to obtain a more detailed understanding of the issues.
Q: WHY ARE THE REORGANIZATIONS BEING PROPOSED?
RiverSource Investments, a wholly-owned subsidiary of Ameriprise Financial, Inc.
and the investment manager of the RiverSource Funds, recently purchased all of
the outstanding capital stock of J. & W. Seligman & Co. Incorporated
("Seligman"), the former investment manager of the Seligman Funds, and became
the investment manager of the Seligman Funds. In connection with the purchase of
Seligman, the RiverSource Family of Funds now includes the Seligman Funds in
addition to funds branded "RiverSource," "RiverSource Partners" and
"Threadneedle". RiverSource Investments has proposed that the Selling Funds be
reorganized into the Buying Funds. The Reorganization of each Selling Fund into
the corresponding Buying Fund would result in a larger combined fund with the
same or similar investment objectives, principal investment strategies and
fundamental investment policies, which will allow for more focused distribution,
potentially increasing sales of and economies of scale in the combined fund.
Additionally, following each Reorganization, expenses of the larger combined
fund are expected to be lower than the expenses would have been for the Selling
Fund.
Q: IF APPROVED, WHEN WILL THE REORGANIZATIONS HAPPEN?
The Reorganizations will take place as soon as practicable following shareholder
approval, and are expected to close before the end of the third quarter of 2009.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE REORGANIZATION PROPOSALS?
After careful consideration, the Board of each Selling Fund recommends that you
vote FOR the Reorganization of your Selling Fund.
Q: WHY ARE THE MANAGER OF MANAGERS PROPOSALS BEING PROPOSED?
As explained above, in connection with its recent purchase of all of the
outstanding capital stock of Seligman, RiverSource Investments became the
investment manager of each of the Seligman Subadvised Funds. Shareholders of the
Seligman Subadvised Funds are being asked to approve the Manager of Managers
Proposals in order to conform the Seligman Subadvised Funds' policies in this
respect to the policies of the other funds in the RiverSource Family of Funds.
The Manager of Managers Proposals will allow the investment manager, with the
oversight and approval of the Board, the flexibility to appoint new subadvisers
and/or materially modify subadvisory agreements without the delay and cost
associated with holding a shareholder meeting.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE MANAGER OF MANAGER
PROPOSALS?
After careful consideration, the Board of each Seligman Subadvised Fund
recommends that you vote FOR the Manager of Managers proposal for your Seligman
Subadvised Fund.
Q: HOW DO I VOTE?
You can vote in one of four ways:
- - By telephone
- - By internet
- - By mail with the enclosed proxy card
- - In person at the meeting
Please refer to the enclosed proxy card for the telephone number and internet
address.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the combined proxy
statement/prospectus or about voting procedures, please call the Funds' proxy
solicitor, Computershare Fund Services, toll free at (866) 438-8932.
STATEMENT OF ADDITIONAL INFORMATION
RIVERSOURCE DIVERSIFIED INCOME SERIES, INC.
RiverSource Diversified Bond Fund
RIVERSOURCE GLOBAL SERIES, INC.
Threadneedle Emerging Markets Fund
Threadneedle Global Equity Fund
RIVERSOURCE HIGH YIELD INCOME SERIES, INC.
RiverSource High Yield Bond Fund
RIVERSOURCE INVESTMENT SERIES, INC.
RiverSource Balanced Fund
RIVERSOURCE INTERNATIONAL MANAGERS SERIES, INC.
RiverSource Partners International Select Growth Fund
RIVERSOURCE GOVERNMENT INCOME SERIES, INC.
RiverSource Short Duration U.S. Government Fund
APRIL 17, 2009
This Statement of Additional Information ("SAI") incorporates by reference the
following described Buying and Selling Fund documents, each of which has been
previously filed and accompanies this SAI.
1. The most recent annual report for Seligman Core Fixed Income Fund, Inc. for
the period ended Sept. 30, 2008
2. The most recent annual report for Seligman Emerging Markets Fund, for the
period ended Oct. 31, 2008;
3. The most recent annual report for Seligman Global Growth Fund, for the
period ended Oct. 31, 2008;
4. The most recent annual report for Seligman High-Yield Fund, Inc. for the
period ended Dec. 31, 2008;
5. The most recent annual report for Seligman Income and Growth Fund, Inc. for
the period ended Dec. 31, 2008;
6. The most recent annual report for Seligman International Growth Fund, for
the period ended Oct. 31, 2008;
7. The most recent annual report for Seligman U.S. Government Securities Fund
for the period ended Dec. 31, 2008;
8. The most recent annual report for RiverSource Balanced Fund, for the period
ended Sept. 30, 2008.
9. The most recent annual report for RiverSource Diversified Bond Fund, for
the period ended Aug. 31, 2008;
10. The most recent annual report for RiverSource High Yield Bond Fund for the
period ended May 31, 2008 and semiannual report, for the period ended Nov.
30, 2008.
11. The most recent annual report for RiverSource Partners International Select
Growth Fund, for the period ended Oct. 31, 2008;
12. The most recent annual report for RiverSource Short Duration U.S.
Government Fund for the period ended May 31, 2008 and semiannual report,
for the period ended Nov. 30, 2008.
13. The most recent annual report for Threadneedle Emerging Markets Fund, for
the period ended Oct. 31, 2008;
14. The most recent annual report for Threadneedle Global Equity Fund, for the
period ended Oct. 31, 2008;
15. The most recent SAI for the Buying Funds, dated Jan. 29, 2009.
This SAI is not a prospectus. It should be read in conjunction with the proxy
statement/prospectus, dated the same date as this SAI, which may be obtained by
calling (866) 438-8932 or writing to RiverSource Funds, 734 Ameriprise Financial
Center, Minneapolis, MN 55474.
In accordance with Securities and Exchange Commission requirements, pro forma
financial statements are not included for RiverSource Balanced Fund, RiverSource
Diversified Bond Fund and Threadneedle Global Equity Fund since the net asset
value of each Selling Fund is less than 10% of the net asset value of its
corresponding Buying Fund.
TABLE OF CONTENTS
<Table>
RIVERSOURCE HIGH YIELD BOND FUND PRO FORMA FINANCIALS
Introduction to Proposed Fund Reorganization.................................. 3
Pro Forma Combining Statement of Assets and Liabilities....................... 4
Pro Forma Combining Statement of Operations................................... 5
Notes to Pro Forma Financial Statements....................................... 6
Combined Portfolio of Investments............................................. 8
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND PRO FORMA FINANCIALS
Introduction to Proposed Fund Reorganization.................................. 21
Pro Forma Combining Statement of Assets and Liabilities....................... 22
Pro Forma Combining Statement of Operations................................... 23
Notes to Pro Forma Financial Statements....................................... 24
Combined Portfolio of Investments............................................. 26
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND PRO FORMA FINANCIALS
Introduction to Proposed Fund Reorganization.................................. 41
Pro Forma Combining Statement of Assets and Liabilities....................... 42
Pro Forma Combining Statement of Operations................................... 43
Notes to Pro Forma Financial Statements....................................... 44
Combined Portfolio of Investments............................................. 46
THREADNEEDLE EMERGING MARKETS FUND PRO FORMA FINANCIALS
Introduction to Proposed Fund Reorganization.................................. 57
Pro Forma Combining Statement of Assets and Liabilities....................... 58
Pro Forma Combining Statement of Operations................................... 59
Notes to Pro Forma Financial Statements....................................... 60
Combined Portfolio of Investments............................................. 62
</Table>
2
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
INTRODUCTION TO PROPOSED FUND REORGANIZATION
Nov. 30, 2008
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements
have been derived from financial statements prepared for the RiverSource High
Yield Bond Fund and the Seligman High-Yield Fund as of Nov. 30, 2008.
RiverSource High Yield Bond Fund invests primarily in high-yield debt
instruments including corporate debt securities and bank loans rated below
investment grade and may invest up to 25% of the Fund's net assets in high-yield
debt instruments of foreign issuers. Seligman High-Yield Fund invests primarily
in non-investment grade, high-yield securities which carry non-investment grade
ratings or are securities deemed to be below investment grade by RiverSource
Investments, LLC (the investment manager).
Under the proposed Agreement and Plan of Reorganization, share classes of
Seligman High-Yield Fund would be exchanged for share classes of RiverSource
High Yield Bond Fund.
<Table>
<Caption>
SELLING FUND BUYING FUND
- ------------------------------------------------------------------------------------------------------
Seligman High-Yield Fund Class A RiverSource High Yield Bond Fund Class A
- ------------------------------------------------------------------------------------------------------
Seligman High-Yield Fund Class B RiverSource High Yield Bond Fund Class B
- ------------------------------------------------------------------------------------------------------
Seligman High-Yield Fund Class C RiverSource High Yield Bond Fund Class C
- ------------------------------------------------------------------------------------------------------
Seligman High-Yield Fund Class R* RiverSource High Yield Bond Fund Class R2
- ------------------------------------------------------------------------------------------------------
Seligman High-Yield Fund Class I* RiverSource High Yield Bond Fund Class R5
- ------------------------------------------------------------------------------------------------------
</Table>
* Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman High-Yield Fund will be redesignated as Class R2 and Class R5
shares, respectively.
Note: RiverSource High Yield Bond Fund also offers Class I, Class R3, Class R4
and Class W shares.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivor,
RiverSource High Yield Bond Fund, as if the transaction had occurred at the
beginning of the fiscal year ending Nov. 30, 2008.
3
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
RIVERSOURCE
HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA
NOV. 30, 2008 (UNAUDITED) BOND FUND FUND ADJUSTMENTS
ASSETS
Investments in securities, at cost
Unaffiliated issuers $ 1,211,689,995 $ 163,289,838 $ --
Affiliated money market fund $ 66,162,340 $ -- $ --
Other affiliated issuers $ 13,076,335 $ -- $ --
----------------------------------------------------------
Investments in securities, at value
Unaffiliated issuers $ 822,980,918 $ 127,106,462 $ --
Affiliated money market fund $ 66,162,340 $ -- $ --
Other affiliated issuers $ 11,527 $ -- $ --
Cash -- 3,632 --
Capital shares receivable 2,727,895 4,197 --
Dividends and accrued interest receivable 24,621,619 3,901,780 --
Receivable for investment securities sold 10,722,081 1,823,750 --
Investment management services fees receivable (Note 2) -- -- 34,185(a)
Transfer agency fees receivable (Note 2) -- -- 392,580(b)
Receivable from RiverSource Investments, LLC (Note 2) -- -- 681,805(f)
Other receivable 220,452 -- --
Prepaid expenses -- 108,057 --
Other assets -- 31,087 --
- -------------------------------------------------------------------------------------------------------------------
Total assets 927,446,832 132,978,965 1,108,570
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
Dividends payable to shareholders 1,079,069 620,026 --
Capital shares payable 1,174,736 416,745 --
Payable for reorganization costs (Note 2) -- -- 133,709(g)
Payable for investment securities purchased 47,332,115 2,428,444 --
Accrued investment management services fees (Note 2) 28,261 74,785 (103,046)(a)
Accrued distribution fees 177,586 51,162 --
Accrued transfer agency fees (Note 2) 10,097 135,884 (145,981)(b)
Accrued administrative services fees (Note 2) 3,250 -- 136,428(c)
Accrued plan administration services fees (Note 2) 280 -- 11,230(d)
Other accrued expenses (Note 2) 195,332 142,408 (264,597)(e)
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 50,000,726 3,869,454 (232,257)
- -------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 877,446,106 $ 129,109,511 $1,340,827
- -------------------------------------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value for RiverSource High
Yield Bond Fund and $.001 par value for Seligman
High-Yield Fund (Notes 2 and 3) $ 4,577,329 $ 69,634 $ 610,679(g)
Additional paid-in capital (Notes 2 and 3) 2,703,836,895 1,607,816,870 (744,388)(g)
Undistributed (excess of distributions over) net
investment income (Note 2) (1,038,245) 397,138 1,474,536
Accumulated net realized gain (loss) (1,428,376,440) (1,442,990,755) --
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in
foreign currencies (401,553,433) (36,183,376) --
- -------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 877,446,106 $ 129,109,511 $1,340,827
- -------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares:
Class A $ 713,352,124 $ 80,764,011 $ 838,750
Class B $ 89,891,192 $ 7,772,228 $ 80,716
Class C $ 11,662,478 $ 32,094,382 $ 333,306
Class I $ 49,225,589 N/A $ --
Class R2 $ 3,413 $ 3,465,127 $ 35,986
Class R3 $ 503,624 N/A $ --
Class R4 $ 876,565 N/A $ --
Class R5 $ 3,253 $ 5,013,763 $ 52,069
Class W $ 11,927,868 N/A $ --
Shares outstanding (Note 3):
Class A shares 372,021,638 43,609,141 --
Class B shares 46,900,987 4,196,149 --
Class C shares 6,121,775 17,254,169 --
Class I shares 25,697,857 N/A --
Class R2 shares 1,775 1,867,498 --
Class R3 shares 261,213 N/A --
Class R4 shares 457,103 N/A --
Class R5 shares 1,695 2,706,982 --
Class W shares 6,268,887 N/A --
Net asset value per share of outstanding capital
stock:
Class A $ 1.92 $ 1.85 $ --
Class B $ 1.92 $ 1.85 $ --
Class C $ 1.91 $ 1.86 $ --
Class I $ 1.92 N/A $ --
Class R2 $ 1.92 $ 1.86 $ --
Class R3 $ 1.93 N/A $ --
Class R4 $ 1.92 N/A $ --
Class R5 $ 1.92 $ 1.85 $ --
Class W $ 1.90 N/A $ --
- -------------------------------------------------------------------------------------------------------------------
<Caption>
RIVERSOURCE
HIGH YIELD
BOND FUND
PRO FORMA
NOV. 30, 2008 (UNAUDITED) COMBINED
ASSETS
Investments in securities, at cost
Unaffiliated issuers $ 1,374,979,833
Affiliated money market fund $ 66,162,340
Other affiliated issuers $ 13,076,335
------------------
Investments in securities, at value
Unaffiliated issuers $ 950,087,380
Affiliated money market fund $ 66,162,340
Other affiliated issuers $ 11,527
Cash 3,632
Capital shares receivable 2,732,092
Dividends and accrued interest receivable 28,523,399
Receivable for investment securities sold 12,545,831
Investment management services fees receivable (Note 2) 34,185
Transfer agency fees receivable (Note 2) 392,580
Receivable from RiverSource Investments, LLC (Note 2) 681,805
Other receivable 220,452
Prepaid expenses 108,057
Other assets 31,087
- ---------------------------------------------------------------------------
Total assets 1,061,534,367
- ---------------------------------------------------------------------------
LIABILITIES
Dividends payable to shareholders 1,699,095
Capital shares payable 1,591,481
Payable for reorganization costs (Note 2) 133,709
Payable for investment securities purchased 49,760,559
Accrued investment management services fees (Note 2) --
Accrued distribution fees 228,748
Accrued transfer agency fees (Note 2) --
Accrued administrative services fees (Note 2) 139,678
Accrued plan administration services fees (Note 2) 11,510
Other accrued expenses (Note 2) 73,143
- ---------------------------------------------------------------------------
Total liabilities 53,637,923
- ---------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 1,007,896,444
- ---------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value for RiverSource High
Yield Bond Fund and $.001 par value for Seligman
High-Yield Fund (Notes 2 and 3) $ 5,257,642
Additional paid-in capital (Notes 2 and 3) 4,310,909,377
Undistributed (excess of distributions over) net
investment income (Note 2) 833,429
Accumulated net realized gain (loss) (2,871,367,195)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in
foreign currencies (437,736,809)
- ---------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 1,007,896,444
- ---------------------------------------------------------------------------
Net assets applicable to outstanding shares:
Class A $ 794,954,885
Class B $ 97,744,136
Class C $ 44,090,166
Class I $ 49,225,589
Class R2 $ 3,504,526
Class R3 $ 503,624
Class R4 $ 876,565
Class R5 $ 5,069,085
Class W $ 11,927,868
Shares outstanding (Note 3):
Class A shares 414,523,076
Class B shares 50,991,062
Class C shares 23,099,622
Class I shares 25,697,857
Class R2 shares 1,825,271
Class R3 shares 261,213
Class R4 shares 457,103
Class R5 shares 2,640,149
Class W shares 6,268,887
Net asset value per share of outstanding capital
stock:
Class A $ 1.92
Class B $ 1.92
Class C $ 1.91
Class I $ 1.92
Class R2 $ 1.92
Class R3 $ 1.93
Class R4 $ 1.92
Class R5 $ 1.92
Class W $ 1.90
- ---------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
4
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
<Table>
<Caption>
RIVERSOURCE RIVERSOURCE
RIVERSOURCE SELIGMAN HIGH YIELD BOND HIGH YIELD BOND
HIGH YIELD BOND HIGH-YIELD FUND PRO FORMA FUND PRO FORMA
YEAR ENDED NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
INVESTMENT INCOME
Income:
Interest $ 124,067,760 $ 22,473,977 $ -- $ 146,541,737
Dividends -- 266,828 -- 266,828
Income distributions from affiliated money
market fund 1,517,178 -- -- 1,517,178
Fee income from securities lending 22,882 -- -- 22,882
- --------------------------------------------------------------------------------------------------------------------
Total income 125,607,820 22,740,805 -- 148,348,625
- --------------------------------------------------------------------------------------------------------------------
Expenses:
Investment management services fees (Note 2) 7,820,685 1,417,953 (137,231)(a) 9,101,407
Distribution fees
Class A 2,638,990 335,142 -- 2,974,132
Class B 1,596,920 168,117 -- 1,765,037
Class C 175,066 533,476 -- 708,542
Class R2 41 22,363 -- 22,404
Class R3 183 -- -- 183
Class W 75,149 -- -- 75,149
Transfer agency fees (Note 2)
Class A 1,796,231 541,812 (353,808)(b) 1,984,235
Class B 286,547 67,752 (45,432)(b) 308,867
Class C 30,617 214,354 (122,042)(b) 122,929
Class R2 4 18,132 (15,886)(b) 2,250
Class R3 37 -- -- 37
Class R4 444 -- -- 444
Class R5 3 5,071 (1,393)(b) 3,681
Class W 60,119 -- -- 60,119
Administrative services fees (Note 2) 878,544 -- 136,428(c) 1,014,972
Plan administration services fees (Note 2)
Class R2 20 -- 11,230(d) 11,250
Class R3 183 -- -- 183
Class R4 2,218 -- -- 2,218
Compensation of board members (Note 2) 29,856 19,110 (14,254)(e) 34,712
Custodian fees (Note 2) 140,800 93,296 (70,396)(e) 163,700
Printing and postage (Note 2) 296,530 53,952 (5,724)(e) 344,758
Registration fees (Note 2) 99,374 109,010 (92,848)(e) 115,536
Professional fees (Note 2) 67,557 73,395 (62,407)(e) 78,545
Other (Note 2) 39,441 25,383 (18,968)(e) 45,856
- --------------------------------------------------------------------------------------------------------------------
Total expenses 16,035,559 3,698,318 (792,731) 18,941,146
Expenses waived/reimbursed by RiverSource
Investments, LLC (Note 2) (663,066) -- (681,805)(f) (1,344,871)
Earnings and bank fee credits on cash balances (38,953) -- -- (38,953)
- --------------------------------------------------------------------------------------------------------------------
Total net expenses 15,333,540 3,698,318 (1,474,536) 17,557,322
- --------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net 110,274,280 19,042,487 1,474,536 130,791,303
- --------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (117,233,769) (72,066,506) -- (189,300,275)
Swap transactions (7,852,423) -- -- (7,852,423)
- --------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (125,086,192) (72,066,506) -- (197,152,698)
Net change in unrealized appreciation
(depreciation) on investments
and on translation of assets and liabilities
in foreign currencies (312,462,142) (25,895,747) -- (338,357,889)
- --------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign
currencies (437,548,334) (97,962,253) -- (535,510,587)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(327,274,054) $(78,919,766) $ 1,474,536 $(404,719,284)
- --------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
5
RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND)
SELIGMAN HIGH-YIELD FUND (SELLING FUND)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited as to Nov. 30, 2008)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two Funds at, and for, the
12-month period ended Nov. 30, 2008. These statements have been derived from
financial statements prepared for the RiverSource High Yield Bond Fund and the
Seligman High-Yield Fund as of Nov. 30, 2008.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
RiverSource High Yield Bond Fund invests primarily in high-yield debt
instruments including corporate debt securities and bank loans rated below
investment grade and may invest up to 25% of the Fund's net assets in high-yield
debt instruments of foreign issuers.
Seligman High-Yield Fund invests primarily in non-investment grade, high-yield
securities which carry non-investment grade ratings or are securities deemed to
be below investment grade by RiverSource Investments, LLC (the investment
manager).
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of Seligman High-Yield Fund in exchange for Class A, Class B, Class
C, Class R2 and Class R5 shares of RiverSource High Yield Bond Fund under U.S.
generally accepted accounting principles. The pro forma statements reflect
estimates for the combined RiverSource High Yield Bond Fund based on the
increased asset level of the Reorganization and associated economies of scale,
adjusted to reflect current fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the Funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, RiverSource High Yield
Bond Fund, as if the transaction had occurred at the beginning of the year
presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect the change in investment management services fee due to the
Reorganization.
(b) To reflect the change in transfer agent fees due to the Reorganization
including adjusting for closed account fees for each Seligman High-Yield
Fund shareholder account that will be closed on the system as a result of
the Reorganization.
(c) To reflect the change in administrative services fees due to the
Reorganization.
(d) To reflect the change in plan administration services fees due to the
Reorganization.
(e) To reflect the change in other fees due to the Reorganization.
(f) To adjust the expense reimbursement to reflect the net reduction in fees
resulting from the Reorganization per the agreement (through May 31, 2009)
by RiverSource Investments, LLC and its affiliates to waive certain fees and
absorb certain expenses of the combined fund.
(g) Includes the impact of estimated Reorganization costs of $133,709, none of
which are recurring expenses.
6
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C, Class R2 and Class R5 shares of RiverSource High Yield Bond
Fund as if the Reorganization were to have taken place on Nov. 30, 2008. The
following table reflects the number of RiverSource High Yield Bond Fund shares
assumed to be issued to the shareholders of the Seligman High-Yield Fund.
<Table>
<Caption>
SELIGMAN RIVERSOURCE TOTAL
HIGH-YIELD FUND HIGH YIELD BOND FUND PRO FORMA
SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------
Class A 42,501,438 372,021,638 414,523,076
- ------------------------------------------------------------------------------------------------------------------
Class B 4,090,075 46,900,987 50,991,062
- ------------------------------------------------------------------------------------------------------------------
Class C 16,977,847 6,121,775 23,099,622
- ------------------------------------------------------------------------------------------------------------------
Class I N/A 25,697,857 25,697,857
- ------------------------------------------------------------------------------------------------------------------
Class R2* 1,823,496 1,775 1,825,271
- ------------------------------------------------------------------------------------------------------------------
Class R3 N/A 261,213 261,213
- ------------------------------------------------------------------------------------------------------------------
Class R4 N/A 457,103 457,103
- ------------------------------------------------------------------------------------------------------------------
Class R5* 2,638,454 1,695 2,640,149
- ------------------------------------------------------------------------------------------------------------------
Class W N/A 6,268,887 6,268,887
- ------------------------------------------------------------------------------------------------------------------
</Table>
* Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman High-Yield Fund will be redesignated as Class R2 and Class R5
shares, respectively.
7
COMBINED PORTFOLIO OF INVESTMENTS
RiverSource High Yield Bond Fund
NOV. 30, 2008 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (80.0%)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
MORTGAGE-BACKED (0.2%)(F)
Countrywide Alternative Loan
Trust
Collateralized Mtge
Obligation
Series 2007-OH3 Cl A3
09/25/47 1.90% $ 8,876,968 $ -- $ 8,876,968(i) $ 2,073,730 $ -- $ 2,073,730
------------------------------------------
AEROSPACE & DEFENSE (1.8%)
Alion Science and Technology
02/01/15 10.25 10,600,000 1,300,000 11,900,000 5,830,000 721,500 6,551,500
L-3 Communications
06/15/12 7.63 983,000 -- 983,000 904,360 -- 904,360
07/15/13 6.13 2,035,000 -- 2,035,000 1,729,750 -- 1,729,750
01/15/15 5.88 -- 2,000,000 2,000,000 -- 1,630,000 1,630,000
L-3 Communications
Series B
10/15/15 6.38 8,575,000 -- 8,575,000 7,117,250 -- 7,117,250
Moog
Sr Sub Nts
06/15/18 7.25 629,000 -- 629,000(d) 484,330 -- 484,330
------------------------------------------
Total 16,065,690 2,351,500 18,417,190
------------------------------------------
AUTOMOTIVE (0.1%)
Ford Motor
Sr Unsecured
07/16/31 7.45 -- 4,250,000 4,250,000 -- 1,083,750 1,083,750
------------------------------------------
BROKERAGE (0.1%)
Lehman Brothers Holdings
Sr Unsecured
05/02/18 6.88 6,150,000 -- 6,150,000(b,g,o) 615,000 -- 615,000
------------------------------------------
BUILDING MATERIALS (0.8%)
Gibraltar Inds
Series B
12/01/15 8.00 11,907,000 1,590,000 13,497,000 7,441,875 1,001,700 8,443,575
------------------------------------------
CHEMICALS (4.6%)
Chemtura
06/01/16 6.88 14,736,000 2,285,000 17,021,000 8,104,800 1,268,175 9,372,975
Hexion US Finance/Nova
Scotia Finance
Sr Secured
11/15/14 9.75 6,881,000 -- 6,881,000 3,578,120 -- 3,578,120
INVISTA
Sr Unsecured
05/01/12 9.25 16,861,000 2,685,000 19,546,000(d) 13,320,190 1,973,475 15,293,665
MacDermid
Sr Sub Nts
04/15/17 9.50 7,518,000 1,000,000 8,518,000(d) 3,909,360 545,000 4,454,360
Momentive Performance
Pay-in-kind
12/01/14 10.13 15,620,000 3,000,000 18,620,000(n) 4,607,900 930,525 5,538,425
NALCOnrg
11/15/11 7.75 3,370,000 -- 3,370,000 2,990,875 -- 2,990,875
11/15/13 8.88 5,155,000 825,000 5,980,000 4,124,000 664,125 4,788,125
------------------------------------------
Total 40,635,245 5,381,300 46,016,545
------------------------------------------
CONSUMER CYCLICAL SERVICES (0.8%)
Service Corp Intl
Sr Unsecured
06/15/17 7.00 -- 1,725,000 1,725,000 -- 1,250,625 1,250,625
</Table>
8
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
West Corp
10/15/16 11.00 $14,909,000 $2,000,000 $ 16,909,000 $ 6,410,870 $ 870,000 $ 7,280,870
------------------------------------------
Total 6,410,870 2,120,625 8,531,495
------------------------------------------
CONSUMER PRODUCTS (2.1%)
AAC Group Holding
Sr Unsecured
10/01/12 10.25 5,800,000 -- 5,800,000(d) 5,220,000 -- 5,220,000
American Achievement Group
Holding
Sr Unsecured Pay-in-kind
10/01/12 14.75 1,632,455 -- 1,632,455(n) 1,552,873 -- 1,552,873
Jarden
05/01/17 7.50 7,263,000 1,335,000 8,598,000 4,720,950 874,425 5,595,375
Sealy Mattress
06/15/14 8.25 2,256,000 -- 2,256,000 1,229,520 -- 1,229,520
Visant Holding
Sr Disc Nts
(Zero coupon through 12-
01-08, thereafter 10.25%)
12/01/13 8.91 4,815,000 2,525,000 7,340,000(m) 3,514,950 1,862,188 5,377,138
Visant Holding
Sr Nts
12/01/13 8.75 3,080,000 -- 3,080,000 2,217,600 -- 2,217,600
------------------------------------------
Total 18,455,893 2,736,613 21,192,506
------------------------------------------
ELECTRIC (5.7%)
AES
Sr Unsecured
09/15/10 9.38 -- 2,250,000 2,250,000 -- 1,946,250 1,946,250
Allegheny Energy Supply
Sr Unsecured
03/15/11 7.80 -- 2,000,000 2,000,000 -- 1,910,000 1,910,000
Dynegy Holdings
Sr Unsecured
02/15/12 8.75 -- 1,000,000 1,000,000 -- 847,500 847,500
05/01/16 8.38 4,852,000 2,500,000 7,352,000 3,372,140 1,750,000 5,122,140
05/15/18 7.13 8,020,000 -- 8,020,000 4,731,800 -- 4,731,800
Edison Mission Energy
Sr Unsecured
06/15/16 7.75 1,672,000 -- 1,672,000 1,308,340 -- 1,308,340
05/15/17 7.00 -- 1,950,000 1,950,000 -- 1,472,250 1,472,250
Energy Future Holdings
11/15/14 5.55 -- 2,000,000 2,000,000 -- 968,514 968,514
11/01/17 10.88 10,711,000 955,000 11,666,000(d) 6,908,595 620,750 7,529,345
Midwest Generation LLC
Pass-Through Ctfs Series
A
07/02/09 8.30 -- 697,732 697,732 -- 668,078 668,078
Midwest Generation LLC
Pass-Through Ctfs Series
B
01/02/16 8.56 5,858,628 -- 5,858,628 5,360,644 -- 5,360,644
Mirant Americas Generation
LLC
Sr Unsecured
10/01/21 8.50 -- 500,000 500,000 -- 352,500 352,500
Mirant North America LLC
12/31/13 7.38 7,769,000 -- 7,769,000 6,720,185 -- 6,720,185
NRG Energy
02/01/16 7.38 -- 1,900,000 1,900,000 -- 1,548,500 1,548,500
01/15/17 7.38 14,165,000 -- 14,165,000 11,438,238 -- 11,438,238
Sierra Pacific Resources
03/15/14 8.63 -- 609,000 609,000 -- 567,571 567,571
Texas Competitive Electric
Holdings LLC
11/01/15 10.25 7,395,000 -- 7,395,000(d) 4,732,800 -- 4,732,800
------------------------------------------
Total 44,572,742 12,651,913 57,224,655
------------------------------------------
</Table>
9
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
ENTERTAINMENT (1.3%)
AMC Entertainment
02/01/16 11.00 $ 5,748,000 $1,000,000 $ 6,748,000 $ 4,081,080 $ 715,000 $ 4,796,080
HRP Myrtle Beach Operations
Sr Secured
04/01/12 0.00 -- 1,000,000 1,000,000(b,d) -- 445,000 445,000
United Artists Theatre
Circuit
Pass-Through Ctfs Series
BB5
07/01/15 9.30 6,368,250 -- 6,368,250(k) 5,986,154 -- 5,986,154
United Artists Theatre
Circuit
Pass-Through Ctfs Series
BC3
07/01/15 9.30 2,047,393 -- 2,047,393(k) 1,924,550 -- 1,924,550
------------------------------------------
Total 11,991,784 1,160,000 13,151,784
------------------------------------------
ENVIRONMENTAL (0.3%)
Browning-Ferris Inds
09/15/35 7.40 -- 1,500,000 1,500,000 -- 1,087,500 1,087,500
Clean Harbors
Sr Secured
07/15/12 11.25 957,000 -- 957,000 972,551 -- 972,551
Crown Cork & Seal
Sr Unsecured
04/15/23 8.00 -- 1,500,000 1,500,000 -- 1,113,750 1,113,750
------------------------------------------
Total 972,551 2,201,250 3,173,801
------------------------------------------
FOOD AND BEVERAGE (4.0%)
ASG Consolidated LLC/Finance
Sr Disc Nts
11/01/11 11.50 19,195,000 1,500,000 20,695,000 16,411,725 1,290,000 17,701,725
Constellation Brands
12/01/11 8.38 -- 500,000 500,000 -- 437,500 437,500
Cott Beverages USA
12/15/11 8.00 16,541,000 2,200,000 18,741,000 9,759,190 1,309,000 11,068,190
Del Monte
12/15/12 8.63 -- 1,950,000 1,950,000 -- 1,774,500 1,774,500
02/15/15 6.75 -- 750,000 750,000 -- 615,000 615,000
Pinnacle Foods Finance LLC
04/01/15 9.25 -- 1,515,000 1,515,000 -- 1,007,475 1,007,475
04/01/17 10.63 13,508,000 -- 13,508,000 7,564,480 -- 7,564,480
Smithfield Foods
Sr Unsecured
08/01/11 7.00 -- 650,000 650,000 -- 393,250 393,250
07/01/17 7.75 -- 1,000,000 1,000,000 -- 527,500 527,500
------------------------------------------
Total 33,735,395 7,354,225 41,089,620
------------------------------------------
GAMING (6.4%)
Boyd Gaming
Sr Sub Nts
02/01/16 7.13 15,590,000 2,175,000 17,765,000 8,808,350 1,239,750 10,048,100
Circus & Eldorado Jt
Venture/Silver Legacy
Capital
1st Mtge
03/01/12 10.13 9,215,000 -- 9,215,000 5,943,675 -- 5,943,675
Firekeepers Development
Authority
Sr Secured
05/01/15 13.88 7,160,000 -- 7,160,000(d) 4,725,600 -- 4,725,600
Fontainebleau Las Vegas
Holdings LLC/Capital
2nd Mtge
06/15/15 10.25 14,586,000 -- 14,586,000(d) 1,896,180 -- 1,896,180
Indianapolis Downs
LLC/Capital
Sr Secured
11/01/12 11.00 7,040,000 1,495,000 8,535,000(d) 3,308,800 717,600 4,026,400
MGM Mirage
04/01/13 6.75 2,475,000 -- 2,475,000 1,287,000 -- 1,287,000
06/01/16 7.50 4,450,000 -- 4,450,000 2,291,750 -- 2,291,750
MGM Mirage
Sr Secured
11/15/13 13.00 5,150,000 785,000 5,935,000(d) 4,377,500 659,400 5,036,900
</Table>
10
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Pokagon Gaming Authority
Sr Nts
06/15/14 10.38 $ 8,325,000 $1,000,000 $ 9,325,000(d) $ 7,034,625 $ 850,000 $ 7,884,625
San Pasqual Casino
09/15/13 8.00 -- 1,000,000 1,000,000(d) -- 745,000 745,000
Shingle Springs Tribal
Gaming Authority
Sr Nts
06/15/15 9.38 15,499,000 2,700,000 18,199,000(d) 7,362,025 1,228,500 8,590,525
Tunica-Biloxi Gaming
Authority
Sr Unsecured
11/15/15 9.00 10,245,000 -- 10,245,000(d) 8,759,475 -- 8,759,475
Wynn Las Vegas LLC/Capital
1st Mtge
12/01/14 6.63 3,700,000 1,000,000 4,700,000 2,617,750 712,500 3,330,250
------------------------------------------
Total 58,412,730 6,152,750 64,565,480
------------------------------------------
GAS DISTRIBUTORS (0.8%)
Southwestern Energy
Sr Nts
02/01/18 7.50 4,875,000 855,000 5,730,000(d) 4,119,375 726,750 4,846,125
Williams Partners LP/Finance
Sr Unsecured
02/01/17 7.25 4,835,000 -- 4,835,000 3,795,475 -- 3,795,475
------------------------------------------
Total 7,914,850 726,750 8,641,600
------------------------------------------
GAS PIPELINES (0.7%)
El Paso
Sr Unsecured
06/15/17 7.00 -- 2,000,000 2,000,000 -- 1,433,986 1,433,986
Southern Star Central
Sr Nts
03/01/16 6.75 6,815,000 -- 6,815,000 5,520,150 -- 5,520,150
------------------------------------------
Total 5,520,150 1,433,986 6,954,136
------------------------------------------
HEALTH CARE (6.1%)
Community Health Systems
07/15/15 8.88 8,208,000 1,000,000 9,208,000 6,586,920 807,500 7,394,420
DaVita
03/15/13 6.63 4,421,000 -- 4,421,000 3,912,585 -- 3,912,585
03/15/15 7.25 4,236,000 1,500,000 5,736,000 3,664,140 1,305,000 4,969,140
HCA
Sr Secured
11/15/14 9.13 -- 500,000 500,000 -- 407,500 407,500
11/15/16 9.25 1,255,000 500,000 1,755,000 1,019,688 407,500 1,427,188
HCA
Sr Secured Pay-in-kind
11/15/16 9.63 2,860,000 415,000 3,275,000(n) 2,059,200 299,837 2,359,037
HCA
Sr Unsecured
02/15/16 6.50 12,190,000 2,000,000 14,190,000 6,826,400 1,130,000 7,956,400
11/06/33 7.50 -- 1,900,000 1,900,000 -- 940,500 940,500
IASIS Healthcare LLC/Capital
06/15/14 8.75 -- 1,800,000 1,800,000 -- 1,377,000 1,377,000
NMH Holdings
Sr Unsecured Pay-in-kind
06/15/14 9.94 5,927,654 -- 5,927,654(d,i,n) 4,208,634 -- 4,208,634
Omnicare
12/15/13 6.75 4,638,000 -- 4,638,000 3,872,730 -- 3,872,730
12/15/15 6.88 -- 1,350,000 1,350,000 -- 1,100,250 1,100,250
Omnicare
Sr Sub Nts
06/01/13 6.13 3,765,000 -- 3,765,000 3,012,000 -- 3,012,000
Select Medical
Sr Unsecured
09/15/15 8.83 15,812,000 2,250,000 18,062,000(i) 9,012,840 1,293,750 10,306,590
</Table>
11
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Vanguard Health Holding I
LLC
(Zero coupon through 10-
01-09, thereafter 11.25%)
10/01/15 7.09 $ 2,955,000 $ -- $ 2,955,000(m) $ 2,275,350 $ -- $ 2,275,350
Vanguard Health Holding II
LLC
10/01/14 9.00 6,532,000 1,000,000 7,532,000 5,225,600 805,000 6,030,600
------------------------------------------
Total 51,676,087 9,873,837 61,549,924
------------------------------------------
HOME CONSTRUCTION (1.4%)
K Hovnanian Enterprises
Sr Secured
05/01/13 11.50 7,930,000 875,000 8,805,000 6,066,450 673,750 6,740,200
Norcraft Holdings LP/Capital
Sr Disc Nts
09/01/12 9.75 6,200,000 -- 6,200,000 4,960,000 -- 4,960,000
Toll Corp
12/01/11 8.25 -- 250,000 250,000 -- 206,250 206,250
William Lyon Homes
02/15/14 7.50 12,380,000 -- 12,380,000 2,352,200 -- 2,352,200
------------------------------------------
Total 13,378,650 880,000 14,258,650
------------------------------------------
INDEPENDENT ENERGY (6.0%)
Chesapeake Energy
07/15/13 7.63 -- 3,050,000 3,050,000 -- 2,096,875 2,096,875
08/15/14 7.00 5,722,000 -- 5,722,000 4,348,720 -- 4,348,720
01/15/16 6.63 6,892,000 -- 6,892,000 4,807,170 -- 4,807,170
01/15/18 6.25 2,520,000 -- 2,520,000 1,650,600 -- 1,650,600
Compton Petroleum Finance
12/01/13 7.63 10,221,000 -- 10,221,000(c) 4,190,610 -- 4,190,610
Connacher Oil and Gas
Sr Secured
12/15/15 10.25 9,160,000 1,485,000 10,645,000(c,d) 4,763,200 779,625 5,542,825
EXCO Resources
01/15/11 7.25 9,018,000 1,300,000 10,318,000 6,943,860 1,007,500 7,951,360
Forest Oil
06/15/19 7.25 -- 2,000,000 2,000,000 -- 1,380,000 1,380,000
Hilcorp Energy I LP/Finance
Sr Unsecured
11/01/15 7.75 9,690,000 -- 9,690,000(d) 6,928,350 -- 6,928,350
PetroHawk Energy
07/15/13 9.13 -- 1,000,000 1,000,000 -- 770,000 770,000
Quicksilver Resources
08/01/15 8.25 6,324,000 -- 6,324,000 4,110,600 -- 4,110,600
04/01/16 7.13 3,900,000 1,700,000 5,600,000 2,242,500 986,000 3,228,500
Range Resources
05/15/16 7.50 3,250,000 -- 3,250,000 2,697,500 -- 2,697,500
05/01/18 7.25 2,010,000 1,000,000 3,010,000 1,602,975 798,750 2,401,725
SandRidge Energy
Pay-in-kind
04/01/15 8.63 11,738,000 1,625,000 13,363,000(n) 7,453,630 1,040,000 8,493,630
------------------------------------------
Total 51,739,715 8,858,750 60,598,465
------------------------------------------
LODGING (0.3%)
Felcor Lodging
Sr Unsecured
06/01/11 9.00 -- 2,750,000 2,750,000 -- 1,918,125 1,918,125
Host Hotels & Resorts
Sr Secured
06/01/16 6.75 -- 2,000,000 2,000,000 -- 1,340,000 1,340,000
------------------------------------------
Total -- 3,258,125 3,258,125
------------------------------------------
MEDIA CABLE (3.5%)
Charter Communications
Holdings I LLC/Capital
Sr Secured
10/01/15 11.00 -- 720,000 720,000 -- 194,400 194,400
Charter Communications
Holdings II LLC/Capital
10/01/13 10.25 7,680,000 -- 7,680,000 3,494,400 -- 3,494,400
10/01/13 10.25 2,860,000 415,000 3,275,000(d) 1,215,500 178,450 1,393,950
</Table>
12
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Charter Communications
Holdings II LLC/Capital
Sr Unsecured
09/15/10 10.25 $ -- $1,500,000 $ 1,500,000 $ -- $ 768,750 $ 768,750
Charter Communications
Holdings II LLC/Capital
Sr Unsecured Series B
09/15/10 10.25 4,617,000 -- 4,617,000 2,193,075 -- 2,193,075
Charter Communications
Operating LLC/Capital
Sr Secured
04/30/14 8.38 4,056,000 2,000,000 6,056,000(d) 2,758,080 1,370,000 4,128,080
CSC Holdings
Sr Unsecured
04/15/12 6.75 -- 1,000,000 1,000,000 -- 842,500 842,500
06/15/15 8.50 12,095,000 2,200,000 14,295,000(d) 9,676,000 1,787,500 11,463,500
Mediacom Broadband LLC
Sr Unsecured
10/15/15 8.50 -- 1,000,000 1,000,000 -- 715,000 715,000
Mediacom LLC/Capital
Sr Unsecured
01/15/13 9.50 7,220,000 -- 7,220,000 5,920,400 -- 5,920,400
Virgin Media Finance
04/15/14 8.75 5,145,000 800,000 5,945,000(c) 3,717,263 582,000 4,299,263
------------------------------------------
Total 28,974,718 6,438,600 35,413,318
------------------------------------------
MEDIA NON CABLE (9.1%)
Dex Media
Sr Disc Nts
11/15/13 9.00 4,505,000 3,225,000 7,730,000 585,650 435,375 1,021,025
Dex Media West LLC/Finance
Sr Sub Nts Series B
08/15/13 9.88 3,819,000 500,000 4,319,000 840,180 111,250 951,430
DIRECTV Holdings
LLC/Financing
06/15/15 6.38 5,175,000 1,675,000 6,850,000 4,204,688 1,369,313 5,574,001
05/15/16 7.63 7,266,000 -- 7,266,000 6,194,265 -- 6,194,265
EchoStar DBS
10/01/14 6.63 5,040,000 2,550,000 7,590,000 3,603,600 1,829,625 5,433,225
02/01/16 7.13 10,449,000 -- 10,449,000 7,418,790 -- 7,418,790
Intelsat
Sr Unsecured
08/15/14 9.25 6,925,000 1,600,000 8,525,000(d) 5,886,250 1,388,000 7,274,250
Lamar Media
08/15/15 6.63 7,632,000 2,835,000 10,467,000 5,533,200 2,069,550 7,602,750
Lamar Media
Series B
08/15/15 6.63 6,030,000 -- 6,030,000 4,371,750 -- 4,371,750
Lamar Media
Series C
08/15/15 6.63 4,146,000 -- 4,146,000 3,005,850 -- 3,005,850
LBI Media
Sr Sub Nts
08/01/17 8.50 5,112,000 1,000,000 6,112,000(d) 1,789,200 355,000 2,144,200
Liberty Media
Sr Unsecured
07/15/29 8.50 -- 1,000,000 1,000,000 -- 624,720 624,720
Liberty Media LLC
Sr Unsecured
05/15/13 5.70 19,626,000 2,740,000 22,366,000 13,167,966 1,852,089 15,020,055
LIN Television
05/15/13 6.50 2,655,000 1,000,000 3,655,000 1,234,575 470,000 1,704,575
LIN Television
Series B
05/15/13 6.50 640,000 -- 640,000 297,600 -- 297,600
Nielsen Finance LLC
08/01/14 10.00 6,230,000 2,000,000 8,230,000 4,485,600 1,450,000 5,935,600
RadioOne
02/15/13 6.38 9,914,000 -- 9,914,000 3,370,760 -- 3,370,760
Rainbow Natl Services LLC
09/01/12 8.75 12,485,000 -- 12,485,000(d) 10,986,800 -- 10,986,800
09/01/14 10.38 3,003,000 -- 3,003,000(d) 2,597,595 -- 2,597,595
</Table>
13
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
RH Donnelley
Sr Unsecured
01/15/13 6.88 $ 1,579,000 $ -- $ 1,579,000 $ 205,270 $ -- $ 205,270
------------------------------------------
Total 79,779,589 11,954,922 91,734,511
------------------------------------------
METALS (1.6%)
CII Carbon LLC
11/15/15 11.13 3,890,000 -- 3,890,000(d) 3,656,600 -- 3,656,600
Freeport-McMoRan Copper &
Gold
Sr Unsecured
04/01/15 8.25 7,965,000 -- 7,965,000 5,774,625 -- 5,774,625
04/01/17 8.38 1,350,000 2,000,000 3,350,000 958,500 1,421,888 2,380,388
Noranda Aluminum Acquisition
Pay-in-kind
05/15/15 6.60 11,258,000 1,350,000 12,608,000(i,n) 3,658,850 445,500 4,104,350
Peabody Energy
Series B
03/15/13 6.88 -- 500,000 500,000 -- 427,500 427,500
------------------------------------------
Total 14,048,575 2,294,888 16,343,463
------------------------------------------
NON CAPTIVE CONSUMER (1.8%)
Triad Acquisition
Sr Unsecured Series B
05/01/13 11.13 23,225,000 -- 23,225,000 18,115,500 -- 18,115,500
------------------------------------------
NON CAPTIVE DIVERSIFIED (0.5%)
Ford Motor Credit LLC
Sr Unsecured
01/12/09 5.80 -- 1,600,000 1,600,000 -- 1,425,846 1,425,846
09/15/10 10.25 -- 1,500,000 1,500,000 -- 757,831 757,831
08/10/11 9.88 2,947,000 -- 2,947,000 1,414,560 -- 1,414,560
GMAC LLC
Sr Unsecured
08/28/12 6.88 3,105,000 -- 3,105,000 1,086,964 -- 1,086,964
12/01/14 6.75 -- 1,000,000 1,000,000 -- 325,212 325,212
------------------------------------------
Total 2,501,524 2,508,889 5,010,413
------------------------------------------
OIL FIELD SERVICES (0.3%)
Bristow Group
09/15/17 7.50 -- 1,000,000 1,000,000 -- 695,000 695,000
Helix Energy Solutions Group
Sr Unsecured
01/15/16 9.50 3,068,000 950,000 4,018,000(d) 1,610,700 503,500 2,114,200
------------------------------------------
Total 1,610,700 1,198,500 2,809,200
------------------------------------------
OTHER FINANCIAL INSTITUTIONS (1.2%)
Cardtronics
08/15/13 9.25 8,906,000 1,400,000 10,306,000 6,601,573 1,044,750 7,646,323
Cardtronics
Series B
08/15/13 9.25 5,653,000 -- 5,653,000 4,190,286 -- 4,190,286
------------------------------------------
Total 10,791,859 1,044,750 11,836,609
------------------------------------------
OTHER INDUSTRY (0.7%)
Chart Inds
Sr Sub Nts
10/15/15 9.13 9,185,000 -- 9,185,000 6,567,275 -- 6,567,275
------------------------------------------
PACKAGING (0.6%)
Owens-Brockway Glass
Container
05/15/13 8.25 -- 2,000,000 2,000,000(c) -- 1,890,000 1,890,000
Vitro
02/01/17 9.13 16,236,000 -- 16,236,000(c) 4,302,540 -- 4,302,540
------------------------------------------
Total 4,302,540 1,890,000 6,192,540
------------------------------------------
PAPER (2.5%)
Boise Cascade LLC
10/15/14 7.13 6,482,000 -- 6,482,000 3,629,920 -- 3,629,920
</Table>
14
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Cascades
02/15/13 7.25 $ 2,985,000 $ 500,000 $ 3,485,000(c) $ 1,671,600 $ 282,500 $ 1,954,100
Domtar
10/15/11 7.88 -- 1,000,000 1,000,000 -- 820,000 820,000
Georgia-Pacific LLC
01/15/17 7.13 4,918,000 -- 4,918,000(d) 3,614,730 -- 3,614,730
Georgia-Pacific LLC
Sr Unsecured
05/15/31 8.88 -- 3,000,000 3,000,000 -- 1,890,000 1,890,000
Graham Packaging Intl
08/15/13 9.50 -- 500,000 500,000 -- 347,500 347,500
Jefferson Smurfit US
Sr Unsecured
06/01/13 7.50 8,335,000 -- 8,335,000 2,417,150 -- 2,417,150
NewPage
Sr Secured
05/01/12 10.00 11,127,000 1,565,000 12,692,000 6,008,580 852,925 6,861,505
Norampac
06/01/13 6.75 4,247,000 -- 4,247,000(c) 2,165,970 -- 2,165,970
Smurfit-Stone Container
Enterprises
Sr Unsecured
03/15/17 8.00 3,535,000 1,000,000 4,535,000 936,775 270,000 1,206,775
------------------------------------------
Total 20,444,725 4,462,925 24,907,650
------------------------------------------
PHARMACEUTICALS (1.0%)
Warner Chilcott
02/01/15 8.75 9,902,000 1,000,000 10,902,000 8,738,515 887,500 9,626,015
------------------------------------------
RETAILERS (0.3%)
Neiman Marcus Group
Pay-in-kind
10/15/15 9.00 5,605,000 1,000,000 6,605,000(n) 2,382,125 430,000 2,812,125
Toys "R" Us
Sr Unsecured
10/15/18 7.38 -- 1,000,000 1,000,000 -- 415,000 415,000
------------------------------------------
Total 2,382,125 845,000 3,227,125
------------------------------------------
TECHNOLOGY (2.3%)
Communications & Power Inds
02/01/12 8.00 9,130,000 1,700,000 10,830,000 7,486,600 1,402,500 8,889,100
CPI Intl
Sr Unsecured
02/01/15 8.88 1,825,000 -- 1,825,000(i) 1,797,625 -- 1,797,625
Flextronics
Sr Sub Nts
11/15/14 6.25 -- 2,000,000 2,000,000(c) -- 1,490,000 1,490,000
SS&C Technologies
12/01/13 11.75 3,414,000 -- 3,414,000 3,021,390 -- 3,021,390
SunGard Data Systems
08/15/13 9.13 -- 1,500,000 1,500,000 -- 1,170,000 1,170,000
08/15/15 10.25 10,890,000 -- 10,890,000 6,316,200 -- 6,316,200
------------------------------------------
Total 18,621,815 4,062,500 22,684,315
------------------------------------------
TRANSPORTATION SERVICES (0.8%)
Hertz
01/01/14 8.88 2,930,000 1,635,000 4,565,000 1,512,613 852,244 2,364,857
01/01/16 10.50 9,479,000 -- 9,479,000 3,791,600 -- 3,791,600
Quality Distribution
LLC/Capital
01/15/12 9.25 4,239,000 -- 4,239,000(i) 1,504,845 -- 1,504,845
------------------------------------------
Total 6,809,058 852,244 7,661,302
------------------------------------------
WIRELESS (4.7%)
Centennial Communications
Sr Nts
01/01/13 9.63 12,491,000 675,000 13,166,000(i) 11,679,085 634,500 12,313,585
</Table>
15
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Cricket Communications
11/01/14 9.38 $ -- $1,000,000 $ 1,000,000 $ -- $ 798,750 $ 798,750
07/15/15 10.00 5,915,000 -- 5,915,000(d) 4,909,450 -- 4,909,450
MetroPCS Wireless
11/01/14 9.25 9,995,000 1,590,000 11,585,000 8,195,900 1,311,750 9,507,650
Nextel Communications
Series D
08/01/15 7.38 22,311,000 1,930,000 24,241,000 8,924,400 772,363 9,696,763
Nextel Communications
Series E
10/31/13 6.88 365,000 -- 365,000 153,300 -- 153,300
Sprint Capital
01/30/11 7.63 10,570,000 1,510,000 12,080,000 7,610,400 1,087,686 8,698,086
Sprint Nextel
Sr Unsecured
12/01/16 6.00 -- 1,500,000 1,500,000 -- 833,623 833,623
------------------------------------------
Total 41,472,535 5,438,672 46,911,207
------------------------------------------
WIRELINES (5.6%)
Citizens Communications
Sr Unsecured
03/15/15 6.63 -- 650,000 650,000 -- 425,750 425,750
Fairpoint Communications
Sr Unsecured
04/01/18 13.13 7,865,000 1,000,000 8,865,000(d) 4,011,150 515,000 4,526,150
Frontier Communications
Sr Unsecured
03/15/19 7.13 9,705,000 -- 9,705,000 5,604,638 -- 5,604,638
GCI
Sr Unsecured
02/15/14 7.25 4,930,000 -- 4,930,000 3,956,325 -- 3,956,325
Level 3 Communications
Sub Nts
09/15/09 6.00 3,050,000 -- 3,050,000 2,806,000 -- 2,806,000
Level 3 Financing
03/15/13 12.25 5,525,000 1,665,000 7,190,000 3,176,875 965,700 4,142,575
Qwest
Sr Unsecured
06/15/15 7.63 11,190,000 2,000,000 13,190,000 8,448,450 1,520,000 9,968,450
06/01/17 6.50 11,610,000 800,000 12,410,000 8,127,000 564,000 8,691,000
09/15/33 6.88 -- 500,000 500,000 -- 301,250 301,250
Qwest Communications Intl
02/15/09 5.65 -- 333,000 333,000(i) -- 331,335 331,335
Windstream
08/01/13 8.13 1,875,000 -- 1,875,000 1,546,875 -- 1,546,875
08/01/16 8.63 11,807,000 1,575,000 13,382,000 9,209,459 1,236,375 10,445,834
03/15/19 7.00 4,605,000 1,000,000 5,605,000 3,188,963 697,500 3,886,463
------------------------------------------
Total 50,075,735 6,556,910 56,632,645
------------------------------------------
TOTAL BONDS
(Cost: $1,164,725,519) $686,849,745 $119,663,374 $806,513,119
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
16
<Table>
<Caption>
SENIOR LOANS (13.2%)(H)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
BORROWER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
AEROSPACE & DEFENSE (0.3%)
Alion Science and Technology
Term Loan
TBD TBD 4,565,000 -- 4,565,000(g,p) 2,967,250 -- 2,967,250
------------------------------------------
AUTOMOTIVE (0.8%)
Ford Motor
Term Loan
TBD TBD 3,110,000 -- 3,110,000(g,p) 1,265,770 -- 1,265,770
12/15/13 4.43 8,257,975 -- 8,257,975 3,360,995 -- 3,360,995
Lear
Term Loan
TBD TBD 1,935,000 -- 1,935,000(g,p) 932,032 -- 932,032
3.59-
06/27/14 6.26 3,075,000 -- 3,075,000 1,481,135 -- 1,481,135
------------------------------------------
Total 7,039,932 -- 7,039,932
------------------------------------------
CHEMICALS (0.7%)
Hexion Specialty Chemicals
Tranche C Term Loan
TBD TBD 13,162,520 -- 13,162,520(g,p) 7,019,967 -- 7,019,967
------------------------------------------
CONSUMER CYCLICAL SERVICES (0.4%)
West Corp
Tranche B2 Term Loan
TBD TBD 2,094,837 -- 2,094,837(g,p) 1,298,799 -- 1,298,799
3.77-
10/24/13 4.73 4,852,215 -- 4,852,215 3,008,373 -- 3,008,373
------------------------------------------
Total 4,307,172 -- 4,307,172
------------------------------------------
ENTERTAINMENT (0.3%)
AMC Entertainment
Pay-in-kind Term Loan
06/13/12 7.82 5,910,940 -- 5,910,940(n) 2,955,470 -- 2,955,470
------------------------------------------
FOOD AND BEVERAGE (0.3%)
Pinnacle Foods Finance LLC
Term Loan
5.60-
04/02/14 6.80 3,823,901 -- 3,823,901 2,619,372 -- 2,619,372
------------------------------------------
GAMING (1.4%)
Fontainebleau Las Vegas
Delayed Draw Term Loan
TBD TBD 5,657,216 -- 5,657,216(g,p,q) 1,923,453 -- 1,923,453
Fontainebleau Las Vegas
Tranche B Term Loan
06/06/14 6.07 11,314,432 -- 11,314,432 3,846,907 -- 3,846,907
Great Lakes Gaming of
Michigan
Term Loan
08/15/12 9.00 8,230,891 -- 8,230,891(k) 8,066,274 -- 8,066,274
------------------------------------------
Total 13,836,634 -- 13,836,634
------------------------------------------
HEALTH CARE (1.8%)
HCA
Tranche B Term Loan
11/17/13 6.01 11,595,783 -- 11,595,783 8,669,819 -- 8,669,819
IASIS Healthcare LLC
Pay-in-kind Term Loan
06/13/14 8.76 17,913,812 -- 17,913,812(n) 8,956,906 -- 8,956,906
------------------------------------------
Total 17,626,725 -- 17,626,725
------------------------------------------
MEDIA CABLE (0.8%)
Charter Communications
Term Loan
3.63-
09/06/14 5.63 12,383,461 -- 12,383,461 8,342,118 -- 8,342,118
------------------------------------------
MEDIA NON CABLE (1.0%)
Dex Media West LLC
Tranche B Term Loan
TBD TBD 3,250,000 -- 3,250,000(g,p) 1,618,500 -- 1,618,500
</Table>
17
<Table>
<Caption>
SENIOR LOANS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
BORROWER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
Idearc
Tranche B Term Loan
3.44-
11/17/14 5.77 $ 2,458,744 $ -- $ 2,458,744 $ 797,985 $ -- $ 797,985
Nielson Finance
Term Loan
TBD TBD 3,090,000 -- 3,090,000(c,g,p) 2,056,519 -- 2,056,519
3.77-
08/09/13 4.39 8,232,167 -- 8,232,167(c) 5,478,837 -- 5,478,837
------------------------------------------
Total 9,951,841 -- 9,951,841
------------------------------------------
METALS (--%)
Noranda Aluminum
Tranche B Term Loan
TBD TBD 750,000 -- 750,000(g,p) 438,750 -- 438,750
------------------------------------------
OIL FIELD SERVICES (1.2%)
Dresser
2nd Lien Term Loan
05/04/15 7.99 20,560,000 -- 20,560,000 12,473,135 -- 12,473,135
------------------------------------------
OTHER FINANCIAL INSTITUTIONS (0.5%)
ACE Cash Express
Tranche B Term Loan
10/05/13 6.77 9,565,855 -- 9,565,855 5,261,220 -- 5,261,220
------------------------------------------
PAPER (0.4%)
Georgia-Pacific
Tranche B1 Term Loan
TBD TBD 5,804,290 -- 5,804,290(g,p) 4,516,492 -- 4,516,492
------------------------------------------
RETAILERS (1.2%)
Neiman Marcus Group
Term Loan
5,191,251(-
TBD TBD 5,191,251 -- g,p) 3,263,065 -- 3,263,065
04/06/13 4.57 2,123,950 -- 2,123,950 1,335,051 -- 1,335,051
Toys "R" Us
Tranche B Term Loan
TBD TBD 1,870,000 -- 1,870,000(g,p) 1,095,502 -- 1,095,502
07/19/12 5.72 11,110,199 -- 11,110,199 6,508,688 -- 6,508,688
------------------------------------------
Total 12,202,306 -- 12,202,306
------------------------------------------
TECHNOLOGY (1.4%)
Flextronics Intl
Term Loan
6.13-
10/01/14 7.07 13,951,055 -- 13,951,055 9,486,718 -- 9,486,718
Flextronics Intl
Tranche A1A Delayed Draw
Term Loan
10/01/14 7.07 4,008,924 -- 4,008,924 2,726,068 -- 2,726,068
SunGard Data Systems
Tranche B Term Loan
TBD TBD 3,305,000 -- 3,305,000(g,p) 2,267,527 -- 2,267,527
------------------------------------------
Total 14,480,313 -- 14,480,313
------------------------------------------
WIRELINES (0.7%)
Fairpoint Communications
Tranche B Term Loan
03/08/15 6.56 11,558,000 -- 11,558,000 7,235,309 -- 7,235,309
------------------------------------------
TOTAL SENIOR LOANS
(Cost: $196,922,339) $133,274,006 $ -- $133,274,006
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
18
<Table>
<Caption>
COMMON STOCKS (--%)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
OIL, GAS & CONSUMABLE FUELS (--%)
Link Energy LLC Unit 1,646,684 -- 1,646,684(b,j) $ 11,527 $ -- $ 11,527
------------------------------------------
PAPER & FOREST PRODUCTS (--%)
Crown Paper Escrow 29,470,000 -- 29,470,000(b,k) 29 -- 29
------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (--%)
Arena Brands 111,111 -- 111,111(b,k,l) 158,889 -- 158,889
------------------------------------------
TOTAL COMMON STOCKS
(Cost: $18,965,223) $ 170,445 $ -- $ 170,445
- --------------------------------------------------------------------------------------------------------------------------------
<Caption>
OTHER (0.3%)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
OTHER FINANCIAL INSTITUTIONS
Varde Fund V LP 25,000,000 -- 25,000,000(e,k,l) $ 2,698,250 $ -- $ 2,698,250
------------------------------------------
TOTAL OTHER
(Cost: $--) $ 2,698,250 $ -- $ 2,698,250
- --------------------------------------------------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUNDS (7.3%)
SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
HIGH YIELD HIGH YIELD
RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND
HIGH YIELD HIGH-YIELD PRO FORMA HIGH YIELD HIGH-YIELD PRO FORMA
BOND FUND FUND COMBINED BOND FUND FUND COMBINED
RiverSource Short-Term Cash Fund,
0.69% 66,162,340 66,162,340(r) $ 66,162,340 -- $ 66,162,340
SSgA U.S. Treasury Money Market Fund -- 7,443,087 7,443,087 -- 7,443,087 7,443,087
------------------------------------------
TOTAL MONEY MARKET FUNDS
(Cost: $73,605,427) $ 66,162,340 $ 7,443,087 $ 73,605,427
------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $1,016,261,-
(Cost: $1,454,218,508)(s) $889,154,786 $127,106,461 247
- --------------------------------------------------------------------------------------------------------------------------------
NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
</Table>
(A) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(B) Non-income producing. For long-term debt securities, item identified is
in default as to payment of interest and/or principal.
(C) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless
otherwise noted. At Nov. 30, 2008, the value of foreign securities
represented 3.3% of net assets.
(D) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At Nov. 30, 2008, the value of these securities
amounted to $160,159,644 of 15.9% of net assets.
(E) The share amount for Limited Liability Companies (LLC) or Limited
Partnerships (LP) represents capital contributions.
(F) Mortgage-backed securities represent direct or indirect participations
in, or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities
and collateralized mortgage obligations. These securities may be issued
or guaranteed by U.S. government agencies or instrumentalities, or by
private issuers, generally originators and investors in mortgage loans,
including savings associations, mortgage bankers, commercial banks,
investment bankers and special purpose entities. The maturity dates
shown represent the original maturity of the underlying obligation.
Actual maturity may vary based upon prepayment activity on these
obligations. Unless otherwise noted, the coupon rates presented are
fixed rates.
(G) At Nov. 30, 2008, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$41,979,589.
(H) Senior loans have rates of interest that float periodically based
primarily on the London Interbank Offered Rate ("LIBOR") and other
short-term rates. Remaining maturities of senior loans may be less than
the stated maturities shown as a result of contractual or optional
prepayments by the borrower. Such prepayments cannot be predicted with
certainty.
(I) Interest rate varies either based on a predetermined schedule or to
reflect current market conditions; rate shown is the effective rate on
Nov. 30, 2008.
19
(J) Investments representing 5% or more of the outstanding voting securities
of the issuer. Transactions with companies that are or were affiliates
during the six months ended Nov. 30, 2008 are as follows:
<Table>
<Caption>
BEGINNING PURCHASE SALES ENDING DIVIDEND
ISSUER COST COST COST COST INCOME VALUE(A)
- -------------------------------------------------------------------------------------------------------------------
Link Energy LLC Unit $13,076,335 -- -- $13,076,335 -- $11,527
- -------------------------------------------------------------------------------------------------------------------
</Table>
(K) Identifies issues considered to be illiquid as to their marketability
(see Note 1 to the financial statements). Information concerning such
security holdings at Nov. 30, 2008, is as follows:
<Table>
<Caption>
VALUE AS A
PERCENTAGE OF VALUE AS A VALUE AS A
RIVERSOURCE HIGH PERCENTAGE OF PERCENTAGE OF PRO
ACQUISITION YIELD BOND FUND SELIGMAN HIGH-YIELD FORMA COMBINED
SECURITY DATES COST NET ASSETS FUND NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Arena Brands
Common 09-03-92 $5,888,888 0.02% -- 0.02%
Crown Paper Escrow
Common 04-16-07 -- 0.00% -- 0.00%
Great Lakes Gaming of Michigan
Term Loan
9.00% 2012 03-01-07 thru 09-15-07 8,114,567 0.92% -- 0.80%
United Artists Theatre Circuit
Pass-Through Ctfs Series BB5
9.30% 2015 12-08-95 thru 04-03-02 6,129,317 0.68% -- 0.59%
United Artists Theatre Circuit
Pass-Through Ctfs Series BC3
9.30% 2015 12-06-01 1,684,496 0.22% -- 0.19%
Varde Fund V LP 04-27-00 thru 06-19-00 --* 0.31% -- 0.27%
</Table>
* The original cost for this position in fiscal year 2004 was $25,000,000.
From Sept. 29, 2004 through March 7, 2005, $25,000,000 was returned to the
fund in the form of return of capital.
(L) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
(M) For those zero coupon bonds that become coupon paying at a future date,
the interest rate disclosed represents the annualized effective yield
from the date of acquisition to maturity.
(N) Pay-in-kind securities are securities in which the issuer makes interest
or dividend payments in cash or in additional securities. The securities
usually have the same terms as the original holdings.
(O) On Sept. 15, 2008, Lehman Brothers Holdings filed a Chapter 11
bankruptcy petition.
(P) Represents a senior loan purchased on a when-issued or delayed-delivery
basis. Certain details associated with this purchase are not known prior
to the settlement date of the transaction. In addition, senior loans
typically trade without accrued interest and therefore a weighted
average coupon rate is not available prior to settlement. At settlement,
if still unknown, the borrower or counterparty will provide the Fund
with the final weighted average coupon rate and maturity date.
(Q) At Nov. 30, 2008, the Fund had unfunded senior loan commitments pursuant
to the term of the loan agreement. The Fund receives a stated coupon
rate until the borrower draws on the loan commitment, at which time the
rate will become the stated rate in the loan agreement.
<Table>
<Caption>
BORROWER UNFUNDED COMMITMENT
- --------------------------------------------------------------------------------------------
Fontainebleau Las Vegas Delayed Draw $5,509,045
</Table>
(R) Affiliated Money Market Fund -- See Note 5 to the financial statements
in the annual report. The rate shown is the seven-day current annualized
yield at Nov. 30, 2008.
(S) At Nov. 30, 2008, the approximate cost of securities for federal income
tax purposes and the approximate aggregate gross unrealized appreciation
and depreciation based on that cost was:
<Table>
<Caption>
RIVERSOURCE
HIGH YIELD
BOND FUND
RIVERSOURCE SELIGMAN PRO FORMA
HIGH YIELD BOND FUND HIGH-YIELD FUND COMBINED
Cost of securities for federal income tax purposes: $1,290,929,000 $163,289,000 $1,454,218,000
Unrealized appreciation $ 4,239,000 $ 52,000 $ 4,291,000
Unrealized depreciation (406,013,000) (36,235,000) (442,248,000)
- ----------------------------------------------------------------------------------------------------------------
Net unrealized depreciation $ (401,774,000) $(36,183,000) $ (437,957,000)
- ----------------------------------------------------------------------------------------------------------------
</Table>
20
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
INTRODUCTION TO PROPOSED FUND REORGANIZATION
Oct. 31, 2008
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements
have been derived from financial statements prepared for the RiverSource
Partners International Select Growth Fund and the Seligman International Growth
Fund as of Oct. 31, 2008. RiverSource Partners International Select Growth Fund
invests primarily in equity securities of foreign issuers, in both developed and
emerging markets, that are believed to offer strong growth potential. Seligman
International Growth Fund invests primarily in high-quality, large- and mid-
capitalization growth companies with a market capitalization of $1 billion or
more at the time of purchase and will invest in any country; however, it
typically will not invest in the United States.
Under the proposed Agreement and Plan of Reorganization, share classes of
Seligman International Growth Fund would be exchanged for share classes of
RiverSource Partners International Select Growth Fund.
<Table>
<Caption>
SELLING FUND BUYING FUND
- -----------------------------------------------------------------------------------------------------------------------------
Seligman International Growth Fund Class A RiverSource Partners International Select Growth Fund Class A
- -----------------------------------------------------------------------------------------------------------------------------
Seligman International Growth Fund Class B RiverSource Partners International Select Growth Fund Class B
- -----------------------------------------------------------------------------------------------------------------------------
Seligman International Growth Fund Class C RiverSource Partners International Select Growth Fund Class C
- -----------------------------------------------------------------------------------------------------------------------------
Seligman International Growth Fund Class R(1) RiverSource Partners International Select Growth Fund Class R2(2)
- -----------------------------------------------------------------------------------------------------------------------------
Seligman International Growth Fund Class I(1) RiverSource Partners International Select Growth Fund Class R5(2)
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman International Growth Fund will be redesignated as Class R2 and
Class R5 shares, respectively.
(2) The inception date for the RiverSource Partners International Select Growth
Fund Class R2 and Class R5 shares is expected to be in the third quarter of
2009.
Note: RiverSource Partners International Select Growth Fund also offers Class I
and Class R4 shares.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivor,
RiverSource Partners International Select Growth Fund, as if the transaction had
occurred at the beginning of the fiscal year ending Oct. 31, 2008.
21
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE
PARTNERS SELIGMAN INTERNATIONAL PARTNERS
INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL
SELECT GROWTH GROWTH PRO FORMA SELECT GROWTH FUND
OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS PRO FORMA COMBINED
ASSETS
Investments in securities, at cost
Unaffiliated issuers $ 519,162,871 $ 45,146,953 $ -- $ 564,309,824
Affiliated money market fund $ 11,780,597 $ -- $ -- $ 11,780,597
--------------------------------------------------------------------
Investments in securities, at value
Unaffiliated issuers $ 365,979,624 $ 39,362,312 $ -- $ 405,341,936
Affiliated money market fund $ 11,780,597 $ -- $ -- $ 11,780,597
Cash -- 2,688,791 -- 2,688,791
Foreign currency holdings (identified cost $24
for Seligman International Growth Fund) -- 33 -- 33
Capital shares receivable 222,943 61,705 -- 284,648
Dividends and accrued interest receivable 1,232,232 112,553 -- 1,344,785
Receivable for investment securities sold 6,333,407 2,629,866 -- 8,963,273
Investment management services fees receivable
(Note 2) -- -- 16,139(a) 16,139
Transfer agency fees receivable (Note 2) -- -- 139,352(b) 139,352
Other receivable (Note 2) -- -- 32,333(e) 32,333
Receivable from RiverSource Investments, LLC
(Note 2) 272,508 -- 923,981(f) 1,196,489
Unrealized appreciation on forward foreign
currency contracts 92,879 8,960 -- 101,839
Prepaid expenses -- 36,046 -- 36,046
Other assets -- 6,135 -- 6,135
- ----------------------------------------------------------------------------------------------------------------------
Total assets 385,914,190 44,906,401 1,111,805 431,932,396
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Foreign currency overdraft 408,258 -- -- 408,258
Capital shares payable 337,883 194,926 -- 532,809
Payable for investment securities purchased 6,072,577 4,524,435 -- 10,597,012
Unrealized depreciation on forward foreign
currency contracts 49,386 29,204 -- 78,590
Accrued investment management services fees
(Note 2) 10,225 52,908 (63,133)(a) --
Accrued distribution fees 2,189 15,679 -- 17,868
Accrued transfer agency fees (Note 2) 1,989 -- (1,989)(b) --
Accrued administrative services fees (Note 2) 825 -- 62,281(c) 63,106
Accrued plan administration services fees (Note
2) 4 -- 1,404(d) 1,408
Other accrued expenses (Note 2) 127,787 108,855 (236,642)(e) --
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 7,011,123 4,926,007 (238,079) 11,699,051
- ----------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital
stock $ 378,903,067 $ 39,980,394 $1,349,884 $ 420,233,345
- ----------------------------------------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value for RiverSource
Partners International Select Growth Fund and
$.001 par value for Seligman International
Growth Fund (Note 3) $ 808,978 $ 5,287 $ 84,079 $ 898,344
Additional paid-in capital (Note 3) 593,834,837 74,630,032 (84,079) 668,380,790
Undistributed net investment income (Note 2) 393,561 19,115 1,349,884 1,762,560
Accumulated net realized gain (loss) (62,954,767) (28,895,024) -- (91,849,791)
Unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities
in foreign currencies (153,179,542) (5,779,016) -- (158,958,558)
- ----------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 378,903,067 $ 39,980,394 $1,349,884 $ 420,233,345
- ----------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding
shares: Class A $ 190,233,626 $ 17,996,886 $ 607,641 $ 208,838,153
Class B $ 29,647,619 $ 2,083,135 $ 70,334 $ 31,801,088
Class C $ 3,212,928 $ 10,403,453 $ 351,259 $ 13,967,640
Class I $ 155,259,864 N/A $ -- $ 155,259,864
Class R2 N/A $ 414,091 $ 13,981 $ 428,072
Class R4 $ 549,030 N/A $ -- $ 549,030
Class R5 N/A $ 9,082,829 $ 306,669 $ 9,389,498
Shares outstanding (Note 3): Class
A shares 40,703,983 2,304,203 -- 44,687,822
Class B shares 6,606,389 308,402 -- 7,086,003
Class C shares 717,874 1,537,450 -- 3,118,479
Class I shares 32,753,046 N/A -- 32,753,046
Class R2 shares N/A 53,633 -- 91,664
Class R4 shares 116,504 N/A -- 116,504
Class R5 shares N/A 1,083,471 -- 1,980,907
Net asset value per share of outstanding capital
stock: Class A $ 4.67 $ 7.81 $ -- $ 4.67
Class B $ 4.49 $ 6.75 $ -- $ 4.49
Class C $ 4.48 $ 6.77 $ -- $ 4.48
Class I $ 4.74 N/A $ -- $ 4.74
Class R2 N/A $ 7.72 $ -- $ 4.67
Class R4 $ 4.71 N/A $ -- $ 4.71
Class R5 N/A $ 8.38 $ -- $ 4.74
- ----------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
22
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
<Table>
<Caption>
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS PARTNERS
PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL
INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND SELECT GROWTH FUND
SELECT GROWTH GROWTH PRO FORMA PRO FORMA
YEAR ENDED OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
INVESTMENT INCOME
Income:
Dividends $ 16,167,508 $ 1,871,755 $ -- $ 18,039,263
Interest 12,456 15,962 -- 28,418
Income distributions from affiliated money
market fund 739,119 -- -- 739,119
Fee income from securities lending 385,329 -- -- 385,329
Less foreign taxes withheld (1,602,354) (140,903) -- (1,743,257)
- ----------------------------------------------------------------------------------------------------------------------
Total income 15,702,058 1,746,814 -- 17,448,872
- ----------------------------------------------------------------------------------------------------------------------
Expenses:
Investment management services fees (Note 2) 5,965,413 813,827 (79,272)(a) 6,699,968
Distribution fees
Class A 850,640 99,447 -- 950,087
Class B 586,365 55,984 -- 642,349
Class C 55,865 225,513 -- 281,378
Class R2 -- 2,810 -- 2,810
Transfer agency fees (Note 2)
Class A 730,718 180,772 (75,778)(b) 835,712
Class B 133,231 24,550 (8,600)(b) 149,181
Class C 12,429 104,720 (52,298)(b) 64,851
Class R2 -- 2,737 (2,456)(b) 281
Class R4 569 -- -- 569
Class R5 -- 9,064 (2,209)(b) 6,855
Administrative services fees (Note 2) 511,522 -- 62,281(c) 573,803
Plan administration services fees (Note 2)
Class R2 -- -- 1,404(d) 1,404
Class R4 2,845 -- -- 2,845
Compensation of board members (Note 2) 14,027 7,896 (6,106)(e) 15,817
Custodian fees (Note 2) 340,490 177,274 (133,818)(e) 383,946
Printing and postage (Note 2) 102,584 30,105 (17,013)(e) 115,676
Registration fees (Note 2) 66,850 64,770 (56,238)(e) 75,382
Professional fees (Note 2) 58,787 56,216 (48,713)(e) 66,290
Other (Note 2) 34,814 11,530 (7,087)(e) 39,257
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 9,467,149 1,867,215 (425,903) 10,908,461
Expenses waived/reimbursed by RiverSource
Investments, LLC (Note 2) (277,382) (23,792) (923,981)(f) (1,225,155)
Earnings and bank fee credits on cash
balances (5,620) -- -- (5,620)
- ----------------------------------------------------------------------------------------------------------------------
Total net expenses 9,184,147 1,843,423 (1,349,884) 9,677,686
- ----------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net 6,517,911 (96,609) 1,349,884 7,771,186
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (58,195,406) (30,998,937) -- (89,194,343)
Foreign currency transactions (527,664) 1,929,320 -- 1,401,656
Payment from RiverSource Investments, LLC 272,508 -- -- 272,508
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (58,450,562) (29,069,617) -- (87,520,179)
Net change in unrealized appreciation
(depreciation) on investments and
on translation of assets and liabilities in
foreign currencies (346,344,916) (31,217,589) -- (377,562,505)
- ----------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign
currencies (404,795,478) (60,287,206) -- (465,082,684)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(398,277,567) $(60,383,815) $ 1,349,884 $(457,311,498)
- ----------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
23
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)
SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited as to Oct. 31, 2008)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two Funds at, and for, the
12-month period ended Oct. 31, 2008. These statements have been derived from
financial statements prepared for the RiverSource Partners International Select
Growth Fund and the Seligman International Growth Fund as of Oct. 31, 2008.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
RiverSource Partners International Select Growth Fund invests primarily in
equity securities of foreign issuers, in both developed and emerging markets,
that are believed to offer strong growth potential.
Seligman International Growth Fund invests primarily in high-quality, large- and
mid-capitalization growth companies with a market capitalization of $1 billion
or more at the time of purchase and will invest in any country; however, it
typically will not invest in the United States.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of Seligman International Growth Fund in exchange for Class A, Class
B, Class C, Class R2 and Class R5 shares of RiverSource Partners International
Select Growth Fund under U.S. generally accepted accounting principles. The pro
forma statements reflect estimates for the combined RiverSource Partners
International Select Growth Fund based on the increased asset level of the
Reorganization and associated economies of scale, adjusted to reflect current
fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the Funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, RiverSource Partners
International Select Growth Fund, as if the transaction had occurred at the
beginning of the year presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect the change in investment management services fee due to the
Reorganization. In addition, the Performance Incentive Adjustment (PIA) was
calculated based on the combined average net assets of the two funds and the
RiverSource Partners International Select Growth Fund PIA rate as of Oct.
31, 2008.
(b) To reflect the change in transfer agent fees due to the Reorganization
including adjusting for closed account fees for each Seligman International
Growth Fund shareholder account that will be closed on the system as a
result of the Reorganization.
(c) To reflect the change in administrative services fees due to the
Reorganization.
(d) To reflect the change in plan administration services fees due to the
Reorganization.
(e) To reflect the change in other fees due to the Reorganization.
(f) To adjust the expense reimbursement to reflect the net reduction in fees
resulting from the Reorganization per the agreement (through Oct. 31, 2009)
by RiverSource Investments, LLC and its affiliates to waive certain fees and
absorb certain expenses of the combined fund.
24
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C, Class R2 and Class R5 shares of RiverSource Partners
International Select Growth Fund as if the Reorganization were to have taken
place on Oct. 31, 2008. The following table reflects the number of RiverSource
Partners International Select Growth Fund shares assumed to be issued to the
shareholders of the Seligman International Growth Fund.
<Table>
<Caption>
RIVERSOURCE
SELIGMAN PARTNERS
INTERNATIONAL INTERNATIONAL TOTAL
GROWTH FUND SELECT GROWTH FUND PRO FORMA
SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------
Class A 3,983,839 40,703,983 44,687,822
- ----------------------------------------------------------------------------------------------------------------
Class B 479,614 6,606,389 7,086,003
- ----------------------------------------------------------------------------------------------------------------
Class C 2,400,605 717,874 3,118,479
- ----------------------------------------------------------------------------------------------------------------
Class I N/A 32,753,046 32,753,046
- ----------------------------------------------------------------------------------------------------------------
Class R2(1),(2) 91,664 N/A 91,664
- ----------------------------------------------------------------------------------------------------------------
Class R4 N/A 116,504 116,504
- ----------------------------------------------------------------------------------------------------------------
Class R5(1),(2) 1,980,907 N/A 1,980,907
- ----------------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman International Growth Fund will be redesignated as Class R2 and
Class R5 shares, respectively.
(2) The inception date for the RiverSource Partners International Select Growth
Fund Class R2 and Class R5 shares is expected to be in the third quarter of
2009.
25
COMBINED PORTFOLIO OF INVESTMENTS
RiverSource Partners International Select Growth Fund
OCT. 31, 2008 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (96.5%)(C)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
AUSTRALIA (4.0%)
Australian
Stock
Exchange 30,000 -- 30,000 $ 602,083 $ -- $ 602,083
BHP Billiton 230,250 -- 230,250 4,421,058 -- 4,421,058
Billabong
Intl 155,000 -- 155,000 1,238,434 -- 1,238,434
Centennial
Coal 226,795 -- 226,795 533,044 -- 533,044
CSL 76,559 28,623 105,182 1,860,918 697,638 2,558,556
Leighton
Holdings 43,763 -- 43,763 727,297 -- 727,297
Mount Gibson
Iron 292,336 -- 292,336(b) 73,119 -- 73,119
OneSteel 214,024 -- 214,024 491,444 -- 491,444
Origin
Energy 153,032 -- 153,032 1,604,046 -- 1,604,046
Perpetual 35,000 -- 35,000 814,601 -- 814,601
Rio Tinto 38,029 -- 38,029 1,966,312 -- 1,966,312
Sino Gold
Mining 323,000 -- 323,000(b) 743,575 -- 743,575
Sonic
Healthcare 97,607 -- 97,607 891,528 -- 891,528
-------------------------------------------------------
Total 15,967,459 697,638 16,665,097
-------------------------------------------------------
AUSTRIA (0.4%)
OMV 20,288 -- 20,288 649,187 -- 649,187
Verbund
Series A 23,257 -- 23,257 1,099,820 -- 1,099,820
-------------------------------------------------------
Total 1,749,007 -- 1,749,007
-------------------------------------------------------
BELGIUM (0.7%)
Colruyt 4,203 -- 4,203 944,315 -- 944,315
Eurofins
Scientific 8,000 -- 8,000 447,988 -- 447,988
Groupe
Bruxelles
Lambert 8,156 -- 8,156 598,950 -- 598,950
Hansen
Transmis-
sions Intl -- 209,064 209,064(b) -- 353,482 353,482
Mobistar 10,571 -- 10,571 701,244 -- 701,244
-------------------------------------------------------
Total 2,692,497 353,482 3,045,979
-------------------------------------------------------
BRAZIL (0.8%)
Companhia
Vale do Rio
Doce ADR -- 20,300 20,300 -- 266,336 266,336
Localiza
Rent A Car 117,300 -- 117,300 456,589 -- 456,589
Natura
Cosmeticos 70,000 -- 70,000 590,361 -- 590,361
Petroleo
Brasileiro
ADR -- 10,700 10,700 -- 287,723 287,723
Porto Seguro 150,000 -- 150,000 747,220 -- 747,220
Suzano Papel
e Celulose 196,000 -- 196,000 1,167,099 -- 1,167,099
-------------------------------------------------------
Total 2,961,269 554,059 3,515,328
-------------------------------------------------------
CAMBODIA (0.1%)
NagaCorp 2,500,000 -- 2,500,000 436,171 -- 436,171
-------------------------------------------------------
CANADA (4.8%)
Agrium 19,400 -- 19,400 743,349 -- 743,349
Alimentation
Couche-Tard 58,100 -- 58,100 783,539 -- 783,539
Barrick Gold -- 10,100 10,100 -- 229,472 229,472
Brookfield
Asset
Management
Cl A 71,600 -- 71,600 1,253,795 -- 1,253,795
Canadian
Natural
Resources -- 4,800 4,800 -- 242,210 242,210
Canadian Oil
Sands Trust
Unit 29,400 -- 29,400 789,075 -- 789,075
CCL Inds Cl
B 31,000 -- 31,000 771,816 -- 771,816
CGI Group Cl
A 102,218 -- 102,218(b) 816,082 -- 816,082
EnCana 67,600 -- 67,600 3,435,120 -- 3,435,120
Gildan
Activewear 24,943 -- 24,943(b) 581,682 -- 581,682
</Table>
26
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Horizon
North
Logistics 114,400 -- 114,400(b) $ 75,004 $ -- $ 75,004
Ivanhoe
Mines 39,000 -- 39,000(b) 101,954 -- 101,954
Potash Corp
of
Saskatchewan 20,400 12,800 33,200 1,737,034 1,091,328 2,828,362
Precision
Drilling
Trust Unit 36,300 -- 36,300 391,635 -- 391,635
Research in
Motion -- 7,600 7,600(b) -- 383,268 383,268
Rogers
Communica-
tions Cl B -- 13,400 13,400 -- 389,004 389,004
ShawCor Cl A 77,300 -- 77,300 1,170,775 -- 1,170,775
Shoppers
Drug Mart 39,400 -- 39,400 1,517,208 -- 1,517,208
Sino-Forest
Cl A 91,200 -- 91,200(b) 853,758 -- 853,758
Suncor
Energy 13,900 -- 13,900 333,960 -- 333,960
Talisman
Energy -- 20,000 20,000 -- 197,627 197,627
Teck Cominco
Cl B 53,400 -- 53,400 531,807 -- 531,807
Tesco 16,500 -- 16,500(b) 187,770 -- 187,770
Toronto-
Dominion
Bank 15,700 -- 15,700 741,644 -- 741,644
Uranium One 138,000 -- 138,000(b) 116,818 -- 116,818
UTS Energy 77,000 -- 77,000(b) 58,791 -- 58,791
Viterra 62,800 -- 62,800(b) 398,705 -- 398,705
Xtreme Coil
Drilling 14,600 -- 14,600(b) 46,043 -- 46,043
-------------------------------------------------------
Total 17,437,364 2,532,909 19,970,273
-------------------------------------------------------
CHILE (0.4%)
SQM ADR 73,000 -- 73,000 1,671,700 -- 1,671,700
-------------------------------------------------------
CHINA (1.1%)
China
Communica-
tions
Construction -- 166,000 166,000 -- 115,961 115,961
China Mass
Media Intl
Advertising
ADR 65,200 -- 65,200(b) 283,620 -- 283,620
China
Shipping
Development
Series H 803,000 -- 803,000 791,361 -- 791,361
Ctrip.com
Intl ADR -- 12,300 12,300 -- 376,134 376,134
Jiangsu
Expressway
Series H 1,572,000 -- 1,572,000 1,099,606 -- 1,099,606
Mindray
Medical Intl
ADR 16,000 -- 16,000 344,960 -- 344,960
Parkson
Retail Group -- 228,500 228,500 -- 209,722 209,722
Sinotrans
Series H 2,100,000 -- 2,100,000 471,572 -- 471,572
Sohu.com -- 8,400 8,400(b) -- 461,496 461,496
TravelSky
Technology
Series H 762,900 -- 762,900 183,572 -- 183,572
VisionChina
Media ADR 23,800 -- 23,800(b) 190,400 -- 190,400
-------------------------------------------------------
Total 3,365,091 1,163,313 4,528,404
-------------------------------------------------------
CZECH REPUBLIC (0.2%)
Komercni
Banka 4,400 -- 4,400 670,981 -- 670,981
-------------------------------------------------------
DENMARK (1.2%)
Carlsberg Cl
B -- 3,446 3,446 -- 136,434 136,434
Novo Nordisk
Series B 51,000 -- 51,000 2,733,692 -- 2,733,692
Novozymes
Series B 12,070 -- 12,070 852,072 -- 852,072
Vestas Wind
Systems 26,025 9,828 35,853(b) 1,065,958 404,536 1,470,494
-------------------------------------------------------
Total 4,651,722 540,970 5,192,692
-------------------------------------------------------
FINLAND (1.5%)
Cargotec
Series B 24,000 -- 24,000 332,108 -- 332,108
Fortum 48,994 -- 48,994 1,203,653 -- 1,203,653
Jaakko Poyry
Group 81,000 -- 81,000 1,074,895 -- 1,074,895
Nokia 152,209 32,538 184,747 2,330,743 496,303 2,827,046
Ramirent 90,000 -- 90,000 362,740 -- 362,740
Stockmann
Series B 49,000 -- 49,000 660,157 -- 660,157
-------------------------------------------------------
Total 5,964,296 496,303 6,460,599
-------------------------------------------------------
FRANCE (5.3%)
ALSTOM 31,243 -- 31,243 1,547,971 -- 1,547,971
APRIL Group 16,000 -- 16,000 580,073 -- 580,073
</Table>
27
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
BNP Paribas -- 9,112 9,112 $ -- $ 661,455 $ 661,455
Carbone
Lorraine 16,800 -- 16,800 499,447 -- 499,447
Eutelsat
Communica-
tions 31,521 -- 31,521 676,304 -- 676,304
France
Telecom -- 31,430 31,430 -- 793,124 793,124
GDF Suez 99,746 -- 99,746 4,438,489 -- 4,438,489
Gemalto 25,040 -- 25,040(b) 701,305 -- 701,305
Hermes Intl 10,905 -- 10,905 1,406,993 -- 1,406,993
Hi-Media 50,000 -- 50,000(b) 127,113 -- 127,113
Iliad 11,000 -- 11,000 869,650 -- 869,650
Ingenico 23,377 -- 23,377 364,971 -- 364,971
Meetic 20,000 -- 20,000(b) 281,912 -- 281,912
Neopost 12,000 -- 12,000 1,004,314 -- 1,004,314
Norbert
Dentressan-
gle 12,500 -- 12,500 689,163 -- 689,163
Pierre &
Vacances 11,000 -- 11,000 503,579 -- 503,579
PPR -- 8,227 8,227(b) -- 523,954 523,954
Rubis 13,200 -- 13,200 730,841 -- 730,841
Sanofi-
Aventis -- 8,325 8,325 -- 523,995 523,995
Societe
Generale -- 5,307 5,307 -- 291,394 291,394
SR
Teleperform-
ance 28,979 -- 28,979 625,105 -- 625,105
SUEZ 20 -- 20 867 -- 867
Total -- 6,874 6,874 -- 377,553 377,553
Ubisoft
Entertain-
ment 15,290 -- 15,290(b) 807,931 -- 807,931
Unibail-
Rodamco 8,131 -- 8,131 1,219,095 -- 1,219,095
Vallourec 5,210 -- 5,210 582,579 -- 582,579
Vivendi 50,233 -- 50,233 1,312,582 -- 1,312,582
-------------------------------------------------------
Total 18,970,284 3,171,475 22,141,759
-------------------------------------------------------
GERMANY (5.6%)
Allianz -- 2,456 2,456 -- 183,927 183,927
Bayer 26,618 -- 26,618 1,488,308 -- 1,488,308
CTS Eventim 38,900 -- 38,900 965,704 -- 965,704
Deutsche
Beteiligungs 17,500 -- 17,500 232,702 -- 232,702
Deutsche
Telekom -- 58,432 58,432 -- 869,732 869,732
E.ON 137,121 -- 137,121 5,245,880 -- 5,245,880
ElringKlin-
ger 54,500 -- 54,500 444,214 -- 444,214
Fresenius
Medical -- 13,242 13,242 -- 594,236 594,236
GEA Group 48,989 -- 48,989 705,725 -- 705,725
Hamburger
Hafen und
Logistik 9,000 -- 9,000 301,349 -- 301,349
Metro -- 3,687 3,687 -- 118,818 118,818
MPC
Muenchmeyer
Petersen
Capital 3,000 -- 3,000 28,225 -- 28,225
Rational 8,200 -- 8,200 843,066 -- 843,066
Rhon-
Klinikum 84,100 -- 84,100 1,808,085 -- 1,808,085
RWE 13,685 -- 13,685 1,137,611 -- 1,137,611
SAP 72,747 -- 72,747 2,566,811 -- 2,566,811
SGL Carbon 25,902 -- 25,902(b) 508,291 -- 508,291
Siemens 29,647 -- 29,647 1,780,304 -- 1,780,304
Takkt 40,000 -- 40,000 392,247 -- 392,247
Tognum 26,600 -- 26,600 296,574 -- 296,574
Vossloh 13,900 -- 13,900 1,058,633 -- 1,058,633
Wacker
Chemie 6,226 -- 6,226 677,220 -- 677,220
Wincor
Nixdorf 28,100 -- 28,100 1,220,124 -- 1,220,124
ZhongDe
Waste
Technology 12,100 -- 12,100 149,877 -- 149,877
-------------------------------------------------------
Total 21,850,950 1,766,713 23,617,663
-------------------------------------------------------
</Table>
28
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
GREECE (0.8%)
Alpha Bank 87,238 -- 87,238 $ 1,273,218 $ -- $ 1,273,218
Intralot-
Integrated
Lottery
Systems &
Services 251,000 -- 251,000 1,291,709 -- 1,291,709
OPAP 45,376 -- 45,376 990,420 -- 990,420
-------------------------------------------------------
Total 3,555,347 -- 3,555,347
-------------------------------------------------------
HONG KONG (2.4%)
BOC Hong
Kong
Holdings 428,500 -- 428,500 490,631 -- 490,631
Cheung Kong
Holdings 89,000 -- 89,000 854,585 -- 854,585
China Green
Holdings 1,420,000 -- 1,420,000 1,102,535 -- 1,102,535
China Mobile -- 22,500 22,500 -- 197,419 197,419
Esprit
Holdings -- 10,500 10,500 -- 58,946 58,946
FU JI Food &
Catering
Services
Holdings 737,000 -- 737,000 390,163 -- 390,163
Global
Digital
Creations
Holdings 1,894,600 -- 1,894,600(b) 21,758 -- 21,758
Hang Seng
Bank 64,400 -- 64,400 803,597 -- 803,597
Hong Kong
Aircraft
Engineering 50,000 -- 50,000 394,136 -- 394,136
Hong Kong
Exchanges
and Clearing 140,000 -- 140,000 1,419,797 -- 1,419,797
Hopewell
Highway
Infrastruc-
ture 1,100,000 -- 1,100,000 720,217 -- 720,217
Hutchison
Whampoa 249,000 -- 249,000 1,345,642 -- 1,345,642
Lenovo Group 1,257,000 -- 1,257,000 381,138 -- 381,138
Lifestyle
Intl
Holdings 860,000 -- 860,000 574,081 -- 574,081
Noble Group 642,000 -- 642,000 467,559 -- 467,559
REXCAPITAL
Financial
Holdings 5,000,000 -- 5,000,000(b) 92,400 -- 92,400
TPV
Technology 1,495,000 -- 1,495,000 296,835 -- 296,835
Wharf
Holdings 172,000 -- 172,000 343,198 -- 343,198
Xinyu
Hengdeli
Holdings 1,600,000 -- 1,600,000 290,280 -- 290,280
-------------------------------------------------------
Total 9,988,552 256,365 10,244,917
-------------------------------------------------------
INDIA (1.0%)
Asian Paints 48,446 -- 48,446 948,029 -- 948,029
Housing
Development
Finance 33,000 -- 33,000 1,197,876 -- 1,197,876
Jain
Irrigation
Systems 77,000 -- 77,000 480,755 -- 480,755
Mundra Port
and Special
Economic
Zone 63,500 -- 63,500 468,449 -- 468,449
Shree Cement 8,350 -- 8,350 68,553 -- 68,553
Shriram
Transport
Finance 80,000 -- 80,000 355,023 -- 355,023
United
Phosphorus 380,000 -- 380,000 837,318 -- 837,318
-------------------------------------------------------
Total 4,356,003 -- 4,356,003
-------------------------------------------------------
INDONESIA (0.1%)
Perusahaan
Gas Negara 3,500,000 -- 3,500,000 438,744 -- 438,744
-------------------------------------------------------
IRELAND (0.5%)
Paddy Power 24,500 -- 24,500 417,623 -- 417,623
United Drug 400,000 -- 400,000 1,553,717 -- 1,553,717
-------------------------------------------------------
Total 1,971,340 -- 1,971,340
-------------------------------------------------------
ISRAEL (0.5%)
Teva
Pharmaceuti-
cal Inds ADR -- 43,900 43,900 -- 1,882,432 1,882,432
-------------------------------------------------------
ITALY (1.0%)
Amplifon 69,500 -- 69,500 108,379 -- 108,379
Cobra
Automotive
Technologies 30,000 -- 30,000(b) 80,488 -- 80,488
Compagnie
Industriali
Riunite 453,100 -- 453,100 486,566 -- 486,566
Enel 177,532 -- 177,532 1,187,314 -- 1,187,314
GranitiFian-
dre 62,000 -- 62,000 295,298 -- 295,298
Lottomatica 34,182 -- 34,182 797,798 -- 797,798
</Table>
29
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
SABAF 15,000 -- 15,000 $ 309,065 $ -- $ 309,065
Terna -- R-
ete
Elettrica
Nationale 253,964 -- 253,964 818,778 -- 818,778
-------------------------------------------------------
Total 4,083,686 -- 4,083,686
-------------------------------------------------------
JAPAN (20.7%)
AEON Delight 35,000 -- 35,000 862,450 -- 862,450
AEON Mall 54,000 -- 54,000 1,333,410 -- 1,333,410
Ain
Pharmaciez 35,000 -- 35,000 670,836 -- 670,836
AS ONE 28,600 -- 28,600 569,247 -- 569,247
Asahi
Breweries 80,900 -- 80,900 1,335,726 -- 1,335,726
Asics 95,100 -- 95,100 596,035 -- 596,035
Astellas
Pharma 23,900 10,600 34,500 962,931 433,347 1,396,278
Bank of
Kyoto 76,000 -- 76,000 799,648 -- 799,648
Benesse 18,700 -- 18,700 785,636 -- 785,636
Canon 33,400 -- 33,400 1,169,048 -- 1,169,048
Chuo Mitsui
Trust
Holdings 110,000 -- 110,000 434,114 -- 434,114
Cosel 69,900 -- 69,900 580,877 -- 580,877
CyberAgent 700 -- 700 625,113 -- 625,113
Daihatsu
Motor 78,000 -- 78,000 577,668 -- 577,668
Daiichi
Sankyo -- 10,300 10,300 -- 210,780 210,780
Daito Trust
Construction 19,000 -- 19,000 801,739 -- 801,739
East Japan
Railway 369 -- 369 2,626,539 -- 2,626,539
Eisai -- 10,200 10,200 -- 335,299 335,299
FamilyMart 22,900 -- 22,900 907,531 -- 907,531
Fast
Retailing 17,163 -- 17,163 1,830,225 -- 1,830,225
FCC 60,000 -- 60,000 748,863 -- 748,863
Fukuoka REIT 120 -- 120 471,728 -- 471,728
Glory 35,000 -- 35,000 501,729 -- 501,729
Hamamatsu
Photonics 25,000 -- 25,000 555,031 -- 555,031
Hisamitsu
Pharmaceuti-
cal 26,200 -- 26,200 1,092,308 -- 1,092,308
Hitachi 434,000 -- 434,000 2,038,222 -- 2,038,222
Hitachi
Metals 68,000 -- 68,000 511,442 -- 511,442
Honda Motor 49,900 -- 49,900 1,241,129 -- 1,241,129
Hosiden 58,300 -- 58,300 612,429 -- 612,429
Ibiden 35,000 -- 35,000 654,910 -- 654,910
ITOCHU 189,000 -- 189,000 999,097 -- 999,097
Japan Pure
Chemical 46 -- 46 103,495 -- 103,495
Japan
Tobacco 621 168 789 2,203,721 596,540 2,800,261
Jupiter
Telecommuni-
cations 2,100 -- 2,100 1,407,356 -- 1,407,356
Kamigumi 130,000 -- 130,000 1,034,514 -- 1,034,514
Kansai Paint 370,000 -- 370,000 2,065,596 -- 2,065,596
Kansai Urban
Banking 10,400 -- 10,400 12,079 -- 12,079
KDDI 247 -- 247 1,480,322 -- 1,480,322
Keyence 4,400 -- 4,400 843,413 -- 843,413
Kintetsu
World
Express 35,400 -- 35,400 513,934 -- 513,934
Konami 31,000 -- 31,000 560,973 -- 560,973
Kurita Water
Inds 30,600 -- 30,600 698,367 -- 698,367
Lawson 20,900 -- 20,900 1,021,801 -- 1,021,801
Makita 26,000 -- 26,000 471,574 -- 471,574
Marubeni 319,000 -- 319,000 1,239,676 -- 1,239,676
Mitsubishi 129,300 -- 129,300 2,167,912 -- 2,167,912
Mitsubishi
Electric 272,000 -- 272,000 1,686,687 -- 1,686,687
Mitsubishi
UFJ
Financial
Group 426,000 -- 426,000 2,677,806 -- 2,677,806
Mitsui & Co 109,000 -- 109,000 1,056,451 -- 1,056,451
Mitsui
Fudosan 121,000 16,000 137,000 2,111,225 275,464 2,386,689
Mitsui OSK
Lines 184,000 -- 184,000 961,100 -- 961,100
</Table>
30
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Mitsui
Sumitomo
Insurance
Group
Holdings 22,500 -- 22,500 $ 625,413 $ -- $ 625,413
MIURA 27,300 -- 27,300 560,927 -- 560,927
Nakanishi 8,400 -- 8,400 602,146 -- 602,146
NGK
Insulators 43,000 -- 43,000 446,751 -- 446,751
Nikon 73,000 -- 73,000 1,029,087 -- 1,029,087
Nintendo 8,900 1,200 10,100 2,860,443 378,477 3,238,920
Nippon
Building
Fund 90 -- 90 865,051 -- 865,051
Nippon Meat
Packers 51,000 -- 51,000 699,714 -- 699,714
Nippon
Residential
Investment 208 -- 208 111,964 -- 111,964
Nippon Yusen
Kabushiki
Kaisha 179,000 -- 179,000 865,828 -- 865,828
NTT DoCoMo -- 235 235 -- 372,841 372,841
Olympus 27,000 -- 27,000 520,484 -- 520,484
ORIX JREIT 140 -- 140 641,964 -- 641,964
Osaka
Securities
Exchange 255 -- 255 838,156 -- 838,156
Panasonic 165,000 -- 165,000 2,657,857 -- 2,657,857
POINT 20,000 -- 20,000 982,553 -- 982,553
Rakuten 2,104 -- 2,104 1,043,324 -- 1,043,324
Ryohin
Keikaku 13,000 -- 13,000 622,181 -- 622,181
Seven Bank 421 -- 421 1,212,919 -- 1,212,919
Shimano 23,700 -- 23,700 678,139 -- 678,139
Shin-Etsu
Chemical 47,000 -- 47,000 2,499,005 -- 2,499,005
Sony 17,300 -- 17,300 410,131 -- 410,131
Square Enix
Holdings 23,000 -- 23,000 579,615 -- 579,615
Suruga Bank 144,000 -- 144,000 1,355,921 -- 1,355,921
Sysmex 16,800 -- 16,800 522,045 -- 522,045
T&D Holdings 18,300 -- 18,300 699,279 -- 699,279
T. Hasegawa 42,500 -- 42,500 606,812 -- 606,812
Tamron 35,000 -- 35,000 376,418 -- 376,418
Tokio Marine
Holdings 67,600 -- 67,600 2,085,765 -- 2,085,765
TOPCON 127,800 -- 127,800 719,522 -- 719,522
Uni-Charm -- 5,700 5,700 -- 406,750 406,750
Unicharm
PetCare 31,300 -- 31,300 1,104,766 -- 1,104,766
Union Tool 25,600 -- 25,600 567,829 -- 567,829
Ushio 45,000 -- 45,000 608,096 -- 608,096
USS 11,000 -- 11,000 673,940 -- 673,940
Wacom 413 -- 413 364,760 -- 364,760
Yahoo! Japan -- 1,115 1,115 -- 365,023 365,023
Yokohama
Rubber 126,000 -- 126,000 618,424 -- 618,424
Yusen Air &
Sea Service 52,000 -- 52,000 558,488 -- 558,488
ZENRIN 26,000 -- 26,000 218,561 -- 218,561
-------------------------------------------------------
Total 83,647,941 3,374,521 87,022,462
-------------------------------------------------------
LUXEMBOURG (0.7%)
ArcelorMit-
tal 39,516 -- 39,516 1,025,534 -- 1,025,534
Millicom
Intl
Cellular -- 10,600 10,600 -- 424,000 424,000
SES FDR 82,000 -- 82,000 1,474,624 -- 1,474,624
-------------------------------------------------------
Total 2,500,158 424,000 2,924,158
-------------------------------------------------------
MEXICO (0.4%)
Financiera
Independen-
cia 177,654 -- 177,654 122,404 -- 122,404
Grupo
Aeropor-
tuario del
Sureste ADR 24,000 -- 24,000 773,760 -- 773,760
Urbi
Desarrollos
Urbanos 500,000 -- 500,000(b) 751,283 -- 751,283
-------------------------------------------------------
Total 1,647,447 -- 1,647,447
-------------------------------------------------------
NETHERLANDS (4.6%)
Aalberts
Inds 91,317 -- 91,317 833,948 -- 833,948
Arcadis 48,900 -- 48,900 578,517 -- 578,517
</Table>
31
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Fugro 58,686 -- 58,686 $ 2,096,360 $ -- $ 2,096,360
Imtech 94,000 -- 94,000 1,435,565 -- 1,435,565
Koninklijke
(Royal) KPN 177,259 29,240 206,499 2,495,490 411,430 2,906,920
Koninklijke
Ahold 159,087 -- 159,087 1,707,254 -- 1,707,254
Koninklijke
DSM 17,547 -- 17,547 488,483 -- 488,483
Koninklijke
Vopak 39,126 -- 39,126 1,268,153 -- 1,268,153
Qiagen 29,712 -- 29,712(b) 423,313 -- 423,313
Reed
Elsevier 122,169 -- 122,169 1,632,340 -- 1,632,340
Royal
Boskalis
Westminster 18,419 -- 18,419 607,855 -- 607,855
Smit Intl 13,400 -- 13,400 903,800 -- 903,800
Ten Cate 74,320 -- 74,320 1,575,191 -- 1,575,191
Unilever 70,309 -- 70,309 1,693,811 -- 1,693,811
Unit 4
Agresso 64,150 -- 64,150 960,568 -- 960,568
Wavin 66,830 -- 66,830 233,133 -- 233,133
-------------------------------------------------------
Total 18,933,781 411,430 19,345,211
-------------------------------------------------------
NEW ZEALAND (0.1%)
Sky City
Entertain-
ment Group 264,229 -- 264,229 509,677 -- 509,677
-------------------------------------------------------
NORWAY (0.7%)
DNB NOR 100 -- 100 580 -- 580
Kongsberg
Automotive 63,150 -- 63,150(b) 34,429 -- 34,429
StatoilHydro 84,200 -- 84,200 1,694,523 -- 1,694,523
Tandberg 34,300 -- 34,300 424,614 -- 424,614
Yara Intl 29,770 -- 29,770 622,312 -- 622,312
-------------------------------------------------------
Total 2,776,458 -- 2,776,458
-------------------------------------------------------
POLAND ( -- %)
ING Bank
Slaski 1,200 -- 1,200 172,178 -- 172,178
-------------------------------------------------------
PORTUGAL (0.2%)
Jeronimo
Martins 140,138 -- 140,138 714,902 -- 714,902
-------------------------------------------------------
RUSSIA (0.1%)
RBC
Information
Systems ADR 10,450 -- 10,450 56,221 -- 56,221
Vimpelcom
ADR -- 20,800 20,800(b) -- 301,600 301,600
-------------------------------------------------------
Total 56,221 301,600 357,821
-------------------------------------------------------
SINGAPORE (1.1%)
CDL
Hospitality
Trusts 1,344,500 -- 1,344,500 613,571 -- 613,571
ComfortDel-
Gro 850,000 -- 850,000 697,537 -- 697,537
Mapletree
Logistics
Trust 1,973,100 -- 1,973,100 560,574 -- 560,574
Mapletree
Logistics
Trust Series
A 1,479,825 -- 1,479,825(e) 406,021 -- 406,021
Olam Intl 800,000 -- 800,000 704,547 -- 704,547
Singapore
Exchange 450,000 -- 450,000 1,611,513 -- 1,611,513
-------------------------------------------------------
Total 4,593,763 -- 4,593,763
-------------------------------------------------------
SOUTH AFRICA (0.8%)
Impala
Platinum
Holdings 66,000 -- 66,000 690,389 -- 690,389
Mr Price
Group 310,000 -- 310,000 763,339 -- 763,339
Naspers
Series N 64,000 -- 64,000 1,067,811 -- 1,067,811
Randgold
Resources
ADR 29,500 -- 29,500 914,795 -- 914,795
-------------------------------------------------------
Total 3,436,334 -- 3,436,334
-------------------------------------------------------
SOUTH KOREA (0.7%)
MegaStudy 6,850 -- 6,850 770,653 -- 770,653
Sung Kwang
Bend 41,000 -- 41,000 388,458 -- 388,458
Taewoong 11,372 -- 11,372 554,243 -- 554,243
</Table>
32
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Woongjin
Coway 50,700 -- 50,700 $ 1,044,103 $ -- $ 1,044,103
-------------------------------------------------------
Total 2,757,457 -- 2,757,457
-------------------------------------------------------
SPAIN (2.0%)
Grifols 34,914 -- 34,914 694,571 -- 694,571
Iberdrola 118,651 -- 118,651 858,415 -- 858,415
Mapfre 201,970 -- 201,970 642,548 -- 642,548
Red
Electrica de
Espana 17,800 -- 17,800 779,920 -- 779,920
Telefonica 293,252 -- 293,252 5,427,624 -- 5,427,624
-------------------------------------------------------
Total 8,403,078 -- 8,403,078
-------------------------------------------------------
SWEDEN (1.3%)
Atlas Copco
Series A 124,600 -- 124,600 1,045,633 -- 1,045,633
Hexagon
Series B 172,710 -- 172,710 1,131,917 -- 1,131,917
HEXPOL 49,196 -- 49,196(b) 197,546 -- 197,546
Modern Times
Group Series
B 20,475 -- 20,475 439,598 -- 439,598
Nobia 104,170 -- 104,170 227,078 -- 227,078
Nordea Bank 52,309 -- 52,309 419,499 -- 419,499
Oriflame
Cosmetics
SDR 16,296 -- 16,296 509,397 -- 509,397
Securitas
Systems
Series B 469,000 -- 469,000 475,887 -- 475,887
Sweco Series
B 139,000 -- 139,000 852,467 -- 852,467
Swedish
Match -- 18,400 18,400(b) -- 253,657 253,657
-------------------------------------------------------
Total 5,299,022 253,657 5,552,679
-------------------------------------------------------
SWITZERLAND (10.3%)
ABB 62,015 -- 62,015(b) 813,600 -- 813,600
Actelion 28,586 6,448 35,034(b) 1,509,942 340,919 1,850,861
Aryzta 44,100 -- 44,100(b) 1,573,258 -- 1,573,258
Burckhardt
Compression
Holding 4,350 -- 4,350 565,447 -- 565,447
Geberit 11,600 -- 11,600 1,205,020 -- 1,205,020
Givaudan 750 -- 750 510,995 -- 510,995
Julius Baer
Holding -- 12,036 12,036 -- 473,788 473,788
Kuehne &
Nagel Intl 24,500 -- 24,500 1,483,177 -- 1,483,177
Lonza Group 11,822 -- 11,822 981,014 -- 981,014
Nestle 241,728 38,226 279,954 9,398,860 1,490,029 10,888,889
Novartis 156,762 27,161 183,923 7,955,898 1,374,038 9,329,936
Roche
Holding 29,421 11,977 41,398 4,498,679 1,833,269 6,331,948
Sika 1,200 -- 1,200 946,047 -- 946,047
Sonova
Holding 18,810 -- 18,810 781,465 -- 781,465
Synthes 11,061 -- 11,061 1,427,153 -- 1,427,153
Temenos
Group 29,567 -- 29,567(b) 370,260 -- 370,260
UBS -- 63,775 63,775 -- 1,088,206 1,088,206
Xstrata 93,209 -- 93,209 1,594,128 -- 1,594,128
Zurich
Financial
Services 5,706 -- 5,706 1,157,470 -- 1,157,470
-------------------------------------------------------
Total 36,772,413 6,600,249 43,372,662
-------------------------------------------------------
TAIWAN (0.6%)
Everlight
Electronics 282,975 -- 282,975 427,848 -- 427,848
Formosa Intl
Hotels 81,800 -- 81,800 561,209 -- 561,209
GeoVision 60,000 -- 60,000 249,087 -- 249,087
President
Chain Store 318,000 -- 318,000 738,636 -- 738,636
Wah Lee
Industrial 341,755 -- 341,755 321,115 -- 321,115
-------------------------------------------------------
Total 2,297,895 -- 2,297,895
-------------------------------------------------------
UNITED KINGDOM (18.1%)
3i Group -- 49,584 49,584 -- 433,232 433,232
Aggreko 118,017 -- 118,017 825,761 -- 825,761
Anglo
American 99,811 29,048 128,859 2,504,152 717,371 3,221,523
</Table>
33
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
ARM Holdings -- 694,390 694,390 $ -- $ 1,081,961 $ 1,081,961
AstraZeneca -- 28,946 28,946 -- 1,230,642 1,230,642
Autonomy 72,059 67,433 139,492(b) 1,142,437 1,063,202 2,205,639
AVEVA Group 38,097 -- 38,097 485,616 -- 485,616
Babcock Intl
Group 117,774 -- 117,774 736,856 -- 736,856
BAE Systems 345,074 -- 345,074 1,939,469 -- 1,939,469
Barclays -- 59,648 59,648(b) -- 175,666 175,666
BG Group 253,614 -- 253,614 3,728,782 -- 3,728,782
BHP Billiton 118,803 49,279 168,082 2,017,153 836,313 2,853,466
British
American
Tobacco 136,293 13,582 149,875 3,738,076 372,997 4,111,073
Cable &
Wireless 530,986 -- 530,986 1,052,310 -- 1,052,310
Cadbury -- 45,342 45,342 -- 416,664 416,664
Capita Group 143,000 85,302 228,302 1,477,480 878,360 2,355,840
Chemring
Group 23,376 -- 23,376 599,650 -- 599,650
Cobham 360,988 -- 360,988 1,097,003 -- 1,097,003
Compass
Group 273,250 -- 273,250 1,270,518 -- 1,270,518
easyJet -- 289,687 289,687(b) -- 1,437,028 1,437,028
Enterprise
Inns 243,374 -- 243,374 383,220 -- 383,220
FirstGroup 129,189 -- 129,189 852,453 -- 852,453
G4S 375,738 -- 375,738 1,137,891 -- 1,137,891
GAME Group 245,627 -- 245,627 515,195 -- 515,195
GlaxoSmithK-
line 317,051 -- 317,051 6,094,410 -- 6,094,410
HMV Group 277,241 -- 277,241 444,041 -- 444,041
IG Group
Holdings 130,897 -- 130,897 611,496 -- 611,496
Imperial
Tobacco
Group 104,119 -- 104,119 2,790,289 -- 2,790,289
Informa 128,200 -- 128,200 434,297 -- 434,297
Inmarsat 130,419 -- 130,419 889,114 -- 889,114
Intermediate
Capital
Group 37,500 -- 37,500 584,550 -- 584,550
Intertek
Group 182,176 -- 182,176 2,157,327 -- 2,157,327
Intl Power 316,111 -- 316,111 1,130,783 -- 1,130,783
J Sainsbury -- 109,901 109,901 -- 502,666 502,666
John D Wood
& Co 136,926 -- 136,926 529,195 -- 529,195
Keller Group 42,000 -- 42,000 353,238 -- 353,238
Michael Page
Intl -- 114,256 114,256 -- 369,305 369,305
Next -- 34,722 34,722 -- 589,613 589,613
Northgate 110,000 -- 110,000 226,328 -- 226,328
Petrofac 83,944 -- 83,944 581,071 -- 581,071
Prudential 274,748 -- 274,748 1,380,024 -- 1,380,024
Reckitt
Benckiser
Group 71,434 30,132 101,566 3,021,364 1,266,486 4,287,850
Rio Tinto 42,455 14,894 57,349 1,982,980 694,587 2,677,567
Rotork 102,886 -- 102,886 1,232,752 -- 1,232,752
Royal Dutch
Shell Cl A -- 24,326 24,326 -- 665,081 665,081
RPS Group 342,400 -- 342,400 814,976 -- 814,976
Serco Group 220,000 -- 220,000 1,311,864 -- 1,311,864
Smith &
Nephew 110,000 -- 110,000 1,007,104 -- 1,007,104
Stagecoach
Group 288,916 -- 288,916 867,409 -- 867,409
Standard
Chartered 139,077 -- 139,077 2,298,317 -- 2,298,317
Tesco 244,681 102,872 347,553 1,340,510 562,318 1,902,828
Tullett
Prebon 153,390 -- 153,390 587,789 -- 587,789
Tullow Oil 36,000 -- 36,000 305,704 -- 305,704
Unilever 97,311 -- 97,311 2,185,970 -- 2,185,970
Vodafone
Group -- 80,515 80,515 -- 155,085 155,085
Wm Morrison
Supermarkets 348,257 109,913 458,170 1,482,720 469,610 1,952,330
-------------------------------------------------------
Total 62,149,644 13,918,187 76,067,831
-------------------------------------------------------
UNITED STATES (1.7%)
Atwood
Oceanics 58,000 -- 58,000(b) 1,593,840 -- 1,593,840
</Table>
34
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
BioMarin
Pharmaceuti-
cal 28,000 -- 28,000(b) $ 512,960 $ -- $ 512,960
Bristow
Group 13,500 -- 13,500(b) 334,395 -- 334,395
Central
European
Distribution 38,000 -- 38,000(b) 1,094,020 -- 1,094,020
FMC
Technologies 30,600 -- 30,600(b) 1,070,694 -- 1,070,694
iShares MSCI
EAFE Index
Fund 39,938 -- 39,938 1,782,033 -- 1,782,033
Oceaneering
Intl 5,000 -- 5,000(b) 140,850 -- 140,850
Synthes -- 5,135 5,135 -- 663,009 663,009
-------------------------------------------------------
Total 6,528,792 663,009 7,191,801
-------------------------------------------------------
TOTAL COMMON
STOCKS
(Cost:
$564,309,82-
4) $365,979,624 $39,362,312 $405,341,936
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (2.8%)
SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED
RiverSource
Short-Term
Cash Fund,
1.60% 11,780,597 -- 11,780,597(d) $ 11,780,597 $ -- $ 11,780,597
-------------------------------------------------------
TOTAL MONEY
MARKET FUND
(Cost:
$11,780,597) $ 11,780,597 $ -- $ 11,780,597
-------------------------------------------------------
TOTAL
INVESTMENTS
IN
SECURITIES
(Cost:
$576,090,42-
1)(f) $377,760,221 $39,362,312 $417,122,533
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
35
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
INDUSTRY VALUE VALUE VALUE
RIVERSOURCE
RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL
PERCENTAGE OF INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
NET ASSETS GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Aerospace & Defense 0.9% $ 3,636,122 $ -- $ 3,636,122
Air Freight &
Logistics 0.5 2,233,157 -- 2,233,157
Airlines 0.3 -- 1,437,028 1,437,028
Auto Components 0.5 1,926,418 -- 1,926,418
Automobiles 0.4 1,818,797 -- 1,818,797
Beverages 0.6 2,429,746 136,434 2,566,180
Biotechnology 1.3 4,578,391 1,038,557 5,616,948
Building Products 0.4 1,888,776 -- 1,888,776
Capital Markets 1.0 2,247,867 1,995,226 4,243,093
Chemicals 3.9 15,309,467 1,091,328 16,400,795
Commercial Banks 3.4 13,363,132 1,128,515 14,491,647
Commercial Services
& Supplies 1.5 6,240,689 -- 6,240,689
Communications
Equipment 0.9 3,004,444 879,571 3,884,015
Computers &
Peripherals 0.7 2,964,162 -- 2,964,162
Construction &
Engineering 1.2 4,788,072 115,961 4,904,033
Construction
Materials -- 68,553 -- 68,553
Consumer Finance 0.1 477,427 -- 477,427
Containers &
Packaging 0.2 771,816 -- 771,816
Distributors 0.1 290,280 -- 290,280
Diversified
Consumer Services 0.4 1,556,289 -- 1,556,289
Diversified
Financial Services 1.8 7,464,028 -- 7,464,028
Diversified
Telecommunication
Services 3.1 10,734,188 2,375,886 13,110,074
Electric Utilities 2.7 11,193,780 -- 11,193,780
Electrical
Equipment 1.9 7,607,501 404,536 8,012,037
Electronic
Equipment,
Instruments &
Components 1.8 7,770,213 -- 7,770,213
Energy Equipment &
Services 1.9 8,142,628 -- 8,142,628
Food & Staples
Retailing 3.4 12,533,799 1,653,412 14,187,211
Food Products 4.7 18,157,619 1,490,029 19,647,648
Gas Utilities 0.4 1,169,585 416,664 1,586,249
Health Care
Equipment &
Supplies 1.4 5,205,357 663,009 5,868,366
Health Care
Providers &
Services 1.3 4,930,956 594,236 5,525,192
Hotels, Restaurants
& Leisure 1.9 7,644,487 376,134 8,020,621
Household Durables 1.5 6,487,079 -- 6,487,079
Household Products 1.1 3,021,364 1,673,236 4,694,600
Independent Power
Producers & Energy
Traders 0.3 1,130,783 -- 1,130,783
Industrial
Conglomerates 0.9 3,612,512 -- 3,612,512
Insurance 1.9 7,917,792 183,927 8,101,719
Internet & Catalog
Retail 0.3 1,435,571 -- 1,435,571
Internet Software &
Services 0.3 281,912 826,519 1,108,431
IT Services 0.2 999,654 -- 999,654
Leisure Equipment &
Products 0.5 2,083,644 -- 2,083,644
Life Sciences Tools
& Services 0.4 1,852,315 -- 1,852,315
Machinery 2.6 10,414,014 353,482 10,767,496
Marine 1.0 4,101,466 -- 4,101,466
Media 2.7 10,911,644 389,004 11,300,648
Metals & Mining 5.4 19,569,842 2,744,079 22,313,921
Multiline Retail 0.8 1,856,419 1,323,289 3,179,708
Multi-Utilities 1.3 5,576,967 -- 5,576,967
Office Electronics 0.5 2,173,362 -- 2,173,362
Oil, Gas &
Consumable Fuels 3.6 13,249,050 1,770,194 15,019,244
Paper & Forest
Products 0.5 2,020,857 -- 2,020,857
Personal Products 0.3 1,099,758 -- 1,099,758
Pharmaceuticals 7.8 24,826,226 7,823,802 32,650,028
Professional
Services 1.6 5,334,807 1,247,665 6,582,472
</Table>
36
<Table>
<Caption>
INDUSTRY VALUE VALUE VALUE
RIVERSOURCE
RIVERSOURCE PARTNERS
PARTNERS SELIGMAN INTERNATIONAL
PERCENTAGE OF INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND
NET ASSETS GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Real Estate
Investment Trusts
(REITs) 1.2 $ 4,889,968 $ -- $ 4,889,968
Real Estate
Management &
Development 1.7 6,697,952 275,464 6,973,416
Road & Rail 1.4 5,726,855 -- 5,726,855
Semiconductors &
Semiconductor
Equipment 0.3 -- 1,081,961 1,081,961
Software 2.8 10,356,412 1,441,679 11,798,091
Specialty Retail 1.3 5,436,371 58,946 5,495,317
Textiles, Apparel &
Luxury Goods 1.3 5,398,335 -- 5,398,335
Thrifts & Mortgage
Finance 0.3 1,197,876 -- 1,197,876
Tobacco 2.4 8,732,086 1,223,194 9,955,280
Trading Companies &
Distributors 1.5 6,293,435 -- 6,293,435
Transportation
Infrastructure 1.7 6,963,984 -- 6,963,984
Wireless
Telecommunication
Services 0.8 2,181,566 1,149,345 3,330,911
Other(1) 2.8 11,780,597 -- 11,780,597
- -------------------------------------------------------------------------------------------
Total $377,760,221 $39,362,312 $417,122,533
- -------------------------------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
37
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008
RiverSource Partners International Select Growth Fund
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
Nov. 3, 2008 474,700 775,375 $11,488 $ --
British Pound U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 422,254 344,627 -- (5,806)
Canadian Dollar U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 1,348,178 1,741,044 23,331 --
European Monetary Unit U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 502,030 335,375 -- (3,308)
Singapore Dollar U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 1,781,042 1,570,695 35,114 --
Swiss Franc U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 240,088 369,764 5,509 --
U.S. Dollar Australian Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 637,866 390,517 -- (9,446)
U.S. Dollar British Pound
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 83,940 102,848 1,414 --
U.S. Dollar Canadian Dollar
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 13,378 37,111 71 --
U.S. Dollar Polish Zloty
- ------------------------------------------------------------------------------------------
Nov. 3, 2008 68,224 102,139 681 --
U.S. Dollar Singapore Dollar
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 80,423 103,842 1,375 --
European Monetary Unit U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 56,034,950 577,510 8,526 --
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 12,936 1,026 19 --
Mexican Peso U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 630,413 383,230 -- (13,719)
U.S. Dollar British Pound
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 788,546 952,106 1,616 --
U.S. Dollar Canadian Dollar
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 649,617 63,023,713 -- (9,669)
U.S. Dollar Japanese Yen
- ------------------------------------------------------------------------------------------
Nov. 4, 2008 7,075 10,388 -- (67)
U.S. Dollar Singapore Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 7,693 6,377 -- (7)
Canadian Dollar U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 11,837 15,090 9 --
European Monetary Unit U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 4,791,733 48,563 -- (94)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 23,817 1,848 -- (6)
Mexican Peso U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 361,456 533,869 -- (6,896)
U.S. Dollar Australian Dollar
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 216,067 134,215 -- (87)
U.S. Dollar British Pound
- ------------------------------------------------------------------------------------------
Nov. 5, 2008 12,534 18,588 6 --
U.S. Dollar Singapore Dollar
- ------------------------------------------------------------------------------------------
Nov. 6, 2008 4,978,267 50,773 731 --
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
Nov. 6, 2008 285,028 433,630 2,989 --
U.S. Dollar Australian Dollar
- ------------------------------------------------------------------------------------------
Nov. 6, 2008 19,491 1,911,046 -- (281)
U.S. Dollar Japanese Yen
- ------------------------------------------------------------------------------------------
Total $92,879 $(49,386)
- ------------------------------------------------------------------------------------------
</Table>
38
Seligman International Growth Fund
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
Nov. 3, 2008 285,706 364,275 $ 129 $ --
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 814,944 122,718 1,722 --
Norwegian Krone U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 408,669 353,430 1,038 --
Swiss Franc U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 410,796 251,043 -- (6,780)
U.S. Dollar British Pound
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 146,556 178,804 1,792 --
U.S. Dollar Canadian Dollar
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 21,428 16,563 -- (318)
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 246,263 190,223 -- (3,814)
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 275,962 2,139,260 69 --
U.S. Dollar Hong Kong Dollar
- -----------------------------------------------------------------------------------------------
Nov. 3, 2008 50,554 57,181 -- (1,248)
U.S. Dollar Swiss Franc
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 90,605 117,297 1,817 --
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 382,889 232,558 -- (8,621)
U.S. Dollar British Pound
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 135,523 162,758 -- (488)
U.S. Dollar Canadian Dollar
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 123,256 709,686 -- (1,782)
U.S. Dollar Danish Krone
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 67,063 52,598 -- (24)
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 177,164 17,150,315 -- (3,066)
U.S. Dollar Japanese Yen
- -----------------------------------------------------------------------------------------------
Nov. 4, 2008 163,559 186,227 -- (2,977)
U.S. Dollar Swiss Franc
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 102,169 130,143 -- (76)
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 90,812 115,777 32 --
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 307,104 265,587 774 --
Swiss Franc U.S. Dollar
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 57,241 35,561 -- (10)
U.S. Dollar British Pound
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 147,177 178,518 934 --
U.S. Dollar Canadian Dollar
- -----------------------------------------------------------------------------------------------
Nov. 5, 2008 303,224 29,900,636 305 --
U.S. Dollar Japanese Yen
- -----------------------------------------------------------------------------------------------
Nov. 6, 2008 2,979,628 30,595 348 --
Japanese Yen U.S. Dollar
- -----------------------------------------------------------------------------------------------
Total $ 8,960 $(29,204)
- -----------------------------------------------------------------------------------------------
PRO FORMA COMBINED
TOTAL $101,839 $(78,590)
- -----------------------------------------------------------------------------------------------
<Caption>
NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
</Table>
(A) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(B) Non-income producing.
(C) Foreign security values are stated in U.S. dollars.
(D) Affiliated Money Market Fund -- See Note 5 to the financial statements in
the annual report. The rate shown is the seven-day current annualized
yield at Oct. 31, 2008.
(E) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
39
(F) At Oct. 31, 2008, the cost of securities for federal income tax purposes
and the aggregate gross unrealized appreciation and depreciation based on
that cost was:
<Table>
<Caption>
RIVERSOURCE
PARTNERS
RIVERSOURCE PARTNERS SELIGMAN INTERNATIONAL
INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND
SELECT GROWTH FUND GROWTH FUND PRO FORMA COMBINED
Cost of securities for federal income tax purposes: $ 537,108,889 $47,322,896 $ 584,431,785
Unrealized appreciation 14,274,295 535,060 14,809,355
Unrealized depreciation (173,622,963) (8,495,644) (182,118,607)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized depreciation $(159,348,668) $(7,960,584) $(167,309,252)
- ---------------------------------------------------------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
40
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
INTRODUCTION TO PROPOSED FUND REORGANIZATION
Nov. 30, 2008
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements
have been derived from financial statements prepared for the RiverSource Short
Duration U.S. Government Fund and the Seligman U.S. Government Securities Fund
as of Nov. 30, 2008. RiverSource Short Duration U.S. Government Fund invests
primarily in debt securities issued or guaranteed as to principal and interest
by the U.S. government, or its agencies or instrumentalities. Seligman U.S.
Government Securities Fund invests primarily in U.S. government securities which
are debt securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or government sponsored enterprises.
Under the proposed Agreement and Plan of Reorganization, share classes of
Seligman U.S. Government Securities Fund would be exchanged for share classes of
RiverSource Short Duration U.S. Government Fund.
<Table>
<Caption>
SELLING FUND BUYING FUND
- ---------------------------------------------------------------------------------------------------------------
Seligman U.S. Government Securities Fund Class A RiverSource Short Duration U.S. Government Fund Class A
- ---------------------------------------------------------------------------------------------------------------
Seligman U.S. Government Securities Fund Class B RiverSource Short Duration U.S. Government Fund Class B
- ---------------------------------------------------------------------------------------------------------------
Seligman U.S. Government Securities Fund Class C RiverSource Short Duration U.S. Government Fund Class C
- ---------------------------------------------------------------------------------------------------------------
Seligman U.S. Government Securities Fund Class
R(1) RiverSource Short Duration U.S. Government Fund Class R2(2)
- ---------------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R shares of the Seligman
U.S. Government Securities Fund will be redesignated as Class R2 shares.
(2) The inception date for the RiverSource Short Duration U.S. Government Fund
Class R2 shares is expected to be in the third quarter of 2009.
Note: RiverSource Short Duration U.S. Government Fund also offers Class I, Class
R4 and Class W shares.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivor,
RiverSource Short Duration U.S. Government Fund, as if the transaction had
occurred at the beginning of the fiscal year ending Nov. 30, 2008.
41
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
RIVERSOURCE SELIGMAN U.S. GOVERNMENT U.S. GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND FUND
U.S. GOVERNMENT SECURITIES PRO FORMA PRO FORMA
NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
ASSETS
Investments in securities, at cost
Unaffiliated issuers $ 856,828,651 $92,254,153 $ -- $ 949,082,804
Affiliated money market fund $ 23,204,156 $ -- $ -- $ 23,204,156
----------------------------------------------------------------------------
Investments in securities, at value
Unaffiliated issuers $ 821,536,813 $94,412,985 $ -- $ 915,949,798
Affiliated money market fund $ 23,204,156 $ -- $ -- $ 23,204,156
Cash -- 64,844 -- 64,844
Capital shares receivable 1,158,621 12,185 -- 1,170,806
Dividends and accrued interest receivable 3,717,190 497,874 -- 4,215,064
Receivable for investment securities sold 9,632,333 -- -- 9,632,333
Transfer agency fees receivable (Note 2) -- -- 39,986(b) 39,986
Receivable from RiverSource Investments, LLC
(Note 2) -- -- 139,531(f) 139,531
Prepaid expenses -- 42,812 -- 42,812
Other assets -- 14,178 -- 14,178
- ------------------------------------------------------------------------------------------------------------------------------
Total assets 859,249,113 95,044,878 179,517 954,473,508
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Forward sale commitments, at value (proceeds
receivable $9,347,823 for RiverSource Short
Duration U.S. Government Fund) 9,434,419 -- -- 9,434,419
Dividends payable to shareholders 211,503 57,967 -- 269,470
Capital shares payable 829,806 303,871 -- 1,133,677
Payable for reorganization costs (Note 2) -- -- 80,918(g) 80,918
Payable for investment securities purchased 39,811,910 13,056,559 -- 52,868,469
Variation margin payable 271,205 -- -- 271,205
Accrued investment management services fees
(Note 2) 21,210 32,327 (3,286)(a) 50,251
Accrued distribution fees 151,076 32,583 -- 183,659
Accrued transfer agency fees (Note 2) 6,779 61,509 (68,288)(b) --
Accrued administrative services fees (Note 2) 3,009 -- 47,747(c) 50,756
Accrued plan administration services fees (Note
2) 901 -- 7,363(d) 8,264
Other accrued expenses (Note 2) 536,061 69,553 (166,217)(e) 439,397
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities 51,277,879 13,614,369 (101,763) 64,790,485
- ------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital
stock $ 807,971,234 $81,430,509 $ 281,280 $ 889,683,023
- ------------------------------------------------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value for RiverSource
Short Duration U.S. Government Fund
and $.001 par value for Seligman U.S.
Government Securities Fund (Notes 2 and 3) $ 1,776,823 $ 11,369 $ 168,218(g) $ 1,956,410
Additional paid-in capital (Notes 2 and 3) 1,040,002,565 86,549,235 (249,136)(g) 1,126,302,664
Excess of distributions over net investment
income (Note 2) (405,936) (24,156) 362,198 (67,894)
Accumulated net realized gain (loss) (196,133,845) (7,264,771) -- (203,398,616)
Unrealized appreciation (depreciation) on
investments and on translation of assets and
liabilities in foreign currencies (37,268,373) 2,158,832 -- (35,109,541)
- ------------------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 807,971,234 $81,430,509 $ 281,280 $ 889,683,023
- ------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding
shares: Class A $ 586,444,617 $47,195,472 $ 163,025 $ 633,803,114
Class B $ 129,748,319 $ 8,916,698 $ 30,800 $ 138,695,817
Class C $ 11,782,382 $21,042,387 $ 72,685 $ 32,897,454
Class I $ 75,499,402 N/A $ -- $ 75,499,402
Class R2 N/A $ 4,275,952 $ 14,770 $ 4,290,722
Class R4 $ 4,491,730 N/A $ -- $ 4,491,730
Class W $ 4,784 N/A $ -- $ 4,784
Shares outstanding
(Note 3): Class A shares 128,981,199 6,593,371 -- 139,389,660
Class B shares 28,536,267 1,242,979 -- 30,502,750
Class C shares 2,591,394 2,935,262 -- 7,232,069
Class I shares 16,585,126 N/A -- 16,585,126
Class R2 shares N/A 597,126 -- 943,016
Class R4 shares 987,307 N/A -- 987,307
Class W shares 1,053 N/A -- 1,053
Net asset value per share of outstanding capital
stock: Class A $ 4.55 $ 7.16 $ -- $ 4.55
Class B $ 4.55 $ 7.17 $ -- $ 4.55
Class C $ 4.55 $ 7.17 $ -- $ 4.55
Class I $ 4.55 N/A $ -- $ 4.55
Class R2 N/A $ 7.16 $ -- $ 4.55
Class R4 $ 4.55 N/A $ -- $ 4.55
Class W $ 4.54 N/A $ -- $ 4.54
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
42
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
<Table>
<Caption>
RIVERSOURCE RIVERSOURCE
RIVERSOURCE SELIGMAN SHORT DURATION SHORT DURATION
SHORT DURATION U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES FUND PRO FORMA PRO FORMA
YEAR ENDED NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
INVESTMENT INCOME
Income:
Interest $ 35,106,555 $3,122,790 $ -- $ 38,229,345
Income distributions from affiliated
money market fund 255,080 -- -- 255,080
- ---------------------------------------------------------------------------------------------------------------------------
Total income 35,361,635 3,122,790 -- 38,484,425
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment management services fees (Note
2) 3,825,944 343,471 (3,286)(a) 4,166,129
Distribution fees
Class A 1,372,442 101,543 -- 1,473,985
Class B 1,516,358 72,321 -- 1,588,679
Class C 98,304 169,925 -- 268,229
Class R2 -- 14,623 -- 14,623
Class W 12 -- -- 12
Transfer agency fees (Note 2)
Class A 970,169 196,588 (48,046)(b) 1,118,711
Class B 284,318 34,161 (2,286)(b) 316,193
Class C 17,982 81,021 (45,373)(b) 53,630
Class R2 -- 14,042 (12,569)(b) 1,473
Class R4 2,263 -- -- 2,263
Class W 10 -- -- 10
Administrative services fees (Note 2) 542,966 -- 47,747(c) 590,713
Plan administration services fees (Note
2)
Class R2 -- -- 7,363(d) 7,363
Class R4 11,316 -- -- 11,316
Compensation of board members (Note 2) 19,075 6,440 (4,796)(e) 20,719
Custodian fees (Note 2) 91,875 28,334 (20,415)(e) 99,794
Printing and postage (Note 2) 135,880 28,998 (17,286)(e) 147,592
Registration fees (Note 2) 95,354 88,736 (80,517)(e) 103,573
Professional fees (Note 2) 44,307 39,313 (35,494)(e) 48,126
Other (Note 2) 32,326 10,495 (7,709)(e) 35,112
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 9,060,901 1,230,011 (222,667) 10,068,245
Expenses waived/reimbursed by
RiverSource Investments, LLC (Note
2) (1,071,144) -- (139,531)(f) (1,210,675)
Earnings and bank fee credits on
cash balances (28,530) -- -- (28,530)
- ---------------------------------------------------------------------------------------------------------------------------
Total net expenses 7,961,227 1,230,011 (362,198) 8,829,040
- ---------------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net 27,400,408 1,892,779 362,198 29,655,385
- ---------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions 2,946,255 1,078,111 -- 4,024,366
Futures contracts (9,675,202) -- -- (9,675,202)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (6,728,947) 1,078,111 -- (5,650,836)
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities
in foreign currencies (35,338,940) 901,867 -- (34,437,073)
- ---------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and
foreign currencies (42,067,887) 1,979,978 -- (40,087,909)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(14,667,479) $3,872,757 $ 362,198 $(10,432,524)
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements.
43
RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND)
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited as to Nov. 30, 2008)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two Funds at, and for, the
12-month period ended Nov. 30, 2008. These statements have been derived from
financial statements prepared for the RiverSource Short Duration U.S. Government
Fund and the Seligman U.S. Government Securities Fund as of Nov. 30, 2008.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
RiverSource Short Duration U.S. Government Fund invests primarily in debt
securities issued or guaranteed as to principal and interest by the U.S.
government, or its agencies or instrumentalities.
Seligman U.S. Government Securities Fund invests primarily in U.S. government
securities which are debt securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or government sponsored
enterprises.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of Seligman U.S. Government Securities Fund in exchange for Class A,
Class B, Class C and Class R2 shares of RiverSource Short Duration U.S.
Government Fund under U.S. generally accepted accounting principles. The pro
forma statements reflect estimates for the combined RiverSource Short Duration
U.S. Government Fund based on the increased asset level of the Reorganization
and associated economies of scale, adjusted to reflect current fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the Funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, RiverSource Short Duration
U.S. Government Fund, as if the transaction had occurred at the beginning of the
year presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect the change in investment management services fee due to the
Reorganization.
(b) To reflect the change in transfer agent fees due to the Reorganization
including adjusting for closed account fees for each Seligman U.S.
Government Securities Fund shareholder account that will be closed on the
system as a result of the Reorganization.
(c) To reflect the change in administrative services fees due to the
Reorganization.
(d) To reflect the change in plan administration services fees due to the
Reorganization.
(e) To reflect the change in other fees due to the Reorganization.
(f) To adjust the expense reimbursement to reflect the net reduction in fees
resulting from the Reorganization per the agreement (through May 31, 2009)
by RiverSource Investments, LLC and its affiliates to waive certain fees and
absorb certain expenses of the combined fund.
(g) Includes the impact of estimated Reorganization costs of $80,918, none of
which are recurring expenses.
44
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C and Class R2 shares of RiverSource Short Duration U.S.
Government Fund as if the Reorganization were to have taken place on Nov. 30,
2008. The following table reflects the number of RiverSource Short Duration U.S.
Government Fund shares assumed to be issued to the shareholders of the Seligman
U.S. Government Securities Fund.
<Table>
<Caption>
SELIGMAN RIVERSOURCE
U.S. GOVERNMENT SHORT DURATION TOTAL
SECURITIES FUND U.S. GOVERNMENT FUND PRO FORMA
SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------
Class A 10,408,461 128,981,199 139,389,660
- -----------------------------------------------------------------------------------------------------------------
Class B 1,966,483 28,536,267 30,502,750
- -----------------------------------------------------------------------------------------------------------------
Class C 4,640,675 2,591,394 7,232,069
- -----------------------------------------------------------------------------------------------------------------
Class I N/A 16,585,126 16,585,126
- -----------------------------------------------------------------------------------------------------------------
Class R2(1),(2) 943,016 N/A 943,016
- -----------------------------------------------------------------------------------------------------------------
Class R4 N/A 987,307 987,307
- -----------------------------------------------------------------------------------------------------------------
Class W N/A 1,053 1,053
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R shares of the Seligman
U.S. Government Securities Fund will be redesignated as Class R2 shares.
(2) The inception date for the RiverSource Short Duration U.S. Government Fund
Class R2 shares is expected to be in the third quarter of 2009.
45
COMBINED PORTFOLIO OF INVESTMENTS
RiverSource Short Duration U.S. Government Fund
NOV. 30, 2008 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
BONDS (83.7%)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
U.S. GOVERNMENT OBLIGATIONS & AGENCIES (28.1%)
Federal Home Loan
Bank
12/29/08 5.13% $24,390,000 $ -- $24,390,000 $ 24,441,614 $ -- $ 24,441,614
04/09/09 2.32 225,000 -- 225,000 226,138 -- 226,138
05/20/11 2.63 -- 2,565,000 2,565,000 -- 2,551,554 2,551,554
10/18/13 3.63 -- 2,000,000 2,000,000 -- 2,045,786 2,045,786
11/17/17 5.00 -- 500,000 500,000 -- 529,080 529,080
Federal Home Loan
Mtge Corp
06/15/11 6.00 -- 500,000 500,000 -- 542,810 542,810
08/20/12 5.50 -- 2,610,000 2,610,000 -- 2,835,708 2,835,708
07/15/14 5.00 -- 900,000 900,000 -- 974,572 974,572
06/13/18 4.88 5,405,000 -- 5,405,000 5,736,449 -- 5,736,449
Federal Natl Mtge
Assn
06/09/10 3.26 -- 580,000 580,000 -- 590,299 590,299
08/12/10 3.25 -- 870,000 870,000 -- 885,905 885,905
11/19/12 4.75 -- 730,000 730,000 -- 775,014 775,014
04/09/13 3.25 18,880,000 -- 18,880,000 19,000,908 -- 19,000,908
01/02/14 5.13 16,915,000 -- 16,915,000 17,386,759 -- 17,386,759
02/13/17 5.00 -- 2,500,000 2,500,000 -- 2,646,788 2,646,788
07/09/18 5.00 -- 500,000 500,000 -- 500,335 500,335
11/15/30 6.63 1,945,000 -- 1,945,000 2,438,911 -- 2,438,911
U.S. Treasury
08/15/09 3.50 -- 1,500,000 1,500,000 -- 1,528,127 1,528,127
10/22/09 1.27 -- 2,000,000 2,000,000 -- 1,983,244 1,983,244
04/30/10 2.13 -- 260,000 260,000 -- 265,484 265,484
06/30/10 2.88 5,730,000 -- 5,730,000 5,910,850 -- 5,910,850
10/31/10 1.50 57,750,000 -- 57,750,000 58,336,509 -- 58,336,509
12/15/10 4.38 10,550,000 -- 10,550,000(i) 11,295,094 -- 11,295,094
02/28/11 4.50 -- 175,000 175,000 -- 188,740 188,740
06/30/12 4.88 -- 735,000 735,000 -- 827,392 827,392
08/31/12 4.13 -- 2,830,000 2,830,000 -- 3,124,940 3,124,940
09/30/13 0.01 -- 7,425,000 7,425,000 -- 7,860,640 7,860,640
02/15/14 4.00 -- 405,000 405,000 -- 447,652 447,652
11/15/16 4.63 -- 1,000,000 1,000,000 -- 1,131,954 1,131,954
11/15/17 4.25 -- 3,315,000 3,315,000 -- 3,662,299 3,662,299
11/15/18 3.75 25,300,000 2,672,000 27,972,000 27,003,803 2,852,780 29,856,583
11/15/26 6.50 -- 2,400,000 2,400,000 -- 1,211,436 1,211,436
02/15/31 5.38 -- 375,000 375,000 -- 466,319 466,319
02/15/36 4.50 -- 585,000 585,000 -- 678,326 678,326
U.S. Treasury
Inflation-
Indexed Bond
01/15/14 2.00 17,769,221 367,074 18,136,295(j) 15,998,571 330,625 16,329,196
01/15/15 1.63 22,919,000 -- 22,919,000(j) 20,085,473 -- 20,085,473
01/15/16 2.00 -- 286,614 286,614(j) -- 255,333 255,333
07/15/18 1.38 -- 253,655 253,655(j) -- 227,239 227,239
01/15/28 1.75 -- 522,190 522,190(j) -- 430,644 430,644
------------------------------------------------
Total 207,861,079 42,351,025 250,212,104
------------------------------------------------
ASSET-BACKED (1.3%)
Capital Auto
Receivables
Asset Trust
Series 2006-SN1A
Cl A4B
03/20/10 1.56 3,250,000 -- 3,250,000(d,h) 3,204,317 -- 3,204,317
Countrywide Asset-
backed Ctfs
Series 2007-7 Cl
2A2
10/25/37 1.56 2,600,000 -- 2,600,000(h) 2,036,939 -- 2,036,939
Residential Asset
Securities
Series 2007-KS3
Cl AI2
04/25/37 1.58 4,050,000 -- 4,050,000(h) 3,555,310 -- 3,555,310
Soundview Home
Equity Loan
Trust
Series 2006-EQ1
Cl A2
10/25/36 1.51 3,900,000 -- 3,900,000(h) 3,177,283 -- 3,177,283
------------------------------------------------
Total 11,973,849 -- 11,973,849
------------------------------------------------
</Table>
46
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
COMMERCIAL MORTGAGE-BACKED (1.1%)(F)
Federal Home Loan
Mtge Corp
Multifamily
Structured Pass-
Through Ctfs
Series K001 Cl
A2
04/25/16 5.65 $ 5,879,459 $ -- $ 5,879,459 $ 5,718,829 $ -- $ 5,718,829
Federal Natl Mtge
Assn #381990
10/01/09 7.11 4,059,446 -- 4,059,446 4,077,332 -- 4,077,332
------------------------------------------------
Total 9,796,161 -- 9,796,161
------------------------------------------------
MORTGAGE-BACKED (53.2%)(F,K)
Adjustable Rate
Mtge Trust
Collateralized
Mtge Obligation
Series 2007-1 Cl
3A21
03/25/37 6.18 1,782,292 -- 1,782,292(g) 910,858 -- 910,858
American Home Mtge
Assets
Collateralized
Mtge Obligation
Series 2007-2 Cl
A2A
03/25/47 1.56 3,232,332 -- 3,232,332(g) 707,095 -- 707,095
American Home Mtge
Investment Trust
Collateralized
Mtge Obligation
Series 2007-1 Cl
GA1C
05/25/47 1.59 4,168,407 -- 4,168,407(g) 1,397,706 -- 1,397,706
Banc of America
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2006-9 Cl
1CB1
01/25/37 6.00 3,236,559 -- 3,236,559 1,565,559 -- 1,565,559
Barclays Capital
LLC Trust
Collateralized
Mtge Obligation
Series 2007-AA4
Cl 11A1
06/25/47 6.20 1,288,492 -- 1,288,492(g) 953,577 -- 953,577
Bear Stearns
Adjustable Rate
Mtge Trust
Collateralized
Mtge Obligation
Series 2007-5 Cl
3A1
08/25/47 5.98 2,050,079 -- 2,050,079(g) 1,175,883 -- 1,175,883
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2005-6CB
Cl 1A1
04/25/35 7.50 1,407,266 -- 1,407,266 1,167,355 -- 1,167,355
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2006-2CB
Cl A11
03/25/36 6.00 5,506,983 -- 5,506,983 2,765,541 -- 2,765,541
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2006-OA11
Cl A3B1
09/25/46 1.58 3,491,021 -- 3,491,021(h) 2,083,813 -- 2,083,813
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2007-22
Cl 2A16
09/25/37 6.50 4,480,708 -- 4,480,708 2,006,519 -- 2,006,519
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2007-25
Cl 1A1
11/25/37 6.50 4,486,403 -- 4,486,403 2,143,659 -- 2,143,659
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2007-OA9
Cl A2
06/25/47 1.75 5,484,812 -- 5,484,812(h) 1,381,370 -- 1,381,370
Countrywide
Alternative Loan
Trust
Collateralized
Mtge Obligation
Series 2007-OH3
Cl A3
09/25/47 1.90 3,706,134 -- 3,706,134(h) 865,782 -- 865,782
</Table>
47
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Countrywide Home
Loans
Collateralized
Mtge Obligation
Series 2005-HYB8
Cl 4A1
12/20/35 5.56 $ 3,069,596 $ -- $ 3,069,596(g) $ 1,404,402 $ -- $ 1,404,402
Countrywide Home
Loans
Collateralized
Mtge Obligation
Series 2005-R2
Cl 2A1
06/25/35 7.00 4,093,993 -- 4,093,993(d) 3,357,259 -- 3,357,259
Federal Home Loan
Mtge Corp
12/01/38 4.50 -- 3,000,000 3,000,000 -- 2,990,625 2,990,625
12/01/38 5.50 -- 6,050,000 6,050,000 -- 6,138,930 6,138,930
12/01/38 6.00 2,000,000(e) 1,000,000 3,000,000 2,043,124 1,021,719 3,064,843
12/01/38 6.50 12,000,000(e) -- 12,000,000 12,344,999 -- 12,344,999
Federal Home Loan
Mtge Corp
#1G0847
07/01/35 4.71 7,007,898 -- 7,007,898(g) 7,022,871 -- 7,022,871
Federal Home Loan
Mtge Corp
#1G2264
10/01/37 6.01 5,943,966 -- 5,943,966(g) 6,066,472 -- 6,066,472
Federal Home Loan
Mtge Corp
#1G2547
12/01/36 6.12 -- 1,547,921 1,547,921(g) -- 1,559,084 1,559,084
Federal Home Loan
Mtge Corp
#1G2598
01/01/37 6.10 2,234,343 -- 2,234,343(g) 2,288,004 -- 2,288,004
Federal Home Loan
Mtge Corp
#1J0614
09/01/37 5.70 3,110,668 -- 3,110,668(g) 3,145,227 -- 3,145,227
Federal Home Loan
Mtge Corp
#1Q0140
08/01/36 6.17 -- 792,969 792,969(g) -- 805,890 805,890
Federal Home Loan
Mtge Corp
#783049
03/01/35 4.85 5,637,612 -- 5,637,612(g) 5,596,536 -- 5,596,536
Federal Home Loan
Mtge Corp
#A18107
01/01/34 5.50 2,972,429 -- 2,972,429 3,020,698 -- 3,020,698
Federal Home Loan
Mtge Corp
#A75929
04/01/38 7.00 -- 401,580 401,580 -- 413,945 413,945
Federal Home Loan
Mtge Corp
#B10459
10/01/18 5.50 -- 1,206,621 1,206,621 -- 1,230,888 1,230,888
Federal Home Loan
Mtge Corp
#C00351
07/01/24 8.00 225,992 -- 225,992 239,170 -- 239,170
Federal Home Loan
Mtge Corp
#C00385
01/01/25 9.00 372,290 -- 372,290 409,359 -- 409,359
Federal Home Loan
Mtge Corp
#C80329
08/01/25 8.00 65,120 -- 65,120 69,022 -- 69,022
Federal Home Loan
Mtge Corp
#E00398
10/01/10 7.00 199,635 -- 199,635 204,515 -- 204,515
Federal Home Loan
Mtge Corp
#E81240
06/01/15 7.50 2,902,216 -- 2,902,216 3,046,587 -- 3,046,587
Federal Home Loan
Mtge Corp
#E90650
07/01/12 5.50 102,663 -- 102,663 105,330 -- 105,330
Federal Home Loan
Mtge Corp
#E92454
11/01/17 5.00 2,474,442 -- 2,474,442 2,521,832 -- 2,521,832
Federal Home Loan
Mtge Corp
#E96624
05/01/18 5.00 -- 1,401,787 1,401,787 -- 1,426,224 1,426,224
</Table>
48
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Home Loan
Mtge Corp
#G00363
06/01/25 8.00 $ 291,984 $ -- $ 291,984 $ 309,477 $ -- $ 309,477
Federal Home Loan
Mtge Corp
#G00501
05/01/26 9.00 494,258 -- 494,258 543,982 -- 543,982
Federal Home Loan
Mtge Corp
#G10669
03/01/12 7.50 1,058,163 -- 1,058,163 1,107,991 -- 1,107,991
Federal Home Loan
Mtge Corp
#G11243
04/01/07 6.50 11,195,847 -- 11,195,847 11,585,737 -- 11,585,737
Federal Home Loan
Mtge Corp
#G12100
11/01/13 5.00 2,613,148 -- 2,613,148 2,645,386 -- 2,645,386
Federal Home Loan
Mtge Corp
#M30074
09/01/09 6.50 27,440 -- 27,440 27,780 -- 27,780
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Interest Only
Series 11 Cl B
01/01/20 15.05 6,687 -- 6,687(b) 1,622 -- 1,622
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Interest Only
Series 237 Cl I0
05/15/36 14.70 1,060,392 -- 1,060,392(b) 171,982 -- 171,982
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Interest Only
Series 2471 Cl
SI
03/15/32 44.63 1,268,415 -- 1,268,415(b) 148,654 -- 148,654
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Interest Only
Series 2783 Cl
MI
03/15/25 78.62 2,222,458 -- 2,222,458(b) 39,513 -- 39,513
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Series 2617 Cl
HD
06/15/16 7.00 5,515,532 -- 5,515,532 5,781,864 -- 5,781,864
Federal Home Loan
Mtge Corp
Collateralized
Mtge Obligation
Series 3346 Cl
FA
02/15/19 1.65 8,677,977 -- 8,677,977(h) 8,305,051 -- 8,305,051
Federal Natl Mtge
Assn
12/01/38 5.00 2,500,000(e) -- 2,500,000 2,516,405 -- 2,516,405
12/01/38 5.50 8,000,000(e) -- 8,000,000 8,132,496 -- 8,132,496
12/01/38 6.00 10,000,000(e) -- 10,000,000 10,221,880 -- 10,221,880
12/01/38 6.50 -- 3,000,000 3,000,000 -- 3,083,907 3,083,907
Federal Natl Mtge
Assn #125032
11/01/21 8.00 122,323 -- 122,323 129,456 -- 129,456
Federal Natl Mtge
Assn #190129
11/01/23 6.00 890,053 -- 890,053 916,033 -- 916,033
Federal Natl Mtge
Assn #190353
08/01/34 5.00 6,382,017 -- 6,382,017 6,435,011 -- 6,435,011
Federal Natl Mtge
Assn #190785
05/01/09 7.50 32,237 -- 32,237 32,668 -- 32,668
Federal Natl Mtge
Assn #190988
06/01/24 9.00 195,601 -- 195,601 211,378 -- 211,378
Federal Natl Mtge
Assn #254384
06/01/17 7.00 279,842 -- 279,842(i) 294,129 -- 294,129
Federal Natl Mtge
Assn #254454
08/01/17 7.00 496,026 -- 496,026 521,351 -- 521,351
Federal Natl Mtge
Assn #254723
05/01/23 5.50 8,198,373 -- 8,198,373 8,367,873 -- 8,367,873
</Table>
49
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Natl Mtge
Assn #254748
04/01/13 5.50 $ 4,473,645 $ -- $ 4,473,645 $ 4,588,283 $ -- $ 4,588,283
Federal Natl Mtge
Assn #254757
05/01/13 5.00 6,057,250 -- 6,057,250 6,110,765 -- 6,110,765
Federal Natl Mtge
Assn #254774
05/01/13 5.50 1,389,294 -- 1,389,294 1,416,125 -- 1,416,125
Federal Natl Mtge
Assn #255501
09/01/14 6.00 560,227 -- 560,227 586,506 -- 586,506
Federal Natl Mtge
Assn #256901
09/01/37 6.50 -- 2,035,299 2,035,299 -- 2,068,332 2,068,332
Federal Natl Mtge
Assn #303885
05/01/26 7.50 427,007 -- 427,007 451,048 -- 451,048
Federal Natl Mtge
Assn #313007
07/01/11 7.50 129,461 -- 129,461 133,613 -- 133,613
Federal Natl Mtge
Assn #336512
02/01/26 6.00 62,122 -- 62,122 64,005 -- 64,005
Federal Natl Mtge
Assn #357485
02/01/34 5.50 12,314,086 -- 12,314,086 12,544,836 -- 12,544,836
Federal Natl Mtge
Assn #407327
01/01/14 5.50 355,442 -- 355,442 364,978 -- 364,978
Federal Natl Mtge
Assn #456374
12/01/13 5.50 604,883 -- 604,883 621,112 -- 621,112
Federal Natl Mtge
Assn #508402
08/01/14 6.50 242,175 -- 242,175(i) 249,358 -- 249,358
Federal Natl Mtge
Assn #545818
07/01/17 6.00 11,673,144 -- 11,673,144 11,978,221 -- 11,978,221
Federal Natl Mtge
Assn #545864
08/01/17 5.50 9,747,354 -- 9,747,354 9,989,792 -- 9,989,792
Federal Natl Mtge
Assn #545910
08/01/17 6.00 1,804,974 -- 1,804,974 1,852,049 -- 1,852,049
Federal Natl Mtge
Assn #555063
11/01/17 5.50 6,915,094 -- 6,915,094 7,091,373 -- 7,091,373
Federal Natl Mtge
Assn #555367
03/01/33 6.00 8,978,406 -- 8,978,406 9,205,572 -- 9,205,572
Federal Natl Mtge
Assn #579485
04/01/31 6.50 2,151,518 -- 2,151,518(i) 2,235,226 -- 2,235,226
Federal Natl Mtge
Assn #593829
12/01/28 7.00 1,463,747 -- 1,463,747 1,536,028 -- 1,536,028
Federal Natl Mtge
Assn #601416
11/01/31 6.50 757,578 -- 757,578 787,062 -- 787,062
Federal Natl Mtge
Assn #630993
09/01/31 7.50 2,104,990 -- 2,104,990 2,220,562 -- 2,220,562
Federal Natl Mtge
Assn #648040
06/01/32 6.50 2,067,362 -- 2,067,362 2,138,773 -- 2,138,773
Federal Natl Mtge
Assn #648349
06/01/17 6.00 6,186,610 -- 6,186,610 6,347,947 -- 6,347,947
Federal Natl Mtge
Assn #651284
07/01/17 6.00 1,212,490 -- 1,212,490 1,244,295 -- 1,244,295
Federal Natl Mtge
Assn #662866
11/01/17 6.00 1,062,928 -- 1,062,928 1,094,739 -- 1,094,739
Federal Natl Mtge
Assn #665752
09/01/32 6.50 1,174,133 -- 1,174,133 1,214,691 -- 1,214,691
Federal Natl Mtge
Assn #670782
11/01/12 5.00 237,174 -- 237,174 238,999 -- 238,999
Federal Natl Mtge
Assn #670830
12/01/12 5.00 330,824 -- 330,824 338,122 -- 338,122
Federal Natl Mtge
Assn #671415
01/01/10 5.00 351,675 -- 351,675 351,902 -- 351,902
Federal Natl Mtge
Assn #678940
02/01/18 5.50 1,856,424 -- 1,856,424 1,904,564 -- 1,904,564
Federal Natl Mtge
Assn #686227
02/01/18 5.50 2,528,653 -- 2,528,653 2,594,469 -- 2,594,469
Federal Natl Mtge
Assn #696837
04/01/18 5.50 2,739,943 -- 2,739,943 2,810,300 -- 2,810,300
</Table>
50
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Natl Mtge
Assn #704610
06/01/33 5.50 $ 9,936,371 $ -- $ 9,936,371(i) $ 10,122,567 $ -- $ 10,122,567
Federal Natl Mtge
Assn #712602
06/01/13 5.00 714,348 -- 714,348 721,090 -- 721,090
Federal Natl Mtge
Assn #722325
07/01/33 4.96 4,476,063 -- 4,476,063(g) 4,500,854 -- 4,500,854
Federal Natl Mtge
Assn #725232
03/01/34 5.00 9,441,311 -- 9,441,311(i) 9,525,608 -- 9,525,608
Federal Natl Mtge
Assn #725425
04/01/34 5.50 8,731,157 -- 8,731,157 8,904,273 -- 8,904,273
Federal Natl Mtge
Assn #725431
08/01/15 5.50 6,492,835 -- 6,492,835 6,667,040 -- 6,667,040
Federal Natl Mtge
Assn #725773
09/01/34 5.50 7,400,391 -- 7,400,391 7,534,440 -- 7,534,440
Federal Natl Mtge
Assn #730632
08/01/33 4.02 1,532,183 -- 1,532,183(g) 1,510,787 -- 1,510,787
Federal Natl Mtge
Assn #735212
12/01/34 5.00 5,669,459 -- 5,669,459 5,716,536 -- 5,716,536
Federal Natl Mtge
Assn #735578
06/01/35 5.00 4,331,665 -- 4,331,665 4,364,926 -- 4,364,926
Federal Natl Mtge
Assn #739243
09/01/33 6.00 2,706,417 -- 2,706,417 2,782,363 -- 2,782,363
Federal Natl Mtge
Assn #739331
09/01/33 6.00 1,409,724 -- 1,409,724 1,444,511 -- 1,444,511
Federal Natl Mtge
Assn #743524
11/01/33 5.00 2,841,728 -- 2,841,728 2,867,101 -- 2,867,101
Federal Natl Mtge
Assn #745275
02/01/36 5.00 995,350 -- 995,350 1,002,993 -- 1,002,993
Federal Natl Mtge
Assn #745392
12/01/20 4.50 -- 994,790 994,790 -- 1,000,474 1,000,474
Federal Natl Mtge
Assn #753508
11/01/33 5.00 2,866,414 -- 2,866,414 2,892,007 -- 2,892,007
Federal Natl Mtge
Assn #791447
10/01/34 6.00 4,334,878 -- 4,334,878(i) 4,439,138 -- 4,439,138
Federal Natl Mtge
Assn #797046
07/01/34 5.50 2,692,051 -- 2,692,051 2,740,815 -- 2,740,815
Federal Natl Mtge
Assn #799769
11/01/34 5.05 3,566,443 -- 3,566,443(g) 3,569,581 -- 3,569,581
Federal Natl Mtge
Assn #799843
11/01/34 4.84 -- 1,075,341 1,075,341(g) -- 1,084,286 1,084,286
Federal Natl Mtge
Assn #801344
10/01/34 5.03 3,843,481 -- 3,843,481(g) 3,851,667 -- 3,851,667
Federal Natl Mtge
Assn #815463
02/01/35 5.50 1,750,823 -- 1,750,823 1,782,537 -- 1,782,537
Federal Natl Mtge
Assn #829597
08/01/35 4.74 -- 1,313,289 1,313,289(g) -- 1,307,055 1,307,055
Federal Natl Mtge
Assn #832641
09/01/35 6.00 6,022,126 -- 6,022,126 6,161,321 -- 6,161,321
Federal Natl Mtge
Assn #849082
01/01/36 5.82 2,559,620 -- 2,559,620(g) 2,583,889 -- 2,583,889
Federal Natl Mtge
Assn #849170
01/01/36 5.95 3,017,448 -- 3,017,448(g) 3,052,241 -- 3,052,241
Federal Natl Mtge
Assn #867549
02/01/36 5.50 -- 1,986,295 1,986,295 -- 2,021,965 2,021,965
Federal Natl Mtge
Assn #878661
02/01/36 5.50 7,268,229 -- 7,268,229 7,348,861 -- 7,348,861
Federal Natl Mtge
Assn #881886
04/01/36 5.36 -- 816,232 816,232(g) -- 824,062 824,062
Federal Natl Mtge
Assn #883267
07/01/36 6.50 4,209,791 -- 4,209,791 4,349,120 -- 4,349,120
Federal Natl Mtge
Assn #886764
08/01/36 5.60 -- 671,832 671,832(g) -- 686,628 686,628
Federal Natl Mtge
Assn #887403
07/01/36 7.00 2,515,995 -- 2,515,995 2,635,569 -- 2,635,569
</Table>
51
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Natl Mtge
Assn #888989
06/01/37 6.05 $ 5,696,176 $ -- $ 5,696,176(g) $ 5,851,509 $ -- $ 5,851,509
Federal Natl Mtge
Assn #895834
04/01/36 6.05 -- 1,312,595 1,312,595(g) -- 1,349,458 1,349,458
Federal Natl Mtge
Assn #902818
11/01/36 5.91 2,014,549 -- 2,014,549(g) 2,044,223 -- 2,044,223
Federal Natl Mtge
Assn #919341
05/01/37 6.50 3,310,688 -- 3,310,688 3,406,756 -- 3,406,756
Federal Natl Mtge
Assn #928771
10/01/37 8.00 5,776,833 -- 5,776,833(i) 6,083,937 -- 6,083,937
Federal Natl Mtge
Assn #946609
09/01/37 5.82 -- 984,920 984,920(g) -- 1,004,445 1,004,445
Federal Natl Mtge
Assn #967656
12/01/37 6.50 -- 3,572,990 3,572,990 -- 3,677,227 3,677,227
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 163 Cl 2
07/25/22 34.02 493,783 -- 493,783(b) 72,472 -- 72,472
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 2002-18
Cl SE
02/25/32 46.58 2,642,309 -- 2,642,309(b) 287,233 -- 287,233
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 2003-26
Cl MI
03/25/23 13.70 1,529,182 -- 1,529,182(b) 209,004 -- 209,004
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 2003-63
Cl IP
07/25/33 25.88 3,553,978 -- 3,553,978(b) 408,092 -- 408,092
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 2003-71
Cl IM
12/25/31 9.86 1,835,688 -- 1,835,688(b) 225,112 -- 225,112
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 2003-81
Cl LI
11/25/13 59.80 1,251,315 -- 1,251,315(b) 11,045 -- 11,045
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 36 Cl 2
08/01/18 15.66 3,987 -- 3,987(b) 876 -- 876
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 367 C l2
01/01/36 12.99 2,652,947 -- 2,652,947(b) 434,371 -- 434,371
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 379 Cl 2
05/01/37 13.46 5,139,714 -- 5,139,714(b) 814,725 -- 814,725
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Interest Only
Series 70 Cl 2
01/15/20 27.28 177,082 -- 177,082(b) 32,598 -- 32,598
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Principal Only
Series G-15 Cl A
06/25/21 2.49 23,502 -- 23,502(c) 21,765 -- 21,765
</Table>
52
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2002-52
Cl FG
09/25/32 1.90 $ 7,459,317 $ -- $ 7,459,317(h) $ 7,323,500 $ -- $ 7,323,500
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2003-133
Cl GB
12/25/26 8.00 1,741,536 -- 1,741,536 1,859,467 -- 1,859,467
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2003-94
Cl QB
07/25/23 5.50 1,451,559 -- 1,451,559 1,450,382 -- 1,450,382
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2003-W11
Cl A1
06/25/33 6.29 107,620 -- 107,620(g) 105,377 -- 105,377
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2004-60
Cl PA
04/25/34 5.50 3,031,541 -- 3,031,541 3,097,939 -- 3,097,939
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2005-50
Cl AH
06/25/25 5.00 -- 2,000,000 2,000,000 -- 1,911,199 1,911,199
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2006-60
Cl JF
10/25/35 1.83 5,258,851 -- 5,258,851(h) 5,092,865 -- 5,092,865
Federal Natl Mtge
Assn
Collateralized
Mtge Obligation
Series 2006-90
Cl FE
09/25/36 1.85 6,697,825 -- 6,697,825(h) 6,554,519 -- 6,554,519
Govt Natl Mtge Assn
12/01/38 5.50 5,000,000 -- 5,000,000(e) 5,068,750 -- 5,068,750
Govt Natl Mtge Assn
#615740
08/15/13 6.00 618,862 -- 618,862 642,152 -- 642,152
Govt Natl Mtge Assn
#648339
10/15/35 5.50 -- 1,600,202 1,600,202 -- 1,632,128 1,632,128
Govt Natl Mtge Assn
#781507
09/15/14 6.00 2,980,624 -- 2,980,624 3,070,300 -- 3,070,300
Govt Natl Mtge Assn
Collateralized
Mtge Obligation
Interest Only
Series 2003-62
Cl IC
03/20/29 76.25 970,053 -- 970,053(b) 13,505 -- 13,505
Govt Natl Mtge Assn
Collateralized
Mtge Obligation
Series 2004-3 Cl
JB
05/20/29 5.00 -- 457,035 457,035 -- 457,176 457,176
Govt Natl Mtge Assn
Collateralized
Mtge Obligation
Series 2006-32
Cl A
01/16/30 5.08 8,548,708 -- 8,548,708 8,626,292 -- 8,626,292
Harborview Mtge
Loan Trust
Collateralized
Mtge Obligation
Series 2004-4 Cl
3A
06/19/34 3.97 390,964 -- 390,964(g) 176,121 -- 176,121
Lehman XS Trust
Series 2006-16N
Cl A1B
11/25/46 1.52 1,998,462 -- 1,998,462(h) 1,800,303 -- 1,800,303
Merrill Lynch
Alternative Note
Asset
Collateralized
Mtge Obligation
Series 2007-OAR1
Cl A1
02/25/37 1.57 5,139,861 -- 5,139,861(h) 1,948,002 -- 1,948,002
Morgan Stanley Mtge
Loan Trust
Series 2006-13AX
Cl A1
10/25/36 1.49 2,770,542 -- 2,770,542(h) 2,529,017 -- 2,529,017
</Table>
53
<Table>
<Caption>
BONDS (CONTINUED)
COUPON PRINCIPAL PRINCIPAL PRINCIPAL
ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Small Business
Administration
Series 2002-P10B
Cl 1
08/01/12 5.20 $ -- $ 493,280 $ 493,280 $ -- $ 496,813 $ 496,813
Washington Mutual
Mtge Pass-
Through Ctfs
Collateralized
Mtge Obligation
Series 2006-AR3
Cl A1A
02/25/46 3.48 1,800,546 -- 1,800,546(g) 758,151 -- 758,151
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2005-10
Cl A1
10/25/35 5.00 5,316,554 -- 5,316,554 4,719,754 -- 4,719,754
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2005-14
Cl 2A1
12/25/35 5.50 2,849,488 -- 2,849,488 2,019,909 -- 2,019,909
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2005-5 Cl
2A1
05/25/35 5.50 3,819,619 -- 3,819,619 3,500,922 -- 3,500,922
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2006-AR6
Cl 5A1
03/25/36 5.11 3,408,850 -- 3,408,850(g) 2,288,186 -- 2,288,186
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2007-11
Cl A68
08/25/37 6.00 4,573,963 -- 4,573,963 2,275,918 -- 2,275,918
Wells Fargo Mtge
Backed
Securities Trust
Collateralized
Mtge Obligation
Series 2007-15
Cl A1
11/25/37 6.00 3,136,295 -- 3,136,295 1,956,141 -- 1,956,141
------------------------------------------------
Total 434,616,183 38,192,460 472,808,643
------------------------------------------------
TOTAL BONDS
(Cost:
$774,463,338) $664,247,272 $80,543,485 $744,790,757
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUNDS (3.9%)(R)
SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
RiverSource Short-
Term Cash Fund,
0.69% 23,204,156 -- 23,204,156(l) $23,204,156 $ -- $23,204,156
SSgA U.S. Treasury
Money Market
Fund -- 11,375,635 11,375,635 -- 11,375,635 $11,375,635
------------------------------------------------
TOTAL MONEY MARKET
FUNDS
(Cost: $34,579,791) $23,204,156 $11,375,635 $34,579,791
- -------------------------------------------------------------------------------------------------------------------------
</Table>
54
<Table>
<Caption>
SHORT-TERM SECURITIES (18.0%)
EFFEC-
TIVE AMOUNT PAYABLE AMOUNT PAYABLE AMOUNT PAYABLE
ISSUER YIELD AT MATURITY AT MATURITY AT MATURITY VALUE(A) VALUE(A) VALUE(A)
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
U.S. U.S.
RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT
SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND
U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
U.S. GOVERNMENT AGENCIES
Federal Home Loan
Bank Disc Nts
12/01/08 0.10% $23,100,000 $ -- $23,100,000 $ 23,099,808 $ -- $ 23,099,808
12/04/08 0.22 45,000,000 -- 45,000,000 44,998,374 -- 44,998,374
12/05/08 0.35 16,000,000 -- 16,000,000 15,998,911 -- 15,998,911
12/09/08 0.35 21,300,000 -- 21,300,000 21,297,722 -- 21,297,722
12/12/08 0.18 12,000,000 -- 12,000,000 11,999,160 -- 11,999,160
12/15/08 0.20 24,900,000 -- 24,900,000 24,897,649 -- 24,897,649
12/23/08 0.20 15,000,000 -- 15,000,000 14,997,917 -- 14,997,917
03/25/09 2.91 -- 2,500,000 2,500,000 -- 2,493,865 2,493,865
------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost:
$163,243,831) $157,289,541 $ 2,493,865 $159,783,406
------------------------------------------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost:
$972,286,960)(m) $844,740,969 $94,412,985 $939,153,954
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT NOV. 30, 2008
RiverSource Short Duration U.S. Government Fund
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
U.S. Long Bond, 20-year 30 $ 3,824,531 March 2009 $ 70,963
U.S. Treasury Note, 2-year 696 150,901,500 April 2009 1,150,951
U.S. Treasury Note, 5-year (806) (94,069,017) April 2009 (1,151,720)
U.S. Treasury Note, 10-year (585) (70,766,719) March 2009 (1,960,133)
- ----------------------------------------------------------------------------------------------------------------
Total $(1,889,939)
- ----------------------------------------------------------------------------------------------------------------
<Caption>
NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
</Table>
(A) Securities are valued by using procedures described in Note 1 to the
financial statements.
(B) Interest only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of
an interest only is extremely sensitive to the rate of principal
payments on the underlying mortgage assets. A rapid (slow) rate of
principal repayments may have an adverse (positive) effect on yield to
maturity. The principal amount shown is the notional amount of the
underlying mortgages. The interest rate disclosed represents yield based
upon the estimated timing and amount of future cash flows at Nov. 30,
2008.
(C) Principal only represents securities that entitle holders to receive
only principal payments on the underlying mortgages. The yield to
maturity of a principal only is sensitive to the rate of principal
payments on the underlying mortgage assets. A slow (rapid) rate of
principal repayments may have an adverse (positive) effect on yield to
maturity. Interest rate disclosed represents yield based upon the
estimated timing of future cash flows at Nov. 30, 2008.
(D) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At Nov. 30, 2008, the value of these securities
amounted to $6,561,576 or 0.7% of net assets.
(E) At Nov. 30, 2008, the cost of securities purchased, including interest
purchased, on a when-issued and/or other forward-commitment basis was
$39,811,910.
(F) Mortgage-backed securities represent direct or indirect participations
in, or are secured by and payable from, mortgage loans secured by real
property, and include single- and multi-class pass-through securities
and collateralized mortgage obligations. These securities may be issued
or guaranteed by U.S. government agencies or instrumentalities, or by
private issuers, generally originators and investors in mortgage loans,
including savings associations, mortgage bankers, commercial banks,
investment bankers and special purpose entities. The maturity dates
shown represent the original maturity of the underlying obligation.
Actual maturity may vary based upon prepayment activity on these
obligations. Unless otherwise noted, the coupon rates presented are
fixed rates.
(G) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on Nov. 30, 2008.
(H) Interest rate varies either based on a predetermined schedule or to
reflect current market conditions; rate shown is the effective rate on
Nov. 30, 2008.
(I) At Nov. 30, 2008, investments in securities included securities valued
at $3,974,282 that were partially pledged as collateral to cover initial
margin deposits on open interest rate futures contracts.
(J) Inflation-indexed bonds are securities in which the principal amount is
adjusted for inflation and the semiannual interest payments equal a
fixed percentage of the inflation-adjusted principal amount.
55
(K) Represents comparable securities held to satisfy future delivery
requirements of the following open forward sale commitments at Nov. 30,
2008:
<Table>
<Caption>
PRINCIPAL PRINCIPAL SETTLEMENT PROCEEDS PROCEEDS
SECURITY AMOUNT AMOUNT DATE RECEIVABLE RECEIVABLE
RIVERSOURCE RIVERSOURCE
SHORT DURATION SHORT DURATION
RIVERSOURCE U.S. GOVERNMENT RIVERSOURCE U.S. GOVERNMENT
SHORT DURATION SELIGMAN FUND SHORT DURATION SELIGMAN FUND
U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
Federal Natl
Mtge Assn
12/01/23 5.50% $9,275,000 $-- $9,275,000 12/16/08 $9,347,823 $-- $9,347,823
<Caption>
SECURITY VALUE VALUE
RIVERSOURCE
SHORT DURATION
RIVERSOURCE U.S. GOVERNMENT
SHORT DURATION SELIGMAN FUND
U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA
FUND FUND COMBINED
Federal Natl
Mtge Assn
12/01/23 5.50% $9,434,419 $-- $9,434,419
</Table>
(L) Affiliated Money Market Fund -- See Note 6 to the financial statements
in the annual report. The rate shown is the seven-day current annualized
yield at Nov. 30, 2008.
(M) At Nov. 30, 2008, the approximate cost of securities for federal income
tax purposes and the approximate aggregate gross unrealized appreciation
and depreciation based on that cost was:
<Table>
<Caption>
RIVERSOURCE
SHORT DURATION
RIVERSOURCE U.S. GOVERNMENT
SHORT DURATION SELIGMAN FUND
U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA
FUND FUND COMBINED
Cost of securities for federal income tax purposes: $880,033,000 $92,254,000 $972,287,000
Unrealized appreciation $ 10,781,000 $ 2,366,000 $ 13,147,000
Unrealized depreciation (46,073,000) (207,000) (46,280,000)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation/depreciation $(35,292,000) 2,159,000 $(33,133,000)
- -----------------------------------------------------------------------------------------------------------
</Table>
56
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
INTRODUCTION TO PROPOSED FUND REORGANIZATION
Oct. 31, 2008
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements
have been derived from financial statements prepared for the Threadneedle
Emerging Markets Fund and the Seligman Emerging Markets Fund as of Oct. 31,
2008. Threadneedle Emerging Markets Fund invests primarily in equity securities
of emerging markets companies or in companies that earn 50% or more of their
total revenues from goods or services produced in emerging market countries or
from sales made in emerging market countries. Seligman Emerging Markets Fund
invests primarily in equity securities of companies that conduct their principal
business activities in emerging markets, are organized under the laws of, or
maintain their principal place of business in emerging markets, or whose
securities are traded principally on exchanges in emerging markets.
Under the proposed Agreement and Plan of Reorganization, share classes of
Seligman Emerging Markets Fund would be exchanged for share classes of
Threadneedle Emerging Markets Fund.
<Table>
<Caption>
SELLING FUND BUYING FUND
- ---------------------------------------------------------------------------------------------------------
Seligman Emerging Markets Fund Class A Threadneedle Emerging Markets Fund Class A
- ---------------------------------------------------------------------------------------------------------
Seligman Emerging Markets Fund Class B Threadneedle Emerging Markets Fund Class B
- ---------------------------------------------------------------------------------------------------------
Seligman Emerging Markets Fund Class C Threadneedle Emerging Markets Fund Class C
- ---------------------------------------------------------------------------------------------------------
Seligman Emerging Markets Fund Class R(1) Threadneedle Emerging Markets Fund Class R2(2)
- ---------------------------------------------------------------------------------------------------------
Seligman Emerging Markets Fund Class I(1) Threadneedle Emerging Markets Fund Class R5
- ---------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman Emerging Markets Fund will be redesignated as Class R2 and Class
R5 shares, respectively.
(2) The inception date for the Threadneedle Emerging Markets Fund Class R2
shares is expected to be in the third quarter of 2009.
Note: Threadneedle Emerging Markets Fund also offers Class I and Class R4
shares.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivor,
Threadneedle Emerging Markets Fund, as if the transaction had occurred at the
beginning of the fiscal year ending Oct. 31, 2008.
57
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
THREADNEEDLE THREADNEEDLE
THREADNEEDLE SELIGMAN EMERGING EMERGING
EMERGING EMERGING MARKETS FUND MARKETS FUND
MARKETS MARKETS PRO FORMA PRO FORMA
OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
ASSETS
Investments in securities, at cost
Unaffiliated issuers $ 424,358,342 $ 95,091,922 $ -- $ 519,450,264
Affiliated money market fund $ 13,521,361 $ -- $ -- $ 13,521,361
------------------------------------------------------------------
Investments in securities, at value
Unaffiliated issuers $ 270,514,080 $ 63,721,034 $ -- $ 334,235,114
Affiliated money market fund $ 13,521,361 $ -- $ -- $ 13,521,361
Cash 667,406 748,010 -- 1,415,416
Foreign currency holdings (identified cost $1,911,096
for Threadneedle Emerging Markets Fund and $47,117
for Seligman Emerging Markets Fund) 1,906,201 47,117 -- 1,953,318
Capital shares receivable 202,353 125,371 -- 327,724
Dividends and accrued interest receivable 435,788 125,347 -- 561,135
Receivable for investment securities sold 12,802,608 43,743 -- 12,846,351
Investment management services fees receivable (Note 2) -- -- 55,609(a) 55,609
Transfer agency fees receivable (Note 2) -- -- 235,755(b) 235,755
Unrealized appreciation on forward foreign currency
contracts -- 1,157,113 -- 1,157,113
Prepaid expenses -- 75,329 -- 75,329
Other assets -- 7,603 -- 7,603
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 300,049,797 66,050,667 291,364 366,391,828
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 278,847 353,783 -- 632,630
Payable for investment securities purchased 17,212,931 -- -- 17,212,931
Unrealized depreciation on forward foreign currency
contracts -- 397,517 -- 397,517
Payable to RiverSource Investments, LLC (Note 2) -- -- 230,433(f) 230,433
Accrued investment management services fees (Note 2) 8,332 81,475 (89,807)(a) --
Accrued distribution fees 2,524 27,957 -- 30,481
Accrued transfer agency fees (Note 2) 2,573 -- (2,573)(b) --
Accrued administrative services fees (Note 2) 607 -- 95,843(c) 96,450
Accrued plan administration services fees (Note 2) 5 -- 25,082(d) 25,087
Other accrued expenses (Note 2) 320,472 166,237 (439,842)(e) 46,867
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 17,826,291 1,026,969 (180,864) 18,672,396
- ---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 282,223,506 $ 65,023,698 $ 472,228 $ 347,719,432
- ---------------------------------------------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value for Threadneedle
Emerging Markets Fund and $.001 par value for
Seligman Emerging Markets Fund (Note 3) $ 576,740 $ 9,089 $ 127,194 $ 713,023
Additional paid-in capital (Note 3) 456,206,763 88,980,080 (127,194) 545,059,649
Undistributed (excess of distributions over) net
investment income (Note 2) (5,170) (1,486) 472,228 465,572
Accumulated net realized gain (loss) (20,707,820) 6,647,955 -- (14,059,865)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in
foreign currencies (153,847,007) (30,611,940) -- (184,458,947)
- ---------------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 282,223,506 $ 65,023,698 $ 472,228 $ 347,719,432
- ---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares:
Class A $ 250,088,197 $ 33,557,713 $ 243,709 $ 283,889,619
Class B $ 28,179,486 $ 2,060,989 $ 14,968 $ 30,255,443
Class C $ 3,162,935 $ 17,208,595 $ 124,976 $ 20,496,506
Class I $ 7,972 N/A $ -- $ 7,972
Class R2 N/A $ 6,861,199 $ 49,829 $ 6,911,028
Class R4 $ 782,170 N/A $ -- $ 782,170
Class R5 $ 2,746 $ 5,335,202 $ 38,746 $ 5,376,694
Shares outstanding
(Note 3): Class A shares 50,453,378 4,533,207 -- 57,268,181
Class B shares 6,354,512 317,272 -- 6,823,125
Class C shares 711,847 2,638,190 -- 4,615,804
Class I shares 1,558 N/A -- 1,558
Class R2 shares N/A 932,562 -- 1,393,352
Class R4 shares 152,215 N/A -- 152,215
Class R5 shares 535 668,107 -- 1,048,088
Net asset value per share of outstanding capital
stock: Class A $ 4.96 $ 7.40 $ -- $ 4.96
Class B $ 4.43 $ 6.50 $ -- $ 4.43
Class C $ 4.44 $ 6.52 $ -- $ 4.44
Class I $ 5.12 N/A $ -- $ 5.12
Class R2 N/A $ 7.36 $ -- $ 4.96
Class R4 $ 5.14 N/A $ -- $ 5.14
Class R5 $ 5.13 $ 7.99 $ -- $ 5.13
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements
58
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
<Table>
<Caption>
THREADNEEDLE THREADNEEDLE
THREADNEEDLE SELIGMAN EMERGING EMERGING
EMERGING EMERGING MARKETS FUND MARKETS FUND
MARKETS MARKETS PRO FORMA PRO FORMA
YEAR ENDED OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED
INVESTMENT INCOME
Income:
Dividends $ 17,185,342 $ 3,512,330 $ -- $ 20,697,672
Interest 64,517 15,571 -- 80,088
Income distributions from affiliated money market
fund 412,142 -- -- 412,142
Less foreign taxes withheld (1,058,784) (164,834) -- (1,223,618)
- ---------------------------------------------------------------------------------------------------------------------
Total income 16,603,217 3,363,067 -- 19,966,284
- ---------------------------------------------------------------------------------------------------------------------
Expenses:
Investment management services fees (Note 2) 7,352,591 1,587,834 (145,416)(a) 8,795,009
Distribution fees
Class A 1,283,814 165,246 -- 1,449,060
Class B 701,567 55,576 -- 757,143
Class C 62,513 349,606 -- 412,119
Class R2 -- 50,182 -- 50,182
Transfer agency fees (Note 2)
Class A 972,852 348,849 (82,692)(b) 1,239,009
Class B 139,042 27,231 -- 166,273
Class C 12,334 182,647 (101,605)(b) 93,376
Class R2 -- 58,236 (53,220)(b) 5,016
Class R4 868 -- -- 868
Class R5 1 5,592 (811)(b) 4,782
Administrative services fees (Note 2) 498,019 -- 95,843(c) 593,862
Plan administration services fees (Note 2)
Class R2 -- -- 25,082(d) 25,082
Class R4 4,342 -- -- 4,342
Compensation of board members (Note 2) 13,359 11,189 (8,508)(e) 16,040
Custodian fees (Note 2) 693,125 357,788 (218,706)(e) 832,207
Printing and postage (Note 2) 117,050 31,315 (7,828)(e) 140,537
Registration fees (Note 2) 86,716 74,595 (57,195)(e) 104,116
Professional fees (Note 2) 79,151 163,487 (147,605)(e) 95,033
Other (Note 2) 168,800 13,879 -- 182,679
- ---------------------------------------------------------------------------------------------------------------------
Total expenses 12,186,144 3,483,252 (702,661) 14,966,735
Expenses waived/reimbursed by RiverSource
Investments, LLC (Note 2) (4,460) (225,973) 230,433(f) --
Earnings and bank fee credits on cash
balances (14,844) -- -- (14,844)
- ---------------------------------------------------------------------------------------------------------------------
Total net expenses 12,166,840 3,257,279 (472,228) 14,951,891
- ---------------------------------------------------------------------------------------------------------------------
Investment income (loss) -- net 4,436,377 105,788 472,228 5,014,393
- ---------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (18,203,439) 8,831,686 -- (9,371,753)
Foreign currency transactions (1,454,385) 1,052,938 -- (401,447)
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (19,657,824) 9,884,624 -- (9,773,200)
Net change in unrealized appreciation
(depreciation) on investments and on translation
of assets and liabilities in foreign currencies (421,981,869) (93,108,293) -- (515,090,162)
- ---------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign
currencies (441,639,693) (83,223,669) -- (524,863,362)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(437,203,316) $(83,117,881) $ 472,228 $(519,848,969)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to pro forma financial statements
59
THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND)
SELIGMAN EMERGING MARKETS FUND (SELLING FUND)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited as to Oct. 31, 2008)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two Funds at, and for, the
12-month period ended Oct. 31, 2008. These statements have been derived from
financial statements prepared for the Threadneedle Emerging Markets Fund and the
Seligman Emerging Markets Fund as of Oct. 31, 2008.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
Threadneedle Emerging Markets Fund invests primarily in equity securities of
emerging markets companies or in companies that earn 50% or more of their total
revenues from goods or services produced in emerging market countries or from
sales made in emerging market countries.
Seligman Emerging Markets Fund invests primarily in equity securities of
companies that conduct their principal business activities in emerging markets,
are organized under the laws of, or maintain their principal place of business
in emerging markets, or whose securities are traded principally on exchanges in
emerging markets.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of Seligman Emerging Markets Fund in exchange for Class A, Class B,
Class C, Class R2 and Class R5 shares of Threadneedle Emerging Markets Fund
under U.S. generally accepted accounting principles. The pro forma statements
reflect estimates for the combined Threadneedle Emerging Markets Fund based on
the increased asset level of the Reorganization and associated economies of
scale, adjusted to reflect current fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the Funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, Threadneedle Emerging
Markets Fund, as if the transaction had occurred at the beginning of the year
presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect the change in investment management services fee due to the
Reorganization. In addition, the Performance Incentive Adjustment (PIA) was
calculated based on the combined average net assets of the two funds and the
Threadneedle Emerging Markets Fund PIA rate as of Oct. 31, 2008.
(b) To reflect the change in transfer agent fees due to the Reorganization
including adjusting for closed account fees for each Seligman Emerging
Markets Fund shareholder account that will be closed on the system as a
result of the Reorganization.
(c) To reflect the change in administrative services fees due to the
Reorganization.
(d) To reflect the change in plan administration services fees due to the
Reorganization.
(e) To reflect the change in other fees due to the Reorganization.
(f) To adjust the expense reimbursement to reflect no reduction in fees
resulting from the Reorganization per the agreement (through Oct. 31, 2009)
by RiverSource Investments, LLC and its affiliates to waive certain fees and
absorb certain expenses of the combined fund.
60
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C, Class R2 and Class R5 shares of Threadneedle Emerging
Markets Fund as if the Reorganization were to have taken place on Oct. 31, 2008.
The following table reflects the number of Threadneedle Emerging Markets Fund
shares assumed to be issued to the shareholders of the Seligman Emerging Markets
Fund.
<Table>
<Caption>
SELIGMAN THREADNEEDLE
EMERGING EMERGING
MARKETS FUND MARKETS FUND TOTAL PRO FORMA
SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------
Class A 6,814,803 50,453,378 57,268,181
- ----------------------------------------------------------------------------------------------------------------
Class B 468,613 6,354,512 6,823,125
- ----------------------------------------------------------------------------------------------------------------
Class C 3,903,957 711,847 4,615,804
- ----------------------------------------------------------------------------------------------------------------
Class I N/A 1,558 1,558
- ----------------------------------------------------------------------------------------------------------------
Class R2(1),(2) 1,393,352 N/A 1,393,352
- ----------------------------------------------------------------------------------------------------------------
Class R4 N/A 152,215 152,215
- ----------------------------------------------------------------------------------------------------------------
Class R5(1) 1,047,553 535 1,048,088
- ----------------------------------------------------------------------------------------------------------------
</Table>
(1) Effective on or about June 13, 2009, the Class R and Class I shares of the
Seligman Emerging Markets Fund will be redesignated as Class R2 and Class
R5 shares, respectively.
(2) The inception date for the Threadneedle Emerging Markets Fund Class R2
shares is expected to be in the third quarter of 2009.
61
COMBINED PORTFOLIO OF INVESTMENTS
Threadneedle Emerging Markets Fund
OCT. 31, 2008 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (95.8%)(C)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
BERMUDA (0.8%)
Credicorp 72,761 -- 72,761 $ 2,857,324 $ $-- $ 2,857,324
BRAZIL (12.9%)
AmBev ADR 54,439 -- 54,439 2,313,658 -- 2,313,658
Amil Participacoes -- 72,200 72,200(b) -- 333,256 333,256
Banco Bradesco 255,100 -- 255,100 2,937,551 -- 2,937,551
Banco Itau Holding
ADR -- 71,700 71,700 -- 793,002 793,002
BM&F Bovespa -- 223,300 223,300(b) -- 596,772 596,772
Companhia
Brasileira de
Distribuicao Grupo
Pao de Acucar ADR -- 23,700 23,700 -- 709,341 709,341
Companhia
Energetica de Minas
Gerais ADR -- 63,800 63,800 -- 970,398 970,398
Companhia
Siderurgica
Nasional ADR -- 35,500 35,500 -- 482,800 482,800
Companhia Vale do
Rio Doce ADR 211,011 124,216 335,227 2,768,464 1,629,714 4,398,178
MRV Engenharia e
Participacoes 160,400 -- 160,400 833,218 -- 833,218
Multiplan
Empreendimentos
Imobiliarios 399,849 -- 399,849(b) 2,017,774 -- 2,017,774
OdontoPrev -- 25,800 25,800(b) -- 332,250 332,250
PDG Realty 269,800 -- 269,800 1,381,506 -- 1,381,506
Petroleo Brasileiro
ADR 327,760 105,200 432,960 8,813,466 2,828,828 11,642,294
Redecard 955,100 -- 955,100 10,405,191 -- 10,405,191
UNIBANCO -- Uniao
de Bancos
Brasileiros GDR 52,661 -- 52,661 3,321,857 -- 3,321,857
Usinas Siderurgicas
de Minas Gerais -- 85,925 85,925 -- 1,009,366 1,009,366
Weg -- 52,300 52,300 -- 296,926 296,926
-------------------------------------------
Total 34,792,685 9,982,653 44,775,338
-------------------------------------------
CANADA (0.6%)
Yamana Gold 460,420 -- 460,420 2,131,745 -- 2,131,745
-------------------------------------------
CHILE (0.5%)
Enersis ADR -- 67,400 67,400 -- 970,560 970,560
Sociedad Quimica y
Minera de Chile ADR -- 35,700 35,700 -- 817,530 817,530
-------------------------------------------
Total -- 1,788,090 1,788,090
-------------------------------------------
CHINA (15.6%)
Angang Steel Series
H -- 594,000 594,000 -- 368,527 368,527
China Construction
Bank Series H 9,620,000 -- 9,620,000 4,772,560 -- 4,772,560
China Life
Insurance Series H 2,005,000 509,000 2,514,000 5,358,462 1,360,306 6,718,768
China Medical
Tehnologies ADR 77,736 -- 77,736 1,894,426 -- 1,894,426
China Merchants
Bank Series H 2,439,000 -- 2,439,000 3,736,882 -- 3,736,882
China Mobile ADR -- 17,400 17,400 -- 763,686 763,686
China Overseas Land
& Investment -- 326,000 326,000 -- 363,121 363,121
China Resources
Enterprise -- 480,000 480,000 -- 942,084 942,084
China Shenhua
Energy Series H -- 518,000 518,000(b) -- 959,592 959,592
CNOOC ADR 71,752 20,700 92,452 5,861,421 1,690,983 7,552,404
First Pacific -- 784,000 784,000(b) -- 316,808 316,808
Golden Meditech -- 1,768,000 1,768,000 -- 253,408 253,408
Hong Kong Exchange
and Clearing -- 78,400 78,400 -- 801,458 801,458
Hopson Development
Holdings -- 710,000 710,000 -- 233,245 233,245
Industrial &
Commercial Bank of
China Series H 18,359,000 2,709,000 21,068,000 8,638,789 1,260,360 9,899,149
Li Ning 1,691,500 -- 1,691,500 2,093,436 -- 2,093,436
Minth Group 2,484,000 -- 2,484,000 868,102 -- 868,102
Ping An Insurance
Group of China
Series H 1,825,000 -- 1,825,000 7,805,478 -- 7,805,478
</Table>
62
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
Shanghai Electric
Group -- 3,370,000 3,370,000 $ -- $ 994,274 $ 994,274
Shangri-La Asia -- 858,000 858,000 -- 1,200,072 1,200,072
Simcere
Pharmaceutical
Group ADR -- 65,173 65,173(b) -- 366,924 366,924
Weiqiao Textile -- 530,500 530,500 -- 108,495 108,495
WSP Holdings ADR -- 131,400 131,400(b) -- 622,836 622,836
Wumart Stores -- 712,178 712,178 -- 579,738 579,738
-------------------------------------------
Total 41,029,556 13,185,917 54,215,473
-------------------------------------------
CZECH REPUBLIC (0.9%)
CEZ 70,000 -- 70,000 3,033,756 -- 3,033,756
-------------------------------------------
EGYPT (0.3%)
Orascom
Construction Inds -- 23,657 23,657 -- 796,470 796,470
Talaat Moustafa
Group -- 598,801 598,801(b) -- 386,706 386,706
-------------------------------------------
Total -- 1,183,176 1,183,176
-------------------------------------------
HONG KONG (6.1%)
China Mobile 2,084,000 -- 2,084,000 18,347,176 -- 18,347,176
China Overseas Land
& Investment 2,566,000 -- 2,566,000 2,897,869 -- 2,897,869
-------------------------------------------
Total 21,245,045 -- 21,245,045
-------------------------------------------
HUNGARY (0.1%)
Richter Gedeon -- 3,543 3,543 -- 486,721 486,721
-------------------------------------------
INDIA (7.7%)
Bajaj Holdings and
Investment -- 38,655 38,655 -- 270,688 270,688
Bharat Heavy
Electricals 91,662 38,576 130,238 2,435,150 1,045,815 3,480,965
Bharti Airtel 412,765 25,465 438,230(b) 5,573,659 347,974 5,921,633
Educomp Solutions -- 10,663 10,663 -- 495,118 495,118
Firstsource
Solutions -- 650,211 650,211(b) -- 199,576 199,576
HDFC Bank ADR -- 2,400 2,400 -- 157,440 157,440
Housing Development
Finance 87,154 -- 87,154 3,163,627 -- 3,163,627
Infosys
Technologies 191,779 -- 191,779 5,574,974 -- 5,574,974
Lanco Infratech -- 108,795 108,795(b) -- 251,704 251,704
Nicholas Piramal
India -- 160,497 160,497 -- 728,710 728,710
Piramal Life
Sciences -- 54,885 54,885(b) -- 76,176 76,176
Punjab Natl Bank -- 11,114 11,114 -- 98,828 98,828
Reliance Inds 145,110 50,927 196,037 4,113,500 1,423,750 5,537,250
Tata Chemicals -- 217,516 217,516 -- 712,688 712,688
-------------------------------------------
Total 20,860,910 5,808,467 26,669,377
-------------------------------------------
INDONESIA (1.1%)
Bank Rakyat
Indonesia 8,962,000 -- 8,962,000 2,729,545 -- 2,729,545
Bumi Resources 7,288,500 -- 7,288,500(f) 1,136,986 -- 1,136,986
-------------------------------------------
Total 3,866,531 -- 3,866,531
-------------------------------------------
ISRAEL (6.4%)
Bezek Israeli
Telecommunication -- 429,592 429,592 -- 637,484 637,484
Check Point
Software
Technologies 297,210 -- 297,210(b) 6,009,586 -- 6,009,586
Israel Chemicals 491,565 46,862 538,427 4,979,313 466,575 5,445,888
Teva Pharmaceutical
Inds ADR 190,786 48,300 239,086 8,180,903 2,071,104 10,252,007
-------------------------------------------
Total 19,169,802 3,175,163 22,344,965
-------------------------------------------
JORDAN (0.2%)
Hikma
Pharmaceuticals -- 122,439 122,439 -- 638,503 638,503
-------------------------------------------
MALAYSIA (1.5%)
Digi.com -- 86,900 86,900 -- 452,061 452,061
IOI 2,647,300 -- 2,647,300 2,101,445 -- 2,101,445
</Table>
63
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
KNM Group 9,350,150 -- 9,350,150 $ 1,587,707 $ -- $ 1,587,707
Kulim -- 329,400 329,400 -- 362,572 362,572
Resorts World -- 891,500 891,500 -- 627,023 627,023
-------------------------------------------
Total 3,689,152 1,441,656 5,130,808
-------------------------------------------
MEXICO (7.1%)
America Movil ADR
Series L 207,252 61,300 268,552 6,412,377 1,896,622 8,308,999
Fomento Economico
Mexicano ADR -- 19,800 19,800 -- 500,742 500,742
Genomma Lab
Internacional -- 232,200 232,200(b) -- 248,125 248,125
Grupo Financiero
Banorte Series O 1,930,900 -- 1,930,900 3,543,198 -- 3,543,198
Grupo Televisa ADR 252,920 64,900 317,820 4,466,567 1,146,134 5,612,701
Impulsora del
Dessarrollo y el
Empleo an America
Latina Series B-1 -- 347,900 347,900(b) -- 297,408 297,408
Wal-Mart de Mexico
Series V 1,747,500 496,000 2,243,500 4,707,272 1,324,080 6,031,352
-------------------------------------------
Total 19,129,414 5,413,111 24,542,525
-------------------------------------------
NORWAY (0.1%)
Copeinca 110,800 -- 110,800(b) 181,059 -- 181,059
-------------------------------------------
PAPUA NEW GUINEA (0.1%)
New Britain Palm
Oil -- 79,663 79,663 -- 252,759 252,759
-------------------------------------------
PERU (0.2%)
Compania de Minas
Buenaventura Cl B
ADR -- 67,500 67,500 -- 853,200 853,200
-------------------------------------------
PHILIPPINES (0.2%)
Philippine Long
Distance Telephone
ADR -- 13,000 13,000 -- 531,700 531,700
-------------------------------------------
QATAR (0.1%)
Commercial Bank of
Qatar GDR -- 102,600 102,600(b,e) -- 307,800 307,800
-------------------------------------------
RUSSIA (7.1%)
Cherkizovo Group -- 26,343 26,343(b) -- 67,175 67,175
Eurasia Drilling
GDR 243,662 -- 243,662(b,e,g) 1,339,747 -- 1,339,747
Gazprom ADR 617,321 10,081 627,402 12,577,916 200,309 12,778,225
Gazprom ADR -- 106,687 106,687(e) -- 2,152,943 2,152,943
MMC Norilsk Nickel
ADR 201,865 -- 201,865 2,025,853 -- 2,025,853
Mobile Telesystems
ADR -- 19,600 19,600 -- 767,340 767,340
Pharmstandard 72,811 -- 72,811(b) 1,830,430 -- 1,830,430
Sibirskiy Cement 24,589 -- 24,589 1,475,340 -- 1,475,340
Vimpel-
Communications ADR 163,588 -- 163,588 2,372,026 -- 2,372,026
-------------------------------------------
Total 21,621,312 3,187,767 24,809,079
-------------------------------------------
SOUTH AFRICA (8.2%)
ABSA Group 335,510 -- 335,510 3,517,898 -- 3,517,898
Adcock Ingram
Holdings -- 142,128 142,128(b) -- 498,403 498,403
African Bank
Investments -- 287,996 287,996 -- 795,072 795,072
Aspen Pharmacare -- 181,064 181,064(b) -- 635,741 635,741
Aveng 720,771 -- 720,771 3,571,281 -- 3,571,281
Gold Fields 485,399 -- 485,399 3,386,473 -- 3,386,473
Gold Fields ADR 218,148 -- 218,148 1,450,684 -- 1,450,684
Impala Platinum
Holdings 258,879 77,515 336,394 2,707,989 813,547 3,521,536
MTN Group 350,937 94,813 445,750 3,949,297 1,069,973 5,019,270
Murray & Roberts
Holdings 272,391 -- 272,391 1,848,111 -- 1,848,111
Sasol 109,036 -- 109,036 3,225,527 -- 3,225,527
Truworths Intl -- 339,884 339,884 -- 1,157,506 1,157,506
-------------------------------------------
Total 23,657,260 4,970,242 28,627,502
-------------------------------------------
SOUTH KOREA (7.9%)
Hyundai Motor 68,408 -- 68,408 3,163,629 -- 3,163,629
</Table>
64
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
Infopia 65,450 -- 65,450 $ 488,514 $ -- $ 488,514
KT 34,150 -- 34,150 870,018 -- 870,018
LG Electronics 45,653 19,346 64,999 3,411,257 1,430,742 4,841,999
NHN 33,539 -- 33,539(b) 3,572,276 -- 3,572,276
Samsung Electronics 27,090 -- 27,090 11,430,540 -- 11,430,540
Yuhan 20,363 -- 20,363 2,964,512 -- 2,964,512
-------------------------------------------
Total 25,900,746 1,430,742 27,331,488
-------------------------------------------
SWITZERLAND (0.1%)
Orascom Development
Holding -- 9,309 9,309(b) -- 269,666 269,666
-------------------------------------------
TAIWAN (7.6%)
Asustek Computer 2,037,062 -- 2,037,062 2,919,344 -- 2,919,344
Chunghwa Telecom 1,286,460 -- 1,286,460 2,129,621 -- 2,129,621
Chunghwa Telecom
ADR -- 34,600 34,600 -- 569,516 569,516
First Financial
Holding 4,196,764 -- 4,196,764 1,980,311 -- 1,980,311
Hon Hai Precision
Industry 1,098,250 382,910 1,481,160 2,652,248 926,982 3,579,230
MediaTek -- 89,000 89,000 -- 794,255 794,255
President Chain
Store -- 203,000 203,000 -- 476,343 476,343
Taiwan Mobile -- 576,000 576,000(b) -- 801,575 801,575
Taiwan
Semiconductor Mfg
ADR 1,119,988 843,000 1,962,988 9,251,101 1,247,355 10,498,456
Tripod Technology 1,008,155 -- 1,008,155 1,232,753 -- 1,232,753
U-Ming Marine
Transport 635,000 -- 635,000 741,724 -- 741,724
Yuanta Financial
Holding -- 1,761,000 1,761,000 -- 701,035 701,035
-------------------------------------------
Total 20,907,102 5,517,061 26,424,163
-------------------------------------------
THAILAND (1.1%)
Bangkok Bank -- 310,700 310,700 -- 632,382 632,382
Kasikornbank 2,094,800 -- 2,094,800 3,066,297 -- 3,066,297
Land and House -- 1,502,300 1,502,300 -- 165,389 165,389
-------------------------------------------
Total 3,066,297 797,771 3,864,068
-------------------------------------------
TURKEY (1.3%)
Akcansa Cimento -- 77,071 77,071 -- 128,337 128,337
Aksigorta -- 130,725 130,725 -- 268,434 268,434
Cimsa Cimento
Sanayi ve Ticaret -- 81,322 81,322 -- 153,435 153,435
Haci Omer Sabanci
Holding -- 141,547 141,547 -- 344,308 344,308
Koc Holding -- 182,184 182,184 -- 340,601 340,601
Turkiye Garanti
Bankasi 2,008,865 -- 2,008,865(b) 3,374,384 -- 3,374,384
-------------------------------------------
Total 3,374,384 1,235,115 4,609,499
-------------------------------------------
TOTAL COMMON STOCKS
(Cost:
$518,063,882) $270,514,080 $62,457,280 $332,971,360
- -----------------------------------------------------------------------------------------------------------
<Caption>
PREFERRED STOCKS (0.4%)
SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
BRAZIL
Companhia de
Bedidas das
Americas -- 22,300 22,300 $ -- $ 936,672 $ 936,672
Petroleo Brasileiro -- 30,400 30,400 -- 327,082 327,082
-------------------------------------------
-- 1,263,754 1,263,754
TOTAL PREFERRED
STOCKS
(Cost: $1,386,382) $ -- $ 1,263,754 $ 1,263,754
- -----------------------------------------------------------------------------------------------------------
</Table>
65
<Table>
<Caption>
MONEY MARKET FUND (3.9%)
SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A)
THREADNEEDLE THREADNEEDLE
EMERGING EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED
RIVERSOURCE SHORT-
TERM CASH FUND,
1.60% 13,521,361 -- 13,521,361(d) $ 13,521,361 $ -- $ 13,521,361
TOTAL MONEY MARKET
FUND
(Cost: $13,521,361) $ 13,521,361 $ -- $ 13,521,361
-------------------------------------------
TOTAL INVESTMENTS
IN SECURITIES
(Cost:
$532,971,625)(h) $284,035,441 $63,721,034 $347,756,475
- -----------------------------------------------------------------------------------------------------------
</Table>
66
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of total net assets at Oct. 31, 2008:
<Table>
<Caption>
INDUSTRY VALUE VALUE VALUE
THREADNEEDLE
EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND
PERCENTAGE OF EMERGING EMERGING PRO FORMA
NET ASSETS MARKETS FUND MARKETS FUND COMBINED
Auto Components 0.2% $ 868,102 $ -- $ 868,102
Automobiles 0.9 3,163,629 -- 3,163,629
Beverages 1.1 2,313,658 1,437,414 3,751,072
Biotechnology -- -- 76,176 76,176
Chemicals 2.0 4,979,313 1,996,793 6,976,106
Commercial Banks 13.7 44,476,596 3,249,812 47,726,408
Computers &
Peripherals 0.8 2,919,344 -- 2,919,344
Construction &
Engineering 1.5 3,571,281 1,627,354 5,198,635
Distributors 0.3 -- 942,084 942,084
Diversified
Consumer Services 0.1 -- 495,118 495,118
Diversified
Financial Services 1.0 -- 3,509,333 3,509,333
Diversified
Telecommunication
Services 2.1 5,371,665 1,738,700 7,110,365
Electric Utilities 1.4 3,033,756 1,940,958 4,974,714
Electrical
Equipment 1.3 2,435,150 2,040,089 4,475,239
Electronic
Equipment,
Instruments &
Components 1.4 3,885,001 926,982 4,811,983
Energy Equipment &
Services 1.7 2,927,454 2,976,088 5,903,542
Food & Staples
Retailing 2.2 4,707,272 3,089,502 7,796,774
Food Products 1.0 2,282,504 999,314 3,281,818
Health Care
Equipment &
Supplies 0.9 2,382,940 585,658 2,968,598
Household Durables 2.0 5,625,981 1,430,742 7,056,723
Industrial
Conglomerate 0.6 1,848,111 340,601 2,188,712
Insurance 4.4 13,163,940 1,961,996 15,125,936
Internet Software &
Services 1.0 3,572,276 -- 3,572,276
IT Services 4.7 15,980,165 199,576 16,179,741
Leisure Equipment &
Products 1.2 2,093,436 2,205,256 4,298,692
Machinery 0.1 -- 296,926 296,926
Marine 0.2 741,724 -- 741,724
Media 1.6 4,466,567 1,146,134 5,612,701
Metals & Mining 5.7 14,471,208 5,157,154 19,628,362
Multi-Utilities 0.4 1,475,340 -- 1,475,340
Oil, Gas &
Consumable Fuels 12.4 35,728,816 7,230,235 42,959,051
Pharmaceuticals 5.4 12,975,845 5,674,231 18,650,076
Real Estate
Management &
Development 1.8 4,915,643 1,148,461 6,064,104
Semiconductors &
Semiconductor
Equipment 6.5 20,681,641 2,041,610 22,723,251
Software 1.7 6,009,586 -- 6,009,586
Specialty Retail 0.3 -- 1,157,506 1,157,506
Thrifts & Mortgage
Finance 0.9 3,163,627 -- 3,163,627
Wireless
Telecommunication
Services 11.6 34,282,510 6,099,231 40,381,741
Other(1) 3.9 13,521,361 -- 13,521,361
- ----------------------------------------------------------------------------
Total $284,035,442 $63,721,034 $347,756,476
- ----------------------------------------------------------------------------
</Table>
(1) Cash & Cash Equivalents.
67
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008
Seligman Emerging Markets Fund
<Table>
<Caption>
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
Nov. 3, 2008 21,594 13,990 $ 1 $ --
Turkish Lira U.S. Dollar
- ---------------------------------------------------------------------------------------
Nov. 4, 2008 382,864 30,314 560 --
Mexican Peso U.S. Dollar
- ---------------------------------------------------------------------------------------
Nov. 21, 2008 2,689,000 2,007,166 276,908 --
Turkish Lira U.S. Dollar
- ---------------------------------------------------------------------------------------
Nov. 21, 2008 143,608 205,000 -- (11,699)
U.S. Dollar Turkish Lira
- ---------------------------------------------------------------------------------------
Nov. 21, 2008 1,075,623 1,502,000 -- (109,150)
U.S. Dollar Turkish Lira
- ---------------------------------------------------------------------------------------
Jan. 22, 2009 2,158,287,000 2,122,627 432,372 --
South Korean Won U.S. Dollar
- ---------------------------------------------------------------------------------------
Jan. 22, 2009 1,035,398 1,312,885,000 -- (7,217)
U.S. Dollar South Korean Won
- ---------------------------------------------------------------------------------------
Jan. 22, 2009 539,048 549,560,000 -- (108,662)
U.S. Dollar South Korean Won
- ---------------------------------------------------------------------------------------
Jan. 22, 2009 291,183 295,842,000 -- (59,495)
U.S. Dollar South Korean Won
- ---------------------------------------------------------------------------------------
Feb. 19, 2009 94,682,000 502,185 45,664 --
Hungarian Forint U.S. Dollar
- ---------------------------------------------------------------------------------------
Feb. 19, 2009 80,830 14,648,000 -- (10,203)
U.S. Dollar Hungarian Forint
- ---------------------------------------------------------------------------------------
Sept. 29, 2009 20,663,000 2,304,723 356,083 --
South African Rand U.S. Dollar
- ---------------------------------------------------------------------------------------
Sept. 29, 2009 2,570,000 287,891 45,525 --
South African Rand U.S. Dollar
- ---------------------------------------------------------------------------------------
Sept. 29, 2009 1,077,058 10,455,000 -- (91,091)
U.S. Dollar South African Rand
- ---------------------------------------------------------------------------------------
Total $1,157,113 $(397,517)
- ---------------------------------------------------------------------------------------
<Caption>
NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
</Table>
(A) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(B) Non-income producing.
(C) Foreign security values are stated in U.S. dollars.
(D) Affiliated Money Market Fund -- See Note 5 to the financial statements
in the annual report. The rate shown is the seven-day current annualized
yield at Oct. 31, 2008.
(E) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the
Fund's Board of Directors. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At Oct. 31, 2008, the value of these securities
amounted to $3,800,490 or 1.1% of net assets.
(F) Security valued by management at fair value according to procedures
approved, in good faith, by the Board.
(G) Identifies issues considered to be illiquid as to their marketability.
These securities may be valued at fair value according to procedures
approved, in good faith, by the Fund's Board of Directors. Information
concerning such security holdings at Oct. 31, 2008, is as follows:
<Table>
<Caption>
VALUE AS A VALUE AS A VALUE AS A
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
THREADNEEDLE SELIGMAN PRO FORMA
ACQUISITION EMERGING MARKETS EMERGING MARKETS COMBINED
SECURITY DATES COST FUND NET ASSETS FUND NET ASSETS NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Eurasia Drilling GDR* 11-02-07 thru 04-15-08 $5,741,380 0.47% -- 0.39%
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
68
(H) At Oct. 31, 2008, the cost of securities for federal income tax purposes
and the aggregate gross unrealized appreciation and depreciation based
on that cost was:
<Table>
<Caption>
THREADNEEDLE
EMERGING
THREADNEEDLE SELIGMAN MARKETS FUND
EMERGING EMERGING PRO FORMA
MARKETS FUND MARKETS FUND COMBINED
Cost of securities for federal income tax purposes: $ 449,749,120 $ 95,827,053 $ 545,576,173
Unrealized appreciation $ 2,377,852 $ 2,878,916 $ 5,256,768
Unrealized depreciation (168,091,531) (34,984,935) (203,076,466)
- --------------------------------------------------------------------------------------------------------------
Net unrealized depreciation $(165,713,679) $(32,106,019) $(197,819,698)
- --------------------------------------------------------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
69
PART C. OTHER INFORMATION
Item 15. Indemnification
The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the trustees, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
Item 16. Exhibits
(1)(a) Articles of Incorporation, as amended October 17, 1988, filed as
Exhibit 1 to Registrant's Post-Effective Amendment No. 7 to
Registration Statement No. 2-96512, are incorporated by reference.
(1)(b) Articles of Amendment to the Articles of Incorporation, dated June 16,
1999, filed as Exhibit (a)(2) to Registrant's Post-Effective Amendment
No. 31 are incorporated by reference.
(1)(c) Articles of Amendment, dated Nov. 14, 2002, filed electronically on or
about May 22, 2003 as Exhibit (a)(3) to Registrant's Post-Effective
Amendment No. 36 to Registration Statement No. 2-96512 are incorporated
by reference.
(1)(d) Articles of Amendment, dated April 21, 2006, filed electronically on or
about July 25, 2007 as Exhibit (a)(4) to Registrant's Post-Effective
Amendment No. 42 to Registration Statement No. 2-96512 are incorporated
by reference.
(1)(e) Certificate of Designation, dated Oct. 5, 2006, filed electronically on
or about Feb. 20, 2009 as Exhibit (a)(5) to Registrant's Post-Effective
Amendment No. 46 to Registration Statement No. 2-96512 is incorporated
by reference.
(1)(f) Certificate of Designation reflecting the addition of Class R2 shares
of RiverSource Short Duration U.S. Government Fund is filed
electronically herewith as Exhibit (1)(f).
(2) By-laws, as amended April 13, 2006 filed electronically filed
electronically as Exhibit (b) to Registrant's Post-Effective Amendment
No. 45 to Registration Statement No. 2-96512 are incorporated by
reference.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is included herein as
Exhibit A to Part A of this Registration Statement.
(5) Not applicable.
(6) Investment Management Services Agreement, amended and restated, dated
May 1, 2006, between Registrant and RiverSource Investments, LLC filed
electronically on or about July 25, 2006 as Exhibit (d) to Registrant's
Post-Effective Amendment No. 42 to Registration Statement No. 2-96512
is incorporated by reference.
(7)(a) Distribution Agreement, effective Aug. 1, 2006, amended and restated as
of Sept. 11, 2007, between Registrant and RiverSource Distributors,
Inc. filed electronically on or about Oct. 30, 2007 as Exhibit (e)(2)
to Diversified Income Series, Inc. Post-Effective Amendment No. 63 to
Registration Statement No. 2-51586 is incorporated by reference.
(7)(b) Distribution Agreement, effective Nov. 7, 2008, between Registrant and
Seligman Advisors, Inc. filed electronically on or about Nov. 25, 2008
as Exhibit (e)(2) to RiverSource Investment Series, Inc. Post-Effective
Amendment No. 121 to Registration Statement No. 2-11328 is incorporated
by reference.
(7)(c) Form of Service Agreement for RiverSource Distributors, Inc. and
RiverSource Service Corporation filed electronically on or about Aug.
27, 2007 as Exhibit (e)(3) to RiverSource Sector Series, Inc.
Post-Effective Amendment No. 39 to Registration Statement No. 33-20872
is incorporated by reference.
(7)(d) Form of RiverSource Funds Dealer Agreement filed electronically on or
about Aug. 27, 2007 as Exhibit (e)(4) to RiverSource Sector Series,
Inc. Post-Effective Amendment No. 39 to Registration Statement No.
33-20872 is incorporated by reference.
(8) Deferred Compensation Plan, amended and restated Jan. 1, 2009, filed
electronically on or about Jan. 27, 2009 as Exhibit (f) to RiverSource
Equity Series, Inc. Post-Effective Amendment No. 105 to Registration
Statement No. 2-13188 is incorporated by reference.
(9) Form of Master Global Custody Agreement with JP Morgan Chase Bank, N.A.
filed electronically on or about Dec. 23, 2008 as Exhibit (g) to
RiverSource International Mangers, Inc. Post-Effective Amendment No. 18
to Registration Statement No. 333-64010 is incorporated by reference.
(10)(a) Plan of Distribution and Agreement of Distribution, dated Aug. 1, 2006,
amended and restated Nov. 12, 2008, between Registrant and RiverSource
Distributors, Inc. filed electronically on or about March 27, 2009 as
Exhibit (m)(1) to RiverSource Income Series, Inc. Post-Effective
Amendment No. 105 to Registration Statement No. 2-10700 is incorporated
by reference.
(10)(b) Plan of Distribution and Agreement of Distribution, effective Nov. 7,
2008, amended and restated Nov. 12, 2008, between Registrant and
Seligman Advisors, Inc. filed electronically on or about
March 27, 2009 as Exhibit (m)(2) to RiverSource Income Series, Inc.
Post-Effective Amendment No. 105 to Registration Statement No. 2-10700
is incorporated by reference.
(10)(c) Rule 18f - 3(d) Plan, amended and restated as of Nov. 12, 2008, filed
electronically on or about March 27, 2009 as Exhibit (n) to RiverSource
Income Series, Inc. Post-Effective Amendment No. 105 to Registration
Statement No. 2-10700 is incorporated by reference.
(11) Opinion and consent of counsel as to the legality of the securities
being registered is filed electronically herewith as Exhibit (11).
(12) Tax opinion to be filed by Amendment.
(13)(a) Administrative Services Agreement, dated Oct. 1, 2005, amended and
restated Nov. 12, 2008, between Registrant and Ameriprise Financial,
Inc. filed electronically on or about Feb. 27, 2009 as Exhibit (h)(1)
to RiverSource Variable Series Trust Post-Effective Amendment No. 4 to
Registration Statement No. 333-146374 is incorporated by reference.
(13)(b) Plan Administration Services Agreement, dated Dec. 1, 2006, amended and
restated Nov. 12, 2008, between Registrant and RiverSource Service
Corporation filed electronically on or about
March 27, 2009 as Exhibit (h)(3) to RiverSource Income Series, Inc.
Post-Effective Amendment No. 105 to Registration Statement No. 2-10700
is incorporated by reference.
(13)(c) Transfer Agency Agreement, dated Oct. 1, 2005, amended and restated
Nov. 12, 2008, between Registrant and RiverSource Service Corporation
filed electronically on or about March 27, 2009 as Exhibit (h)(2) to
RiverSource Income Series, Inc. Post-Effective Amendment No. 105 to
Registration Statement No. 2-10700 is incorporated by reference.
(13)(d) License Agreement, effective May 1, 2006, amended and restated as of
Nov. 12, 2008, between Ameriprise Financial, Inc. and RiverSource Group
of Funds filed electronically on or about Feb. 27, 2009 as Exhibit
(h)(4) to RiverSource Variable Series Trust Post-Effective Amendment
No. 4 to Registration Statement No. 333-146374 is incorporated by
reference.
(13)(e) Master Fee Cap/Fee Waiver Agreement, dated Oct. 1, 2005, amended and
restated Nov. 12, 2008, between RiverSource Investments, LLC,
Ameriprise Financial, Inc., RiverSource Service Corporation,
RiverSource Distributors, Inc., Seligman Advisors, Inc. (now known as
RiverSource Fund Distributors, Inc.) and the Registrant filed
electronically on or about Feb. 27, 2009 as Exhibit (h)(3) to
RiverSource Variable Series Trust Post-Effective Amendment No. 4 to
Registration Statement No. 333-146374 is incorporated by reference.
(14)(a) Consent of Independent Registered Public Accounting Firm (Deloitte &
Touche LLP), dated April 13, 2009 is filed electronically herewith as
Exhibit (14)(a).
(14)(b) Consent of Independent Registered Public Accounting Firm (Ernst & Young
LLP), dated April 13, 2009 is filed electronically herewith as Exhibit
(14)(b).
(15) Financial Statements: Not applicable.
(16) Directors/Trustees Power of Attorney to sign this Registration
Statement and its amendments, dated Jan. 8, 2009, filed electronically
on or about Feb. 27, 2009 as Exhibit (16) to Registration Statement No.
333-157592 is incorporated by reference.
(17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically on or about Aug. 27, 2007 as Exhibit (p)(1) to
RiverSource Sector Series, Inc. Post-Effective Amendment No. 39 to
Registration Statement No. 33-20872 is incorporated by reference.
(17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's principal
underwriter, dated April 2008, filed electronically on or about April
25, 2008 as Exhibit (p)(2) to RiverSource Variable Series Trust
Post-Effective Amendment No. 3 to Registration Statement No. 333-146374
is incorporated by reference.
(17)(c) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
adviser, dated Nov. 15, 2008, filed electronically on or about Nov. 25,
2008 as Exhibit (p)(3) to RiverSource Investment Series, Inc.
Post-Effective Amendment No. 121 to Registration Statement No. 2-11328
is incorporated by reference.
(17)(d) Prospectus, dated May 1, 2008, for Seligman High Income Fund Series,
Inc. (on behalf of its series Seligman U.S. Government Securities Fund)
is filed electronically herewith as Exhibit (17)(d).
(17)(e) Statement of Additional Information, dated April 1, 2009, for
RiverSource Short Duration U.S. Government Fund is filed electronically
herewith as Exhibit (17)(e).
(17)(f) Statement of Additional Information, dated May 1, 2008, for Seligman
U.S. Government Securities Fund is filed electronically herewith as
Exhibit (17)(f).
(17)(g) Prospectus, dated July 30, 2008, for RiverSource Short Duration U.S.
Government Fund is filed electronically herewith as Exhibit (17)(g).
(17)(h) Annual Report for the period ended December 31, 2008 for Seligman U.S.
Government Securities Fund is filed electronically herewith as Exhibit
(17)(h).
(17)(i) Annual Report for the period ended May 31, 2008 for RiverSource Short
Duration U.S. Government Fund is filed electronically herewith as
Exhibit (17)(i).
(17)(j) Semiannual Report for the period ended Nov. 30, 2008 for RiverSource
Short Duration U.S. Government Fund is filed electronically herewith as
Exhibit (17)(j).
(17)(k) Supplement dated April 3, 2009 to the prospectus dated May 1, 2008 of
Seligman U.S. Government Securities Fund is filed electronically
herewith as Exhibit (17)(k).
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this registration statement by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) of the Securities
Act, the reoffering prospectus will contain the information called for by
the applicable registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The Registrant undertakes to file by Post-Effective Amendment an
Opinion of Counsel supporting the tax consequences of the proposed
reorganization within a reasonable time following the reorganization.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Amendment to the
Registration Statement has been signed on behalf of the Registrant, in the City
of Minneapolis, and State of Minnesota on the 14th day of April 2009.
RIVERSOURCE GOVERNMENT INCOME SERIES, INC.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities
indicated on the 14th day of April, 2009.
Signature Capacity
- --------- ------------------
/s/ Stephen R. Lewis, Jr.* Chair of the Board
- ------------------------------
Stephen R. Lewis, Jr.
/s/ Kathleen A. Blatz* Director
- ------------------------------
Kathleen A. Blatz
/s/ Arne H. Carlson* Director
- ------------------------------
Arne H. Carlson
/s/ Pamela G. Carlton* Director
- ------------------------------
Pamela G. Carlton
/s/ Patricia M. Flynn* Director
- ------------------------------
Patricia M. Flynn
/s/ Arne P. Jones* Director
- ------------------------------
Arne P. Jones
/s/ Jeffrey Laikind* Director
- ------------------------------
Jeffrey Laikind
/s/ John F. Maher* Director
- ------------------------------
John F. Maher
/s/ Catherine James Paglia* Director
- ------------------------------
Catherine James Paglia
/s/ Leroy C. Richie* Director
- ------------------------------
Leroy C. Richie
/s/ Alison Taunton-Rigby* Director
- ------------------------------
Alison Taunton-Rigby
/s/ William F. Truscott* Director
- ------------------------------
William F. Truscott
* Signed pursuant to Directors/Trustees Power of Attorney, dated Jan. 8,
2009, filed electronically on or about Feb. 27, 2009 as Exhibit (16) to
Registration Statement No. 333-157592, by:
/s/ Scott R. Plummer
- ------------------------------
Scott R. Plummer
EXHIBIT INDEX
(1)(f) Certificate of Designation reflecting the addition of Class R2 shares
of RiverSource Short Duration U.S. Government Fund.
(11) Opinion and consent of counsel as to the legality of the securities
being registered.
(14)(a) Consent of Independent Registered Public Accounting Firm (Deloitte &
Touche LLP).
(14)(b) Consent of Independent Registered Public Accounting Firm (Ernst & Young
LLP).
(17)(d) Prospectus, dated May 1, 2008, for Seligman High Income Fund Series,
Inc. (on behalf of its series Seligman U.S. Government Securities
Fund).
(17)(e) Statement of Additional Information, dated April 1, 2009, for
RiverSource Short Duration U.S. Government Fund.
(17)(f) Statement of Additional Information, dated May 1, 2008, for Seligman
U.S. Government Securities Fund.
(17)(g) Prospectus, dated July 30, 2008, for RiverSource Short Duration U.S.
Government Fund.
(17)(h) Annual Report for the period ended December 31, 2008 for Seligman U.S.
Government Securities Fund.
(17)(i) Annual Report for the period ended May 31, 2008 for RiverSource Short
Duration U.S. Government Fund.
(17)(j) Semiannual Report for the period ended Nov. 30, 2008 for RiverSource
Short Duration U.S. Government Fund.
(17)(k) Supplement dated April 3, 2009 to the prospectus dated May 1, 2008 of
Seligman U.S. Government Securities Fund.