0000950123-10-006870.txt : 20130225
0000950123-10-006870.hdr.sgml : 20130225
20100129171023
ACCESSION NUMBER: 0000950123-10-006870
CONFORMED SUBMISSION TYPE: 485APOS
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20100129
DATE AS OF CHANGE: 20100512
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RIVERSOURCE MONEY MARKET SERIES, INC.
CENTRAL INDEX KEY: 0000049698
IRS NUMBER: 411254759
STATE OF INCORPORATION: MN
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: 485APOS
SEC ACT: 1933 Act
SEC FILE NUMBER: 002-54516
FILM NUMBER: 10560919
BUSINESS ADDRESS:
STREET 1: 50606 AMERIPRISE FINANCIAL CENTER
STREET 2: H27/5228
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55474
BUSINESS PHONE: 612-671-4321
MAIL ADDRESS:
STREET 1: 50606 AMERIPRISE FINANCIAL CENTER
STREET 2: H27/5228
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55474
FORMER COMPANY:
FORMER CONFORMED NAME: AXP MONEY MARKET SERIES INC
DATE OF NAME CHANGE: 20000823
FORMER COMPANY:
FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC
DATE OF NAME CHANGE: 19920917
FORMER COMPANY:
FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC
DATE OF NAME CHANGE: 19920703
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RIVERSOURCE MONEY MARKET SERIES, INC.
CENTRAL INDEX KEY: 0000049698
IRS NUMBER: 411254759
STATE OF INCORPORATION: MN
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: 485APOS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-02591
FILM NUMBER: 10560920
BUSINESS ADDRESS:
STREET 1: 50606 AMERIPRISE FINANCIAL CENTER
STREET 2: H27/5228
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55474
BUSINESS PHONE: 612-671-4321
MAIL ADDRESS:
STREET 1: 50606 AMERIPRISE FINANCIAL CENTER
STREET 2: H27/5228
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55474
FORMER COMPANY:
FORMER CONFORMED NAME: AXP MONEY MARKET SERIES INC
DATE OF NAME CHANGE: 20000823
FORMER COMPANY:
FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC
DATE OF NAME CHANGE: 19920917
FORMER COMPANY:
FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC
DATE OF NAME CHANGE: 19920703
0000049698
S000003359
Columbia Money Market Fund
C000087768
RiverSource Cash Management Fund Class Z
485APOS
1
n55917ae485apos.txt
485APOS
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 68 (File No. 2-54516) [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 59 (File No. 811-2591) [X]
RIVERSOURCE MONEY MARKET SERIES, INC.
50606 Ameriprise Financial Center
Minneapolis, Minnesota 55474
Scott R. Plummer
5228 Ameriprise Financial Center
Minneapolis, MN 55474
(612) 671-1947
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
[RiverSource Investments logo]
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
RIVERSOURCE
CASH MANAGEMENT FUND
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS [DATE], 2010
> RIVERSOURCE CASH MANAGEMENT FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH
MAXIMUM CURRENT INCOME CONSISTENT
WITH LIQUIDITY AND STABILITY OF PRINCIPAL.
Class Ticker Symbol
----- -------------
Class Z --
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE
2
TABLE OF CONTENTS
SUMMARY OF THE FUND
Investment Objective.................................. 3
Fees and Expenses of the Fund......................... 3
Principal Investment Strategies of the Fund........... 3
Principal Risks of Investing in the Fund.............. 3
Past Performance...................................... 4
Fund Management....................................... 4
Buying and Selling Shares............................. 4
Tax Information....................................... 5
Financial Intermediary Compensation................... 5
MORE INFORMATION ABOUT THE FUND
Investment Objective.................................. 6
Principal Investment Strategies of the Fund........... 6
Principal Risks of Investing in the Fund.............. 6
More about Annual Fund Operating Expenses............. 7
Other Investment Strategies and Risks................. 7
Fund Management and Compensation...................... 7
BUYING AND SELLING SHARES............................. S.1
Description of Class Z Shares..................... S.1
Opening an Account................................ S.1
EXCHANGING OR SELLING SHARES.......................... S.3
Exchanges......................................... S.4
Selling Shares.................................... S.5
PRICING AND VALUING OF FUND SHARES.................... S.5
DISTRIBUTIONS AND TAXES............................... S.5
GENERAL INFORMATION................................... S.6
3
SUMMARY OF THE FUND
INVESTMENT OBJECTIVE
RiverSource Cash Management Fund (the Fund) seeks to provide shareholders with
maximum current income consistent with liquidity and stability of principal.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
Class Z shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS Z
-------
Maximum sales charge (load) imposed on purchases (as a percentage
of offering price) None
Maximum deferred sales charge (load) imposed on redemptions (as a
percentage of offering price at the time of purchase, or current net
asset value, whichever is less) None
ANNUAL FUND OPERATING EXPENSES(a) (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)
CLASS Z
-------
Management fees [___]%
Distribution and/or service (12b-1) fees 0.00%
Other expenses [___]%
[Acquired fund fees and expenses] [___]%
Total annual fund operating expenses [___]%
Less: Fee waiver/expense reimbursement(b) [(_)]%
Total annual (net) fund operating expenses
after fee waiver/expense reimbursement(b) [___]%
(a) Other expenses [and acquired fund fees and expenses] are based on
estimated amounts for the current fiscal year.
(b) The investment manager and its affiliates have contractually agreed to
waive certain fees and to reimburse certain expenses (other than acquired
fund fees and expenses, if any) until ______________, unless sooner
terminated at the sole discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund
expenses (excluding acquired fund fees and expenses, if any) will not
exceed ___% for Class Z.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. [The Example includes contractual commitments to waive fees and
reimburse expenses expiring as indicated.] Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS
------ -------
Class Z $[___] $[___]
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND
The Fund's assets primarily are invested in money market instruments, such as
marketable debt obligations issued by corporations or the U.S. government or its
agencies, bank certificates of deposit, bankers' acceptances, letters of credit,
and commercial paper, including asset-backed commercial paper. The Fund may
invest more than 25% of its total assets in money market instruments issued by
U.S. banks, U.S. branches of foreign banks and U.S. government securities.
Additionally, the Fund may invest up to 35% of its total assets in U.S.
dollar-denominated foreign investments.
Because the Fund seeks to maintain a constant net asset value of $1.00 per
share, capital appreciation is not expected to play a role in the Fund's return.
The Fund's yield will vary from day-to-day.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Principal risks
associated with an investment in the Fund include:
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 money market funds.
4
CONCENTRATION RISK. Investments that are concentrated in a particular issuer,
geographic region, or sector will make the Fund's portfolio value more
susceptible to the events or conditions impacting the issuer, geographic region,
or sector. If, for example the Fund concentrates its investments in banks, the
value of these investments may be adversely affected by economic or regulatory
developments in the banking industry.
CREDIT RISK. Credit risk is the risk that fixed-income securities in the Fund's
portfolio will decline in price or fail to pay interest or repay principal when
due because the issuer of the security or the counterparty to a contract will
default or otherwise become unable or unwilling to honor its financial
obligations. Unrated securities held by the Fund present increased credit risk.
INTEREST RATE RISK. A rise in the overall level of interest rates may result in
the decline in the prices of fixed income securities held by the Fund. Falling
interest rates may result in a decline in the Fund's income and yield.
REINVESTMENT RISK. Reinvestment risk is the risk that the Fund will not be able
to reinvest income or principal at the same rate it currently is earning.
PAST PERFORMANCE
The following bar chart and table provide some illustration of the risks of
investing in the Fund by showing the variability of performance. Class A share
information is shown in the bar chart and table because Class Z shares are new
as of the date of this prospectus and therefore performance information is not
available. How the Fund has performed in the past does not indicate how the Fund
will perform in the future.
Updated performance information, including current 7-day yield, is available at
__________________ or by calling, without charge, (800) ____________.
CLASS A* AVERAGE ANNUAL TOTAL RETURNS
[to be updated by amendment]
(CALENDAR YEAR)
During the periods shown:
- Highest return for a calendar quarter was ______% (quarter ended ________)
- Lowest return for a calendar quarter was ______% (quarter ended _________)
AVERAGE ANNUAL TOTAL RETURNS (AFTER APPLICABLE SALES CHARGES)
(FOR PERIODS ENDED DEC. 31, 2009) 1 YEAR 5 YEARS 10 YEARS
------------------------------------------------ ------ ------- --------
RiverSource Cash Management Fund Class A* shares [___]% [___]% [___]%
* The returns shown are for Class A shares which are offered for sale under
a separate prospectus. Class Z shares would have substantially similar
annual returns because the shares are invested in the same portfolio of
securities and the annual returns would differ only to the extent that the
classes do not have the same expenses.
FUND MANAGEMENT
INVESTMENT MANAGER: RiverSource Investments, LLC
BUYING AND SELLING SHARES
With limited exceptions, Class Z shares are generally closed to new investors,
and are available for purchase only to existing Class Z shareholders purchasing
through exchanges from Class Z shares of other Columbia Funds.
NONQUALIFIED ACCOUNTS TAX QUALIFIED ACCOUNTS
--------------------- ----------------------
Minimum Initial Investment $ 2,000 $ 1,000
Subsequent Investments $ 100 $ 100*
* $50 for scheduled investment plans
EXCHANGING OR SELLING SHARES
Your shares are redeemable -- they may be sold back to the Fund. If you maintain
your account with a financial intermediary, you must contact that financial
intermediary to exchange or sell shares of the Fund.
5
If your account was established directly with the Fund, you may use one of the
following methods to request an exchange or sales of shares.
BY MAIL: Mail your exchange or sale request to:
Regular mail: Columbia Funds, P.O. Box 8081, Boston MA 02266-8081
Express mail: Columbia Funds, c/o Boston Financial, 30 Dan Road, Canton,
MA 02021-2809
BY TELEPHONE OR WIRE TRANSFER: Call (800) 345-6611. A service fee may be charged
against your account for each wire sent.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or
capital gains.
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund and its related companies may pay the
financial intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other financial intermediary to recommend the Fund over another investment. Ask
your financial intermediary or visit their website for more information.
6
MORE INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE
RiverSource Cash Management Fund (the Fund) seeks to provide shareholders with
maximum current income consistent with liquidity and stability of principal.
Because any investment involves risk, there is no assurance this objective can
be achieved. Only shareholders can change the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND
The Fund's assets primarily are invested in money market instruments, such as
marketable debt obligations issued by corporations or the U.S. government or its
agencies, bank certificates of deposit, bankers' acceptances, letters of credit,
and commercial paper, including asset-backed commercial paper. The Fund may
invest more than 25% of its total assets in money market instruments issued by
U.S. banks, U.S. branches of foreign banks and U.S. government securities.
Additionally, the Fund may invest up to 35% of its total assets in U.S.
dollar-denominated foreign investments.
Because the Fund seeks to maintain a constant net asset value of $1.00 per
share, capital appreciation is not expected to play a role in the Fund's return.
The Fund's yield will vary from day-to-day.
The Fund restricts its investments to instruments that meet certain maturity and
quality standards required by the U.S. Securities and Exchange Commission for
money market funds. For example, the Fund:
- Invests substantially in securities rated in the highest short-term rating
category, or deemed of comparable quality by the investment manager
(RiverSource Investments, LLC).
- Limits its average portfolio maturity to ninety days or less.
- Buys obligations with remaining maturities of 397 days or less.
- Buys only obligations that are denominated in U.S. dollars and present
minimal credit risk.
In pursuit of the Fund's objective, the investment manager chooses investments
by:
- Considering opportunities and risks given current interest rates and
anticipated interest rates.
- Purchasing securities based on the timing of cash flows in and out of the
Fund.
In evaluating whether to sell a security, the investment manager considers,
among other factors, whether:
- The issuer's credit rating declines or the investment manager expects a
decline (the Fund, in certain cases, may continue to own securities that
are down-graded until the investment manager believes it is advantageous
to sell).
- Political, economic, or other events could affect the issuer's
performance.
- The investment manager identifies a more attractive opportunity.
- The issuer or the security continues to meet the other standards described
above.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Principal risks
associated with an investment in the Fund include:
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 money market funds.
CONCENTRATION RISK. Investments that are concentrated in a particular issuer,
geographic region, or sector will make the Fund's portfolio value more
susceptible to the events or conditions impacting the issuer, geographic region,
or sector. Because of the Fund's concentration, the Fund's overall value may
decline to a greater degree than if the Fund held a less concentrated portfolio.
The more a fund diversifies, the more it spreads risk. For example, if the Fund
concentrates its investments in banks, the value of these investments may be
adversely affected by economic or regulatory developments in the banking
industry.
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
7
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.
INTEREST RATE RISK. A rise in the overall level of interest rates may result in
the decline in the prices of fixed income securities held by the Fund. The
Fund's yield will vary; it is not fixed for a specific period like the yield on
a bank certificate of deposit. Falling interest rates may result in a decline in
the Fund's income and yield (since the Fund must then invest in lower-yielding
fixed income securities). Under certain circumstances, the yield decline could
cause the Fund's net yield to be negative (such as when Fund expenses exceed
income levels).
REINVESTMENT RISK. Reinvestment risk is the risk that the Fund will not be able
to reinvest income or principal at the same rate it currently is earning.
MORE ABOUT ANNUAL FUND OPERATING EXPENSES
The following information is presented in addition to, and should be read in
conjunction with, the "Fees and Expenses of the Fund" that appears in the
Summary of the Fund.
Calculation of Annual Fund Operating Expenses. Annual fund operating expenses
are based on estimated expenses for the Fund's current fiscal year and are
expressed as a percentage (expense ratio) of the Fund's estimated average net
assets during the fiscal period. The expense ratios reflect current fee
arrangements. In general, the Fund's operating expenses will increase as its
assets decrease, such that the Fund's actual expense ratios may be higher than
the expense ratios presented in the table. The commitment by the investment
manager and its affiliates to waive fees and/or cap (reimburse) expenses is
expected to limit the impact of any increase in the Fund's operating expenses
that would otherwise result because of a decrease in the Fund's assets in the
current fiscal year.
From time to time, the investment manager and its affiliates may waive or absorb
expenses of the Fund for the purpose of allowing the Fund to avoid a negative
net yield or to increase the Fund's positive net yield. The Fund's yield would
be negative if Fund expenses exceed Fund income. Any such expense limitation is
voluntary and may be revised or terminated at any time without notice and,
accordingly, any positive net yield resulting therefrom will cease.
OTHER INVESTMENT STRATEGIES AND RISKS
Other Investment Strategies. In addition to the principal investment strategies
previously described, the Fund may invest in other securities and may use other
investment strategies that are not principal investment strategies. For more
information on strategies and holdings, and the risks of such strategies, see
the Fund's SAI and its annual and semiannual reports.
Directed Brokerage. The Fund's Board of Directors (the 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
SAI.
FUND MANAGEMENT AND COMPENSATION
INVESTMENT MANAGER
RiverSource Investments, LLC (the investment manager or RiverSource
Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is
the investment manager to the RiverSource Family of Funds (including the
RiverSource funds, RiverSource Partners funds, Seligman funds and Threadneedle
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 the RiverSource Family of Funds,
RiverSource Investments manages investments for itself and its affiliates. For
institutional clients, RiverSource Investments and its affiliates provide
investment management and related services, such as separate account asset
management, and institutional trust and custody, as well as other investment
products. For all of its clients, RiverSource Investments seeks to allocate
investment opportunities in an equitable manner over time. See the SAI for more
information.
The RiverSource Family of Funds has received an order from the Securities and
Exchange Commission that permits RiverSource Investments, subject to the
approval of the Board, to appoint a subadviser or change the terms of a
subadvisory agreement for a fund without first obtaining shareholder approval.
The order permits the fund to add or change unaffiliated subadvisers or change
the fees paid to subadvisers from time to time without the expense and delays
associated with obtaining shareholder approval of the change. If the Fund was to
seek to rely on the order,
8
holders of a majority of the Fund's outstanding
voting securities would need to approve operating the Fund in this manner. There
is no assurance shareholder approval, if sought, would be received, and no
changes will be made without shareholder approval until that time. For more
information, see the SAI.
RiverSource Investments and its affiliates may have other relationships,
including significant financial relationships, with current or potential
subadvisers or their affiliates, which may create a conflict of interest. In
making recommendations to the Board to appoint or to change a subadviser, or to
change the terms of a subadvisory agreement, RiverSource Investments does not
consider any other relationship it or its affiliates may have with a subadviser,
and RiverSource Investments discloses the nature of any material relationships
it has with a subadviser to the Board.
The Fund pays RiverSource Investments a fee for managing its assets. Under the
Investment Management Services Agreement (Agreement), the fee for the most
recent fiscal year was 0.29% of the Fund's average daily net assets. Under the
Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory
expenses. A discussion regarding the basis for the Board approving the Agreement
is available in the Fund's annual shareholder report for the year ended July 31,
2009.
S.1
BUYING AND SELLING SHARES
The Fund is 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 FUND. FINANCIAL INTERMEDIARIES THAT OFFER THE FUND 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 CLASS Z SHARES
The Fund offers one class of shares in this prospectus: Class Z shares. The Fund
also offers other classes of shares through a separate prospectus. Each share
class has its own fee structure and eligibility requirements. The following
summarizes the key features of the Class Z shares offered by this prospectus.
Contact your financial intermediary or the Fund for more information.
CONTINGENT DISTRIBUTION PLAN
INITIAL DEFERRED SALES AND/OR ADMINISTRATION
AVAILABILITY(a) SALES CHARGE CHARGE (CDSC) SERVICE FEE SERVICES FEE
------------------ ------------ -------------- ------------ ---------------
Class Z Limited to certain No. No. No. No.
eligible investors.
(a) See "Buying and Selling Shares, Class Z Eligible Investors" for more
information on availability of Class Z shares and eligible investors. See
"Buying and Selling Shares, Opening an Account" for information on minimum
investment and account balance requirements.
CLASS Z ELIGIBLE INVESTORS
With limited exceptions, Class Z shares are generally closed to new investors,
and are available for purchase only to existing Class Z shareholders purchasing
through exchanges from Class Z shares of other Columbia Funds. Class Z shares of
RiverSource Cash Management Fund may not be exchanged into other classes or
funds in the RiverSource Family of Funds.
In addition, for Class Z shares, the distributor, in its sole discretion, may
accept or authorize financial intermediaries to accept investments from other
investors not listed above.
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.
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.
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.
S.2
METHODS OF PURCHASING SHARES
These Methods of purchasing shares generally apply to Class Z shares.
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 whom 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 columbiamanagement.com or may be requested by
calling (800) 345-6611. Please include your written exchange
instructions containing your name and appropriate account
number.
Mail your written exchange instructions and completed
application to:
REGULAR MAIL COLUMBIA FUNDS
P.O. BOX 8081
BOSTON, MA 02266-8081
EXPRESS MAIL COLUMBIA FUNDS
C/O BOSTON FINANCIAL
30 DAN ROAD
CANTON, MA 02021-2809
BY PHONE Call (800) 345-6611 or send signed written instructions to the
address above.
MINIMUM INVESTMENT AND ACCOUNT BALANCE - CLASS Z
NONQUALIFIED ACCOUNTS TAX QUALIFIED ACCOUNTS
--------------------- -----------------------
Initial investment $2,000 $1,000
Subsequent investments $100 $100*
Account balance** $1,000 None
* $50 for scheduled investment plans.
** 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.
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.
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.
S.3
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 COLUMBIA FUNDS
P.O. BOX 8081
BOSTON, MA 02266-8081
EXPRESS MAIL COLUMBIA 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.
S.4
WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED)
ACCOUNT ESTABLISHED WITH THE FUND (CONTINUED)
BY MAIL Note: Any express mail delivery charges you pay will vary
(CONTINUED) depending on domestic or international delivery instructions.
BY TELEPHONE Call (800) 345-6611. 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) 345-6611 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.
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.
EXCHANGES
Generally, you may exchange your Fund shares for shares of the same class of any
publicly offered Columbia Fund 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.
SHORT-TERM OR EXCESSIVE TRADING
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. FUNDS THAT INVEST IN SECURITIES THAT TRADE INFREQUENTLY MAY BE VULNERABLE
TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF INEFFICIENCIES IN THE SECURITIES
MARKETS.
The Fund is a money market fund and seeks to provide shareholders current
income, liquidity and a stable net asset value of $1.00 per share. In addition,
the Fund is designed to serve as a short-term cash equivalent investment for
shareholders and, therefore, expects shareholders to engage in frequent
purchases and redemptions. Because of the inherently liquid nature of the Fund's
investments, and money market instruments in general, and the Fund's intended
purpose to serve as a short-term investment vehicle for shareholders, the Fund
does not monitor or limit shareholder purchases and redemptions of Fund shares.
However, the Fund's policies and procedures do provide the
S.5
Fund with the right to reject any purchase orders by any investor for any
reason, including orders that appear to be associated with market timing
activities.
Other exchange policies:
- Exchanges must be made into the same class of shares of the share class
being exchanged out of.
- If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases, unless a waiver applies.
- 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.
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.
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
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.
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. The 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
The 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 the Fund,
it is unlikely the Fund 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 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.
S.6
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).
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.
IMPORTANT: This information is a brief and selective summary of some of the tax
rules that apply to an investment in the 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 Fund. The Fund may only be purchased or sold directly or through financial
intermediaries authorized by the distributor to offer the Fund. NOT ALL
FINANCIAL INSTITUTIONS ARE AUTHORIZED TO SELL THE FUND. 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. 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
Fund.
Administration Services. Ameriprise Financial, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the Fund. These services include administrative,
accounting, treasury, and other services. Fees paid by the Fund for these
services are included under "Other expenses" in the expense table under "Fees
and Expenses of the Fund" in the Summary of the Fund section of this prospectus.
Distribution and Shareholder Services. RiverSource Fund Distributors, Inc.,
50611 Ameriprise Financial Center, Minneapolis, Minnesota 55474, (the
distributor), provides underwriting and distribution services to the Fund.
See "Other Investment Strategies and Risks" for the Fund's 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 Fund. The Fund pays the transfer agent a fee, 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 Fund.
Fees paid by the Fund for these services are included under "Other expenses" in
the expense table under
S.7
"Fees and Expenses of the Fund" in the Summary of the Fund section of this
prospectus. 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.
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 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
S.8
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
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
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 the 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.
Funds in the RiverSource Family of Funds - which include funds offered under
the RiverSource, RiverSource Partners, Seligman and Threadneedle brands - can be
purchased from authorized financial intermediaries.
Additional information about the Fund and its investments is available in the
Fund's SAI, and annual and semiannual reports to shareholders. In the Fund's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its last fiscal year. The SAI is incorporated by reference in this prospectus.
For a free copy of the SAI, the annual report, or the semiannual report, or to
request other information about the Fund, contact ______________ (through the
address, phone number or website listed below) or your financial intermediary.
To make a shareholder inquiry, contact the financial intermediary through whom
you purchased the Fund.
_____________________
[address]
[(800)______________]
[website address]
Information about the Fund, including the SAI, can be reviewed at the Securities
and Exchange Commission's (Commission) Public Reference Room in Washington, D.C.
(for information about the public reference room call 1-202-551-8090). Reports
and other information about the Fund are available on the EDGAR Database on the
Commission's Internet site at www.sec.gov. Copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: publicinfo@sec.gov, or by writing to the Commission's Public
Reference Section, Washington, D.C. 20549-1520.
Investment Company Act File #811-2591
[RiverSource Investments logo]
S- -99 ( / )
____ ___ __ __
The information in this Statement of Additional Information (SAI) is not
complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This SAI is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
STATEMENT OF ADDITIONAL INFORMATION
[DATE], 2010
RIVERSOURCE BOND SERIES, INC.
RiverSource Floating Rate Fund
Class A: RFRAX Class B: RSFBX Class C: RFRCX
Class I: RFRIX Class R4: -- Class R5: RFRFX
Class W: RFRWX
RiverSource Income Opportunities Fund
Class A: AIOAX Class B: AIOBX Class C: RIOCX
Class I: AOPIX Class R4: --
RiverSource Inflation Protected Securities Fund
Class A: APSAX Class B: APSBX Class C: RIPCX
Class I: AIPIX Class R2: RIPRX Class R4: --
Class W: RIPWX
RiverSource Limited Duration Bond Fund
Class A: ALDAX Class B: ALDBX Class C: RDCLX
Class I: ALDIX Class R4: -- Class W: RLDWX
RIVERSOURCE CALIFORNIA TAX-EXEMPT TRUST
RiverSource California Tax-Exempt Fund
Class A: ICALX Class B: ACABX Class C: RCTCX
RIVERSOURCE DIMENSIONS SERIES, INC.
RiverSource Disciplined Small and Mid Cap Equity Fund
Class A: RDSAX Class B: -- Class C: RDSCX
Class I: RDSIX Class R4: -- Class W: RSDVX
RiverSource Disciplined Small Cap Value Fund
Class A: RDVAX Class I: RCVIX Class R4: RSDVX
Class B: -- Class R2: -- Class R5: --
Class C: RDVCX Class R3: --
RIVERSOURCE DIVERSIFIED INCOME SERIES, INC.
RiverSource Diversified Bond Fund
Class A: INBNX Class B: ININX Class C: AXBCX
Class I: RDBIX Class R2: -- Class R3: RSDBX
Class R4: IDBYX Class R5: RSVBX Class W: RVBWX
RIVERSOURCE EQUITY SERIES, INC.
RiverSource Mid Cap Growth Fund
Class A: INVPX Class B: IDQBX Class C: AESCX
Class I: AQUIX Class R4: IESYX
RIVERSOURCE GLOBAL SERIES, INC.
RiverSource Absolute Return Currency and Income Fund
Class A: RARAX Class B: -- Class C: RARCX
Class I: RVAIX Class R4: -- Class R5: --
Class W: RACWX
RiverSource Emerging Markets Bond Fund
Class A: REBAX Class B: -- Class C: REBCX
Class I: RSMIX Class R4: -- Class W: REMWX
RiverSource Global Bond Fund
Class A: IGBFX Class B: IGLOX Class C: AGBCX
Class I: AGBIX Class R4: RGBRX Class W: RGBWX
Threadneedle Emerging Markets Fund
Class A: IDEAX Class B: IEMBX Class C: RMCEX
Class I: RSRIX Class R2: REMRX Class R4: --
Class R5: REMFX
Threadneedle Global Equity Fund
Class A: IGIGX Class B: IDGBX Class C: RGCEX
Class I: -- Class R2: -- Class R3: --
Class R4: IDGYX Class R5: RGERX Class W: --
Threadneedle Global Equity Income Fund
Class A: RTNAX Class B: -- Class C: RTNEX
Class I: -- Class R2: RGEOX Class R3: RGETX
Class R4: RGEYX Class R5: RGEFX
Threadneedle Global Extended Alpha Fund
Class A: RTAAX Class I: -- Class R4: REYRX
Class B: -- Class R2: REAOX Class R5: REAFX
Class C: RTACX Class R3: RTNRX
RIVERSOURCE GOVERNMENT INCOME SERIES, INC.
RiverSource Short Duration U.S. Government Fund
Class A: IFINX Class B: ISHOX Class C: AXFCX
Class I: AGMIX Class R2: RSDRX Class R4: IDFYX
Class W: RSDWX
RiverSource U.S. Government Mortgage Fund
Class A: AUGAX Class B: AUGBX Class C: AUGCX
Class I: RVGIX Class R4: RSGYX
RIVERSOURCE HIGH YIELD INCOME SERIES, INC.
RiverSource High Yield Bond Fund
Class A: INEAX Class B: IEIBX Class C: APECX
Class I: RSHIX Class R2: -- Class R3: --
Class R4: RSHYX Class R5: RSHRX Class W: RHYWX
RIVERSOURCE INCOME SERIES, INC.
RiverSource Income Builder Basic Income Fund
Class A: RBBAX Class B: RBBBX Class C: RBBCX
Class R4: --
RiverSource Income Builder Enhanced Income Fund
Class A: RSBAX Class B: REIVX Class C: RIECX
Class R4: --
RiverSource Income Builder Moderate Income Fund
Class A: RSMAX Class B: RSMBX Class C: RSMCX
Class R4: --
RIVERSOURCE INTERNATIONAL MANAGERS SERIES, INC.
RiverSource Partners International Select Growth Fund
Class A: AXGAX Class B: APIBX Class C: RIACX
Class I: AIGGX Class R2: RISRX Class R4: --
Class R5: RISSX
RiverSource Partners International Select Value Fund
Class A: APIAX Class B: AXIBX Class C: APICX
Class I: APRIX Class R4: --
RiverSource Partners International Small Cap Fund
Class A: AISCX Class B: APNBX Class C: RISLX
Class I: RPSCX Class R4: --
RIVERSOURCE INTERNATIONAL SERIES, INC.
RiverSource Disciplined International Equity Fund
Class A: RDIAX Class B: RDIBX Class C: RDICX
Class I: RSDIX Class R2: RDIOX Class R3: RDIEX
Class R4: RDIRX Class R5: RDIFX Class W: RDIWX
Threadneedle Asia Pacific Fund
Class R5: TAPRX
Threadneedle European Equity Fund
Class A: AXEAX Class B: AEEBX Class C: REECX
Class I: -- Class R4: --
Threadneedle International Opportunity Fund
Class A: INIFX Class B: IWWGX Class C: ROPCX
Class I: ATNIX Class R2: -- Class R3: --
Class R4: IDIYX Class R5: --
RIVERSOURCE INVESTMENT SERIES, INC.
RiverSource Balanced Fund
Class A: INMUX Class B: IDMBX Class C: RVBCX
Class R2: RVBRX Class R4: IDMYX Class R5: RVBSX
RiverSource Disciplined Large Cap Growth Fund
Class A: RDLAX Class B: -- Class C: RDLCX
Class I: RDLIX Class R2: -- Class R3: --
Class R4: RDLFX Class R5: -- Class W: RDLWX
RiverSource Disciplined Large Cap Value Fund
Class A: RLCAX Class B: -- Class C: RDCCX
Class I: -- Class R2: RLCOX Class R3: RLCTX
Class R4: RLCYX Class R5: RLCRX Class W: RLCWX
RiverSource Diversified Equity Income Fund
Class A: INDZX Class B: IDEBX Class C: ADECX
Class I: ADIIX Class R2: RDEIX Class R3: RDERX
Class R4: IDQYX Class R5: RSEDX Class W: --
RiverSource Mid Cap Value Fund
Class A: AMVAX Class B: AMVBX Class C: AMVCX
Class I: RMCIX Class R2: RMVTX Class R3: RMCRX
Class R4: RMCVX Class R5: RSCMX Class W: --
RIVERSOURCE LARGE CAP SERIES, INC.
RiverSource Disciplined Equity Fund
Class A: AQEAX Class B: AQEBX Class C: RDCEX
Class I: ALEIX Class R2: -- Class R3: RSDEX
Class R4: RQEYX Class R5: RSIPX Class W: RDEWX
RIVERSOURCE MANAGERS SERIES, INC.
RiverSource Partners Aggressive Growth Fund
Class A: ASGFX Class B: ARGBX Class C: RAGCX
Class I: APAIX Class R2: -- Class R3: --
Class R4: RSASX Class R5: --
RiverSource Partners Fundamental Value Fund
Class A: AFVAX Class B: AFVBX Class C: AFVCX
Class I: AFVIX Class R4: --
RiverSource Partners Select Value Fund
Class A: AXVAX Class B: AXVBX Class C: ACSVX
Class I: RSSIX Class R4: --
RiverSource Partners Small Cap Equity Fund
Class A: AXSAX Class B: AXSBX Class C: RSQEX
Class I: -- Class R4: --
RiverSource Partners Small Cap Value Fund
Class A: ASVAX Class B: ASVBX Class C: APVCX
Class I: -- Class R2: RSVTX Class R3: RSVRX
Class R4: RSGLX Class R5: RSCVX
RIVERSOURCE MARKET ADVANTAGE SERIES, INC.
RiverSource Portfolio Builder Aggressive Fund
Class A: AXBAX Class B: AXPBX Class C: RBGCX
Class R4: --
RiverSource Portfolio Builder Conservative Fund
Class A: ABDAX Class B: ABBDX Class C: RPCCX
Class R4: --
RiverSource Portfolio Builder Moderate Aggressive Fund
Class A: AXMAX Class B: ABMBX Class C: AGECX
Class R4: --
RiverSource Portfolio Builder Moderate Conservative Fund
Class A: AUCAX Class B: AMDBX Class C: RBMCX
Class R4: --
RiverSource Portfolio Builder Moderate Fund
Class A: ABUAX Class B: AURBX Class C: AMTCX
Class R4: --
RiverSource Portfolio Builder Total Equity Fund
Class A: AXTAX Class B: AXTBX Class C: RBTCX
Class R4: --
RiverSource S&P 500 Index Fund
Class D: ADIDX Class E: ADIEX
RiverSource Small Company Index Fund
Class A: ISIAX Class B: ISIBX Class R4: ISCYX
RIVERSOURCE MONEY MARKET SERIES, INC.
RiverSource Cash Management Fund
Class A: IDSXX Class B: ACBXX Class C: RCCXX
Class I: RCIXX Class R2: RVRXX Class R5: --
Class W: RCWXX Class Y: IDYXX Class Z: --
RIVERSOURCE SECTOR SERIES, INC.
RiverSource Dividend Opportunity Fund
Class A: INUTX Class B: IUTBX Class C: ACUIX
Class I: RSOIX Class R2: RSOOX Class R3: RSOTX
Class R4: RSORX Class R5: RSDFX Class W: --
RiverSource Real Estate Fund
Class A: ARLAX Class B: AESBX Class C: RRECX
Class I: AESIX Class R4: -- Class W: RREWX
RIVERSOURCE SELECTED SERIES, INC.
RiverSource Precious Metals and Mining Fund
Class A: INPMX Class B: INPBX Class C: RPMCX
Class I: -- Class R4: AEVYX
RIVERSOURCE SERIES TRUST
RiverSource 120/20 Contrarian Equity Fund
Class A: RCEAX Class B: RZZBX Class C: RECCX
Class I: -- Class R5: RCERX
RiverSource Recovery and Infrastructure Fund
Class A: RRIAX Class B: RRIBX Class C: RRICX
Class I: RRIIX Class R2: RRIRX Class R3: RRISX
Class R4: RRIYX Class R5: RRIZX
RiverSource Retirement Plus 2010 Fund
Class A: -- Class R2: -- Class R3: RSRPX
Class R4: RSERX Class R5: RSPRX Class Y: RSSPX
RiverSource Retirement Plus 2015 Fund
Class A: -- Class R2: -- Class R3: RSRTX
Class R4: RSEMX Class R5: RSCUX Class Y: RSFNX
RiverSource Retirement Plus 2020 Fund
Class A: -- Class R2: -- Class R3: RSEPX
Class R4: RSMTX Class R5: RSUCX Class Y: RSNFX
RiverSource Retirement Plus 2025 Fund
Class A: -- Class R2: -- Class R3: RSMPX
Class R4: RSPLX Class R5: RSURX Class Y: RSMEX
RiverSource Retirement Plus 2030 Fund
Class A: -- Class R2: -- Class R3: RSRNX
Class R4: RSELX Class R5: RSEEX Class Y: RPTYX
RiverSource Retirement Plus 2035 Fund
Class A: -- Class R2: -- Class R3: RSRRX
Class R4: RSMNX Class R5: RSUSX Class Y: RPOYX
RiverSource Retirement Plus 2040 Fund
Class A: -- Class R2: -- Class R3: RSRCX
Class R4: RSMMX Class R5: RSPUX Class Y: RPFYX
RiverSource Retirement Plus 2045 Fund
Class A: -- Class R2: -- Class R3: RSRUX
Class R4: RSNNX Class R5: RSUPX Class Y: RRPYX
RIVERSOURCE SPECIAL TAX-EXEMPT SERIES TRUST
RiverSource Minnesota Tax-Exempt Fund
Class A: IMNTX Class B: IDSMX Class C: RMTCX
RiverSource New York Tax-Exempt Fund
Class A: INYKX Class B: -- Class C: RNTCX
RIVERSOURCE STRATEGIC ALLOCATION SERIES, INC.
RiverSource Strategic Allocation Fund
Class A: IMRFX Class B: IMRBX Class C: RSSCX
Class I: -- Class R2: -- Class R3: RSACX
Class R4: IDRYX Class R5: RSALX
Statement of Additional Information - [Date], 2010
RiverSource Strategic Income Allocation Fund
Class A: RSGAX Class B: RIABX Class C: RAICX
Class R2: RSDOX Class R3: RSARX Class R4: RSTRX
Class R5: RSFRX
RIVERSOURCE STRATEGY SERIES, INC.
RiverSource Equity Value Fund
Class A: IEVAX Class B: INEGX Class C: REVCX
Class I: -- Class R2: REVRX Class R3: RSEVX
Class R4: AEVYX Class R5: RSEYX Class W: --
RiverSource Partners Small Cap Growth Fund
Class A: AXSCX Class B: ASGBX Class C: APRCX
Class I: RSWIX Class R2: -- Class R3: --
Class R4: RSLGX Class R5: --
RIVERSOURCE TAX-EXEMPT INCOME SERIES, INC.
RiverSource Tax-Exempt High Income Fund
Class A: INHYX Class B: IHYBX Class C: AHECX
RIVERSOURCE TAX-EXEMPT MONEY MARKET SERIES, INC.
RiverSource Tax-Exempt Money Market Fund: ITFXX
RIVERSOURCE TAX-EXEMPT SERIES, INC.
RiverSource Intermediate Tax-Exempt Fund
Class A: INFAX Class B: INFBX Class C: RTICX
RiverSource Tax-Exempt Bond Fund
Class A: INTAX Class B: ITEBX Class C: RTCEX
SELIGMAN FRONTIER FUND, INC.
Class A: SLFRX Class B: SLFBX Class C: SLFCX
Class I: -- Class R2: SFFRX Class R3: SFFSX
Class R4: SFFTX Class R5: SFFIX
SELIGMAN GLOBAL FUND SERIES, INC.
Seligman Global Technology Fund
Class A: SHGTX Class B: SHTBX Class C: SHTCX
Class I: -- Class R2: SGTRX Class R3: SGTFX
Class R4: SGTSX Class R5: SGTTX
SELIGMAN MUNICIPAL FUND SERIES, INC.
Seligman Minnesota Municipal Class
Class A: SMNNX Class C: SMNCX
Seligman National Municipal Class
Class A: SNXEX Class C: SNACX
Seligman New York Municipal Class
Class A: SNYTX Class C: SNYCX
SELIGMAN MUNICIPAL SERIES TRUST
Seligman California Municipal High Yield Series
Class A: SCHYX Class C: SCHCX
Seligman California Municipal Quality Series
Class A: SCTQX Class C: SCQCX
SELIGMAN TARGETHORIZON ETF PORTFOLIOS, INC.
Seligman TargETFund 2015
Class A: STJAX Class B: -- Class C: STJCX
Class R2: STJRX Class R5: STJIX
Seligman TargETFund 2025
Class A: STKAX Class B: -- Class C: STKCX
Class R2: STKRX Class R5: STKIX
Seligman TargETFund 2035
Class A: STZAX Class B: -- Class C: STZCX
Class R2: STZRX Class R5: STZIX
Seligman TargETFund 2045
Class A: STQAX Class B: -- Class C: STQCX
Class R2: STQRX Class R5: STQIX
Seligman TargETFund Core
Class A: SHVAX Class B: -- Class C: SHVCX
Class R2: SHVRX Class R5: SHVIX
This is the Statement of Additional Information ("SAI") for each of the funds
listed on the previous page. This SAI is not a prospectus. It should be read
together with the appropriate current fund prospectus, the date of which can be
found in Table 1 of this SAI.
Each fund's financial statements for its most recent fiscal period are contained
in the fund's annual or semiannual report to shareholders. The Independent
Registered Public Accounting Firm's Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of Investments in
Securities and any applicable Schedule of Affiliated Funds, contained in the
Annual Report, are incorporated in this SAI by reference. No other portion of
the Annual Report is incorporated by reference. For a free copy of a fund
prospectus, annual or semiannual report, contact your financial intermediary or
write to the RiverSource Family of Funds which includes RiverSource funds,
Seligman funds and Threadneedle funds, 734 Ameriprise Financial Center,
Minneapolis, MN 55474, call 1(800) 221-2450 or visit riversource.com/funds (for
RiverSource and Threadneedle funds) or seligman.com (for Seligman funds).
Each fund is governed by a Board of Directors/Trustees (the "Board") that meets
regularly to review a wide variety of matters affecting the funds. Detailed
information about fund governance, the funds' investment manager, RiverSource
Investments, LLC (the "investment manager" or "RiverSource Investments"), a
wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"),
and other aspects of fund management can be found by referencing the Table of
Contents or the List of Tables on the following pages.
Statement of Additional Information - [Date], 2010
TABLE OF CONTENTS
Fundamental and Nonfundamental Investment Policies.............................. p. 5
Investment Strategies and Types of Investments.................................. p. 12
Information Regarding Risks and Investment Strategies........................... p. 14
Securities Transactions......................................................... p. 41
Brokerage Commissions Paid to Brokers Affiliated with the Investment Manager.... p. 55
Valuing Fund Shares............................................................. p. 60
Portfolio Holdings Disclosure................................................... p. 71
Proxy Voting.................................................................... p. 73
Investing in a Fund............................................................. p. 75
Selling Shares.................................................................. p. 82
Pay-out Plans................................................................... p. 82
Capital Loss Carryover.......................................................... p. 82
Taxes........................................................................... p. 88
Service Providers............................................................... p. 94
Investment Management Services................................................ p. 94
Administrative Services....................................................... p. 143
Transfer Agency Services...................................................... p. 147
Plan Administration Services.................................................. p. 148
Distribution Services......................................................... p. 148
Plan and Agreement of Distribution............................................ p. 151
Payments to Financial Intermediaries.......................................... p. 157
Custodian Services............................................................ p. 159
Board Services Corporation.................................................... p. 160
Organizational Information...................................................... p. 160
Board Members and Officers...................................................... p. 166
Control Persons and Principal Holders of Securities............................. p. 190
Information Regarding Pending and Settled Legal Proceedings..................... p. 210
Independent Registered Public Accounting Firm................................... p. 212
Appendix A: Description of Ratings.............................................. p. A-1
Appendix B: State Risk Factors.................................................. p. B-1
Appendix C: Additional Information about the S&P 500 Index...................... p. C-1
Appendix D: Class A -- Calculation of the Sales Charge.......................... p. D-1
Statement of Additional Information - [Date], 2010 Page 1
LIST OF TABLES
1. Fund Fiscal Year Ends, Prospectus Date and Investment Categories........... p. 3
2. Fundamental Policies....................................................... p. 5
3. Investment Strategies and Types of Investments............................. p. 12
4. Total Brokerage Commissions................................................ p. 43
5. Brokerage Directed for Research, and Turnover Rates........................ p. 46
6. Securities of Regular Brokers or Dealers................................... p. 49
7. Brokerage Commissions Paid to Investment Manager or Affiliates............. p. 55
8. Valuing Fund Shares........................................................ p. 60
9. Class A Initial Sales Charge............................................... p. 76
10. Public Offering Price...................................................... p. 77
11. Capital Loss Carryover..................................................... p. 83
12. Corporate Deduction and Qualified Dividend Income.......................... p. 90
13. Investment Management Services Agreement Fee Schedule...................... p. 94
14. PIA Indexes................................................................ p. 103
15A. Performance Incentive Adjustment Calculation............................... p. 105
15B. Performance Incentive Adjustment Calculation............................... p. 106
16. Management Fees and Nonadvisory Expenses................................... p. 107
17. Subadvisers and Subadvisory Agreement Fee Schedules........................ p. 111
18. Subadvisory Fees........................................................... p. 113
19. Portfolio Managers......................................................... p. 115
20. Administrative Services Agreement Fee Schedule............................. p. 143
21. Administrative Fees........................................................ p. 145
22. Sales Charges Paid to Distributor.......................................... p. 149
23. 12b-1 Fees................................................................. p. 153
24. Unreimbursed Distribution Expenses......................................... p. 156
25. RiverSource Family of Funds History Table.................................. p. 161
26. Board Members.............................................................. p. 166
27. Fund Officers.............................................................. p. 167
28. Committee Meetings......................................................... p. 170
29. Board Member Holdings...................................................... p. 171
29A. Board Member Holdings -- as of Quarter End................................. p. 177
30. Board Member Compensation -- All Funds..................................... p. 183
31. Board Member Compensation -- Individual Funds.............................. p. 184
32. Control Persons and Principal Holders of Securities........................ p. 190
Statement of Additional Information - [Date], 2010 Page 2
TABLE 1. FUND FISCAL YEAR ENDS, PROSPECTUS DATE AND INVESTMENT CATEGORIES
FUND FISCAL YEAR END PROSPECTUS DATE FUND INVESTMENT CATEGORY
---------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity April 30 June 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and
Income October 31 Dec. 30, 2009 Taxable fixed income*
---------------------------------------------------------------------------------------------------------------
RiverSource Balanced September 30 Nov. 27, 2009 Balanced
---------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt August 31 Oct. 30, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Cash Management July 31 Sept. 29, 2009 Taxable money market
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity July 31 Sept. 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity October 31 Dec. 30, 2008 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth September 30 Nov. 27, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value September 30 Nov. 27, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap
Equity July 31 Sept. 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value July 31 Sept. 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond August 31 Oct. 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income September 30 Nov. 27, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity June 30 Aug. 28, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond October 31 Dec. 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Equity Value March 31 May 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate July 31 Sept. 29, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Global Bond October 31 Dec. 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond May 31 July 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income January 31** April 1, 2009 Fund-of-funds - fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income January 31** April 1, 2009 Fund-of-funds - fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income January 31** April 1, 2009 Fund-of-funds - fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities July 31 Sept. 29, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities July 31 Sept. 29, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt November 30 Jan. 29, 2010 Tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond July 31 Sept. 29, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth November 30 Jan. 22, 2010 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value September 30 Nov. 27, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt August 31 Oct. 30, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt August 31 Oct. 30, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth May 31 July 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value May 31 July 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Growth October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Value October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value May 31 July 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity May 31 July 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth March 31 May 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value May 31 July 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive January 31 April 1, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative January 31 April 1, 2009 Fund-of-funds - fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate January 31 April 1, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Aggressive January 31 April 1, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative January 31 April 1, 2009 Fund-of-funds - fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity January 31 April 1, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining March 31 May 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Real Estate June 30 Aug. 28, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure April 30 June 29, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 3
FUND FISCAL YEAR END PROSPECTUS DATE FUND INVESTMENT CATEGORY
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 April 30 June 29, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index January 31 April 1, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government May 31 July 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index January 31 April 1, 2009 Equity
---------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation September 30 Nov. 27, 2009 Balanced
---------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation September 30 Nov. 27, 2009 Taxable fixed income*
---------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond November 30 Jan. 29, 2010 Tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income November 30 Jan. 29, 2010 Tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market December 31 Feb. 27, 2009 Tax-exempt money market
---------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage May 31 July 30, 2009 Taxable fixed income
---------------------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield September 30 Nov. 27, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality September 30 Nov. 27, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
Seligman Frontier October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Seligman Global Technology October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal September 30 Nov. 27, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
Seligman National Municipal September 30 Nov. 27, 2009 Tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
Seligman New York Municipal September 30 Nov. 27, 2009 State tax-exempt fixed income
---------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 September 30 Nov. 27, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 September 30 Nov. 27, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 September 30 Nov. 27, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 September 30 Nov. 27, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core September 30 Nov. 27, 2009 Fund-of-funds - equity
---------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle European Equity October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income Fund October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha Fund October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity October 31 Dec. 30, 2009 Equity
---------------------------------------------------------------------------------------------------------------
* The taxable fixed income fund investment category includes Absolute Return
Currency and Income Fund, which is an alternative investment strategy.
Although Strategic Income Allocation Fund is a taxable fixed income fund,
it may invest up to 10% of its portfolio in equity securities.
** The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June 1,
2007 to Jan. 31, 2008. For years prior to 2008, the fiscal period ended
May 31.
Statement of Additional Information - [Date], 2010 Page 4
FUNDAMENTAL AND NONFUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies adopted by a fund cannot be changed without the
approval of a majority of the outstanding voting securities of the fund (i.e.,
shareholders) as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Nonfundamental investment policies may be changed by the Board at
any time.
Notwithstanding any of a fund's other investment policies, each fund, subject to
certain limitations, may invest its assets in an open-end management investment
company having substantially the same investment objectives, policies, and
restrictions as the fund for the purpose of having those assets managed as part
of a combined pool.
FUNDAMENTAL POLICIES
Fundamental policies are policies that can be changed only with shareholder
approval. The chart below shows fund-specific policies that may be changed only
with shareholder approval. The chart indicates whether or not the fund has a
policy on a particular topic. A dash indicates that the fund does not have a
policy on a particular topic. Please see "Investment Strategies and Types of
Investments" for more information regarding your fund's investment strategies.
The specific policy is stated in the paragraphs that follow the table.
TABLE 2. FUNDAMENTAL POLICIES
C D E
A B BUY MORE INVEST CONCEN- G J K
BUY OR BUY OR THAN 10% MORE TRATE F ACT AS ISSUE BUY ON
SELL SELL OF THAN IN ANY INVEST AN I SENIOR MARGIN/
REAL COMMODI- AN 5% IN AN ONE LESS UNDER- H BORROW SECURI- SELL
FUND ESTATE TIES ISSUER ISSUER INDUSTRY THAN 80% WRITER LENDING MONEY TIES SHORT
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B5 C1 D1 E8 -- G1 H1 I1 J1 --
120/20
Contrarian
Equity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 -- -- E7 -- G1 H1 I1 J1 --
Absolute
Return
Currency and
Income
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Balanced
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 -- -- -- F1 G1 H1 I1 J1 --
California
Tax-Exempt
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A3 A3 C1 D1 -- -- G1 H1 I1 J1 K1
Cash
Management
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Disciplined
Equity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C1 D1 E1 -- G1 H1 I1 J1 --
Disciplined
International
Equity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Disciplined
Large Cap
Growth
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C2 C2 E1 -- G1 H1 I1 J1 --
Disciplined
Large Cap
Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C1 D1 E1 -- G1 H1 I1 J1 --
Disciplined
Small and Mid
Cap Equity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C1 D1 E1 -- G1 H1 I1 J1 --
Disciplined
Small Cap
Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Diversified
Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Diversified
Equity Income
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 -- -- G1 H1 I1 J1 --
Dividend
Opportunity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 -- -- E5 -- G1 H1 I1 J1 --
Emerging
Markets Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Equity Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C1 D1 E6 -- G1 H1 I1 J1 --
Floating Rate
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 -- E1 -- G1 H1 I1 J1 --
Global Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
High Yield
Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Income
Builder Basic
Income*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Income
Builder
Enhanced
Income*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Income
Builder
Moderate
Income*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Income
Opportunities
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 -- -- E1 -- G1 H1 I1 J1 --
Inflation
Protected
Securities
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 -- F3(a) G1 H1 I1 J1 --
Intermediate
Tax-Exempt
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Limited
Duration Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource Mid A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Cap Growth
-----------------------------------------------------------------------------------------------------------------------------
RiverSource Mid A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Cap Value
-----------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 5
C D E
A B BUY MORE INVEST CONCEN- G J K
BUY OR BUY OR THAN 10% MORE TRATE F ACT AS ISSUE BUY ON
SELL SELL OF THAN IN ANY INVEST AN I SENIOR MARGIN/
REAL COMMODI- AN 5% IN AN ONE LESS UNDER- H BORROW SECURI- SELL
FUND ESTATE TIES ISSUER ISSUER INDUSTRY THAN 80% WRITER LENDING MONEY TIES SHORT
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 -- -- -- F1 G1 H1 I1 J1 --
Minnesota
Tax-Exempt
-----------------------------------------------------------------------------------------------------------------------------
RiverSource New A1 B1 -- -- -- F1 G1 H1 I1 J1 --
York Tax-
Exempt
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
Aggressive
Growth
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
Fundamental
Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
International
Select Growth
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
International
Select Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
International
Small Cap
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
Select Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
Small Cap
Equity
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Partners
Small Cap
Growth
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 -- -- E1 -- G1 H1 I1 J1 --
Partners
Small Cap
Value
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder
Aggressive*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder
Conservative*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder
Moderate*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder
Moderate
Aggressive*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder
Moderate
Conservative*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C2 C2 E2 -- G1 H1 I1 J1 --
Portfolio
Builder Total
Equity*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1(b) -- -- E3 -- G1 H1 I1 J1 --
Precious
Metals and
Mining
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 -- -- -- -- G1 H1 I1 J1 --
Real Estate
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 -- -- E1 -- G1 H1 I1 J1 --
Recovery and
Infrastruc-
ture
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2010*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2015*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2020*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2025*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2030*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2035*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2040*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B4 C2 C2 E2 -- G1 H1 I1 J1 --
Retirement
Plus 2045*
-----------------------------------------------------------------------------------------------------------------------------
RiverSource S&P A1 B1 -- -- E4 -- G1 H1 I1 J1 --
500 Index
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Short
Duration U.S.
Government
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Small Company
Index
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Strategic
Allocation
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B3 C1 D1 E1 -- G1 H1 I1 J1 --
Strategic
Income
Allocation
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 -- F3(c) G1 H1 I1 J1 --
Tax-Exempt
Bond
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 -- F2 G1 H1 I1 J1 --
Tax-Exempt
High Income
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A2 B2 C1 D1 -- F3 G1 H1 I1 J1 K2
Tax-Exempt
Money Market
-----------------------------------------------------------------------------------------------------------------------------
RiverSource A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
U.S.
Government
Mortgage
-----------------------------------------------------------------------------------------------------------------------------
Seligman A4 B6(d) D2 D2 E9 F4 G1 H2 I2 -- K3(e)
California
Municipal
High-Yield
-----------------------------------------------------------------------------------------------------------------------------
Seligman A4 B6(d) D2 D2 E9 F4 G1 H2 I2 -- K3(e)
California
Municipal
Quality
-----------------------------------------------------------------------------------------------------------------------------
Seligman A4 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
Frontier
-----------------------------------------------------------------------------------------------------------------------------
Seligman Global A4 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
Technology
-----------------------------------------------------------------------------------------------------------------------------
Seligman A5 B6 D2 D2 E9 F4 G1 H3 I2 -- K3
Minnesota
Municipal
-----------------------------------------------------------------------------------------------------------------------------
Seligman A5 B6 D2 D2 E9 F4 G1 H3 I2 -- K3
National
Municipal
-----------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 6
C D E
A B BUY MORE INVEST CONCEN- G J K
BUY OR BUY OR THAN 10% MORE TRATE F ACT AS ISSUE BUY ON
SELL SELL OF THAN IN ANY INVEST AN I SENIOR MARGIN/
REAL COMMODI- AN 5% IN AN ONE LESS UNDER- H BORROW SECURI- SELL
FUND ESTATE TIES ISSUER ISSUER INDUSTRY THAN 80% WRITER LENDING MONEY TIES SHORT
-----------------------------------------------------------------------------------------------------------------------------
Seligman New A5 B6 D2 D2 E9 F4 G1 H3 I2 -- K3
York
Municipal
-----------------------------------------------------------------------------------------------------------------------------
Seligman A6 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
TargETFund
2015*
-----------------------------------------------------------------------------------------------------------------------------
Seligman A6 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
TargETFund
2025*
-----------------------------------------------------------------------------------------------------------------------------
Seligman A6 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
TargETFund
2035*
-----------------------------------------------------------------------------------------------------------------------------
Seligman A6 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
TargETFund
2045*
-----------------------------------------------------------------------------------------------------------------------------
Seligman A6 B7 C3 C3 E10 -- G2 H4 J2 J2 K4
TargETFund
Core*
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B3 C2 C2 E1 -- G1 H1 I1 J1 --
Asia Pacific
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Emerging
Markets
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B1 -- -- E1 -- G1 H1 I1 J1 --
European
Equity
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
Global Equity
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B3 C2 C2 E1 -- G1 H1 I1 J1 --
Global Equity
Income
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B3 C2 C2 E1 -- G1 H1 I1 J1 --
Global
Extended
Alpha
-----------------------------------------------------------------------------------------------------------------------------
Threadneedle A1 B1 C1 D1 E1 -- G1 H1 I1 J1 --
International
Opportunity
-----------------------------------------------------------------------------------------------------------------------------
* The fund-of-funds invests in a combination of underlying funds. These
underlying funds have adopted their own investment policies that may be
more or less restrictive than those of the fund-of-funds. The policies of
the underlying funds may permit a fund to engage in investment strategies
indirectly that would otherwise be prohibited under the fund's investment
restrictions.
(a) For purposes of this policy, the fund will not include any investments
subject to the alternative minimum tax.
(b) Additionally, the fund may purchase gold, silver, or other precious
metals, strategic metals or other metals occurring naturally with such
metals.
(c) The fund does not intend to purchase bonds or other debt securities the
interest from which is subject to the alternative minimum tax.
(d) The policy includes futures contracts.
(e) A fund may be deemed an underwriter in connection with the purchase and
sale of portfolio securities.
A. BUY OR SELL REAL ESTATE
A1 - The fund will not buy or sell real estate, unless acquired as a result
of ownership of securities or other instruments, except this shall not
prevent the fund from investing in securities or other instruments
backed 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.
A2 - The fund will not invest in real estate, but the fund can invest in
municipal bonds and notes secured by real estate or interest therein.
For purposes of this policy, real estate includes real estate limited
partnerships.
A3 - The fund will not buy or sell real estate, commodities or commodity
contracts. For purposes of this policy, real estate includes real
estate limited partnerships.
A4 - The fund will not purchase or hold any real estate, except that a fund
may invest in securities secured by real estate or interests therein
or issued by persons (other than real estate investment trusts) which
deal in real estate or interests therein.
A5 - The fund will not purchase or hold any real estate, including limited
partnership interests on real property, except that the fund may
invest in securities secured by real estate or interests therein or
issued by persons (other than real estate investment trusts) which
deal in real estate or interests therein.
A6 - The fund will not purchase or hold any real estate, except a fund may
invest (through investments in Underlying exchange-traded funds) in
securities secured by real estate or interests therein or issued by
persons (including real estate investment trusts) which deal in real
estate or interests therein.
B. BUY OR SELL PHYSICAL COMMODITIES
B1 - The fund will not buy or sell physical commodities unless acquired as
a result of ownership of securities or other instruments, except this
shall not prevent the fund from buying or selling options and futures
contracts or from investing in securities or other instruments backed
by, or whose value is derived from, physical commodities.
B2 - The fund will not invest in commodities or commodity contracts.
B3 - The fund will not buy or sell physical commodities unless acquired as
a result of ownership of securities or other instruments, except this
shall not prevent the fund from buying or selling options, futures
contracts and foreign currency or from investing in securities or
other instruments backed by, or whose value is derived from, physical
commodities.
Statement of Additional Information - [Date], 2010 Page 7
B4 - The fund will not buy or sell physical commodities unless acquired as
a result of ownership of securities or other instruments, except this
shall not prevent the fund from buying or selling options, futures
contracts and foreign currency or from entering into forward currency
contracts or from investing in securities or other instruments backed
by, or whose value is derived from, physical commodities.
B5 - The fund will not buy or sell commodities, except that the fund may to
the extent consistent with its investment objective(s), invest in
securities of companies that purchase or sell commodities or which
invest in such programs, and purchase and sell options, forward
contracts, futures contracts, and options on futures contracts and
enter into swap contracts and other financial transactions relating to
commodities. This restriction does not apply to foreign currency
transactions including without limitation forward currency contracts.
B6 - The fund will not purchase or sell commodities or commodity contracts.
B7 - The fund will not purchase or sell commodities or commodity contracts,
except to the extent permissible under applicable law and
interpretations, as they may be amended from time to time.
C. BUY MORE THAN 10% OF AN ISSUER
C1 - 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. For tax-exempt
funds, for purposes of this policy, the terms of a municipal security
determine the issuer.
C2 - The fund will not purchase securities (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities)
of any one issuer if, as a result, more than 5% of its total assets
will be invested in the securities of such issuer or it would own more
than 10% of the voting securities of such issuer, except that: (a) up
to 25% of its total assets may be invested without regard to these
limitations; and (b) a fund's assets may be invested in the securities
of one or more management investment companies to the extent permitted
by the 1940 Act, the rules and regulations thereunder, or any
applicable exemptive relief.
C3 - The fund will not make any investment inconsistent with its
classification as a diversified company under the 1940 Act.
D. INVEST MORE THAN 5% IN AN ISSUER
D1 - The fund will not invest more than 5% of its total assets in
securities of any company, government, or political 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. For tax-exempt funds, for purposes of this policy,
the terms of a municipal security determine the issuer.
D2 - The fund will not, as to 50% of the value of its total assets,
purchase securities of any issuer if immediately thereafter more than
5% of total assets at market value would be invested in the securities
of any issuer (except that this limitation does not apply to
obligations issued or guaranteed as to principal and interest by the
U.S. Government or its agencies or instrumentalities).
E. CONCENTRATE
E1 - The fund will not concentrate in any one industry. According to the
present interpretation by the Securities and Exchange Commission
(SEC), this means that up to 25% of the fund's total assets, based on
current market value at time of purchase, can be invested in any one
industry.
E2 - The fund will not concentrate in any one industry. According to the
present interpretation by the SEC, this means that up to 25% of the
fund's total assets, based on current market value at time of
purchase, can be invested in any one industry. The fund itself does
not intend to concentrate, however, the aggregation of holdings of the
underlying funds may result in the fund indirectly investing more than
25% of its assets in a particular industry. The fund does not control
the investments of the underlying funds and any indirect concentration
will occur only as a result of the fund following its investment
objectives by investing in the underlying funds.
E3 - The fund will not invest less than 25% of its total assets in the
precious metals industry, based on current market value at the time of
purchase, unless market conditions temporarily require a defensive
investment strategy.
E4 - The fund will not concentrate in any one industry unless that industry
represents more than 25% of the index tracked by the fund. For all
other industries, in accordance with the current interpretation by the
SEC, this means that up to 25% of the fund's total assets, based on
current market value at time of purchase, can be invested in any one
industry.
Statement of Additional Information - [Date], 2010 Page 8
E5 - While the fund may invest 25% or more of its total assets in the
securities of foreign governmental and corporate entities located in
the same country, it will not invest 25% or more of its total assets
in any single foreign governmental issuer.
E6 - The fund will not concentrate in any one industry. According to the
present interpretation by the SEC, this means that up to 25% of the
fund's total assets, based on current market value at time of
purchase, can be invested in any one industry. For purposes of this
restriction, loans will be considered investments in the industry of
the underlying borrower, rather than that of the seller of the loan.
E7 - The fund will not concentrate in any one industry, provided however,
that this restriction shall not apply to securities or obligations
issued or guaranteed by the U.S. Government, banks or bank holding
companies or finance companies. For all other industries, this means
that up to 25% of the fund's total assets, based on current market
value at the time of purchase, can be invested in any one industry.
E8 - The fund will not purchase any securities which would cause 25% or
more of the value of its total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that: a)
there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government, any state or territory of the
United States, or any of their agencies, instrumentalities or
political subdivisions; and b) notwithstanding this limitation or any
other fundamental investment limitation, assets may be invested in the
securities of one or more management investment companies to the
extent permitted by the 1940 Act, the rules and regulations thereunder
and any applicable exemptive relief.
E9 - The fund will not invest more than 25% of total assets, at market
value, in any one industry; except that municipal securities and
securities of the U.S. Government, its agencies and instrumentalities
are not considered an industry for purposes of this limitation.
E10 - The fund will not invest 25% or more of its total assets, at market
value, in the securities of issuers in any particular industry,
provided that this limitation shall exclude securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities (which may include mortgage related securities).
For purposes of applying the limitation set forth in the concentration policy,
above, the funds will generally use the industry classifications provided by the
Global Industry Classification System.
F. INVEST LESS THAN 80%
F1 - The fund will not under normal market conditions, invest less than 80%
of its net assets in municipal obligations that are generally exempt
from federal income tax as well as respective state and local income
tax.
F2 - The fund will not under normal market conditions, invest less than 80%
of its net assets in bonds and notes issued by or on behalf of state
and local governmental units whose interest, in the opinion of counsel
for the issuer, is exempt from federal income tax and is not subject
to the alternative minimum tax.
F3 - The fund will not under normal market conditions, invest less than 80%
of its net assets in bonds and other debt securities issued by or on
behalf of state or local governmental units whose interest, in the
opinion of counsel for the issuer, is exempt from federal income tax.
F4 - The fund will not, under normal market conditions, invest less than
80% of its net assets in securities the interest on which is exempt
from regular federal income tax and (except for Seligman National
Municipal) regular, personal income tax of its designated state, and
temporary investments in taxable securities will be limited to 20% of
the value of the fund's net assets.
G. ACT AS AN UNDERWRITER
G1 - The fund will not act as an underwriter (sell securities for others).
However, under the securities laws, the fund may be deemed to be an
underwriter when it purchases securities directly from the issuer and
later resells them.
G2 - The fund will not underwrite the securities of other issuers, except
insofar as the fund may be deemed an underwriter under the Securities
Act of 1933 (the 1933 Act) in disposing of a portfolio security or in
connection with investments in other investment companies.
H. LENDING
H1 - The fund will not lend securities or participate in an interfund
lending program if the total of all such loans would exceed 33 1/3% of
the fund's total assets except this fundamental 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. For RiverSource funds-of-funds - equity,
under current Board policy, the fund has no current intention to
borrow to a material extent.
Statement of Additional Information - [Date], 2010 Page 9
H2 - The fund will not make loans, except to the extent that the purchase
of notes, bonds or other evidences of indebtedness or deposits with
banks may be considered loans.
H3 - The fund will not make loans except to the extent that the purchase of
notes, bonds or other evidences of indebtedness or the entry into
repurchase agreements or deposits with banks may be considered loans.
The fund does not have a present intention of entering into repurchase
agreements.
H4 - The fund will not make loans, except as permitted by the 1940 Act or
any rule thereunder, any SEC or SEC staff interpretations thereof or
any exemptions therefrom which may be granted by the SEC.
I. BORROWING
I1 - The fund will not borrow money, except for temporary purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of its
total assets (including the amount borrowed) less liabilities (other
than borrowings) immediately after the borrowings. For RiverSource
funds-of-funds - equity, under current Board policy, the fund has no
current intention to borrow to a material extent.
I2 - The fund will not borrow money, except from banks for temporary
purposes (such as meeting redemption requests or for extraordinary or
emergency purposes) in an amount not to exceed 10% of the value of its
total assets at the time the borrowing is made (not including the
amount borrowed). The fund will not purchase additional portfolio
securities if the fund has outstanding borrowings in excess of 5% of
the value of its total assets.
J. ISSUE SENIOR SECURITIES
J1 - The fund will not issue senior securities, except as permitted under
the 1940 Act, the rules and regulations thereunder and any applicable
exemptive relief.
J2 - The fund will not issue senior securities or borrow money, except as
permitted by the 1940 Act or any rule thereunder, any SEC or SEC staff
interpretations thereof or any exemptions therefrom which may be
granted by the SEC.
K. BUY ON MARGIN/SELL SHORT
K1 - The fund will not buy on margin or sell short or deal in options to
buy or sell securities.
K2 - The fund will not buy on margin or sell short.
K3 - The fund will not write or purchase put, call, straddle or spread
options; purchase securities on margin or sell "short"; or underwrite
the securities of other issuers.
K4 - The fund will not purchase securities on margin except as permitted by
the 1940 Act or any rule thereunder, any SEC or SEC staff
interpretations thereof or any exemptions therefrom which may be
granted by the SEC.
IN ADDITION TO THE POLICIES DESCRIBED ABOVE AND ANY FUNDAMENTAL POLICY DESCRIBED
IN THE PROSPECTUS:
FOR RIVERSOURCE CASH MANAGEMENT, THE FUND WILL NOT:
- Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or debentures, state bonds, municipal bonds,
or industrial revenue bonds.
FOR SELIGMAN CALIFORNIA MUNICIPAL HIGH YIELD, SELIGMAN CALIFORNIA MUNICIPAL
QUALITY, SELIGMAN MINNESOTA MUNICIPAL, SELIGMAN NATIONAL MUNICIPAL AND SELIGMAN
NEW YORK MUNICIPAL, THE FUND WILL NOT:
- Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, or
for the purpose of hedging a fund's obligations under its deferred
compensation plan for directors/trustees.
- Purchase or hold the securities of any issuer, if to its knowledge,
directors/trustees or officers of a fund individually owning beneficially
more than 0.5% of the securities of that issuer own in the aggregate more
than 5% of such securities.
- Mortgage or pledge any of its assets, except to secure permitted
borrowings noted above.
FOR SELIGMAN FRONTIER AND SELIGMAN GLOBAL TECHNOLOGY, THE FUND WILL NOT:
- Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the fund and, only in the case of Seligman Global
Technology, the directors and officers of the fund's investment manager,
individually owning beneficially more than 0.5% of the outstanding
securities of that issuer own in the aggregate more than 5% of such
securities.
- Enter into repurchase agreements of more than one week's duration if more
than 10% of the fund's net assets would be so invested.
Statement of Additional Information - [Date], 2010 Page 10
NONFUNDAMENTAL POLICIES
Nonfundamental policies are policies that can be changed by the Board without
shareholder approval. The following nonfundamental policies are in addition to
those described in the prospectus.
FOR FUNDS OTHER THAN MONEY MARKET FUNDS:
- No more than 15% of the fund's net assets will be held in securities and
other instruments that are illiquid.
FOR MONEY MARKET FUNDS:
- No more than 10% of the fund's net assets will be held in securities and
other instruments that are illiquid.
ADDITIONALLY, REGARDING LIMITING INVESTMENTS IN FOREIGN SECURITIES:
FOR RIVERSOURCE 120/20 CONTRARIAN EQUITY, RIVERSOURCE BALANCED, RIVERSOURCE
DISCIPLINED EQUITY, RIVERSOURCE DISCIPLINED LARGE CAP GROWTH, RIVERSOURCE
DISCIPLINED LARGE CAP VALUE, RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY,
RIVERSOURCE DISCIPLINED SMALL CAP VALUE, RIVERSOURCE DIVERSIFIED BOND,
RIVERSOURCE DIVERSIFIED EQUITY INCOME, RIVERSOURCE DIVIDEND OPPORTUNITY,
RIVERSOURCE EQUITY VALUE, RIVERSOURCE FLOATING RATE, RIVERSOURCE HIGH YIELD
BOND, RIVERSOURCE INCOME OPPORTUNITIES, RIVERSOURCE INFLATION PROTECTED
SECURITIES, RIVERSOURCE LIMITED DURATION BOND, RIVERSOURCE MID CAP GROWTH,
RIVERSOURCE MID CAP VALUE, RIVERSOURCE PARTNERS AGGRESSIVE GROWTH, RIVERSOURCE
PARTNERS FUNDAMENTAL VALUE, RIVERSOURCE PARTNERS SELECT VALUE, RIVERSOURCE
PARTNERS SMALL CAP EQUITY, RIVERSOURCE PARTNERS SMALL CAP GROWTH, RIVERSOURCE
PARTNERS SMALL CAP VALUE, RIVERSOURCE REAL ESTATE, RIVERSOURCE RECOVERY AND
INFRASTRUCTURE AND SELIGMAN FRONTIER:
- Up to 25% of the fund's net assets may be invested in foreign investments.
FOR RIVERSOURCE PRECIOUS METALS AND MINING:
- Under normal market conditions, the fund intends to invest at least 50% of
its total assets in foreign investments.
FOR RIVERSOURCE SHORT DURATION U.S. GOVERNMENT AND RIVERSOURCE U.S. GOVERNMENT
MORTGAGE:
- Up to 20% of the fund's net assets may be invested in foreign investments.
FOR RIVERSOURCE STRATEGIC ALLOCATION:
- The fund may invest its total assets, up to 50%, in foreign investments.
Statement of Additional Information - [Date], 2010 Page 11
INVESTMENT STRATEGIES AND TYPES OF INVESTMENTS
This table shows many of the various investment strategies and investments the
funds are allowed to engage in and purchase. It is intended to show the breadth
of investments that the investment manager or subadviser (individually and
collectively, the "investment manager") may make on behalf of a fund. For a
description of principal risks for an individual fund, please see the applicable
prospectus for that fund. Notwithstanding a fund's ability to utilize these
strategies and investments, the investment manager is not obligated to use them
at any particular time. For example, even though the investment manager is
authorized to adopt temporary defensive positions and is authorized to attempt
to hedge against certain types of risk, these practices are left to the
investment manager's sole discretion.
Fund-of-funds invest in a combination of underlying funds, although they may
invest directly in stocks, bonds and other securities. These underlying funds
have their own investment strategies and types of investments they are allowed
to engage in and purchase. Fund-of-funds currently only invest in underlying
funds, which may invest directly in securities and engage in investment
strategies, indicated in the table below.
INVESTMENT STRATEGIES AND TYPES OF INVESTMENTS: A black circle indicates that
the investment strategy or type of investment generally is authorized for a
category of funds. Exceptions are noted in the footnotes to the table. See Table
1 for fund categories.
TABLE 3. INVESTMENT STRATEGIES AND TYPES OF INVESTMENTS
FUNDS-OF-FUNDS - TAXABLE TAXABLE TAX-EXEMPT TAX-EXEMPT STATE
EQUITY AND FIXED MONEY MONEY FIXED TAX-EXEMPT
INVESTMENT STRATEGY BALANCED EQUITY FIXED INCOME INCOME MARKET MARKET INCOME FIXED INCOME
---------------------------------------------------------------------------------------------------------------------------------
Agency and government securities o o o o o o o o
---------------------------------------------------------------------------------------------------------------------------------
Borrowing o o o o o -- o o
---------------------------------------------------------------------------------------------------------------------------------
Cash/money market instruments o o o o o o o o
---------------------------------------------------------------------------------------------------------------------------------
Collateralized bond obligations o o A o o -- -- o o
---------------------------------------------------------------------------------------------------------------------------------
Commercial paper o o o o o o o o
---------------------------------------------------------------------------------------------------------------------------------
Common stock o o o o B -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Convertible securities o o o o C -- -- o o
---------------------------------------------------------------------------------------------------------------------------------
Corporate bonds o o o o D -- o o
---------------------------------------------------------------------------------------------------------------------------------
Debt obligations o o o o o o o o
---------------------------------------------------------------------------------------------------------------------------------
Depositary receipts o o o o -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Derivative instruments
(including options and futures) o o o o -- -- o o
---------------------------------------------------------------------------------------------------------------------------------
Exchange-traded funds o o o o -- -- o o
---------------------------------------------------------------------------------------------------------------------------------
Floating rate loans o -- o o -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Foreign currency transactions o o o o -- -- o --
---------------------------------------------------------------------------------------------------------------------------------
Foreign securities o o o o o -- o o
---------------------------------------------------------------------------------------------------------------------------------
Funding agreements o o o o o o o o
---------------------------------------------------------------------------------------------------------------------------------
High yield debt securities (junk
bonds) o o o o -- -- o o J
---------------------------------------------------------------------------------------------------------------------------------
Illiquid and restricted securities o o o o o o o o
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Indexed securities o o o o -- -- o o
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Inflation protected securities o o o o -- -- o o
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Initial Public Offerings (IPOs) o o o o o o o o
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Inverse floaters o E o o -- -- o o
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Investment companies o o o o o o o o
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Lending of portfolio securities o o o o o o o o
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Loan participations o o o o -- -- o o
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Mortgage- and asset-backed securities o o F o o o o o o
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Mortgage dollar rolls o G o o -- -- o o
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Statement of Additional Information - [Date], 2010 Page 12
FUNDS-OF-FUNDS - TAXABLE TAXABLE TAX-EXEMPT TAX-EXEMPT STATE
EQUITY AND FIXED MONEY MONEY FIXED TAX-EXEMPT
INVESTMENT STRATEGY BALANCED EQUITY FIXED INCOME INCOME MARKET MARKET INCOME FIXED INCOME
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Municipal obligations o o o o -- o o o
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Pay-in-kind securities o o o o -- -- o o
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Preferred stock o o o o H -- -- o H --
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Real estate investment trusts o o o o -- -- o o
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Repurchase agreements o o o o o o o o
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Reverse repurchase agreements o o o o o -- o o
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Short sales I I o I -- -- I I
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Sovereign debt o o o o o -- o o
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Structured investments o o o o -- -- o o
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Swap agreements o o o o -- -- o o
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Variable- or floating-rate securities o o o o o o o o
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Warrants o o o o -- -- o --
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When-issued securities and forward
commitments o o o o -- -- o o
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Zero-coupon and step-coupon
securities o o o o o o o o
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A. The following funds are not authorized to invest in collateralized bond
obligations: RiverSource Partners International Select Growth, RiverSource
Partners International Select Value, RiverSource Partners International
Small Cap, RiverSource Partners Select Value, RiverSource Partners Small
Cap Equity, RiverSource Partners Small Cap Growth and RiverSource Partners
Small Cap Value.
B. The following funds are not authorized to invest in common stock:
RiverSource Short Duration U.S. Government, RiverSource U.S. Government
Mortgage.
C. The following funds are not authorized to invest in convertible
securities: RiverSource Short Duration U.S. Government, RiverSource U.S.
Government Mortgage.
D. While the fund is prohibited from investing in corporate bonds, it may
invest in securities classified as corporate bonds if they meet the
requirements of Rule 2a-7 of the 1940 Act.
E. The following fund is authorized to invest in inverse floaters:
RiverSource Real Estate.
F. The following funds are not authorized to invest in mortgage- and asset-
backed securities: RiverSource Partners Small Cap Growth, RiverSource S&P
500 Index and RiverSource Small Company Index.
G. The following funds are authorized to invest in mortgage dollar rolls:
RiverSource Real Estate.
H. The following funds are not authorized to invest in preferred stock:
RiverSource Tax-Exempt High Income, RiverSource Intermediate Tax-Exempt,
RiverSource Tax-Exempt Bond, RiverSource Short Duration U.S. Government,
RiverSource U.S. Government Mortgage.
I. Except for Seligman California Municipal High-Yield, Seligman California
Municipal Quality, Seligman Minnesota Municipal and Seligman New York
Municipal, which are prohibited from selling short, the funds are not
prohibited from engaging in short sales, however, each fund will seek
Board approval prior to utilizing short sales as an active part of its
investment strategy.
J. The following funds are not authorized to invest in high yield debt
securities: Seligman California Municipal Quality, Seligman Minnesota,
Seligman National and Seligman New York.
Statement of Additional Information - [Date], 2010 Page 13
INFORMATION REGARDING RISKS AND INVESTMENT STRATEGIES
RISKS
The following is a summary of risk characteristics. Following this summary is a
description of certain investments and investment strategies and the risks most
commonly associated with them (including certain risks not described below and,
in some cases, a more comprehensive discussion of how the risks apply to a
particular investment or investment strategy). A mutual fund's risk profile is
largely defined by the fund's primary portfolio holdings and investment
strategies. However, most mutual funds are allowed to use certain other
strategies and investments that may have different risk characteristics.
Accordingly, one or more of the following types of risk may be associated with a
fund at any time (for a description of principal risks and investment strategies
for an individual fund, please see that fund's prospectus):
ACTIVE MANAGEMENT RISK. For a fund that is actively managed, its performance
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, a fund could underperform
other mutual funds with similar investment objectives and strategies.
AFFILIATED FUND RISK. For funds-of-funds, the risk that the investment manager
may have potential conflicts of interest in selecting underlying funds because
the fees paid to it by some underlying funds are higher than the fees paid by
other underlying funds. However, the investment manager is a fiduciary to the
funds and is legally obligated to act in their best interests when selecting
underlying funds.
ALLOCATION RISK. For funds-of-funds, the risk that the investment manager's
evaluations regarding asset classes or underlying funds may be incorrect. There
is no guarantee that the underlying funds will achieve their investment
objectives. There is also a risk that the selected underlying funds' performance
may be lower than the performance of the asset class they were selected to
represent or may be lower than the performance of alternative underlying funds
that could have been selected to represent the asset class.
BORROWING RISK. To the extent the fund borrows money for investment purposes,
which is commonly referred to as "leveraging," the fund's exposure to
fluctuations in the prices of its assets will be increased as compared to the
fund's exposure if the fund did not borrow. The fund's borrowing activities will
exaggerate any increase or decrease in the net asset value of the fund. In
addition, the interest which the fund pays on borrowed money, together with any
additional costs of maintaining a borrowing facility, are additional costs borne
by the fund and could reduce or eliminate any net investment profits. Unless
profits on assets acquired with borrowed funds exceed the costs of borrowing,
the use of borrowing will diminish the investment performance of the fund
compared with what it would have been without borrowing. When the fund borrows
money it must comply with certain asset coverage requirements, which at times
may require the fund to dispose of some of its holdings, even though it may be
disadvantageous to do so at the time.
COMMON STOCK RISK. An adverse event, such as an unfavorable earnings report, may
depress the value of a particular common stock held by the fund. Also, the
prices of common stocks are sensitive to general movements in the stock market
and a drop in the stock market may depress the price of common stocks to which
the fund has exposure. Common stock prices fluctuate for several reasons,
including changes to investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, or when political
or economic events affecting an issuer occurs. In addition, common stock prices
may be particularly sensitive to rising interest rates, as the cost of capital
rises and borrowing costs increase.
CREDIT RISK. Credit risk is the risk that one or more fixed income securities in
the fund's portfolio will decline in price or fail to pay interest or repay
principal when due because the issuer of the security experiences a decline in
its financial status and is unable or unwilling to honor its obligations,
including the payment of interest or the repayment of principal. Adverse
conditions in the credit markets can adversely affect the broader global
economy, including the credit quality of issuers of fixed income securities in
which the fund may invest. Changes by nationally recognized statistical rating
organizations in its rating of securities and in the ability of an issuer to
make scheduled payments may also affect the value of the fund's investments. To
the extent the fund invests in below-investment grade securities, it will be
exposed to a greater amount of credit risk than a fund which invests solely in
investment grade securities. The prices of lower grade securities are more
sensitive to negative developments, such as a decline in the issuer's revenues
or a general economic downturn, than are the prices of higher grade securities.
Fixed income securities of below investment grade quality are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal when due and therefore involve a greater risk of default. 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.
Statement of Additional Information - [Date], 2010 Page 14
CONFIDENTIAL INFORMATION ACCESS RISK. For funds investing in floating rate
loans, the investment manager normally will seek to avoid the receipt of
material, non-public information (Confidential Information) about the issuers of
floating rate loans being considered for acquisition by the fund, or held in the
fund. In many instances, issuers of floating rate loans offer to furnish
Confidential Information to prospective purchasers or holders of the issuer's
floating rate loans to help potential investors assess the value of the loan.
The investment manager's decision not to receive Confidential Information from
these issuers may disadvantage the fund as compared to other floating rate loan
investors, and may adversely affect the price the fund pays for the loans it
purchases, or the price at which the fund sells the loans. Further, in
situations when holders of floating rate loans are asked, for example, to grant
consents, waivers or amendments, the investment manager's ability to assess the
desirability of such consents, waivers or amendments may be compromised. For
these and other reasons, it is possible that the investment manager's decision
under normal circumstances not to receive Confidential Information could
adversely affect the fund's performance.
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.
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. 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 loss for the fund. In addition to
the potential for increased losses, the use of derivative instruments may lead
to increased volatility within a fund. Derivative instruments in which the fund
invests will typically increase the fund's exposure to its principal risks (as
described in the fund's prospectus) 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. There is no
guarantee that a hedging strategy will eliminate the risk which the hedging
strategy is intended to offset, which may lead to losses within a fund.
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.
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. Derivative
instruments which are not traded on an exchange, including, but not limited to,
forward contracts, swaps, and over-the-counter options may have liquidity risk.
Certain derivatives have the potential for unlimited losses regardless of the
size of the initial investment.
DIVERSIFICATION RISK. A non-diversified fund may invest more of its assets in
fewer companies than if it were a diversified fund. Because each investment has
a greater effect on the fund's performance, the fund may be more exposed to the
risks of loss and volatility than a fund that invests more broadly.
EXCHANGE-TRADED FUND (ETF) RISK. An ETF's share price may not track its
specified market index and may trade below its net asset value. ETFs generally
use a "passive" investment strategy and will not attempt to take defensive
positions in volatile or declining markets. An active secondary market in an
ETF's shares may not develop or be maintained and may be halted or interrupted
due to actions by its listing exchange, unusual market conditions or other
reasons. There can be no assurance an ETF's shares will continue to be listed on
an active exchange. In addition, shareholders bear both their proportionate
share of the fund's expenses and similar expenses incurred through ownership of
the ETF.
The funds generally expect to purchase shares of ETFs through broker-dealers in
transactions on a securities exchange, and in such cases the funds will pay
customary brokerage commissions for each purchase and sale. Shares of an ETF may
also
Statement of Additional Information - [Date], 2010 Page 15
be acquired by depositing a specified portfolio of the ETF's underlying
securities, as well as a cash payment generally equal to accumulated dividends
of the securities (net of expenses) up to the time of deposit, with the ETF's
custodian, in exchange for which the ETF will issue a quantity of new shares
sometimes referred to as a "creation unit". Similarly, shares of an ETF
purchased on an exchange may be accumulated until they represent a creation
unit, and the creation unit may redeemed in kind for a portfolio of the
underlying securities (based on the ETF's net asset value) together with a cash
payment generally equal to accumulated dividends as of the date of redemption.
The funds may redeem creation units for the underlying securities (and any
applicable cash), and may assemble a portfolio of the underlying securities (and
any required cash) to purchase creation units. The funds' ability to redeem
creation units may be limited by the 1940 Act, which provides that ETFs will not
be obligated to redeem shares held by the funds in an amount exceeding one
percent of their total outstanding securities during any period of less than 30
days.
There is a risk that ETFs in which a fund invests may terminate due to
extraordinary events. For example, any of the service providers to ETFs, such as
the trustee or sponsor, may close or otherwise fail to perform their obligations
to the ETF, and the ETF may not be able to find a substitute service provider.
Also, ETFs may be dependent upon licenses to use the various indices as a basis
for determining their compositions and/or otherwise to use certain trade names.
If these licenses are terminated, the ETFs may also terminate. In addition, an
ETF may terminate if its net assets fall below a certain amount.
FOREIGN CURRENCY RISK. The Fund's exposure to foreign currencies subjects the
Fund to constantly changing exchange rates and the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of short
positions, that the U.S. dollar will decline in value relative to the currency
being sold forward. Currency rates in foreign countries may fluctuate
significantly over short periods of time for a number of reasons, including
changes in interest rates and economic or political developments in the U.S. or
abroad. As a result, the Fund's exposure to foreign currencies may reduce the
returns of the Fund. Trading of foreign currencies also includes the risk of
clearing and settling trades which, if prices are volatile, may be difficult.
FOREIGN/EMERGING MARKETS RISK. 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 risks:
Country risk includes the political, economic, and other conditions of the
country. These conditions include lack of publicly available information, less
government oversight and regulation of business and industry practices of stock
exchanges, brokers and listed companies than in the U.S. (including lack of
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to domestic companies). In addition, with certain foreign
countries, there is the possibility of nationalization, expropriation, the
imposition of additional withholding or confiscatory taxes, political, social,
or economic instability, diplomatic developments that could affect investments
in those countries, or other unforeseen actions by regulatory bodies (such as
changes to settlement or custody procedures). It may be more difficult for an
investor's agents to keep currently informed about corporate actions such as
stock dividends or other matters that may affect the prices of portfolio
securities. 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. Payment for securities without delivery
may be required in certain foreign markets and, when participating in new
issues, some foreign countries require payment to be made in advance of issuance
(at the time of issuance, the market value of the security may be more or less
than the purchase price). Fixed commissions on some foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Further, the
Fund may encounter difficulties or be unable to pursue legal remedies and obtain
judgments in foreign courts. The introduction of a single currency, the euro, on
Jan. 1, 1999 for participating European nations in the Economic and Monetary
Union (EU) presents unique risks. The most important is the exposure to the
economic, political and social development of the member countries in the EU.
Currency risk results from the constantly changing exchange rates 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
Statement of Additional Information - [Date], 2010 Page 16
marked by extreme inflation, devaluation of currencies, dependence on trade
partners, and hostile relations with neighboring countries.
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.
For state-specific funds. Because state-specific tax-exempt funds invest
primarily in the municipal securities issued by the state and political sub-
divisions of the state, each fund will be particularly affected by political and
economic changes, adverse conditions to an industry significant to the area and
other developments in the state in which it invests. This vulnerability to
factors affecting the state's tax-exempt investments will be significantly
greater than that of a more geographically diversified fund, which may result in
greater losses and volatility. See Appendix B for details. The value of
municipal securities owned by a fund also may be adversely affected by future
changes in federal or state income tax laws.
In addition, because of the relatively small number of issuers of tax-exempt
securities and because the state-specific funds may concentrate in a segment of
the tax-exempt debt market, such as revenue bonds for health care facilities,
housing or airports, the fund may invest a higher percentage of its assets in a
single issuer and, therefore, be more exposed to the risk of loss by investing
in a few issuers than a fund that invests more broadly. At times, the fund and
other accounts managed by the investment manager may own all or most of the debt
of a particular issuer. These investments may cause the value of a fund's shares
to change more than the values of other funds' shares that invest in more
diversified investments. This concentration of ownership may make it more
difficult to sell, or to determine the fair value of, these investments. The
yields on the securities in which the fund invests generally are dependent on a
variety of factors, including the financial condition of the issuer or other
obligor, the revenue source from which the debt service is payable, general
economic and monetary conditions, conditions in the relevant market, the size of
a particular issue, the maturity of the obligation, and the rating of the issue.
Because many tax-exempt bonds may be revenue or general obligations of local
governments or authorities, ratings on tax-exempt bonds may be different from
the ratings given to the general obligation bonds of a particular state.
More information about state specific risks may be available from official state
resources.
HIGHLY LEVERAGED TRANSACTIONS RISK. Certain corporate loans and corporate debt
securities involve refinancings, recapitalizations, mergers and acquisitions,
and other financings for general corporate purposes. These 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.
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.
INDEXING RISK. For funds that are managed to an index, the fund's performance
will rise and fall, subject to any tracking error, as the performance of the
index rises and falls.
INFLATION-PROTECTED SECURITIES RISK. Inflation-protected debt securities tend to
react to change in real interest rates. Real interest rates can be described as
nominal interest rates minus the expected impact of inflation. In general, the
price of an inflation-protected debt security falls when real interest rates
rise, and rises when real interest rates fall. Interest payments on inflation-
protected debt securities will vary as the principal and/or interest is adjusted
for inflation and may be more volatile than interest paid on ordinary bonds. In
periods of deflation, the fund may have no income at all. Income earned by a
shareholder depends on the amount of principal invested and that principal
cannot seek to grow with inflation unless the investor reinvests the portion of
fund distributions that comes from inflation adjustments.
INFRASTRUCTURE-RELATED COMPANIES RISK. Investments in infrastructure-related
securities have greater exposure to adverse economic, regulatory, political,
legal, and other changes affecting the issuers of such securities.
Infrastructure-related businesses are subject to a variety of factors that may
adversely affect their business or operations including high interest costs in
connection with capital construction programs, costs associated with
environmental and other regulations, the effects
Statement of Additional Information - [Date], 2010 Page 17
of economic slowdown and surplus capacity, increased competition from other
providers of services, uncertainties concerning availability of fuel at
reasonable prices, the effects of energy conservation policies and other
factors. Additionally, infrastructure-related entities may be subject to
regulation by various governmental authorities and may also be affected by
governmental regulation of rates charged to customers, service interruption
and/or legal challenges due to environmental, operational or other mishaps and
the imposition of special tariffs and changes in tax laws, regulatory policies
and accounting standards. There is also the risk that corruption may negatively
affect publicly-funded infrastructure projects, especially in foreign markets,
resulting in delays and cost overruns.
INITIAL PUBLIC OFFERING (IPO) RISK. IPOs are subject to many of the same risks
as investing in companies with smaller market capitalizations. To the extent a
fund determines to invest in IPOs it may not be able to invest to the extent
desired, because, for example, only a small portion (if any) of the securities
being offered in an IPO may be made available. The investment performance of a
fund during periods when it is unable to invest significantly or at all in IPOs
may be lower than during periods when the fund is able to do so. In addition, as
a fund increases in size, the impact of IPOs on the fund's performance will
generally decrease. IPOs sold within 12 months of purchase will result in
increased short-term capital gains, which will be taxable to shareholders as
ordinary income.
INTEREST RATE RISK. The securities in the portfolio are subject to 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, or the value of its stocks or bonds, may perform poorly.
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.
LEVERAGE RISK. Leverage occurs when the fund increases its assets available for
investment using borrowings, short sales, derivatives, or similar instruments or
techniques. Due to the fact that short sales involve borrowing securities and
then selling them, the fund's short sales effectively leverage the fund's
assets. The use of leverage may make any change in the fund's net asset value
("NAV") even greater and thus result in increased volatility of returns. The
fund's assets that are used as collateral to secure the short sales may decrease
in value while the short positions are outstanding, which may force the fund to
use its other assets to increase the collateral. Leverage can also create an
interest expense that may lower the fund's overall returns. Lastly, there is no
guarantee that a leveraging strategy will be successful.
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. 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.
MASTER LIMITED PARTNERSHIP RISK. Investments in securities (units) of master
limited partnerships involve risks that differ from an investment in common
stock. Holders of the units of master limited partnerships have more limited
control and limited rights to vote on matters affecting the partnership. There
are also certain tax risks associated with an investment in units of master
limited partnerships. In addition, conflicts of interest may exist between
common unit holders, subordinated unit holders and the general partner of a
master limited partnership, including a conflict arising as a result of
incentive distribution payments.
MORTGAGE-RELATED AND OTHER ASSET-BACKED SECURITIES RISK. Generally, rising
interest rates tend to extend the duration of fixed rate mortgage-related
securities, making them more sensitive to changes in interest rates. As a
result, in a period of rising interest rates, if a fund holds mortgage-related
securities, it may exhibit additional volatility. This is known as extension
risk. In addition, adjustable and fixed rate mortgage-related securities are
subject to prepayment risk. When interest rates decline, borrowers may pay off
their mortgages sooner.
PORTFOLIO TRADING AND TURNOVER RISKS. Portfolio trading may be undertaken to
accomplish the investment objectives of the funds in relation to actual and
anticipated movements in interest rates, securities markets and for other
reasons. In addition, a security may be sold and another of comparable quality
purchased at approximately the same time to take advantage of what the
investment manager believes to be a temporary price disparity between the two
securities. Temporary price disparities between two comparable securities may
result from supply and demand imbalances where, for example, a temporary
oversupply of certain securities may cause a temporarily low price for such
security, as compared with other securities of like quality and characteristics.
A fund may also engage in short-term trading consistent with its investment
objectives. Securities
Statement of Additional Information - [Date], 2010 Page 18
may be sold in anticipation of a market decline or purchased in anticipation of
a market rise and later sold, or to recognize a gain.
A change in the securities held by a fund is known as "portfolio turnover." The
use of certain derivative instruments with relatively short maturities may tend
to exaggerate the portfolio turnover rate for a fund. High portfolio turnover
may involve correspondingly greater expenses to the fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestments in other securities. Trading in debt obligations
does not generally involve the payment of brokerage commissions, but does
involve indirect transaction costs. The use of futures contracts may involve the
payment of commissions to futures commission merchants. The higher the rate of
portfolio turnover of the fund, the higher the transaction costs borne by the
fund generally will be. Transactions in the fund's portfolio securities may
result in realization of taxable capital gains (including short-term capital
gains which are generally taxed to stockholders at ordinary income tax rates).
The trading costs and tax effects associated with portfolio turnover may
adversely affect the fund's performance.
PREPAYMENT AND EXTENSION RISK. 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 portfolio 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 portfolio 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.
QUANTITATIVE MODEL RISK. Securities selected using quantitative methods may
perform differently from the market as a whole as a result of the factors used
in the quantitative method, the weight placed on each factor, and changes in the
factors' historical trends. The quantitative methodology employed by the
investment manager has been extensively tested using historical securities
market data, but has only recently begun to be used to manage the funds. There
can be no assurance that the methodology will enable the fund to achieve its
objective.
REAL ESTATE INDUSTRY RISK. Certain underlying funds concentrate their
investments in securities of companies operating in the real estate industry,
making the fund is more susceptible to risks associated with the ownership of
real estate and with the real estate industry in general. These risks can
include fluctuations in the value of the underlying properties, defaults by
borrowers or tenants, market saturation, decreases in market rates for rents,
and other economic, political, or regulatory occurrences affecting the real
estate industry, including REITs.
REITs depend upon specialized management skills, may have limited financial
resources, may have less trading volume, and may be subject to more abrupt or
erratic price movements than the overall securities markets. REITs are also
subject to the risk of failing to qualify for tax-free pass-through of income.
Some REITs (especially mortgage REITs) are affected by risks similar to those
associated with investments in debt securities including changes in interest
rates and the quality of credit extended.
REINVESTMENT RISK. The risk that an investor will not be able to reinvest income
or principal at the same rate it currently is earning.
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, the more it spreads risk and potentially reduces the
risks of loss and volatility.
SHORT SALES RISK. The fund may make short sales, which involves selling a
security the fund does not own in anticipation that the security's price will
decline. The fund must borrow those securities to make delivery to the buyer.
The fund may not always be able to borrow a security it wants to sell short. The
fund will suffer a loss if it sells a security short and the value of the
security rises rather than falls. It is possible that the fund's long positions
will decline in value at the same time that the value of its short positions
increase, thereby increasing potential losses to the fund. Short sales expose
the fund to the risk that it will be required to buy the security sold short
(also known as "covering" the short position) at a time when the security has
appreciated in value, thus resulting in a loss to the fund. The fund may also be
required to close out a short position at a time when it might not otherwise
choose, for example, if the lender of the security calls it back, which may have
the effect of reducing or eliminating potential gain, or cause the fund to
realize a loss. Short positions introduce more risk to the fund than long
positions (purchases) because the maximum sustainable loss on a security
purchased (held long) is limited to the amount paid for the security plus the
transaction costs, whereas there is no maximum attainable price of the shorted
security. Therefore, in theory, securities sold short have unlimited risk.
Additionally, the fund's use of short sales in effect "leverages" the fund, as
the fund intends to use the cash proceeds from short sales to invest in
additional long positions. This leverage effect potentially exposes the fund to
greater risks due to unanticipated market movements, which may magnify losses
and increase the volatility of returns. See Leverage Risk and Market Risk.
Statement of Additional Information - [Date], 2010 Page 19
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.
TAX RISK. As a regulated investment company, a fund must derive at least 90% of
its gross income for each taxable year from sources treated as "qualifying
income" under the Internal Revenue Code of 1986, as amended. The fund currently
intends to take positions in forward currency contracts with notional value up
to the fund's total net assets. Although foreign currency gains currently
constitute "qualifying income" the Treasury Department has the authority to
issue regulations excluding from the definition of "qualifying incomes" a fund's
foreign currency gains not "directly related" to its "principal business" of
investing in stocks or securities (or options and futures with respect thereto).
Such regulations might treat gains from some of the fund's foreign currency-
denominated positions as not "qualifying income" and there is a remote
possibility that such regulations might be applied retroactively, in which case,
the fund might not qualify as a regulated investment company for one or more
years. In the event the Treasury Department issues such regulations, the fund's
Board of Directors may authorize a significant change in investment strategy or
fund liquidation.
TECHNOLOGY AND TECHNOLOGY-RELATED INVESTMENT RISKS. The market prices of
technology and technology-related stocks tend to exhibit a greater degree of
market risk and price volatility than other types of investments. These stocks
may fall in and out of favor with investors rapidly, which may cause sudden
selling and dramatically lower market prices. These stocks also may be affected
adversely by changes in technology, consumer and business purchasing patterns,
government regulation and/or obsolete products or services. In addition, a
rising interest rate environment tends to negatively affect technology and
technology-related companies. In such an environment, those companies with high
market valuations may appear less attractive to investors, which may cause sharp
decreases in the companies' market prices. Further, those technology or
technology-related companies seeking to finance their expansion would have
increased borrowing costs, which may negatively impact their earnings. As a
result, these factors may negatively affect the performance of the fund.
Finally, the fund may be susceptible to factors affecting the technology and
technology-related industries. Technology and technology-related companies are
often smaller and less experienced companies and may be subject to greater risks
than larger companies, such as limited product lines, markets and financial and
managerial resources. These risks may be heightened for technology companies in
foreign markets.
TRACKING ERROR RISK. For funds that are managed to an index, the fund may not
track the index perfectly because differences between the index and the fund's
portfolio can cause differences in performance. The investment manager purchases
securities and other instruments in an attempt to replicate the performance of
the index. However, the tools that the investment manager uses to replicate the
index are not perfect and the fund's performance is affected by factors such as
the size of the fund's portfolio, transaction costs, management fees and
expenses, brokerage commissions and fees, the extent and timing of cash flows in
and out of the fund and changes in the index.
In addition, the returns from a specific type of security (for example, mid-cap
stocks) may trail returns from other asset classes or the overall market. Each
type of security will go through cycles of doing better or worse than stocks or
bonds in general. These periods may last for several years.
UNDERLYING FUND SELECTION RISK. For funds-of-funds, the risk that the selected
underlying funds' performance may be lower than the performance of the asset
class they were selected to represent or may be lower than the performance of
alternative underlying funds that could have been selected to represent the
investment category.
INVESTMENT STRATEGIES
The following information supplements the discussion of each fund's investment
objectives, policies, and strategies that are described in the prospectus and in
this SAI. The following describes strategies that many mutual funds use and
types of securities that they purchase. Please refer to the table titled
Investment Strategies and Types of Investments to see which are applicable to
various categories of funds.
AGENCY AND GOVERNMENT SECURITIES
The U.S. government, its agencies and instrumentalities, and government-
sponsored enterprises issue many different types of securities. U.S. Treasury
bonds, notes, and bills and securities, including mortgage pass through
certificates of the Government National Mortgage Association (GNMA), are
guaranteed by the U.S. government.
Other U.S. government securities are issued or guaranteed by federal agencies or
instrumentalities or government-sponsored enterprises but are not guaranteed by
the U.S. government. This may increase the credit risk associated with these
investments. Government-sponsored entities issuing securities include privately
owned, publicly chartered entities created to
Statement of Additional Information - [Date], 2010 Page 20
reduce borrowing costs for certain sectors of the economy, such as farmers,
homeowners, and students. They include the Federal Farm Credit Bank System, Farm
Credit Financial Assistance Corporation, Federal Home Loan Bank, Federal Home
Loan Mortgage Corporation(*) (FHLMC), Federal National Mortgage Association(*)
(FNMA), Student Loan Marketing Association (SLMA), and Resolution Trust
Corporation (RTC). Government-sponsored entities may issue discount notes (with
maturities ranging from overnight to 360 days) and bonds. Agency and government
securities are subject to the same concerns as other debt obligations. (See also
Debt Obligations and Mortgage- and Asset-Backed Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with agency and government securities include:
Inflation Risk, Interest Rate Risk, Prepayment and Extension Risk, and
Reinvestment Risk.
* On Sept. 7, 2008, the Federal Housing Finance Agency (FHFA), an agency of
the U.S. government, placed the FHLMC and FNMA into conservatorship, a
statutory process with the objective of returning the entities to normal
business operations. FHFA will act as the conservator to operate the
enterprises until they are stabilized.
BORROWING
If the fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is paid off. If the fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage. Under the
1940 Act, the fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of the
fund's holdings may be disadvantageous from an investment standpoint. Leveraging
by means of borrowing may exaggerate the effect of any increase or decrease in
the value of portfolio securities or the fund's NAV, and money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with borrowing include: Inflation Risk.
CASH/MONEY MARKET INSTRUMENTS
Cash-equivalent investments include short-term U.S. and Canadian government
securities and negotiable certificates of deposit, non-negotiable fixed-time
deposits, bankers' acceptances, and letters of credit of banks or savings and
loan associations having capital, surplus, and undivided profits (as of the date
of its most recently published annual financial statements) in excess of $100
million (or the equivalent in the instance of a foreign branch of a U.S. bank)
at the date of investment. A fund also may purchase short-term notes and
obligations of U.S. and foreign banks and corporations and may use repurchase
agreements with broker-dealers registered under the Securities Exchange Act of
1934 and with commercial banks. (See also Commercial Paper, Debt Obligations,
Repurchase Agreements, and Variable- or Floating-Rate Securities.) These types
of instruments generally offer low rates of return and subject a fund to certain
costs and expenses. See Appendix A for a discussion of securities ratings.
Bankers' acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
Bank certificates of deposit are certificates issued against funds deposited in
a bank (including eligible foreign branches of U.S. banks), are for a definite
period of time, earn a specified rate of return and are normally negotiable.
A fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a
money market fund established for the exclusive use of the RiverSource Family of
Funds and other institutional clients of RiverSource Investments.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with cash/money market instruments include: Credit Risk
and Inflation Risk.
COLLATERALIZED BOND OBLIGATIONS
Collateralized bond obligations (CBOs) are investment grade bonds backed by a
pool of bonds, which may include junk bonds. CBOs are similar in concept to
collateralized mortgage obligations (CMOs), but differ in that CBOs represent
different degrees of credit quality rather than different maturities. (See also
Mortgage- and Asset-Backed Securities.) Underwriters of CBOs package a large and
diversified pool of high-risk, high-yield junk bonds, which is then separated
into "tiers." Typically, the first tier represents the higher quality collateral
and pays the lowest interest rate; the second tier is backed by riskier bonds
and pays a higher rate; the third tier represents the lowest credit quality and
instead of receiving a fixed interest rate receives the residual interest
payments -- money that is left over after the higher tiers have been paid. CBOs,
like CMOs, are substantially overcollateralized and this, plus the
diversification of the pool backing them, may earn certain of the tiers
investment-grade bond ratings. Holders of third-tier CBOs stand to earn high
yields or less money depending on the rate of defaults in the collateral pool.
(See also High-Yield Debt Securities (Junk Bonds).)
Statement of Additional Information - [Date], 2010 Page 21
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with CBOs include: Credit Risk, Interest Rate Risk and
Prepayment and Extension Risk.
COMMERCIAL PAPER
Commercial paper is a short-term debt obligation with a maturity ranging from 2
to 270 days issued by banks, corporations, and other borrowers. It is sold to
investors with temporary idle cash as a way to increase returns on a short-term
basis. These instruments are generally unsecured, which increases the credit
risk associated with this type of investment. (See also Debt Obligations and
Illiquid and Restricted Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with commercial paper include: Credit Risk and
Liquidity Risk.
COMMON STOCK
Common stock represents units of ownership in a corporation. Owners typically
are entitled to vote on the selection of directors and other important matters
as well as to receive dividends on their holdings. In the event that a
corporation is liquidated, the claims of secured and unsecured creditors and
owners of bonds and preferred stock take precedence over the claims of those who
own common stock.
The price of common stock is generally determined by corporate earnings, type of
products or services offered, projected growth rates, experience of management,
liquidity, and general market conditions for the markets on which the stock
trades.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with common stock include: Issuer Risk, Market Risk,
and Small and Mid-Sized Company Risk.
CONVERTIBLE SECURITIES
Convertible securities are bonds, debentures, notes, preferred stocks, or other
securities that may be converted into common, preferred or other securities of
the same or a different issuer within a particular period of time at a specified
price. Some convertible securities, such as preferred equity-redemption
cumulative stock (PERCs), have mandatory conversion features. Others are
voluntary. A convertible security entitles the holder to receive interest
normally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted, or exchanged.
Convertible securities have unique investment characteristics in that they
generally (i) have higher yields than common stocks but lower yields than
comparable non-convertible securities, (ii) are less subject to fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (iii) provide the potential for capital appreciation if the market price of
the underlying common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value. Generally,
the conversion value decreases as the convertible security approaches maturity.
To the extent the market price of the underlying common stock approaches or
exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value. A convertible security
generally will sell at a premium over its conversion value by the extent to
which investors place value on the right to acquire the underlying common stock
while holding a fixed income security.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with convertible securities include: Interest Rate
Risk, Issuer Risk, Market Risk, Prepayment and Extension Risk, and Reinvestment
Risk.
CORPORATE BONDS
Corporate bonds are debt obligations issued by private corporations, as distinct
from bonds issued by a government or its agencies or a municipality. Corporate
bonds typically have four distinguishing features: (1) they are taxable; (2)
they have a par value of $1,000; (3) they have a term maturity, which means they
come due all at once; and (4) many are traded on major exchanges. Corporate
bonds are subject to the same concerns as other debt obligations. (See also Debt
Obligations and High-Yield Debt Securities (Junk Bonds).) Corporate bonds may be
either secured or unsecured. Unsecured corporate bonds are generally referred to
as "debentures." See Appendix A for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with corporate bonds include: Credit Risk, Interest
Rate Risk, Issuer Risk, Prepayment and Extension Risk, and Reinvestment Risk.
Statement of Additional Information - [Date], 2010 Page 22
DEBT OBLIGATIONS
Many different types of debt obligations exist (for example, bills, bonds, or
notes). Issuers of debt obligations have a contractual obligation to pay
interest at a fixed, variable or floating rate on specified dates and to repay
principal on a specified maturity date. Certain debt obligations (usually
intermediate- and long-term bonds) have provisions that allow the issuer to
redeem or "call" a bond before its maturity. Issuers are most likely to call
these securities during periods of falling interest rates. When this happens, an
investor may have to replace these securities with lower yielding securities,
which could result in a lower return.
The market value of debt obligations is affected primarily by changes in
prevailing interest rates and the issuers perceived ability to repay the debt.
The market value of a debt obligation generally reacts inversely to interest
rate changes. When prevailing interest rates decline, the price usually rises,
and when prevailing interest rates rise, the price usually declines.
In general, the longer the maturity of a debt obligation, the higher its yield
and the greater the sensitivity to changes in interest rates. Conversely, the
shorter the maturity, the lower the yield but the greater the price stability.
As noted, the values of debt obligations also may be affected by changes in the
credit rating or financial condition of their issuers. Generally, the lower the
quality rating of a security, the higher the degree of risk as to the payment of
interest and return of principal. To compensate investors for taking on such
increased risk, those issuers deemed to be less creditworthy generally must
offer their investors higher interest rates than do issuers with better credit
ratings. (See also Agency and Government Securities, Corporate Bonds, and High-
Yield Debt Securities (Junk Bonds).)
Generally, debt obligations that are investment grade are those that have been
rated in one of the top four credit quality categories by two out of the three
independent rating agencies. In the event that a debt obligation has been rated
by only two agencies, the most conservative, or lower, rating must be in one of
the top four credit quality categories in order for the security to be
considered investment grade. If only one agency has rated the debt obligation,
that rating must be in one of the top four credit quality categories for the
security to be considered investment grade. See Appendix A for a discussion of
securities ratings.
All ratings limitations are applied at the time of purchase. Subsequent to
purchase, a debt security may cease to be rated or its rating may be reduced
below the minimum required for purchase by a fund. Neither event will require
the sale of such a security, but it will be a factor in considering whether to
continue to hold the security. To the extent that ratings change as a result of
changes in a rating agency or its rating system, a fund will attempt to use
comparable ratings as standards for selecting investments.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with debt obligations include: Credit Risk, Interest
Rate Risk, Issuer Risk, Prepayment and Extension Risk, and Reinvestment Risk.
DEPOSITARY RECEIPTS
Some foreign securities are traded in the form of American Depositary Receipts
(ADRs). ADRs are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying securities of foreign issuers. European
Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs) are receipts
typically issued by foreign banks or trust companies, evidencing ownership of
underlying securities issued by either a foreign or U.S. issuer. Generally,
depositary receipts in registered form are designed for use in the U.S. and
depositary receipts in bearer form are designed for use in securities markets
outside the U.S. Depositary receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may be converted.
Depositary receipts involve the risks of other investments in foreign
securities. In addition, ADR holders may not have all the legal rights of
shareholders and may experience difficulty in receiving shareholder
communications. (See also Common Stock and Foreign Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with depositary receipts include: Foreign/Emerging
Markets Risk, Issuer Risk, and Market Risk.
DERIVATIVE INSTRUMENTS
Derivative instruments are commonly defined to include securities or contracts
whose values depend, in whole or in part, on (or "derive" from) the value of one
or more other assets, such as securities, currencies, or commodities.
A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to options or forward contracts. Such instruments may be
used to maintain cash reserves while remaining fully invested, to offset
anticipated declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns. Derivative
instruments are characterized by requiring little or no initial payment. Their
value changes daily based on a security, a currency, a group of securities or
currencies, or an index. A small change in the value of the underlying security,
currency, or index can cause a sizable percentage gain or loss in the price of
the derivative instrument.
Statement of Additional Information - [Date], 2010 Page 23
Options and forward contracts are considered to be the basic "building blocks"
of derivatives. For example, forward- based derivatives include forward
contracts, swap contracts, and exchange-traded futures. Forward-based
derivatives are sometimes referred to generically as "futures contracts."
Option-based derivatives include privately negotiated, over-the-counter (OTC)
options (including caps, floors, collars, and options on futures) and exchange-
traded options on futures. Diverse types of derivatives may be created by
combining options or futures in different ways, and by applying these structures
to a wide range of underlying assets.
Options. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees for the length of the contract to sell the security at the set price when
the buyer wants to exercise the option, no matter what the market price of the
security is at that time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person who writes a
put option agrees to buy the security at the set price if the purchaser wants to
exercise the option during the length of the contract, no matter what the market
price of the security is at that time. An option is covered if the writer owns
the security (in the case of a call) or sets aside the cash or securities of
equivalent value (in the case of a put) that would be required upon exercise.
The price paid by the buyer for an option is called a premium. In addition to
the premium, the buyer generally pays a broker a commission. The writer receives
a premium, less another commission, at the time the option is written. The
premium received by the writer is retained whether or not the option is
exercised. A writer of a call option may have to sell the security for a below-
market price if the market price rises above the exercise price. A writer of a
put option may have to pay an above-market price for the security if its market
price decreases below the exercise price.
When an option is purchased, the buyer pays a premium and a commission. It then
pays a second commission on the purchase or sale of the underlying security if
the option is exercised. For record keeping and tax purposes, the price obtained
on the sale of the underlying security is the combination of the exercise price,
the premium, and both commissions.
One of the risks an investor assumes when it buys an option is the loss of the
premium. To be beneficial to the investor, the price of the underlying security
must change within the time set by the option contract. Furthermore, the change
must be sufficient to cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the exercise of the
option and sale (in the case of a call) or purchase (in the case of a put) of
the underlying security. Even then, the price change in the underlying security
does not ensure a profit since prices in the option market may not reflect such
a change.
Options on many securities are listed on options exchanges. If a fund writes
listed options, it will follow the rules of the options exchange. Options are
valued at the close of the New York Stock Exchange. An option listed on a
national exchange, Chicago Board Options Exchange, or NASDAQ will be valued at
the mean of the last bid and ask prices.
Options on certain securities are not actively traded on any exchange, but may
be entered into directly with a dealer. These options may be more difficult to
close. If an investor is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call written by the
investor expires or is exercised.
Futures Contracts. A futures contract is a sales contract between a buyer
(holding the "long" position) and a seller (holding the "short" position) for an
asset with delivery deferred until a future date. The buyer agrees to pay a
fixed price at the agreed future date and the seller agrees to deliver the
asset. The seller hopes that the market price on the delivery date is less than
the agreed upon price, while the buyer hopes for the contrary. Many futures
contracts trade in a manner similar to the way a stock trades on a stock
exchange and the commodity exchanges.
Generally, a futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction is effected by an investor taking an
opposite position. At the time a futures contract is made, a good faith deposit
called initial margin is set up. Daily thereafter, the futures contract is
valued and the payment of variation margin is required so that each day a buyer
would pay out cash in an amount equal to any decline in the contract's value or
receive cash equal to any increase. At the time a futures contract is closed
out, a nominal commission is paid, which is generally lower than the commission
on a comparable transaction in the cash market.
Futures contracts may be based on various securities, securities indexes (such
as the S&P 500 Index), foreign currencies and other financial instruments and
indexes.
A fund may engage in futures and related options transactions to produce
incremental earnings, to hedge existing positions, and to increase flexibility.
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 commodity pool operator, meaning that the fund may invest in
futures contracts without registering with the CFTC.
Statement of Additional Information - [Date], 2010 Page 24
Options on Futures Contracts. Options on futures contracts give the holder a
right to buy or sell futures contracts in the future. Unlike a futures contract,
which requires the parties to the contract to buy and sell a security on a set
date (some futures are settled in cash), an option on a futures contract merely
entitles its holder to decide on or before a future date (within nine months of
the date of issue) whether to enter into a contract. If the holder decides not
to enter into the contract, all that is lost is the amount (premium) paid for
the option. Further, because the value of the option is fixed at the point of
sale, there are no daily payments of cash to reflect the change in the value of
the underlying contract. However, since an option gives the buyer the right to
enter into a contract at a set price for a fixed period of time, its value does
change daily.
One of the risks in buying an option on a futures contract is the loss of the
premium paid for the option. The risk involved in writing options on futures
contracts an investor owns, or on securities held in its portfolio, is that
there could be an increase in the market value of these contracts or securities.
If that occurred, the option would be exercised and the asset sold at a lower
price than the cash market price. To some extent, the risk of not realizing a
gain could be reduced by entering into a closing transaction. An investor could
enter into a closing transaction by purchasing an option with the same terms as
the one previously sold. The cost to close the option and terminate the
investor's obligation, however, might still result in a loss. Further, the
investor might not be able to close the option because of insufficient activity
in the options market. Purchasing options also limits the use of monies that
might otherwise be available for long-term investments.
Options on Indexes. Options on indexes are securities traded on national
securities exchanges. An option on an index is similar to an option on a futures
contract except all settlements are in cash. A fund exercising a put, for
example, would receive the difference between the exercise price and the current
index level. Options may also be traded with respect to other types of indexes,
such as options on indexes of commodities futures.
Currency Options. Options on currencies are contracts that give the buyer the
right, but not the obligation, to buy (call options) or sell (put options) a
specified amount of a currency at a predetermined price (strike price) on or
before the option matures (expiry date). Conversely, the seller has the
obligation to buy or sell a currency option upon exercise of the option by the
purchaser. Currency options are traded either on a national securities exchange
or over-the-counter.
Tax and Accounting Treatment. As permitted under federal income tax laws and to
the extent a fund is allowed to invest in futures contracts, a fund would intend
to identify futures contracts as part of a mixed straddle and not mark them to
market, that is, not treat them as having been sold at the end of the year at
market value. If a fund is using short futures contracts for hedging purposes,
the fund may be required to defer recognizing losses incurred on short futures
contracts and on underlying securities. Any losses incurred on securities that
are part of a straddle may be deferred to the extent there is unrealized
appreciation on the offsetting position until the offsetting position is sold.
Federal income tax treatment of gains or losses from transactions in options,
options on futures contracts and indexes will depend on whether the option is a
section 1256 contract. If the option is a non-equity option, a fund would either
make a 1256(d) election and treat the option as a mixed straddle or mark to
market the option at fiscal year end and treat the gain/loss as 40% short-term
and 60% long-term.
The Internal Revenue Service (IRS) has ruled publicly that an exchange-traded
call option is a security for purposes of the 50%-of-assets test and that its
issuer is the issuer of the underlying security, not the writer of the option,
for purposes of the diversification requirements.
Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (a fund's agent in acquiring the futures position). During the
period the futures contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a daily basis
to reflect the market value of the contract at the end of each day's trading.
Variation margin payments will be made or received depending upon whether gains
or losses are incurred. All contracts and options will be valued at the last-
quoted sales price on their primary exchange.
Other Risks of Derivatives. The primary risk of derivatives is the same as the
risk of the underlying asset, namely that the value of the underlying asset may
go up or down. Adverse movements in the value of an underlying asset can expose
an investor to losses. Derivative instruments may include elements of leverage
and, accordingly, the fluctuation of the value of the derivative instrument in
relation to the underlying asset may be magnified. The successful use of
derivative instruments depends upon a variety of factors, particularly the
investment manager's ability to predict movements of the securities, currencies,
and commodity markets, which requires different skills than predicting changes
in the prices of individual securities. There can be no assurance that any
particular strategy will succeed.
Another risk is the risk that a loss may be sustained as a result of the failure
of a counterparty to comply with the terms of a derivative instrument. The
counterparty risk for exchange-traded derivative instruments is generally less
than for privately-negotiated or OTC derivative instruments, since generally a
clearing agency, which is the issuer or counterparty to each exchange-traded
instrument, provides a guarantee of performance. For privately-negotiated
instruments, there is no similar clearing agency guarantee. In all transactions,
an investor will bear the risk that the counterparty will default, and this
could result in a loss of the expected benefit of the derivative transaction and
possibly other losses.
Statement of Additional Information - [Date], 2010 Page 25
When a derivative transaction is used to completely hedge another position,
changes in the market value of the combined position (the derivative instrument
plus the position being hedged) result from an imperfect correlation between the
price movements of the two instruments. With a perfect hedge, the value of the
combined position remains unchanged for any change in the price of the
underlying asset. With an imperfect hedge, the values of the derivative
instrument and its hedge are not perfectly correlated. For example, if the value
of a derivative instrument used in a short hedge (such as writing a call option,
buying a put option, or selling a futures contract) increased by less than the
decline in value of the hedged investment, the hedge would not be perfectly
correlated. Such a lack of correlation might occur due to factors unrelated to
the value of the investments being hedged, such as speculative or other
pressures on the markets in which these instruments are traded.
Derivatives also are subject to the risk that they cannot be sold, closed out,
or replaced quickly at or very close to their fundamental value. Generally,
exchange contracts are very liquid because the exchange clearinghouse is the
counterparty of every contract. OTC transactions are less liquid than exchange-
traded derivatives since they often can only be closed out with the other party
to the transaction.
Another risk is caused by the legal unenforcibility of a party's obligations
under the derivative. A counterparty that has lost money in a derivative
transaction may try to avoid payment by exploiting various legal uncertainties
about certain derivative products.
(See also Foreign Currency Transactions.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with derivative instruments include: Derivatives Risk
and Liquidity Risk.
EXCHANGE-TRADED FUNDS
Exchange-traded funds (ETFs) represent shares of ownership in funds, unit
investment trusts or depositary receipts. ETFs hold portfolios of securities
that are designed to replicate, as closely as possible before expenses, the
price and yield of a specified market index. The performance results of ETFs
will not replicate exactly the performance of the pertinent index due to
transaction and other expenses, including fees to service providers, borne by
ETFs. ETF shares are sold and redeemed at net asset value only in large blocks
called creation units and redemption units, respectively. The funds' ability to
redeem redemption units may be limited by the 1940 Act, which provides that ETFs
will not be obligated to redeem shares held by the funds in an amount exceeding
one percent of their total outstanding securities during any period of less than
30 days. There is a risk that Underlying ETFs in which a fund invests may
terminate due to extraordinary events. ETF shares also may be purchased and sold
in secondary market trading on national securities exchanges, which allows
investors to purchase and sell ETF shares at their market price throughout the
day.
Although one or more of the other risks described in this SAI may apply,
investments in ETFs involve the same risks associated with a direct investment
in the types of securities included in the indices the ETFs are designed to
replicate, including Market Risk. ETFs generally use a "passive" investment
strategy and will not attempt to take defensive positions in volatile or
declining markets. Shares of an ETF may trade at a market price that is less
than their net asset value and an active trading market in such shares may not
develop or continue and may be halted or interrupted due to actions by its
listing exchange, unusual market conditions or other reasons. For example, any
of the service providers to ETFs, such as the trustee or sponsor, may close or
otherwise fail to perform their obligations to the ETF, and the ETF may not be
able to find a substitute service provider. Also, ETFs may be dependent upon
licenses to use the various indices as a basis for determining their
compositions and/or otherwise to use certain trade names. If these licenses are
terminated, the ETFs may also terminate. In addition, an ETF may terminate if
its net assets fall below a certain amount. Although the funds believe that, in
the event of the termination of an ETF, they will be able to invest instead in
shares of an alternate ETF tracking the same market index or another index
covering the same general market, there can be no assurance that shares of an
alternate ETF would be available for investment at that time. There can be no
assurance an ETF's shares will continue to be listed on an active exchange.
Finally, there can be no assurance that the portfolio of securities purchased by
an ETF to replicate a particular index will replicate such index.
Generally, under the 1940 Act, a fund may not acquire shares of another
investment company (including ETFs) if, immediately after such acquisition, (i)
such fund would hold more than 3% of the other investment company's total
outstanding shares, (ii) if such fund's investment in securities of the other
investment company would be more than 5% of the value of the total assets of the
Fund, or (iii) if more than 10% of such fund's total assets would be invested in
investment companies. The SEC has granted orders for exemptive relief to certain
ETFs that permit investments in those ETFs by other investment companies (such
as the Seligman TargETFunds) in excess of these limits. The Seligman
TargETFunds' ability to invest in ETFs will be severely constrained unless ETFs
have received such an order from the SEC, and the ETF and the Seligman
TargETFunds take appropriate steps to comply with the relevant terms and
conditions of such orders.
Statement of Additional Information - [Date], 2010 Page 26
The Seligman TargETFunds will invest in an ETF only if the SEC has issued an
exemptive order to the ETF which permits investment companies, including the
Seligman TargETFFunds, to invest in ETFs beyond the limitations in the 1940 Act,
subject to certain terms and conditions, including that such investment
companies enter into an agreement with the ETF before investing in them in
excess of the 3% limitation in the 1940 Act. To the extent other ETFs obtain
similar exemptive relief from the SEC, the Seligman TargETFunds may seek to
qualify to invest in such other ETFs in excess of the 1940 Act limitations. Each
Seligman TargETFund may invest greater than 25% of its assets in any one ETF,
although no Seligman TargETFFund intends to invest greater than 40% of its
assets in any one ETF.
To the extent the 1940 Act limitations apply to an ETF, such limitations may
prevent Seligman TargETFund from allocating its investments in the manner that
the investment manager considers optimal, or cause the investment manager to
select a similar index or sector-based mutual fund or other investment company
(each, an "Other Investment Company"), or a basket of stocks (a group of
securities related by index or sector that are pre-selected by, and made
available through, certain brokers) ("Stock Baskets") providing similar exposure
as an alternative. The Seligman TargETFunds may also invest in Other Investment
Companies or Stock Baskets when the investment manager believes they represent
more attractive opportunities than similar ETFs held in the portfolio.
ETFs, because they invest in other securities (e.g., common stocks of small-,
mid- and large capitalization companies (U.S. and foreign, including, for
example, real estate investment trusts and emerging markets securities) and
fixed income securities), are subject to the risks of investment associated with
these and other types of investments, as described in this SAI.
FLOATING RATE LOANS
Most floating rate loans are acquired directly from the agent bank or from
another holder of the loan by assignment. Most such loans are secured, and most
impose restrictive covenants which must be met by the borrower. These loans are
typically made by a syndicate of banks and institutional investors, represented
by an agent bank which has negotiated and structured the loan and which is
responsible generally for collecting interest, principal, and other amounts from
the borrower on its own behalf and on behalf of the other lending institutions
in the syndicate, and for enforcing its and their other rights against the
borrower. Each of the lending institutions, including the agent bank, lends to
the borrower a portion of the total amount of the loan, and retains the
corresponding interest in the loan. Floating rate loans may include delayed draw
term loans and prefunded or synthetic letters of credit.
A fund's ability to receive payments of principal and interest and other amounts
in connection with loans held by it will depend primarily on the financial
condition of the borrower. The failure by the fund to receive scheduled interest
or principal payments on a loan would adversely affect the income of the fund
and would likely reduce the value of its assets, which would be reflected in a
reduction in the fund's net asset value. Banks and other lending institutions
generally perform a credit analysis of the borrower before originating a loan or
purchasing an assignment in a loan. In selecting the loans in which the fund
will invest, however, the investment manager will not rely on that credit
analysis of the agent bank, but will perform its own investment analysis of the
borrowers. The investment manager's analysis may include consideration of the
borrower's financial strength and managerial experience, debt coverage,
additional borrowing requirements or debt maturity schedules, changing financial
conditions, and responsiveness to changes in business conditions and interest
rates. The majority of loans the fund will invest in will be rated by one or
more of the nationally recognized rating agencies. Investments in loans may be
of any quality, including "distressed" loans, and will be subject to the fund's
credit quality policy.
Loans may be structured in different forms, including assignments and
participations. In an assignment, a fund purchases an assignment of a portion of
a lender's interest in a loan. In this case, the fund may be required generally
to rely upon the assigning bank to demand payment and enforce its rights against
the borrower, but would otherwise be entitled to all of such bank's rights in
the loan.
The borrower of a loan may, either at its own election or pursuant to terms of
the loan documentation, prepay amounts of the loan from time to time. There is
no assurance that a fund will be able to reinvest the proceeds of any loan
prepayment at the same interest rate or on the same terms as those of the
original loan.
Corporate loans in which a fund may purchase a loan assignment are made
generally to finance internal growth, mergers, acquisitions, recapitalizations,
stock repurchases, leveraged buy-outs, dividend payments to sponsors and other
corporate activities. The highly leveraged capital structure of certain
borrowers may make such loans especially vulnerable to adverse changes in
economic or market conditions. The fund may hold investments in loans for a very
short period of time when opportunities to resell the investments that the
investment manager believes are attractive arise.
Certain of the loans acquired by a fund may involve revolving credit facilities
under which a borrower may from time to time borrow and repay amounts up to the
maximum amount of the facility. In such cases, the fund would have an obligation
to advance its portion of such additional borrowings upon the terms specified in
the loan assignment. To the extent that the
Statement of Additional Information - [Date], 2010 Page 27
fund is committed to make additional loans under such an assignment, it will at
all times designate cash or securities in an amount sufficient to meet such
commitments.
Notwithstanding its intention in certain situations to not receive material,
non-public information with respect to its management of investments in floating
rate loans, the investment manager may from time to time come into possession of
material, non-public information about the issuers of loans that may be held in
a fund's portfolio. Possession of such information may in some instances occur
despite the investment manager's efforts to avoid such possession, but in other
instances the investment manager may choose to receive such information (for
example, in connection with participation in a creditors' committee with respect
to a financially distressed issuer). As, and to the extent, required by
applicable law, the investment manager's ability to trade in these loans for the
account of the fund could potentially be limited by its possession of such
information. Such limitations on the investment manager's ability to trade could
have an adverse effect on the fund by, for example, preventing the fund from
selling a loan that is experiencing a material decline in value. In some
instances, these trading restrictions could continue in effect for a substantial
period of time.
In some instances, other accounts managed by the investment manager may hold
other securities issued by borrowers whose floating rate loans may be held in a
fund's portfolio. These other securities may include, for example, debt
securities that are subordinate to the floating rate loans held in the fund's
portfolio, convertible debt or common or preferred equity securities. In certain
circumstances, such as if the credit quality of the issuer deteriorates, the
interests of holders of these other securities may conflict with the interests
of the holders of the issuer's floating rate loans. In such cases, the
investment manager may owe conflicting fiduciary duties to the fund and other
client accounts. The investment manager will endeavor to carry out its
obligations to all of its clients to the fullest extent possible, recognizing
that in some cases certain clients may achieve a lower economic return, as a
result of these conflicting client interests, than if the investment manager's
client accounts collectively held only a single category of the issuer's
securities.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with floating rate loans include: Credit Risk and
Prepayment and Extension Risk.
FOREIGN CURRENCY TRANSACTIONS
Investments in foreign securities usually involve currencies of foreign
countries. In addition, a fund may hold cash and cash equivalent investments in
foreign currencies. As a result, the value of a fund's assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
exchange rates and exchange control regulations. Also, a fund may incur costs in
connection with conversions between various currencies. Currency exchange rates
may fluctuate significantly over short periods of time causing a fund's NAV (Net
Asset Value) to fluctuate. Currency exchange rates are generally determined by
the forces of supply and demand in the foreign exchange markets, actual or
anticipated changes in interest rates, and other complex factors. Currency
exchange rates also can be affected by the intervention of U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments.
Spot Rates and Derivative Instruments. A fund may conduct its foreign currency
exchange transactions either at the spot (cash) rate prevailing in the foreign
currency exchange market or by entering into forward currency exchange contracts
(forward contracts). (See also Derivative Instruments.) These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such derivative instruments, a
fund could be disadvantaged by having to deal in the odd lot market for the
underlying foreign currencies at prices that are less favorable than for round
lots.
A fund may enter into forward contracts for a variety of reasons, but primarily
it will enter into such contracts for risk management (hedging) or for
investment purposes.
A fund may enter into forward contracts to settle a security transaction or
handle dividend and interest collection. When a fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency or has been
notified of a dividend or interest payment, it may desire to lock in the price
of the security or the amount of the payment, usually in U.S. dollars, although
it could desire to lock in the price of the security in another currency. By
entering into a forward contract, a fund would be able to protect itself against
a possible loss resulting from an adverse change in the relationship between
different currencies from the date the security is purchased or sold to the date
on which payment is made or received or when the dividend or interest is
actually received.
A fund may enter into forward contracts when management of the fund believes the
currency of a particular foreign country may decline in value relative to
another currency. When selling currencies forward in this fashion, a fund may
seek to hedge the value of foreign securities it holds against an adverse move
in exchange rates. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since the future
value of securities in foreign currencies more than likely will change between
the date the forward contract is entered into and the date it matures. The
Statement of Additional Information - [Date], 2010 Page 28
projection of short-term currency market movements is extremely difficult and
successful execution of a short-term hedging strategy is highly uncertain.
Unless specifically permitted, a fund would not enter into such forward
contracts or maintain a net exposure to such contracts when consummating the
contracts would obligate it to deliver an amount of foreign currency in excess
of the value of its securities or other assets denominated in that currency.
This method of protecting the value of the fund's securities against a decline
in the value of a currency does not eliminate fluctuations in the underlying
prices of the securities. It simply establishes a rate of exchange that can be
achieved at some point in time. Although forward contracts tend to minimize the
risk of loss due to a decline in value of hedged currency, they tend to limit
any potential gain that might result should the value of such currency increase.
A fund may also enter into forward contracts when its management believes the
currency of a particular country will increase in value relative to another
currency. A fund may buy currencies forward to gain exposure to a currency
without incurring the additional costs of purchasing securities denominated in
that currency.
Absolute Return Currency and Income Fund is designed to invest in a combination
of forward currency contracts and U.S. dollar-denominated market instruments in
an attempt to obtain an investment result that is substantially the same as a
direct investment in a foreign currency-denominated instrument. For example, the
combination of U.S. dollar-denominated instruments with long forward currency
exchange contracts creates a position economically equivalent to a position in
the foreign currency, in anticipation of an increase in the value of the foreign
currency against the U.S. dollar. Conversely, the combination of U.S. dollar-
denominated instruments with short forward currency exchange contracts is
economically equivalent to borrowing the foreign currency for delivery at a
specified date in the future, in anticipation of a decrease in the value of the
foreign currency against the U.S. dollar. This strategy may also be employed by
other funds. Unanticipated changes in the currency exchange results could result
in poorer performance for funds that enter into these types of transactions.
A fund may designate cash or securities in an amount equal to the value of the
fund's total assets committed to consummating forward contracts entered into
under the circumstance set forth above. If the value of the securities declines,
additional cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the fund's commitments
on such contracts.
At maturity of a forward contract, a fund may either deliver (if a contract to
sell) or take delivery of (if a contract to buy) the foreign currency or
terminate its contractual obligation by entering into an offsetting contract
with the same currency trader, the same maturity date, and covering the same
amount of foreign currency.
If a fund engages in an offsetting transaction, it would incur a gain or loss to
the extent there has been movement in forward contract prices. If a fund engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to buy or sell the foreign currency.
Although a fund values its assets each business day in terms of U.S. dollars, it
may not intend to convert its foreign currencies into U.S. dollars on a daily
basis. It would do so from time to time, and shareholders should be aware of
currency conversion costs. Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the difference (spread)
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to a fund at one rate, while
offering a lesser rate of exchange should a fund desire to resell that currency
to the dealer.
For Absolute Return Currency and Income Fund, it is possible, under certain
circumstances, including entering into forward currency contracts for investment
purposes, that the fund may have to limit or restructure its forward contract
currency transactions to qualify as a "regulated investment company" under the
Internal Revenue Code.
Options on Foreign Currencies. A fund may buy put and call options and write
covered call and cash-secured put options on foreign currencies for hedging
purposes and to gain exposure to foreign currencies. For example, a decline in
the dollar value of a foreign currency in which securities are denominated will
reduce the dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against the diminutions in the
value of securities, a fund may buy put options on the foreign currency. If the
value of the currency does decline, a fund would have the right to sell the
currency for a fixed amount in dollars and would offset, in whole or in part,
the adverse effect on its portfolio that otherwise would have resulted.
Conversely, where a change in the dollar value of a currency would increase the
cost of securities a fund plans to buy, or where a fund would benefit from
increased exposure to the currency, a fund may buy call options on the foreign
currency. The purchase of the options could offset, at least partially, the
changes in exchange rates.
As in the case of other types of options, however, the benefit to a fund derived
from purchases of foreign currency options would be reduced by the amount of the
premium and related transaction costs. In addition, where currency exchange
rates do
Statement of Additional Information - [Date], 2010 Page 29
not move in the direction or to the extent anticipated, a fund could sustain
losses on transactions in foreign currency options that would require it to
forego a portion or all of the benefits of advantageous changes in rates.
A fund may write options on foreign currencies for the same types of purposes.
For example, when a fund anticipates a decline in the dollar value of foreign-
denominated securities due to adverse fluctuations in exchange rates it could,
instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option would most likely not be
exercised and the diminution in value of securities would be fully or partially
offset by the amount of the premium received.
Similarly, instead of purchasing a call option when a foreign currency is
expected to appreciate, a fund could write a put option on the relevant
currency. If rates move in the manner projected, the put option would expire
unexercised and allow the fund to hedge increased cost up to the amount of the
premium.
As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the fund would be required to buy or sell
the underlying currency at a loss that may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the fund also may
be required to forego all or a portion of the benefits that might otherwise have
been obtained from favorable movements on exchange rates.
All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if a fund holds currency sufficient to cover the
option or has an absolute and immediate right to acquire that currency without
additional cash consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An option writer
could lose amounts substantially in excess of its initial investments, due to
the margin and collateral requirements associated with such positions.
Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an over-the-
counter trading environment, many of the protections afforded to exchange
participants will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an
unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost.
Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the Options Clearing Corporation (OCC), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting a fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in certain foreign countries
for that purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
Foreign Currency Futures and Related Options. A fund may enter into currency
futures contracts to buy or sell currencies. It also may buy put and call
options and write covered call and cash-secured put options on currency futures.
Currency futures contracts are similar to currency forward contracts, except
that they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures call
for payment of delivery in U.S. dollars. A fund may use currency futures for the
same purposes as currency forward contracts, subject to CFTC limitations.
Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the value of
the fund's investments. A currency hedge, for example, should protect a Yen-
denominated bond against a decline in the Yen, but will not protect a fund
against price decline if the issuer's creditworthiness deteriorates. Because the
value of a fund's investments denominated in foreign currency will change in
response to many factors other than exchange rates, it may not be possible to
match the amount of a forward contract to the value of a fund's investments
denominated in that currency over time.
Statement of Additional Information - [Date], 2010 Page 30
A fund will hold securities or other options or futures positions whose values
are expected to offset its obligations. The fund would not enter into an option
or futures position that exposes the fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or (ii) cash,
receivables and short-term debt securities with a value sufficient to cover its
potential obligations. (See also Derivative Instruments and Foreign Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with foreign currency transactions include: Derivatives
Risk, Interest Rate Risk, and Liquidity Risk.
FOREIGN SECURITIES
Foreign securities, foreign currencies, and securities issued by U.S. entities
with substantial foreign operations involve special risks, including those set
forth below, which are not typically associated with investing in U.S.
securities. Foreign companies are not generally subject to uniform accounting,
auditing, and financial reporting standards comparable to those applicable to
domestic companies. Additionally, many foreign stock markets, while growing in
volume of trading activity, have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of domestic companies. Similarly, volume and
liquidity in most foreign bond markets are less than the volume and liquidity in
the U.S. and, at times, volatility of price can be greater than in the U.S.
Further, foreign markets have different clearance, settlement, registration, and
communication procedures and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in such
procedures could result in temporary periods when assets are uninvested and no
return is earned on them. The inability of an investor to make intended security
purchases due to such problems could cause the investor to miss attractive
investment opportunities.
Payment for securities without delivery may be required in certain foreign
markets and, when participating in new issues, some foreign countries require
payment to be made in advance of issuance (at the time of issuance, the market
value of the security may be more or less than the purchase price). Some foreign
markets also have compulsory depositories (i.e., an investor does not have a
choice as to where the securities are held). Fixed commissions on some foreign
stock exchanges are generally higher than negotiated commissions on U.S.
exchanges. Further, an investor may encounter difficulties or be unable to
pursue legal remedies and obtain judgments in foreign courts. There is generally
less government supervision and regulation of business and industry practices,
stock exchanges, brokers, and listed companies than in the U.S. It may be more
difficult for an investor's agents to keep currently informed about corporate
actions such as stock dividends or other matters that may affect the prices of
portfolio securities. Communications between the U.S. and foreign countries may
be less reliable than within the U.S., thus increasing the risk of delays or
loss of certificates for portfolio securities. In addition, with respect to
certain foreign countries, there is the possibility of nationalization,
expropriation, the imposition of additional withholding or confiscatory taxes,
political, social, or economic instability, diplomatic developments that could
affect investments in those countries, or other unforeseen actions by regulatory
bodies (such as changes to settlement or custody procedures).
The risks of foreign investing may be magnified for investments in emerging
markets, which may have relatively unstable governments, economies based on only
a few industries, and securities markets that trade a small number of
securities.
The introduction of a single currency, the euro, on Jan. 1, 1999 for
participating European nations in the Economic and Monetary Union (EU) presents
unique uncertainties, including the legal treatment of certain outstanding
financial contracts after Jan. 1, 1999 that refer to existing currencies rather
than the euro; the establishment and maintenance of exchange rates; the
fluctuation of the euro relative to non-euro currencies; whether the interest
rate, tax or labor regimes of European countries participating in the euro will
converge over time; and whether the admission of other countries such as Poland,
Latvia, and Lithuania as members of the EU may have an impact on the euro.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with foreign securities include: Foreign/Emerging
Markets Risk and Issuer Risk.
FUNDING AGREEMENTS
A fund may invest in funding agreements issued by domestic insurance companies.
Funding agreements are short-term, privately placed, debt obligations of
insurance companies that offer a fixed- or floating-rate of interest. These
investments are not readily marketable and therefore are considered to be
illiquid securities. (See also Illiquid and Restricted Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with funding agreements include: Credit Risk and
Liquidity Risk.
HIGH-YIELD DEBT SECURITIES (JUNK BONDS)
High yield (high-risk) debt securities are sometimes referred to as junk bonds.
They are non-investment grade (lower quality) securities that have speculative
characteristics. Lower quality securities, while generally offering higher
yields than
Statement of Additional Information - [Date], 2010 Page 31
investment grade securities with similar maturities, involve greater risks,
including the possibility of default or bankruptcy. They are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. The special risk considerations in connection with
investments in these securities are discussed below.
See Appendix A for a discussion of securities ratings. (See also Debt
Obligations.)
All fixed rate interest-bearing securities typically experience appreciation
when interest rates decline and depreciation when interest rates rise. The
market values of lower-quality and comparable unrated securities tend to reflect
individual corporate developments to a greater extent than do higher rated
securities, which react primarily to fluctuations in the general level of
interest rates. Lower-quality and comparable unrated securities also tend to be
more sensitive to economic conditions than are higher-rated securities. As a
result, they generally involve more credit risks than securities in the higher-
rated categories. During an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of lower-quality securities may
experience financial stress and may not have sufficient revenues to meet their
payment obligations. The issuer's ability to service its debt obligations also
may be adversely affected by specific corporate developments, the issuer's
inability to meet specific projected business forecasts, or the unavailability
of additional financing. The risk of loss due to default by an issuer of these
securities is significantly greater than a default by issuers of higher-rated
securities because such securities are generally unsecured and are often
subordinated to other creditors. Further, if the issuer of a lower quality
security defaulted, an investor might incur additional expenses to seek
recovery.
Credit ratings issued by credit rating agencies are designed to evaluate the
safety of principal and interest payments of rated securities. They do not,
however, evaluate the market value risk of lower-quality securities and,
therefore, may not fully reflect the true risks of an investment. In addition,
credit rating agencies may or may not make timely changes in a rating to reflect
changes in the economy or in the condition of the issuer that affect the market
value of the securities. Consequently, credit ratings are used only as a
preliminary indicator of investment quality.
An investor may have difficulty disposing of certain lower-quality and
comparable unrated securities because there may be a thin trading market for
such securities. Because not all dealers maintain markets in all lower quality
and comparable unrated securities, there is no established retail secondary
market for many of these securities. To the extent a secondary trading market
does exist, it is generally not as liquid as the secondary market for higher-
rated securities. The lack of a liquid secondary market may have an adverse
impact on the market price of the security. The lack of a liquid secondary
market for certain securities also may make it more difficult for an investor to
obtain accurate market quotations. Market quotations are generally available on
many lower-quality and comparable unrated issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers or prices
for actual sales.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with high-yield debt securities include: Credit Risk,
Interest Rate Risk, and Prepayment and Extension Risk.
ILLIQUID AND RESTRICTED SECURITIES
Illiquid securities are securities that are not readily marketable. These
securities may include, but are not limited to, certain securities that are
subject to legal or contractual restrictions on resale, certain repurchase
agreements, and derivative instruments. To the extent a fund invests in illiquid
or restricted securities, it may encounter difficulty in determining a market
value for the securities. Disposing of illiquid or restricted securities may
involve time-consuming negotiations and legal expense, and it may be difficult
or impossible for a fund to sell the investment promptly and at an acceptable
price.
In determining the liquidity of all securities and derivatives, such as Rule
144A securities, which are unregistered securities offered to qualified
institutional buyers, and interest-only and principal-only fixed mortgage-backed
securities (IOs and POs) issued by the U.S. government or its agencies and
instrumentalities the investment manager, under guidelines established by the
Board, will consider any relevant factors including the frequency of trades, the
number of dealers willing to purchase or sell the security and the nature of
marketplace trades.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with illiquid and restricted securities include:
Liquidity Risk.
INDEXED SECURITIES
The value of indexed securities is linked to currencies, interest rates,
commodities, indexes, or other financial indicators. Most indexed securities are
short- to intermediate-term fixed income securities whose values at maturity or
interest rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be more volatile than the
underlying instrument itself and they may be less liquid than the securities
represented by the index. (See also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with indexed securities include: Liquidity Risk and
Market Risk.
Statement of Additional Information - [Date], 2010 Page 32
INFLATION PROTECTED SECURITIES
Inflation is a general rise in prices of goods and services. Inflation erodes
the purchasing power of an investor's assets. For example, if an investment
provides a total return of 7% in a given year and inflation is 3% during that
period, the inflation-adjusted, or real, return is 4%. Inflation-protected
securities are debt securities whose principal and/or interest payments are
adjusted for inflation, unlike debt securities that make fixed principal and
interest payments. One type of inflation-protected debt security is issued by
the U.S. Treasury. The principal of these securities is adjusted for inflation
as indicated by the Consumer Price Index for Urban Consumers (CPI) and interest
is paid on the adjusted amount. The CPI is a measurement of changes in the cost
of living, made up of components such as housing, food, transportation and
energy.
If the CPI falls, the principal value of inflation-protected securities will be
adjusted downward, and consequently the interest payable on these securities
(calculated with respect to a smaller principal amount) will be reduced.
Conversely, if the CPI rises, the principal value of inflation-protected
securities will be adjusted upward, and consequently the interest payable on
these securities will be increased. Repayment of the original bond principal
upon maturity is guaranteed in the case of U.S. Treasury inflation-protected
securities, even during a period of deflation. However, the current market value
of the inflation-protected securities is not guaranteed and will fluctuate.
Other inflation-indexed securities include inflation-related bonds, which may or
may not provide a similar guarantee. If a guarantee of principal is not
provided, the adjusted principal value of the bond repaid at maturity may be
less than the original principal.
Other issuers of inflation-protected debt securities include other U.S.
government agencies or instrumentalities, corporations and foreign governments.
There can be no assurance that the CPI or any foreign inflation index will
accurately measure the real rate of inflation in the prices of goods and
services. Moreover, there can be no assurance that the rate of inflation in a
foreign country will be correlated to the rate of inflation in the United
States.
If interest rates rise due to reasons other than inflation (for example, due to
changes in currency exchange rates), investors in these securities may not be
protected to the extent that the increase is not reflected in the bond's
inflation measure.
Any increase in principal for an inflation-protected security resulting from
inflation adjustments is considered by IRS regulations to be taxable income in
the year it occurs. For direct holders of an inflation-protected security, this
means that taxes must be paid on principal adjustments even though these amounts
are not received until the bond matures. By contrast, a fund holding these
securities distributes both interest income and the income attributable to
principal adjustments in the form of cash or reinvested shares, which are
taxable to shareholders.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with inflation- protected securities include: Interest
Rate Risk and Market Risk.
INITIAL PUBLIC OFFERINGS (IPOS)
Companies issuing IPOs generally have limited operating histories, and their
prospects for future profitability are uncertain. These companies often are
engaged in new and evolving businesses and are particularly vulnerable to
competition and to changes in technology, markets and economic conditions. They
may be dependent on certain key managers and third parties, need more personnel
and other resources to manage growth and require significant additional capital.
They may also be dependent on limited product lines and uncertain property
rights and need regulatory approvals. Funds that invest in IPOs can be affected
by sales of additional shares and by concentration of control in existing
management and principal shareholders. Stock prices of IPOs can also be highly
unstable, due to the absence of a prior public market, the small number of
shares available for trading and limited investor information. Most IPOs involve
a high degree of risk not normally associated with offerings of more seasoned
companies.
Although one or more risks described in this SAI may apply, the largest risks
associated with IPOs include: Small and Mid-Sized Company Risk and Initial
Public Offering (IPO) Risk.
INVERSE FLOATERS
Inverse floaters or inverse floating rate securities are a type of derivative
long-term fixed income obligation with a floating or variable interest rate that
moves in the opposite direction of short-term interest rates. As short-term
interest rates go down, the holders of the inverse floaters receive more income
and, as short-term interest rates go up, the holders of the inverse floaters
receive less income. As with all long-term fixed income securities, the price of
the inverse floater moves inversely with long-term interest rates; as long-term
interest rates go down, the price of the inverse floater moves up and, when
long-term interest rates go up, the price of the inverse floater moves down.
While inverse floater securities tend to provide more income than similar term
and credit quality fixed-rate bonds, they also exhibit greater volatility in
price movement (both up and down).
In the municipal market an inverse floater is typically created when the owner
of a municipal fixed rate bond transfers that bond to a trust in exchange for
cash and a residual interest in the trust's assets and cash flows (inverse
floater certificates).
Statement of Additional Information - [Date], 2010 Page 33
The trust funds the purchase of the bond by issuing two classes of certificates:
short-term floating rate notes (typically sold to third parties) and the inverse
floaters (also known as residual certificates). No additional income beyond that
provided by the trust's underlying bond is created; rather, that income is
merely divided-up between the two classes of certificates. The holder of the
inverse floating rate securities typically has the right to (1) cause the
holders of the short-term floating rate notes to tender their notes at par
($100) and (2) to return the inverse floaters and withdraw the underlying bonds,
thereby collapsing the trust. (See also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with transactions in inverse floaters include: Interest
Rate Risk, Credit Risk, Liquidity Risk and Market Risk.
INVESTMENT COMPANIES
Investing in securities issued by registered and unregistered investment
companies may involve the duplication of advisory fees and certain other
expenses.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with the securities of other investment companies
include: Market Risk.
LENDING OF PORTFOLIO SECURITIES
To generate additional income, a fund may lend up to one-third of the value of
its total assets to broker-dealers, banks or other institutional borrowers of
securities. JPMorgan Chase Bank, N.A. serves as lending agent (the Lending
Agent) to the funds pursuant to a securities lending agreement (the Securities
Lending Agreement) approved by the Board.
Under the Securities Lending Agreement, the Lending Agent loans securities to
approved borrowers pursuant to borrower agreements in exchange for collateral
equal to at least 100% of the market value of the loaned securities. Collateral
may consist of cash, securities issued by the U.S. government or its agencies or
instrumentalities (collectively, "U.S. government securities") or such other
collateral as may be approved by the Board. For loans secured by cash, the fund
retains the interest earned on cash collateral investments, but is required to
pay the borrower a rebate for the use of the cash collateral. For loans secured
by U.S. government securities, the borrower pays a borrower fee to the Lending
Agent on behalf of the fund. If the market value of the loaned securities goes
up, the Lending Agent will request additional collateral from the borrower. If
the market value of the loaned securities goes down, the borrower may request
that some collateral be returned. During the existence of the loan, the lender
will receive from the borrower amounts equivalent to any dividends, interest or
other distributions on the loaned securities, as well as interest on such
amounts.
Loans are subject to termination by a fund or a borrower at any time. A fund may
choose to terminate a loan in order to vote in a proxy solicitation if the fund
has knowledge of a material event to be voted on that would affect the fund's
investment in the loaned security.
Securities lending involves counterparty risk, including the risk that a
borrower may not provide additional collateral when required or return the
loaned securities in a timely manner. Counterparty risk also includes a
potential loss of rights in the collateral if the borrower or the Lending Agent
defaults or fails financially. This risk is increased if a fund's loans are
concentrated with a single or limited number of borrowers. There are no limits
on the number of borrowers a fund may use and a fund may lend securities to only
one or a small group of borrowers. Funds participating in securities lending
also bear the risk of loss in connection with investments of cash collateral
received from the borrowers. Cash collateral is invested in accordance with
investment guidelines contained in the Securities Lending Agreement and approved
by the Board. To the extent that the value or return of a fund's investments of
the cash collateral declines below the amount owed to a borrower, a fund may
incur losses that exceed the amount it earned on lending the security. The
Lending Agent will indemnify a fund from losses resulting from a borrower's
failure to return a loaned security when due, but such indemnification does not
extend to losses associated with declines in the value of cash collateral
investments.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with the lending of portfolio securities include:
Credit Risk.
LOAN PARTICIPATIONS
Loans, loan participations, and interests in securitized loan pools are
interests in amounts owed by a corporate, governmental, or other borrower to a
lender or consortium of lenders (typically banks, insurance companies,
investment banks, government agencies, or international agencies). Loans involve
a risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to an investor in the event of fraud or misrepresentation.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with loan participations include: Credit Risk.
Statement of Additional Information - [Date], 2010 Page 34
MORTGAGE- AND ASSET-BACKED SECURITIES
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 (CMOs). These securities may be issued or guaranteed by
U.S. government agencies or instrumentalities (see also Agency and Government
Securities), or by private issuers, generally originators and investors in
mortgage loans, including savings associations, mortgage bankers, commercial
banks, investment bankers, and special purpose entities. Mortgage-backed
securities issued by private lenders may be supported by pools of mortgage loans
or other mortgage-backed securities that are guaranteed, directly or indirectly,
by the U.S. government or one of its agencies or instrumentalities, or they may
be issued without any governmental guarantee of the underlying mortgage assets
but with some form of non-governmental credit enhancement. Commercial mortgage-
backed securities (CMBS) are a specific type of mortgage-backed security
collateralized by a pool of mortgages on commercial real estate.
Stripped mortgage-backed securities are a type of mortgage-backed security that
receive differing proportions of the interest and principal payments from the
underlying assets. Generally, there are two classes of stripped mortgage-backed
securities: Interest Only (IO) and Principal Only (PO). IOs entitle the holder
to receive distributions consisting of all or a portion of the interest on the
underlying pool of mortgage loans or mortgage-backed securities. POs entitle the
holder to receive distributions consisting of all or a portion of the principal
of the underlying pool of mortgage loans or mortgage-backed securities. The cash
flows and yields on IOs and POs are extremely sensitive to the rate of principal
payments (including prepayments) on the underlying mortgage loans or mortgage-
backed securities. A rapid rate of principal payments may adversely affect the
yield to maturity of IOs. A slow rate of principal payments may adversely affect
the yield to maturity of POs. If prepayments of principal are greater than
anticipated, an investor in IOs may incur substantial losses. If prepayments of
principal are slower than anticipated, the yield on a PO will be affected more
severely than would be the case with a traditional mortgage-backed security.
CMOs are hybrid mortgage-related instruments secured by pools of mortgage loans
or other mortgage-related securities, such as mortgage pass through securities
or stripped mortgage-backed securities. CMOs may be structured into multiple
classes, often referred to as "tranches," with each class bearing a different
stated maturity and entitled to a different schedule for payments of principal
and interest, including prepayments. Principal prepayments on collateral
underlying a CMO may cause it to be retired substantially earlier than its
stated maturity. The yield characteristics of mortgage-backed securities differ
from those of other debt securities. Among the differences are that interest and
principal payments are made more frequently on mortgage-backed securities,
usually monthly, and principal may be repaid at any time. These factors may
reduce the expected yield.
Asset-backed securities have structural characteristics similar to mortgage-
backed securities. Asset-backed debt obligations represent direct or indirect
participation in, or secured by and payable from, assets such as motor vehicle
installment sales contracts, other installment loan contracts, home equity
loans, leases of various types of property, and receivables from credit card or
other revolving credit arrangements. The credit quality of most asset-backed
securities depends primarily on the credit quality of the assets underlying such
securities, how well the entity issuing the security is insulated from the
credit risk of the originator or any other affiliated entities, and the amount
and quality of any credit enhancement of the securities. Payments or
distributions of principal and interest on asset- backed debt obligations may be
supported by non-governmental credit enhancements including letters of credit,
reserve funds, overcollateralization, and guarantees by third parties. The
market for privately issued asset-backed debt obligations is smaller and less
liquid than the market for government sponsored mortgage-backed securities. (See
also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with mortgage and asset-backed securities include:
Credit Risk, Interest Rate Risk, Liquidity Risk, and Prepayment and Extension
Risk.
MORTGAGE DOLLAR ROLLS
Mortgage dollar rolls are investments in which an investor sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
purchase substantially similar securities on a specified future date. While an
investor foregoes principal and interest paid on the mortgage-backed securities
during the roll period, the investor is compensated by the difference between
the current sales price and the lower price for the future purchase as well as
by any interest earned on the proceeds of the initial sale. The investor also
could be compensated through the receipt of fee income equivalent to a lower
forward price.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with mortgage dollar rolls include: Credit Risk and
Interest Rate Risk.
MUNICIPAL OBLIGATIONS
Municipal obligations include debt obligations issued by or on behalf of states,
territories, possessions, or sovereign nations within the territorial boundaries
of the United States (including the District of Columbia, Guam and Puerto Rico).
The
Statement of Additional Information - [Date], 2010 Page 35
interest on these obligations is generally exempt from federal income tax.
Municipal obligations are generally classified as either "general obligations"
or "revenue obligations."
General obligation bonds are secured by the issuer's pledge of its full faith,
credit, and taxing power for the payment of interest and principal. Revenue
bonds are payable only from the revenues derived from a project or facility or
from the proceeds of a specified revenue source. Industrial development bonds
are generally revenue bonds secured by payments from and the credit of private
users. Municipal notes are issued to meet the short-term funding requirements of
state, regional, and local governments. Municipal notes include tax anticipation
notes, bond anticipation notes, revenue anticipation notes, tax and revenue
anticipation notes, construction loan notes, short-term discount notes, tax-
exempt commercial paper, demand notes, and similar instruments.
Municipal lease obligations may take the form of a lease, an installment
purchase, or a conditional sales contract. They are issued by state and local
governments and authorities to acquire land, equipment, and facilities. An
investor may purchase these obligations directly, or it may purchase
participation interests in such obligations. Municipal leases may be subject to
greater risks than general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must meet in order
to issue municipal obligations. Municipal leases may contain a covenant by the
state or municipality to budget for and make payments due under the obligation.
Certain municipal leases may, however, provide that the issuer is not obligated
to make payments on the obligation in future years unless funds have been
appropriated for this purpose each year.
Yields on municipal bonds and notes depend on a variety of factors, including
money market conditions, municipal bond market conditions, the size of a
particular offering, the maturity of the obligation, and the rating of the
issue. The municipal bond market has a large number of different issuers, many
having smaller sized bond issues, and a wide choice of different maturities
within each issue. For these reasons, most municipal bonds do not trade on a
daily basis and many trade only rarely. Because many of these bonds trade
infrequently, the spread between the bid and offer may be wider and the time
needed to develop a bid or an offer may be longer than other security markets.
See Appendix A for a discussion of securities ratings. (See also Debt
Obligations.)
Taxable Municipal Obligations. There is another type of municipal obligation
that is subject to federal income tax for a variety of reasons. These municipal
obligations do not qualify for the federal income exemption because (a) they did
not receive necessary authorization for tax-exempt treatment from state or local
government authorities, (b) they exceed certain regulatory limitations on the
cost of issuance for tax-exempt financing or (c) they finance public or private
activities that do not qualify for the federal income tax exemption. These non-
qualifying activities might include, for example, certain types of multi-family
housing, certain professional and local sports facilities, refinancing of
certain municipal debt, and borrowing to replenish a municipality's underfunded
pension plan.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with municipal obligations include: Credit Risk,
Inflation Risk, Interest Rate Risk, and Market Risk.
PREFERRED STOCK
Preferred stock is a type of stock that pays dividends at a specified rate and
that has preference over common stock in the payment of dividends and the
liquidation of assets. Preferred stock does not ordinarily carry voting rights.
The price of a preferred stock is generally determined by earnings, type of
products or services, projected growth rates, experience of management,
liquidity, and general market conditions of the markets on which the stock
trades.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with preferred stock include: Issuer Risk and Market
Risk.
REAL ESTATE INVESTMENT TRUSTS
Real estate investment trusts (REITs) are pooled investment vehicles that manage
a portfolio of real estate or real estate related loans to earn profits for
their shareholders. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property, such as shopping centers,
nursing homes, office buildings, apartment complexes, and hotels, and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. REITs can be subject to extreme
volatility due to fluctuations in the demand for real estate, changes in
interest rates, and adverse economic conditions. Similar to investment
companies, REITs are not taxed on income distributed to shareholders provided
they comply with certain requirements under the tax law. The failure of a REIT
to continue to qualify as a REIT for tax purposes can materially affect its
value. A fund will indirectly bear its proportionate share of any expenses paid
by a REIT in which it invests.
Statement of Additional Information - [Date], 2010 Page 36
REITs often do not provide complete tax information until after the calendar
year-end. Consequently, because of the delay, it may be necessary for a fund
investing in REITs to request permission to extend the deadline for issuance of
Forms 1099-DIV beyond January 31. In the alternative, amended Forms 1099-DIV may
be sent.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with REITs include: Interest Rate Risk, Issuer Risk and
Market Risk.
REPURCHASE AGREEMENTS
Repurchase agreements may be entered into with certain banks or non-bank
dealers. In a repurchase agreement, the purchaser buys a security at one price,
and at the time of sale, the seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually within seven days). The repurchase
agreement determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve certain risks in the event of a
default or insolvency of the other party to the agreement, including possible
delays or restrictions upon the purchaser's ability to dispose of the underlying
securities.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with repurchase agreements include: Credit Risk.
REVERSE REPURCHASE AGREEMENTS
In a reverse repurchase agreement, an investor sells a security and enters into
an agreement to repurchase the security at a specified future date and price.
The investor generally retains the right to interest and principal payments on
the security. Since the investor receives cash upon entering into a reverse
repurchase agreement, it may be considered a borrowing. (See also Derivative
Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with reverse repurchase agreements include: Credit Risk
and Interest Rate Risk.
SHORT SALES
In short-selling transactions, a fund sells a security it does not own in
anticipation of a decline in the market value of the security. To complete the
transaction, a fund must borrow the security to make delivery to the buyer. A
fund is obligated to replace the security borrowed by purchasing it at the
market price at the time of replacement. The price at such time may be more or
less than the price at which the security was sold by a fund, which may result
in a loss or gain, respectively. Unlike taking a long position in a security by
purchasing the security, where potential losses are limited to the purchase
price, short sales have no cap on maximum losses, and gains are limited to the
price of the security at the time of the short sale.
Short sales of forward commitments and derivatives do not involve borrowing a
security. These types of short sales may include futures, options, contracts for
differences, forward contracts on financial instruments and options such as
contracts, credit-linked instruments, and swap contracts.
A fund may not always be able to borrow a security it wants to sell short. A
fund also may be unable to close out an established short position at an
acceptable price and may have to sell long positions at disadvantageous times to
cover its short positions. The value of your investment in a fund will fluctuate
in response to the movements in the market. Fund performance also will depend on
the effectiveness of the investment manager's research and the management team's
investment decisions.
Short sales also involve other costs. A fund must repay to the lender an amount
equal to any dividends or interest that accrues while the loan is outstanding.
To borrow the security, a fund may be required to pay a premium. A fund also
will incur truncation costs in effecting short sales. The amount of any ultimate
gain for a fund resulting from a short sale will be decreased and the amount of
any ultimate loss will be increased, by the amount of premiums, interest or
expenses a fund may be required to pay in connection with the short sale. Until
a fund closes the short position, it will earmark and reserve fund assets, in
cash or liquid securities to offset a portion of the leverage risk. Realized
gains from short sales are typically treated as short-term gains/losses.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with short sales include: Market Risk and Short Sales
Risk.
SOVEREIGN DEBT
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by a variety of factors, including its cash
flow situation, the extent of its reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's
Statement of Additional Information - [Date], 2010 Page 37
policy toward international lenders, and the political constraints to which a
sovereign debtor may be subject. (See also Foreign Securities.)
With respect to sovereign debt of emerging market issuers, investors should be
aware that certain emerging market countries are among the largest debtors to
commercial banks and foreign governments. At times, certain emerging market
countries have declared moratoria on the payment of principal and interest on
external debt.
Certain emerging market countries have experienced difficulty in servicing their
sovereign debt on a timely basis that led to defaults and the restructuring of
certain indebtedness.
Sovereign debt includes Brady Bonds, which are securities issued under the
framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external commercial bank indebtedness.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with sovereign debt include: Credit Risk and
Foreign/Emerging Markets Risk.
STRUCTURED INVESTMENTS
A structured investment is a security whose return is tied to an underlying
index or to some other security or pool of assets. Structured investments
generally are individually negotiated agreements and may be traded over-the-
counter. Structured investments are created and operated to restructure the
investment characteristics of the underlying security. This restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, of specified instruments, such as commercial bank loans, and the issuance
by that entity of one or more classes of debt obligations ("structured
securities") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured securities to create securities with different
investment characteristics, such as varying maturities, payment priorities, and
interest rate provisions. The extent of the payments made with respect to
structured securities is dependent on the extent of the cash flow on the
underlying instruments. Because structured securities typically involve no
credit enhancement, their credit risk generally will be equivalent to that of
the underlying instruments. Structured securities are often offered in different
classes. As a result a given class of a structured security may be either
subordinated or unsubordinated to the right of payment of another class.
Subordinated structured securities typically have higher yields and present
greater risks than unsubordinated structured securities. Structured securities
are typically sold in private placement transactions, and at any given time
there may be no active trading market for a particular structured security.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with structured investments include: Credit Risk and
Liquidity Risk.
SWAP AGREEMENTS
Swap agreements are typically individually negotiated agreements that obligate
two parties to exchange payments based on a reference to a specified asset,
reference rate or index. Swap agreements will tend to shift a party's investment
exposure from one type of investment to another. A swap agreement can increase
or decrease the volatility of a fund's investments and its net asset value.
Swap agreements are traded in the over-the-counter market and may be considered
to be illiquid. Swap agreements entail the risk that a party will default on its
payment obligations. A fund will enter into a swap agreement only if the claims-
paying ability of the other party or its guarantor is considered to be
investment grade by the investment manager. Generally, the unsecured senior debt
or the claims-paying ability of the other party or its guarantor must be rated
in one of the three highest rating categories of at least one Nationally
Recognized Statistical Rating Organization (NRSRO) at the time of entering into
the transaction. If there is a default by the other party to such a transaction,
a fund will have to rely on its contractual remedies (which may be limited by
bankruptcy, insolvency or similar laws) pursuant to the agreements related to
the transaction. In certain circumstances, a fund may seek to minimize
counterparty risk by requiring the counterparty to post collateral.
Swap agreements are usually entered into without an upfront payment because the
value of each party's position is the same. The market values of the underlying
commitments will change over time resulting in one of the commitments being
worth more than the other and the net market value creating a risk exposure for
one counterparty or the other.
Interest Rate Swaps. Interest rate swap agreements are often used to obtain or
preserve a desired return or spread at a lower cost than through a direct
investment in an instrument that yields the desired return or spread. They are
financial instruments that involve the exchange of one type of interest rate
cash flow for another type of interest rate cash flow on specified dates in the
future. In a standard interest rate swap transaction, two parties agree to
exchange their respective commitments to pay fixed or floating rates on a
predetermined specified (notional) amount. The swap agreement notional amount is
the
Statement of Additional Information - [Date], 2010 Page 38
predetermined basis for calculating the obligations that the swap counterparties
have agreed to exchange. Under most swap agreements, the obligations of the
parties are exchanged on a net basis. The two payment streams are netted out,
with each party receiving or paying, as the case may be, only the net amount of
the two payments. Interest rate swaps can be based on various measures of
interest rates, including LIBOR, swap rates, treasury rates and other foreign
interest rates.
Cross Currency Swaps. Cross currency swaps are similar to interest rate swaps,
except that they involve multiple currencies. A fund may enter into a currency
swap when it has exposure to one currency and desires exposure to a different
currency. Typically the interest rates that determine the currency swap payments
are fixed, although occasionally one or both parties may pay a floating rate of
interest. Unlike an interest rate swap, however, the principal amounts are
exchanged at the beginning of the contract and returned at the end of the
contract. In addition to paying and receiving amounts at the beginning and
termination of the agreements, both sides will also have to pay in full
periodically based upon the currency they have borrowed. Change in foreign
exchange rates and changes in interest rates, as described above, may negatively
affect currency swaps.
Total Return Swaps. Total return swaps are contracts in which one party agrees
to make periodic payments based on the change in market value of the underlying
assets, which may include a specified security, basket of securities or security
indexes during the specified period, in return for periodic payments based on a
fixed or variable interest rate of the total return from other underlying
assets. Total return swap agreements may be used to obtain exposure to a
security or market without owning or taking physical custody of such security or
market. For example, CMBS total return swaps are bilateral financial contracts
designed to replicate synthetically the total returns of commercial mortgage-
backed securities. In a typical total return equity swap, payments made by the
fund or the counterparty are based on the total return of a particular reference
asset or assets (such as an equity security, a combination of such securities,
or an index). That is, one party agrees to pay another party the return on a
stock, basket of stocks, or stock index in return for a specified interest rate.
By entering into an equity index swap, for example, the index receiver can gain
exposure to stocks making up the index of securities without actually purchasing
those stocks. Total return swaps involve not only the risk associated with the
investment in the underlying securities, but also the risk of the counterparty
not fulfilling its obligations under the agreement.
Swaption Transaction. A swaption is an option on a swap agreement and a contract
that gives a counterparty the right (but not the obligation) to enter into a new
swap agreement or to shorten, extend, cancel or otherwise modify an existing
swap agreement, at some designated future time on specified terms, in return for
payment of the purchase price (the "premium") of the option. The fund may write
(sell) and purchase put and call swaptions to the same extent it may make use of
standard options on securities or other instruments. The writer of the contract
receives the premium and bears the risk of unfavorable changes in the market
value on the underlying swap agreement.
Swaptions can be bundled and sold as a package. These are commonly called
interest rate caps, floors and collars. In interest rate cap transactions, in
return for a premium, one party agrees to make payments to the other to the
extent that interest rates exceed a specified rate, or cap. Interest rate floor
transactions require one party, in exchange for a premium to agree to make
payments to the other to the extent that interest rates fall below a specified
level, or floor. In interest rate collar transactions, one party sells a cap and
purchases a floor, or vice versa, in an attempt to protect itself against
interest rate movements exceeding given minimum or maximum levels or collar
amounts.
Credit Default Swaps. Credit default swaps are contracts in which third party
credit risk is transferred from one party to another party by one party, the
protection buyer, making payments to the other party, the protection seller, in
return for the ability of the protection buyer to deliver a reference
obligation, or portfolio of reference obligations, to the protection seller upon
the occurrence of certain credit events relating to the issuer of the reference
obligation and receive the notional amount of the reference obligation from the
protection seller. A fund may use credit default swaps for various purposes
including to increase or decrease its credit exposure to various issuers. For
example, as a seller in a transaction, a fund could use credit default swaps as
a way of increasing investment exposure to a particular issuer's bonds in lieu
of purchasing such bonds directly. Similarly, as a buyer in a transaction, a
fund may use credit default swaps to hedge its exposure on bonds that it owns or
in lieu of selling such bonds. A credit default swap agreement may have as
reference obligations one or more securities that are not currently held by the
fund. The fund may be either the buyer or seller in the transaction. Credit
default swaps may also be structured based on the debt of a basket of issuers,
rather than a single issuer, and may be customized with respect to the default
event that triggers purchase or other factors. As a seller, the fund generally
receives an up front payment or a fixed rate of income throughout the term of
the swap, which typically is between six months and three years, provided that
there is no credit event. If a credit event occurs, generally the seller must
pay the buyer the full face amount of deliverable obligations of the reference
obligations that may have little or no value. If the fund is a buyer and no
credit event occurs, the fund recovers nothing if the swap is held through its
termination date. However, if a credit event occurs, the buyer may elect to
receive the full notional value of the swap in exchange for an equal face amount
of deliverable obligations of the reference obligation that may have little or
no value.
Statement of Additional Information - [Date], 2010 Page 39
Credit default swap agreements can involve greater risks than if a fund had
invested in the reference obligation directly since, in addition to general
market risks, credit default swaps are subject to counterparty credit risk,
leverage risk, hedging risk, correlation risk and liquidity risk. A fund will
enter into credit default swap agreements only with counterparties that meet
certain standards of creditworthiness. A buyer generally also will lose its
investment and recover nothing should no credit event occur and the swap is held
to its termination date. If a credit event were to occur, the value of any
deliverable obligation received by the seller, coupled with the upfront or
periodic payments previously received, may be less than the full notional value
it pays to the buyer, resulting in a loss of value to the seller. A fund's
obligations under a credit default swap agreement will be accrued daily (offset
against any amounts owing to the fund). In connection with credit default swaps
in which a fund is the buyer, the fund will segregate or "earmark" cash or other
liquid assets, or enter into certain offsetting positions, with a value at least
equal to the fund's exposure (any accrued but unpaid net amounts owed by the
fund to any counterparty), on a marked-to-market basis. In connection with
credit default swaps in which a fund is the seller, the fund will segregate or
"earmark" cash or other liquid assets, or enter into offsetting positions, with
a value at least equal to the full notional amount of the swap (minus any
amounts owed to the fund). Such segregation or "earmarking" will ensure that the
fund has assets available to satisfy its obligations with respect to the
transaction. Such segregation or "earmarking" will not limit the fund's exposure
to loss.
The use of swap agreements by a fund entails certain risks, which may be
different from, or possibly greater than, the risks associated with investing
directly in the securities and other investments that are the referenced asset
for the swap agreement. Swaps are highly specialized instruments that require
investment techniques, risk analyses, and tax planning different from those
associated with stocks, bonds, and other traditional investments. The use of a
swap requires an understanding not only of the referenced asset, reference rate,
or index, but also of the swap itself, without the benefit of observing the
performance of the swap under all the possible market conditions. Because some
swap agreements have a leverage component, adverse changes in the value or level
of the underlying asset, reference rate, or index can result in a loss
substantially greater than the amount invested in the swap itself. Certain swaps
have the potential for unlimited loss, regardless of the size of the initial
investment.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with swaps include: Credit Risk, Liquidity Risk and
Market Risk.
VARIABLE- OR FLOATING-RATE SECURITIES
Variable-rate securities provide for automatic establishment of a new interest
rate at fixed intervals (daily, monthly, semiannually, etc.). Floating-rate
securities generally provide for automatic adjustment of the interest rate
whenever some specified interest rate index changes. Variable- or floating-rate
securities frequently include a demand feature enabling the holder to sell the
securities to the issuer at par. In many cases, the demand feature can be
exercised at any time. Some securities that do not have variable or floating
interest rates may be accompanied by puts producing similar results and price
characteristics. Variable-rate demand notes include master demand notes that are
obligations that permit the investor to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the
investor as lender, and the borrower. The interest rates on these notes
fluctuate from time to time. The issuer of such obligations normally has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of such obligations. Because
these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be traded.
There generally is not an established secondary market for these obligations.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the lender's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and may involve
heightened risk of default by the issuer.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with variable- or floating-rate securities include:
Credit Risk.
WARRANTS
Warrants are securities giving the holder the right, but not the obligation, to
buy the stock of an issuer at a given price (generally higher than the value of
the stock at the time of issuance) during a specified period or perpetually.
Warrants may be acquired separately or in connection with the acquisition of
securities. Warrants do not carry with them the right to dividends or voting
rights and they do not represent any rights in the assets of the issuer.
Warrants may be considered to have more speculative characteristics than certain
other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to its expiration date.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with warrants include: Market Risk.
Statement of Additional Information - [Date], 2010 Page 40
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
When-issued securities and forward commitments involve a commitment to purchase
or sell specific securities at a predetermined price or yield in which payment
and delivery take place after the customary settlement period for that type of
security. Normally, the settlement date occurs within 45 days of the purchase
although in some cases settlement may take longer. The investor does not pay for
the securities or receive dividends or interest on them until the contractual
settlement date. Such instruments involve the risk of loss if the value of the
security to be purchased declines prior to the settlement date and the risk that
the security will not be issued as anticipated. If the security is not issued as
anticipated, a fund may lose the opportunity to obtain a price and yield
considered to be advantageous.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with when-issued securities and forward commitments
include: Credit Risk.
ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES
These securities are debt obligations that do not make regular cash interest
payments (see also Debt Obligations). Zero-coupon and step-coupon securities are
sold at a deep discount to their face value because they do not pay interest
until maturity. Pay-in-kind securities pay interest through the issuance of
additional securities. Because these securities do not pay current cash income,
the price of these securities can be extremely volatile when interest rates
fluctuate. See Appendix A for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with zero- coupon, step-coupon, and pay-in-kind
securities include: Credit Risk and Interest Rate Risk.
A fund cannot issue senior securities but this does not prohibit certain
investment activities for which assets of the fund are set aside, or margin,
collateral or escrow arrangements are established, to cover the related
obligations. Examples of those activities include borrowing money, delayed-
delivery and when-issued securities transactions, and contracts to buy or sell
options, derivatives, and hedging instruments.
SECURITIES TRANSACTIONS
Except as otherwise noted, the description of policies and procedures in this
section also applies to any fund subadviser. Subject to policies set by the
Board, as well as the terms of the investment management services agreements,
and subadviser agreements, as applicable, the investment manager or subadviser
is authorized to determine, consistent with a fund's investment objective and
policies, which securities will be purchased, held, or sold. In determining
where the buy and sell orders are to be placed, the investment manager has been
directed to use its best efforts to obtain the best available price and the most
favorable execution except where otherwise authorized by the Board.
Each fund, the investment manager, any subadviser and RiverSource Fund
Distributors, Inc. (principal underwriter and distributor of the funds) has a
strict Code of Ethics that prohibits affiliated personnel from engaging in
personal investment activities that compete with or attempt to take advantage of
planned portfolio transactions for the fund.
A fund's securities may be traded on an agency basis with brokers or dealers or
on a principal basis with dealers. In an agency trade, the broker-dealer
generally is paid a commission. In a principal trade, the investment manager
will trade directly with the issuer or with a dealer who buys or sells for its
own account, rather than acting on behalf of another client. The investment
manager may pay the dealer a commission or instead, the dealer's profit, if any,
is the difference, or spread, between the dealer's purchase and sale price for
the security.
BROKER-DEALER SELECTION
In selecting broker-dealers to execute transactions, the investment manager and
each subadviser will consider from among such factors as the ability to minimize
trading costs, trading expertise, infrastructure, ability to provide information
or services, financial condition, confidentiality, competitiveness of commission
rates, evaluations of execution quality, promptness of execution, past history,
ability to prospect for and find liquidity, difficulty of trade, security's
trading characteristics, size of order, liquidity of market, block trading
capabilities, quality of settlement, specialized expertise, overall
responsiveness, willingness to commit capital and research services provided.
The Board has adopted a policy prohibiting the investment manager, or any
subadviser, from considering sales of shares of the funds as a factor in the
selection of broker-dealers through which to execute securities transactions.
On a periodic basis, the investment manager makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions, including
review by an independent third-party evaluator. The review evaluates execution,
operational efficiency, and research services.
Statement of Additional Information - [Date], 2010 Page 41
COMMISSION DOLLARS
Broker-dealers typically provide a bundle of services including research and
execution of transactions. The research provided can be either proprietary
(created and provided by the broker-dealer) or third party (created by a third
party but provided by the broker-dealer). Consistent with the interests of the
fund, the investment manager and each subadviser may use broker-dealers who
provide both types of research products and services in exchange for
commissions, known as "soft dollars," generated by transactions in fund
accounts.
The receipt of research and brokerage products and services is used by the
investment manager, and by each subadviser, to the extent it engages in such
transactions, to supplement its own research and analysis activities, by
receiving the views and information of individuals and research staffs of other
securities firms, and by gaining access to specialized expertise on individual
companies, industries, areas of the economy and market factors. Research and
brokerage products and services may include reports on the economy, industries,
sectors and individual companies or issuers; statistical information; accounting
and tax law interpretations; political analyses; reports on legal developments
affecting portfolio securities; information on technical market actions; credit
analyses; on-line quotation systems; risk measurement; analyses of corporate
responsibility issues; on-line news services; and financial and market database
services. Research services may be used by the investment manager in providing
advice to multiple RiverSource accounts, including the funds (or by any
subadviser to any other client of the subadviser) even though it is not possible
to relate the benefits to any particular account or fund.
On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
Board has adopted a policy authorizing the investment manager to do so, to the
extent authorized by law, if the investment manager or subadviser determines, in
good faith, that such commission is reasonable in relation to the value of the
brokerage or research services provided by a broker or dealer, viewed either in
the light of that transaction or the investment manager's or subadviser's
overall responsibilities with respect to a fund and the other funds or accounts
for which it acts as investment manager (or by any subadviser to any other
client of that subadviser).
As a result of these arrangements, some portfolio transactions may not be
effected at the lowest commission, but overall execution may be better. The
investment manager and each subadviser have represented that under its
procedures the amount of commission paid will be reasonable and competitive in
relation to the value of the brokerage services and research products and
services provided.
The investment manager or a subadviser may use step-out transactions. A "step-
out" is an arrangement in which the investment manager or subadviser executes a
trade through one broker-dealer but instructs that broker-dealer to step-out all
or a part of the trade to another broker-dealer. The second broker-dealer will
clear and settle, and receive commissions for, the stepped-out portion. The
investment manager or subadviser may receive research products and services in
connection with step-out transactions.
Use of fund commissions may create potential conflicts of interest between the
investment manager or subadviser and a fund. However, the investment manager and
each subadviser has policies and procedures in place intended to mitigate these
conflicts and ensure that the use of fund commissions falls within the "safe
harbor" of Section 28(e) of the Securities Exchange Act of 1934. Some products
and services may be used for both investment decision-making and non-investment
decision-making purposes ("mixed use" items). The investment manager and each
subadviser, to the extent it has mixed use items, has procedures in place to
assure that fund commissions pay only for the investment decision-making portion
of a mixed-use item.
TRADE AGGREGATION AND ALLOCATION
Generally, orders are processed and executed in the order received. When a fund
buys or sells the same security as another portfolio, fund, or account, the
investment manager or subadviser carries out the purchase or sale pursuant to
policies and procedures designed in such a way believed to be fair to the fund.
Purchase and sale orders may be combined or aggregated for more than one account
if it is believed it would be consistent with best execution. Aggregation may
reduce commission costs or market impact on a per-share and per-dollar basis,
although aggregation may have the opposite effect. There may be times when not
enough securities are received to fill an aggregated order, including in an
initial public offering, involving multiple accounts. In that event, the
investment manager and each subadviser has policies and procedures designed in
such a way believed to result in a fair allocation among accounts, including the
fund.
From time to time, different portfolio managers with the investment manager may
make differing investment decisions related to the same security. However, with
certain exceptions for funds managed using strictly quantitative methods, a
portfolio manager or portfolio management team may not sell a security short if
the security is owned in another portfolio managed by that portfolio manager or
portfolio management team. On occasion, a fund may purchase and sell a security
simultaneously in order to profit from short-term price disparities.
Statement of Additional Information - [Date], 2010 Page 42
The investment manager has portfolio management teams in its Minneapolis, New
York and Los Angeles offices that may share research information regarding
leveraged loans. The investment manager operates separate and independent
trading desks in these locations for the purpose of purchasing and selling
leveraged loans. As a result, the investment manager does not aggregate orders
in leveraged loans across portfolio management teams. For example, funds and
other client accounts being managed by these portfolio management teams may
purchase and sell the same leveraged loan in the secondary market on the same
day at different times and at different prices. There is also the potential for
a particular account or group of accounts, including a fund, to forego an
opportunity or to receive a different allocation (either larger or smaller) than
might otherwise be obtained if the investment manager were to aggregate trades
in leveraged loans across the portfolio management teams. Although the
investment manager does not aggregate orders in leveraged loans across its
portfolio management teams in Minneapolis, New York and Los Angeles, it operates
in this structure subject to its duty to seek best execution.
The following table shows total brokerage commissions paid in the last three
fiscal periods. Substantially all firms through whom transactions were executed
provide research services. The table is organized by fiscal year end. You can
find your fund's fiscal year end in Table 1.
TABLE 4. TOTAL BROKERAGE COMMISSIONS
TOTAL BROKERAGE COMMISSIONS
----------------------------------------------------------------------------------------------------
FUND 2009 2008 2007
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
----------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income $ 0 $ 0(a)$ 0
----------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income 0 0(a) 0
----------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income 0 0(a) 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Aggressive 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Conservative 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index 16,486 40,706 21,050
----------------------------------------------------------------------------------------------------
RiverSource Small Company Index 123,243 108,360 56,843
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
----------------------------------------------------------------------------------------------------
RiverSource Equity Value 525,309 591,525 773,828
----------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth 554,351 581,945 850,077
----------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining 1,067,960 960,159 494,184
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
----------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity 38,789 38,557(b) N/A
----------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure 128,097(c) N/A N/A
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 0 0 0(d)
----------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 0 0 0(d)
----------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 43
TOTAL BROKERAGE COMMISSIONS
----------------------------------------------------------------------------------------------------
FUND 2009 2008 2007
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
----------------------------------------------------------------------------------------------------
RiverSource High Yield Bond $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth 923,343 859,002 1,160,632
----------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value 298,507 292,900 217,139
----------------------------------------------------------------------------------------------------
RiverSource Partners Select Value 846,306 838,472 1,757,678
----------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity 221,516 519,535 455,170
----------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value 1,484,768 1,179,158 1,422,160
----------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government 35,642 43,210 42,504
----------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage 14,329 17,640 10,386
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
----------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity 673,569 412,022 576,524
----------------------------------------------------------------------------------------------------
RiverSource Real Estate 205,118 173,705 187,309
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
----------------------------------------------------------------------------------------------------
RiverSource Cash Management 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 2,084,675 1,951,255 1,577,337
----------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap Equity 541,939 124,754 156,759
----------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value 178,570 75,041 64,928
----------------------------------------------------------------------------------------------------
RiverSource Floating Rate 12,760 861 0
----------------------------------------------------------------------------------------------------
RiverSource Income Opportunities 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities 17,762 11,586 0
----------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond 4,188 4,138 5,172
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
----------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 0 1,938 4,143
----------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 95,997 111,876 91,815
----------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt 0 3,418 7,293
----------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 0 724 1,524
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------------
RiverSource Balanced 688,814 493,156 567,773
----------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth 649,261 150,374 45,978(e)
----------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value 378,324 6,631(f) N/A
----------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income 4,728,940 4,085,552 3,790,954
----------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 2,601,029 1,672,775 1,219,474
----------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation 1,248,108 1,049,954 1,425,483
----------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation 22,351 17,707 6,639(e)
----------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield 0 0 0
----------------------------------------------------------------------------------------------------
Seligman California Municipal Quality 0 0 0
----------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 0 0 0
----------------------------------------------------------------------------------------------------
Seligman National Municipal 0 0 0
----------------------------------------------------------------------------------------------------
Seligman New York Municipal 0 0 0
----------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 12,772 7,434 3,559
----------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 1,327 7,302 2,743
----------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 1,215 1,206 461
----------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 1,173 948 308
----------------------------------------------------------------------------------------------------
Seligman TargETFund Core 26,992 10,913 10,770
----------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 44
TOTAL BROKERAGE COMMISSIONS
----------------------------------------------------------------------------------------------------
FUND 2009 2008 2007
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31 $
----------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and Income 0 $ 0 $ 0
----------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity 500,331 514,960 547,910
----------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond 0 0 0
----------------------------------------------------------------------------------------------------
RiverSource Global Bond 7,292 18,925 17,268
----------------------------------------------------------------------------------------------------
RiverSource Partners International Select Growth 901,265 1,690,066 1,932,330
----------------------------------------------------------------------------------------------------
RiverSource Partners International Select Value 959,077 1,558,333 1,426,926
----------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap 265,317 270,663 353,096
----------------------------------------------------------------------------------------------------
Seligman Frontier 157,476 250,561 388,531
----------------------------------------------------------------------------------------------------
Seligman Global Technology 1,319,806 1,747,855 2,082,502
----------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific 41,731(g) N/A N/A
----------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 2,108,103 3,346,690 3,361,865
----------------------------------------------------------------------------------------------------
Threadneedle European Equity 189,286 396,474 282,104
----------------------------------------------------------------------------------------------------
Threadneedle Global Equity 581,962 1,185,084 1,474,583
----------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income 18,370 5,030(h) N/A
----------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha 11,397 6,647(h) N/A
----------------------------------------------------------------------------------------------------
Threadneedle International Opportunity 793,899 1,020,584 1,150,182
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt 42 684 2,175
----------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 2,752,727 2,165,273 2,813,784
----------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 315 6,431 19,450
----------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income 1,080 24,531 74,062
----------------------------------------------------------------------------------------------------
2008 2007 2006
----------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
----------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 0 0 0
----------------------------------------------------------------------------------------------------
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal period
ended on May 31.
(b) For the period from Oct. 18, 2007 (when shares became publicly available)
to April 30, 2008.
(c) For the period from Feb. 19, 2009 (when shares become publicly available)
to April 30, 2009.
(d) For the period from May 18, 2006 (when shares became publicly available)
to April 30, 2007.
(e) For the period from May 17, 2007 (when shares became publicly available)
to Sept. 30, 2007.
(f) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
(g) For the period from July 15, 2009 (when shares became publicly available)
to Oct. 31, 2009.
(h) For the period from Aug. 1, 2008 (when shares became publicly available)
to Oct. 31, 2008.
Statement of Additional Information - [Date], 2010 Page 45
For the last fiscal period, transactions were specifically directed to firms in
exchange for research services as shown in the following table. The table also
shows portfolio turnover rates for the last two fiscal periods. Higher turnover
rates may result in higher brokerage expenses and taxes. The table is organized
by fiscal year end. You can find your fund's fiscal year end in Table 1.
TABLE 5. BROKERAGE DIRECTED FOR RESEARCH AND TURNOVER RATES
----------------------------------------------------------------------------------------------------------------------
BROKERAGE DIRECTED FOR RESEARCH*
-------------------------------------
AMOUNT OF TURNOVER RATES
AMOUNT OF COMMISSIONS -------------------------------------
FUND TRANSACTIONS IMPUTED OR PAID 2009 2008
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic
Income(a) $ 0(b) $ 0(b) 39% 19%
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced
Income(a) 0(b) 0(b) 36 24
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate
Income(a) 0(b) 0(b) 40 19
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder
Aggressive 0(b) 0(b) 35 40
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder
Conservative 0(b) 0(b) 27 29
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 0(b) 0(b) 34 27
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Aggressive 0(b) 0(b) 33 33
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative 0(b) 0(b) 29 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total
Equity 0(b) 0(b) 28 31
----------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index 0 0 5 4
----------------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index 0 0 23 14
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value 19,822,056 98,022 21 25
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth 72,126,889 69,150 133 122
----------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining 210,782,120 235,261 340(c) 241(c)
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
----------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity 2,803,890 4,443 36 23(d)
----------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure 4,731,215(e) 9,214(e) 4(e) N/A
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 0(b) 0(b) 55 92
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 0(b) 0(b) 53 47
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 0(b) 0(b) 52 50
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 0(b) 0(b) 47 41
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 0(b) 0(b) 47 50
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 0(b) 0(b) 48 44
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 0(b) 0(b) 50 52
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 0(b) 0(b) 51 50
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
----------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 0 0 83 64
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth 128,933,735 90,607 179 141
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value 0 0 19 14
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value 305,069,938 82,345 118 88
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity 11,173,721 11,606 67 106
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value 110,871,407 37,132 120 45
----------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S.
Government 0 0 271(g) 209
----------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage 0 0 431(g) 354(f)
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 46
----------------------------------------------------------------------------------------------------------------------
BROKERAGE DIRECTED FOR RESEARCH*
-------------------------------------
AMOUNT OF TURNOVER RATES
AMOUNT OF COMMISSIONS -------------------------------------
FUND TRANSACTIONS IMPUTED OR PAID 2009 2008
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
----------------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity $ 69,622,230 $ 140,358 21% 20%
----------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate 22,122,335 33,883 51 52
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management 0 0 N/A N/A
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 174,490,339 148,743 61 58
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid
Cap Equity 694,423 757 104 56
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value 1,538,636 1,766 98 87
----------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate 0 0 84 43
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities 0 0 81 75
----------------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected
Securities 0 0 160(h) 59
----------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond 0 0 335(i) 218(g)
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
----------------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 0 0 49 49
----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 0 0 371(g) 226(g)
----------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt 0 0 33 23
----------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 0 0 34 31
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------------------------------
RiverSource Balanced 134,013,627 160,642 189(g) 105(g)
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap
Growth 115,848,221 85,590 58 70
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value 38,146,821 31,490 63 6(j)
----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income 1,100,570,862 1,494,280 38 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 85,198,971 545,756 42 34
----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation 92,052,055 81,422 136(g) 123(g)
----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation 0 0 143 137
----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal High-
Yield 0 0 63(k) 4
----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality 0 0 46(k) 13
----------------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 0 0 29(k) 16
----------------------------------------------------------------------------------------------------------------------
Seligman National Municipal 0 0 107(k) 16
----------------------------------------------------------------------------------------------------------------------
Seligman New York Municipal 0 0 53(k) 0
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 0 0 58 70
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 0 0 13 61
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 0 0 16 38
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 0 0 36 48
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core 0 0 45 46
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 47
----------------------------------------------------------------------------------------------------------------------
BROKERAGE DIRECTED FOR RESEARCH*
-------------------------------------
AMOUNT OF TURNOVER RATES
AMOUNT OF COMMISSIONS -------------------------------------
FUND TRANSACTIONS IMPUTED OR PAID 2009 2008
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency
and Income $ 0 $ 0 16% 39%
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International
Equity 8,041,109 2,162 85 61
----------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond 0 0 62 82
----------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond 0 0 69 75
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International
Select Growth 83,531,533 99,348 90 85
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International
Select Value 33,502,807 17,102 63 40
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International
Small Cap 95,857 63 174 87
----------------------------------------------------------------------------------------------------------------------
Seligman Frontier 142,448,732 47,004 162 156
----------------------------------------------------------------------------------------------------------------------
Seligman Global Technology 2,739,223,355 460,483 150 171
----------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific(l) 8,232,647 23,202 4 N/A
----------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 794,301,729 1,895,074 149 133
----------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity 113,984,459 144,742 154 180
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 300,110,709 477,223 81 97
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income 6,599,033 11,416 45 10(m)
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha 4,801,721 7,937 133 36(m)
----------------------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity 536,939,110 737,307 97 78
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt 0 0 26 36
----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 454,152,183 799,318 126 76
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 0 0 29 37
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income 0 0 30 37
----------------------------------------------------------------------------------------------------------------------
2008 2007
----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 0 0 N/A N/A
----------------------------------------------------------------------------------------------------------------------
* Reported numbers include third party soft dollar commissions and
portfolio manager directed commissions directed for research.
RiverSource also receives proprietary research from brokers, but these
amounts have not been included in the table.
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal
period ended on May 31.
(b) The underlying funds may have directed transactions to firms in exchange
for research services.
(c) Higher turnover rates may result in higher brokerage expenses and taxes.
The higher turnover rate can be primarily attributed to repositioning
the fund to a smaller number of holdings as it worked through risk
management and secondarily, market volatility made up the balance of the
turnover rate.
(d) For the period from Oct. 18, 2007 (when shares became publicly
available) to April 30, 2008.
(e) For the period from Feb. 19, 2009 (when shares became publicly
available) to April 30, 2009.
(f) A significant portion of the turnover was the result of "roll"
transactions in liquid derivatives and Treasury securities. In the
derivative transactions, positions in expiring contracts are liquidated
and simultaneously replaced with positions in new contracts with
equivalent characteristics. In the Treasury transactions, existing
holdings are sold to purchase newly issued securities with slightly
longer maturity dates. Although these transactions affect the turnover
rate of the portfolio, they do not change the risk exposure or result in
material transaction costs. The remaining turnover resulted from
strategic reallocations and relative value trading. After transaction
costs, this activity is expected to enhance the returns on the fund.
(g) Includes mortgage dollar rolls. If mortgage dollar roll transactions
were excluded, the portfolio turnover would have been: 184% for
RiverSource Diversified Bond for the fiscal period ended Aug. 31, 2009;
124% for RiverSource Limited Duration Bond Fund for the fiscal period
ended July 31, 2008; 122% for RiverSource Diversified Bond Fund for the
fiscal period ended Aug. 31, 2008; 110% and 86% for RiverSource Balanced
Fund and 116% and 89% for RiverSource Strategic Allocation Fund for the
fiscal periods ended Sept. 30, 2009 and 2008, respectively; 199% for
RiverSource Short Duration U.S. Government Fund and 162% for RiverSource
U.S. Government Mortgage Fund for the fiscal period ended May 31, 2009.
(h) The fund's turnover rate has historically been low. The increase in
turnover rate is primarily a result of repositioning holdings after
management changes in the first quarter of 2009 and following a more
active management style.
Statement of Additional Information - [Date], 2010 Page 48
(i) The turnover was a result of a combination of a change in the investment
strategy and the growth of the fund. The fund experienced high net
inflows in the second quarter of 2009, increasing the NAV.
(j) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
(k) The fund's turnover rate has historically been low. The increase in
turnover rate is primarily a result of repositioning holdings after
management changes in the second quarter of 2009, and additionally for
Seligman National Municipal, mergers of 14 state-specific Seligman
Municipal Funds during the period into the Fund.
(l) For the period from July 15, 2009 (when the Fund became publicly
available) to Oct. 31, 2009.
(m) For the period from Aug. 1, 2008 (when the Fund became available) to
Oct. 31, 2008.
As of the end of the most recent fiscal period, the fund held securities of its
regular brokers or dealers or of the parent of those brokers or dealers that
derived more than 15% of gross revenue from securities-related activities as
presented below. The table is organized by fiscal year end. You can find your
fund's fiscal year end in Table 1.
TABLE 6. SECURITIES OF REGULAR BROKERS OR DEALERS
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Aggressive None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Conservative None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index Ameriprise Financial $ 65,185
------------------------------------------------------------------
Charles Schwab 190,015
------------------------------------------------------------------
Citigroup 289,179
------------------------------------------------------------------
E*Trade Financial 9,587
------------------------------------------------------------------
Franklin Resources 109,671
------------------------------------------------------------------
Goldman Sachs Group 533,707
------------------------------------------------------------------
JPMorgan Chase & Co. 1,423,202
------------------------------------------------------------------
Legg Mason 34,047
------------------------------------------------------------------
Morgan Stanley 321,071
------------------------------------------------------------------
PNC Financial Services Group 207,965
-----------------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index Investment Technology Group 1,062,970
------------------------------------------------------------------
LaBranche & Co. 408,547
------------------------------------------------------------------
optionsXpress 525,824
------------------------------------------------------------------
Piper Jaffray Companies 490,510
------------------------------------------------------------------
Stifel Financial 1,019,664
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value Goldman Sachs Group 2,832,324
------------------------------------------------------------------
JPMorgan Chase & Co. 7,599,674
------------------------------------------------------------------
Morgan Stanley 1,446,897
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth Eaton Vance 187,370
------------------------------------------------------------------
Knight Capital Group Cl A 294,755
------------------------------------------------------------------
Stifel Financial 185,800
-----------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining None N/A
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 49
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-----------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 None N/A
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond Lehman Brothers Holdings* $ 1,014,750
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth TD Ameritrade Holding 1,797,004
------------------------------------------------------------------
Jefferies Group 1,273,510
------------------------------------------------------------------
Morgan Stanley 2,445,642
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value Goldman Sachs Group 3,132,832
------------------------------------------------------------------
JPMorgan Chase & Co. 16,047,411
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value Stifel Financial 1,563,086
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity Eaton Vance 235,769
------------------------------------------------------------------
Investment Technology Group 114,109
------------------------------------------------------------------
Knight Capital Group Cl A 70,957
------------------------------------------------------------------
LaBranche & Co. 5,500
------------------------------------------------------------------
optionsXpress Holdings 1,315,143
------------------------------------------------------------------
Stifel Financial 33,526
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value Legg Mason 2,039,824
-----------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government Goldman Sachs Group 7,801,414
------------------------------------------------------------------
JPMorgan Chase Commercial Mtge
Securities 7,081,672
------------------------------------------------------------------
JPMorgan Chase & Co. 2,680,716
------------------------------------------------------------------
Morgan Stanley 8,340,454
------------------------------------------------------------------
Morgan Stanley Mtge Loan Trust 1,136,508
-----------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage Citigroup/Deutsche Bank Commercial
Mtge Trust 2,782,149
------------------------------------------------------------------
Credit Suisse Mortgage Capital Ctfs 1,650,000
------------------------------------------------------------------
GS Mortgage Securities II 640,382
------------------------------------------------------------------
LB-UBS Commercial Mtge Trust 1,713,264
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-----------------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity Goldman Sachs Group 11,150,932
------------------------------------------------------------------
JPMorgan Chase & Co. 16,627,373
-----------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate None N/A
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management Citigroup Funding 878,596,585
------------------------------------------------------------------
JPMorgan Chase Funding 91,787,016
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity Citigroup 13,013,528
------------------------------------------------------------------
E*TRADE Financial 384,006
------------------------------------------------------------------
Goldman Sachs Group 7,150,254
------------------------------------------------------------------
JPMorgan Chase & Co. 29,286,767
------------------------------------------------------------------
Morgan Stanley 27,556,906
------------------------------------------------------------------
PNC Financial Services Group 12,166,793
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 50
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap Equity optionsXpress Holdings $ 131,893
------------------------------------------------------------------
Stifel Financial 356,750
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value Knight Capital Group Cl A 226,201
------------------------------------------------------------------
Stifel Financial 448,672
-----------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate Ameritrade Holding Corp. 745,140
------------------------------------------------------------------
Nuveen Investments 754,491
-----------------------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond Citigroup 1,451,559
------------------------------------------------------------------
Goldman Sachs Group 1,710,667
------------------------------------------------------------------
JPMorgan Chase & Co. 1,666,579
------------------------------------------------------------------
Lehman Brothers Holdings* 78,100
------------------------------------------------------------------
Merrill Lynch & Co. 824,070
------------------------------------------------------------------
Morgan Stanley 1,705,223
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond Bear Stearns Adjustable Rate
Mortgage Trust 5,130,924
------------------------------------------------------------------
Bear Stearns Alternative Trust 14,970
------------------------------------------------------------------
Bear Stearns Commercial Mortgage
Securities 3,546,017
------------------------------------------------------------------
ChaseFlex Trust 1,409,767
------------------------------------------------------------------
Citigroup 25,350,618
------------------------------------------------------------------
Citigroup Commercial Mortgage Trust 2,837,338
------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial
Mortgage Trust 9,615,239
------------------------------------------------------------------
Citigroup Funding 11,998,570
------------------------------------------------------------------
CS First Boston Mtge Securities 12,910,140
------------------------------------------------------------------
Goldman Sachs Group 14,411,592
------------------------------------------------------------------
GS Mortgage Securities II 20,476,757
------------------------------------------------------------------
Jefferies & Co. 15,527,394
------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage
Securities 53,453,994
------------------------------------------------------------------
JPMorgan Chase & Co. 14,640,885
------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust 16,071,271
------------------------------------------------------------------
Lehman Brothers Holdings* 1,862,306
------------------------------------------------------------------
Merrill Lynch Mortgage Trust 2,665,078
------------------------------------------------------------------
Morgan Stanley 13,240,853
------------------------------------------------------------------
Morgan Stanley Capital I 10,028,848
-----------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt None N/A
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 51
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
-----------------------------------------------------------------------------------------------------------------------
RiverSource Balanced Bear Stearns Adjustable Rate
Mortgage Trust $ 713,060
------------------------------------------------------------------
Bear Stearns Commercial Mortgage
Securities 899,869
------------------------------------------------------------------
ChaseFlex Trust 849,320
------------------------------------------------------------------
Citigroup 1,082,219
------------------------------------------------------------------
Citigroup Commercial Mortgage Trust 316,302
------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial
Mortgage Trust 393,676
------------------------------------------------------------------
Goldman Sachs Group 18,865,931
------------------------------------------------------------------
GS Mortgage Securities II 1,030,324
------------------------------------------------------------------
JPMorgan Chase & Co. 8,998,091
------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage
Securities 2,697,566
------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust 1,354,451
------------------------------------------------------------------
Lehman Brothers Holdings* 236,004
------------------------------------------------------------------
Merrill Lynch Mortgage Trust 188,000
------------------------------------------------------------------
Morgan Stanley 3,258,404
------------------------------------------------------------------
Morgan Stanley Capital 1 1,291,191
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth Franklin Resources 1,934,035
------------------------------------------------------------------
Goldman Sachs Group 20,863,258
------------------------------------------------------------------
Morgan Stanley 9,177,567
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value Citigroup 6,796,957
------------------------------------------------------------------
Goldman Sachs Group 6,574,659
------------------------------------------------------------------
JPMorgan Chase & Co. 1,293,917
------------------------------------------------------------------
Morgan Stanley 6,536,678
------------------------------------------------------------------
PNC Financial Services Group 1,943,649
-----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income Goldman Sachs Group 178,337,738
------------------------------------------------------------------
JPMorgan Chase & Co. 85,834,923
------------------------------------------------------------------
Morgan Stanley 52,518,110
-----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value Goldman Sachs & Co. 47,226,353
-----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation Bear Stearns Commercial Mortgage
Securities 699,898
------------------------------------------------------------------
Citigroup 6,504,737
------------------------------------------------------------------
Citigroup Commercial Mortgage Trust 316,302
------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial
Mortgage Trust 183,715
------------------------------------------------------------------
Credit Suisse Group 457,330
------------------------------------------------------------------
CS First Boston Mortgage Securities 155,406
------------------------------------------------------------------
Goldman Sachs Group 9,642,282
------------------------------------------------------------------
GS Mortgage Securities II 788,719
------------------------------------------------------------------
JPMorgan Chase & Co. 10,872,093
------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage
Securities 2,234,879
------------------------------------------------------------------
Knight Capital Group Cl A 96,200
------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust 559,502
------------------------------------------------------------------
Morgan Stanley 9,436,155
------------------------------------------------------------------
Morgan Stanley Capital 1 709,666
------------------------------------------------------------------
optionsXpress Holdings 82,339
------------------------------------------------------------------
PNC Financial Services Group 6,225,544
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 52
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation Ameritrade Holding
Corp. -- subsidiary $ 624,828
------------------------------------------------------------------
Bear Stearns Commercial Mortgage
Securities 868,876
------------------------------------------------------------------
Citigroup 118,157
------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial
Mortgage Trust 985,508
------------------------------------------------------------------
CS First Boston Mortgage Securities 1,069,849
------------------------------------------------------------------
Goldman Sachs Group 171,602
------------------------------------------------------------------
JPMorgan Chase & Co. 268,331
------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage
Securities 889,173
------------------------------------------------------------------
Lehman Brothers Holdings* 15,975
------------------------------------------------------------------
Merrill Lynch Mortgage Trust 178,336
------------------------------------------------------------------
Morgan Stanley 801,038
------------------------------------------------------------------
Morgan Stanley Capital 1 69,125
------------------------------------------------------------------
Nuveen Investments 97,091
-----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman National Municipal None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman New York Municipal None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core None N/A
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and Income GS Mortgage Securities II 2,719,948
------------------------------------------------------------------
Lehman Brothers Holdings* 100,800
------------------------------------------------------------------
Morgan Stanley, Dean Witter Capital
1 428,016
-----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity Credit Suisse Mortgage Capital Ctfs 3,138,369
-----------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond Morgan Stanley 2,351,866
-----------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond Bear Stearns Commercial Mortgage
Securities 237,337
------------------------------------------------------------------
Citigroup 1,003,392
------------------------------------------------------------------
Citigroup Commercial Mortgage Trust 1,581,548
------------------------------------------------------------------
CS First Boston Mortgage Securities 595,440
------------------------------------------------------------------
Goldman Sachs Group 1,188,323
------------------------------------------------------------------
GS Mortgage Securities II 1,102,326
------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage
Securities 1,702,095
------------------------------------------------------------------
JPMorgan Chase & Co. 770,873
------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust 1,501,910
------------------------------------------------------------------
Lehman Brothers Holdings* 212,850
------------------------------------------------------------------
Merrill Lynch & Co. 366,682
------------------------------------------------------------------
Morgan Stanley 11,964,651
------------------------------------------------------------------
Morgan Stanley Capital 1 1,334,954
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select Growth Credit Suisse Group 4,008,753
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select Value Citigroup Funding 6,997,755
------------------------------------------------------------------
Morgan Stanley 20,000,000
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap None N/A
-----------------------------------------------------------------------------------------------------------------------
Seligman Frontier Affiliated Managers Group 380,940
------------------------------------------------------------------
Piper Jaffray Companies 171,643
------------------------------------------------------------------
Stifel Financial 244,212
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 53
VALUE OF SECURITIES OWNED AT
FUND ISSUER END OF FISCAL PERIOD
-----------------------------------------------------------------------------------------------------------------------
Seligman Global Technology None N/A
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific None N/A
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets None N/A
-----------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity Credit Suisse Group $ 2,058,583
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Citigroup Commercial Mortgage Trust 6,721,641
------------------------------------------------------------------
Credit Suisse Mortgage Capital Ctfs 2,352,116
------------------------------------------------------------------
Goldman Sachs Group 5,039,414
------------------------------------------------------------------
JPMorgan Chase & Co. 9,925,220
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income None N/A
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha Citigroup 64,732
------------------------------------------------------------------
Goldman Sachs Group 119,119
-----------------------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity Credit Suisse Group 7,751,291
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth E*TRADE Financial 3,797,720
------------------------------------------------------------------
Legg Mason 2,696,490
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond None N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income None N/A
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market None N/A
-----------------------------------------------------------------------------------------------------------------------
* Subsequent to Aug. 31, 2008. Lehman Brothers Holdings filed a Chapter 11
bankruptcy petition.
Statement of Additional Information - [Date], 2010 Page 54
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE INVESTMENT MANAGER
Affiliates of the investment manager may engage in brokerage and other
securities transactions on behalf of a fund according to procedures adopted by
the Board and to the extent consistent with applicable provisions of the federal
securities laws. Subject to approval by the Board, the same conditions apply to
transactions with broker-dealer affiliates of any subadviser. The investment
manager will use an affiliate only if (i) the investment manager determines that
the fund will receive prices and executions at least as favorable as those
offered by qualified independent brokers performing similar brokerage and other
services for the fund and (ii) the affiliate charges the fund commission rates
consistent with those the affiliate charges comparable unaffiliated customers in
similar transactions and if such use is consistent with terms of the Investment
Management Services Agreement.
Information about any brokerage commissions paid by a fund in the last three
fiscal periods to brokers affiliated with the fund's investment manager is
contained in the following table. The table is organized by fiscal year end. You
can find your fund's fiscal year end in Table 1.
TABLE 7. BROKERAGE COMMISSIONS PAID TO INVESTMENT MANAGER OR AFFILIATES
PERCENT OF
AGGREGATE
AGGREGATE DOLLAR AGGREGATE AGGREGATE
DOLLAR AMOUNT OF DOLLAR DOLLAR
AMOUNT OF PERCENT OF TRANSACTIONS AMOUNT OF AMOUNT OF
COMMISSIONS AGGREGATE INVOLVING COMMISSIONS COMMISSIONS
NATURE OF PAID TO BROKERAGE PAYMENT OF PAID TO PAID TO
BROKER AFFILIATION BROKER COMMISSIONS COMMISSIONS BROKER BROKER
FUND ----------------------------------------------------------------------------------------------
2009 2008 2007
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder None -- -- -- -- $ 0(a) $ 0
Basic Income
--------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder None -- -- -- -- 0(a) 0
Enhanced Income
--------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder None -- -- -- -- 0(a) 0
Moderate Income
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Aggressive
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Conservative
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Moderate
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Moderate
Aggressive
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Moderate
Conservative
--------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio None -- -- -- -- 0 0
Builder Total Equity
--------------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
RiverSource Small Company None -- -- -- -- 0 0
Index
--------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 55
PERCENT OF
AGGREGATE
AGGREGATE DOLLAR AGGREGATE AGGREGATE
DOLLAR AMOUNT OF DOLLAR DOLLAR
AMOUNT OF PERCENT OF TRANSACTIONS AMOUNT OF AMOUNT OF
COMMISSIONS AGGREGATE INVOLVING COMMISSIONS COMMISSIONS
NATURE OF PAID TO BROKERAGE PAYMENT OF PAID TO PAID TO
BROKER AFFILIATION BROKER COMMISSIONS COMMISSIONS BROKER BROKER
FUND ----------------------------------------------------------------------------------------------
2009 2008 2007
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
--------------------------
RiverSource Equity Value None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small UBS 1 $ 2,243 0.40% 0.97% $3,919 0
Cap Growth Securities
--------------------------------------------------------------------------------------------------------------------------
RiverSource Precious None -- -- -- -- 0 0
Metals and Mining
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
--------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 None -- -- -- -- 0(b) N/A
Contrarian Equity
--------------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and None(c) -- -- -- -- N/A N/A
Infrastructure
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2010
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2015
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2020
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2025
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2030
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2035
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2040
--------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement None -- -- -- -- 0 0(d)
Plus 2045
--------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 56
PERCENT OF
AGGREGATE
AGGREGATE DOLLAR AGGREGATE AGGREGATE
DOLLAR AMOUNT OF DOLLAR DOLLAR
AMOUNT OF PERCENT OF TRANSACTIONS AMOUNT OF AMOUNT OF
COMMISSIONS AGGREGATE INVOLVING COMMISSIONS COMMISSIONS
NATURE OF PAID TO BROKERAGE PAYMENT OF PAID TO PAID TO
BROKER AFFILIATION BROKER COMMISSIONS COMMISSIONS BROKER BROKER
FUND ----------------------------------------------------------------------------------------------
2009 2008 2007
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource High Yield None -- -- -- -- 0 0
Bond
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners JPMorgan 2 $62,224 14.93% 6.60% $3,532 $ 23
Aggressive Growth Securities,
Inc.
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners None -- -- -- -- 0 0
Fundamental Value
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Gabelli & 3 -- -- 0 7,352
Select Value Co.
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Wachovia 4 141 0.13 0.12 0 568
Cap Equity Capital
Markets
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small None -- -- -- -- 0 0
Cap Value
--------------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration None -- -- -- -- 0 0
U.S. Government
--------------------------------------------------------------------------------------------------------------------------
RiverSource U.S. None -- -- -- -- 0 0
Government Mortgage
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
--------------------------------------------------------------------------------------------------------------------------
RiverSource Dividend -- -- -- -- 0 0
Opportunity None
--------------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource Cash None -- -- -- -- $ 0 $ 0
Management
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None 0 0
Equity
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None -- -- -- -- 0 0
Small and Mid Cap Equity
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None -- -- -- -- 0 0
Small
Cap Value
--------------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
RiverSource Income None -- -- -- -- 0 0
Opportunities
--------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation None -- -- -- -- 0 0
Protected Securities
--------------------------------------------------------------------------------------------------------------------------
RiverSource Limited None -- -- -- -- 0 0
Duration Bond
--------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 57
PERCENT OF
AGGREGATE
AGGREGATE DOLLAR AGGREGATE AGGREGATE
DOLLAR AMOUNT OF DOLLAR DOLLAR
AMOUNT OF PERCENT OF TRANSACTIONS AMOUNT OF AMOUNT OF
COMMISSIONS AGGREGATE INVOLVING COMMISSIONS COMMISSIONS
NATURE OF PAID TO BROKERAGE PAYMENT OF PAID TO PAID TO
BROKER AFFILIATION BROKER COMMISSIONS COMMISSIONS BROKER BROKER
FUND ----------------------------------------------------------------------------------------------
2009 2008 2007
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource California None -- -- -- -- 0 0
Tax-Exempt
--------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified None -- -- -- -- 0 0
Bond
--------------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax- None -- -- -- -- 0 0
Exempt
--------------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax- None -- -- -- -- 0 0
Exempt
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
--------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None -- -- -- -- 0 0(e)
Large Cap Growth
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None -- -- -- -- 0(f) N/A
Large Cap Value
--------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified None -- -- -- -- 0 0
Equity Income
--------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic None -- -- -- -- 0 0
Allocation
--------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic None -- -- -- -- 0 0(e)
Income Allocation
--------------------------------------------------------------------------------------------------------------------------
Seligman California None -- -- -- -- 0 0
Municipal High-Yield
--------------------------------------------------------------------------------------------------------------------------
Seligman California None -- -- -- -- 0 0
Municipal Quality
--------------------------------------------------------------------------------------------------------------------------
Seligman Minnesota None -- -- -- -- 0 0
Municipal
--------------------------------------------------------------------------------------------------------------------------
Seligman National None -- -- -- -- 0 0
Municipal
--------------------------------------------------------------------------------------------------------------------------
Seligman New York None -- -- -- -- 0 0
Municipal
--------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource Absolute None -- -- -- -- 0 0
Return Currency and Income
--------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined None -- -- -- -- 0 0
International Equity
--------------------------------------------------------------------------------------------------------------------------
RiverSource Emerging None -- -- -- -- 0 0
Markets Bond
--------------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 58
PERCENT OF
AGGREGATE
AGGREGATE DOLLAR AGGREGATE AGGREGATE
DOLLAR AMOUNT OF DOLLAR DOLLAR
AMOUNT OF PERCENT OF TRANSACTIONS AMOUNT OF AMOUNT OF
COMMISSIONS AGGREGATE INVOLVING COMMISSIONS COMMISSIONS
NATURE OF PAID TO BROKERAGE PAYMENT OF PAID TO PAID TO
BROKER AFFILIATION BROKER COMMISSIONS COMMISSIONS BROKER BROKER
FUND ----------------------------------------------------------------------------------------------
2009 2008 2007
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Merrill 5 $ 585 0.27% 0.42% 0 0
International Select Lynch
Growth Capital
Markets
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Sanford 6 0 -- -- 1,677 0
International Select Value Bernstein
--------------------------------------------------------------------------------------------------------------------------
RiverSource Partners None -- -- -- -- $ 0 $ 0
International Small Cap
--------------------------------------------------------------------------------------------------------------------------
Seligman Frontier None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Seligman Global Technology None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific None(j) -- -- -- -- N/A N/A
--------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging None -- -- -- -- 0 0
Markets
--------------------------------------------------------------------------------------------------------------------------
Threadneedle European None -- -- -- -- 0 0
Equity
--------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity None -- -- -- -- 0 0
--------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity None -- -- -- -- 0(k) N/A
Income
--------------------------------------------------------------------------------------------------------------------------
Threadneedle Global None -- -- -- -- 0(k) N/A
Extended Alpha
--------------------------------------------------------------------------------------------------------------------------
Threadneedle International None -- -- -- -- 0 0
Opportunity
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
--------------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate None -- -- -- -- 0 0
Tax-Exempt
--------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth -- -- -- -- 0 0
None
--------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt None -- -- -- -- 0 0
Bond
--------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt None -- -- -- -- 0 0
High Income
--------------------------------------------------------------------------------------------------------------------------
2008 2007 2006
--------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
--------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt None -- -- -- -- 0 0
Money Market
--------------------------------------------------------------------------------------------------------------------------
(1) Affiliate of UBS Global Asset Management, a subadviser.
(2) Affiliate of American Century, a subadviser.
(3) Affiliate of GAMCO Investors, Inc. a former subadviser, terminated Sept.
29, 2006.
(4) Affiliate of Jennison Associates, LLC, a subadviser.
(5) Affiliate of Columbia Wanger, a subadviser.
(6) Affiliate of AllianceBernstein, a subadviser.
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal
period ended on May 31.
(b) For the period from Oct. 18, 2007 (when shares became publicly
available) to April 30, 2008.
(c) For the period from Feb. 19, 2009 (when shares became publicly
available) to April 30, 2009.
(d) For the period from May 18, 2006 (when shares became publicly available)
to April 30, 2007.
(e) For the period from May 17, 2007 (when shares became publicly available)
to Sept. 30, 2007.
(f) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
Statement of Additional Information - [Date], 2010 Page 59
(g) For the period from June 15, 2006 (when the Fund became available) to
Oct. 31, 2006.
(h) For the period from May 18, 2006 (when shares became publicly available)
to Oct. 31, 2006.
(i) For the period from Feb. 16, 2006 (when shares became publicly
available) to Oct. 31, 2006.
(j) For the period from July 15, 2009 (when shares became publicly
available) to Oct. 31, 2009.
(k) For the period from Aug. 1, 2008 (when shares became publicly available)
to Oct. 31, 2008.
VALUING FUND SHARES
As of the end of the most recent fiscal period, the computation of net asset
value per share of a class of a fund was based on net assets of that class
divided by the number of class shares outstanding as shown in the following
table. The table is organized by fiscal year end. You can find your fund's
fiscal year end in Table 1. All expenses of a fund, including the management fee
and administrative services fee and, as applicable, distribution and plan
administration fees, are accrued daily and taken into account for the purpose of
determining NAV.
TABLE 8. VALUING FUND SHARES
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income
Class A $ 186,970,729 22,677,468 $ 8.24
Class B 27,939,305 3,394,885 8.23
Class C 9,281,940 1,126,721 8.24
Class R4 8,257 1,000 8.26
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income
Class A 164,090,568 21,598,784 7.60
Class B 18,998,046 2,503,256 7.59
Class C 7,980,635 1,051,482 7.59
Class R4 103,837 13,670 7.60
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income
Class A 338,875,864 43,137,952 7.86
Class B 40,992,857 5,230,164 7.84
Class C 14,003,542 1,784,927 7.85
Class R4 14,829 1,885 7.87
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive
Class A 294,773,096 45,416,245 6.49
Class B 56,863,918 8,803,125 6.46
Class C 11,330,376 1,765,176 6.42
Class R4 141,064 21,713 6.50
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative
Class A 145,919,328 17,150,019 8.51
Class B 41,589,703 4,905,272 8.48
Class C 10,602,340 1,249,604 8.48
Class R4 20,746 2,461 8.43
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Class A 664,054,374 87,640,367 7.58
Class B 144,798,038 19,199,873 7.54
Class C 33,449,418 4,433,154 7.55
Class R4 78,368 10,348 7.57
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Aggressive
Class A 644,510,105 91,887,421 7.01
Class B 130,075,493 18,628,806 6.98
Class C 26,360,644 3,778,666 6.98
Class R4 558,316 79,497 7.02
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 60
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative
Class A $ 257,155,177 32,046,209 $ 8.02
Class B 60,844,849 7,606,644 8.00
Class C 15,772,351 1,971,183 8.00
Class R4 25,381 3,177 7.99
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity
Class A 245,908,353 40,787,041 6.03
Class B 45,514,660 7,624,879 5.97
Class C 9,263,309 1,558,801 5.94
Class R4 74,311 12,287 6.05
-----------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index
Class D 21,470,665 7,875,153 2.73
Class E 87,567,351 32,008,961 2.74
-----------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index
Class A 280,601,738 99,425,503 2.82
Class B 50,844,680 22,379,419 2.27
Class R4 4,364,248 1,490,973 2.93
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Equity Value
Class A 450,712,507 68,890,198 6.54
Class B 50,134,973 7,632,829 6.57
Class C 3,102,757 477,818 6.49
Class I 3,591 548 6.55
Class R2 2,447 374 6.54
Class R3 107,204 16,368 6.55
Class R4 4,173,423 636,556 6.56
Class R5 2,447 374 6.54
Class W 2,484 380 6.54
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth
Class A 38,606,437 17,175,057 2.25
Class B 11,644,484 5,603,218 2.08
Class C 1,632,974 785,175 2.08
Class I 30,343,515 13,031,926 2.33
Class R2 2,156 951 2.27
Class R3 2,169 951 2.28
Class R4 53,805 23,512 2.29
Class R5 2,183 951 2.30
-----------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining
Class A 94,319,611 10,433,590 9.04
Class B 12,722,723 1,541,104 8.26
Class C 2,257,212 278,920 8.09
Class I 9,068 989 9.17
Class R4 73,212 7,985 9.17
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-----------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity
Class A 27,439,148 2,402,528 11.42
Class B 1,599,194 141,516 11.30
Class C 1,341,742 118,740 11.30
Class I 3,232,961 281,691 11.48
Class R5 5,735 500 11.47
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 61
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure
Class A $ 50,777,415 4,371,521 $11.62
Class B 4,017,674 346,389 11.60
Class C 2,722,636 234,730 11.60
Class I 12,377,893 1,064,623 11.63
Class R2 11,607 1,000 11.61
Class R3 11,614 1,000 11.61
Class R4 22,600 1,945 11.62
Class R5 11,626 1,000 11.63
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010
Class A 3,095,956 447,244 6.92
Class R2 3,240 468 6.92
Class R3 3,240 468 6.92
Class R4 3,242 468 6.93
Class R5 3,243 468 6.93
Class Y 4,703,534 678,609 6.93
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015
Class A 4,840,029 712,731 6.79
Class R2 3,164 465 6.80
Class R3 3,163 465 6.80
Class R4 3,164 465 6.80
Class R5 3,167 465 6.81
Class Y 13,012,797 1,910,356 6.81
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020
Class A 3,732,214 589,755 6.33
Class R2 8,994 1,416 6.35
Class R3 2,948 464 6.35
Class R4 2,948 464 6.35
Class R5 2,952 464 6.36
Class Y 14,824,867 2,331,930 6.36
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025
Class A 2,261,901 361,260 6.26
Class R2 15,488 2,472 6.27
Class R3 2,929 466 6.29
Class R4 2,936 465 6.31
Class R5 2,936 465 6.31
Class Y 18,489,701 2,936,299 6.30
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030
Class A 4,733,464 752,794 6.29
Class R2 7,048 1,118 6.30
Class R3 2,927 464 6.31
Class R4 2,923 464 6.30
Class R5 2,926 464 6.31
Class Y 18,044,906 2,860,073 6.31
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035
Class A 1,296,313 208,303 6.22
Class R2 2,910 467 6.23
Class R3 2,912 467 6.24
Class R4 2,912 467 6.24
Class R5 2,915 467 6.24
Class Y 13,096,274 2,097,551 6.24
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040
Class A 1,247,058 206,572 6.04
Class R2 8,314 1,373 6.06
Class R3 19,225 3,175 6.06
Class R4 2,811 464 6.06
Class R5 2,814 464 6.06
Class Y 8,534,956 1,407,503 6.06
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 62
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045
Class A $ 1,182,765 191,544 $ 6.17
Class R2 2,883 466 6.19
Class R3 2,883 466 6.19
Class R4 2,883 466 6.19
Class R5 2,885 466 6.19
Class Y 7,820,301 1,262,765 6.19
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond
Class A 1,003,575,895 436,811,958 2.30
Class B 109,559,138 47,713,625 2.30
Class C 21,579,358 9,454,650 2.28
Class I 74,332,691 32,399,309 2.29
Class R2 14,121 6,128 2.30
Class R3 1,242,890 538,148 2.31
Class R4 2,390,655 1,040,477 2.30
Class R5 3,897 1,695 2.30
Class W 6,434,725 2,824,309 2.28
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth
Class A 207,169,730 33,798,503 6.13
Class B 30,452,015 5,204,722 5.85
Class C 1,762,044 301,006 5.85
Class I 71,268,211 11,379,715 6.26
Class R2 75,006 12,246 6.12
Class R3 16,916 2,736 6.18
Class R4 90,922 14,618 6.22
Class R5 3,564 572 6.23
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value
Class A 319,303,984 86,102,190 3.71
Class B 68,807,426 19,386,443 3.55
Class C 8,381,816 2,350,575 3.57
Class I 147,813,699 39,425,906 3.75
Class R4 161,351 43,267 3.73
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value
Class A 171,586,494 54,027,990 3.18
Class B 33,999,040 11,190,973 3.04
Class C 3,664,376 1,209,841 3.03
Class I 52,038,069 16,131,939 3.23
Class R4 58,363 18,230 3.20
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity
Class A 106,851,808 31,129,071 3.43
Class B 11,759,149 3,675,291 3.20
Class C 1,271,635 397,882 3.20
Class I 6,010 1,724 3.49
Class R4 2,148,452 615,294 3.49
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value
Class A 194,255,683 58,055,466 3.35
Class B 61,304,340 19,668,144 3.12
Class C 5,806,654 1,858,261 3.12
Class I 40,476,472 11,699,997 3.46
Class R2 341,874 102,053 3.35
Class R3 26,984 7,954 3.39
Class R4 153,671 45,029 3.41
Class R5 7,086,719 2,072,383 3.42
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 63
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government
Class A $ 529,368,837 114,236,678 $ 4.63
Class B 113,216,242 24,431,558 4.63
Class C 12,866,781 2,776,585 4.63
Class I 41,851,347 9,022,598 4.64
Class R4 4,331,129 934,061 4.64
Class W 4,876 1,053 4.63
-----------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage
Class A 78,939,541 16,543,068 4.77
Class B 24,176,629 5,064,728 4.77
Class C 4,090,259 856,738 4.77
Class I 221,584,142 46,475,255 4.77
Class R4 63,991 13,427 4.77
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity
Class A 793,420,879 142,297,299 5.58
Class B 91,922,474 16,598,559 5.54
Class C 14,770,403 2,672,956 5.53
Class I 158,905,085 28,437,503 5.59
Class R2 3,648 653 5.59
Class R3 3,648 653 5.59
Class R4 490,289 87,730 5.59
Class R5 3,648 653 5.59
Class W 3,174 568 5.59
-----------------------------------------------------------------------------------------------------------------
RiverSource Real Estate
Class A 39,604,801 6,343,058 6.24
Class B 5,963,230 962,244 6.20
Class C 786,769 127,106 6.19
Class I 88,405,029 14,132,093 6.26
Class R4 58,277 9,376 6.22
Class W 1,710 275 6.22
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Cash Management
Class A 3,278,885,669 3,293,890,320 1.00
Class B 76,369,716 76,708,061 1.00
Class C 7,073,282 7,106,706 1.00
Class I 74,516,509 74,791,575 1.00
Class R5 4,979 5,000 1.00
Class W 31,351,087 31,471,737 1.00
Class Y 31,088,681 31,174,679 1.00
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity
Class A 692,099,784 160,878,551 4.30
Class B 15,588,211 3,653,826 4.27
Class C 2,105,003 496,767 4.24
Class I 331,846,856 76,648,563 4.33
Class R2 2,840 661 4.30
Class R3 2,842 661 4.30
Class R4 89,590,579 20,740,477 4.32
Class R5 2,848 661 4.31
Class W 725,762,099 169,124,201 4.29
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap
Equity
Class A 10,111,472 1,619,203 6.24
Class B 930,139 152,289 6.11
Class C 286,217 46,841 6.11
Class I 20,778,847 3,315,675 6.27
Class R4 7,534 1,205 6.25
Class W 127,931,961 20,599,400 6.21
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 64
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value
Class A $ 10,761,916 1,602,931 $ 6.71
Class B 260,921 39,508 6.60
Class C 77,078 11,670 6.60
Class I 42,272,925 6,285,223 6.73
Class R2 3,052 455 6.71
Class R3 3,906 582 6.71
Class R4 6,715 1,000 6.72
Class R5 3,058 455 6.72
-----------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate
Class A 267,669,492 33,743,042 7.93
Class B 13,753,092 1,732,968 7.94
Class C 15,721,401 1,981,722 7.93
Class I 112,680,741 14,208,955 7.93
Class R4 112,619 14,159 7.95
Class R5 4,420 556 7.95
Class W 3,943 497 7.93
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities
Class A 402,063,679 44,650,530 9.00
Class B 34,051,872 3,782,976 9.00
Class C 35,122,534 3,902,941 9.00
Class I 158,288,141 17,558,605 9.01
Class R4 252,589 27,960 9.03
-----------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities
Class A 243,639,793 24,991,361 9.75
Class B 24,639,182 2,528,696 9.74
Class C 11,238,772 1,153,520 9.74
Class I 186,201,393 19,104,355 9.75
Class R4 81,087 8,322 9.74
Class W 189,822,155 19,475,564 9.75
-----------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond
Class A 114,937,002 12,147,905 9.46
Class B 7,256,740 767,195 9.46
Class C 9,493,745 1,004,100 9.45
Class I 123,650,521 13,064,289 9.46
Class R4 98,684 10,402 9.49
Class W 4,851 512 9.47
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
-----------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt
Class A 156,529,091 32,281,411 4.85
Class B 2,746,317 566,512 4.85
Class C 2,638,601 543,497 4.85
-----------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond
Class A 2,402,834,582 505,515,125 4.75
Class B 191,468,923 40,286,990 4.75
Class C 52,650,113 11,074,642 4.75
Class I 787,166,241 165,384,786 4.76
Class R2 287,638 60,428 4.76
Class R3 9,829 2,067 4.76
Class R4 72,569,590 15,286,568 4.75
Class R5 296,257 62,408 4.75
Class W 578,424,162 121,658,362 4.75
-----------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt
Class A 301,420,555 58,435,558 5.16
Class B 9,061,802 1,755,984 5.16
Class C 12,604,907 2,443,475 5.16
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 65
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt
Class A $ 52,995,844 10,905,515 $ 4.86
Class B 2,051,875 422,258 4.86
Class C 931,186 191,649 4.86
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Balanced
Class A 567,386,530 64,566,373 8.79
Class B 17,661,853 2,021,254 8.74
Class C 9,454,482 1,084,116 8.72
Class R2 119,765 13,638 8.78
Class R4 45,391,810 5,164,844 8.79
Class R5 10,692 1,217 8.79
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth
Class A 274,023,730 36,524,683 7.50
Class B 3,579,138 481,472 7.43
Class C 1,561,360 210,004 7.43
Class I 206,056,085 27,238,022 7.57
Class R2 7,533 1,000 7.53
Class R3 7,539 1,000 7.54
Class R4 7,730 1,025 7.54
Class R5 7,561 1,000 7.56
Class W 188,126,122 25,003,227 7.52
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value
Class A 1,434,098 184,422 7.78
Class B 57,553 7,464 7.71
Class C 27,275 3,524 7.74
Class I 60,019,450 7,688,355 7.81
Class R2 7,766 1,000 7.77
Class R3 7,779 1,000 7.78
Class R4 13,843 1,776 7.79
Class R5 7,804 1,000 7.80
Class W 237,104,669 30,469,778 7.78
-----------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income
Class A 3,516,947,647 423,238,665 8.31
Class B 377,652,270 45,345,973 8.33
Class C 72,371,930 8,719,127 8.30
Class I 212,064,386 25,537,767 8.30
Class R2 8,271,071 998,943 8.28
Class R3 110,247,680 13,285,646 8.30
Class R4 197,976,509 23,806,751 8.32
Class R5 53,334,196 6,415,412 8.31
Class W 3,002 361 8.32
-----------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value
Class A 1,351,336,081 219,846,167 6.15
Class B 104,322,229 17,668,539 5.90
Class C 41,952,034 7,101,337 5.91
Class I 44,213,966 7,069,592 6.25
Class R2 15,826,707 2,592,379 6.11
Class R3 46,598,913 7,595,392 6.14
Class R4 337,592,770 54,533,230 6.19
Class R5 133,143,010 21,466,665 6.20
Class W 3,138 506 6.20
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 66
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation
Class A $1,122,673,319 133,009,047 $ 8.44
Class B 115,318,212 13,795,868 8.36
Class C 46,514,897 5,592,862 8.32
Class I 3,660 434 8.43
Class R2 3,660 434 8.43
Class R3 3,660 434 8.43
Class R4 1,219,103 144,213 8.45
Class R5 3,660 434 8.43
-----------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation
Class A 255,190,331 26,582,876 9.60
Class B 25,702,531 2,676,844 9.60
Class C 13,328,854 1,389,310 9.59
Class R2 5,157 537 9.60
Class R3 5,157 537 9.60
Class R4 68,365 7,124 9.60
Class R5 5,157 537 9.60
-----------------------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield
Class A 31,142,713 4,653,633 6.69
Class C 6,162,106 919,720 6.70
-----------------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality
Class A 40,319,393 6,023,523 6.69
Class C 3,514,624 527,353 6.66
-----------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal
Class A 71,247,393 9,145,572 7.79
Class C 1,407,064 180,200 7.81
-----------------------------------------------------------------------------------------------------------------
Seligman National Municipal
Class A 665,767,573 82,031,969 8.12
Class C 36,644,916 4,493,860 8.15
-----------------------------------------------------------------------------------------------------------------
Seligman New York Municipal
Class A 76,943,770 9,243,243 8.32
Class C 8,196,244 982,659 8.34
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015
Class A 12,869,269 1,940,646 6.63
Class C 12,264,632 1,882,061 6.52
Class R2 1,495,666 226,740 6.60
Class R5 25,221 3,765 6.70
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025
Class A 17,518,203 2,562,329 6.84
Class C 13,402,662 2,002,910 6.69
Class R2 3,182,793 469,091 6.79
Class R5 245,363 35,571 6.90
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035
Class A 5,955,957 840,606 7.09
Class C 2,414,707 346,244 6.97
Class R2 1,481,321 209,743 7.06
Class R5 7,946 1,115 7.13
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045
Class A 3,216,301 455,251 7.06
Class C 882,294 126,804 6.96
Class R2 523,492 74,309 7.04
Class R5 17,878 2,516 7.11
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core
Class A 20,084,624 3,119,620 6.44
Class C 28,956,029 4,495,509 6.44
Class R2 9,547,700 1,483,888 6.43
Class R5 105,101 16,332 6.44
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 67
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and
Income
Class A $ 114,237,775 11,504,415 $ 9.93
Class B 2,026,053 205,708 9.85
Class C 7,609,307 773,530 9.84
Class I 28,925,560 2,899,043 9.98
Class R4 9,944 1,000 9.94
Class R5 9,397 942 9.98
Class W 86,999,758 8,768,011 9.92
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity
Class A 49,044,997 7,030,588 6.98
Class B 7,031,214 1,021,394 6.88
Class C 1,094,910 159,170 6.88
Class I 126,948,273 18,085,070 7.02
Class R2 3,525 509 6.93
Class R3 3,530 509 6.94
Class R4 69,728 9,972 6.99
Class R5 3,546 509 6.97
Class W 282,912,809 40,530,503 6.98
-----------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond
Class A 32,726,471 3,161,305 10.35
Class B 2,419,853 234,037 10.34
Class C 722,068 69,939 10.32
Class I 106,358,547 10,273,954 10.35
Class R4 23,156 2,238 10.35
Class W 117,037,431 11,319,382 10.34
-----------------------------------------------------------------------------------------------------------------
RiverSource Global Bond
Class A 252,772,959 35,605,039 7.10
Class B 29,976,819 4,198,213 7.14
Class C 5,556,941 784,634 7.08
Class I 169,716,515 23,886,385 7.11
Class R4 168,713 23,740 7.11
Class W 60,278,436 8,500,017 7.09
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Growth
Class A 181,148,068 31,216,716 5.80
Class B 24,733,743 4,433,114 5.58
Class C 9,527,501 1,710,456 5.57
Class I 191,323,369 32,651,792 5.86
Class R2 122,389 21,139 5.79
Class R4 489,252 84,049 5.82
Class R5 938,080 159,892 5.87
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Value
Class A 710,323,385 125,309,364 5.67
Class B 80,458,495 15,117,302 5.32
Class C 10,917,260 2,057,531 5.31
Class I 182,888,529 31,357,443 5.83
Class R4 493,430 85,118 5.80
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap
Class A 25,159,619 4,951,093 5.08
Class B 4,125,636 846,784 4.87
Class C 486,947 100,059 4.87
Class I 31,466,684 6,079,010 5.18
Class R4 401,664 78,176 5.14
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 68
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Seligman Frontier
Class A $ 23,379,805 2,848,890 $ 8.21
Class B 1,118,495 169,585 6.60
Class C 8,899,070 1,342,806 6.63
Class I 999,800 114,806 8.71
Class R2 81,518 10,109 8.06
Class R3 5,027 623 8.07
Class R4 9,819 1,128 8.70
Class R5 625,564 71,840 8.71
-----------------------------------------------------------------------------------------------------------------
Seligman Global Technology
Class A 325,789,863 19,750,519 16.50
Class B 21,966,464 1,541,875 14.25
Class C 69,848,512 4,900,053 14.25
Class I 23,827,145 1,442,107 16.52
Class R2 5,131,007 315,762 16.25
Class R3 5,301 326 16.26
Class R4 289,226 17,518 16.51
Class R5 5,304 321 16.52
-----------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific
Class R5 53,643,171 4,698,479 11.42
-----------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets
Class A 416,296,725 53,776,169 7.74
Class B 38,489,191 5,601,155 6.87
Class C 32,757,231 4,756,330 6.89
Class I 68,977,761 8,575,621 8.04
Class R2 12,235,711 1,580,451 7.74
Class R4 1,186,515 147,397 8.05
Class R5 538,197 66,743 8.06
-----------------------------------------------------------------------------------------------------------------
Threadneedle European Equity
Class A 64,717,075 13,311,370 4.86
Class B 6,123,682 1,268,930 4.83
Class C 1,156,669 240,707 4.81
Class I 6,487 1,336 4.86
Class R4 18,019 3,711 4.86
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity
Class A 394,510,625 64,353,725 6.13
Class B 33,008,877 5,717,899 5.77
Class C 10,570,042 1,851,492 5.71
Class I 32,596,470 5,289,556 6.16
Class R2 46,070 7,498 6.14
Class R3 3,897 634 6.15
Class R4 6,058,555 980,165 6.18
Class R5 17,622 2,861 6.16
Class W 3,934 639 6.16
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income
Class A 21,078,520 2,483,415 8.49
Class B 2,067,434 244,105 8.47
Class C 449,282 53,062 8.47
Class I 4,190,596 493,000 8.50
Class R2 8,493 1,000 8.49
Class R3 8,495 1,000 8.50
Class R4 10,456 1,230 8.50
Class R5 8,499 1,000 8.50
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 69
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE OF ONE SHARE
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha
Class A $ 2,647,582 150,018 $17.65
Class B 258,403 14,788 17.47
Class C 125,035 7,154 17.48
Class I 4,366,888 246,500 17.72
Class R2 8,780 500 17.56
Class R3 8,808 500 17.62
Class R4 59,122 3,345 17.67
Class R5 8,852 500 17.70
-----------------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity
Class A 257,909,909 33,503,026 7.70
Class B 20,431,810 2,710,581 7.54
Class C 6,942,369 936,735 7.41
Class I 116,826,749 15,026,177 7.77
Class R2 1,110,150 142,157 7.81
Class R3 3,876 496 7.81
Class R4 226,706 28,868 7.85
Class R5 3,890 496 7.84
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt
Class A 84,077,384 15,978,559 5.26
Class B 3,518,592 669,458 5.26
Class C 4,753,140 904,158 5.26
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth
Class A 553,923,464 64,580,896 8.58
Class B 50,253,513 7,048,364 7.13
Class C 7,874,750 1,103,661 7.14
Class I 71,139,006 7,877,330 9.03
Class R4 4,055,434 458,745 8.84
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond
Class A 645,167,080 173,557,831 3.72
Class B 14,670,642 3,944,081 3.72
Class C 8,445,704 2,271,237 3.72
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income
Class A 2,233,824,301 533,202,685 4.19
Class B 37,295,962 8,910,422 4.19
Class C 15,135,314 3,611,273 4.19
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 138,915,998 138,948,951 1.00
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS OTHER THAN MONEY MARKET FUNDS. A fund's securities are valued as
follows as of the close of business of the New York Stock Exchange (the
Exchange):
- Securities traded on a securities exchange for which a last-quoted sales
price is readily available are valued at the last-quoted sales price on
the exchange where such security is primarily traded.
- Securities traded on a securities exchange for which a last-quoted sales
price is not readily available are valued at the mean of the closing bid
and asked prices, looking first to the bid and asked prices on the
exchange where the security is primarily traded and, if none exist, to the
over-the-counter market.
- Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.
- Securities included in the NASDAQ National Market System for which a last-
quoted sales price is not readily available, and other securities traded
over-the-counter but not included in the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.
- Futures and options traded on major exchanges are valued at the last-
quoted sales price on their primary exchange.
Statement of Additional Information - [Date], 2010 Page 70
- Foreign securities traded outside the United States are generally valued
as of the time their trading is complete, which is usually different from
the close of the Exchange. Foreign securities quoted in foreign currencies
are translated into U.S. dollars utilizing spot exchange rates at the
close of regular trading on the Exchange.
- Occasionally, events affecting the value of securities occur between the
time the primary market on which the securities are traded closes and the
close of the Exchange. If events materially affect the value of
securities, the securities will be valued at their fair value according to
procedures decided upon in good faith by the Board. This occurs most
commonly with foreign securities, but may occur in other cases. The fair
value of a security is likely to be different from the quoted or published
price.
- Short-term securities maturing more than 60 days from the valuation date
are valued at the readily available market price or approximate market
value based on current interest rates. Typically, short-term securities
maturing in 60 days or less that originally had maturities of more than 60
days at acquisition date are valued at amortized cost using the market
value on the 61st day before maturity. Short-term securities maturing in
60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value determined by
systematically increasing the carrying value of a security if acquired at
a discount, or reducing the carrying value if acquired at a premium, so
that the carrying value is equal to maturity value on the maturity date.
- Securities without a readily available market price and securities for
which the price quotations or valuations received from other sources are
deemed unreliable or not reflective of market value are valued at fair
value as determined in good faith by the Board. The Board is responsible
for selecting methods it believes provide fair value.
- When possible, bonds are valued at an evaluated bid by a pricing service
independent from the funds. If a valuation of a bond is not available from
a pricing service, the bond will be valued by a dealer knowledgeable about
the bond if such a dealer is available.
The assets of funds-of-funds consist primarily of shares of the underlying
funds, which are valued at their NAVs. Other securities held by funds-of-funds
are valued as described above.
FOR MONEY MARKET FUNDS. In accordance with Rule 2a-7 of the 1940 Act, all of the
securities in the fund's portfolio are valued at amortized cost. The amortized
cost method of valuation is an approximation of market value determined by
systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to maturity value on the maturity date. Amortized cost
does not take into consideration unrealized capital gains or losses.
The Board has established procedures designed to stabilize the fund's price per
share for purposes of sales and redemptions at $1, to the extent that it is
reasonably possible to do so. These procedures include review of the fund's
securities by the Board, at intervals deemed appropriate by it, to determine
whether the fund's net asset value per share computed by using available market
quotations deviates from a share value of $1 as computed using the amortized
cost method. The Board must consider any deviation that appears and, if it
exceeds 0.5%, it must determine what action, if any, needs to be taken. If the
Board determines a deviation exists that may result in a material dilution of
the holdings of current shareholders or investors, or in any other unfair
consequences for shareholders, it must undertake remedial action that it deems
necessary and appropriate. Such action may include withholding dividends,
calculating net asset value per share for purposes of sales and redemptions
using available market quotations, making redemptions in kind, and selling
securities before maturity in order to realize capital gains or losses or to
shorten average portfolio maturity.
While the amortized cost method provides certainty and consistency in portfolio
valuation, it may result in valuations of securities that are either somewhat
higher or lower than the prices at which the securities could be sold. This
means that during times of declining interest rates the yield on the fund's
shares may be higher than if valuations of securities were made based on actual
market prices and estimates of market prices. Accordingly, if using the
amortized cost method were to result in a lower portfolio value, a prospective
investor in the fund would be able to obtain a somewhat higher yield than the
investor would get if portfolio valuations were based on actual market values.
Existing shareholders, on the other hand, would receive a somewhat lower yield
than they would otherwise receive. The opposite would happen during a period of
rising interest rates.
PORTFOLIO HOLDINGS DISCLOSURE
Each fund's Board and the investment manager believe that the investment ideas
of the investment manager and any subadviser with respect to portfolio
management of a fund should benefit the fund and its shareholders, and do not
want to afford speculators an opportunity to profit by anticipating fund trading
strategies or by using fund portfolio holdings information for stock picking.
However, each fund's Board also believes that knowledge of the fund's portfolio
holdings can
Statement of Additional Information - [Date], 2010 Page 71
assist shareholders in monitoring their investments, making asset allocation
decisions, and evaluating portfolio management techniques.
Each fund's Board has therefore adopted the investment manager's policies and
approved the investment manager's procedures, including the investment manager's
oversight of subadviser practices, relating to disclosure of the fund's
portfolio securities. These policies and procedures are intended to protect the
confidentiality of fund portfolio holdings information and generally prohibit
the release of such information until such information is made public, unless
such persons have been authorized to receive such information on a selective
basis, as described below. It is the policy of the fund not to provide or permit
others to provide portfolio holdings on a selective basis, and the investment
manager does not intend to selectively disclose portfolio holdings or expect
that such holdings information will be selectively disclosed, except where
necessary for the fund's operation or where there are legitimate business
purposes for doing so and, in any case, where conditions are met that are
designed to protect the interests of the fund and its shareholders. Although the
investment manager seeks to limit the selective disclosure of portfolio holdings
information and such selective disclosure is monitored under the fund's
compliance program for conformity with the policies and procedures, there can be
no assurance that these policies will protect the fund from the potential misuse
of holdings information by individuals or firms in possession of that
information. Under no circumstances may the investment manager, its affiliates
or any employee thereof receive any consideration or compensation for disclosing
such holdings information.
A complete schedule of each fund's portfolio holdings is available semi-annually
and annually in shareholder reports filed on Form N-CSR and, after the first and
third fiscal quarters, in regulatory filings on Form N-Q. These shareholder
reports and regulatory filings are filed with the SEC in accordance with federal
securities laws and are generally available within sixty (60) days of the end of
a fund's fiscal quarter, on the SEC's website.
In addition, the investment manager makes publicly available information
regarding a fund's top ten holdings (including name and percentage of a fund's
assets invested in each such holding) and the percentage breakdown of a fund's
investments by country, sector and industry, as applicable. This holdings
information is made publicly available through the websites
(riversource.com/funds for RiverSource and Threadneedle funds and seligman.com
for Seligman funds) as of month-end, approximately ten (10) days following the
month-end. In addition to the monthly top ten holdings and the portfolio
holdings information made available on the SEC website as part of a fund's
annual, semi-annual and fiscal quarter filings, the investment manager also
publishes on websites each fund's full portfolio holdings (including name and
percentage of a fund's assets invested in each such holding) as of the end of
each calendar quarter. This full list of portfolio holdings is made available
approximately thirty (30) days following the end of each calendar quarter.
From time to time, the investment manager may make partial or complete fund
holdings information that is not publicly available on the websites or otherwise
available in advance of the time restrictions noted above (1) to its affiliated
and unaffiliated service providers that require the information in the normal
course of business in order to provide services to the fund (including, without
limitation entities identified by name in the fund's prospectus or this SAI,
such as custodians, auditors, subadvisers, financial printers (Cenveo, Inc.,
Bowne, Vestek, Data Communique, Inc.), pricing services (including Reuters
Pricing Service, FT Interactive Data Corporation, Bear Stearns Pricing Service,
and Kenny S&P), proxy voting services (such as Risk Metrics), and companies that
deliver or support systems that provide analytical or statistical information
(including Factset Research Systems, Bloomberg, L.P.), (2) to facilitate the
review and/or rating of the fund by ratings and rankings agencies (including
Morningstar, Inc., Thomson Financial and Lipper Inc.), (3) entities that provide
trading, research or other investment related services (including Citigroup,
Merrill Lynch & Co., and Morgan Stanley), and (4) fund intermediaries that
include the funds in discretionary wrap or other investment programs that
request such information in order to support the services provided to investors
in the programs. In such situations, the information is released subject to
confidentiality agreements, duties imposed under applicable policies and
procedures (for example, applicable codes of ethics) designed to prevent the
misuse of confidential information, general duties under applicable laws and
regulations, or other such duties of confidentiality. In addition, the fund
discloses holdings information as required by federal, state or international
securities laws, and may disclose holdings information in response to requests
by governmental authorities, or in connection with litigation or potential
litigation, a restructuring of a holding, where such disclosure is necessary to
participate or explore participation in a restructuring of the holding (e.g., as
part of a bondholder group), or to the issuer of a holding, pursuant to a
request of the issuer or any other party who is duly authorized by the issuer.
Each fund's Board has adopted the policies of the investment manager and
approved the procedures Ameriprise Financial has established to ensure that the
fund's holdings information is only disclosed in accordance with these policies.
Before any selective disclosure of holdings information is permitted, the person
seeking to disclose such holdings information must submit a written request to
the Portfolio Holdings Committee ("PHC"). The PHC is comprised of members from
the investment manager's General Counsel's Office, Compliance, and
Communications. The PHC has been authorized by the fund's Board to perform an
initial review of requests for disclosure of holdings information to evaluate
whether there is a legitimate business purpose for selective disclosure, whether
selective disclosure is in the best interests of a fund and its
Statement of Additional Information - [Date], 2010 Page 72
shareholders, to consider any potential conflicts of interest between the fund,
the investment manager, and its affiliates, and to safeguard against improper
use of holdings information. Factors considered in this analysis are whether the
recipient has agreed to or has a duty to keep the holdings information
confidential and whether risks have been mitigated such that the recipient has
agreed or has a duty to use the holdings information only as necessary to
effectuate the purpose for which selective disclosure was authorized, including
a duty not to trade on such information. Before portfolio holdings may be
selectively disclosed, requests approved by the PHC must also be authorized by a
fund's Chief Compliance Officer or the fund's General Counsel. On at least an
annual basis the PHC reviews the approved recipients of selective disclosure
and, where appropriate, requires a resubmission of the request, in order to re-
authorize any ongoing arrangements. These procedures are intended to be
reasonably designed to protect the confidentiality of fund holdings information
and to prohibit their release to individual investors, institutional investors,
intermediaries that distribute the fund's shares, and other parties, until such
holdings information is made public or unless such persons have been authorized
to receive such holdings information on a selective basis, as set forth above.
In connection with a proposed acquisition by RiverSource Investments' parent
company, Ameriprise Financial, of certain asset management-related businesses
operated by subsidiary companies of the Bank of America Corporation (BAC),
RiverSource Investments may share certain of the Funds' portfolio holdings
information with select personnel of these BAC subsidiary companies as part of
the overall integration efforts with RiverSource Investments. Disclosures are
subject to confidentiality obligations and were approved by the PHC and the
funds' Chief Compliance Officer.
Although the investment manager has set up these procedures to monitor and
control selective disclosure of holdings information, there can be no assurance
that these procedures will protect a fund from the potential misuse of holdings
information by individuals or firms in possession of that information.
PROXY VOTING
GENERAL GUIDELINES, POLICIES AND PROCEDURES
The funds uphold a long tradition of supporting sound and principled corporate
governance. For over 30 years, the Board, which consists of a majority of
independent Board members, has determined policies and voted proxies. The funds'
investment manager, RiverSource Investments, and the funds' administrator,
Ameriprise Financial, provide support to the Board in connection with the proxy
voting process.
GENERAL GUIDELINES
CORPORATE GOVERNANCE MATTERS -- The Board supports proxy proposals that it
believes are tied to the interests of shareholders and votes against proxy
proposals that appear to entrench management. For example:
- The Board generally votes in favor of proposals for an independent
chairman or, if the chairman is not independent, in favor of a lead
independent director.
- The Board supports annual election of all directors and proposals to
eliminate classes of directors.
- In a routine election of directors, the Board will generally vote with
management's recommendations because the Board believes that management
and nominating committees of independent directors are in the best
position to know what qualifications are required of directors to form an
effective board. However, the Board will generally vote against a nominee
who has been assigned to the audit, compensation, or nominating committee
if the nominee is not independent of management based on established
criteria. The Board will also withhold support for any director who fails
to attend 75% of meetings or has other activities that appear to interfere
with his or her ability to commit sufficient attention to the company and,
in general, will vote against nominees who are determined to have been
involved in options backdating.
- The Board generally supports proposals requiring director nominees to
receive a majority of affirmative votes cast in order to be elected to the
board, and opposes cumulative voting based on the view that each director
elected should represent the interests of all shareholders.
- Votes in a contested election of directors are evaluated on a case-by-case
basis. In general, the Board believes that incumbent management and
nominating committees, with access to more and better information, are in
the best position to make strategic business decisions. However, the Board
will consider an opposing slate if it makes a compelling business case for
leading the company in a new direction.
Statement of Additional Information - [Date], 2010 Page 73
SHAREHOLDER RIGHTS PLANS -- The Board generally supports shareholder rights
plans based on a belief that such plans force uninvited bidders to negotiate
with a company's board. The Board believes these negotiations allow time for the
company to maximize value for shareholders by forcing a higher premium from a
bidder, attracting a better bid from a competing bidder or allowing the company
to pursue its own strategy for enhancing shareholder value. The Board supports
proposals to submit shareholder rights plans to shareholders and supports
limiting the vote required for approval of such plans to a majority of the votes
cast.
AUDITORS -- The Board values the independence of auditors based on established
criteria. The Board supports a reasonable review of matters that may raise
concerns regarding an auditor's service that may cause the Board to vote against
a management recommendation, including, for example, auditor involvement in
significant financial restatements, options backdating, material weaknesses in
control, attempts to limit auditor liability or situations where independence
has been compromised.
STOCK OPTION PLANS AND OTHER MANAGEMENT COMPENSATION ISSUES -- The Board expects
company management to give thoughtful consideration to providing competitive
long-term employee incentives directly tied to the interest of shareholders. The
Board votes against proxy proposals that it believes dilute shareholder value
excessively.
The Board believes that equity compensation awards can be a useful tool, when
not abused, for retaining employees and giving them incentives to engage in
conduct that will improve the performance of the company. In this regard, the
Board generally favors minimum holding periods of stock obtained by senior
management pursuant to an option plan and will vote against compensation plans
for executives that it deems excessive.
SOCIAL AND CORPORATE POLICY ISSUES -- The Board believes proxy proposals should
address the business interests of the corporation. Shareholder proposals
sometime seek to have the company disclose or amend certain business practices
based purely on social or environmental issues rather than compelling business
arguments. In general, the Board recognizes our fund shareholders are likely to
have differing views of social and environmental issues and believes that these
matters are primarily the responsibility of a company's management and its board
of directors.
POLICIES AND PROCEDURES
The policy of the Board is to vote all proxies of the companies in which a fund
holds investments. Because of the volume and complexity of the proxy voting
process, including inherent inefficiencies in the process that are outside the
control of the Board or the Proxy Team (as defined below), not all proxies may
be voted. The Board has implemented policies and procedures that have been
reasonably designed to vote proxies and to ensure that there are no conflicts
between interests of a fund's shareholders and those of the funds' principal
underwriters, RiverSource Investments, or other affiliated persons. In
exercising its proxy voting responsibilities, the Board may rely upon the
research or recommendations of one or more third party service providers.
The administration of the proxy voting process is handled by the RiverSource
Proxy Administration Team ("Proxy Team"). In exercising its responsibilities,
the Proxy Team may rely upon one or more third party service providers. The
Proxy Team assists the Board in identifying situations where its guidelines do
not clearly require a vote in a particular manner and assists in researching
matters and making voting recommendations. RiverSource Investments may recommend
that a proxy be voted in a manner contrary to the Board's guidelines. In making
recommendations to the Board about voting on a proposal, the investment manager
relies on its own investment personnel (or the investment personnel of a fund's
subadviser(s)) and information obtained from an independent research firm. The
investment manager makes the recommendation in writing. The process requires
that Board members who are independent from the investment manager consider the
recommendation and decide how to vote the proxy proposal or establish a protocol
for voting the proposal.
On an annual basis, or more frequently as determined necessary, the Board
reviews recommendations to revise the existing guidelines or add new guidelines.
Recommendations are based on, among other things, industry trends and the
frequency that similar proposals appear on company ballots.
The Board considers management's recommendations as set out in the company's
proxy statement. In each instance in which a fund votes against management's
recommendation (except when withholding votes from a nominated director), the
Board sends a letter to senior management of the company explaining the basis
for its vote. This permits both the company's management and the Board to have
an opportunity to gain better insight into issues presented by the proxy
proposal(s).
VOTING IN COUNTRIES OUTSIDE THE UNITED STATES (NON-U.S. COUNTRIES) -- Voting
proxies for companies not domiciled in the United States may involve greater
effort and cost due to the variety of regulatory schemes and corporate
practices. For example, certain non-U.S. countries require securities to be
blocked prior to a vote, which means that the securities to be voted may not be
traded within a specified number of days before the shareholder meeting. The
Board typically will not vote securities in non-U.S. countries that require
securities to be blocked as the need for liquidity of the securities in the
funds
Statement of Additional Information - [Date], 2010 Page 74
will typically outweigh the benefit of voting. There may be additional costs
associated with voting in non-U.S. countries such that the Board may determine
that the cost of voting outweighs the potential benefit.
SECURITIES ON LOAN -- The Board will generally refrain from recalling securities
on loan based upon its determination that the costs and lost revenue to the
funds, combined with the administrative effects of recalling the securities,
generally outweigh the benefit of voting the proxy. While neither the Board nor
the funds' administrator assesses the economic impact and benefits of voting
loaned securities on a case-by-case basis, situations may arise where the Board
requests that loaned securities be recalled in order to vote a proxy. In this
regard, if a proxy relates to matters that may impact the nature of a company,
such as a proposed merger or acquisition, and the funds' ownership position is
more significant, the Board has established a guideline to direct the funds'
administrator to use its best efforts to recall such securities based upon its
determination that, in these situations, the benefits of voting such proxies
generally outweigh the costs or lost revenue to the funds, or any potential
adverse administrative effects to the funds, of not recalling such securities.
INVESTMENT IN AFFILIATED FUNDS -- Certain funds may invest in shares of other
funds in the RiverSource Family of Funds (referred to in this context as
"underlying funds") and may own substantial portions of these underlying funds.
The proxy policy of the funds is to ensure that direct public shareholders of
underlying funds control the outcome of any shareholder vote. To help manage
this potential conflict of interest, recognizing that the direct public
shareholders of these underlying funds may represent only a minority interest,
the policy of the funds is to vote proxies of the underlying funds in the same
proportion as the vote of the direct public shareholders. If there are no direct
public shareholders of an underlying fund, the policy is to cast votes in
accordance with instructions from the independent members of the Board.
OBTAIN A PROXY VOTING RECORD
Each year the funds file their proxy voting records with the SEC and make them
available by August 31 for the 12-month period ending June 30 of that year. The
records can be obtained without charge through riversource.com/funds or
searching the website of the SEC at www.sec.gov.
INVESTING IN A FUND
SALES CHARGE
Investors should understand that the purpose and function of the initial sales
charge and distribution fee for Class A shares is the same as the purpose and
function of the contingent deferred sales charge ("CDSC") and distribution fee
for Class B and Class C shares. The sales charges and distribution fees
applicable to each class pay for the distribution of shares of a fund.
Shares of a fund are sold at the class' public offering price. For funds other
than money market funds, the public offering price is the NAV of one share
adjusted for the sales charge for Class A. For money market funds, the public
offering price is the NAV. For all funds, for Class B, Class C, Class D, Class
E, Class I, Class R2, Class R3, Class R4, Class R5, Class W, Class Y and Class Z
there is no initial sales charge so the public offering price is the same as the
NAV.
Statement of Additional Information - [Date], 2010 Page 75
CLASS A - CALCULATION OF THE SALES CHARGE
Sales charges are determined as shown in the following tables. The first table
is organized by investment category. You can find your fund's investment
category in Table 1.
TABLE 9. CLASS A INITIAL SALES CHARGE
For all funds EXCEPT RiverSource Absolute Return Currency and Income,
RiverSource Floating Rate, RiverSource Inflation Protected Securities,
RiverSource Intermediate Tax-Exempt, RiverSource Limited Duration Bond and
RiverSource Short Duration U.S. Government:
---------------------------------------------------------------------------------
FUND-OF-FUNDS - FIXED
INCOME, STATE TAX-EXEMPT
FIXED INCOME, TAXABLE FIXED
BALANCED, EQUITY, FUND-OF- INCOME, TAX-EXEMPT FIXED
FUNDS - EQUITY INCOME
----------------------------------------------------------
FUND CATEGORY SALES CHARGE(a) AS A PERCENTAGE OF:
---------------------------------------------------------------------------------
PUBLIC PUBLIC
OFFERING NET AMOUNT OFFERING NET AMOUNT
TOTAL MARKET VALUE PRICE(b) INVESTED PRICE(b) INVESTED
---------------------------------------------------------------------------------
Up to $49,999 5.75% 6.10% 4.75% 4.99%
---------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.99% 4.25% 4.44%
---------------------------------------------------------------------------------
$100,000 - $249,999 3.50% 3.63% 3.50% 3.63%
---------------------------------------------------------------------------------
$250,000 - $499,999 2.50% 2.56% 2.50% 2.56%
---------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 2.04% 2.00% 2.04%
---------------------------------------------------------------------------------
$1,000,000 or
more(c),(d) 0.00% 0.00% 0.00% 0.00%
---------------------------------------------------------------------------------
For RiverSource Absolute Return Currency and Income, RiverSource Floating Rate,
RiverSource Inflation Protected Securities, RiverSource Intermediate Tax-Exempt,
RiverSource Limited Duration Bond and RiverSource Short Duration U.S.
Government:
-----------------------------------------------------------------------------------------
SALES CHARGE(a) AS A
PERCENTAGE OF SALES CHARGE(a) AS A
PUBLIC OFFERING PERCENTAGE OF
TOTAL MARKET VALUE PRICE(b) NET AMOUNT INVESTED
-----------------------------------------------------------------------------------------
Up to $49,999 3.00% 3.09%
-----------------------------------------------------------------------------------------
$50,000 - $99,999 3.00% 3.09%
-----------------------------------------------------------------------------------------
$100,000 - $249,999 2.50% 2.56%
-----------------------------------------------------------------------------------------
$250,000 - $499,999 2.00% 2.04%
-----------------------------------------------------------------------------------------
$500,000 - $999,999 1.50% 1.52%
-----------------------------------------------------------------------------------------
$1,000,000 or more(c),(d) 0.00% 0.00%
-----------------------------------------------------------------------------------------
(a) Because of rounding in the calculation of purchase price, the portion of
the sales charge retained by the distributor may vary and the actual
sales charge you pay may be more or less than the sales charge
calculated using these percentages.
(b) Purchase price includes the sales charge.
(c) Although there is no sales charge for purchases with a total market
value over $1,000,000, and therefore no re-allowance, the distributor
may pay a financial intermediary the following out of its own resources:
a sales commission of up to 1.00% for a sale of $1,000,000 to
$3,999,999; a sales commission up to 0.50% for a sale of $4,000,000 to
$49,999,999; and a sales commission up to 0.25% for a sale of
$50,000,000 or more.
(d) For certain eligible employee benefit plans defined under section
401(a), 401(k), 457 and 403(b) which meet eligibility rules for the
waiver of applicable sales charges, the distributor may pay the
following out of its own resources: a sale commission of 1.00% for a
sale of $1 to $3,999,999 received in eligible employee benefit plans; a
sales commission of up to 0.50% for a sale of $4,000,000 to $49,999,999;
and a sales commission up to 0.25% for a sale of $50,000,000 or more.
See "Initial Sales Charge -- Waivers of the sales charge for Class A
shares" for employee benefit plan eligibility rules.
Using the sales charge schedule in the table above, for Class A, the public
offering price for an investment of less than $50,000, made on the last day of
the most recent fiscal period, was determined as shown in the following table.
The sales charge is paid to the distributor by the person buying the shares. The
table is organized by fiscal year end. You can find your fund's fiscal year end
in Table 1.
Statement of Additional Information - [Date], 2010 Page 76
TABLE 10. PUBLIC OFFERING PRICE
PUBLIC
NET ASSET 1.0 MINUS MAXIMUM OFFERING
FUND VALUE SALES CHARGE PRICE
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
----------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income $ 8.24 0.9525 $ 8.65
----------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income 7.60 0.9525 7.98
----------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income 7.86 0.9525 8.25
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive 6.49 0.9425 6.89
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative 8.51 0.9525 8.93
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 7.58 0.9425 8.04
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Aggressive 7.01 0.9425 7.44
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative 8.02 0.9525 8.42
----------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity 6.03 0.9425 6.40
----------------------------------------------------------------------------------------------
RiverSource S&P 500 Index (for Class D) 2.73 No sales charge 2.73
----------------------------------------------------------------------------------------------
RiverSource Small Company Index 2.82 0.9425 2.99
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
----------------------------------------------------------------------------------------------
RiverSource Equity Value 6.54 0.9425 6.94
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth 2.25 0.9425 2.39
----------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining 9.04 0.9425 9.59
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
----------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity 11.42 0.9425 12.12
----------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure 11.62 0.9425 12.33
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 6.92 0.9425 7.34
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 6.79 0.9425 7.20
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 6.33 0.9425 6.72
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 6.26 0.9425 6.64
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 6.29 0.9425 6.67
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 6.22 0.9425 6.60
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 6.04 0.9425 6.41
----------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 6.17 0.9425 6.55
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
----------------------------------------------------------------------------------------------
RiverSource High Yield Bond 2.30 0.9525 2.41
----------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth 6.13 0.9425 6.50
----------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value 3.71 0.9425 3.94
----------------------------------------------------------------------------------------------
RiverSource Partners Select Value 3.18 0.9425 3.37
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity 3.43 0.9425 3.64
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value 3.35 0.9425 3.55
----------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government 4.63 0.9700 4.77
----------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage 4.77 0.9525 5.01
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
----------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity 5.58 0.9425 5.92
----------------------------------------------------------------------------------------------
RiverSource Real Estate 6.24 0.9425 6.62
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
----------------------------------------------------------------------------------------------
RiverSource Cash Management 1.00 No sales charge 1.00
----------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 4.30 0.9425 4.56
----------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap
Equity 6.24 0.9425 6.62
----------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value 6.71 0.9425 7.12
----------------------------------------------------------------------------------------------
RiverSource Floating Rate 7.93 0.9700 8.18
----------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 77
PUBLIC
NET ASSET 1.0 MINUS MAXIMUM OFFERING
FUND VALUE SALES CHARGE PRICE
----------------------------------------------------------------------------------------------
RiverSource Income Opportunities $ 9.00 0.9525 $ 9.45
----------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities 9.75 0.9700 10.05
----------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond 9.46 0.9700 9.75
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
----------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 4.85 0.9525 5.09
----------------------------------------------------------------------------------------------
RiverSource Diversified Bond 4.75 0.9525 4.99
----------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt 5.16 0.9525 5.42
----------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 4.86 0.9525 5.10
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------
RiverSource Balanced 8.79 0.9425 9.33
----------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth 7.50 0.9425 7.96
----------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value 7.78 0.9425 8.25
----------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income 8.31 0.9425 8.82
----------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 6.15 0.9425 6.53
----------------------------------------------------------------------------------------------
RiverSource Strategic Allocation 8.44 0.9425 8.95
----------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation 9.60 0.9525 10.08
----------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield 6.69 0.9525 7.02
----------------------------------------------------------------------------------------------
Seligman California Municipal Quality 6.69 0.9525 7.02
----------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 7.79 0.9525 8.18
----------------------------------------------------------------------------------------------
Seligman National Municipal 8.12 0.9525 8.52
----------------------------------------------------------------------------------------------
Seligman New York Municipal 8.32 0.9525 8.73
----------------------------------------------------------------------------------------------
Seligman TargETFund 2015 6.63 0.9425 7.03
----------------------------------------------------------------------------------------------
Seligman TargETFund 2025 6.84 0.9425 7.26
----------------------------------------------------------------------------------------------
Seligman TargETFund 2035 7.09 0.9425 7.52
----------------------------------------------------------------------------------------------
Seligman TargETFund 2045 7.06 0.9425 7.49
----------------------------------------------------------------------------------------------
Seligman TargETFund Core 6.44 0.9425 6.83
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
----------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and Income 9.93 0.9700 10.24
----------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity 6.98 0.9425 7.41
----------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond 10.35 0.9525 10.87
----------------------------------------------------------------------------------------------
RiverSource Global Bond 7.10 0.9525 7.45
----------------------------------------------------------------------------------------------
RiverSource Partners International Select
Growth 5.80 0.9425 6.15
----------------------------------------------------------------------------------------------
RiverSource Partners International Select Value 5.67 0.9425 6.02
----------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap 5.08 0.9425 5.39
----------------------------------------------------------------------------------------------
Seligman Frontier 8.21 0.9425 8.71
----------------------------------------------------------------------------------------------
Seligman Global Technology 16.50 0.9425 17.51
----------------------------------------------------------------------------------------------
Threadneedle Asia Pacific (for Class R5) 11.42 N/A N/A
----------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 7.74 0.9425 8.21
----------------------------------------------------------------------------------------------
Threadneedle European Equity 4.86 0.9425 5.16
----------------------------------------------------------------------------------------------
Threadneedle Global Equity 6.13 0.9425 6.50
----------------------------------------------------------------------------------------------
Threadneedle Global Equity Income 8.49 0.9425 9.01
----------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha 17.65 0.9425 18.73
----------------------------------------------------------------------------------------------
Threadneedle International Opportunity 7.70 0.9425 8.17
----------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 78
PUBLIC
NET ASSET 1.0 MINUS MAXIMUM OFFERING
FUND VALUE SALES CHARGE PRICE
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt $5.26 0.9700 $5.42
----------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 8.58 0.9425 9.10
----------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 3.72 0.9525 3.91
----------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income 4.19 0.9525 4.40
----------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
----------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 1.00 No sales charge 1.00
----------------------------------------------------------------------------------------------
CLASS A - LETTER OF INTENT (LOI)
If you intend to invest $50,000 or more over a period of time, you may be able
to reduce the sales charge you pay on investments in Class A by completing a LOI
form and committing to invest a certain amount. The LOI must be filed with and
accepted in good order by the RiverSource Fund Distributors, Inc., the
distributor of the funds (the distributor). The LOI can start at any time and
you will have up to 13 months to fulfill your commitment. Existing Rights of
Accumulation (ROA) can be included for purposes of meeting your commitment under
the LOI. For example, a shareholder currently has $60,000 ROA in the funds.
Shareholder completes an LOI to invest $100,000 in the funds (ROA eligible
accounts). Shareholder only needs to invest an additional $40,000 in the funds'
Class A shares over the next 13 months in order to fulfill the LOI commitment,
during which time the shareholder receives reduced front-end sales charge(s) on
investments. Your investments during this 13-month period will be charged the
sales charge that applies to the amount you have committed to invest under the
LOI. A portion of your commitment will be invested in Class A shares and placed
in escrow. At the end of the 13-month period, the LOI will end and the shares
will be released from escrow (less any amount necessary to pay sales charges to
the extent the LOI commitment was not met, as described below). Once the LOI has
ended or your investments entitle you to a lower sale charge than would
otherwise be available to you under the LOI, future sales charges will be
determined by ROA as described in the prospectus. If you do not invest the
commitment amount by the end of the 13-month period, the remaining unpaid sales
charge will be redeemed from the escrowed shares and the remaining balance
released from escrow. The commitment amount does not include purchases in any
class of funds other than Class A; does not include any new reinvested dividends
and directed dividends earned in any funds during the 13-month period; purchases
in funds held within a wrap product; and purchases of money market funds unless
they are subsequently exchanged to Class A shares of a fund within the 13-month
period. A LOI is not an option (absolute right) to buy shares. If you purchase
shares through different channels, for example, in a brokerage account or
through a third party, you must inform your financial intermediary in writing
about the LOI when placing any purchase orders during the period of the LOI. If
you do not complete and file the LOI form, or do not request the reduced sales
charge at the time of purchase, you will not be eligible for the reduced sales
charge.
CLASS A SHARES
Class A shares may be sold at net asset value to certain persons since such
sales require less sales effort and lower sales-related expenses as compared
with sales to the general public. If you are eligible to purchase Class A shares
without a sales charge, you should inform your financial advisor, financial
intermediary or the transfer agent of such eligibility and be prepared to
provide proof thereof. 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.
INITIAL SALES CHARGE -- WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES. Sales
charges do not apply to:
- shareholders whose original purchase was in a Strategist fund merged into
a RiverSource fund in 2000.
- participants of "eligible employee benefit plans" including 403(b) plans
for which Ameriprise Financial Services, Inc. (Ameriprise Financial
Services) serves as broker-dealer, and the school district or group
received a written proposal from Ameriprise Financial Services between
November 1, 2007 and December 31, 2008 (each a Qualifying 403(b) Plan). In
order for participants in one of these 403(b) plans to receive this
waiver, at least one participant account of the 403(b) plan must have been
funded at Ameriprise Financial Services prior to December 31, 2009. This
waiver may be discontinued for any Qualifying 403(b) Plan, in the sole
discretion of the distributor, after December 31, 2009.
- to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act.
Statement of Additional Information - [Date], 2010 Page 79
- plans that (i) own Class B shares of any Seligman fund and (ii)
participate in Seligman Growth 401(k) through Ascensus's (formerly BISYS)
third party administration platform may, with new contributions, purchase
Class A shares at net asset value. Class A shares purchased at net asset
value are subject to a CDSC of 1% on shares purchased within 18 months
prior to plan termination.
- to participants in retirement and deferred compensation plans and trusts
used to fund those plans, including but not limited to, those defined in
Sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code and
"rabbi trusts" for which Charles Schwab & Co., Inc. acts as broker dealer.
- to participants in plans established at the transfer agent (Seligman funds
only) prior to January 7, 2008, the plan had $500,000 or 50 participants
when the shares were initially purchased.
- to participants in retirement and benefit plans made through financial
intermediaries that perform participant recordkeeping or other
administrative services for the plans and that have entered into special
arrangements as alliance program partners with the funds and/or the
distributor specifically for such purchases.
- to other investment companies in the RiverSource Family of Funds pursuant
to a "fund of funds" arrangement.
CDSC -- WAIVERS OF THE CDSC FOR CLASS A SHARES. The CDSC will be waived on
sales of shares:
- in connection with participation in the Merrill Lynch Small Market 401(k)
Program, retirement programs administered or serviced by the Princeton
Retirement Group, Paychex, ADP Retirement Services, Hartford Securities
Distribution Company, Inc. or NYLIM Service Company LLC, retirement
programs or accounts administered or serviced by Mercer HR Services, LLC
or its affiliates, or retirement programs or accounts administered or
serviced by firms that have a written agreement with the distributor that
contemplates a waiver of CDSCs, provided that no sales commission or
transaction fee was paid to such authorized financial institution at the
time of purchase.
CLASS B SHARES
Class B shares have a CDSC for six years. Class B shares purchased in a
RiverSource fund prior to May 21, 2005 will convert to Class A shares in the
ninth calendar year of ownership. Class B shares purchased in a Seligman fund on
or prior to June 12, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership. Class B shares purchased in a RiverSource fund
beginning May 21, 2005 and Class B shares purchased in a Seligman fund beginning
June 13, 2009 will convert to Class A shares one month after the completion of
the eighth year of ownership.
CDSC -- WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on
sales of shares:
- in connection with participation in the Merrill Lynch Small Market 401(k)
Program, retirement programs administered or serviced by the Princeton
Retirement Group, Paychex, ADP Retirement Services, Hartford Securities
Distribution Company, Inc. or NYLIM Service Company LLC, retirement
programs or accounts administered or serviced by Mercer HR Services, LLC
or its affiliates, or retirement programs or accounts administered or
serviced by firms that have a written agreement with the distributor that
contemplates a waiver of CDSCs, provided that no sales commission or
transaction fee was paid to such authorized financial institution at the
time of purchase
- for shares of RiverSource funds held in investment-only accounts (i.e.
accounts where Ameriprise Trust Company does not act as the custodian) at
Ameriprise Financial Services on behalf of a trust for an employee benefit
plan
- for shares of RiverSource funds held in IRAs or certain qualified plans,
on or prior to June 12, 2009, such as Keogh plans, tax-sheltered custodial
accounts or corporate pension plans where Ameriprise Trust Company is
acting as custodian, provided that the shareholder is:
- at least 59 1/2 years old and taking a retirement distribution (if
the sale is part of a transfer to an IRA or qualified plan, or a
custodian-to-custodian transfer, the CDSC will not be waived) OR
- selling under an approved substantially equal periodic payment
arrangement.
CLASS C SHARES
Class C shares are available to all investors. Class C shares are sold without a
front-end sales charge. For Class C shares, a 1% CDSC may apply if shares are
sold within one year after purchase. Class C shares are subject to a
distribution fee.
CDSC -- WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on
sales of shares:
- in connection with participation in the Merrill Lynch Small Market 401(k)
Program, retirement programs administered or serviced by the Princeton
Retirement Group, Paychex, ADP Retirement Services, Hartford Securities
Distribution Company, Inc. or NYLIM Service Company LLC, retirement
programs or accounts administered or serviced by Mercer HR Services, LLC
or its affiliates, or retirement programs or accounts administered or
serviced
Statement of Additional Information - [Date], 2010 Page 80
by firms that have a written agreement with the distributor that
contemplates a waiver of CDSCs, provided that no sales commission or
transaction fee was paid to such authorized financial institution at the
time of purchase
- for shares of RiverSource funds held in investment-only accounts (i.e.
accounts where Ameriprise Trust Company does not act as the custodian) at
Ameriprise Financial Services on behalf of a trust for an employee benefit
plan and for shares of RiverSource funds held in tax-sheltered custodial
accounts where Ameriprise Trust Company is the custodian, in cases where
the sale is not a full liquidation of the Qualified Plan Account, and in
cases where the sale is a full liquidation of a Qualified Plan Account
held for the benefit of multiple plan participants, but the full
liquidation is not the result of a mutual fund line-up (plan investment
option) change or plan termination.
CLASS D SHARES
Class D shares are offered through wrap fee programs or other investment
products. Class D shares are sold without a front-end sales charge or CDSC.
Class D shares are subject to a distribution fee.
CLASS E SHARES
Class E shares are offered to qualifying institutional investors and brokerage
accounts. Class E shares are sold without a front-end sales charge or CDSC.
Class E shares are subject to a plan administration fee.
CLASS I SHARES
Class I shares are offered to qualifying institutional investors. Class I shares
are sold without a front-end sales charge or CDSC.
CLASS R SHARES
Class R2, Class R3, Class R4 and Class R5 shares are offered to certain
institutional investors. Class R2, Class R3, Class R4 and Class R5 shares are
sold without a front-end sales charge or a CDSC. Class R2 and Class R3 shares
are subject to a distribution fee. Class R2, Class R3 and R4 shares are subject
to a plan administration fee. The following investors are eligible to purchase
Class R2, Class R3, Class R4 and Class R5 shares:
- Qualified employee benefit plans;
- Trust companies or similar institutions, and charitable organizations that
meet the definition in Section 501(c)(3) of the Internal Revenue Code;
- Nonqualified deferred compensation plans;
- State sponsored college savings plans established under Section 529 of the
Internal Revenue Code;
- Health Savings Accounts (HSAs) created pursuant to public law 108-173.
Additionally, the following eligible investors may purchase Class R5 shares:
- Institutional or corporate accounts above a threshold established by the
distributor (currently $1 million per fund or $10 million in all
RiverSource funds); and
- Bank Trusts.
CLASS W SHARES
Class W shares are offered to qualifying discretionary accounts. Class W shares
are sold without a front-end sales charge or CDSC. Class W shares are subject to
a distribution fee.
CLASS Y SHARES
Class Y shares are offered to certain institutional investors. Class Y shares
are sold without a front-end sales charge or a CDSC. Class Y shares are subject
to a plan administration fee. The following investors are eligible to purchase
Class Y shares:
- Qualified employee benefit plans;
- Trust companies or similar institutions, and charitable organizations that
meet the definition in Section 501(c)(3) of the Internal Revenue Code;
- Nonqualified deferred compensation plans; and
- State sponsored college savings plans established under Section 529 of the
Internal Revenue Code.
CLASS Z SHARES
Class Z shares are sold without a front-end sales charge or a CDSC.
Statement of Additional Information - [Date], 2010 Page 81
With limited exceptions, Class Z shares are generally closed to new investors,
and are available for purchase only to existing Class Z shareholders purchasing
through exchanges from Class Z shares of other Columbia Funds. Class Z shares of
RiverSource Cash Management Fund may not be exchanged into other classes or
funds in the RiverSource Family of Funds.
In addition, for Class I, Class R, Class W and Class Z shares, the distributor,
in its sole discretion, may accept investments from other purchasers not listed
above.
FUND REORGANIZATIONS
Class A shares may be issued without an initial sales charge in connection with
the acquisition of cash and securities owned by other investment companies. Any
CDSC will be waived in connection with the redemption of shares of the fund if
the fund is combined with another fund or in connection with a similar
reorganization transaction.
REJECTION OF BUSINESS
Each fund and the distributor of the fund reserve the right to reject any
business, in their sole discretion.
SELLING SHARES
You have a right to sell your shares at any time. For an explanation of sales
procedures, please see the applicable prospectus.
During an emergency, the Board can suspend the computation of NAV, stop
accepting payments for purchase of shares, or suspend the duty of a fund to
redeem shares for more than seven days. Such emergency situations would occur
if:
- The Exchange closes for reasons other than the usual weekend and holiday
closings or trading on the Exchange is restricted, or
- Disposal of a fund's securities is not reasonably practicable or it is not
reasonably practicable for the fund to determine the fair value of its net
assets, or,
- The SEC, under the provisions of the 1940 Act, declares a period of
emergency to exist.
Should a fund stop selling shares, the Board may make a deduction from the value
of the assets held by the fund to cover the cost of future liquidations of the
assets so as to distribute these costs fairly among all shareholders.
Each fund has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to the lesser of $250,000 or 1% of the net assets
of the fund at the beginning of the period. Although redemptions in excess of
this limitation would normally be paid in cash, the fund reserves the right to
make these payments in whole or in part in securities or other assets in case of
an emergency, or if the payment of a redemption in cash would be detrimental to
the existing shareholders of the fund as determined by the Board. In these
circumstances, the securities distributed would be valued as set forth in this
SAI. Should a fund distribute securities, a shareholder may incur brokerage fees
or other transaction costs in converting the securities to cash.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment in regular
installments. If you redeem shares, you may be subject to a contingent deferred
sales charge as discussed in the prospectus. While the plans differ on how the
pay-out is figured, they all are based on the redemption of your investment. Net
investment income dividends and any capital gain distributions will
automatically be reinvested, unless you elect to receive them in cash. If you
redeem an IRA or a qualified retirement account, certain restrictions, federal
tax penalties, and special federal income tax reporting requirements may apply.
You should consult your tax advisor about this complex area of the tax law.
Applications for a systematic investment in a class of a fund subject to a sales
charge normally will not be accepted while a pay-out plan for any of those funds
is in effect. Occasional investments, however, may be accepted.
To start any of these plans, please consult your financial intermediary. Your
authorization must be received at least five days before the date you want your
payments to begin. Payments will be made on a monthly, bimonthly, quarterly,
semiannual, or annual basis. Your choice is effective until you change or cancel
it.
Statement of Additional Information - [Date], 2010 Page 82
CAPITAL LOSS CARRYOVER
For federal income tax purposes, certain funds had total capital loss carryovers
at the end of the most recent fiscal period that, if not offset by subsequent
capital gains, will expire as provided in the table below. Because the
measurement periods for a regulated investment company's income are different
for excise tax purposes verses income tax purposes, special rules are in place
to protect the amount of earnings and profits needed to support excise tax
distributions. As a result, the funds are permitted to treat net capital losses
realized between November 1 and its fiscal year end ("post-October loss") as
occurring on the first day of the following tax year. The total capital loss
carryovers below include post-October losses, if applicable. It is unlikely that
the Board will authorize a distribution of any net realized capital gains until
the available capital loss carryover has been offset or has expired except as
required by Internal Revenue Service rules. The table is organized by fiscal
year end. You can find your fund's fiscal year end in Table 1.
TABLE 11. CAPITAL LOSS CARRYOVER
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2009 IN 2010 IN 2011 IN 2012 IN 2013 IN 2014
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income
Builder Basic Income $ 8,559,573 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income
Builder Enhanced Income $13,065,266 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income
Builder Moderate Income $19,970,659 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Aggressive $10,806,229 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Conservative $ 192,230 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate $10,391,694 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate
Aggressive $13,834,899 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate
Conservative $ 2,290,537 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Total Equity $11,256,800 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index $ 5,965,014 $0 $942,797 $0 $0 $2,640,220 $235,890
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Small Company
Index $22,588,242 $0 $ 0 $0 $0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2015 IN 2016 IN 2017 IN 2018
------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
------------------------------------------------------------------------------------
RiverSource Income
Builder Basic Income $ 0 $0 $2,942,103 $ 5,617,470
------------------------------------------------------------------------------------
RiverSource Income
Builder Enhanced Income $ 0 $0 $5,920,892 $ 7,144,374
------------------------------------------------------------------------------------
RiverSource Income
Builder Moderate Income $ 0 $0 $7,376,558 $12,594,101
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Aggressive $ 0 $0 $2,936,474 $ 7,869,755
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Conservative $ 0 $0 $ 0 $ 192,230
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate $ 0 $0 $7,597,638 $ 2,794,056
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate
Aggressive $ 0 $0 $1,997,917 $11,836,982
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Moderate
Conservative $ 0 $0 $1,062,939 $ 1,227,598
------------------------------------------------------------------------------------
RiverSource Portfolio
Builder Total Equity $ 0 $0 $3,787,911 $ 7,468,889
------------------------------------------------------------------------------------
RiverSource S&P 500 Index $66,065 $0 $ 0 $ 2,080,042
------------------------------------------------------------------------------------
RiverSource Small Company
Index $ 0 $0 $ 0 $22,588,242
------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 83
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
------------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value $ 102,840,472 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Growth $ 46,052,763 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Precious
Metals and Mining $ 27,030,083 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20
Contrarian
Equity $ 8,822,619 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and
Infrastructure $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2010 $ 2,839,371 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2015 $ 3,165,812 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2020 $ 4,016,808 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2025 $ 3,000,254 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2030 $ 1,777,786 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2035 $ 900,438 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2040 $ 622,124 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2045 $ 301,915 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
------------------------------------------------------------------------------------------------------------------------
RiverSource High Yield
Bond $1,283,661,310 $0 $517,121,802 $552,664,309 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Aggressive
Growth $ 528,390,106 $0 $315,348,050 $23,741,111 $27,111,944 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Fundamental Value $ 100,708,798 $0 $0 $0 -- --
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Select Value $ 111,922,284 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Equity $ 65,709,663 $0 $7,164,740 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Value $ 93,886,708 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Short
Duration U.S. Government $ 88,365,852 $0 $0 $0 $0 $36,267,962
------------------------------------------------------------------------------------------------------------------------
RiverSource
U.S. Government Mortgage $ 13,435,568 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
------------------------------------------------------------------------------------------------------------------------
RiverSource Dividend
Opportunity $ 535,432,960 $0 $0 $343,927,468 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate $ 48,042,039 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2014 IN 2015 IN 2016 IN 2017 IN 2018
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
---------------------------------------------------------------------------------------------------
RiverSource Equity Value $0 $0 $0 $25,779,763 $77,060,709
---------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Growth $0 $0 $0 $12,606,381 $33,446,382
---------------------------------------------------------------------------------------------------
RiverSource Precious
Metals and Mining $0 $0 $0 $16,291,615 $10,738,468
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
---------------------------------------------------------------------------------------------------
RiverSource 120/20
Contrarian
Equity $0 $0 $0 $3,090,734 $5,731,885
---------------------------------------------------------------------------------------------------
RiverSource Recovery and
Infrastructure -- -- -- -- --
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2010 $0 $0 $0 $428,181 $2,411,190
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2015 $0 $0 $0 $704,342 $2,461,470
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2020 $0 $0 $0 $502,050 $3,514,758
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2025 $0 $0 $0 $662,473 $2,337,781
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2030 $0 $0 $0 $623,604 $1,154,182
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2035 $0 $0 $0 $312,553 $587,885
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2040 $0 $0 $0 $370,260 $251,864
---------------------------------------------------------------------------------------------------
RiverSource Retirement
Plus 2045 $0 $0 $0 $84,212 $217,703
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
---------------------------------------------------------------------------------------------------
RiverSource High Yield
Bond $19,078,058 $0 $6,050,907 $110,841,094 $77,905,140
---------------------------------------------------------------------------------------------------
RiverSource Partners
Aggressive
Growth $0 $0 $0 $54,181,922 $108,007,079
---------------------------------------------------------------------------------------------------
RiverSource Partners
Fundamental Value -- -- -- $26,053,833 $74,654,965
---------------------------------------------------------------------------------------------------
RiverSource Partners
Select Value $0 $0 $0 $34,137,314 $77,784,970
---------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Equity $0 $0 $0 $15,394,778 $43,150,145
---------------------------------------------------------------------------------------------------
RiverSource Partners
Small Cap Value $0 $0 $0 $20,926,946 $72,959,762
---------------------------------------------------------------------------------------------------
RiverSource Short
Duration U.S. Government $20,469,230 $9,579,187 $0 $3,846,817 $18,202,656
---------------------------------------------------------------------------------------------------
RiverSource
U.S. Government Mortgage $0 $0 $0 $410,120 $13,025,448
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
---------------------------------------------------------------------------------------------------
RiverSource Dividend
Opportunity $0 $0 $0 $36,972,874 $154,532,618
---------------------------------------------------------------------------------------------------
RiverSource Real Estate -- -- -- $1,114,883 $46,927,156
---------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 84
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
------------------------------------------------------------------------------------------------------------------------
RiverSource Cash
Management $ 15,893,171 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
Equity $704,651,838 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
Small and Mid Cap Equity $ 37,163,240 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
Small Cap Value $ 14,620,644 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate $ 70,681,206 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Income
Opportunities $ 25,537,605 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation
Protected Securities $ 28,705,143 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Limited
Duration Bond $ 17,251,758 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
------------------------------------------------------------------------------------------------------------------------
RiverSource California
Tax-Exempt $ 2,622,059 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified
Bond $248,546,506 $0 $49,658,521 $0 $5,227,159 $3,354,885
------------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota
Tax-Exempt $ 2,322,451 $0 $0 $0 $0 $1,199,755
------------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-
Exempt $ 897,923 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2014 IN 2015 IN 2016 IN 2017 IN 2018
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
---------------------------------------------------------------------------------------------------
RiverSource Cash
Management $0 $0 $6,554 $7,357,069 $8,529,548
---------------------------------------------------------------------------------------------------
RiverSource Disciplined
Equity $0 $0 $0 $63,499,369 $641,152,469
---------------------------------------------------------------------------------------------------
RiverSource Disciplined
Small and Mid Cap Equity $93,125 $21,904 $2,186,828 $19,133,377 $15,728,006
---------------------------------------------------------------------------------------------------
RiverSource Disciplined
Small Cap Value $0 $0 $554,680 $6,233,070 $7,832,894
---------------------------------------------------------------------------------------------------
RiverSource Floating Rate $0 $33,562 $3,488,601 $29,093,899 $38,065,144
---------------------------------------------------------------------------------------------------
RiverSource Income
Opportunities $0 $0 $1,946,556 $16,249,078 $7,341,971
---------------------------------------------------------------------------------------------------
RiverSource Inflation
Protected Securities $0 $0 $0 $8,424,851 $20,280,292
---------------------------------------------------------------------------------------------------
RiverSource Limited
Duration Bond $0 $2,206,552 $0 $825,807 $14,219,399
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
---------------------------------------------------------------------------------------------------
RiverSource California
Tax-Exempt $0 $0 $359,905 $1,247,347 $1,014,807
---------------------------------------------------------------------------------------------------
RiverSource Diversified
Bond $10,357,129 $0 $0 $3,705,819 $176,242,993
---------------------------------------------------------------------------------------------------
RiverSource Minnesota
Tax-Exempt $913,006 $3,601 $0 $206,089 $0
---------------------------------------------------------------------------------------------------
RiverSource New York Tax-
Exempt $0 $0 $3,664 $341,015 $553,244
---------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 85
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced $ 888,451,981 $0 $294,910,142 $368,676,980 $24,886,878 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
Large Cap Growth $ 41,243,744 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
Large Cap Value $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified
Equity Income $1,110,095,393 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value $ 566,727,070 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic
Allocation $ 346,850,712 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic
Income Allocation $ 11,336,901 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Seligman California
Municipal High-Yield $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Seligman California
Municipal Quality $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Seligman Minnesota
Municipal $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Seligman National
Municipal $ 2,099,958 $0 $996,330 $0 $505,484 $0
------------------------------------------------------------------------------------------------------------------------
Seligman New York
Municipal $ 0 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 $ 7,102,014 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 $ 1,803,909 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 $ 256,357 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 $ 541,844 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core $ 12,588,348 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2014 IN 2015 IN 2016 IN 2017 IN 2018
---------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
---------------------------------------------------------------------------------------------------
RiverSource Balanced $0 $8,027,521 $22,923,709 $38,698,637 $130,328,114
---------------------------------------------------------------------------------------------------
RiverSource Disciplined
Large Cap Growth $0 $0 $0 $14,271,533 $26,972,211
---------------------------------------------------------------------------------------------------
RiverSource Disciplined
Large Cap Value -- -- -- -- --
---------------------------------------------------------------------------------------------------
RiverSource Diversified
Equity Income $0 $0 $0 $46,346,713 $1,063,748,680
---------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value $0 $0 $0 $47,902,744 $518,824,326
---------------------------------------------------------------------------------------------------
RiverSource Strategic
Allocation $0 $0 $0 $21,514,298 $325,336,414
---------------------------------------------------------------------------------------------------
RiverSource Strategic
Income Allocation $0 $0 $0 $631,381 $10,705,520
---------------------------------------------------------------------------------------------------
Seligman California
Municipal High-Yield -- -- -- -- --
---------------------------------------------------------------------------------------------------
Seligman California
Municipal Quality -- -- -- -- --
---------------------------------------------------------------------------------------------------
Seligman Minnesota
Municipal -- -- -- -- --
---------------------------------------------------------------------------------------------------
Seligman National
Municipal $0 $0 $598,144 $0 $0
---------------------------------------------------------------------------------------------------
Seligman New York
Municipal -- -- -- -- --
---------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 $0 $0 $0 $1,531,175 $5,570,839
---------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 $0 $0 $0 $158,889 $1,645,020
---------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 $0 $0 $0 $40,056 $216,301
---------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 $0 $0 $0 $25,322 $516,522
---------------------------------------------------------------------------------------------------
Seligman TargETFund Core $0 $0 $0 $901,259 $11,687,089
---------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 86
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2009 IN 2010 IN 2011 IN 2012 IN 2013 IN 2014
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Absolute Return
Currency and
Income $ 5,945,153 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
International
Equity $285,672,442 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Emerging
Markets Bond $ 17,157,025 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Global Bond $ 15,099,745 $ 0 $ 3,665,049 $ 0 $ 0 $ 0 $498,771
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Select Growth $185,090,340 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Select Value $340,858,587 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Small Cap $ 36,130,012 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Seligman
Frontier $ 8,888,714 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Seligman Global
Technology $294,571,144 $ 0 $193,291,798 $17,073,210 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
Asia Pacific $ 0 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
Emerging
Markets $ 98,672,638 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
European Equity $ 44,533,168 $ 0 $ 16,514,517 $ 5,021,215 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
Global Equity $339,519,748 $ 0 $143,688,441 $30,509,951 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
Global Equity
Income $ 1,477,274 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
Global Extended
Alpha $ 1,407,944 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
Threadneedle
International Opportunity $204,715,335 $ 0 $ 59,231,998 $38,262,972 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate
Tax-Exempt $ 704,163 $ 0 $ 0 $ 0 $ 0 $ 0 $177,579
-----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap
Growth $ 66,514,603 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
Bond $ 18,155,779 $ 0 $ 0 $ 0 $ 0 $ 0 $729,269
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
High Income $ 88,820,109 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2015 IN 2016 IN 2017 IN 2018
-----------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------
RiverSource
Absolute Return
Currency and
Income $ 0 $ 0 $ 5,945,153 $ 0
-----------------------------------------------------------------------------------
RiverSource
Disciplined
International
Equity $ 0 $23,521,188 $262,151,254 $ 0
-----------------------------------------------------------------------------------
RiverSource
Emerging
Markets Bond $ 0 $ 2,399,388 $ 14,757,637 $ 0
-----------------------------------------------------------------------------------
RiverSource
Global Bond $ 0 $ 2,328,738 $ 8,607,187 $ 0
-----------------------------------------------------------------------------------
RiverSource
Partners
International
Select Growth $ 823,328 $67,466,960 $116,800,052 $ 0
-----------------------------------------------------------------------------------
RiverSource
Partners
International
Select Value $ 0 $ 0 $340,858,587 $ 0
-----------------------------------------------------------------------------------
RiverSource
Partners
International
Small Cap $ 0 $16,740,416 $ 19,389,596 $ 0
-----------------------------------------------------------------------------------
Seligman
Frontier $ 0 $ 1,048,243 $ 7,840,471 $ 0
-----------------------------------------------------------------------------------
Seligman Global
Technology $17,310,562 $37,526,708 $ 29,368,866 $ 0
-----------------------------------------------------------------------------------
Threadneedle
Asia Pacific -- -- -- --
-----------------------------------------------------------------------------------
Threadneedle
Emerging
Markets $ 0 $28,498,591 $ 70,174,047 $ 0
-----------------------------------------------------------------------------------
Threadneedle
European Equity $ 0 $ 4,272,956 $ 18,724,480 $ 0
-----------------------------------------------------------------------------------
Threadneedle
Global Equity $ 2,715,902 $62,625,028 $ 99,980,426 $ 0
-----------------------------------------------------------------------------------
Threadneedle
Global Equity
Income $ 0 $ 182,867 $ 1,294,407 $ 0
-----------------------------------------------------------------------------------
Threadneedle
Global Extended
Alpha $ 0 $ 577,229 $ 830,715 $ 0
-----------------------------------------------------------------------------------
Threadneedle
International Opportunity $ 0 $12,069,463 $ 95,150,902 $ 0
-----------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------
RiverSource Intermediate
Tax-Exempt $ 0 $ 361,418 $ 165,166 $ 0
-----------------------------------------------------------------------------------
RiverSource Mid Cap
Growth $ 0 $20,714,703 $ 45,799,900 $ 0
-----------------------------------------------------------------------------------
RiverSource Tax-Exempt
Bond $ 0 $ 9,046,561 $ 8,379,949 $ 0
-----------------------------------------------------------------------------------
RiverSource Tax-Exempt
High Income $ 0 $30,950,938 $ 57,869,171 $ 0
-----------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 87
TOTAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT
CAPITAL LOSS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND CARRYOVERS IN 2008 IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
Money Market $675 $0 $0 $0 $0 $0 $675
-----------------------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT AMOUNT AMOUNT
EXPIRING EXPIRING EXPIRING EXPIRING
FUND IN 2014 IN 2015 IN 2016 IN 2017
-----------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------
RiverSource Tax-Exempt
Money Market $0 $0 $0 $0
-----------------------------------------------------------------------------------
TAXES
SUBCHAPTER M COMPLIANCE
Each fund has elected to be taxed under Subchapter M of the Internal Revenue
Code as a regulated investment company. Each fund intends to maintain its
qualification as a regulated investment company by meeting certain requirements
relating to distributions, source of income, and asset diversification.
Distribution requirements include distributing at least 90% of the fund's
investment company taxable income (which includes net short-term capital gains)
and tax-exempt ordinary income to fund shareholders each taxable year. The
source of income rules require that at least 90% of the fund's gross income be
derived from dividends, interest, certain payments with respect to securities
loans, gain from the sale or other disposition of stock, securities or foreign
currencies (subject to certain limitations), and certain other income derived
with respect to its business of investing in stock, securities or currencies,
and net income from certain interests in qualified publicly traded partnerships.
Asset diversification requirements are met when the fund owns, at the end of
each quarter of its taxable year, a portfolio, 50% of which includes cash and
cash items, U.S. government securities, securities of other regulated investment
companies and, securities of other issuers in which the fund has not invested
more than 5% of the value of the fund's assets (or 10% of the value of the
outstanding voting securities of any one issuer). Also, no more than 25% of the
fund's assets may be invested in the securities of any one issuer or two or more
issuers which the fund controls and which are engaged in the same or similar
trades or businesses (excepting U.S. government securities and securities of
other regulated investment companies) or the securities of one or more qualified
publicly traded partnerships. This is a simplified description of the relevant
laws.
If the fund fails to qualify as a regulated investment company under Subchapter
M, the fund would be taxed as a corporation on the entire amount of its taxable
income (including its capital gain) without a dividends paid deduction. Also,
"all of" a shareholder's distributions would generally be taxable to
shareholders as qualified dividend income (QDI) (or could be treated as a return
of capital, if there weren't sufficient earnings and profits) and generally
would be eligible for the dividends received deduction in the case of corporate
shareholders.
Under federal tax law, by the end of a calendar year a fund must declare and pay
dividends representing 98% of ordinary income for that calendar year and 98% of
net capital gains (both long-term and short-term) for the 12-month period ending
Oct. 31 of that calendar year. The fund is subject to an excise tax equal to 4%
of the excess, if any, of the amount required to be distributed over the amount
actually distributed. Each fund intends to comply with federal tax law and avoid
any excise tax. For purposes of the excise tax distributions, section 988
ordinary gains and losses are distributable based on an Oct. 31 year end. This
is an exception to the general rule that ordinary income is paid based on a
calendar year end.
The fund intends to distribute sufficient dividends within each calendar year,
as well as on a fiscal year basis, to avoid income and excise taxes.
A fund may be subject to U.S. taxes resulting from holdings in passive foreign
investment companies (PFIC). To avoid unfavorable tax consequences, a fund may
make an election to mark to market its PFIC investments. A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year is passive
income or 50% or more of the average value of its assets consists of assets that
produce or could produce passive income.
Income earned by a fund may have had foreign taxes imposed and withheld on it in
foreign countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% of a fund's total assets at the
close of its fiscal year consists of securities of foreign corporations, the
fund will be eligible to file an election with the Internal Revenue Service
(IRS) under which shareholders of the fund would be required to include their
pro rata portions of foreign taxes withheld by foreign countries as gross income
in their federal income tax returns. These pro rata portions of foreign taxes
withheld may be taken as a credit or deduction in computing the shareholders'
federal income taxes. If the election is filed, the fund will report to its
shareholders the per share amount of such foreign taxes withheld and the amount
of foreign tax credit or deduction available for federal income tax purposes.
A fund may use equalization payments to satisfy its requirement to make
distributions of net investment income and capital gain net income. Equalization
payments occur when a fund allocates a portion of its net investment income and
realized capital gain net income to redemptions of fund shares. These payments
reduce the amount of taxable distributions paid to
Statement of Additional Information - [Date], 2010 Page 88
shareholders. The IRS has not issued any guidance concerning the methods used to
allocate investment income and capital gain to redemptions of shares. If the IRS
determines that a fund is using an improper method of allocation for these
purposes, the fund may be liable for additional federal income tax.
This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state, and local income tax laws to fund distributions.
See Appendix B for more information regarding state tax-exempt funds.
EXCHANGES, PURCHASES AND SALES
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held more than
one year).
Capital gain of a non-corporate U.S. shareholder that is recognized in a taxable
year beginning before January 1, 2011 is generally taxed at a maximum rate of
15% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less (after taking into account certain hedging transactions), any loss realized
will be treated as long-term capital loss to the extent that it does not exceed
the long-term capital gain distribution.
A capital loss on a sale or redemption of a security in a nonqualified account
may be disallowed for tax purposes if the same or a substantially identical
security is purchased or acquired (including shares acquired through dividend
reinvestment) within 30 days before or after the date of the loss transaction.
This is called a wash sale. When a wash sale occurs, the loss is disallowed to
the extent of shares repurchased, and the cost basis on the security acquired is
increased by the amount of the loss that is disallowed. The loss is disallowed
in a nonqualified account whether the purchase is in a nonqualified account or
in an IRA or Roth IRA, however, an individual's cost basis in an IRA or Roth IRA
is not increased due to the wash sale rules. The wash sale rules apply only to
capital losses. Sales of securities that result in capital gains are generally
recognized when incurred.
If you buy Class A shares and within 91 days exchange into another fund, you may
not include the sales charge in your calculation of tax gain or loss on the sale
of the first fund you purchased. The sales charge may be included in the
calculation of your tax gain or loss on a subsequent sale of the second fund you
purchased.
FOR EXAMPLE
You purchase 100 shares of an equity fund having a public offering price of
$10.00 per share. With a sales load of 5.75%, you pay $57.50 in sales load. With
a NAV of $9.425 per share, the value of your investment is $942.50. Within 91
days of purchasing that fund, you decide to exchange out of that fund, now at a
NAV of $11.00 per share, up from the original NAV of $9.425, and purchase a
second fund, at a NAV of $15.00 per share. The value of your investment is now
$1,100.00 ($11.00 x 100 shares). You cannot use the $57.50 paid as a sales load
when calculating your tax gain or loss in the sale of the first fund shares. So
instead of having a $100.00 gain ($1,100.00 - $1,000.00), you have a $157.50
gain ($1,100.00 - $942.50). You can include the $57.50 sales load in the
calculation of your tax gain or loss when you sell shares in the second fund.
The following paragraphs provide information based on a fund's investment
category. You can find your fund's investment category in Table 1.
FOR STATE TAX-EXEMPT FIXED INCOME AND TAX-EXEMPT FIXED INCOME FUNDS, all
distributions of net investment income during the fund's fiscal year will have
the same percentage designated as tax-exempt. This percentage is expected to be
substantially the same as the percentage of tax-exempt income actually earned
during any particular distribution period.
FOR BALANCED, EQUITY, FUNDS-OF-FUNDS, TAXABLE MONEY MARKET AND TAXABLE FIXED
INCOME FUNDS, if you have a nonqualified investment in a fund and you wish to
move part or all of those shares to an IRA or qualified retirement account in
the fund, you can do so without paying a sales charge. However, this type of
exchange is considered a redemption of shares and may result in a gain or loss
for tax purposes. See wash sale discussion above. In addition, this type of
exchange may result in an excess contribution under IRA or qualified plan
regulations if the amount exchanged exceeds annual contribution limitations. You
should consult your tax advisor for further details about this complex subject.
Statement of Additional Information - [Date], 2010 Page 89
DISTRIBUTIONS
DIVIDENDS
Net investment income dividends (other than qualified dividend income) received
and distributions from the excess of net short-term capital gains over net long-
term capital losses should be treated as ordinary income for federal income tax
purposes. Corporate shareholders are generally entitled to a deduction equal to
70% of that portion of a fund's dividend that is attributable to dividends the
fund received from domestic (U.S.) securities. If there is debt-financed
portfolio stock, that is, bank financing is used to purchase long securities,
the 70% dividends received deduction would be reduced by the average amount of
portfolio indebtedness divided by the average adjusted basis in the stock. This
does not impact the qualified dividend income available to individual
shareholders. For the most recent fiscal period, net investment income dividends
qualified for the corporate deduction are shown in the following table.
Only certain QDI will be subject to the 15% and 0% (for lower-bracket taxpayers)
tax rates for 2008-2010. QDI is dividends earned from domestic corporations and
qualified foreign corporations. Qualified foreign corporations are corporations
incorporated in a U.S. possession, corporations whose stock is readily tradable
on an established U.S. securities market (ADRs), and certain other corporations
eligible for relief under an income tax treaty with the U.S. that includes an
exchange of information agreement. PFICs are excluded from this treatment.
Holding periods for shares must also be met to be eligible for QDI treatment
(more than 60 days for common stock and more than 90 days for certain
preferred's dividends).
Dividends declared in October, November or December, payable to shareholders of
record on a specified date in such a month and paid in the following January
will be treated as having been paid by a fund and received by each shareholder
in December. Under this rule, therefore, shareholders may be taxed in one year
on dividends or distributions actually received in January of the following
year.
The QDI for individuals for the most recent fiscal period is shown in the table
below. The table is organized by fiscal year end. You can find your fund's
fiscal year end in Table 1.
TABLE 12. CORPORATE DEDUCTION AND QUALIFIED DIVIDEND INCOME
PERCENT OF DIVIDENDS
QUALIFYING QUALIFIED DIVIDEND INCOME
FUND FOR CORPORATE DEDUCTION FOR INDIVIDUALS
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
--------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income 13.39% 15.15%
--------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income 10.32 14.00
--------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income 14.02 16.58
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive 36.36 52.12
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative 5.23 7.20
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 12.95 18.45
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Aggressive 20.91 29.91
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative 8.87 12.44
--------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity 69.21 99.47
--------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Small Company Index 100.00 100.00
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
--------------------------------------------------------------------------------------------------
RiverSource Equity Value 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth 0 0
--------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining 1.27 7.08
--------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 90
PERCENT OF DIVIDENDS
QUALIFYING QUALIFIED DIVIDEND INCOME
FUND FOR CORPORATE DEDUCTION FOR INDIVIDUALS
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
--------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity 0% 0%
--------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure 0 0
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 24.54 35.75
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 31.08 46.03
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 34.11 56.35
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 0 0
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 37.40 63.51
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 37.91 63.80
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 38.94 64.17
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
--------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 0 0
--------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth 0 0
--------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Partners Select Value 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity 0 0
--------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value 0 0
--------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government 0 0
--------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage 0 0
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
--------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity 90.66 100.00
--------------------------------------------------------------------------------------------------
RiverSource Real Estate 1.32 8.56
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
--------------------------------------------------------------------------------------------------
RiverSource Cash Management 0 0
--------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap
Equity 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Floating Rate 0 0
--------------------------------------------------------------------------------------------------
RiverSource Income Opportunities 0 0
--------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities 0 0
--------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond 0 0
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
--------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 0 0
--------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 0 0
--------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt 0 0
--------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 0 0
--------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 91
PERCENT OF DIVIDENDS
QUALIFYING QUALIFIED DIVIDEND INCOME
FUND FOR CORPORATE DEDUCTION FOR INDIVIDUALS
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
--------------------------------------------------------------------------------------------------
RiverSource Balanced 58.23% 67.65%
--------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value 46.66 47.51
--------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 100.00 100.00
--------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation 85.51 94.62
--------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation 0.31 1.00
--------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield 0 0
--------------------------------------------------------------------------------------------------
Seligman California Municipal Quality 0 0
--------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 0 0
--------------------------------------------------------------------------------------------------
Seligman National Municipal 0 0
--------------------------------------------------------------------------------------------------
Seligman New York Municipal 0 0
--------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 53.63 87.73
--------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 50.39 100.00
--------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 48.74 100.00
--------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 43.70 100.00
--------------------------------------------------------------------------------------------------
Seligman TargETFund Core 50.44 63.90
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
--------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and
Income 0 0
--------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity 0.25 100.00
--------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond 0 0
--------------------------------------------------------------------------------------------------
RiverSource Global Bond 0 0
--------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Growth 2.04 100.00
--------------------------------------------------------------------------------------------------
RiverSource Partners International Select
Value 2.08 100.00
--------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap 0 0
--------------------------------------------------------------------------------------------------
Seligman Frontier 0 0
--------------------------------------------------------------------------------------------------
Seligman Global Technology 0 0
--------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific 0 53.84
--------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 0.27 81.67
--------------------------------------------------------------------------------------------------
Threadneedle European Equity 0 100.00
--------------------------------------------------------------------------------------------------
Threadneedle Global Equity 77.49 100.00
--------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income 29.74 100.00
--------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha 0 0
--------------------------------------------------------------------------------------------------
Threadneedle International Opportunity 0 100.00
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
--------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt 0 0
--------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 0 0
--------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 0 0
--------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income 0 0
--------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 92
PERCENT OF DIVIDENDS
QUALIFYING QUALIFIED DIVIDEND INCOME
FUND FOR CORPORATE DEDUCTION FOR INDIVIDUALS
--------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
--------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 0% 0 %
--------------------------------------------------------------------------------------------------
CAPITAL GAINS DISTRIBUTIONS
Capital gain distributions, if any, received by shareholders (in cash or
invested in additional shares) should be treated as long-term capital gains
regardless of how long shareholders owned their shares. Short-term capital gains
earned by a fund are paid to shareholders as part of their ordinary income
dividend and are taxable as ordinary income. Special rates on capital gains may
apply to sales of precious metals, if any, owned directly by a fund and to
investments in REITs.
Individual shareholders will be subject to federal income tax on distributions
of net capital gains generally at a maximum rate of 15% if designated as derived
from a fund's capital gains from property held for more than one year and
recognized in the taxable years beginning before January 1, 2011. Net capital
gain of a corporate shareholder is taxed at the same rate as ordinary income.
Such distributions are not eligible for the dividends received deduction allowed
to corporate shareholders. Shareholders receiving distributions in the form of
additional shares issued by a fund will generally be treated for federal income
tax purposes as having received a distribution in an amount equal to the cash
that could have been elected to be received instead of the additional shares.
Under the Internal Revenue Code of 1986 (the Code), gains or losses attributable
to fluctuations in exchange rates that occur between the time a fund accrues
interest or other receivables, or accrues expenses or other liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables or pays such liabilities generally are treated as ordinary income or
ordinary loss. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition may be treated as ordinary or capital gains or losses. These
gains or losses, referred to under the Code as "section 988" gains or losses,
may increase or decrease the amount of a fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
RETURN OF CAPITAL
If a mutual fund is the holder of record of any share of stock on the record
date for any dividend payable with respect to the stock, the dividend will be
included in gross income by the fund as of the later of (1) the date the share
became ex-dividend or (2) the date the fund acquired the share. Because the
dividends on some foreign equity investments may be received some time after the
stock goes ex-dividend, and in certain rare cases may never be received by the
fund, this rule may cause a fund to pay income to its shareholders that it has
not actually received. To the extent that the dividend is never received, the
fund will take a loss at the time that a determination is made that the dividend
will not be received.
If a fund's distributions exceed its current and accumulated earnings and
profits, that portion of the fund's distributions will be treated as a return of
capital to its shareholders. A return of capital is a return of a portion of the
shareholder's original investment. A return of capital will generally not be
taxable, however, any amounts received in excess of a shareholder's tax basis
are treated as capital gain. Forms 1099 will be sent to shareholders to report
any return of capital.
WITHHOLDING
Unless a shareholder provides a certified taxpayer identification number (social
security number for individuals) on the account application or other document
and certifies that the shareholder is not subject to backup withholding, the
fund is required to withhold and remit to the IRS 28% backup withholding on
taxable and exempt-interest dividends and redemptions. Shareholders should be
aware that, under regulations promulgated by the IRS, a fund may be fined for
each account for which a certified taxpayer identification number (social
security number for individuals) is not provided.
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder") depends on whether the income from the fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder. If the income from the fund is not effectively connected with a
U.S. trade or business carried on by a foreign shareholder, ordinary income and
qualified dividends paid to such foreign shareholders generally will be subject
to a 30% U.S. withholding tax under existing provisions of the Internal Revenue
Code applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty or
law. Nonresident shareholders are urged to consult their own tax advisers
concerning the applicability of the U.S. withholding tax.
If the income from the fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
qualified dividends, capital gain dividends, undistributed capital gains
credited to such shareholder and any gains realized upon the sale of shares of
the fund will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. citizens or domestic corporations. In the case of foreign
non-corporate shareholders, the
Statement of Additional Information - [Date], 2010 Page 93
fund may be required to backup withhold U.S. federal income tax on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the fund with proper documentation
related to their foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the fund, the procedure
for claiming the benefit of a lower treaty rate and the applicability of foreign
taxes.
SELIGMAN TARGETFUNDS. Each of Seligman TargETFund 2045, Seligman TargETFund
2035, Seligman TargETFund 2025 and Seligman TargETFund 2015 (Target Date Funds)
will automatically be combined with Seligman TargETFund Core during their
respective target year. The investment manager expects each of these
combinations to be effected as an acquisition of the assets and liabilities of
the applicable Target Date Fund in exchange for shares of TargETFund Core at net
asset value, with the shares of TargETFund Core then distributed to shareholders
of the applicable Target Date Fund. Based on current tax rules, the investment
manager expects the combination to be effected in a non-taxable transaction.
Changes in such tax rules or applicable law or other developments could
negatively impact the combination of the Target Date Funds with Seligman
TargETFund Core.
Due to the impossibility of predicting whether changes in law or other
developments may impact the fairness or overall desirability of the combination
of any two funds ten or more years in the future, the Board of the Seligman
TargETFunds will evaluate each combination in the year it is scheduled to occur
under the standards of Rule 17a-8 under the 1940 Act and general principles of
fairness, and may approve modifications to the methodology or terminate the
combination if it determines that doing so would be in the best interests of
shareholders. Any modifications to the manner of combining funds will be
presented to shareholders for approval if such approval is required under
applicable law.
SERVICE PROVIDERS
INVESTMENT MANAGEMENT SERVICES
RiverSource Investments is the investment manager for each fund. Under the
Investment Management Services Agreements, the investment manager, subject to
the policies set by the Board, provides investment management services to the
funds.
For Seligman funds, RiverSource Investments serves as the investment manager
effective Nov. 7, 2008, with the completion of the acquisition of J. & W.
Seligman & Co. Incorporated by RiverSource Investments and with shareholders
having previously approved a new investment management services agreement
between the funds and RiverSource Investments.
For its services, the investment manager is paid a monthly fee based on the
following schedule. Each class of a fund pays its proportionate share of the
fee. The fee is calculated for each calendar day on the basis of net assets as
of the close of the preceding day.
TABLE 13. INVESTMENT MANAGEMENT SERVICES AGREEMENT FEE SCHEDULE
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity First $0.25 0.950% 0.950%
Next $0.25 0.930%
Next $0.50 0.910%
Over $1.0 0.890%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 94
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency First $1.0 0.890% 0.890%
and Income Next $1.0 0.865%
Next $1.0 0.840%
Next $3.0 0.815%
Next $1.5 0.790%
Next $1.5 0.775%
Next $1.0 0.770%
Next $5.0 0.760%
Next $5.0 0.750%
Next $4.0 0.740%
Next $26.0 0.720%
Over $50.0 0.700%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced First $1.0 0.530% 0.530%
Next $1.0 0.505%
Next $1.0 0.480%
Next $3.0 0.455%
Next $1.5 0.430%
Next $2.5 0.410%
Next $5.0 0.390%
Next $9.0 0.370%
Over $24.0 0.350%
---------------------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt First $0.25 0.410% RiverSource California - 0.410%
RiverSource Minnesota Tax-Exempt Next $0.25 0.385% RiverSource Minnesota - 0.404%
RiverSource New York Tax-Exempt Next $0.25 0.360% RiverSource New York - 0.410%
Next $0.25 0.345%
Next $6.5 0.320%
Next $2.5 0.310%
Next $5.0 0.300%
Next $9.0 0.290%
Next $26.0 0.270%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management First $1.0 0.330% 0.295%
Next $0.5 0.313%
Next $0.5 0.295%
Next $0.5 0.278%
Next $2.5 0.260%
Next $1.0 0.240%
Next $1.5 0.220%
Next $1.5 0.215%
Next $1.0 0.190%
Next $5.0 0.180%
Next $5.0 0.170%
Next $4.0 0.160%
Over $24.0 0.150%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 95
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity First $1.0 0.600% RiverSource Disciplined Equity - 0.588%
RiverSource Disciplined Large Cap
RiverSource Disciplined Large Cap Next $1.0 0.575% Growth - 0.600%
RiverSource Disciplined Large Cap
Growth Next $1.0 0.550% Value - 0.600%
RiverSource Diversified Equity
RiverSource Disciplined Large Cap Value Next $3.0 0.525% Income - 0.558%
RiverSource Diversified Equity Income Next $1.5 0.500%
Next $2.5 0.485%
Next $5.0 0.470%
Next $5.0 0.450%
Next $4.0 0.425%
Next $26.0 0.400%
Over $50.0 0.375%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International
RiverSource Disciplined International First $0.25 0.800% Equity - 0.788%
Equity Next $0.25 0.775% Threadneedle Asia Pacific - 0.800%
Threadneedle Asia Pacific Next $0.25 0.750% Threadneedle European Equity - 0.800%
Threadneedle European Equity Next $0.25 0.725% Threadneedle Global Equity - 0.788%
Threadneedle Global Equity Next $1.0 0.700% Threadneedle Global Equity Income - 0.800%
Threadneedle International
Threadneedle Global Equity Income Next $5.5 0.675% Opportunity - 0.790%
Threadneedle International Opportunity Next $2.5 0.660%
Next $5.0 0.645%
Next $5.0 0.635%
Next $4.0 0.610%
Next $26.0 0.600%
Over $50.0 0.570%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid First $1.0 0.700% 0.700%
Cap Equity Next $1.0 0.675%
RiverSource Mid Cap Growth Next $1.0 0.650%
Next $3.0 0.625%
Next $1.5 0.600%
Next $2.5 0.575%
Next $5.0 0.550%
Next $9.0 0.525%
Next $26.0 0.500%
Over $50.0 0.475%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value First $0.25 0.850% 0.850%
Next $0.25 0.825%
Next $0.25 0.800%
Next $0.25 0.775%
Next $1.0 0.750%
Over $2.0 0.725%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond First $1.0 0.480% RiverSource Diversified Bond - 0.442%
RiverSource Limited Duration Bond Next $1.0 0.455% RiverSource Limited Duration Bond - 0.480%
Next $1.0 0.430%
Next $3.0 0.405%
Next $1.5 0.380%
Next $1.5 0.365%
Next $1.0 0.360%
Next $5.0 0.350%
Next $5.0 0.340%
Next $4.0 0.330%
Next $26.0 0.310%
Over $50.0 0.290%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 96
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity First $0.50 0.610% 0.595%
Next $0.50 0.585%
Next $1.0 0.560%
Next $1.0 0.535%
Next $3.0 0.510%
Next $4.0 0.480%
Next $5.0 0.470%
Next $5.0 0.450%
Next $4.0 0.425%
Next $26.0 0.400%
Over $50.0 0.375%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond First $0.25 0.720% RiverSource Emerging Markets Bond - 0.719%
RiverSource Global Bond Next $0.25 0.695% RiverSource Global Bond - 0.699%
Next $0.25 0.670%
Next $0.25 0.645%
Next $6.5 0.620%
Next $2.5 0.605%
Next $5.0 0.590%
Next $5.0 0.580%
Next $4.0 0.560%
Next $26.0 0.540%
Over $50.0 0.520%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value First $0.50 0.530% 0.530%
Next $0.50 0.505%
Next $1.0 0.480%
Next $1.0 0.455%
Next $3.0 0.430%
Over $6.0 0.400%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate First $1.0 0.610% 0.610%
RiverSource Income Opportunities Next $1.0 0.585%
Next $1.0 0.560%
Next $3.0 0.535%
Next $1.5 0.510%
Next $1.5 0.495%
Next $1.0 0.470%
Next $5.0 0.455%
Next $5.0 0.445%
Next $4.0 0.420%
Next $26.0 0.405%
Over $50.0 0.380%
---------------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond First $1.0 0.590% 0.586%
Next $1.0 0.565%
Next $1.0 0.540%
Next $3.0 0.515%
Next $1.5 0.490%
Next $1.5 0.475%
Next $1.0 0.450%
Next $5.0 0.435%
Next $5.0 0.425%
Next $4.0 0.400%
Next $26.0 0.385%
Over $50.0 0.360%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 97
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income N/A N/A N/A
RiverSource Income Builder Enhanced Income
RiverSource Income Builder Moderate Income
RiverSource Portfolio Builder Aggressive
RiverSource Portfolio Builder Conservative
RiverSource Portfolio Builder Moderate
RiverSource Portfolio Builder Moderate
Aggressive
RiverSource Portfolio Builder Moderate
Conservative
RiverSource Portfolio Builder Total Equity
RiverSource Retirement Plus 2010
RiverSource Retirement Plus 2015
RiverSource Retirement Plus 2020
RiverSource Retirement Plus 2025
RiverSource Retirement Plus 2030
RiverSource Retirement Plus 2035
RiverSource Retirement Plus 2040
RiverSource Retirement Plus 2045
---------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected First $1.0 0.440% 0.440%
Securities Next $1.0 0.415%
Next $1.0 0.390%
Next $3.0 0.365%
Next $1.5 0.340%
Next $1.5 0.325%
Next $1.0 0.320%
Next $5.0 0.310%
Next $5.0 0.300%
Next $4.0 0.290%
Next $26.0 0.270%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt First $1.0 0.390% 0.390%
Next $1.0 0.365%
Next $1.0 0.340%
Next $3.0 0.315%
Next $1.5 0.290%
Next $2.5 0.280%
Next $5.0 0.270%
Next $35.0 0.260%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 98
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value First $1.0 0.700% 0.686%
Next $1.0 0.675%
Next $1.0 0.650%
Next $3.0 0.625%
Next $1.5 0.600%
Next $2.5 0.575%
Next $5.0 0.550%
Next $9.0 0.525%
Next $26.0 0.500%
Over $50.0 0.475%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth First $0.50 0.890% 0.890%
Next $0.50 0.865%
Next $1.0 0.840%
Next $1.0 0.815%
Next $3.0 0.790%
Over $6.0 0.765%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental First $0.50 0.730% 0.728%
Value Next $0.50 0.705%
Next $1.0 0.680%
Next $1.0 0.655%
Next $3.0 0.630%
Over $6.0 0.600%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners International First $0.25 1.000% 0.990%
Select Growth Next $0.25 0.975%
Next $0.25 0.950%
Next $0.25 0.925%
Next $1.0 0.900%
Over $2.0 0.875%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners International First $0.25 0.900% 0.863%
Select Value Next $0.25 0.875%
Next $0.25 0.850%
Next $0.25 0.825%
Next $1.0 0.800%
Over $2.0 0.775%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners International First $0.25 1.120% 1.120%
Small Cap Next $0.25 1.095%
Next $0.25 1.070%
Next $0.25 1.045%
Next $1.0 1.020%
Over $2.0 0.995%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value First $0.50 0.780% 0.780%
Next $0.50 0.755%
Next $1.0 0.730%
Next $1.0 0.705%
Next $3.0 0.680%
Over $6.0 0.650%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity First $0.25 0.970% 0.970%
Next $0.25 0.945%
Next $0.25 0.920%
Next $0.25 0.895%
Over $1.0 0.870%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 99
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth First $0.25 0.920% 0.920%
Next $0.25 0.895%
Next $0.25 0.870%
Next $0.25 0.845%
Next $1.0 0.820%
Over $2.0 0.795%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value First $0.25 0.970% 0.965%
Next $0.25 0.945%
Next $0.25 0.920%
Next $0.25 0.895%
Over $1.0 0.870%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining First $0.25 0.800% 0.800%
Next $0.25 0.775%
Next $0.25 0.750%
Next $0.25 0.725%
Next $1.0 0.700%
Over $2.0 0.675%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate First $1.0 0.840% 0.840%
Next $1.0 0.815%
Next $1.0 0.790%
Next $3.0 0.765%
Next $6.0 0.740%
Next $12.0 0.730%
Over $24.0 0.720%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure First $1.0 0.650% 0.650%
Next $1.0 0.600%
Next $4.0 0.550%
Over $6.0 0.500%
---------------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index First $1.0 0.220% 0.220%
Next $1.0 0.210%
Next $1.0 0.200%
Next $4.5 0.190%
Next $2.5 0.180%
Next $5.0 0.170%
Next $9.0 0.160%
Next $26.0 0.140%
Over $50.0 0.120%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government First $1.0 0.480% 0.480%
Next $1.0 0.455%
Next $1.0 0.430%
Next $3.0 0.405%
Next $1.5 0.380%
Next $1.5 0.365%
Next $1.0 0.340%
Next $5.0 0.325%
Next $5.0 0.315%
Next $4.0 0.290%
Next $26.0 0.275%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 100
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index First $0.25 0.360% 0.357%
Next $0.25 0.350%
Next $0.25 0.340%
Next $0.25 0.330%
Next $6.5 0.320%
Next $7.5 0.300%
Next $9.0 0.280%
Next $26.0 0.260%
Over $50.0 0.240%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation First $1.0 0.570% 0.564%
Next $1.0 0.545%
Next $1.0 0.520%
Next $3.0 0.495%
Next $1.5 0.470%
Next $2.5 0.450%
Next $5.0 0.430%
Next $9.0 0.410%
Over $24.0 0.390%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation First $0.25 0.550% 0.546%
Next $0.25 0.525%
Next $0.25 0.500%
Over $0.75 0.475%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond First $1.0 0.410% 0.410%
Next $1.0 0.385%
Next $1.0 0.360%
Next $3.0 0.335%
Next $1.5 0.310%
Next $2.5 0.300%
Next $5.0 0.290%
Next $9.0 0.280%
Next $26.0 0.260%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income First $1.0 0.470% 0.453%
Next $1.0 0.445%
Next $1.0 0.420%
Next $3.0 0.395%
Next $1.5 0.370%
Next $2.5 0.360%
Next $5.0 0.350%
Next $9.0 0.340%
Next $26.0 0.320%
Over $50.0 0.300%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 101
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market First $1.0 0.330% 0.330%
Next $0.5 0.313%
Next $0.5 0.295%
Next $0.5 0.278%
Next $2.5 0.260%
Next $1.0 0.240%
Next $1.5 0.220%
Next $1.5 0.215%
Next $1.0 0.190%
Next $5.0 0.180%
Next $5.0 0.170%
Next $4.0 0.160%
Over $24.0 0.150%
---------------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage First $1.0 0.480% 0.480%
Next $1.0 0.455%
Next $1.0 0.430%
Next $3.0 0.405%
Next $1.5 0.380%
Next $1.5 0.365%
Next $1.0 0.360%
Next $5.0 0.350%
Next $5.0 0.340%
Next $4.0 0.330%
Next $26.0 0.310%
Over $50.0 0.290%
---------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal First $0.25 0.410% 0.410%
High-Yield(a) Next $0.25 0.385%
Seligman California Municipal Quality(a) Next $0.25 0.360%
Seligman Minnesota Municipal(a) Next $0.25 0.345%
Seligman New York Municipal(a) Next $6.5 0.320%
Next $2.5 0.310%
Next $5.0 0.300%
Next $9.0 0.290%
Next $26.0 0.270%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
Seligman Frontier(b) First $0.75 0.885% 0.885%
Over $0.75 0.790%
---------------------------------------------------------------------------------------------------------------------------
Seligman Global Technology(c) First $2.0 0.950% 0.950%
Next $2.0 0.910%
Over $4.0 0.870%
---------------------------------------------------------------------------------------------------------------------------
Seligman National Municipal(d) First $1.0 0.410% 0.410%
Next $1.0 0.385%
Next $1.0 0.360%
Next $3.0 0.335%
Next $1.5 0.310%
Next $2.5 0.300%
Next $5.0 0.290%
Next $9.0 0.280%
Next $26.0 0.260%
Over $50.0 0.250%
---------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 102
DAILY RATE ON
ASSETS ANNUAL RATE AT LAST DAY OF MOST
FUND (BILLIONS) EACH ASSET LEVEL RECENT FISCAL PERIOD
---------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 First $0.5 0.455% 0.455%
Seligman TargETFund 2025 Next $0.5 0.410%
Seligman TargETFund 2035 Over $1.0 0.365%
Seligman TargETFund 2045
Seligman TargETFund Core
---------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets First $0.25 1.100% 1.086%
Next $0.25 1.080%
Next $0.25 1.060%
Next $0.25 1.040%
Next $1.0 1.020%
Next $5.5 1.000%
Next $2.5 0.985%
Next $5.0 0.970%
Net $5.0 0.960%
Next $4.0 0.935%
Next $26.0 0.920%
Over $50.0 0.900%
---------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha First $0.25 1.050% 1.050%
Next $0.25 1.030%
Next $0.50 1.010%
Next $1.0 0.990%
---------------------------------------------------------------------------------------------------------------------------
(a) Prior to June 15, 2009, the investment manager received an annual fee
equal to 0.50% of the fund's average daily net assets.
(b) Prior to June 15, 2009, the investment manager received a fee equal to
0.95% per annum of the fund's average daily net assets on the first $750
million of net assets and 0.85% per annum of the fund's average daily net
assets in excess of $750 million.
(c) Prior to June 15, 2009, the investment manager received an annual fee
equal to 1.00% of average daily net assets on the first $2 billion of net
assets, 0.95% of average daily net assets on the next $2 billion and
0.90% of average daily net assets in excess of $4 billion.
(d) Prior to Aug. 31, 2009, the investment manager received an annual fee
equal to 0.50% of the fund's average daily net assets.
Under the agreement, a fund also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees and charges; fidelity bond
premiums; certain legal fees; registration fees for shares; consultants' fees;
compensation of Board members, officers and employees not employed by the
investment manager or its affiliates; corporate filing fees; organizational
expenses; expenses incurred in connection with lending securities; interest and
fee expense related to a fund's participation in inverse floater structures; and
expenses properly payable by a fund, approved by the Board.
For Equity and Balanced Funds, except for RiverSource S&P 500 Index, RiverSource
Small Company Index and the Seligman funds before the fee based on the asset
charge is paid, it is adjusted for the fund's investment performance relative to
a Performance Incentive Adjustment Index (PIA Index) as shown in the table
below. The adjustment increased or decreased the fee for the last fiscal period
as shown in the following table. The table is organized by fiscal year end. You
can find your fund's fiscal year end in Table 1.
TABLE 14. PIA INDEXES
FEE INCREASE OR
FUND PIA INDEX (DECREASE)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING MARCH 31
----------------------------------------------------------------------------------------------
RiverSource Equity Value Lipper Large-Cap Value Funds $ 321,014
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth Lipper Small-Cap Growth Funds 25,307
----------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining Lipper Gold Funds (36,234)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING APRIL 30
----------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity Russell 3000 Index N/A*
----------------------------------------------------------------------------------------------
RiverSource Recovery and
Infrastructure S&P 500 Index N/A*
----------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 103
FEE INCREASE OR
FUND PIA INDEX (DECREASE)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING MAY 31
----------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth Lipper Mid-Cap Growth Funds $ (182,474)
----------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value Lipper Large-Cap Core Funds (190,097)
----------------------------------------------------------------------------------------------
RiverSource Partners Select Value Lipper Mid-Cap Value Funds 299,806
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity Lipper Small-Cap Core Funds (72,062)
----------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value Lipper Small-Cap Value Funds (238,798)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING JUNE 30
----------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity Lipper Equity Income Funds (350,345)
----------------------------------------------------------------------------------------------
RiverSource Real Estate Lipper Real Estate Funds (54,067)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING JULY 31
----------------------------------------------------------------------------------------------
RiverSource Disciplined Equity Lipper Large-Cap Core Funds (2,025,724)
----------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid
Cap Equity Lipper Mid-Cap Core Funds (47,237)
----------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap
Value Lipper Small-Cap Value Funds 2,491
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------
RiverSource Balanced Lipper Balanced Funds (474,081)
----------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap
Growth Lipper Large-Cap Growth Funds (9,448)
----------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap
Value Lipper Large-Cap Value Funds (33,219)
----------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income Lipper Equity Income Funds (5,590,723)
----------------------------------------------------------------------------------------------
RiverSource Mid Cap Value Lipper Mid-Cap Value Funds (2,112,990)
----------------------------------------------------------------------------------------------
RiverSource Strategic Allocation Lipper Flexible Portfolio Funds (556,345)
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING OCTOBER 31
----------------------------------------------------------------------------------------------
RiverSource Disciplined International Lipper International Large-Cap Core
Equity Funds (629,082)
----------------------------------------------------------------------------------------------
RiverSource Partners International Lipper International Multi-Cap
Select Growth Growth Funds (267,871)
----------------------------------------------------------------------------------------------
RiverSource Partners International Lipper International Multi-Cap Value
Select Value Funds (1,510,778)
----------------------------------------------------------------------------------------------
RiverSource Partners International
Small Cap Lipper International Small-Cap Funds (48,195)
----------------------------------------------------------------------------------------------
MSCI All Country Asia Pacific Ex-
Threadneedle Asia Pacific Japan Index N/A(a)
----------------------------------------------------------------------------------------------
Threadneedle Emerging Markets Lipper Emerging Markets Funds (54,050)
----------------------------------------------------------------------------------------------
Threadneedle European Equity Lipper European Funds 97,462
----------------------------------------------------------------------------------------------
Threadneedle Global Equity Lipper Global Funds (446,000)
----------------------------------------------------------------------------------------------
Threadneedle Global Equity Income MSCI All Country World Index 10,034
----------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha MSCI All Country World Index N/A(b)
----------------------------------------------------------------------------------------------
Lipper International Large-Cap Core
Threadneedle International Opportunity Funds 286,033
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth Lipper Mid-Cap Growth Funds 469,963
----------------------------------------------------------------------------------------------
(a) The first performance incentive adjustment will be made Feb. 1, 2010. See
Section titled "Transition Period" below.
(b) The first performance incentive adjustment will be made on Aug. 1, 2010.
See Section titled "Transition Period" below.
FOR ALL FUNDS NOTED IN TABLE 14 EXCEPT RIVERSOURCE 120/20 CONTRARIAN EQUITY,
RIVERSOURCE RECOVERY AND INFRASTRUCTURE, AND THREADNEEDLE GLOBAL EXTENDED ALPHA:
The adjustment will be determined monthly by measuring the percentage difference
over a rolling 12-month period (subject to earlier determination based on the
Transition Period, as set forth below) between the annualized performance of one
Class A share of the fund and the annualized performance of the PIA Index
("performance difference"). The performance difference is then used to determine
the adjustment rate. The adjustment rate, computed to five decimal places, is
determined in accordance with the following table and is applied against average
daily net assets for the applicable rolling 12-month period or Transition
Period, and divided by 12 to obtain the fee reflecting the performance fee
adjustment for that month. The table is organized by fund category. You can find
your fund's category in Table 1.
Statement of Additional Information - [Date], 2010 Page 104
TABLE 15A. PERFORMANCE INCENTIVE ADJUSTMENT CALCULATION
--------------------------------------------------------------------------------------------------------
EQUITY FUNDS BALANCED FUNDS
--------------------------------------------------------------------------------------------------------
PERFORMANCE PERFORMANCE
DIFFERENCE ADJUSTMENT RATE DIFFERENCE ADJUSTMENT RATE
--------------------------------------------------------------------------------------------------------
0.00% - 0.50% 0 0.00% - 0.50% 0
--------------------------------------------------------------------------------------------------------
0.50% - 1.00% 6 basis points times the 0.50% - 1.00% 6 basis points times the
performance difference over 0.50%, performance difference over 0.50%,
times 100 (maximum of 3 basis times 100 (maximum of 3 basis
points if a 1% performance points if a 1% performance
difference) difference)
--------------------------------------------------------------------------------------------------------
1.00% - 2.00% 3 basis points, plus 3 basis points 1.00% - 2.00% 3 basis points, plus 3 basis points
times the performance difference times the performance difference
over 1.00%, times 100 (maximum 6 over 1.00%, times 100 (maximum 6
basis points if a 2% performance basis points if a 2% performance
difference) difference)
--------------------------------------------------------------------------------------------------------
2.00% - 4.00% 6 basis points, plus 2 basis points 2.00% - 3.00% 6 basis points, plus 2 basis points
times the performance difference times the performance difference
over 2.00%, times 100 (maximum 10 over 2.00%, times 100 (maximum 8
basis points if a 4% performance basis points if a 3% performance
difference) difference)
--------------------------------------------------------------------------------------------------------
4.00% - 6.00% 10 basis points, plus 1 basis point 3.00% or 8 basis points
times the performance difference more
over 4.00%, times 100 (maximum 12
basis points if a 6% performance
difference)
--------------------------------------------------------------------------------------------------------
6.00% or more 12 basis points
--------------------------------------------------------------------------------------------------------
For example, if the performance difference for an Equity Fund is 2.38%, the
adjustment rate is 0.000676 (0.0006 [6 basis points] plus 0.0038 [the 0.38%
performance difference over 2.00%] x 0.0002 [2 basis points] x 100 (0.000076)).
Rounded to five decimal places, the adjustment rate is 0.00068. The maximum
adjustment rate for the fund is 0.0012 per year. Where the fund's Class A
performance exceeds that of the PIA Index, the fee paid to the investment
manager will increase. Where the performance of the PIA Index exceeds the
performance of the fund's Class A shares, the fee paid to the investment manager
will decrease. The 12-month comparison period rolls over with each succeeding
month, so that it always equals 12 months, ending with the month for which the
performance adjustment is being computed.
TRANSITION PERIOD
The performance incentive adjustment will not be calculated for the first 6
months from the inception of the fund. After 6 full calendar months, the
performance fee adjustment will be determined using the average assets and
performance difference over the first 6 full calendar months, and the adjustment
rate will be applied in full. Each successive month an additional calendar month
will be added to the performance adjustment computation. After 12 full calendar
months, the full rolling 12-month period will take affect.
CHANGE IN INDEX
If the PIA Index ceases to be published for a period of more than 90 days,
changes in any material respect, otherwise becomes impracticable or, at the
discretion of the Board, is no longer appropriate to use for purposes of a
performance incentive adjustment, for example, if Lipper reclassifies the fund
from one peer group to another, the Board may take action it deems appropriate
and in the best interests of shareholders, including: (1) discontinuance of the
performance incentive adjustment until such time as it approves a substitute
index; or (2) adoption of a methodology to transition to a substitute index it
has approved.
In the case of a change in the PIA Index, a fund's performance will be compared
to a 12-month blended index return that reflects the performance of the current
index for the portion of the 12-month performance measurement period beginning
the effective date of the current index and the performance of the prior index
for the remainder of the measurement period. At the conclusion of the transition
period, the performance of the prior index will be eliminated from the
performance incentive adjustment calculation, and the calculation will include
only the performance of the current index.
Statement of Additional Information - [Date], 2010 Page 105
FOR RIVERSOURCE 120/20 CONTRARIAN EQUITY, RIVERSOURCE RECOVERY AND
INFRASTRUCTURE, AND THREADNEEDLE GLOBAL EXTENDED ALPHA:
The adjustment will be determined monthly by measuring the percentage difference
over a rolling 36-month period (subject to earlier determination based on the
Transition Period, as set forth below) between the annualized performance of one
Class A share of the fund and the annualized performance of the PIA Index
("performance difference"). The performance difference will then be used to
determine the adjustment rate. The adjustment rate, computed to five decimal
places, is determined in accordance with the following table and is applied
against average daily net assets for the applicable rolling 36-month period or
Transition Period, and divided by 12 to obtain the fee reflecting the
performance fee adjustment for that month.
TABLE 15B. PERFORMANCE INCENTIVE ADJUSTMENT CALCULATION
--------------------------------------------------------------------------------------------------------
RIVERSOURCE 120/20 CONTRARIAN EQUITY
RIVERSOURCE RECOVERY AND INFRASTRUCTURE THREADNEEDLE GLOBAL EXTENDED ALPHA
--------------------------------------------------------------------------------------------------------
PERFORMANCE PERFORMANCE
DIFFERENCE ADJUSTMENT RATE DIFFERENCE ADJUSTMENT RATE
--------------------------------------------------------------------------------------------------------
0.00% - 0.50% 0 0.00% - 1.00% 0
--------------------------------------------------------------------------------------------------------
0.50% - 1.00% 6 basis points times the 1.00% - 6.00% 10 basis points times the
performance difference over 0.50%, performance difference over 1.00%,
times 100 (maximum of 3 basis times 100 (maximum 50 basis points
points if a 1% performance if a 6% performance difference)
difference)
--------------------------------------------------------------------------------------------------------
1.00% - 2.00% 3 basis points, plus 3 basis points 6.00% or 50 basis points
times the performance difference more
over 1.00%, times 100 (maximum 6
basis points if a 2% performance
difference)
--------------------------------------------------------------------------------------------------------
2.00% - 4.00% 6 basis points, plus 2 basis points
times the performance difference
over 2.00%, times 100 (maximum 10
basis points if a 4% performance
difference)
--------------------------------------------------------------------------------------------------------
4.00% - 6.00% 10 basis points, plus 1 basis point
times the performance difference
over 4.00%, times 100 (maximum 12
basis points if a 6% performance
difference)
--------------------------------------------------------------------------------------------------------
6.00% or more 12 basis points
--------------------------------------------------------------------------------------------------------
For example, if the performance difference for 120/20 Contrarian Equity is
2.38%, the adjustment rate is 0.00138 [the 1.38% performance difference over
1.00%] x 0.0010 [10 basis points] x 100. Rounded to five decimal places, the
adjustment rate is 0.00138. This adjustment rate of 0.00138 is then applied
against the average daily net assets for the applicable rolling 36-month or
Transition Period, and divided by 12, which provides the performance adjustment
fee for that month. Where the fund's Class A performance exceeds that of the PIA
Index for the applicable rolling 36-month period or Transition Period, the fee
paid to the Investment Manager will increase by the adjustment rate. Where the
performance of the PIA Index exceeds the performance of the fund's Class A
shares for the applicable rolling 36-month period or Transition Period, the fee
paid to the Investment Manager will decrease by the adjustment rate.
The 36-month comparison period rolls over with each succeeding month, so that it
always equals 36 months, ending with the month for which the performance
adjustment is being computed.
TRANSITION PERIOD
The performance incentive adjustment will not be calculated for the first 24
months from the inception of the fund. After 24 full calendar months, the
performance fee adjustment will be determined using the average assets and
Performance Difference over the first 24 full calendar months, and the
Adjustment Rate will be applied in full. Each successive month an additional
calendar month will be added to the performance adjustment computation. After 36
full calendar months, the full rolling 36-month period will take affect.
CHANGE IN INDEX
If the PIA Index ceases to be published for a period of more than 90 days,
changes in any material respect, otherwise becomes impracticable or, at the
discretion of the Board, is no longer appropriate to use for purposes of a
performance incentive adjustment, the Board may take action it deems appropriate
and in the best interests of shareholders, including:
Statement of Additional Information - [Date], 2010 Page 106
(1) discontinuance of the performance incentive adjustment until such time as it
approves a substitute index, or (2) adoption of a methodology to transition to a
substitute index it has approved.
In the case of a change the PIA Index, a fund's performance will be compared to
a 36-month blended index return that reflects the performance of the current
index for the portion of the 36-month performance measurement period beginning
the effective date of the current index and the performance of the prior index
for the remainder of the measurement period. At the conclusion of the transition
period, the performance of the prior index will be eliminated from the
performance incentive adjustment calculation, and the calculation will include
only the performance of the current index.
The table below shows the total management fees paid by each fund for the last
three fiscal periods as well as nonadvisory expenses, net of earnings credits,
waivers and expenses reimbursed by the investment manager and its affiliates.
The table is organized by fiscal year end. You can find your fund's fiscal year
end in Table 1.
TABLE 16. MANAGEMENT FEES AND NONADVISORY EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES NONADVISORY EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Income
Builder Basic
Income N/A N/A N/A $ 139,640 $ 103,636(a) $ 145,971
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Income
Builder
Enhanced
Income N/A N/A N/A 118,255 134,546(a) 153,282
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Income
Builder
Moderate
Income N/A N/A N/A 175,842 129,062(a) 202,410
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder
Aggressive N/A N/A N/A* 199,501 168,942 209,004
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder
Conservative N/A N/A N/A* 146,492 96,147 134,788
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder
Moderate N/A N/A N/A* 278,861 247,980 246,216
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder
Moderate
Aggressive N/A N/A N/A* 299,503 247,472 355,360
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder
Moderate
Conservative N/A N/A N/A* 170,774 117,533 140,615
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Portfolio
Builder Total
Equity N/A N/A N/A* 149,589 173,675 188,843
----------------------------------------------------------------------------------------------------------------------------------
RiverSource S&P
500 Index $ 371,178 $ 579,548 $ 566,109 (194,370) (254,777) (272,996)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Small Company
Index 1,990,095 3,292,392 3,889,499 (1,171,627) (1,007,306) (662,392)
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Equity Value 4,340,117 6,797,853 6,969,436 343,552 413,170 361,720
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Small Cap
Growth 1,243,691 1,887,518 2,066,992 (41,768) 99,186 111,014
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Precious
Metals and
Mining 824,176 956,280 876,127 242,615 175,405 144,337
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
120/20
Contrarian
Equity 368,969 159,311(b) N/A 34,475 21,297(b) N/A
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Recovery and
Infrastruc-
ture 45,652(c) N/A N/A 18,717(c) N/A N/A
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2010 N/A N/A N/A (4,254) 41 4,075(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2015 N/A N/A N/A (7,894) 310 3,927(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2020 N/A N/A N/A (9,956) 745 6,231(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2025 N/A N/A N/A (12,026) 332 4,478(d)
----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 107
----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES NONADVISORY EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2030 N/A N/A N/A $ (9,748) $ 431 $ 2,766(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2035 N/A N/A N/A (7,948) 487 878(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2040 N/A N/A N/A (6,946) (796) 2,640(d)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Retirement
Plus 2045 N/A N/A N/A (6,418) (2,131) (2,522)(d)
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
High Yield
Bond $ 6,353,707 $ 9,610,810 $11,401,845 (748,008) 665,785 481,606
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Aggressive
Growth 3,280,397 5,729,264 4,627,106 (997,666) (786,490) (1,047,823)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Fundamental
Value 4,416,792 7,668,633 7,530,722 (939,055) (213,176) (215,041)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Select Value 2,539,813 4,388,735 4,807,861 (278,114) (142,897) (162,440)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Small Cap
Equity 1,381,155 2,441,742 2,964,236 (435,641) (539,268) (464,274)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
Small Cap
Value 3,098,591 6,511,571 9,159,989 (963,886) (972,781) (878,605)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Short
Duration U.S.
Government 3,665,529 3,816,196 4,419,003 (610,585) (771,512) (1,025,939)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
U.S.
Government
Mortgage 1,731,277 1,958,404 1,348,887 (327,855) (389,262) (438,473)
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Dividend
Opportunity 6,381,215 12,015,660 10,678,661 (502,682) 626,341 540,349
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Real Estate 1,227,857 1,667,040 2,299,121 (18,514) 138,649 207,925
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Cash
Management 12,658,313 15,026,220 12,713,351 (1,868,463) 1,290,897 859,062
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
Equity 9,909,438 17,556,244 14,110,274 268,796 726,080 (202,920)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
Small and Mid
Cap Equity 853,191 365,578 273,481 143,015 125,645 91,799
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
Small Cap
Value 363,926 286,759 206,071 47,195 33,868 37,535
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Floating Rate 2,210,544 3,509,190 3,332,472 (61,933) 293,676 151,486
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Income
Opportunities 1,913,521 1,767,885 2,116,555 291,601 196,944 187,627
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Inflation
Protected
Securities 3,322,371 2,554,103 1,313,892 (115,062) (238,396) (126,032)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Limited
Duration Bond 844,435 792,200 726,809 (68,816) (78,320) (73,339)
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
California
Tax-Exempt 663,711 715,946 717,999 73,054 44,499 20,854
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Diversified
Bond 15,648,683 14,772,880 12,770,016 (2,314,025) (461,298) (1,129,485)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Minnesota
Tax-Exempt 1,230,393 1,246,083 1,351,439 196,213 506,328 676,782
----------------------------------------------------------------------------------------------------------------------------------
RiverSource New
York Tax-
Exempt 220,172 242,807 279,438 9,792 75,790 134,099
----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 108
----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES NONADVISORY EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Balanced $ 2,483,462 $ 3,977,541 $ 6,315,077 $ 346,693 $ 437,940 $ 368,447
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
Large Cap
Growth 2,033,555 905,956 114,048(e) 214,462 195,661 54,709(e)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
Large Cap
Value 661,677 6,618(f) N/A 168,055 2,877(f) N/A
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Diversified
Equity Income 17,053,076 44,177,652 42,530,087 1,037,819 1,905,627 1,561,033
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid
Cap Value 9,896,881 18,813,340 15,908,732 776,726 992,201 826,273
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Strategic
Allocation 6,604,411 10,108,947 11,025,000 585,299 1,047,907 921,198
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Strategic
Income
Allocation 1,081,850 904,660 168,875(e) 246,334 294,099 76,656(e)
----------------------------------------------------------------------------------------------------------------------------------
Seligman
California
Municipal
High-Yield 164,150 173,288 174,700 32,933 53,665 32,890
----------------------------------------------------------------------------------------------------------------------------------
Seligman
California
Municipal
Quality 192,624 196,281 214,476 60,833 90,615 72,092
----------------------------------------------------------------------------------------------------------------------------------
Seligman
Minnesota
Municipal 324,501 351,237 375,995 68,180 99,131 88,809
----------------------------------------------------------------------------------------------------------------------------------
Seligman New
York
Municipal 352,211 332,574 342,695 75,556 88,770 71,419
----------------------------------------------------------------------------------------------------------------------------------
Seligman
National
Municipal 1,147,080 304,747 327,359 62,006 106,685 95,664
----------------------------------------------------------------------------------------------------------------------------------
Seligman
TargETFund
2015 121,554 207,083 184,907 (54,705) (4,193) 7,243
----------------------------------------------------------------------------------------------------------------------------------
Seligman
TargETFund
2025 136,473 210,264 157,846 (68,782) (13,470) (551)
----------------------------------------------------------------------------------------------------------------------------------
Seligman
TargETFund
2035 35,438 32,294 6,852 (18,456) (5,254) (15,347)
----------------------------------------------------------------------------------------------------------------------------------
Seligman
TargETFund
2045 19,710 22,283 4,354 (12,505) (3,570) (4,094)
----------------------------------------------------------------------------------------------------------------------------------
Seligman
TargETFund
Core 272,984 457,038 382,979 (119,771) (10,950) 17,561
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Absolute
Return
Currency and
Income 4,698,565 4,188,137 887,341 205,127 313,877 103,119
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Disciplined
International
Equity 2,174,525 5,209,129 2,161,563 252,387 512,793 358,005
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Emerging
Markets Bond 1,320,292 1,182,004 706,943 82,201 172,124 120,044
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Global Bond 3,551,274 5,074,934 3,438,893 (33,836) 165,694 (17,529)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Select Growth 3,240,723 5,965,413 6,048,963 (660,493) 334,550 672,542
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Select Value 5,749,639 13,239,202 20,067,871 511,602 1,054,830 1,286,758
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Partners
International
Small Cap 496,177 1,057,146 1,270,558 (45,193) 63,912 208,621
----------------------------------------------------------------------------------------------------------------------------------
Seligman
Frontier 321,582 579,499 766,116 (20,898) 200,110 250,909
----------------------------------------------------------------------------------------------------------------------------------
Seligman Global
Technology 2,551,543 3,571,473 3,876,481 386,252 680,094 707,762
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
Asia Pacific 78,072(g) N/A N/A 21,500(g) N/A N/A
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
Emerging
Markets 3,791,476 7,352,591 7,106,815 524,327 1,138,897 1,190,259
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
European
Equity 600,499 980,629 952,484 (31,736) 223,792 199,237
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
Global Equity 2,918,784 5,825,153 6,075,014 350,276 554,139 577,463
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
Global Equity
Income 177,834 15,723(h) N/A 25,200 2,989(h) N/A
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
Global
Extended
Alpha 64,424 16,485(h) N/A 4,234 1,122(h) N/A
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle
International
Opportunity 3,074,518 4,661,800 4,923,040 283,182 486,074 545,663
----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 109
----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES NONADVISORY EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Intermediate
Tax-Exempt $ 339,947 $ 291,762 $ 321,011 $ 8,313 $ 2,588 $ (4,565)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid
Cap Growth 4,488,355 4,726,590 6,373,531 281,069 437,496 241,412
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Tax-Exempt
Bond 2,699,258 2,764,541 3,157,092 48,345 506,736 (8,650)
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Tax-Exempt
High Income 10,226,940 11,447,732 13,006,578 (1,338,742) 2,984,232 (847,490)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
2008 2007 2006 2008 2007 2006
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource
Tax-Exempt
Money Market 464,177 406,763 390,170 161,459 32,730 118,441
----------------------------------------------------------------------------------------------------------------------------------
* Effective Feb. 1, 2006, this fee was eliminated.
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal period
ended on May 31.
(b) For the period from Oct. 18, 2007 (when shares became publicly available)
to April 30, 2008.
(c) For the fiscal period from Feb. 19, 2009 (when shares became publicly
available) to April 30, 2009.
(d) For the period from May 18, 2006 (when shares became publicly available)
to April 30, 2007.
(e) For the period from May 17, 2007 (when shares became publicly available)
to Sept. 30, 2007.
(f) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
(g) For the period from July 15, 2009 (when the Fund became available) to
Oct. 31, 2009.
(h) For the period from Aug. 1, 2008 (when shares became publicly available)
to Oct. 31, 2008.
MANAGER OF MANAGERS EXEMPTION
The funds have received an order from the SEC that permits RiverSource
Investments, subject to the approval of the Board, to appoint a subadviser or
change the terms of a subadvisory agreement for a fund without first obtaining
shareholder approval. The order permits the fund to add or change unaffiliated
subadvisers or the fees paid to subadvisers from time to time without the
expense and delays associated with obtaining shareholder approval of the change.
For all Seligman funds except, Seligman Global Smaller Companies, and for
RiverSource California Tax-Exempt, RiverSource Cash Management, RiverSource
Diversified Bond, RiverSource Global Bond, RiverSource High Yield Bond,
RiverSource Intermediate Tax-Exempt, RiverSource Minnesota Tax-Exempt,
RiverSource New York Tax-Exempt, RiverSource Short Duration U.S. Government,
RiverSource Tax-Exempt Bond, RiverSource Tax-Exempt High Income, RiverSource
Tax-Exempt Money Market and RiverSource U.S. Government Mortgage funds: if the
fund was to seek to rely on the order, holders of a majority of the fund's
outstanding voting securities would need to approve operating the fund in this
manner. There is no assurance shareholder approval, if sought, will be received,
and no changes will be made without shareholder approval until that time.
SUBADVISORY AGREEMENTS
The assets of certain funds are managed by subadvisers that have been selected
by the investment manager, subject to the review and approval of the Board. The
investment manager has recommended the subadvisers to the Board based upon its
assessment of the skills of the subadvisers in managing other assets with
objectives and investment strategies substantially similar to those of the
applicable fund. Short-term investment performance is not the only factor in
selecting or terminating a subadviser, and the investment manager does not
expect to make frequent changes of subadvisers. Certain subadvisers, affiliated
with the investment manager, have been directly approved by shareholders. These
subadvisers are noted in Table 18.
The investment manager allocates the assets of a fund with multiple subadvisers
among the subadvisers. Each subadviser has discretion, subject to oversight by
the Board and the investment manager, to purchase and sell portfolio assets,
consistent with the fund's investment objectives, policies, and restrictions.
Generally, the services that a subadviser provides to the fund are limited to
asset management and related recordkeeping services.
The investment manager has entered into an advisory agreement with each
subadviser under which the subadviser provides investment advisory assistance
and day-to-day management of some or all of the fund's portfolio, as well as
investment research and statistical information. A subadviser may also serve as
a discretionary or non-discretionary investment adviser to management or
advisory accounts that are unrelated in any manner to the investment manager or
its affiliates.
Statement of Additional Information - [Date], 2010 Page 110
The following table shows the advisory fee schedules for fees paid by the
investment manager to subadvisers for funds that have subadvisers. The table is
organized by fiscal year end. You can find your fund's fiscal year end in Table
1.
TABLE 17. SUBADVISERS AND SUBADVISORY AGREEMENT FEE SCHEDULES
PARENT
FUND SUBADVISER COMPANY FEE SCHEDULE
---------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
---------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Davis Selected Advisers, N/A 0.45% on the first $100 million, reducing to
Fundamental Value LP (Davis)(a), (b) 0.25% as assets increase
(effective June 18, 2001)
---------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Barrow, Hanley, Mewhinney & D 1.00% on the first $10 million,
Small Cap Value Strauss (BHMS)(a) reducing to 0.30% as assets
(effective March 12, 2004) increase
------------------------------------------------------------------------------------------------------
Donald Smith & Co., Inc. N/A 0.60% on the first $175 million,
(Donald Smith)(a) reducing to 0.55% as assets
(effective March 12, 2004) increase
------------------------------------------------------------------------------------------------------
Federated MDTA, LLC (MDTA)(a) A 0.60% on the first $75 million, reducing to
(effective June 6, 2008) 0.50% as assets increase
------------------------------------------------------------------------------------------------------
Metropolitan West Capital Management, LLC E 0.50% on all assets
(MetWest Capital)
(effective April 24, 2006)
---------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
---------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Columbia Wanger Asset Management L.P. F 0.70% on the first $150 million, reducing to
International Select (Columbia WAM)(a),(d) 0.50% as assets increase
Growth (effective Sept. 5, 2001)
------------------------------------------------------------------------------------------------------
Principal Global Investors, LLC I 0.40% on the first $250 million, reducing to
(Principal Global) 0.25% as assets increase
(effective April 24, 2006)
---------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners AllianceBernstein L.P. N/A 0.65% on the first $75 million, reducing to
International Select (AllianceBernstein) 0.30% as assets increase
Value (effective Sept. 17, 2001)
------------------------------------------------------------------------------------------------------
Mondrian Investment Partners Limited N/A 0.70% on all assets
(Mondrian)
(effective August 18, 2008)
------------------------------------------------------------------------------------------------------
Tradewinds Global Investors, LLC N/A 0.50% on the first $250 million, reducing to
(Tradewinds) 0.40 as assets increase
(effective August 18, 2008)
---------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Columbia WAM(a),(d) F 0.70% on the first $150 million, reducing to
International Small Cap (effective Aug. 10, 2009) 0.50% as assets increase
------------------------------------------------------------------------------------------------------
Batterymarch Financial Management, Inc. G 0.75% on the first $100 million, reducing to
(Batterymarch) 0.70% as assets increase
(effective April 24, 2006)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific Threadneedle International Limited(b) H 0.50% on the first $250 million, reducing to
(Threadneedle) 0.40% as assets increase, and subject to a
(effective July 15, 2009) performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Threadneedle(b) H 0.45% of the first $150 million, reducing to
Markets (effective July 9, 2004) 0.30% as assets increase, and subject to a
performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 111
PARENT
FUND SUBADVISER COMPANY FEE SCHEDULE
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle European Threadneedle(b) H 0.35% of the first $150 million, reducing to
Equity (effective July 9, 2004) 0.20% as assets increase, and subject to a
performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Threadneedle(b) H 0.35% of the first $150 million, reducing to
Equity (effective July 9, 2004) 0.20% as assets increase, and subject to a
performance incentive adjustment(b)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Threadneedle(b) H 0.45% of the first $250 million, reducing to
Equity Income (effective Aug. 1, 2008) 0.35% as assets increase, and subject to a
performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Threadneedle(b) H 0.70% of the first $250 million, reducing to
Extended Alpha (effective Aug. 1, 2008) 0.60% as assets increase, and subject to a
performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
Threadneedle Threadneedle(b) H 0.35% of the first $150 million, reducing to
International Opportunity (effective July 9, 2004) 0.20% as assets increase, and subject to a
performance incentive adjustment(c)
---------------------------------------------------------------------------------------------------------------------------------
(a) The fee is calculated based on the combined net assets subject to the
subadviser's investment management.
(b) Davis is a 1940 Act affiliate of the investment manager because it owns
or has owned more than 5% of the publicly issued securities of the
investment manager's parent company, Ameriprise Financial. Threadneedle
is an affiliate of the investment manager as an indirect wholly-owned
subsidiary of Ameriprise Financial.
(c) The adjustment for Threadneedle is based on the performance of one Class
A share of the fund and the change in the PIA Index described in Table
14. The performance of the fund and the Index will be calculated using
the method described above for the performance incentive adjustment paid
to the investment manager under the terms of the Investment Management
Services Agreement. The amount of the adjustment to Threadneedle's fee,
whether positive or negative, shall be equal to the following amount of
the performance incentive adjustment made to the investment management
fee payable to the investment manager under the terms of the Investment
Management Services Agreement: 50% for Threadneedle Emerging Markets,
Threadneedle European Equity, Threadneedle Global Equity and
Threadneedle International Opportunity; 100% for Threadneedle Global
Equity Income and Threadneedle Global Extended Alpha. The performance
incentive adjustment was effective Dec. 1, 2004.
(d) On September 29, 2009, Bank of America Corporation ("BAC") entered into
an agreement to sell a portion of the asset management business of
Columbia Management Group, LLC, including Columbia WAM, to Ameriprise
Financial, Inc., the parent company of RiverSource Investments (the
"Transaction"). The Transaction is subject to certain approvals and
other conditions to closing, and is currently expected to close in the
spring of 2010.
The Transaction is not expected to result in any change in the Columbia
WAM personnel who manage the Funds or in the manner in which the Fund is
managed. In addition, RiverSource Investments would remain the
investment manager of the Fund and, as such, would continue to be the
entity that oversees the overall management of the Fund. Nonetheless,
the Transaction is expected to result in a change of control of Columbia
WAM under the federal securities laws and thus would cause the automatic
termination of the current investment sub-advisory agreement with
Columbia WAM. In connection with the Transaction, the Board determined
to recommend that shareholders approve a new investment sub-advisory
agreement in order to assure that Columbia WAM may continue to provide
subadvisory services to the Fund following the Transaction. The services
provided by Columbia WAM under the new investment subadvisory agreement
and the fee levels payable to Columbia WAM for subadvisory services
would remain unchanged from the services provided and fee levels payable
under the current investment subadvisory agreement.
A - Federated MDTA LLC is an indirect, wholly-owned subsidiary of Federated
Investors, Inc.
B - American Century Investment Management, Inc. is a direct, wholly-owned
subsidiary of American Century Companies, Inc.
C - Systematic is an affiliate of Affiliated Managers Group.
D - BHMS is an independent-operating subsidiary of Old Mutual Asset
Management.
E - Metropolitan West Capital Management, LLC (MetWest Capital) is a
subsidiary of Wells Fargo & Company and operates within the Evergreen
Investments unit of its asset management division.
F - Columbia WAM is an indirect wholly-owned subsidiary of Columbia
Management Group, Inc., which in turn is a wholly-owned subsidiary of
Bank of America Corporation.
G - Batterymarch is a wholly-owned, independent subsidiary of Legg Mason,
Inc.
H - Threadneedle is an indirect wholly-owned subsidiary of Ameriprise
Financial.
I - Principal Global Investors, LLC is a wholly-owned, indirect subsidiary
of Principal Financial Group, Inc.
Statement of Additional Information - [Date], 2010 Page 112
The following table shows the subadvisory fees paid by the investment manager to
subadvisers in the last three fiscal periods. The table is organized by fiscal
year end. You can find your fund's fiscal year end in Table 1.
TABLE 18. SUBADVISORY FEES
SUBADVISORY FEES PAID
------------------------------------------
FUND SUBADVISER 2009 2008 2007
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Former subadviser: Essex Investment $ 171,944 $ 257,999 $ 281,295
Growth Management Company, LLC (from Sept. 23,
2005 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: MDTA (from Sept. 23, 255,223 397,581 411,034
2005 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: Turner (from Aug. 18, 167,422 241,810 265,516
2003 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: UBS Global Asset 194,949 293,079 342,871
Management (Americas) (from Aug. 18,
2003 to Aug. 7, 2009)
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Former subadviser: American Century 983,026 1,438,912 1,321,245
Growth Investment Management, Inc. (from April
24, 2003 to Nov. 6, 2009)
-------------------------------------------------------------------------------------
Former subadviser: Turner Investment 900,672 1,310,040 1,304,994
Partners, Inc. (from April 24, 2003 to
Nov. 6, 2009)
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Davis 2,020,698 3,220,929 3,673,544
Value
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Former subadviser: Systematic Financial 608,750 1,025,272 753,292(a)
Value Management, L.P. (from Sept. 29, 2006 to
Nov. 6, 2009)
-------------------------------------------------------------------------------------
Former subadviser: WEDGE Capital 666,913 981,822 776,260(a)
Management L.L.P. (from Sept. 29, 2006
to Nov. 6, 2009)
-------------------------------------------------------------------------------------
Former subadviser: GAMCO Asset N/A N/A 786,466(b)
Management Inc.
(from inception to September 28, 2006)
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Former subadviser: American Century 280,018 506,417 662,396
Equity (from Dec. 12, 2003 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: Jennison Associates 271,108 107,599(c) N/A
LLC (from Feb. 22, 2008 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: Lord Abbett & Co. LLC 363,340 583,123 677,462
(from Dec. 12, 2003 to Aug. 7, 2009)
-------------------------------------------------------------------------------------
Former subadviser: Wellington Management N/A 362,413(d) 650,960*
Company, LLP (from Dec. 12, 2003 to Feb.
22, 2008)
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap BHMS 437,027 865,372 970,241
Value
-------------------------------------------------------------------------------------
Donald Smith 497,789 984,692 1,180,183
-------------------------------------------------------------------------------------
MDTA 443,715 N/A(e) N/A
-------------------------------------------------------------------------------------
MetWest Capital 466,432 955,503 1,769,553
-------------------------------------------------------------------------------------
Former subadviser: Franklin Portfolio 22,583 964,510 1,198,029
Associates
(from March 2004 to June 6, 2008)
-------------------------------------------------------------------------------------
Former subadviser: Goldman Sachs Asset N/A N/A 38,601(f)
Management, L.P. (from Aug. 2002 to
April 24, 2006)
-----------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Columbia WAM 956,567 1,557,963 1,568,158
International Select Growth
-------------------------------------------------------------------------------------
Principal Global 866,239 1,849,485 1,760,150
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 113
SUBADVISORY FEES PAID
------------------------------------------
FUND SUBADVISER 2009 2008 2007
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners AllianceBernstein $2,170,338 $6,268,208 $7,962,307
International
Select Value
-------------------------------------------------------------------------------------
Mondrian 714,196 77,048(g) N/A
-------------------------------------------------------------------------------------
Tradewinds 1,116,798 129,124(g) N/A
-----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Columbia WAM 41,203(h) N/A N/A
International Small Cap
-------------------------------------------------------------------------------------
Batterymarch 188,913 386,194 439,593
-------------------------------------------------------------------------------------
Former subadviser: AIG Global Investment 127,498(i) 355,245 425,696
Corp. (from April 24, 2006 to Aug. 7,
2009)
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific Threadneedle 42,462(j) N/A N/A
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets Threadneedle 1,469,749 2,801,637 2,728,720
-----------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity Threadneedle 260,772 443,279 406,594
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Threadneedle 1,168,151 2,269,177 2,408,387
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Threadneedle 104,654 9,057(k) N/A
Income
-----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Threadneedle 43,117 11,750(k) N/A
Alpha
-----------------------------------------------------------------------------------------------------------------------
Threadneedle International Threadneedle 1,254,178 1,907,215 1,895,712
Opportunity
-----------------------------------------------------------------------------------------------------------------------
* Beginning on July 1, 2006, under the Subadvisory Agreement, RiverSource
Investments is subject to a minimum annual fee of $350,000, payable to
Wellington Management.
(a) For the fiscal period from Sept. 29, 2006 to May 31, 2007.
(b) For the fiscal period from June 1, 2006 to Sept. 28, 2006.
(c) For the fiscal period from Feb. 22, 2008 to May 31, 2008.
(d) For the fiscal period from June 1, 2007 to Feb. 22, 2008.
(e) The subadviser did not begin managing the fund until after the fund's
fiscal year end.
(f) Payments made to subadviser in accordance with termination agreement.
(g) For the fiscal period from Aug. 18, 2008 to Oct. 31, 2008.
(h) For the fiscal period from Aug. 10, 2009 to Oct. 31, 2009.
(i) For the fiscal period from Nov. 1, 2008 to Aug. 7, 2009.
(j) For the fiscal period from July 15, 2009 to Oct. 31, 2009.
(k) For the fiscal period from Aug. 1, 2008 to Oct. 31, 2008.
Statement of Additional Information - [Date], 2010 Page 114
PORTFOLIO MANAGERS. For funds other than money market funds, the following table
provides information about the fund's portfolio managers as of the end of the
most recent fiscal period. The table is organized by fiscal year end. You can
find your fund's fiscal year end in Table 1.
TABLE 19. PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 32 RICs $9.23 billion 9 RICs ($6.78 B) None
Income Builder 2 PIVs $595.75 million
Basic Income 15 other accounts $948.29 million
--------------------------------------------------------------------------------------------
Colin Lundgren 16 RICs $948.29 million None None (6) (21)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 32 RICs $9.26 billion 9 RICs ($6.78 B) None
Income Builder 2 PIVs $595.75 million
Enhanced Income 15 other accounts $948.29 million
--------------------------------------------------------------------------------------------
Colin Lundgren 16 RICs $981.77 million None None (6) (21)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 32 RICs $9.06 billion 9 RICs ($6.78 B) $100,001 -
Income Builder 2 PIVs $595.75 million $500,000
Moderate Income 15 other accounts $948.29 million
--------------------------------------------------------------------------------------------
Colin Lundgren 16 RICs $779.16 million None $100,001 - (6) (21)
$500,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $10,001 -
Portfolio $50,000
Builder
Aggressive
-------------------- -------------
David M. Joy 5 RICs $2.48 billion None None (1) (22)
-------------------- -------------
Michelle M. None
Keeley(c)
-------------------- -------------
William F. None
Truscott(c)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $10,001 -
Portfolio $50,000
Builder
Conservative
-------------------- -------------
David M. Joy 5 RICs $2.64 billion None None (1) (22)
-------------------- -------------
Michelle M. None
Keeley(c)
-------------------- -------------
William F. None
Truscott(c)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $50,001 -
Portfolio $100,000
Builder Moderate
-------------------- -------------
David M. Joy 5 RICs $2.0 billion None None (1) (22)
-------------------- -------------
Michelle M. None
Keeley(c)
-------------------- -------------
William F. None
Truscott(c)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $10,001 -
Portfolio $50,000
Builder Moderate
Aggressive
-------------------- -------------
David M. Joy None (1) (22)
-------------------- -------------
Michelle M. 5 RICs $2.04 billion None None
Keeley(c)
-------------------- -------------
William F. $50,001 -
Truscott(c) $100,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $10,001 -
Portfolio $50,000
Builder Moderate
Conservative
-------------------- -------------
David M. Joy 5 RICs $2.51 billion None None (1) (22)
-------------------- -------------
Michelle M. None
Keeley(c)
-------------------- -------------
William F. None
Truscott(c)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Kent M. Bergene(b) $10,001 -
Portfolio $50,000
Builder Total
Equity
-------------------- -------------
David M. Joy 5 RICs $2.54 billion None $100,000 - (1) (22)
$500,000
-------------------- -------------
Michelle M. None
Keeley(c)
-------------------- -------------
William F. None
Truscott(c)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource S&P Dimitris Bertsimas 32 RICs $9.44 billion 9 RICs ($6.78 B) None
500 Index 2 PIVs $595.75 million
15 other accounts $948.29 million (2) (21)
--------------------------------------------------------------------------------------------
Georgios Vetoulis 2 RICs $511.99 million None None
1 PIV $586.92 million
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 115
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 32 RICs $9.12 billion 9 RICs ($6.78 B) None
Small Company 2 PIVs $595.75 million
Index 15 other accounts $948.29 million (2) (21)
--------------------------------------------------------------------------------------------
Georgios Vetoulis 2 RICs $186.05 million None None
1 PIV $586.92 million
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Warren Spitz 16 RICs $10.59 billion 10 RICs ($10.2 B) $10,001 -
Equity Value 2 PIVs $35.83 million $50,000 (2) (23)
10 other accounts(d) $319.21 million
--------------------------------------------------------------------------------------------
Steve Schroll $50,001 -
15 RICs $10.56 billion $100,000
-------------------- -------------
Laton Spahr 2 PIVs $35.83 million 9 RICs ($10.2 B) $100,001 -
10 other accounts(d) $319.21 million $500,000
-------------------- -------------
Paul Stocking $50,001 -
$100,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Michael J. Alpert(j) 1 RIC $35.63 million
Partners Small 0 PIVs $0
Cap Growth 12 other accounts $378.43 None None (2) (45)
million(d)
---------------------------------------------------------
Stephan B. Yost(j) 1 RIC $35.63 million
0 PIVs $0
12 other accounts $378.43
million(d)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Clay Hoes 1 PIV $46.70 million None $1 - $10,000 (2),(3) (23)
Precious Metals
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Warren Spitz 16 RICs $11.50 billion 10 RICs ($11.05 B) None
120/20 2 PIVs $38.06 million
Contrarian 10 other accounts(d) $400.77 million
Equity
--------------------------------------------------------------------------------------------
Steve Schroll $10,001 -
15 RICs $11.43 billion 9 RICs ($10.98 B) $50,000
-------------------- -------------
Laton Spahr 2 PIVs $38.06 million $100,001 - (2) (23)
10 other accounts(d) $400.77 million $500,000
-------------------- -------------
Paul Stocking $100,001 -
$500,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Warren Spitz 16 RICs $11.47 billion 10 RICs ($11.01 B) $500,001 - (2) (23)
Recovery and 2 PIVs $38.06 million $1,000,000
Infrastructure 10 other accounts(d) $400.77 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.75 billion 9 RICs ($7.0 B) (6) (21)
Retirement Plus 1 PIV $606.31 million
2010 14 other accounts(d) $2.50 billion None
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.28 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.74 billion 9 RICs ($7.0 B) None (6) (21)
Retirement Plus 1 PIV $606.31 million
2015 14 other accounts(d) $2.50 billion
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.27 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.74 billion 9 RICs ($7.0 B) None (6) (21)
Retirement Plus 1 PIV $606.31 million
2020 14 other accounts(d) $2.50 billion
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.27 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.74 billion 9 RICs ($7.0 B) $10,001 - (6) (21)
Retirement Plus 1 PIV $606.31 million $50,000
2025 14 other accounts(d) $2.50 billion
--------------------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.27 billion None None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.73 billion 9 RICs ($7.0 B) Over (6) (21)
Retirement Plus 1 PIV $606.31 million $1,000,000
2030 14 other accounts(d) $2.50 billion
--------------------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.27 billion None $10,001 -
4 other accounts $41.11 million $50,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.74 billion 9 RICs ($7.0 B) None (6) (21)
Retirement Plus 1 PIV $606.31 million
2035 14 other accounts(d) $2.50 billion
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.28 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 116
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.75 billion 9 RICs ($7.0 B) None (6) (21)
Retirement Plus 1 PIV $606.31 million
2040 14 other accounts(d) $2.50 billion
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.28 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $9.75 billion 9 RICs ($7.0 B) None (6) (21)
Retirement Plus 1 PIV $606.31 million
2045 14 other accounts(d) $2.50 billion
------------------------------------------------------------------------------
Colin Lundgren 16 RICs $1.28 billion None
4 other accounts $41.11 million
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource High Scott Schroepfer 10 RICs $12.4 billion None $500,001 -
Yield Bond 0 PIVs $0 $1,000,000 (2) (27)
0 other accounts $0
------------------------------------------------------------------------------------------------------------------------------------
RiverSource John Schonberg(k) 8 RICs $1.43 billion (2) (44)
Partners 2 PIVs $20.71 million
Aggressive 6 other accounts $1.2 million
Growth
--------------------------------------------------------- ----------------------
Sam Murphy(k) 2 RICs $1.05 million 2 RICs ($1.05 M) None
3 other accounts $0.12 million
---------------------------------------------------------
Mike Marzolf(k) 2 RICs $1.05 million (2), (3) (44)
2 other accounts $0.05 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource DAVIS:
Partners Christopher C. Davis 29 RICs $49.0 billion
Fundamental 12 PIVs $799.0 million
Value 122 other $7.5 billion None None(f) (9) (29)
accounts(e)
---------------------------------------------------------
Kenneth C. Feinberg 27 RICs $49.0 billion
11 PIVs $732.0 million
113 other $6.8 billion
accounts(e)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Steve Schroll(l) 13 RICs $14.15 billion
Partners Select 2 PIVs $48.35 million
Value 18 other accounts(d) $8.64 billion
---------------------------------------------------------
Laton Spahr(l) 13 RICs $14.15 billion 9 RICs ($13.65 B) None (2) (23)
2 PIVs $48.35 million
16 other accounts(d) $4.89 billion
---------------------------------------------------------
Paul Stocking(l) 13 RICs $14.15 billion
2 PIVs $48.35 million
21 other accounts(d) $8.85 billion
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Neil T. Eigen(j) 7 RICs $587.6 million
Partners Small 1 PIV $113.71 million
Cap Equity 64 other accounts $2.59 1 RIC ($149.7 M) None (2) (26)
billion(d)
---------------------------------------------------------
Richard S. Rosen(j) 7 RICs $587.6 million
1 PIV $113.71 million
64 other accounts $2.59
billion(d)
------------------------------------------------------------------------------------------------------------------------------------
RiverSource DONALD SMITH:
Partners Small Donald G. Smith 1 RIC $609 million 1 RIC ($609M)
Cap Value
--------------------
Richard L. Greenberg 1 PIV $97 million None (10) (32)
30 other accounts $1,751 million
-------------------------------------------------------------------------------------------------------------------
MDTA:
Daniel J. Mahr
--------------------
Douglas Thunen 9 RIC $740.9 million 1 other account
--------------------
Frederick Konopka 3 PIV $179.1 million ($411,922) None (5) (25)
--------------------
Brian M. Greenberg 57 other accounts $3.27 billion
-------------------------------------------------------------------------------------------------------------------
BHMS:
James S. McClure 4 RIC $484.1 million None
--------------------
John P. Harloe 1 PIV $3.5 million None (12) (33)
15 other accounts $458.1 million
-------------------------------------------------------------------------------------------------------------------
METWEST:
Samir Sikka 4 RICs $347.8 million None
3 PIVs $61.2 million None (13) (34)
9 other accounts $54.4 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Todd White 13 RICs $13.21 billion 2 other accounts $50,001 -
Short Duration 7 PIVs $3.39 billion ($93.84M) $100,000
U.S. Government 39 other accounts $19.29 (2) (27)
billion(d)
--------------------------------------------------------------------------------------------
John McColley 2 RICs $565.3 million None None
0 PIVs $0
0 other accounts $0
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 117
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Todd White 13 RICs $13.58 billion 2 other accounts $50,001 -
Government 7 PIVs $3.39 billion ($93.84M) $100,000
Mortgage 39 other accounts $19.29 (2) (27)
billion(d)
--------------------------------------------------------------------------------------------
Jason J. Callan 0 RICs $0 None None
0 PIVs $0
0 other accounts $0
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Warren Spitz 16 RICs $11.86 billion 8 RICs ($11.1 B) $1 -
Dividend 2 PIVs $40.6 million $10,000
Opportunity 10 other accounts $427.1
million(d)
--------------------------------------------------------------------------------------------
Steve Schroll $50,000 - (2) (23)
15 RICs $11.68 billion 8 RICs ($11.1 B) $100,000
-------------------- -------------
Laton Spahr 2 PIVs $40.6 million $100,001 -
10 other accounts $427.1 $500,000
million(d)
-------------------- -------------
Paul Stocking $10,001 -
$50,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Real Julene Melquist 0 RICs $0 None $10,001 - (2),(3) (23)
Estate 0 PIVs $0 $50,000
0 other accounts $0
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $8.83 billion 8 RICs ($5.82 B) $100,001-
Disciplined 1 PIV $593.72 million $500,000
Equity 1 other account $2.55 billion (2) (21)
--------------------------------------------------------------------------------------------
Gina Mourtzinou 11 RICs $6.58 billion 7 RICs ($5.46 B) $50,001-
4 other accounts $99.99 million $100,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $10.53 billion 8 RICs ($7.51 B) $100,001- (2) (21)
Disciplined 1 PIV $593.72 million $500,000
Small and Mid 1 other account $2.55 billion
Cap Equity
--------------------------------------------------------------------------------------------
Gina Mourtzinou 11 RICs $8.28 billion 7 RICs ($7.16 B) None
4 other accounts $99.99 million
--------------------------------------------------------------------------------------------
Steve Kokkotos 2 RICs $931.20 million 2 RICs ($931.2 M) $10,001-
1 other account $7.13 million $50,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 31 RICs $10.64 billion 8 RICs ($7.62 B) $100,001- (2) (21)
Disciplined 1 PIV $593.72 million $500,000
Small Cap Value 1 other account $2.55 billion
--------------------------------------------------------------------------------------------
Gina Mourtzinou 11 RICs $8.38 billion 7 RICs ($7.27 B) $10,001-
4 other accounts $99.99 million $50,000
--------------------------------------------------------------------------------------------
Steve Kokkotos 2 RICs $1.04 billion 2 RICs (1.04 B) $10,001-
1 other account $7.13 million $50,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Lynn Hopton 11 PIVs $4.85 billion None None (2) (35)
Floating Rate 3 other accounts $430.04 million
-------------------- -------------
Yvonne Stevens None
--------------------------------------------------------- -------------
Steve Staver None None $50,001-
$100,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Brian Lavin 1 RIC $1.65 billion None $50,001- (2) (27)
Income 1 PIV $8.21 million $100,000
Opportunities 1 other account $596.79 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Todd White 13 RICs $13.32 billion 3 RICs ($976.24 M); $10,001- (2) (27)
Inflation 7 PIVs $3.24 billion 2 other accounts $50,000
Protected 37 other accounts(d) $19.37 billion ($160.99 M)
Securities
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Tom Murphy 8 RICs $10.28 billion 3 RICs ($1.39 B) $50,001- (2) (27)
Limited Duration 2 PIVs $816.27 million $100,000
Bond 15 other accounts $12.23 billion
--------------------------------------------------------------------------------------------
Timothy J. Doubek 1 other account $25.37 million None $10,001-
$50,000
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource 10 RICs $4.34 billion
California Tax- 8 other accounts $6.35 billion
Exempt
---------------- ------------------------------------
RiverSource Catherine Stienstra 10 RICs $4.18 billion None None (2) (27)
Minnesota Tax- 8 other accounts $6.35 billion
Exempt
---------------- ------------------------------------
RiverSource New 10 RICs $4.45 billion
York Tax-Exempt 8 other accounts $6.35 billion
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 118
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Tom Murphy 6 RICs $6.26 billion 3 RICs ($916.13 M) $10,001-
Diversified Bond 2 PIVs $826.67 million $50,000
14 other accounts $12.60 billion
--------------------------------------------------------------------------------------------
Scott Schroepfer 7 RICs $8.29 billion 3 RICs ($916.13 M) None (2) (27)
------------------------------------------------------------------------------
Todd White 10 RICs $10.20 billion 3 RICs ($916.13 M); $50,001-
7 PIVs $3.21 billion 2 other accounts $100,000
35 other accounts(d) $20.05 billion ($161.06)
------------------------------------------------------------------------------------------------------------------------------------
FOR FUND WITH FISCAL PERIOD ENDING SEPTEMBER 30
------------------------------------------------------------------------------------------------------------------------------------
Balanced Warren Spitz 13 RICs $14.05 billion 9 RICs ($13.55 B) None
2 PIVs $48.35 million
18 other accounts(d) $6.70 billion
--------------------------------------------------------------------------------------------
Steve Schroll 12 RICs $13.73 billion None
2 PIVs $48.35 million
18 other accounts(d) $2.42 billion
--------------------------------------------------------- -------------
Laton Spahr 12 RICs $13.73 billion 8 RICs ($13.23 B) $1 - $10,000 (2) (23)
2 PIVs $48.35 million
16 other accounts(d) $2.96 billion
--------------------------------------------------------- -------------
Paul Stocking 12 RICs $13.73 billion None
2 PIVs $48.35 million
21 other accounts(d) $6.91 billion
-------------------------------------------------------------------------------------------------------------------
Tom Murphy 6 RICs $10.40 billion 2 RICs ($729.4 M) None
2 PIVs $835.61 million
18 other accounts $15.33 billion
--------------------------------------------------------------------------------------------
Scott Schroepfer 7 RICs $12.47 billion 2 RICs ($729.4 M) None (2) (27)
4 other accounts $8.13 billion
--------------------------------------------------------------------------------------------
Todd White 10 RICs $14.35 billion 2 RICs ($729.4 M); None
7 PIVs $3.12 billion 2 other accounts
41 other accounts(d) $24.80 billion ($161.1 M)
------------------------------------------------------------------------------------------------------------------------------------
Disciplined Dimitris Bertsimas 29 RICs $10.68 billion 7 RICs ($7.6 B) None (2) (21)
Large Cap Growth 1 PIV $636.13 million
18 other accounts(d) $7.71 billion
--------------------------------------------------------------------------------------------
Gina Mourtzinou 9 RICs $8.28 billion 6 RICs ($7.19 B) None
12 other accounts $1.83 billion
------------------------------------------------------------------------------------------------------------------------------------
Disciplined Dimitris Bertsimas 29 RICs $11.02 billion 7 RICs ($7.94 B) None
Large Cap Value 1 PIV $636.13 million
18 other accounts(d) $7.71 billion
--------------------------------------------------------------------------------------------
Gina Mourtzinou 9 RICs $8.62 billion 6 RICs ($7.53 B) None (2) (21)
12 other accounts $1.83 billion
------------------------------------------------------------------------------------------------------------------------------------
Diversified Warren Spitz 13 RICs $9.91 billion 9 RICs ($9.42 B) $50,001-
Equity Income 2 PIVs $48.35 million $100,000
18 other accounts(d) $6.70 billion
--------------------------------------------------------------------------------------------
Laton Spahr 12 RICs $9.59 billion 8 RICs ($9.09 B) $100,001-
2 PIVs $48.35 million $500,000
16 other accounts(d) $2.96 billion
--------------------------------------------------------- -------------
Steve Schroll 12 RICs $9.59 billion $50,001- (2) (23)
2 PIVs $48.35 million $100,000
18 other accounts(d) $2.42 billion
--------------------------------------------------------- -------------
Paul Stocking 12 RICs $9.59 billion $100,001-
2 PIVs $48.35 million $500,000
21 other accounts(d) $6.91 billion
------------------------------------------------------------------------------------------------------------------------------------
Mid Cap Value Warren Spitz 13 RICs $12.40 billion 9 RICs ($11.9 B) $1-$10,000
2 PIVs $48.35 million
18 other accounts(d) $6.70 billion
--------------------------------------------------------------------------------------------
Laton Spahr 12 RICs $12.07 billion $100,001-
2 PIVs $48.35 million $500,000
16 other accounts(d) $2.96 billion
--------------------------------------------------------- -------------
Steve Schroll 12 RICs $12.07 billion 8 RICs ($11.58 B) $50,001- (2) (23)
2 PIVs $48.35 million $100,000
18 other accounts(d) $2.42 billion
--------------------------------------------------------- -------------
Paul Stocking 12 RICs $12.07 billion $100,001-
2 PIVs $48.35 million $500,000
21 other accounts(d) $6.91 billion
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 119
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
Strategic Tom Murphy 6 RICs $10.23 billion 2 RICs ($5.65 M) None
Allocation 2 PIVs $835.61 million
18 other accounts $15.33 billion
--------------------------------------------------------------------------------------------
Scott Schroepfer 7 RICs $12.31 billion 2 RICs (5.65 M) None
4 other accounts $8.13 billion (2) (27)
--------------------------------------------------------------------------------------------
Todd White 10 RICs $14.18 billion 2 RICs (5.65 M); None
7 PIVs $3.12 billion 2 other accounts
41 other accounts(d) $24.80 billion ($161.1 M)
-------------------------------------------------------------------------------------------------------------------
Dimitris Bertsimas 29 RICs $10.41 billion 7 RICs ($7.33 B) Over $500,000
1 PIV $636.13 million
18 other accounts(d) $7.71 billion
--------------------------------------------------------------------------------------------
Gina Mourtzinou 9 RICs $8.28 billion 6 RICs ($6.92 B) $100,001-
12 other accounts $1.83 billion $500,000 (2) (21)
--------------------------------------------------------------------------------------------
Alex Sauer-Budge 1 RIC $408.21 million 1 RIC ($408.21 M) $1-$10,000
2 other accounts $221.56 million
--------------------------------------------------------------------------------------------
Steve E. Kokkotos 2 RICs $197.22 million 2 RICs ($197.22 M) $50,001-
3 other accounts $516.51 million $100,000
------------------------------------------------------------------------------------------------------------------------------------
Strategic Income Colin Lundgren 16 RICs $1.24 billion None None
Allocation 14 other accounts $1.22 billion
--------------------------------------------------------------------------------------------
Gene Tannuzzo 2 other accounts $0.04 million None $1-$10,000 (2) (27)
------------------------------------------------------------------------------------------------------------------------------------
Seligman Catherine Stienstra 10 RICs $4.64 billion None None (2) (27)
California 11 other accounts $6.76 billion
Municipal High-
Yield
------------------------------------------------------------------------------------------------------------------------------------
Seligman Catherine Stienstra 10 RICs $4.64 billion None None (2) (27)
California 11 other accounts $6.76 billion
Municipal
Quality
------------------------------------------------------------------------------------------------------------------------------------
Seligman Catherine Stienstra 10 RICs $4.61 billion None None (2) (27)
Minnesota 11 other accounts $6.76 billion
Municipal
------------------------------------------------------------------------------------------------------------------------------------
Seligman Catherine Stienstra 10 RICs $3.98 billion None None (2) (27)
National 11 other accounts $6.76 billion
Municipal
------------------------------------------------------------------------------------------------------------------------------------
Seligman New Catherine Stienstra 10 RICs $4.59 billion None None (2) (27)
York Municipal 11 other accounts $6.76 billion
------------------------------------------------------------------------------------------------------------------------------------
Seligman John Schonberg 6 RICs $1.23 billion 2 RICs ($1.12 B) None (2) (44)
TargETFund 2015 2 PIVs $20.41 million
5 other accounts $1.13 million
-------------------------------------------------------------------------------------------------------------------
Charles Kadlec 4 RICs $107.69 million None $100,001 - (2) (22)
7 other accounts $9.88 million $500,000
--------------------------------------------------------- -------------
Gary Terpening 4 RICs $107.69 million None
3 other accounts $0.40 million
------------------------------------------------------------------------------------------------------------------------------------
Seligman John Schonberg 6 RICs $1.23 billion 2 RICs ($1.12 B) None (2) (44)
TargETFund 2025 2 PIVs $20.41 million
5 other accounts $1.13 million
-------------------------------------------------------------------------------------------------------------------
Charles Kadlec 4 RICs $99.96 million None $100,001 - (2) (22)
7 RICs $9.88 million $500,000
--------------------------------------------------------- -------------
Gary Terpening 4 RICs $99.96 million $100,001 -
3 other accounts $0.40 million $500,000
------------------------------------------------------------------------------------------------------------------------------------
Seligman John Schonberg 6 RICs $1.23 billion 2 RICs ($1.12 B) None (2) (44)
TargETFund 2035 2 PIVs $20.41 million
5 other accounts $1.13 million
-------------------------------------------------------------------------------------------------------------------
Charles Kadlec 4 RICs $124.47 million None $1 - (2) (22)
7 RICs $9.88 million $10,000
--------------------------------------------------------- -------------
Gary Terpening 4 RICs $124.47 million None
3 other accounts $0.40 million
------------------------------------------------------------------------------------------------------------------------------------
Seligman John Schonberg 6 RICs $1.23 billion 2 RICs ($1.12 B) None (2) (44)
TargETFund 2045 2 PIVs $20.41 million
5 other accounts $1.13 million
-------------------------------------------------------------------------------------------------------------------
Charles Kadlec 4 RICs $129.70 million None $10,001 - (2) (22)
7 RICs $9.88 million $50,000
--------------------------------------------------------- -------------
Gary Terpening 4 RICs $129.70 million None
3 other accounts $0.40 million
------------------------------------------------------------------------------------------------------------------------------------
Seligman John Schonberg 6 RICs $1.23 billion 2 RICs ($1.12 B) None (2) (44)
TargETFund Core 2 PIVs $20.41 million
5 other accounts $1.13 million
-------------------------------------------------------------------------------------------------------------------
Charles Kadlec 4 RICs $75.53 million None $100,001 - (2) (22)
7 RICs $9.88 million $500,000
--------------------------------------------------------- -------------
Gary Terpening 4 RICs $75.53 million None
3 other accounts $0.40 million
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 120
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Nicholas Pifer 5 RICs $4.79 billion None $50,001 - (2) (27)
Absolute Return 3 PIVs $33.59 million $100,000
Currency and 17 other accounts(d) $6.27 billion
Income
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Dimitris Bertsimas 29 RICs $10.53 billion 7 RICs ($7.54 B) $100,001 -
Disciplined 1 PIV $609.30 million $500,000 (2) (21)
International 18 other accounts(d) $6.10 billion
Equity
--------------------------------------------------------------------------------------------
Alex Sauer-Budge 1 RIC $877.17 million 1 RIC ($877.17 M) $0-$10,000
2 other accounts $0.21 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Nicholas Pifer 5 RICs $4.77 billion $10,001 -
Emerging Markets 3 PIVs $33.59 million None $50,000 (2) (27)
Bond 17 other accounts(d) $6.27 billion
--------------------------------------------------------- -------------
Jim Carlene 4 PIVs $174.53 million $10,001 -
7 other accounts $966.74 million $50,000
------------------------------------------------------------------------------------------------------------------------------------
RiverSource Nicholas Pifer 5 RICs $4.51 billion None $50,001 - (2) (27)
Global Bond 3 PIVs $33.59 million $100,000
17 other accounts(d) $6.27 billion
------------------------------------------------------------------------------------------------------------------------------------
RiverSource COLUMBIA WAM:
Partners
International
Select Growth
P. Zachary Egan 2 RICs $4.10 billion None None (15) (37)
---------------------------------------------------------
Louis J. Mendes 3 RICs $5.50 billion
-------------------------------------------------------------------------------------------------------------------
PRINCIPAL GLOBAL:
John Pihlblad 9 RICs $3.14 billion
2 PIVs $373.39 million None None (16) (38)
3 other accounts $257.06 million
---------------------------------------------------------
Steven Larson 6 RICs $2.20 billion
1 PIV $105.81 million
2 other accounts $257.06 million
------------------------------------------------------------------------------------------------------------------------------------
RiverSource ALLIANCEBERNSTEIN:
Partners
International
Select Value
Kevin F. Simms 112 RICs $38.41 billion 3 RICs ($6.56 B);
--------------------
Henry S. D'Auria 195 PIVs $19.99 billion 3 PIVs ($839 M);
--------------------
Sharon E. Fay 33,923 other $96.14 billion 86 other ($8.82 B)
accounts
------------------------------------------------------------------------------
Marilyn G. Fedak 43 RICs $11.20 billion 1 RIC ($3.64 B);
52 PIVs $1.43 billion 8 other ($584 M) None (17) (39)
33,271 other $23.54 billion
accounts
------------------------------------------------------------------------------
Giulio Martini 53 RICs $23.88 billion 2 RICs ($2.92 B);
94 PIVs $17.06 billion 2 PIVs ($792 M);
548 other accounts $58.71 billion 62 other ($6.79 B)
-------------------------------------------------------------------------------------------------------------------
MONDRIAN:
Ormala Krishnan 1 RIC $363.0 million None None (8) (40)
1 PIV $406.0 million
11 other accounts $1.08 billion
-------------------------------------------------------------------------------------------------------------------
TRADEWINDS:
Peter Boardman 4 RICs $1.80 billion
9 PIVs $906.79 million None None (11) (41)
41,851 other $11.98 billion
accounts
---------------------------------------------------------
Alberto Jimenez 4 RICs $1.81 billion
Crespo 9 PIVs $906.79 million
41,848 other $11.85 billion
accounts
------------------------------------------------------------------------------------------------------------------------------------
RiverSource COLUMBIA WAM:
Partners
International
Small Cap
P. Zachary Egan 2 RICs $4.30 billion None None (15) (37)
---------------------------------------------------------
Louis Mendes III 3 RICs $5.60 billion
-------------------------------------------------------------------------------------------------------------------
BATTERYMARCH:
Adam Petryk 7 RICs $2.59 billion
18 PIVs $1.43 billion None None (18) (42)
28 other accounts $4.16 billion
---------------------------------------------------------
Charles F. Lovejoy 3 RICs $1.51 billion
--------------------
Christopher W. Floyd 11 PIVs $651.76 million
18 other accounts $2.03 billion
------------------------------------------------------------------------------------------------------------------------------------
Seligman Michael Alpert 1 RIC $97.15 million None (2) (45)
Frontier 18 other accounts $1.44 billion 1 RIC ($97.15 M)
--------------------------------------------------------- -------------
Stephen Yost 1 RIC $97.15 million None
16 other accounts $9.07 billion
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 121
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
Seligman Global Richard M. Parower 3 RICs $3.40 billion $100,001 -
Technology 5 PIVs $904.02 million $500,000
6 other accounts $3.39 billion
--------------------------------------------------------- -------------
Paul H. Wick 3 RICs $3.40 billion None
5 PIVs $904.02 million
5 other accounts $3.04 billion
--------------------------------------------------------- -------------
Reema D. Shah 3 RICs $3.40 billion None None (2) (36)
5 PIVs $904.02 million
8 other accounts $9.11 billion
--------------------------------------------------------- -------------
Ajay Diwan 3 RICs $3.40 billion None
5 PIVs $904.02 million
7 other accounts $5.76 billion
--------------------------------------------------------- -------------
Benjamin Lu 1 RIC $6.11 million $0 -
2 PIVs $41.12 million $10,000
1 other account $0.01 million
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
Asia Pacific
Vanessa Donegan 2 PIVs $2.17 billion 1 other ($156.61 M) None(g) (14) (43)
7 other accounts $4.16 billion
------------------------------------------------------------------------------
Rafael Polatinsky 1 PIV $201.29 million None
4 other accounts $20.0 billion
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
Emerging Markets
Julian A.S. Thompson 1 RIC $832.97 million 1 RIC ($832.97 M) (14) (43)
-------------------- --------------------
Jules Mort 4 PIVs $984.10 million None None(g)
2 other accounts $29.80 million
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
European Equity
Rob Jones 3 PIVs $169.95 million None
1 other accounts $39.35 million None(g) (14) (43)
------------------------------------------------------------------------------
Dan Ison 4 PIVs $211.49 million 1 PIV ($86.38 M)
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
Global Equity
Stephen Thornber 2 RICs $28.09 million None
3 PIVs $779.53 million
3 other accounts $411.64 million None(g) (14) (43)
------------------------------------------------------------------------------
Andrew Holliman 2 RICs $7.50 million 1 RIC, 1 PIV
6 PIVs $1.63 billion ($16.2 M)
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
Global Equity
Income
Stephen Thornber 2 RICs $481.64 million 1 RIC ($481.64 M)
3 PIVs $779.53 million
3 other accounts $411.64 million None(g) (14) (43)
------------------------------------------------------------------------------
Jeremy Podger 2 RICs $28.09 million 3 PIVs, 1 other
7 PIV $144.71 million ($96.2 M)
4 other accounts $120.63 million
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
Global Extended
Alpha
Andrew Holliman 1 RICs $481.64 million 1 RIC, 1 PIV
6 PIVs $1.63 billion ($16.2 M)
------------------------------------------------------------------------------
Jeremy Podger 1 RICs $28.09 million 3 PIVs, 1 other None(g) (14) (43)
7 PIV $692.70 million ($96.2 M)
4 other accounts $120.63 million
------------------------------------------------------------------------------------------------------------------------------------
Threadneedle THREADNEEDLE:
International
Opportunity
Alex Lyle 1 RIC $552.78 million 1 RIC ($552.78 M);
16 PIVs $1.20 million 1 other ($221.18 M)
30 other accounts $2.17 billion None(g) (14) (43)
------------------------------------------------------------------------------
Esther Perkins 1 RIC $552.78 million 1 RIC ($552.78 M)
3 other accounts $264.31 million
------------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
------------------------------------------------------------------------------------------------------------------------------------
Intermediate Catherine Stienstra 10 RICs $4.40 billion None None (2) (27)
Tax-Exempt 11 other accounts $6.50 billion
------------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth John K. Schonberg 7 RICs $745.93 million (2)
2 PIVs $15.93 million
6 other accounts $1.12 million
--------------------------------------------------------- ---------
Sam Murphy 1 RIC $364.11 million 1 RIC ($364.11 M) None (44)
3 other accounts $0.12 million
---------------------------------------------------------
Mike Marzolf 1 RIC $364.11 million (2), (3)
2 other accounts $0.05 million
------------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 122
OTHER ACCOUNTS MANAGED (EXCLUDING THE FUND)
--------------------------------------------------------- POTENTIAL
APPROXIMATE OWNERSHIP CONFLICTS
NUMBER AND TYPE TOTAL NET PERFORMANCE BASED OF FUND OF STRUCTURE OF
FUND PORTFOLIO MANAGER OF ACCOUNT* ASSETS ACCOUNTS(a) SHARES INTEREST COMPENSATION
------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Catherine Stienstra 10 RICs $3.82 billion None None (2) (27)
11 other accounts $6.50 billion
------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt High Catherine Stienstra 10 RICs $2.21 billion None None (2) (27)
Income 11 other accounts $6.50 billion
------------------------------------------------------------------------------------------------------------------------------------
* RIC refers to a Registered Investment Company; PIV refers to a Pooled
Investment Vehicle.
(a) Number of accounts for which the advisory fee paid is based in part or
wholly on performance and the aggregate net assets in those accounts.
(b) Mr. Bergene has overall accountability for the group that monitors the
subadvisers for the funds and for making recommendations to the Boards of
Directors on changes to those subadvisers.
(c) Ms. Keeley, who serves as Executive Vice President -- Equity and Fixed
Income for RiverSource Investments, and Mr. Truscott, who serves as Chief
Investment Officer for RiverSource Investments, oversee the portfolio
managers who manage other accounts for RiverSource Investments, including
the underlying funds in which the Funds-of-Funds invest, and other
accounts managed by RiverSource Investments and its affiliates including
institutional assets, proprietary assets and hedge funds.
(d) Reflects each wrap program strategy as a single client, rather than
counting each participant in the program as a separate client.
(e) Wrap accounts have been counted at the sponsor level.
(f) Neither Christopher Davis nor Kenneth Feinberg own any shares of
RiverSource Partners Fundamental Value Fund. However, both portfolio
managers have over $1 million invested in the Davis Funds, which are
managed in a similar style.
(g) The fund is available for sale only in the U.S. The portfolio managers do
not reside in the U.S. and therefore do not hold any shares of the fund.
(h) The portfolio manager began managing the fund after its last fiscal year
end; reporting information is as of Oct. 31, 2008.
(i) The portfolio manager began managing the fund after its last fiscal year
end; reporting information is provided as of Jan. 31, 2009.
(j) The portfolio manager began managing the fund after its last fiscal year
end; reporting information is provided as of May 31, 2009.
(k) The portfolio manager began managing the fund after its last fiscal year
end; reporting information is provided as of Nov. 30, 2009.
(l) The portfolio manager began managing the fund after its last fiscal year
end; reporting information is provided as of Sept. 30, 2009.
POTENTIAL CONFLICTS OF INTEREST
(1) RIVERSOURCE: Management of Funds-of-Funds differs from that of the other
funds. The portfolio management process is set forth generally below and
in more detail in the funds' prospectus.
Management of the portfolios is based on initial asset class guidance
provided by the Capital Markets Committee, a group of RiverSource
Investments investment professionals, and subsequent allocation
determinations by the Asset Allocation Committee and Fund Selection
Committee within established guidelines set forth in the prospectus. The
Asset Allocation Committee, comprised of portfolio managers Joy, Keeley
and Truscott, determines each funds-of-fund's allocation among the three
main asset classes (equity, fixed income and cash) and allocation among
investment categories within each asset class. The Fund Selection
Committee, comprised portfolio managers Bergene, Joy, Keeley and
Truscott, determines each funds-of-fund's allocation among the
underlying funds. These allocation determinations are reviewed by the
Asset Allocation Committee and Fund Selection Committee at least
quarterly.
Because of the structure of the funds-of-funds, the potential conflicts
of interest for the portfolio managers may be different than the
potential conflicts of interest for portfolio managers who manage other
funds. These potential conflicts of interest include
- The portfolio managers of the underlying funds are under the
supervision of portfolio managers Keeley and Truscott. Keeley and
Truscott may have influence over the management of the underlying
funds through their supervision of the underlying funds' portfolio
managers and/or through their ability, as part of the Asset Allocation
Committee and Fund Selection Committee, to influence the allocation of
funds-of-funds assets to or away from the underlying funds.
- Portfolio managers Joy, Keeley and Truscott also serve as members of
the Capital Markets Committee. As described above, the Capital Markets
Committee provides initial guidance with respect to asset allocation,
and its view may play a significant role in the asset class
determinations made by the Asset Allocation Committee and, as a
result, in the underlying fund determinations made by the Fund
Selection Committee.
In addition to the accounts above, portfolio managers may manage
accounts in a personal capacity that may include holdings that are
similar to, or the same as, those of the fund. The investment manager
has in place a Code of Ethics that is designed to address conflicts and
that, among other things, imposes restrictions on the ability of the
portfolio managers and other "investment access persons" to invest in
securities that may be recommended or traded in the fund and other
client accounts.
(2) RIVERSOURCE: RiverSource Investments portfolio managers may manage one
or more mutual funds as well as other types of accounts, including hedge
funds, proprietary accounts, separate accounts for institutions and
individuals, and other pooled investment vehicles. Portfolio managers
make investment decisions for an account or portfolio based on its
investment objectives and policies, and other relevant investment
considerations. A portfolio manager may manage another account whose
fees may be materially greater than the management fees paid by the Fund
and may include a performance-based fee. Management of multiple funds
and accounts may create potential conflicts of interest relating to
Statement of Additional Information - [Date], 2010 Page 123
the allocation of investment opportunities, competing investment
decisions made for different accounts and the aggregation and allocation
of trades. In addition, RiverSource Investments monitors a variety of
areas (e.g., allocation of investment opportunities) and compliance with
the firm's Code of Ethics, and places additional investment restrictions
on portfolio managers who manage hedge funds and certain other accounts.
RiverSource Investments has a fiduciary responsibility to all of the
clients for which it manages accounts. RiverSource Investments seeks to
provide best execution of all securities transactions and to aggregate
securities transactions and then allocate securities to client accounts
in a fair and equitable basis over time. RiverSource Investments has
developed policies and procedures, including brokerage and trade
allocation policies and procedures, designed to mitigate and manage the
potential conflicts of interest that may arise from the management of
multiple types of accounts for multiple clients.
In addition to the accounts above, portfolio managers may manage
accounts in a personal capacity that may include holdings that are
similar to, or the same as, those of the fund. The investment manager's
Code of Ethics is designed to address conflicts and, among other things,
imposes restrictions on the ability of the portfolio managers and other
"investment access persons" to invest in securities that may be
recommended or traded in the fund and other client accounts.
(3) RIVERSOURCE: The portfolio manager's responsibilities also include
working as a securities analyst. This dual role may give rise to
conflicts with respect to making investment decisions for accounts that
the portfolio manager manages versus communicating his or her analyses
to other portfolio managers concerning securities that he or she follows
as an analyst.
(4) TURNER: As is typical for many money managers, potential conflicts of
interest may arise related to Turner's management of accounts including
the fund where not all accounts are able to participate in a desired
IPO, or other limited opportunity, relating to use of soft dollars and
other brokerage practices, related to the voting of proxies, employee
personal securities trading, and relating to a variety of other
circumstances. In all cases, however, Turner believes it has written
policies and procedures in place reasonably designed to prevent
violations of the federal securities laws and to prevent material
conflicts of interest from arising. Please also see Turner's Form ADV,
Part II for a description of some of its policies and procedures in this
regard.
(5) MDTA: As a general matter, certain conflicts of interest may arise in
connection with a portfolio manager's management of a fund's
investments, on the one hand, and the investments of other accounts for
which the portfolio manager is responsible, on the other. For example,
it is possible that the various accounts managed could have different
investment strategies that, at times, might conflict with one another to
the possible detriment of the Fund. Alternatively, to the extent that
the same investment opportunities might be desirable for more than one
account, possible conflicts could arise in determining how to allocate
them. Other potential conflicts might include conflicts created by
specific portfolio manager compensation arrangements, and conflicts
relating to selection of brokers or dealers to execute fund portfolio
trades and/or specific uses of commissions from Fund portfolio trades
(for example, research, or "soft dollars"). The Adviser has structured
the portfolio managers' compensation in a manner, and the Fund has
adopted policies and procedures, reasonably designed to safeguard the
Fund from being negatively affected as a result of any such potential
conflicts.
(6) RIVERSOURCE: Management of the Income Builder and Retirement Plus Funds-
of-Funds differs from that of the other funds. The portfolio management
process is set forth generally below and in more detail in the funds'
prospectus.
Management of the portfolios is based on proprietary, quantitative
techniques and qualitative review of the quantitative output. Using
these methodologies, a group of RiverSource Investments' investment
professionals allocates each fund's assets within and across different
asset classes in an effort to achieve the fund's objective of providing
a high level of current income and growth of capital. After the initial
allocation, the fund will be rebalanced monthly in an effort to maximize
the level of income and capital growth, incorporating various measures
of relative value subject to constraints that set minimum or maximum
exposure within asset classes, as set forth in the prospectus. Within
the equity and fixed income asset classes, the quantitative model
establishes allocations for the funds, seeking to achieve each fund's
objective by investing in defined investment categories. The target
allocation range constraints are intended, in part, to promote
diversification within the asset classes.
Because of the structure of the funds-of-funds, the potential conflicts
of interest for the portfolio managers may be different than the
potential conflicts of interest for portfolio managers who manage other
funds. These potential conflicts of interest include:
- In certain cases, the portfolio managers of the underlying funds are
the same as the portfolio managers of the Income Builder and
Retirement Plus Funds-of-Funds, and could influence the allocation of
funds-of-funds assets to or away from the underlying funds that they
manage.
- RiverSource Investments, LLC and its affiliates may receive higher
compensation as a result of allocations to underlying funds with
higher fees.
- RiverSource Investments, LLC monitors the performance of the
underlying funds and may, from time to time, recommend to the board of
directors of the funds a change in portfolio management or fund
strategy or the closure or merger of an underlying fund. In addition,
RiverSource Investments, LLC may believe that certain funds may
benefit
Statement of Additional Information - [Date], 2010 Page 124
from additional assets or could be harmed by redemptions. All of these
factors may also influence decisions in connection with the allocation
of funds-of-funds assets to or away from certain underlying funds.
In addition to the accounts above, portfolio managers may manage
accounts in a personal capacity that may include holdings that are
similar to, or the same as, those of the fund. The investment manager
has in place a Code of Ethics that is designed to address conflicts and
that, among other things, imposes restrictions on the ability of the
portfolio managers and other "investment access persons" to invest in
securities that may be recommended or traded in the fund and other
client accounts.
(7) AMERICAN CENTURY: Certain conflicts of interest may arise in connection
with the management of multiple portfolios. Potential conflicts include,
for example, conflicts among investment strategies and conflicts in the
allocation of investment opportunities. American Century has adopted
policies and procedures that are designed to minimize the effects of
these conflicts.
Responsibility for managing American Century client portfolios is
organized according to investment discipline. Investment disciplines
include, for example, quantitative equity, small- and mid-cap growth,
large-cap growth, value, international, fixed income, asset allocation,
and sector funds. Within each discipline are one or more portfolio teams
responsible for managing specific client portfolios. Generally, client
portfolios with similar strategies are managed by the same team using
the same objective, approach, and philosophy. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across similar portfolios, which minimizes the potential for
conflicts of interest.
For each investment strategy, one portfolio is generally designated as
the "policy portfolio." Other portfolios with similar investment
objectives, guidelines and restrictions are referred to as "tracking
portfolios." When managing policy and tracking portfolios, a portfolio
team typically purchases and sells securities across all portfolios that
the team manages. American Century's trading systems include various
order entry programs that assist in the management of multiple
portfolios, such as the ability to purchase or sell the same relative
amount of one security across several funds. In some cases a tracking
portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers
make purchase and sale decisions for such portfolios alongside the
policy portfolio to the extent the overlap is appropriate, and
separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same
security for multiple portfolios when it believes such aggregation is
consistent with its duty to seek best execution on behalf of its
clients. Orders of certain client portfolios may, by investment
restriction or otherwise, be determined not available for aggregation.
American Century has adopted policies and procedures to minimize the
risk that a client portfolio could be systematically advantaged or
disadvantaged in connection with the aggregation of orders. To the
extent equity trades are aggregated, shares purchased or sold are
generally allocated to the participating portfolios pro rata based on
order size. Because initial public offerings (IPOs) are usually
available in limited supply and in amounts too small to permit across-
the-board pro rata allocations, American Century has adopted special
procedures designed to promote a fair and equitable allocation of IPO
securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio
teams are responsible for executing trades with broker/dealers in a
predominantly dealer marketplace. Trade allocation decisions are made by
the portfolio manager at the time of trade execution and orders entered
on the fixed income order management system.
Finally, investment of American Century's corporate assets in
proprietary accounts may raise additional conflicts of interest. To
mitigate these potential conflicts of interest, American Century has
adopted policies and procedures intended to provide that trading in
proprietary accounts is performed in a manner that does not give
improper advantage to American Century to the detriment of client
portfolios.
(8) MONDRIAN: Mondrian does not foresee any material conflicts of interest
that may arise in the management of the funds and any other accounts
managed with similar investment guidelines. Mondrian acts solely as an
investment manager and does not engage in any other business activities.
The following is a list of some potential conflicts of interest that can
arise in the course of normal investment management business activities.
Mondrian maintains and operates various policies and procedures which
are designed to prevent or manage any of the conflicts identified below
so that the interests of its clients are always put ahead of Mondrian's
own interests or those of its employees and directors:
Allocation of aggregated trades
Mondrian may from time to time aggregate trades for a number of its
clients.
Mondrian's policy requires that all allocations of aggregated trades
must be fair between clients. Transactions involving commingled orders
are allocated in a manner deemed equitable to each account. When a
combined order is executed in a series of transactions, at different
prices, each account participating in the order may be allocated an
average price obtained from the broker/dealer. When a trade can be
allocated in a cost efficient manner to our clients, it will be prorated
across all participating accounts. Mondrian may randomly allocate
purchases or sales among participating
Statement of Additional Information - [Date], 2010 Page 125
accounts when the amounts involved are too small to be evenly
proportioned in a cost efficient manner. In performing random
allocations, Mondrian will consider consistency of strategy
implementation among participating accounts.
Allocation of investment opportunities
Mondrian is an investment manager of multiple client portfolios. As
such, it has to ensure that investment opportunities are allocated
fairly between clients. There is a potential risk that Mondrian may
favor one client over another client in making allocations of investment
opportunities.
Mondrian makes security selection decisions at committee level. Those
securities identified as investment opportunities are added to a list of
approved securities; portfolios will hold only such approved securities.
All portfolios governed by the same or a similar mandate will be
structured similarly (that is, will hold the same or comparable stocks),
and will exhibit similar characteristics. Sale and purchase
opportunities identified at regular investment meetings will be applied
to portfolios across the board, subject to the requirements of
individual client mandates.
See also "Side-by-side management of hedge funds" below.
Allocation of IPO opportunities
Initial Public Offerings ("IPO's") present a potential conflict of
interest when they are priced at a discount to the anticipated secondary
market price and the issuer has restricted or scaled back its allocation
due to market demand. In such instances, the IPO allocation could be
divided among a small select group of clients with others not receiving
the allocation they would otherwise be entitled to.
Mondrian clients with relevant mandates are given an equal opportunity,
proportionate to the size of their portfolio, to participate in IPO
trades. All IPO purchases are allocated on a strict pro-rata basis.
Dealing in investments as principal in connections with the provision of
seed capital
A conflict of interest exists when a portfolio management firm manages
its own money alongside client money.
Mondrian generally does not trade for its own account. However, Mondrian
and its affiliates have provided the seed capital to certain investment
vehicles that have been established by Mondrian group entities. Mondrian
serves as the investment manager to these investment vehicles.
Mondrian operates dealing policies designed to ensure the fair and equal
treatment of all clients e.g. the allocation of aggregated trades among
clients. These policies ensure that any portfolios in which Mondrian has
an investment interest do not receive favorable treatment relative to
other client portfolios.
Directorships and external arrangements
Certain Mondrian staff may hold positions in external organizations.
There is a potential risk that Mondrian personnel may place their own
interests (resulting from outside employment/directorships) ahead of the
interests of Mondrian clients.
Before accepting an executive or non-executive directorship or any other
appointment in another company, employees, including executive
directors, must obtain the prior approval of the Chief Executive
Officer. The Chief Compliance Officer must also be informed of all such
appointments and changes.
The CEO and CCO will only permit appointments that would not present a
conflict of interest with the individual's responsibilities to Mondrian
clients.
Dual agency
Dual Agency (also known as Cross Trading) concerns those transactions
where Mondrian may act as agent for both the buyer and seller. In such
circumstances there is a potential conflict of interest as it may be
possible to favor one client over another when establishing the
execution price and/or commission rate.
Although it rarely does so, Mondrian may act as agent for both buying
and selling parties with respect to transactions in investments. If
Mondrian proposes to act in such capacity, the Portfolio Manager will
first obtain approval from the Chief Compliance Officer. The CCO has an
obligation to ensure that both parties are treated fairly in any such
trade.
Employee personal account dealing
There are a number of potential conflicts when staff of an investment
firm engage in buying and selling securities for their personal account.
Mondrian has arrangements in place to ensure that none of its directors,
officers or employees (or persons connected to them by way of a business
or domestic relationship) effects any transaction on their own account
which conflicts with client interests.
Mondrian's rules which govern personal account dealing and general
ethical standards are set out in the Mondrian Investment Partners Code
of Ethics.
Statement of Additional Information - [Date], 2010 Page 126
Gifts and entertainment (received)
In the normal course of business Mondrian employees may receive gifts
and entertainment from third parties e.g. brokers and other service
providers. This results in a potential conflict of interest when
selecting third parties to provide services to Mondrian and its clients.
Mondrian has a policy which requires that gifts and entertainment
received are reported to the Chief Compliance Officer (any items in
excess of L100 require pre-approval).
All gifts and entertainment are reviewed to ensure that they are not
inappropriate and that staff have not been unduly influenced by them.
Gifts and entertainment (given)
In the normal course of business, Mondrian employees may provide gifts
and entertainment to third parties. Excessively lavish gifts and
entertainment would be inappropriate.
Mondrian has a policy which requires that any gifts and entertainment
provided are reported to the Chief Compliance Officer (any items in
excess of L200 require pre-approval).
All gifts and entertainment are reviewed to ensure that they are not
inappropriate and that staff have not attempted to obtain undue
influence from them.
Performance fees
Where an investment firm has clients with a performance fee arrangement
there is a risk that those clients could be favored over clients without
performance fees.
Mondrian charges fees as a proportion of assets under management. In a
very limited number of situations, in addition to this fee basis,
certain accounts also include a performance fee basis.
The potential conflict of interest arising from these fee arrangements
is addressed by Mondrian's procedures for the allocation of aggregated
trades among clients. Investment opportunities are allocated totally
independently of fee arrangements.
Side-by-side management of hedge funds (Mondrian Alpha Funds)
Where an investment manager has responsibility for managing long only
portfolios alongside portfolios that can take short positions there is
potential for a conflict of interest to arise between the two types of
portfolio.
Mondrian acts as investment manager for two Fixed Income Alpha and one
Equity Alpha fund. The Alpha Funds are permitted to take short positions
and are also permitted to invest in some or all of the same securities
that Mondrian manages for other clients.
Mondrian is satisfied that the investment styles of these different
products significantly reduce the likelihood of a conflict of interest
arising. However, Mondrian has a number of policies and procedures in
place that are designed to ensure that any potential conflicts are
correctly managed and monitored so that all clients are treated fairly.
Soft dollar arrangements
Where an investment manager has soft dollar arrangements in place with a
broker/dealer there is a potential conflict of interest as trading
volumes through that broker/dealer are usually important in ensuring
that soft dollar targets are met.
As is typical in the investment management industry, Mondrian client
funds are used to pay brokerage commissions for the execution of
transactions in the client's portfolio. As part of that execution
service, brokers generally provide proprietary research to their clients
as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; and providing information
on economic factors and trends.
Proprietary research may be used by Mondrian in connection with its
investment decision-making process with respect to one or more accounts
managed by it, and it may or may not be used, or used exclusively, with
respect to the account generating the brokerage.
With the exception of the receipt of proprietary research, Mondrian has
no other soft dollar or commission sharing arrangements in place with
brokers.
(9) DAVIS: Actual or apparent conflicts of interest may arise when a
portfolio manager has day-to-day management responsibilities with
respect to more than one portfolio or other account. More specifically,
portfolio managers who manage multiple portfolios and/or other accounts
are presented with the following potential conflicts:
- The management of multiple portfolios and/or other accounts may result
in a portfolio manager devoting unequal time and attention to the
management of each portfolio and/or other account. Davis Advisors
seeks to manage such competing interests for the time and attention of
portfolio managers by having portfolio managers focus on a particular
investment discipline. Most other accounts managed by a portfolio
manager are managed using the same investment models that are used in
connection with the management of the portfolios.
Statement of Additional Information - [Date], 2010 Page 127
- If a portfolio manager identifies a limited investment opportunity
which may be suitable for more than one portfolio or other account, a
portfolio may not be able to take full advantage of that opportunity
due to an allocation of filled purchase or sale orders across all
eligible portfolios and other accounts. To deal with these situations,
Davis Advisors has adopted procedures for allocating portfolio
transactions across multiple accounts.
- With respect to securities transactions for the portfolios, Davis
Advisors determines which broker to use to execute each order,
consistent with its duty to seek best execution of the transaction.
However, with respect to certain other accounts (such as mutual funds,
other pooled investment vehicles that are not registered mutual funds,
and other accounts managed for organizations and individuals), Davis
Advisors may be limited by the client with respect to the selection of
brokers or may be instructed to direct trades through a particular
broker. In these cases, Davis Advisors may place separate, non-
simultaneous, transactions for a portfolio and another account which
may temporarily affect the market price of the security or the
execution of the transaction, or both, to the detriment of the
portfolio or the other account.
- Finally, substantial investment of Davis Advisor or Davis Family
assets in certain mutual funds may lead to conflicts of interest. To
mitigate these potential conflicts of interest, Davis Advisors has
adopted policies and procedures intended to ensure that all clients
are treated fairly over time. Davis Advisors does not receive an
incentive based fee on any account.
(10) DONALD SMITH: Donald Smith & Co., Inc. is very sensitive to conflicts of
interest that could possibly arise in its capacity of serving as an
investment adviser. It remains committed to resolving any and all
conflicts in the best interest of its clients.
Donald Smith & Co., Inc. is an independent investment advisor with no
parent or subsidiary organizations. Additionally, it has no affiliated
organizations, brokerage, nor any investment banking activities.
Clients include mutual funds, public and corporate pension plans,
endowments and foundations, and other separate accounts. Donald Smith &
Co., Inc. has put in place systems, policies and procedures, which have
been designed to maintain fairness in portfolio management across all
clients. Potential conflicts between funds or with other types of
accounts are managed via allocation policies and procedures, internal
review processes, and direct oversight by Donald G. Smith, President.
(11) TRADEWINDS: Actual or apparent conflicts of interest may arise when a
portfolio manager has day-to-day management responsibilities with
respect to more than one account. More specifically, portfolio managers
who manage multiple accounts are presented with several potential
conflicts, which is not intended to be an exhaustive list:
- The management of multiple accounts may result in a portfolio manager
devoting unequal time and attention to the management of each account.
Tradewinds seeks to manage such competing interests for the time and
attention of portfolio managers by having portfolio managers focus on
a particular investment discipline. Most accounts managed by a
portfolio manager in a particular investment strategy are managed
using the same investment models.
- If a portfolio manager identifies a limited investment opportunity
which may be suitable for more than one account, an account may not be
able to take full advantage of that opportunity due to an allocation
of filled purchase or sale orders across all eligible accounts. To
deal with these situations, Tradewinds has adopted procedures for
fairly allocating portfolio transactions across multiple accounts.
- With respect to many of its clients' accounts, Tradewinds determines
which broker to use to execute transaction orders, consistent with its
duty to seek best execution of the transaction. However, with respect
to certain other accounts, Tradewinds may be limited by the client
with respect to the selection of brokers or may be instructed to
direct trades through a particular broker. In these cases, Tradewinds
may place separate, non-simultaneous, transactions for a Fund and
other accounts which may temporarily affect the market price of the
security or the execution of the transaction, or both, to the
detriment of the Fund or the other accounts.
- Some clients are subject to different regulations. As a consequence of
this difference in regulatory requirements, some clients may not be
permitted to engage in all the investment techniques or transactions
or to engage in these transactions to the same extent as the other
accounts managed by the portfolio manager. Finally, the appearance of
a conflict of interest may arise where Tradewinds has an incentive,
such as a performance-based management fee, which relates to the
management of some accounts, with respect to which a portfolio manager
has day-to-day management responsibilities.
Tradewinds has adopted certain compliance procedures which are designed
to address these types of conflicts common among investment managers.
However, there is no guarantee that such procedures will detect each and
every situation in which a conflict arises.
(12) BHMS: Actual or potential conflicts of interest may arise when a
portfolio manager has management responsibilities to more than one
account (including the Fund). BHMS manages potential conflicts between
funds or with other types of accounts through allocation policies and
procedures, internal review processes and oversight by directors and
Statement of Additional Information - [Date], 2010 Page 128
independent third parties to ensure that no client, regardless of type
or fee structure, is intentionally favored at the expense of another.
Allocation policies are designed to address potential conflicts in
situations where two or more funds or accounts participate in investment
decisions involving the same securities.
(13) METWEST: Certain conflicts of interest may arise in connection with the
management of multiple portfolios and investment strategies. Potential
conflicts include the allocation of investment opportunities across
client accounts and the allocation of similar investments across
different strategies. MetWest Capital has adopted policies and
procedures designed to minimize the effects of these conflicts.
Responsibility for managing MetWest Capital client portfolios is
organized according to investment strategy. All accounts in each
strategy are managed to a model portfolio, as specified by the
investment team. The investment team implements the model consistently
across client portfolios. Consequently, position sizes and industry and
sector allocations are similar across our clients' portfolios.
Typically, no positions differ from portfolio to portfolio, except in
the case of client-imposed restrictions. For such a portfolio, the
investment team determines the position(s) that comply with client
requirements. This process minimizes the potential for conflicts of
interest.
MetWest Capital's allocation policy allocates all investment
opportunities among clients in the fairest possible way, taking into
account clients' best interests. We have adopted policies and procedures
designed to ensure that allocations do not involve a practice of
favoring or disfavoring any strategy, client or group of clients.
Account and strategy performance is never a factor in trade allocations.
When necessary, we address known conflicts of interests in our trading
practices by disclosure to clients and/or in our Form ADV or other
appropriate action.
The decision to buy or sell a position in the model portfolio is based
on the direction of the investment team. Once the decision is made,
traders prepare the trade "blocks." All participating strategies and
client portfolios (those without pending cash flows or prohibited
transactions) are block-traded together, typically grouped either by
custodian or trade broker according to best-execution practices. Orders
are placed to ensure random fills so that no one strategy, client or
group of clients is favored or disfavored on a systematic basis.
Each portfolio/relationship manager is responsible for reviewing the
blocks and implementing all buy and sell orders for his/her accounts,
taking into consideration client-specific factors. A committee,
comprised of the Chief Investment Officer and portfolio/relationship
managers, reviews trade reports for all accounts on a daily basis.
(14) THREADNEEDLE: Threadneedle Investments portfolio managers may manage one
or more mutual funds as well as other types of accounts, including
proprietary accounts, separate accounts for institutions, and other
pooled investment vehicles. Portfolio managers make investment decisions
for an account or portfolio based on its investment objectives and
policies, and other relevant investment considerations. A portfolio
manager may manage a separate account or other pooled investment vehicle
whose fees may be materially greater than the management fees paid by
the Fund and may include a performance-based fee. Management of multiple
funds and accounts may create potential conflicts of interest relating
to the allocation of investment opportunities, and the aggregation and
allocation of trades. In addition, the portfolio manager's
responsibilities at Threadneedle Investments include working as a
securities analyst. This dual role may give rise to conflicts with
respect to making investment decisions for accounts that he/she manages
versus communicating his/her analyses to other portfolio managers
concerning securities that he/she follows as an analyst.
Threadneedle Investments has a fiduciary responsibility to all of the
clients for which it manages accounts. Threadneedle Investments seeks to
provide best execution of all securities transactions and to aggregate
securities transactions and then allocate securities to client accounts
in a fair and timely manner. Threadneedle Investments has developed
policies and procedures, including brokerage and trade allocation
policies and procedures, designed to mitigate and manage the potential
conflicts of interest that may arise from the management of multiple
types of accounts for multiple clients.
(15) COLUMBIA WAM: Like other investment professionals with multiple clients,
a Fund's portfolio manager(s) may face certain potential conflicts of
interest in connection with managing both the Fund and other accounts at
the same time. The Advisor (Columbia Wanger Asset Management) and the
Funds have adopted compliance policies and procedures that attempt to
address certain of the potential conflicts that portfolio managers face
in this regard. Certain of these conflicts of interest are summarized
below.
The management of accounts with different advisory fee rates and/or fee
structures, including accounts that pay advisory fees based on account
performance (performance fee accounts), if any, may raise potential
conflicts of interest for a portfolio manager by creating an incentive
to favor higher fee accounts.
Potential conflicts of interest also may arise when a portfolio manager
has personal investments in other accounts that may create an incentive
to favor those accounts. As a general matter and subject to the
Advisor's Code of Ethics and certain limited exceptions, the Advisor's
investment professionals do not have the opportunity to invest in client
accounts, other than the Funds.
Statement of Additional Information - [Date], 2010 Page 129
A portfolio manager who is responsible for managing multiple funds
and/or accounts may devote unequal time and attention to the management
of those funds and/or accounts. The effects of this potential conflict
may be more pronounced where funds and/or accounts managed by a
particular portfolio manager have different investment strategies.
A portfolio manager may be able to select or influence the selection of
the broker/dealers that are used to execute securities transactions for
the Funds. A portfolio manager's decision as to the selection of
broker/dealers could produce disproportionate costs and benefits among
the Funds and the other accounts the portfolio manager manages.
A potential conflict of interest may arise when a portfolio manager buys
or sells the same securities for a Fund and other accounts. On occasions
when a portfolio manager considers the purchase or sale of a security to
be in the best interests of a Fund as well as other accounts, the
Advisor's trading desk may, to the extent consistent with applicable
laws and regulations, aggregate the securities to be sold or bought in
order to obtain the best execution and lower brokerage commissions, if
any. Aggregation of trades may create the potential for unfairness to a
Fund or another account if a portfolio manager favors one account over
another in allocating the securities bought or sold.
"Cross trades," in which a portfolio manager sells a particular security
held by a Fund to another account (potentially saving transaction costs
for both accounts), could involve a potential conflict of interest if,
for example, a portfolio manager is permitted to sell a security from
one account to another account at a higher price than an independent
third party would pay. The Advisor and the Funds have adopted compliance
procedures that provide that any transactions between the Fund and
another account managed by the Advisor are to be made at an independent
current market price, consistent with applicable laws and regulation.
Another potential conflict of interest may arise based on the different
investment objectives and strategies of a Fund and other accounts
managed by its portfolio manager(s). Depending on another account's
objectives and other factors, a portfolio manager may give advice to and
make decisions for a Fund that may differ from advice given, or the
timing or nature of decisions made, with respect to another account. A
portfolio manager's investment decisions are the product of many factors
in addition to basic suitability for the particular account involved.
Thus, a portfolio manager may buy or sell a particular security for
certain accounts, and not for a Fund, even though it could have been
bought or sold for the Fund at the same time. A portfolio manager also
may buy a particular security for one or more accounts when one or more
other accounts are selling the security (including short sales). There
may be circumstances when a portfolio manager's purchases or sales of
portfolio securities for one or more accounts may have an adverse effect
on other accounts, including the Funds.
A Fund's portfolio manager(s) also may have other potential conflicts of
interest in managing the Fund, and the description above is not a
complete description of every conflict that could be deemed to exist in
managing both the Fund and other accounts. Many of the potential
conflicts of interest to which the Advisor's portfolio managers are
subject are essentially the same as or similar to the potential
conflicts of interest related to the investment management activities of
the Advisor and its affiliates.
(16) PRINCIPAL GLOBAL: Principal Global Investors provides investment
advisory services to numerous clients other than the Fund. The
investment objectives and policies of these accounts may differ from
those of the Fund. Based on these differing circumstances, potential
conflicts of interest may arise because the subadviser may be required
to pursue different investment strategies on behalf of the Fund and
other client accounts. For example, a subadviser may be required to
consider an individual client's existing positions, personal tax
situation, suitability, personal biases and investment time horizon,
which considerations would not affect his investment decisions on behalf
of the Fund. This means that research on securities to determine the
merits of including them in the Fund's portfolio are similar, but not
identical, to those employed in building private client portfolios. As a
result, there may be instances in which a subadviser purchases or sells
an investment for one or more private accounts and not for the Fund, or
vice versa. To the extent the Fund and other clients seek to acquire the
same security at about the same time, the Fund may not be able to
acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Fund may not
be able to obtain as large an execution of an order to sell or as high a
price for any particular security if the subadviser desires to sell the
same portfolio security at the same time on behalf of other clients. On
the other hand, if the same securities are bought or sold at the same
time by more than one client, the resulting participation in volume
transactions could produce better executions for the Fund.
Personal Trading:
Access Persons of Principal Global Investors, as defined in Principal
Global Investors' Code of Ethics, may buy and sell for themselves
securities of issuers that Principal Global Investors also trades for
its clients, so long as those purchases and sales are conducted in
accordance with the Code of Ethics. To avoid conflicts of interest with
clients, the Code of Ethics provides for the maintenance of a master
securities list that includes all securities then traded by Principal
Global Investors for purchase or sale on behalf of clients. Access
Persons are required to make inquiry before
Statement of Additional Information - [Date], 2010 Page 130
completing a personal securities transaction to determine whether the
proposed transaction conforms to the Code of Ethics. Each calendar
quarter, personnel complete a report of personal securities transaction.
These reports are reviewed each quarter to determine whether anyone
completing such a report has purchased or sold a security in a manner
not in accordance with the Code of Ethics.
Allocation of Trades:
Principal Global Investors acts as investment adviser for a variety of
individual accounts, ERISA accounts, mutual funds, insurance company
separate accounts, and public employee retirement plans and places
orders to trade portfolio securities for each of these accounts. If, in
carrying out the investment objectives of its clients, occasions arise
in which Principal Global Investors deems it advisable to purchase or
sell the same equity securities for two or more client accounts at the
same or approximately the same time, the Registrant may submit the
orders to purchase or sell to a broker/dealer for execution on an
aggregate or "bunched" basis. The Registrant will not aggregate orders
unless it believes that aggregation is consistent with (1) its duty to
seek best execution and (2) the terms of its investment advisory
agreements. In order to prevent conflicts of interest, Principal Global
Investors has a policy and procedures in place to equitably distribute
allocations of shares purchased or sold in a "bunched" trade. Principal
Global Investors' policy prohibits any allocation of trades in a manner
that Principal Global Investors' proprietary accounts, affiliated
accounts, or any particular client(s) or group of clients receive more
favorable treatment than other client accounts.
(17) ALLIANCEBERNSTEIN: As an investment adviser and fiduciary,
AllianceBernstein owes its clients and shareholders an undivided duty of
loyalty. We recognize that conflicts of interest are inherent in our
business and accordingly have developed policies and procedures
(including oversight monitoring) reasonably designed to detect, manage
and mitigate the effects of actual or potential conflicts of interest in
the area of employee personal trading, managing multiple accounts for
multiple clients, including AllianceBernstein Mutual Funds, and
allocating investment opportunities. Investment professionals, including
portfolio managers and research analysts, are subject to the above-
mentioned policies and oversight monitoring to ensure that all clients
are treated equitably. We place the interests of our clients first and
expect all of our employees to meet their fiduciary duties.
Employee Personal Trading
AllianceBernstein has adopted a Code of Business Conduct and Ethics that
is designed to detect and prevent conflicts of interest when investment
professionals and other personnel of AllianceBernstein own, buy or sell
securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential
conflict of interest when an employee owns or trades in a security that
is owned or considered for purchase or sale by a client, or recommended
for purchase or sale by an employee to a client. Subject to the
reporting requirements and other limitations of its Code of Business
Conduct and Ethics, AllianceBernstein permits its employees to engage in
personal securities transactions, and also allows them to acquire
investments in the AllianceBernstein Mutual Funds through direct
purchase, 401K/profit sharing plan investment and/or notionally in
connection with deferred incentive compensation awards.
AllianceBernstein's Code of Ethics and Business Conduct requires
disclosure of all personal accounts and maintenance of brokerage
accounts with designated broker-dealers approved by AllianceBernstein.
The Code also requires preclearance of all securities transactions and
imposes a 90 day holding period for securities purchased by employees to
discourage short-term trading.
Managing Multiple Accounts for Multiple Clients
AllianceBernstein has compliance policies and oversight monitoring in
place to address conflicts of interest relating to the management of
multiple accounts for multiple clients. Conflicts of interest may arise
when an investment professional has responsibilities for the investments
of more than one account because the investment professional may be
unable to devote equal time and attention to each account. The
investment professional or investment professional teams for each client
may have responsibilities for managing all or a portion of the
investments of multiple accounts with a common investment strategy,
including other registered investment companies, unregistered investment
vehicles, such as hedge funds, pension plans, separate accounts,
collective trusts and charitable foundations. Among other things,
AllianceBernstein's policies and procedures provide for the prompt
dissemination to investment professionals of initial or changed
investment recommendations by analysts so that investment professionals
are better able to develop investment strategies for all accounts they
manage. In addition, investment decisions by investment professionals
are reviewed for the purpose of maintaining uniformity among similar
accounts and ensuring that accounts are treated equitably. No investment
professional that manages client accounts carrying performance fees is
compensated directly or specifically for the performance of those
accounts. Investment professional compensation reflects a broad
contribution in multiple dimensions to long-term investment success for
our clients and is not tied specifically to the performance of any
particular client's account, nor is it directly tied to the level or
change in the level of assets under management.
Statement of Additional Information - [Date], 2010 Page 131
Allocating Investment Opportunities
AllianceBernstein has policies and procedures intended to address
conflicts of interest relating to the allocation of investment
opportunities. These policies and procedures are designed to ensure that
information relevant to investment decisions is disseminated promptly
within its portfolio management teams and investment opportunities are
allocated equitably among different clients. The investment
professionals at AllianceBernstein routinely are required to select and
allocate investment opportunities among accounts. Portfolio holdings,
position sizes, and industry and sector exposures tend to be similar
across similar accounts, which minimizes the potential for conflicts of
interest relating to the allocation of investment opportunities.
Nevertheless, investment opportunities may be allocated differently
among accounts due to the particular characteristics of an account, such
as size of the account, cash position, tax status, risk tolerance and
investment restrictions or for other reasons.
AllianceBernstein's procedures are also designed to prevent potential
conflicts of interest that may arise when AllianceBernstein has a
particular financial incentive, such as a performance-based management
fee, relating to an account. An investment professional may perceive
that he or she has an incentive to devote more time to developing and
analyzing investment strategies and opportunities or allocating
securities preferentially to accounts for which AllianceBernstein could
share in investment gains.
To address these conflicts of interest, AllianceBernstein's policies and
procedures require, among other things, the prompt dissemination to
investment professionals of any initial or changed investment
recommendations by analysts; the aggregation of orders to facilitate
best execution for all accounts; price averaging for all aggregated
orders; objective allocation for limited investment opportunities (e.g.,
on a rotational basis) to ensure fair and equitable allocation among
accounts; and limitations on short sales of securities. These procedures
also require documentation and review of justifications for any
decisions to make investments only for select accounts or in a manner
disproportionate to the size of the account.
(18) BATTERYMARCH: Batterymarch recognizes that actual or potential conflicts
may arise in managing multiple client accounts. A brief description of
some of the potential conflicts of interest and compliance factors that
may arise as a result is included below. We do not believe any of these
potential conflicts of interest and compliance factors pose significant
risk to any client account.
Allocation of Limited Investment Opportunities
If an investment team identifies a limited investment opportunity
(including initial public offerings) that may be suitable for multiple
client accounts, each account may not be able to take full advantage
of that opportunity due to liquidity constraints or other factors.
Batterymarch has adopted policies and procedures designed to ensure
that allocations of limited investment opportunities are conducted in
a fair and equitable manner between client accounts.
Allocation of Partially-Filled Transactions in Securities
Batterymarch often aggregates for execution as a single transaction
orders for the purchase or sale of a particular security for multiple
client accounts. If Batterymarch is unable to fill an aggregated order
completely, but receives a partial fill, Batterymarch will typically
allocate the transactions relating to the partially filled order to
clients on a pro-rata basis with a minimum fill size. Batterymarch may
make exceptions from this general policy from time to time based on
factors such as the availability of cash, country/regional/sector
allocation decisions, investment guidelines and restrictions, and the
costs for minimal allocation actions.
Opposite (i.e., Contradictory) Transactions in Securities
Batterymarch provides investment advisory services for various clients
and under various investment mandates and may give advice, and take
action, with respect to any of those clients that may differ from the
advice given, or the timing or nature of action taken, with respect to
any other individual client account.
In the course of providing advisory services, Batterymarch may
simultaneously recommend the sale of a particular security for one
client account while recommending the purchase of the same or a
similar security for another account. This may occur for a variety of
reasons. For example, in order to raise cash to handle a
redemption/withdrawal from a client account, Batterymarch may be
forced to sell a security that is ranked a "buy" by its stock
selection model.
Certain Batterymarch portfolio managers that manage long-only
portfolios also manage portfolios that sell securities short. As such,
Batterymarch may purchase or sell a security in one or more of its
long-only portfolios under management during the same day it executes
an opposite transaction in the same or a similar security for one or
more of its portfolios under management that hold securities short,
and certain Batterymarch client account portfolios may contain
securities sold short that are simultaneously held as long positions
in certain of the long-only portfolios managed by Batterymarch. The
stock selection model(s), risk controls and portfolio construction
rules used by Batterymarch to manage its clients' long-only portfolios
differ from the model and rules that are used to manage client account
portfolios that hold securities short. Because different stock
selection models, risk controls and
Statement of Additional Information - [Date], 2010 Page 132
portfolio construction rules are used, it is possible that the same or
similar securities may be ranked differently for different mandates
and that the timing of trading in such securities may differ.
Selection of Brokers/Dealers
In selecting a broker or dealer, Batterymarch may choose a broker
whose commission rate is in excess of that which another broker might
have charged for the same transaction, based upon Batterymarch's
judgment of that broker's superior execution capabilities and/or as a
result of Batterymarch's perceived value of the broker's research
services. Although Batterymarch does not participate in any
traditional soft dollar arrangements whereby a broker purchases
research from a third party on Batterymarch's behalf, Batterymarch
does receive proprietary research services from brokers. Batterymarch
generally seeks to achieve trade executions with brokers of the
highest quality and at the lowest possible cost, although there can be
no assurance that this objective will always be achieved. Batterymarch
does not enter into any arrangements with brokers, formal or
otherwise, regarding order flow as a result of research received.
Clients should consider that there is a potential conflict of interest
between their interests in obtaining best execution and an investment
adviser's receipt of research from brokers selected by the investment
adviser for trade executions. The proprietary research services which
Batterymarch obtains from brokers may be used to service all of
Batterymarch's clients and not just those clients paying commissions
to brokers providing those research services, and not all proprietary
research may be used by Batterymarch for the benefit of the one or
more client accounts which paid commissions to a broker providing such
research.
Personal Securities Transactions
Batterymarch allows its employees to trade in securities that it
recommends to advisory clients. Batterymarch's supervised persons, to
the extent not prohibited by Batterymarch's Code of Ethics, may buy,
hold or sell securities or investment products (including interests in
partnerships and investment companies) at or about the same time that
Batterymarch is purchasing, holding or selling the same or similar
securities or investment products for client account portfolios and
the actions taken by such persons on a personal basis may be, or may
be deemed to be, inconsistent with the actions taken by Batterymarch
for its client accounts.
Batterymarch employees may also invest in mutual funds that are
managed by Batterymarch. This may result in a potential conflict of
interest since Batterymarch employees have knowledge of such funds'
investment holdings, which is non-public information.
Clients should understand that these activities may create a conflict
of interest between Batterymarch, its supervised persons and its
clients. To address this, Batterymarch has adopted a written Code of
Ethics designed to prevent and detect personal trading activities that
may interfere or conflict with client interests (including
shareholders' interests in funds managed by Batterymarch).
Batterymarch and certain Batterymarch employees may also have
ownership interests in certain other client accounts, including pooled
investment vehicles, that invest in long and short positions. Firm and
employee ownership of such accounts may create additional potential
conflicts of interest for Batterymarch.
Performance-Based Fee Arrangements
Batterymarch manages some accounts under performance-based fee
arrangements. Batterymarch recognizes that this type of incentive
compensation creates the risk for potential conflicts of interest.
This structure may create an incentive to allocate investments having
a greater potential for higher returns to accounts of those clients
paying the higher performance fee. To prevent conflicts of interest,
Batterymarch generally requires portfolio decisions to be made on a
product specific basis. Additionally, Batterymarch requires average
pricing of all aggregated orders. Lastly, the investment performance
on specific accounts is not a factor in determining the portfolio
managers' compensation; performance analysis is reviewed on an
aggregate product basis.
Although Batterymarch believes that its policies and procedures are
appropriate to prevent, eliminate or minimize the harm of many potential
conflicts of interest between Batterymarch, its related persons and
clients, clients should be aware that no set of policies and procedures
can possibly anticipate or relieve all potential conflicts of interest.
Moreover, it is possible that additional potential conflicts of interest
may exist that Batterymarch has not identified in the summary above.
Batterymarch's CCO conducts a review of the firm's potential conflicts
of interest and a risk assessment on an annual basis.
(19) SYSTEMATIC: Systematic Financial Management, L.P. (Systematic) is an
affiliated firm of Affiliated Managers Group, Inc. (AMG). The AMG
Affiliates do not formulate advice for Systematic's clients and do not,
in Systematic's view, present any potential conflict of interest with
Systematic's clients. From time to time, potential conflicts of interest
may arise between a portfolio manager's management of the investments of
the Funds, on the one hand, and the management of other accounts, on the
other. The portfolio managers oversee the investment of various types of
accounts in the same strategy, such as mutual funds, pooled investment
vehicles and separate accounts for individuals
Statement of Additional Information - [Date], 2010 Page 133
and institutions. Investment decisions generally are applied to all
accounts utilizing that particular strategy, taking into consideration
client restrictions, instructions and individual needs. A portfolio
manager may manage an account whose fees may be higher or lower than the
fee charged to a Fund to provide for varying client circumstances.
Management of multiple funds and accounts may create potential conflicts
of interest relating to the allocation of investment opportunities, and
the aggregation and allocation of client trades. Additionally, the
management of the Funds and other accounts may result in a portfolio
manager devoting unequal time and attention to the management of the
Funds or other accounts. However, Systematic has a variety of internal
controls in place that are reasonably designed to detect such conflicts
and protect the interest of its clients.
During the normal course of managing assets for multiple clients of
varying types and asset levels, the portfolio managers may encounter
conflicts of interest that could, if not properly addressed, be harmful
to one or more of our clients. Those of a material nature that are
encountered most frequently involve security selection, employee
personal securities trading, proxy voting and the allocation of
securities. To mitigate these conflicts and ensure its clients are not
impacted negatively by the adverse actions of Systematic or its
employees, Systematic has implemented a series of policies and
procedures including, but not limited to, its Code of Ethics, which
addresses personal securities trading, Proxy Voting Policy and Trade
Error Policy, designed to prevent and detect conflicts when they occur.
Systematic reasonably believes that these and other policies combined
with the periodic review and testing performed by its compliance
professionals adequately protects the interest of its clients. A
portfolio manager may also face other potential conflicts of interest in
managing the Funds, and the description above is not a complete
description of every conflict of interest that could be deemed to exist
in managing both the Fund and the other accounts listed above.
(20) WEDGE: During the normal course of managing assets for multiple clients
of varying types and asset levels, WEDGE will inevitably encounter
conflicts of interest that could, if not properly addressed, be harmful
to one or more of its clients. Those of a material nature that are
encountered most frequently surround security selection, brokerage
selection, employee personal securities trading, proxy voting and the
allocation of securities. WEDGE is therefore forced to consider the
possible personal conflicts that occur for an analyst and portfolio
manager as well as those for the firm when a security is recommended for
purchase or sale. When trading securities, WEDGE must address the issues
surrounding the selection of brokers to execute trades considering the
personal conflicts of the trader and the firm's conflict to obtain best
execution of client transactions versus offsetting the cost of research
or enhancing its relationship with a broker for potential future gain.
And finally, WEDGE must consider the implications that a limited supply
or demand for a particular security poses on the allocation of that
security across accounts.
To mitigate these conflicts and ensure its clients are not negatively
impacted by the adverse actions of WEDGE or its employees, WEDGE has
implemented a series of policies including its Personal Security Trading
Policy, Proxy Voting Policy, Equity Trading Policy, Trading Error
Policy, and others designed to prevent and detect conflicts when they
occur. WEDGE reasonably believes that these and other policies combined
with the periodic review and testing performed by its compliance
professionals adequately protects the interests of its clients.
STRUCTURE OF COMPENSATION
(21) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus, and (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus and equity incentive awards are paid from a team
bonus pool that is based on the performance of the accounts managed by
the portfolio management team, which might include mutual funds, wrap
accounts, institutional portfolios and hedge funds. Funding for the
bonus pool is determined by a percentage of the aggregate assets under
management in the accounts managed by the portfolio managers, including
the fund, and by the short term (typically one-year) and long-term
(typically three-year, five-year and ten-year) performance of those
accounts in relation to the relevant peer group universe. Funding for
the bonus pool would also include a percentage of any performance fees
earned on long/short mutual funds managed by the Team. With respect to
hedge funds and separately managed accounts that follow a hedge fund
mandate, funding for the bonus pool is a percentage of performance fees
earned on the hedge funds or accounts managed by the portfolio managers.
Senior management of RiverSource Investments has the discretion to
increase or decrease the size of the part of the bonus pool and to
determine the exact amount of each portfolio manager's bonus paid from
this portion of the bonus pool based on his/her performance as an
employee. In addition, where portfolio managers invest in a hedge fund
managed by the investment manager, they receive a cash reimbursement for
the investment management fees charged on their hedge fund investments.
RiverSource Investments portfolio managers are provided with a benefits
package, including life insurance, health insurance, and participation
in a company 401(k) plan, comparable to that received by other
RiverSource Investments employees. Certain investment personnel are also
eligible to defer a portion of their compensation. An individual making
this type of election can allocate the deferral to the returns
associated with one or more products they manage or support or to
certain other products managed by their investment team. Depending upon
their job level, RiverSource Investments portfolio managers may also be
eligible for other benefits or perquisites that are available to all
RiverSource Investments employees at the same job level.
Statement of Additional Information - [Date], 2010 Page 134
(22) RIVERSOURCE: The compensation of RiverSource Investments employees
consists of (i) a base salary, (ii) an annual cash bonus, and (iii)
equity incentive awards in the form of stock options and/or restricted
stock. The annual cash bonus is based on management's assessment of the
employee's performance relative to individual and business unit goals
and objectives. For portfolio managers Joy, Keeley and Truscott, may be
based, in part, on achieving certain investment performance goals and
retaining and attracting assets under management, and for portfolio
manager Bergene, on developing competitive products, managing existing
products, and selecting and monitoring subadvisers for funds. In
addition, subject to certain vesting requirements, the compensation of
portfolio managers Joy, Keeley and Truscott, includes an annual award
based on the performance of Ameriprise Financial over rolling three-year
periods. This program is being discontinued and the final award under
this plan covers the three-year period that started in January 2007 and
ends in December 2009. RiverSource Investments' portfolio managers are
provided with a benefits package including life insurance, health
insurance and participation in the company's 401(k) plan comparable to
that received by other RiverSource Investments employees. Depending upon
their job level, RiverSource Investments' portfolio managers may also be
eligible for other benefits or perquisites that are available to all
RiverSource Investments employees at the same job level.
(23) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus, and (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus and equity incentive awards are paid from a team
bonus pool that is based on the performance of the accounts managed by
the portfolio management team, which might include mutual funds, wrap
accounts, institutional portfolios and hedge funds. With the exception
of Mr. Spitz, the bonus pool is determined by a percentage of the
aggregate assets under management in the accounts managed by the
portfolio managers, including the fund, plus, where applicable, a
percentage of the assets of the funds they support as research analysts,
and by the short term (typically one-year) and long-term (typically
three-year and five-year) performance of those accounts in relation to
the relevant peer group universe. Mr. Spitz receives a bonus based on
management fees on one product and asset retention efforts associated
with other products managed by the team. Funding for the bonus pool may
also include a percentage of any performance fees earned on long/short
mutual funds managed by the Team. One member of the team does not
participate in the pool but instead receives a bonus based on management
fees on one product and asset retention efforts associated with other
products managed by the team. Senior management of RiverSource
Investments has the discretion to increase or decrease the size of the
part of the bonus pool and to determine the exact amount of each
portfolio manager's bonus paid from this portion of the bonus pool based
on his/her performance as an employee. RiverSource Investments portfolio
managers are provided with a benefits package, including life insurance,
health insurance, and participation in a company 401(k) plan, comparable
to that received by other RiverSource Investments employees. Certain
investment personnel are also eligible to defer a portion of their
compensation. An individual making this type of election can allocate
the deferral to the returns associated with one or more products they
manage or support or to certain other products managed by their
investment team. Depending upon their job level, RiverSource Investments
portfolio managers may also be eligible for other benefits or
perquisites that are available to all RiverSource Investments employees
at the same job level.
(24) TURNER: Turner's investment professionals receive a base salary
commensurate with their level of experience. Turner's goal is to
maintain competitive base salaries through review of industry standards,
market conditions, and salary surveys. Bonus compensation, which is a
multiple of base salary, is based on the performance of each
individual's sector and portfolio assignments relative to appropriate
market benchmarks. In addition, each employee is eligible for equity
awards. Turner believes this compensation provides incentive to attract
and retain highly qualified people.
The objective performance criteria noted above accounts for 90% of the
bonus calculation. The remaining 10% is based upon subjective, "good
will" factors including teamwork, interpersonal relations, the
individual's contribution to overall success of the firm, media and
client relations, presentation skills, and professional development.
Portfolio managers/analysts are reviewed on an annual basis. The Chief
Investment Officer, Robert E. Turner, CFA, is responsible for setting
base salaries, bonus targets, and making all subjective judgments
related to an investment professionals' compensation.
(25) MDTA: The portfolio managers are paid a fixed base salary and a variable
annual incentive. Base salary is determined within a market competitive
position-specific salary range, based on experience and performance. For
purposes of calculating the annual incentive amount, each mutual fund
and institutional account managed by MDTA is categorized as reflecting
one of several designated "Strategies." The annual incentive amount is
based on current calendar year asset-weighted composite investment
performance of each Strategy, which is measured on a total return basis
gross of fees and expenses vs. the Strategy's designated benchmark
(i.e., with respect to the Fund's Strategy, Russell 2000 Value Index).
The portfolio managers are also part of investment teams for other
accounts in addition to the Fund. Such other accounts may be categorized
as reflecting different Strategies, which may have different benchmarks.
Although the performance of each Strategy composite is considered in
calculating the annual incentive amount, their relative weightings
differ. The performance of one of the other Strategies (which does not
include the Fund in its composite
Statement of Additional Information - [Date], 2010 Page 135
performance) represents a significant portion of the calculation. The
remaining Strategies are divided into two groups, with each Strategy
within a group receiving equal weighting. The Strategy to which the Fund
is assigned and the other Strategies in the same group receive higher
weighting than Strategies in the other group. As a separate matter,
pursuant to the terms of a business acquisition agreement, the portfolio
managers may receive additional consideration based on the achievement
of specified revenue targets.
In addition, Daniel Mahr was awarded a grant of restricted Federated
stock. Awards of restricted stock are discretionary and are made in
variable amounts based on the subjective judgment of MDTA's senior
management.
(26) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus and (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus and equity incentive awards are paid from a team
bonus pool that is based on the performance of the accounts managed by
the portfolio management team, which might include mutual funds, wrap
accounts, institutional portfolios and hedge funds. Funding for the
bonus pool is determined by a percentage of the aggregate assets under
management in the accounts managed by the portfolio managers, including
the fund, and by the short term (typically one-year) and long-term
(typically three-year and five-year) performance of those accounts in
relation to the relevant peer group universe. Senior management of
RiverSource Investments has the discretion to increase or decrease the
size of the part of the bonus pool and to determine the exact amount of
each portfolio manager's bonus paid from this portion of the bonus pool
based on his/her performance as an employee. RiverSource Investments
portfolio managers are provided with a benefits package, including life
insurance, health insurance, and participation in a company 401(k) plan,
comparable to that received by other RiverSource Investments employees.
Certain investment personnel are also eligible to defer a portion of
their compensation. An individual making this type of election can
allocate the deferral to the returns associated with one or more
products they manage or support or to certain other products managed by
their investment team. Depending upon their job level, RiverSource
Investments portfolio managers may also be eligible for other benefits
or perquisites that are available to all RiverSource Investments
employees at the same job level.
(27) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus, a portion of which may be
subject to a mandatory deferral program, and may include (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus is paid from a team bonus pool that is based on
the performance of the accounts managed by the portfolio management
team, which might include mutual funds, wrap accounts, institutional
portfolios and hedge funds. The bonus pool is determined by the
aggregate market competitive bonus targets for the teams of which the
portfolio manager is a member and by the short-term (typically one-year)
and long-term (typically three-year) performance of those accounts in
relation to applicable benchmarks or the relevant peer group universe.
Senior management of RiverSource Investments has the discretion to
increase or decrease the size of the part of the bonus pool and to
determine the exact amount of each portfolio manager's bonus paid from
this portion of the bonus pool based on his/her performance as an
employee. RiverSource Investments portfolio managers are provided with a
benefits package, including life insurance, health insurance, and
participation in a company 401(k) plan, comparable to that received by
other RiverSource Investments employees. Certain investment personnel
are also eligible to defer a portion of their compensation. An
individual making this type of election can allocate the deferral to the
returns associated with one or more products they manage or support or
to certain other products managed by their investment team. Depending
upon their job level, RiverSource Investments portfolio managers may
also be eligible for other benefits or perquisites that are available to
all RiverSource Investments employees at the same job level.
(28) AMERICAN CENTURY: The compensation of American Century's portfolio
managers is structured to align the interests of portfolio managers with
those of the shareholders whose assets they manage. For the fiscal year
ended May 31, 2009, it included the components described below, each of
which is determined with reference to a number of factors, such as
overall performance, market competition, and internal equity.
Compensation is not directly tied to the value of assets held in client
portfolios.
Base Salary
Portfolio managers receive base pay in the form of a fixed annual
salary.
Bonus
A significant portion of portfolio manager compensation takes the form
of an annual incentive bonus tied to performance. Bonus payments are
determined by a combination of factors. One factor is fund investment
performance. For most American Century mutual funds, investment
performance is measured by a combination of one- and three- year pre-tax
performance relative to various benchmarks and/or internally-customized
peer groups. The performance comparison periods may be adjusted based on
a fund's inception date or a portfolio manager's tenure on the fund.
Custom peer groups are constructed using all the funds in appropriate
Lipper or Morningstar categories as a starting point. Funds are then
eliminated from the peer group that is both more stable over the long-
term (i.e., has less peer
Statement of Additional Information - [Date], 2010 Page 136
turnover) and that more closely represents the fund's true peers based
on internal investment mandates. In 2008, American Century Investments
began placing increased emphasis on long-term performance and is phasing
in five year performance periods.
Portfolio managers may have responsibility for multiple American Century
mutual funds. In such cases, the performance of each is assigned a
percentage weight appropriate for the portfolio manager's relative
levels of responsibility.
Portfolio managers also may have responsibility for portfolios that are
managed in a fashion similar to that of other American Century mutual
funds. This is the case for the Partners Small Cap Equity and Partners
Aggressive Growth Funds. If the performance of a similarly managed
account is considered for purposes of compensation, it is either
measured in the same way as a comparable American Century mutual fund
(i.e., relative to the performance of a benchmark and/or peer group) or
relative to the performance of such mutual fund. Performance of Partners
Small Cap Equity Fund is measured relative to the performance of a
comparable American Century mutual fund. Performance of Partners
Aggressive Growth Fund is not separately considered in determining
portfolio manager compensation.
A second factor in the bonus calculation relates to the performance of
all American Century funds managed according to a particular investment
style, such as U.S. growth, U.S. value, international, quantitative or
fixed income. Performance is measured for each product individually as
described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset
weighted) depending on the portfolio manager's responsibilities and
products managed. This feature is designed to encourage effective
teamwork among portfolio management teams in achieving long-term
investment success for similarly styled portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Restricted Stock Plans
Portfolio managers are eligible for grants of restricted stock of ACC.
These grants are discretionary, and eligibility and availability can
vary from year to year. The size of an individual's grant is determined
by individual and product performance as well as other product-specific
considerations. Grants can appreciate/depreciate in value based on the
performance of the ACC stock during the restriction period (generally
three to four years).
Deferred Compensation Plans
Portfolio managers are eligible for grants of deferred compensation.
These grants are used in very limited situations, primarily for
retention purposes. Grants are fixed and can appreciate/depreciate in
value based on the performance of the American Century mutual funds in
which the portfolio manager chooses to invest them.
(29) DAVIS: Kenneth Feinberg's compensation as a Davis Advisors employee
consists of (i) a base salary, (ii) an annual bonus equal to a
percentage of growth in Davis Advisors' profits, (iii) awards of equity
("Units") in Davis Advisors including Units, options on Units, and/or
phantom Units, and (iv) an incentive plan whereby Davis Advisors
purchases shares in selected funds managed by Davis Advisors. At the end
of specified periods, generally five years following the date of
purchase, some, all, or none of the fund shares will be registered in
the employee's name based on fund performance after expenses on a pre-
tax basis versus the S&P 500 Index and versus peer groups as defined by
Morningstar or Lipper. Davis Advisors' portfolio managers are provided
benefits packages including life insurance, health insurance, and
participation in company 401(k) plan comparable to that received by
other company employees.
Christopher Davis's annual compensation as an employee of Davis Advisors
consists of a base salary. Davis Advisors' portfolio managers are
provided benefits packages including life insurance, health insurance,
and participation in company 401(k) plan comparable to that received by
other company employees.
(30) SYSTEMATIC: Ron Mushock and Kevin McCreesh are limited partners of the
firm and Co-Portfolio Managers for the strategy. As Partners, their
compensation consists of a combination of a fixed base salary, and a
share of Systematic's profits based upon each Partner's respective
individual ownership position in Systematic. Although total compensation
is influenced by Systematic's overall profitability and therefore is
based in part on the aggregate performance of all of Systematic's
portfolios, including the Fund. Compensation is not based on performance
of the Fund individually. The Partners are provided with a benefits
package, including health insurance, and participation in a company
401(k) plan, comparable to that received by other Systematic employees.
The Portfolio Managers are not compensated based solely on the
performance of, or the value of assets held in, the Fund or any other
individual portfolio managed by Systematic.
(31) WEDGE: WEDGE's incentive compensation has been structured to reward all
professionals for their contribution to the overall growth and
profitability of the firm. Compensation is not directly tied to fund
performance or growth in assets for any fund or other account managed by
a portfolio manager. General Partners are compensated via a percentage
of the firm's net profitability following a peer review, which focuses
on performance in their specific area of responsibility, as well as
their contribution to the general management of the firm, and their
importance to the firm in
Statement of Additional Information - [Date], 2010 Page 137
the future. Other investment professionals receive a competitive salary
and bonus based on the firm's investment and business success and their
specific contribution to that record.
(32) DONALD SMITH: All employees at Donald Smith & Co., Inc. are compensated
on incentive plans. The compensation for portfolio managers, analysts
and traders at Donald Smith consists of a base salary, a partnership
interest in the firm's profits, and possibly an additional,
discretionary bonus. This discretionary bonus can exceed 100% of the
base salary if performance for clients exceeds established benchmarks.
The current benchmark utilized is the Russell 2000 Value Index.
Additional distribution of firm ownership is a strong motivation for
continued employment at Donald Smith & Co., Inc. Administrative
personnel are also given a bonus as a function of their contribution and
the profitability of the firm.
(33) BHMS: In addition to base salary, all portfolio managers and analysts at
BHMS share in a bonus pool that is distributed semi-annually. Analysts
and portfolio managers are rated on their value added to the team-
oriented investment process. Overall compensation applies with respect
to all accounts managed and compensation does not differ with respect to
distinct accounts managed by a portfolio manager. Compensation is not
tied to a published or private benchmark. It is important to understand
that contributions to the overall investment process may include not
recommending securities in an analyst's sector if there are no
compelling opportunities in the industries covered by that analyst.
The compensation of portfolio managers is not directly tied to fund
performance or growth in assets for any fund or other account managed by
a portfolio manager and portfolio managers are not compensated for
bringing in new business. Of course, growth in assets from the
appreciation of existing assets and/or growth in new assets will
increase revenues and profit. The consistent, long-term growth in assets
at any investment firm is to a great extent, dependent upon the success
of the portfolio management team. The compensation of the portfolio
management team at the Adviser will increase over time, if and when
assets continue to grow through competitive performance.
(34) METWEST: MetWest Capital's compensation system is designed not only to
attract and retain experienced, highly qualified investment personnel,
but also to closely align employees' interests with clients' interests.
Compensation for investment professionals consists of a base salary,
bonus, and generous benefits. Benefits include a comprehensive insurance
benefits program (medical, vision and dental), 401(k) plan with an
employer-matched contribution. A material portion of each such
professional's annual compensation is in the form of a bonus tied to
results relative to clients' benchmarks and overall client satisfaction.
Bonuses may range from 20% to over 100% of salary.
MetWest Capital's compensation system is not determined on an account-
specific basis. Rather, bonuses are tied to overall firm profitability
and composite performance relative to the benchmark. The primary
benchmark for the Small Cap Intrinsic Value strategy is the Russell 2000
Value Index. To reinforce long-term focus, performance is measured over
MetWest Capital's investment horizon (typically two to four years).
Analysts are encouraged to maintain a long-term focus and are not
compensated for the number of their recommendations that are purchased
in the portfolio. Rather, their bonuses are tied to overall strategy
performance.
Mr. Lisenbee is an owner of MetWest Capital. As such, his compensation
consists of a fixed salary and participation in the firm's profits.
(35) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus and may include (iii) an
equity incentive award in the form of stock options and/or restricted
stock. The annual cash bonus is paid from a team bonus pool that is
based on the performance of the accounts managed by the portfolio
management team, which might include mutual funds, wrap accounts,
institutional portfolios and hedge funds. Funding for the bonus pool is
based upon a percentage of profits generated by the institutional
portfolios they manage. Lynn Hopton and Yvonne Stevens may also be paid
from a bonus pool based upon the performance of the mutual fund(s) they
manage. Funding for this bonus pool is determined by a percentage of the
aggregate assets under management in the mutual fund(s) they manage, and
by the short term (typically one-year) and long-term (typically three-
year) performance of the mutual fund(s) in relation to the relevant peer
group universe. Senior management of RiverSource Investments has the
discretion to increase or decrease the size of the bonus pool related to
mutual funds and to determine the exact amount of each portfolio
manager's bonus paid from this portion of the bonus pool based on
his/her performance as an employee. Senior management of RiverSource
Investments does not have discretion over the size of the bonus pool
related to institutional portfolios. RiverSource Investments portfolio
managers are provided with a benefits package, including life insurance,
health insurance, and participation in a company 401(k) plan, comparable
to that received by other RiverSource Investments employees. Certain
investment personnel are also eligible to defer a portion of their
compensation. An individual making this type of election can allocate
the deferral to the returns associated with one or more products they
manage or support or to certain other products managed by their
investment team. Depending upon their job level, RiverSource Investments
portfolio managers may also be eligible for other benefits or
perquisites that are available to all RiverSource Investments employees
at the same job level.
(36) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus, and may include (iii) an
equity incentive award in the form of stock options and/or restricted
stock. The annual cash bonus, and in some instances the base salary, are
paid from a team bonus pool that is based on the performance of the
accounts managed by the portfolio management team, which might include
mutual funds, wrap accounts, institutional portfolios and hedge funds.
The bonus pool is determined by a percentage of the management fees on
the accounts
Statement of Additional Information - [Date], 2010 Page 138
managed by the portfolio managers, including the fund. The percentage of
management fees that fund the bonus pool is based on the short term
(typically one-year) and long-term (typically three-year and five-year)
performance of those accounts in relation to the relevant peer group
universe. Funding for the bonus pool may also include a percentage of
any performance fees earned on long/short mutual funds managed by the
Team. With respect to hedge funds and separately managed accounts that
follow a hedge fund mandate, funding for the bonus pool is a percentage
of performance fees earned on the hedge funds or accounts managed by the
portfolio managers. RiverSource Investments portfolio managers are
provided with a benefits package, including life insurance, health
insurance, and participation in a company 401(k) plan, comparable to
that received by other RiverSource Investments employees. Depending upon
their job level, RiverSource Investments portfolio managers may also be
eligible for other benefits or perquisites that are available to all
RiverSource Investments employees at the same job level.
(37) COLUMBIA WAM: As of December 31, 2008, the portfolio managers received
all of their compensation from the Advisor and its parent company,
Columbia Management. P. Zachary Egan and Louis J. Mendes each received
compensation in the form of salary and incentive compensation.
Typically, a high proportion of an analyst's or portfolio manager's
bonus is paid in cash with a smaller proportion going into two separate
incentive plans. The first plan is a notional investment based on the
performance of certain Columbia Funds, including the Columbia Acorn
Funds. The second plan consists of Bank of America restricted stock
and/or options. For 2008, investments in the second plan were made
through a deferred cash program. Both plans vest over three years from
the date of issuance. The CWAM total incentive compensation pool,
including cash and the two incentive plans, is based on formulas, with
investment performance of individual portfolio managers and certain
analysts, plus firm-wide investment performance, as primary drivers.
Analysts and portfolio managers are positioned in a number of
compensation tiers based on cumulative performance of the portfolios
they manage. Performance of each Fund for purposes of portfolio manager
compensation is measured relative to its primary benchmark. One and
three year performance periods primarily drive incentive levels.
Excellent performance results in advancement to a higher tier until the
highest tier is reached. Higher tiers have higher base compensation
levels and wider incentive compensation ranges. While cumulative
performance places analysts and managers in tiers, current year
performance drives changes in incentive compensation levels. Incentive
compensation varies by tier, and can range between a fraction of base
pay to several times base pay; the objective being to provide very
competitive total compensation for high performing analysts and
portfolio managers. If a fund's performance declines, the compensation
incentives available to its analysts and portfolio manager(s) also
declines.
(38) PRINCIPAL GLOBAL: Principal Global Investors offers all employees a
competitive total remuneration package which is reviewed on an annual
basis to ensure market competitiveness. Total cash compensation is
targeted at the median of the market and benefits are targeted slightly
above median. The investment staff is compensated under a base salary
plus variable annual bonus (incentive compensation). Incentive
compensation for equity portfolio managers is derived from a profit pool
based and allocated to individuals based on relative investment
performance and other subjective factors such as team profitability,
individual performance and collaborative efforts. A percentage (75%) of
the profit pool is delivered in the form of cash with the balance of the
pool (25%) deferred for a 3 year period in the form of co-investment and
Principal Financial Group equity. Individual co-investment aligns
portfolio managers' deferred compensation with the fund or strategy they
manage thereby providing a more aligned interest with their respective
client's interests.
- Investment performance is based on gross performance versus a
benchmark, peer group or both, depending on the client mandate.
- Performance versus peers is measured for a period up to five years
(shorter if the portfolio manager has managed the respective portfolio
for a period less than three years).
- Investment performance incentive payout starts at 66th percentile and
reaches 100% at the 25th percentile for the 1, 3, and 5-year periods.
2% of incentive payout is achieved at 66th percentile. No payout is
realized if performance is below 67th percentile.
As a wholly-owned subsidiary of Principal Financial Group, all Principal
Global employees are eligible to participate in our Employee Stock
Purchase Plan that allows them to purchase company stock at a 15%
discount every six months. In addition, through our 401(k) plan,
employees are able to contribute to an Employee Stock Ownership Plan
(ESOP) through which they can buy additional company stock.
(39) ALLIANCEBERNSTEIN: AllianceBernstein's compensation program for
investment professionals is designed to be competitive and effective in
order to attract and retain the highest caliber employees. The
compensation program for investment professionals is designed to reflect
their ability to generate long-term investment success for our clients.
Investment professionals do not receive any direct compensation based
upon the investment returns of any individual client account, nor is
compensation tied directly to the level or change in the level of assets
under management. Investment professionals' annual compensation is
comprised of the following:
(i) Fixed base salary: This is generally the smallest portion of
compensation. The base salary is a relatively low, fixed salary
within a similar range for all investment professionals. The base
salary does not change significantly from year-to-year, and hence,
is not particularly sensitive to performance.
Statement of Additional Information - [Date], 2010 Page 139
(ii) Discretionary incentive compensation in the form of an annual cash
bonus: AllianceBernstein's overall profitability determines the
total amount of incentive compensation available to investment
professionals. This portion of compensation is determined
subjectively based on qualitative and quantitative factors. In
evaluating this component of an investment professional's
compensation, AllianceBernstein considers the contribution to
his/her team or discipline as it relates to that team's overall
contribution to the long-term investment success, business results
and strategy of AllianceBernstein. Quantitative factors considered
include, among other things, relative investment performance (e.g.,
by comparison to competitor or peer group funds or similar styles of
investments, and appropriate, broad-based or specific market
indices), and consistency of performance. There are no specific
formulas used to determine this part of an investment professional's
compensation and the compensation is not tied to any pre-determined
or specified level of performance. AllianceBernstein also considers
qualitative factors such as the complexity and risk of investment
strategies involved in the style or type of assets managed by the
investment professional; success of marketing/business development
efforts and client servicing; seniority/length of service with the
firm; management and supervisory responsibilities; and fulfillment
of AllianceBernstein's leadership criteria.
(iii) Discretionary incentive compensation in the form of awards under
AllianceBernstein's Partners Compensation Plan ("deferred awards"):
AllianceBernstein's overall profitability determines the total
amount of deferred awards available to investment professionals. The
deferred awards are allocated among investment professionals based
on criteria similar to those used to determine the annual cash
bonus. Deferred awards, which are in the form of AllianceBernstein's
publicly traded securities, vest over a four-year period and are
generally forfeited if the employee resigns or AllianceBernstein
terminates his/her employment.
(iv) Contributions under AllianceBernstein's Profit Sharing/401(k) Plan:
The contributions are based on AllianceBernstein's overall
profitability. The amount and allocation of the contributions are
determined at the sole discretion of AllianceBernstein.
(40) MONDRIAN: Mondrian has the following programs in place to retain key
investment staff:
1. Competitive Salary -- All investment professionals are remunerated
with a competitive base salary.
2. Profit Sharing Bonus Pool -- All Mondrian staff, including portfolio
managers and senior officers, qualify for participation in an annual
profit sharing pool determined by the company's profitability
(approximately 30% of profits).
3. Equity Ownership -- Mondrian is ultimately controlled by a
partnership of senior management and Hellman & Friedman LLC, an
independent private equity firm. Mondrian is currently 67% owned by
its senior employees, including the majority of investment
professionals, senior client service officers, and senior operations
personnel. The private equity funds sponsored by Hellman & Friedman
LLC are passive, non-controlling minority investors in Mondrian and
do not have day-to-day involvement in the management of Mondrian.
Incentives (Bonus and Equity Programs) focus on the key areas of
research quality, long-term and short-term stock performance, teamwork,
client service and marketing. As an individual's ability to influence
these factors depends on that individual's position and seniority within
the firm, so the allocation of participation in these programs will
reflect this.
At Mondrian, the investment management of particular portfolios is not
"star manager" based but uses a team system. This means that Mondrian's
investment professionals are primarily assessed on their contribution to
the team's effort and results, though with an important element of their
assessment being focused on the quality of their individual research
contribution.
Compensation Committee
In determining the amount of bonuses and equity awarded, Mondrian's
Board of Directors consults with the company's Compensation Committee,
who will make recommendations based on a number of factors including
investment research, organization management, team work, client
servicing and marketing.
Defined Contribution Pension Plan
All portfolio managers are members of the Mondrian defined contribution
pension plan where Mondrian pays a regular monthly contribution and the
member may pay additional voluntary contributions if they wish. The Plan
is governed by Trustees who have responsibility for the trust fund and
payments of benefits to members. In addition, the Plan provides death
benefits for death in service and a spouse's or dependant's pension may
also be payable.
Mondrian believes that this compensation structure, coupled with the
opportunities that exist within a successful and growing business, are
adequate to attract and retain high caliber employees.
(41) TRADEWINDS: Tradewinds offers a highly competitive compensation
structure with the purpose of attracting and retaining the most talented
investment professionals. These professionals are rewarded through a
combination of cash and long-term incentive compensation as determined
by the firm's executive committee. Total cash compensation (TCC)
consists of both a base salary and an annual bonus that can be a
multiple of the base salary. The firm annually benchmarks TCC to
prevailing industry norms with the objective of achieving competitive
levels for all contributing professionals.
Statement of Additional Information - [Date], 2010 Page 140
Available bonus pool compensation is primarily a function of the firm's
overall annual profitability. Individual bonuses are based primarily on
the following:
- Overall performance of client portfolios;
- Objective review of stock recommendations and the quality of primary
research;
- Subjective review of the professional's contributions to portfolio
strategy, teamwork, collaboration and work ethic.
To further strengthen our incentive compensation package and to create
an even stronger alignment to the long-term success of the firm,
Tradewinds has made available to most investment professionals equity
participation opportunities, the values of which are determined by the
increase in profitability of Tradewinds over time.
Finally, some of our investment professionals have received additional
remuneration as consideration for signing employment agreements. These
agreements range from retention agreements to long-term employment
contracts with significant non-solicitation and, in some cases, non-
compete clauses.
(42) BATTERYMARCH: In addition to customary employee benefits (e.g., medical
coverage), Batterymarch's compensation for investment professionals
includes:
- competitive base salaries;
- individual performance-based bonuses based on the investment
professionals' added value to the portfolios for which they are
responsible measured on a one-, three- and five-year basis versus
benchmarks and peer universes as well as their contributions to
research, client service and new business development;
- corporate profit-sharing; and
- annual contribution to a non-qualified deferred compensation plan that
has a cliff-vesting requirement (i.e., they must remain employed with
the firm for at least 31 months to receive payment).
Performance is evaluated on an aggregate product basis that the
portfolio manager is responsible for and is generally not analyzed by
any individual client portfolios. Portfolio manager compensation is not
tied to, nor increased or decreased as the result of, any performance
fees that may be earned by Batterymarch. Lastly, portfolio managers do
not receive a percentage of the revenue earned on any of Batterymarch's
client portfolios.
(43) THREADNEEDLE: To align the interests of our investment staff with those
of our clients the remuneration plan for senior individuals comprises
basic salary, an annual profit share (linked to individual performance
and the profitability of the company) and a Long Term Incentive Plan
known as the Equity Incentive Plan ("EIP") linked to measures of
Threadneedle's corporate success. Threadneedle believes this encourages
longevity of service.
The split between each component varies between investment professionals
and will be dependent on performance and the type of funds they manage.
The split of the profit share focuses on three key areas of success:
- Performance of own funds and research recommendations,
- Performance of all portfolios in the individual's team,
- Broader contribution to the wider thinking of the investment team,
e.g. idea generation, interaction with colleagues and commitment for
example to assisting the sales effort.
Consideration of the individual's general contribution is designed to
encourage fund managers to think beyond personal portfolio performance
and considers contributions made in:
- Inter-team discussions, including asset allocation, global sector
themes and weekly investment meetings,
- Intra-team discussion, stock research and investment insights,
- Marketing support, including written material and presentations.
It is important to appreciate that in order to maximize an individual's
rating and hence their profit share, they need to score well in all
areas. It is not sufficient to produce good personal fund performance
without contributing effectively to the team and wider investment
department. This structure is closely aligned with the Threadneedle's
investment principles of sharing ideas and effective communication.
(44) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus, and (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus and equity incentive awards are paid from a team
bonus pool that is based on the performance of the accounts managed by
the portfolio management team, which might include mutual funds, wrap
accounts, institutional portfolios and hedge funds. The bonus pool is
determined by a percentage of the aggregate assets under management in
the accounts managed by the portfolio managers, including the fund,
plus, where applicable, a percentage of the assets of the funds they
support as research analysts, and by the short term (typically one-year)
and long-term (typically three-year) performance of those accounts in
relation to the relevant peer group universe. Funding for the bonus pool
may also include a percentage of any performance fees earned on
long/short mutual funds managed by the Team. Senior management of
RiverSource Investments has the discretion to increase or decrease the
size of the part of the bonus pool and to
Statement of Additional Information - [Date], 2010 Page 141
determine the exact amount of each portfolio manager's bonus paid from
this portion of the bonus pool based on his/her performance as an
employee. RiverSource Investments portfolio managers are provided with a
benefits package, including life insurance, health insurance, and
participation in a company 401(k) plan, comparable to that received by
other RiverSource Investments employees. Certain investment personnel
are also eligible to defer a portion of their compensation. An
individual making this type of election can allocate the deferral to the
returns associated with one or more products they manage or support or
to certain other products managed by their investment team. Depending
upon their job level, RiverSource Investments portfolio managers may
also be eligible for other benefits or perquisites that are available to
all RiverSource Investments employees at the same job level.
(45) RIVERSOURCE: Portfolio manager compensation is typically comprised of
(i) a base salary, (ii) an annual cash bonus and (iii) an equity
incentive award in the form of stock options and/or restricted stock.
The annual cash bonus and equity incentive awards are paid from a team
bonus pool that is based on the performance of the accounts managed by
the portfolio management team, which might include mutual funds, wrap
accounts, institutional portfolios and hedge funds. Funding for the
bonus pool is determined by the short term (typically one-year) and
long-term (typically three-year and five-year) performance of the
accounts managed by the portfolio managers, including the fund, in
relation to the relevant peer group universe. Senior management of
RiverSource Investments has the discretion to increase or decrease the
size of the part of the bonus pool and to determine the exact amount of
each portfolio manager's bonus paid from this portion of the bonus pool
based on his/her performance as an employee. RiverSource Investments
portfolio managers are provided with a benefits package, including life
insurance, health insurance, and participation in a company 401(k) plan,
comparable to that received by other RiverSource Investments employees.
Certain investment personnel are also eligible to defer a portion of
their compensation. An individual making this type of election can
allocate the deferral to the returns associated with one or more
products they manage or support or to certain other products managed by
their investment team. Depending upon their job level, RiverSource
Investments portfolio managers may also be eligible for other benefits
or perquisites that are available to all RiverSource Investments
employees at the same job level.
Statement of Additional Information - [Date], 2010 Page 142
ADMINISTRATIVE SERVICES
Each fund listed in the table below has an Administrative Services Agreement
with Ameriprise Financial. Under this agreement, the fund pays Ameriprise
Financial for providing administration and accounting services. The fee is
calculated as follows:
TABLE 20. ADMINISTRATIVE SERVICES AGREEMENT FEE SCHEDULE
ASSET LEVELS AND BREAKPOINTS IN APPLICABLE FEES
------------------------------------------------------------------------------------------
$500,000,001 - $1,000,000,001 - $3,000,000,001 -
FUND $0 - 500,000,000 1,000,000,000 3,000,000,000 $12,000,000,000 12,000,000,001 +
------------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian
Equity 0.080% 0.075% 0.070% 0.060% 0.050%
RiverSource Absolute Return
Currency and Income
RiverSource Disciplined
International Equity
RiverSource Disciplined Small Cap
Value
RiverSource Emerging Markets Bond
RiverSource Global Bond
RiverSource Partners International
Select Growth
RiverSource Partners International
Select Value
RiverSource Partners International
Small Cap
RiverSource Partners Small Cap
Equity
RiverSource Partners Small Cap
Growth
RiverSource Partners Small Cap
Value
RiverSource Small Company Index
RiverSource Strategic Allocation
Seligman Frontier
Seligman Global Technology
Threadneedle Asia Pacific
Threadneedle Emerging Markets
Threadneedle European Equity
Threadneedle Global Equity
Threadneedle Global Equity Income
Threadneedle Global Extended Alpha
Threadneedle International
Opportunity
------------------------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 0.070% 0.065% 0.060% 0.050% 0.040%
RiverSource Diversified Bond
RiverSource Floating Rate
RiverSource High Yield Bond
RiverSource Income Opportunities
RiverSource Inflation Protected
RiverSource Intermediate Tax-
Exempt
RiverSource Limited Duration Bond
RiverSource Minnesota Tax-Exempt
RiverSource New York Tax-Exempt
RiverSource Short Duration U.S.
Government
RiverSource Strategic Income
Allocation
RiverSource Tax-Exempt Bond
RiverSource Tax-Exempt High Income
RiverSource U.S. Government
Mortgage
Seligman California Municipal
High-Yield
Statement of Additional Information - [Date], 2010 Page 143
ASSET LEVELS AND BREAKPOINTS IN APPLICABLE FEES
------------------------------------------------------------------------------------------
$500,000,001 - $1,000,000,001 - $3,000,000,001 -
FUND $0 - 500,000,000 1,000,000,000 3,000,000,000 $12,000,000,000 12,000,000,001 +
------------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal
Quality 0.070% 0.065% 0.060% 0.050% 0.040%
Seligman Minnesota Municipal
Seligman National Municipal
Seligman New York Municipal
------------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced 0.060% 0.055% 0.050% 0.040% 0.030%
RiverSource Cash Management
RiverSource Disciplined Equity
RiverSource Disciplined Large Cap
Growth
RiverSource Disciplined Large Cap
Value
RiverSource Disciplined Small and
Mid Cap Equity
RiverSource Diversified Equity
Income
RiverSource Dividend Opportunity
RiverSource Equity Value
RiverSource Mid Cap Growth
RiverSource Mid Cap Value
RiverSource Partners Aggressive
Growth
RiverSource Partners Fundamental
Value
RiverSource Partners Select Value
RiverSource Precious Metals and
Mining
RiverSource Real Estate
RiverSource S&P 500 Index
RiverSource Recovery and
Infrastructure
RiverSource Tax-Exempt Money
Market
Seligman TargETFund 2015
Seligman TargETFund 2025
Seligman TargETFund 2035
Seligman TargETFund 2045
Seligman TargETFund Core
------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic
Income 0.020% 0.020% 0.020% 0.020% 0.020%
RiverSource Income Builder
Enhanced Income
RiverSource Income Builder
Moderate Income
RiverSource Portfolio Builder
Aggressive
RiverSource Portfolio Builder
Conservative
RiverSource Portfolio Builder
Moderate
RiverSource Portfolio Builder
Moderate Aggressive
RiverSource Portfolio Builder
Moderate Conservative
RiverSource Portfolio Builder
Total Equity
RiverSource Retirement Plus 2010
RiverSource Retirement Plus 2015
RiverSource Retirement Plus 2020
RiverSource Retirement Plus 2025
RiverSource Retirement Plus 2030
RiverSource Retirement Plus 2035
RiverSource Retirement Plus 2040
RiverSource Retirement Plus 2045
------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 144
The fee is calculated for each calendar day on the basis of net assets as of the
close of the preceding day. Fees paid in each of the last three fiscal periods
are shown in the table below. The table also shows the daily rate applied to
each fund's net assets as of the last day of the most recent fiscal period. The
table is organized by fiscal year end. You can find your fund's fiscal year end
in Table 1.
TABLE 21. ADMINISTRATIVE FEES
----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES FEES PAID IN: DAILY RATE
--------------------------------------------------------------------------------------------------- APPLIED TO
FUND 2009 2008 2007 FUND ASSETS
----------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income $ 56,956 $ 38,041(a) $ 25,671 0.020%
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income 54,275 45,848(a) 37,153 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income 108,149 82,229(a) 58,560 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive 96,644 110,897 86,301 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative 36,929 26,665 24,051 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 193,553 183,783 138,034 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Aggressive 205,250 223,400 172,602 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate
Conservative 72,830 62,617 50,763 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity 84,413 101,924 76,312 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index 101,230 158,059 153,231 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index 446,427 738,676 867,030 0.080
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Equity Value 448,794 680,124 674,042 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth 105,946 159,051 173,239 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining 64,531 77,686 67,215 0.060
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-----------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity 31,071 13,416(b) N/A 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure 4,214(c) N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2010 2,441 3,623 1,779(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 4,449 5,483 1,861(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 4,871 7,572 2,961(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 5,145 7,280 2,293(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 5,001 7,160 2,579(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 3,258 4,249 1,548(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2040 2,051 4,915 2,928(d) 0.020
-----------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2045 1,726 1,670 586(d) 0.020
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 722,190 1,069,014 1,259,292 0.066
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth 232,850 350,088 334,364 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value 374,303 594,407 645,012 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value 172,308 300,721 355,085 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity 119,853 208,114 267,622 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value 277,260 565,329 754,675 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government 521,265 541,748 623,283 0.069
-----------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage 252,478 285,601 196,713 0.070
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity 642,082 1,033,158 884,333 0.057
-----------------------------------------------------------------------------------------------------------------
RiverSource Real Estate 91,566 132,646 153,117 0.060
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 145
----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES FEES PAID IN: DAILY RATE
--------------------------------------------------------------------------------------------------- APPLIED TO
FUND 2009 2008 2007 FUND ASSETS
----------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Cash Management $2,132,989 $2,507,729 $2,141,669 0.051%
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 1,094,618 1,701,542 1,224,572 0.054
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap Equity 77,180 38,114 24,904 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value 34,017 30,592 20,681 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate 253,669 398,924 378,190 0.070
-----------------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities 219,083 202,872 242,883 0.069
-----------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities 515,776 399,972 209,028 0.069
-----------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond 123,147 115,529 105,993 0.070
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
-----------------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt 113,317 122,235 122,586 0.070
-----------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 2,122,615 2,012,548 1,752,212 0.059
-----------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt 212,293 215,249 234,353 0.070
-----------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 37,590 41,455 47,710 0.070
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Balanced 331,811 519,542 623,784 0.059
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth 203,583 101,276 11,405(e) 0.059
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value 69,490 662(f) N/A 0.060
-----------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income 1,985,768 3,272,256 3,449,519 0.048
-----------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 946,227 1,335,281 1,196,773 0.054
-----------------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation 962,590 1,505,894 1,340,234 0.076
-----------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation 137,849 115,139 21,493(e) 0.070
------------------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield* 7,436 N/A N/A 0.070
-----------------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality* 8,837 N/A N/A 0.070
-----------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal* 14,896 N/A N/A 0.070
-----------------------------------------------------------------------------------------------------------------
Seligman National Municipal* 42,999 N/A N/A 0.069
-----------------------------------------------------------------------------------------------------------------
Seligman New York Municipal* 17,197 N/A N/A 0.070
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015* 4,585 N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025* 5,686 N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035* 1,661 N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045* 835 N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core* 10,074 N/A N/A 0.060
-----------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 146
----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES FEES PAID IN: DAILY RATE
--------------------------------------------------------------------------------------------------- APPLIED TO
FUND 2009 2008 2007 FUND ASSETS
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and Income $ 417,444 $ 373,454 $ 79,761 0.080%
-----------------------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity 282,974 549,173 209,295 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond 146,703 131,334 78,549 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Global Bond 401,109 572,976 388,646 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select Growth 282,773 511,522 490,174 0.080
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Select Value 651,133 1,395,090 1,759,221 0.078
-----------------------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap 38,884 79,183 92,062 0.080
-----------------------------------------------------------------------------------------------------------------
Seligman Frontier 10,073 N/A N/A 0.030
-----------------------------------------------------------------------------------------------------------------
Seligman Global Technology 102,757 N/A N/A 0.040
-----------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific 7,807(g) N/A N/A 0.080
-----------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 280,656 498,019 503,279 0.079
-----------------------------------------------------------------------------------------------------------------
Threadneedle European Equity 50,304 96,107 105,886 0.080
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 340,869 549,601 611,621 0.080
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income 16,780 1,528(h) N/A 0.080
-----------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha 4,908 1,256(h) N/A 0.080
-----------------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity 281,413 460,205 540,718 0.080
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt 61,016 52,367 57,618 0.070
-----------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 339,961 471,791 652,889 0.059
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 453,062 463,150 525,515 0.069
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income 1,428,680 1,603,416 1,823,812 0.063
-----------------------------------------------------------------------------------------------------------------
2008 2007 2006
-----------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market 84,396 73,957 69,922 0.060%
-----------------------------------------------------------------------------------------------------------------
* Prior to June 15, 2009, and for Seligman National, prior to Aug. 31,
2009, the fund did not pay a separate administrative services fee. Fees
for administration services were included in the fund's management fees
as charged by the fund's pervious investment manager.
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal period
ended on May 31.
(b) For the period from Oct. 18, 2007 (when shares became publicly available)
to April 30, 2008.
(c) For the period from Feb. 19, 2009 (when shares became publicly available)
to April 30, 2009.
(d) For the period from May 18, 2006 (when shares became publicly available)
to April 30, 2007.
(e) For the period from May 17, 2007 (when shares became publicly available)
to Sept. 30, 2007.
(f) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
(g) For the period from July 15, 2009 (when the Fund became available) to
Oct. 31, 2009.
(h) For the period from Aug. 1, 2008 (when shares became publicly available)
to Oct. 31, 2008.
TRANSFER AGENCY SERVICES
Each fund has a Transfer Agency Agreement with RiverSource Service Corporation
(the "transfer agent") located at 734 Ameriprise Financial Center, Minneapolis,
MN 55474. This agreement governs RiverSource Service Corporation's
responsibility for administering and/or performing transfer agent functions, for
acting as service agent in connection with dividend and distribution functions
and for performing shareholder account administration agent functions in
connection with the purchase, exchange and redemption or repurchase of the
fund's shares.
CLASS A, CLASS B, CLASS C AND CLASS D. For Class A, Class B, Class C and Class
D, RiverSource Service Corporation will earn a fee from the fund determined by
multiplying the number of shareholder accounts at the end of the day by a rate
determined for each class per year and dividing by the number of days in the
year. The fund will pay on the basis of the relative percentage of net assets of
each class of shares, first allocating the base fee (equal to Class A shares)
across share classes, and then allocating the incremental per share class fee,
based on the number of shareholder accounts. The fee varies depending on the
investment category of the fund. You can find your fund's investment category in
Table 1.
Statement of Additional Information - [Date], 2010 Page 147
BALANCED, EQUITY, FUNDS-OF-FUNDS - EQUITY FUNDS
The annual per account fee accrued daily and payable monthly, for the applicable
classes is as follows:
Class A Class B Class C Class D
------- ------- ------- -------
$19.50 $20.50 $20.00 $19.50
FUNDS-OF-FUNDS - FIXED INCOME, STATE TAX-EXEMPT FIXED INCOME,
TAXABLE FIXED INCOME, TAX-EXEMPT FIXED INCOME FUNDS
The annual per account fee accrued daily and payable monthly, for the applicable
classes is as follows:
Class A Class B Class C
------- ------- -------
$20.50 $21.50 $21.00
MONEY MARKET FUNDS
The annual per account fee accrued daily and payable monthly, for the applicable
classes is as follows. The fee for RiverSource Tax-Exempt Money Market Fund,
which does not have separate classes of shares, is the same as that applicable
to Class A:
Class A Class B Class C
------- ------- -------
$22.00 $23.00 $22.50
CLASS E, CLASS R2, CLASS R3, CLASS R4, CLASS R5, CLASS W CLASS Y AND CLASS
Z. For Class E, Class R2, Class R3, Class R4, Class R5, Class W and Class Y,
RiverSource Service Corporation will earn a fee from the fund, accrued daily and
payable monthly, determined by multiplying the average daily net assets of the
applicable class by the annual rate shown below:
Class E Class R2 Class R3 Class R4 Class R5 Class W Class Y Class Z
------- -------- -------- -------- -------- ------- ------- -------
0.05% 0.05% 0.05% 0.05% 0.05% 0.20% 0.05% %
In addition, an annual closed-account fee of $5.00 per inactive account is
charged on a pro rata basis for 12 months from the date the account becomes
inactive. The transfer agent also charges an annual fee of $3 per account
serviced directly by the fund or its designated agent for Class A, Class B and
Class C shares. The fees paid to RiverSource Service Corporation may be changed
by the Board without shareholder approval.
PLAN ADMINISTRATION SERVICES
The funds* have a Plan Administration Services Agreement with the transfer
agent. Under the 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 (HSAs).
The fee for services is equal on an annual basis to the following percentage of
the average daily net assets of the fund attributable to the applicable class:
Class E Class R2 Class R3 Class R4 Class Y
------- -------- -------- -------- -------
0.15% 0.25% 0.25% 0.25% 0.15%
The fees paid to the transfer agent may be changed by the Board without
shareholder approval.
* Currently, not all funds offer classes of shares that are subject to this fee.
You can reference Table 8 for the classes of shares your fund offers.
DISTRIBUTION SERVICES
RiverSource Fund Distributors, Inc., an indirect wholly-owned subsidiary of
RiverSource Investments, 50611 Ameriprise Financial Center, Minneapolis, MN
55474, serves as the funds' principal underwriter and distributor. Prior to June
1, 2009, for RiverSource and Threadneedle funds, RiverSource Distributors, Inc.
also served as principal underwriter and distributor to the funds. Prior to Oct.
1, 2007, for RiverSource and Threadneedle funds, Ameriprise Financial Services,
Inc. also served as principal underwriter and distributor to the funds. Prior to
Nov. 7, 2008, for Seligman funds, Seligman Advisors, Inc. also served as
principal underwriter and distributor to the funds. The fund's shares are
offered on a continuous basis. Under a Distribution Agreement, sales charges
deducted for distributing fund shares are paid to the distributor daily. The
following table shows the sales charges paid to the distributor and the amount
retained by the distributor after paying commissions and other
Statement of Additional Information - [Date], 2010 Page 148
expenses for each of the last three fiscal periods. The table is organized by
fiscal year end. You can find your fund's fiscal year end in Table 1.
TABLE 22. SALES CHARGES PAID TO DISTRIBUTOR
-----------------------------------------------------------------------------------------------------------------------------------
AMOUNT RETAINED AFTER PAYING
SALES CHARGES PAID TO DISTRIBUTOR COMMISSIONS AND OTHER EXPENSES
-----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder $ 466,216 $ 688,587(a)$ 1,155,448 $ (21,562) $ (56,086)(a)$ 6,089
Basic Income
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 296,977 831,981(a) 1,678,918 (533) 176,661(a) 287,006
Enhanced Income
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 654,937 1,279,681(a) 2,955,938 77,641 34,001(a) 435,561
Moderate Income
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 2,081,242 2,848,037 3,260,693 552,795 799,417 1,029,231
Aggressive
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 528,590 384,348 455,765 16,829 4,989 94,296
Conservative
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3,277,766 3,944,827 4,127,743 661,689 702,939 1,084,978
Moderate
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 4,181,445 5,635,597 6,845,238 1,125,393 1,613,677 2,326,266
Moderate Aggressive
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 982,012 1,088,559 1,084,727 153,386 140,630 252,979
Moderate Conservative
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 1,561,130 2,257,735 2,414,356 319,114 471,536 594,766
Total Equity
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index N/A N/A N/A N/A N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index 365,094 563,878 973,579 317,088 117,897 220,620
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value 374,068 496,313 928,630 65,246 16,594 86,064
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap 110,096 174,193 265,315 13,222 25,734 52,127
Growth
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and 159,379 192,503 178,460 55,468 50,572 33,944
Mining
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian 57,137 149,480(b) N/A 5,429 46,196(b) N/A
Equity
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and 221,190(c) N/A N/A (7,085)(c) N/A N/A
Infrastructure
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 7,536 32,694 2,283(d) 1,465 11,266 (6,048)(d)
2010
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 17,354 70,298 35,493(d) 5,173 50,360 27,942(d)
2015
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 26,015 41,850 35,121(d) 12,539 21,519 23,828(d)
2020
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 21,208 49,187 38,880(d) 7,872 25,003 25,335(d)
2025
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 19,999 51,530 29,205(d) 9,336 28,063 15,221(d)
2030
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 14,670 31,469 21,303(d) 6,101 19,162 13,718(d)
2035
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 17,700 39,332 14,822(d) 8,815 21,208 7,670(d)
2040
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 16,697 23,890 10,606(d) 6,510 12,087 5,832(d)
2045
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 974,983 882,107 1,787,813 108,896 41,174 139,630
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive 243,591 390,356 359,329 59,181 83,271 63,452
Growth
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners 494,967 766,263 1,266,023 43,220 58,252 158,689
Fundamental Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select 187,112 314,511 518,110 15,783 25,291 61,797
Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap 114,800 184,740 309,112 26,375 48,448 95,646
Equity
-----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 149
-----------------------------------------------------------------------------------------------------------------------------------
AMOUNT RETAINED AFTER PAYING
SALES CHARGES PAID TO DISTRIBUTOR COMMISSIONS AND OTHER EXPENSES
-----------------------------------------------------------------------------------------------------------------------------------
FUND 2009 2008 2007 2009 2008 2007
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap $ 287,969 $ 607,350 $ 1,147,620 $ 38,780 $ 117,005 $ 249,915
Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. 530,165 660,354 962,025 107,433 (152,827) (85,482)
Government
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government 101,207 136,891 252,402 (70,344) (116,397) (67,241)
Mortgage
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Dividend 798,182 1,648,530 2,653,148 39,934 206,622 266,495
Opportunity
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate 98,301 211,915 813,437 18,158 63,306 218,298
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management 367,743 339,219 437,392 367,712 339,111 423,832
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity 261,402 412,821 661,751 67,822 85,890 140,529
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 24,097 26,228 55,865 7,132 7,923 9,445
and Mid Cap Equity
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 8,386 6,647 15,644 2,011 1,943 1,960
Cap Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate 189,836 380,143 1,282,342 11,806 (174,369) (554,729)
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income 951,690 135,655 320,351 251,745 (11,090) (6,952)
Opportunities
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected 332,292 407,706 105,703 101,013 51,044 18,732
Securities
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration 145,544 92,255 136,687 17,573 9,475 28,890
Bond
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource California Tax- 92,347 91,928 150,760 9,806 5,945 46,117
Exempt
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 1,922,949 1,992,222 2,340,251 (92,219) 176,513 419,415
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax- 406,782 463,447 338,160 84,001 37,217 12,594
Exempt
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt 20,992 29,401 43,518 8,033 8,217 6,984
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced 189,413 287,586 474,702 39,038 36,359 32,524
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 69,425 87,685 20,834(e) 15,099 30,621 5,197(e)
Cap Growth
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 2,270 0(f) N/A 566 0(f) N/A
Cap Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity 3,383,179 6,331,545 9,553,810 496,151 1,204,186 1,407,616
Income
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 954,172 2,444,490 3,538,910 207,568 898,395 862,120
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic 2,055,294 5,371,458 8,570,846 347,495 1,321,113 1,738,063
Allocation
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income 600,969 400,285 267,319(e) 2,484 28,302 26,129(e)
Allocation
-----------------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 37,316 98,702 18,611 36,272 13,104 3,125
High-Yield
-----------------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 60,005 37,798 15,149 56,335 5,413 2,159
Quality
-----------------------------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 66,716 49,497 35,607 55,756 6,427 4,740
-----------------------------------------------------------------------------------------------------------------------------------
Seligman National Municipal 222,346 57,892 18,992 199,904 7,651 3,601
-----------------------------------------------------------------------------------------------------------------------------------
Seligman New York Municipal 166,632 48,724 31,659 157,302 7,550 6,334
-----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 22,260 77,218 242,913 22,260 9,521 25,977
-----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 26,925 79,939 188,122 26,925 9,918 19,976
-----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 3,094 13,483 13,573 2,975 1,677 1,493
-----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 7,658 27,815 7,910 7,508 3,493 791
-----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core 24,251 126,638 297,932 24,251 15,617 30,512
-----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 150
-----------------------------------------------------------------------------------------------------------------------------------
AMOUNT RETAINED AFTER PAYING
SALES CHARGES PAID TO DISTRIBUTOR COMMISSIONS AND OTHER EXPENSES
-----------------------------------------------------------------------------------------------------------------------------------
2009 2008 2007 2009 2008 2007
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return $ 118,256 $ 288,047 $ 10,519 $ 40,664 $ 52,383 $ 3,448
Currency and Income
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined 61,779 168,692 130,761 8,596 36,899 14,894
International Equity
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets 70,770 41,906 25,743 28,245 10,486 1,421
Bond
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond 218,412 391,577 314,002 32,697 118,930 215,442
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners 213,399 560,302 885,940 43,200 118,125 226,007
International Select Growth
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners 580,503 1,584,444 4,085,674 68,413 235,164 641,699
International Select Value
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners 53,930 88,479 164,026 26,245 20,053 19,649
International Small Cap
-----------------------------------------------------------------------------------------------------------------------------------
Seligman Frontier 1,357 10,431 25,638 735 1,351 3,856
-----------------------------------------------------------------------------------------------------------------------------------
Seligman Global Technology 221,563 265,528 309,290 184,936 233,685 274,719
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific(g) N/A N/A N/A N/A N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 558,505 780,872 886,062 140,308 (4,109,358) (7,004,024)
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity 68,398 124,828 226,464 19,191 35,391 90,745
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 361,007 800,774 896,578 60,748 114,011 99,098
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 38,564 18,558(h) N/A 7,576 4,340(h) N/A
Income
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended 8,674 1,795(h) N/A 3,445 307(h) N/A
Alpha
-----------------------------------------------------------------------------------------------------------------------------------
Threadneedle International 168,431 319,850 501,090 37,276 49,744 56,669
Opportunity
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax- 75,578 59,348 62,985 3,223 (792) (10,183)
Exempt
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 453,947 360,393 608,683 131,709 59,123 115,052
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 477,836 319,831 313,115 100,280 64,831 (19,725)
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High 1,164,712 1,042,555 1,182,244 192,881 151,444 181,059
Income
-----------------------------------------------------------------------------------------------------------------------------------
2008 2007 2006 2008 2007 2006
-----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money N/A N/A N/A N/A N/A N/A
Market
-----------------------------------------------------------------------------------------------------------------------------------
(a) The fund changed its fiscal year end effective Jan. 31, 2008 from May 31
to Jan. 31. For 2008, the information shown is for the period from June
1, 2007 through Jan. 31, 2008. For years prior to 2008, the fiscal
period ended on May 31.
(b) For the period from Oct. 18, 2007 (when shares became publicly
available) to April 30, 2008.
(c) For the period from Feb. 19, 2009 (when shares became publicly
available) to April 30, 2009.
(d) For the period from May 18, 2006 (when shares became publicly available)
to April 30, 2007.
(e) For the period from May 17, 2007 (when shares became publicly available)
to Sept. 30, 2007.
(f) For the period from Aug. 1, 2008 (when shares became publicly available)
to Sept. 30, 2008.
(g) For the period from July 15, 2009 (when the Fund became available) to
Oct. 31, 2009.
(h) For the period from Aug. 1, 2008 (when shares became publicly available)
to Oct. 31, 2008.
Part of the sales charge may be paid to selling dealers who have agreements with
the distributor. The distributor will retain the balance of the sales charge. At
times the entire sales charge may be paid to selling dealers.
PLAN AND AGREEMENT OF DISTRIBUTION
To help defray the cost of distribution and servicing not covered by the sales
charges received under the Distribution Agreement, each fund listed in Table 24.
12b-1 Fees, approved a Plan of Distribution (the "Plan") and entered into an
Statement of Additional Information - [Date], 2010 Page 151
agreement under the Plan pursuant to Rule 12b-1 under the 1940 Act. Under the
Plan, of the type known as a reimbursement plan, the fund pays the distributor a
fee up to actual expenses incurred at an annual rate as follows:
FOR FUNDS OTHER THAN MONEY MARKET FUNDS:
The fee is equal on an annual basis to the following percentage of the
average daily net assets of the fund attributable to the applicable class:
Class A Class B Class C Class D Class R2 Class R3 Class W
------- ------- ------- ------- -------- -------- -------
0.25% 1.00% 1.00% 0.25% 0.50% 0.25% 0.25%
For Class B and Class C, of the 1.00% fee, up to 0.75% is reimbursed for
distribution expenses. Up to an additional 0.25% of the 1.00% fee is paid to
the distributor to reimburse certain expenses incurred in connection with
providing services to fund shareholders.
For Class R2 and Class R3, up to the entire amount of the fee shall be
reimbursed for distribution expenses. Of that amount, for Class R2, up to
0.25% of the 0.50% fee may be reimbursed for shareholder servicing expenses.
FOR MONEY MARKET FUNDS:
The fee for services is equal on an annual basis to the following percentage
of the average daily net assets of the fund attributable to the applicable
class. The fee for RiverSource Tax-Exempt Money Market, which does not have
separate classes of shares, is the same as that applicable to Class A:
Class A Class B Class C Class R2 Class W
------- ------- ------- -------- -------
0.10% 0.85% 0.75% 0.50% 0.10%
For Class B, of the 0.85% fee, up to 0.75% is reimbursed for distribution
expenses. Up to an additional 0.10% of the 0.85% fee is paid to the
distributor to reimburse certain expenses incurred in connection with
providing services to fund shareholders. The distributor has currently
agreed not to be reimbursed by the fund for distribution (12b-1) fees equal
to 0.10% of the 0.85% fee for Class B and 0.25% for Class R2.
FOR ALL FUNDS:
Distribution and shareholder servicing expenses include payment of distribution
and shareholder servicing fees to financial institutions that sell shares of the
fund. Financial institutions may compensate their financial advisors with the
distribution and shareholder servicing fees paid to them by the distributor.
Payments under the Plan are intended to result in an increase in fund assets and
thus potentially result in economies of scale and lower costs for all
shareholders.
Each class has exclusive voting rights on the Plan as it applies to that class.
In addition, because Class B shares convert to Class A shares, Class B
shareholders have the right to vote on any material increase to expenses charged
under the Class A plan.
Distribution expenses covered under this Plan include commissions to financial
intermediaries and expenses related to printing prospectuses and reports used
for sales purposes, the preparation, printing and distribution of advertising
and sales literature, personnel, travel, office and equipment, and other
distribution-related expenses. Shareholder service expenses include costs of
establishing and maintaining shareholder accounts and records, assisting with
purchase, redemption and exchange requests, arranging for bank wires, monitoring
dividend payments from the funds on behalf of shareholders, forwarding certain
shareholder communications from funds to shareholders, receiving and responding
to inquiries and answering questions regarding the funds, aiding in maintaining
the investment of shareholders in the funds and other service-related expenses.
A substantial portion of the expenses are not specifically identified to any one
of the funds. The fee is not allocated to any one service (such as advertising,
compensation to financial intermediaries, or other uses). However, a significant
portion of the fee is generally used for sales and promotional expenses.
The Plan must be approved annually by the Board, including a majority of the
Board members who are not "interested persons" (as defined in the 1940 Act) of
the fund (Independent Directors), if it is to continue for more than a year. At
least quarterly, the Board reviews written reports concerning the amounts
expended under the Plan and the purposes for which such expenditures were made.
The Plan and any agreement related to it may be terminated at any time by vote
of a majority of Board members who are not interested persons of the fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan, or by vote of a majority of the outstanding
voting securities of the relevant class of shares or by the distributor.
Any agreement related to the Plan will terminate in the event of its assignment,
as that term is defined in the 1940 Act. The Plan may not be amended to increase
the amount to be spent for distribution without shareholder approval, and all
material
Statement of Additional Information - [Date], 2010 Page 152
amendments to the Plan must be approved by a majority of the Board members,
including a majority of the Independent Directors and who do not have a
financial interest in the operation of the Plan or any agreement related to it.
The selection and nomination of Independent Directors is the responsibility of
the other Independent Directors. Independent Directors do not have any direct or
indirect financial interest in the operation of the Plan or any related
agreement.
For its most recent fiscal period, each fund paid 12b-1 fees as shown in the
following table. The table is organized by fiscal year end. You can find your
fund's fiscal year end in Table 1.
TABLE 23. 12B-1 FEES
FUND CLASS A CLASS B CLASS C CLASS D CLASS R2 CLASS R3 CLASS W
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-------------------------------------------------------------------------------------------------------------------
RiverSource RiverSource $ 593,211 $ 362,603 $112,193 N/A N/A N/A N/A
Income Builder Basic Income
-------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 580,823 278,815 110,421 N/A N/A N/A N/A
Enhanced Income
-------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 1,158,585 587,094 185,812 N/A N/A N/A N/A
Moderate Income
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 969,765 809,179 142,465 N/A N/A N/A N/A
Aggressive
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 328,254 434,092 99,134 N/A N/A N/A N/A
Conservative
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 1,870,904 1,818,537 374,530 N/A N/A N/A N/A
Moderate
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 2,048,240 1,742,740 319,656 N/A N/A N/A N/A
Moderate Aggressive
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 687,072 724,001 168,921 N/A N/A N/A N/A
Moderate Conservative
-------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 850,481 691,958 125,500 N/A N/A N/A N/A
Total Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index N/A N/A N/A $91,928 N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
RiverSource Small Company 1,166,038 914,171 N/A N/A N/A N/A N/A
Index
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value 1,688,097 830,333 44,669 N/A $ 18 $ 353 $ 9
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 160,344 205,641 25,972 N/A 15 8 N/A
Cap Growth
-------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals 229,611 135,038 20,903 N/A N/A N/A N/A
and Mining
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian 78,294 18,994 10,617 N/A N/A N/A N/A
Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and 9,478 3,157 1,947 N/A 9 5 N/A
Infrastructure(a)
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 8,900 N/A N/A N/A 18 9 N/A
2010
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 13,407 N/A N/A N/A 18 9 N/A
2015
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 8,463 N/A N/A N/A 19 9 N/A
2020
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5,737 N/A N/A N/A 20 9 N/A
2025
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 8,216 N/A N/A N/A 21 10 N/A
2030
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 3,286 N/A N/A N/A 17 9 N/A
2035
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 3,151 N/A N/A N/A 18 11 N/A
2040
-------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2,870 N/A N/A N/A 17 9 N/A
2045
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 2,194,454 1,126,604 154,385 N/A 47 1,124 32,692
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners 637,734 400,332 20,799 N/A 367 16 N/A
Aggressive Growth
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners 1,016,187 892,153 98,358 N/A N/A N/A N/A
Fundamental Value
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select 524,683 439,515 44,376 N/A N/A N/A N/A
Value
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 326,818 153,089 14,814 N/A N/A N/A N/A
Cap Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 587,080 760,649 67,562 N/A 1,288 28 N/A
Cap Value
-------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 153
FUND CLASS A CLASS B CLASS C CLASS D CLASS R2 CLASS R3 CLASS W
-------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration $1,393,600 $1,284,921 $111,382 N/A N/A N/A $ 11
U.S. Government
-------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government 213,851 267,370 40,318 N/A N/A N/A N/A
Mortgage
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-------------------------------------------------------------------------------------------------------------------
RiverSource Dividend 2,154,545 1,012,961 150,461 N/A $ 18 $ 9 8
Opportunity
-------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate 137,477 83,293 9,596 N/A N/A N/A 5
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management 4,078,135 863,598 77,611 N/A N/A N/A 50,965
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined 1,808,099 231,197 20,366 N/A 14 7 2,229,343
Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 26,259 9,361 2,044 N/A N/A N/A 233,585
and Mid Cap Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 24,904 3,242 642 N/A 14 8 N/A
Cap Value
-------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate 512,870 162,968 144,229 N/A N/A N/A 9
-------------------------------------------------------------------------------------------------------------------
RiverSource Income 468,741 249,052 113,732 N/A N/A N/A N/A
Opportunities
-------------------------------------------------------------------------------------------------------------------
RiverSource Inflation 579,520 348,185 110,716 N/A N/A N/A 553,667
Protected Securities
-------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration 165,150 74,699 23,364 N/A N/A N/A 11
Bond
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
-------------------------------------------------------------------------------------------------------------------
RiverSource California Tax- 388,632 39,496 24,784 N/A N/A N/A N/A
Exempt
-------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 4,876,489 2,344,842 378,881 N/A 135 23 1,433,055
-------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax- 703,042 127,738 92,844 N/A N/A N/A N/A
Exempt
-------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax- 124,348 32,203 7,408 N/A N/A N/A N/A
Exempt
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
-------------------------------------------------------------------------------------------------------------------
RiverSource Balanced 1,240,431 190,901 34,422 N/A 54 N/A N/A
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 285,822 31,420 14,405 N/A 31 16 148,342
Cap Growth
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 2,658 717 132 N/A 33 16 203,257
Cap Value
-------------------------------------------------------------------------------------------------------------------
RiverSource Diversified 7,673,291 4,133,298 654,310 N/A 32,750 224,770 7
Equity Income
-------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 2,975,723 1,048,865 359,404 N/A 56,692 82,312 7
-------------------------------------------------------------------------------------------------------------------
RiverSource Strategic 2,727,681 1,272,157 456,933 N/A 16 8 N/A
Allocation
-------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income 421,534 206,718 76,158 N/A 23 11 N/A
Allocation
-------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 42,842 N/A 54,350 N/A N/A N/A N/A
High-Yield
-------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 54,798 N/A 34,584 N/A N/A N/A N/A
Quality
-------------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 99,128 N/A 9,092 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman National Municipal 461,232 N/A 105,746 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman New York Municipal 99,753 N/A 67,646 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 29,037 N/A 116,119 N/A 7,361 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 34,200 N/A 114,588 N/A 11,757 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 10,620 N/A 17,945 N/A 6,060 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 6,401 N/A 6,705 N/A 3,486 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core 45,600 N/A 289,930 N/A 41,727 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 154
FUND CLASS A CLASS B CLASS C CLASS D CLASS R2 CLASS R3 CLASS W
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
-------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return $ 416,349 $ 35,353 $ 98,315 N/A N/A N/A $ 530,074
Currency and Income
-------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined 115,524 76,758 9,922 N/A $ 15 $ 7 530,215
International Equity
-------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets 35,486 15,974 3,265 N/A N/A N/A 254,174
Bond
-------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond 593,225 367,588 44,351 N/A N/A N/A 147,100
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners 414,628 250,377 42,614 N/A 110 N/A N/A
International Select Growth
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners 1,476,812 892,831 106,186 N/A N/A N/A N/A
International Select Value
-------------------------------------------------------------------------------------------------------------------
RiverSource Partners 57,422 42,653 4,096 N/A N/A N/A N/A
International Small Cap
-------------------------------------------------------------------------------------------------------------------
Seligman Frontier 56,264 11,282 86,834 N/A 453 3 N/A
-------------------------------------------------------------------------------------------------------------------
Seligman Global Technology 469,642 85,618 559,118 N/A 15,300 3 N/A
-------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific(b) N/A N/A N/A N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 715,248 302,533 99,973 N/A 13,518 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity 134,391 81,471 9,558 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 884,744 362,565 57,394 N/A 192 8 8
-------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 38,589 17,080 2,551 N/A 36 18 N/A
Income
-------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended 5,199 2,820 1,035 N/A 36 18 N/A
Alpha
-------------------------------------------------------------------------------------------------------------------
Threadneedle International 576,787 226,132 30,118 N/A 1,240 8 N/A
Opportunity
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
-------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax- 197,660 44,588 36,432 N/A N/A N/A N/A
Exempt
-------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 1,123,363 500,167 46,013 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 1,580,370 189,971 72,103 N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High 5,482,675 487,040 137,058 N/A N/A N/A N/A
Income
-------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
-------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money 140,660 N/A N/A N/A N/A N/A N/A
Market
-------------------------------------------------------------------------------------------------------------------
(a) For the period from Feb. 19, 2009 (when shares became publicly available)
to April 30, 2009.
(b) For the period from July 15, 2009 (when shares became publicly available)
to Oct. 31, 2009.
Statement of Additional Information - [Date], 2010 Page 155
FOR FUNDS WITH CLASS B AND CLASS C SHARES:
The following table provides the amount of distribution expenses, as a dollar
amount and as a percentage of net assets, incurred by the distributor and not
yet reimbursed ("unreimbursed expense") for Class B and Class C shares. These
amounts are based on the most recent information available as of Oct. 31, 2009
and may be recovered from future payments under the distribution plan or CDSC.
To the extent the unreimbursed expense has been fully recovered, the
distribution fee is reduced.
TABLE 24. UNREIMBURSED DISTRIBUTION EXPENSES
PERCENTAGE OF PERCENTAGE OF
CLASS B CLASS C
FUND CLASS B NET ASSETS CLASS C NET ASSETS
-------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian Equity Fund 75,000 5.27% 14,000 0.73%
-------------------------------------------------------------------------------------------------------
RiverSource Absolute Return Currency and 110,000 5.43% 28,000 0.37%
Income Fund
-------------------------------------------------------------------------------------------------------
RiverSource Balanced Fund 738,000 4.27% 26,000 0.28%
-------------------------------------------------------------------------------------------------------
RiverSource California Tax-Exempt Fund 85,000 3.08% 29,000 0.99%
-------------------------------------------------------------------------------------------------------
RiverSource Cash Management Fund 6,445,000 10.30% 51,000 0.86%
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined Equity Fund 547,000 0.26% 24,000 0.11%
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined International Equity 346,000 4.92% 12,000 1.09%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth Fund 175,000 5.07% 15,000 1.00%
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value Fund 7,000 12.63% 0 0.00%
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap 53,000 5.81% 4,000 1.39%
Equity Fund
-------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small Cap Value Fund 16,000 6.72% 2,000 2.38%
-------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond Fund 8,069,000 4.27% 264,000 0.47%
-------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity Income Fund 16,722,000 4.60% 694,000 0.99%
-------------------------------------------------------------------------------------------------------
RiverSource Dividend Opportunity Fund 3,425,000 4.67% 181,000 1.02%
-------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets Bond Fund 116,000 4.80% 47,000 6.51%
-------------------------------------------------------------------------------------------------------
RiverSource Equity Value Fund 1,499,000 3.10% 44,000 0.96%
-------------------------------------------------------------------------------------------------------
RiverSource Floating Rate Fund 848,000 6.53% 88,000 0.56%
-------------------------------------------------------------------------------------------------------
RiverSource Global Bond Fund 1,166,000 3.89% 62,000 1.12%
-------------------------------------------------------------------------------------------------------
RiverSource Government Money Market Fund 105,000 2.11% 2,812,000 19.97%
-------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond Fund 3,569,000 3.49% 143,000 0.20%
-------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Fund 1,794,000 6.86% 70,000 0.61%
-------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income 1,241,000 7.13% 54,000 0.62%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Income 2,408,000 6.59% 88,000 0.57%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Income Opportunities Fund 1,610,000 4.35% 279,000 0.61%
-------------------------------------------------------------------------------------------------------
RiverSource Inflation Protected Securities 1,139,000 4.94% 128,000 0.88%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax-Exempt Fund 122,000 3.44% 40,000 0.89%
-------------------------------------------------------------------------------------------------------
RiverSource LaSalle Global Real Estate Fund N/A N/A 787,000 25.90%
-------------------------------------------------------------------------------------------------------
RiverSource LaSalle Monthly Dividend Real 38,000 1.72% 325,000 3.47%
Estate Fund
-------------------------------------------------------------------------------------------------------
RiverSource Limited Duration Bond Fund 542,000 5.37% 267,000 1.01%
-------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth Fund 1,745,000 3.47% 74,000 0.98%
-------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value Fund 4,613,000 4.69% 246,000 0.61%
-------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax-Exempt Fund 231,000 2.56% 111,000 0.80%
-------------------------------------------------------------------------------------------------------
RiverSource New York Tax-Exempt Fund 63,000 3.05% 9,000 0.93%
-------------------------------------------------------------------------------------------------------
RiverSource Partners Aggressive Growth Fund 885,000 3.83% 25,000 1.45%
-------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental Value Fund 2,537,000 4.35% 112,000 1.28%
-------------------------------------------------------------------------------------------------------
RiverSource Partners International Select 990,000 4.00% 45,000 0.47%
Growth Fund
-------------------------------------------------------------------------------------------------------
RiverSource Partners International Select 3,900,000 4.84% 151,000 1.38%
Value Fund
-------------------------------------------------------------------------------------------------------
RiverSource Partners International Small Cap 225,000 5.45% 6,000 1.23%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value Fund 1,317,000 4.17% 48,000 1.20%
-------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity Fund 467,000 4.48% 21,000 1.53%
-------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 156
PERCENTAGE OF PERCENTAGE OF
CLASS B CLASS C
FUND CLASS B NET ASSETS CLASS C NET ASSETS
-------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Growth Fund 450,000 4.22% 29,000 1.49%
-------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value Fund 2,012,000 3.40% 91,000 1.35%
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Fund 3,286,000 4.79% 144,000 0.56%
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Conservative 2,257,000 5.76% 128,000 0.79%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 7,037,000 4.97% 326,000 0.77%
Aggressive Fund
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate 3,270,000 5.53% 187,000 0.80%
Conservative Fund
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Fund 8,291,000 5.23% 422,000 0.77%
-------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity 2,708,000 4.83% 117,000 0.47%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Precious Metals and Mining Fund 418,000 3.21% 17,000 0.57%
-------------------------------------------------------------------------------------------------------
RiverSource Real Estate Fund 416,000 7.00% 13,000 1.33%
-------------------------------------------------------------------------------------------------------
RiverSource Recovery and Infrastructure Fund 229,000 1.87% 36,000 0.30%
-------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. Government 3,765,000 4.78% 112,000 0.39%
Fund
-------------------------------------------------------------------------------------------------------
RiverSource Small Company Index Fund 1,548,000 3.56% N/A N/A
-------------------------------------------------------------------------------------------------------
RiverSource Strategic Allocation Fund 6,487,000 5.87% 361,000 0.81%
-------------------------------------------------------------------------------------------------------
RiverSource Strategic Income Allocation Fund 1,228,000 4.76% 91,000 0.63%
-------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond Fund 431,000 2.93% 66,000 0.80%
-------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income Fund 1,007,000 2.68% 142,000 0.95%
-------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage Fund 927,000 4.71% 39,000 0.89%
-------------------------------------------------------------------------------------------------------
Seligman California Municipal High-Yield Fund N/A N/A 207,000 3.47%
-------------------------------------------------------------------------------------------------------
Seligman California Municipal Quality Fund N/A N/A 245,000 7.32%
-------------------------------------------------------------------------------------------------------
Seligman Capital Fund 94,000 1.56% 5,252,000 12.41%
-------------------------------------------------------------------------------------------------------
Seligman Communications and Information Fund 1,333,000 1.26% 20,771,000 3.27%
-------------------------------------------------------------------------------------------------------
Seligman Frontier Fund 19,000 1.67% 1,294,000 14.53%
-------------------------------------------------------------------------------------------------------
Seligman Global Smaller Companies Fund 23,000 1.24% 3,794,000 16.27%
-------------------------------------------------------------------------------------------------------
Seligman Global Technology Fund 105,000 0.48% 4,597,000 6.58%
-------------------------------------------------------------------------------------------------------
Seligman Growth Fund 27,000 0.03% 2,005,000 6.46%
-------------------------------------------------------------------------------------------------------
Seligman Large-Cap Value Fund 116,000 1.86% 2,907,000 7.39%
-------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal Fund N/A N/A 98,000 7.13%
-------------------------------------------------------------------------------------------------------
Seligman National Municipal Fund N/A N/A 415,000 1.16%
-------------------------------------------------------------------------------------------------------
Seligman New York Municipal Fund N/A N/A 275,000 3.38%
-------------------------------------------------------------------------------------------------------
Seligman Smaller-Cap Value Fund 102,000 0.40% 2,722,000 6.43%
-------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 N/A N/A 1,020,000 8.70%
-------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 N/A N/A 1,085,000 8.37%
-------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 N/A N/A 328,000 13.55%
-------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 N/A N/A 191,000 19.25%
-------------------------------------------------------------------------------------------------------
Seligman TargETFund Core N/A N/A 1,787,000 6.44%
-------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets Fund 1,165,000 3.02% 28,000 0.09%
-------------------------------------------------------------------------------------------------------
Threadneedle European Equity Fund 190,000 3.09% 16,000 1.38%
-------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Fund 1,413,000 4.27% 66,000 0.62%
-------------------------------------------------------------------------------------------------------
Threadneedle Global Equity Income Fund 96,000 4.64% 5,000 1.12%
-------------------------------------------------------------------------------------------------------
Threadneedle Global Extended Alpha Fund 29,000 11.22% 1,000 0.80%
-------------------------------------------------------------------------------------------------------
Threadneedle International Opportunity Fund 789,000 3.86% 33,000 0.48%
-------------------------------------------------------------------------------------------------------
PAYMENTS TO FINANCIAL INTERMEDIARIES
The distributor and its affiliates make or support additional cash payments out
of their own resources (including profits earned from providing services to the
funds) to financial intermediaries, including payment to affiliated broker-
dealers, in connection with agreements between the distributor and financial
intermediaries pursuant to which these financial
Statement of Additional Information - [Date], 2010 Page 157
intermediaries sell fund shares and provide services to their clients who are
shareholders of the funds. These payments do not change the price paid by
investors and fund shareholders for the purchase or ownership of shares of the
funds, and these payments are not reflected in the fees and expenses of the
funds, as they are not paid by the funds. These payments are in addition to fees
paid by the funds to the distributor under 12b-1 plans, which fees may be used
to compensate financial intermediaries for the distribution of fund shares and
the servicing of fund shareholders, or paid by the funds to the transfer agent
under the transfer agent agreement or plan administration agreement, which fees
may be used to support networking or servicing fees to compensate financial
intermediaries for supporting shareholder account maintenance, sub-accounting,
plan recordkeeping or other services provided directly by the financial
intermediary to shareholders or plans and plan participants, including
retirement plans, 529 plans, Health Savings Account plans, or other plans, where
participants beneficially own shares of the funds.
These payments are typically made pursuant to an agreement between the
distributor and the financial intermediary, and are typically made in support of
marketing and sales support efforts or program and shareholder servicing, as
further described below. These payments are usually calculated based on a
percentage of fund assets owned through the financial intermediary and/or as a
percentage of fund sales attributable to the financial intermediary. Certain
financial intermediaries require flat fees instead of or in addition to these
asset-based fees as compensation for including or maintaining funds on their
platforms, and, in certain situations, may require the reimbursement of ticket
or operational charges -- fees that a financial intermediary charges its
representatives for effecting transactions in the funds. The amount of payment
varies by financial intermediary, and often is significant. In addition, the
amount of payments may differ based upon the type of fund sold or maintained;
for instance, the amount of payments for an equity fund may differ from payments
for a money-market or fixed income fund. Asset-based payments generally will be
made in a range of up to 0.25% of assets or 0.25% of sales or some combination
thereof. Exceptions to these general ranges will be considered on a case-by-case
basis. Flat fees or annual minimum fees required by a financial intermediary in
addition to such asset-based fees, are considered on a case-by-case basis.
MARKETING AND SALES SUPPORT
Payments may be paid in support of retail, institutional, plan or other fee-
based advisory program distribution efforts. These payments are typically made
by the distributor in its efforts to advertise to and/or educate the financial
intermediary's personnel, including its registered representatives, about the
fund. As a result of these payments, the distributor may obtain a higher profile
and greater visibility for the fund within the financial intermediary's
organization, including placement of the fund on the financial intermediary's
preferred or recommended list. The distributor may also obtain greater access to
sales meetings, sales representatives, and management representatives of the
financial intermediary, including potentially having increased opportunity for
fund representatives to participate in and/or present at conferences or
seminars, sales or training programs for invited registered representatives and
their clients and other events sponsored by the financial intermediary.
PROGRAM AND SHAREHOLDER SERVICING
Payments may be made in support of recordkeeping, reporting, transaction
processing, and other plan administration services provided by a financial
intermediary to or through retirement plans, 529 plans, Health Savings Account
plans, or other plans or fee-based advisory programs but may also be made in
support of certain retail advisory programs, including wrap programs. A
financial intermediary may perform program services itself or may arrange with a
third party to perform program services. These payments may also include
services rendered in connection with fund selection and monitoring, employee
enrollment and education, plan balance rollover or separation, or other similar
services.
Below is a list of firms that the distributor and its affiliates make payments
to for the above described services.
- ACS HR Solutions
- ADP Broker-Dealer, Inc.
- American Century Investment Management, Inc. and American Century Investment
Services, Inc.
- Ameriprise Financial Services, Inc./American Enterprise Investment Services,
Inc.
- Associated Securities Corp.
- Benefit Plans Administrative Services, Inc. and Community Bank System, Inc.
- Boston Financial Data Services, Inc.
- Charles Schwab Trust Co
- Charles Schwab and Company, Inc.
- Citigroup Global Markets Inc.
- Columbia Management Advisors, LLC and Columbia Management Distributors, Inc.
- Digital Retirement Solutions
- Expertplan
- Fidelity Brokerage Services/National Financial Services
- Fidelity Investments Institutional Operations Company/Fidelity Investments
Institutional Service Company
- FTJ Fund Choice
- GWFS Equities, Inc. (Fascore)
- Hartford Life Insurance Company
- Hartford Securities Distribution Company, Inc.
- ICMA-RC Services LLC
- ING Institutional Plan Services, LLC
Statement of Additional Information - [Date], 2010 Page 158
- ING Life Insurance and Annuity
- ING National Trust
- J.P. Morgan Chase Bank, N.A.
- J.P. Morgan Retirement Plan Services, LLC
- John Hancock Life Insurance Co
- John Hancock Life Insurance Co New York
- Lincoln Retirement Services Company LLC
- LPL Financial Corporation
- Massachusetts Mutual Life Insurance Company (Mass Mutual/MML)
- Mercer HR Services, LLC
- Merrill Lynch, Pierce, Fenner & Smith, Inc.
- Mid Atlantic Capital Corp
- Minnesota Life Insurance Company a/k/a Securian
- Morgan Stanley & Co., Inc.
- MSCS Financial Services, LLC (Matrix)
- Mutual Service Corporation
- Nationwide Financial/Nationwide Investment Services Corp
- Newport Retirement Services, Inc.
- NYLife Distributors LLC
- Oppenheimer & Co. Inc.
- Plan Administrators, Inc.
- Principal Life Insurance Company
- Prudential Insurance Company of America
- Prudential Investment Management Services LLC/Prudential Investments LLC
- Raymond James & Associates and Raymond James Financial Services
- RBC Capital Markets Corporation
- Reliance Trust Company
- The Retirement Plan Company, LLC
- Securities America, Inc.
- Security Trust Company
- Standard Retirement Services, Inc.
- TD Ameritrade Trust Company
- The Princeton Retirement Group and GPC Securities, Inc.
- UBS Financial Services, Inc.
- UVest Financial Services Group, Inc.
- Vanguard Fiduciary Trust Co/The Vanguard Group Inc.
- Vertical Management Systems, Inc.
- Wachovia Retirement Services
- Wachovia Bank NA
- Waterstone Financial Group, Inc.
- Wells Fargo Advisors, LLC
- Wells Fargo Bank N.A.
- Wilmington Trust Company
- Wilmington Trust Retirement and Institutional Services Company
OTHER PAYMENTS
The distributor and its affiliates may separately pay financial intermediaries
in order to participate in and/or present at conferences or seminars, sales or
training programs for invited registered representatives and other financial
intermediary employees, client and investor events and other financial
intermediary-sponsored events, and for travel expenses, including lodging
incurred by registered representatives and other employees in connection with
prospecting, asset retention and due diligence trips. The amount of these
payments varies depending upon the nature of the event. The distributor and its
affiliates make payments for such events as they deem appropriate, subject to
internal guidelines and applicable law.
From time to time, to the extent permitted by SEC and NASD rules and by other
applicable laws and regulations, the distributor and its affiliates may make
other reimbursements or payment to financial intermediaries or their registered
representatives, including non-cash compensation, in the form of gifts of
nominal value, occasional meals, tickets, or other entertainment, support for
due diligence trips, training and educational meetings or conference
sponsorships, support for recognition programs, and other forms of non-cash
compensation permissible under regulations to which these financial
intermediaries and their representatives are subject. To the extent these are
made as payments instead of reimbursement, they may provide profit to the
financial intermediary to the extent the cost of such services was less than the
actual expense of the service.
The financial intermediary through which you are purchasing or own shares of
funds has been authorized directly or indirectly by the distributor to sell
funds and/or to provide services to you as a shareholder of funds. Investors and
current shareholders may wish to take such payment arrangements into account
when considering and evaluating any recommendations they receive relating to
fund shares.
If you have questions regarding the specific details regarding the payments your
financial intermediary may receive from the distributor or its affiliates
related to your purchase or ownership of funds, please contact your financial
intermediary.
CUSTODIAN SERVICES
The funds' securities and cash are held pursuant to a custodian agreement with
JPMorgan Chase Bank, N.A. (JPMorgan), 1 Chase Manhattan Plaza, 19th Floor, New
York, NY 10005. The custodian is permitted to deposit some or all of their
Statement of Additional Information - [Date], 2010 Page 159
securities in central depository systems as allowed by federal law. For its
services, each fund pays its custodian a maintenance charge and a charge per
transaction in addition to reimbursing the custodian's out-of-pocket expenses.
As part of this arrangement, securities purchased outside the United States are
maintained in the custody of various foreign branches of JPMorgan or in other
financial institutions as permitted by law and by the fund's custodian
agreement.
BOARD SERVICES CORPORATION
The funds have an agreement with Board Services Corporation (Board Services)
located at 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402. This
agreement sets forth the terms of Board Services' responsibility to serve as an
agent of the funds for purposes of administering the payment of compensation to
each Independent Director, to provide office space for use by the funds and
their boards, and to provide any other services to the boards or the independent
members, as may be reasonably requested.
ORGANIZATIONAL INFORMATION
Each fund is an open-end management investment company. The funds' headquarters
are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268.
SHARES
The shares of a fund represent an interest in that fund's net assets only (and
profits or losses), and, in the event of liquidation, each share of a fund would
have the same rights to dividends and assets as every other share of that fund.
VOTING RIGHTS
As a shareholder in a fund, you have voting rights over the fund's management
and fundamental policies. You are entitled to vote based on your total dollar
interest in the fund. Each class, if applicable, has exclusive voting rights
with respect to matters for which separate class voting is appropriate under
applicable law. Shares of the RiverSource and Threadneedle funds have cumulative
voting rights with respect to the election of Board members. This means that you
have as many votes as the dollar amount you own, including the fractional
amount, multiplied by the number of members to be elected, all of which may, in
the shareholder's discretion, be voted for a single director. The Seligman funds
do not provide for cumulative voting rights.
DIVIDEND RIGHTS
Dividends paid by a fund, if any, with respect to each applicable class of
shares will be calculated in the same manner, at the same time, on the same day,
and will be in the same amount, except for differences resulting from
differences in fee structures.
SHAREHOLDER LIABILITY
For funds organized as Massachusetts business trusts, under Massachusetts law,
shareholders of a Massachusetts business trust may, under certain circumstances,
be held personally liable as partners for its obligation. However, the
Declaration of Trust that establishes a trust, a copy of which, together with
all amendments thereto (the "Declaration of Trust"), is on file with the office
of the Secretary of the Commonwealth of Massachusetts for each applicable fund,
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust, or of any fund in the Trust. The Declaration of Trust provides
that, if any shareholder (or former shareholder) of a fund in the Trust is
charged or held to be personally liable for any obligation or liability of the
Trust, or of any fund in the Trust, solely by reason of being or having been a
shareholder and not because of such shareholder's acts or omissions or for some
other reason, the Trust (upon request of the shareholder) shall assume the
defense against such charge and satisfy any judgment thereon, and the
shareholder or former shareholder (or the heirs, executors, administrators or
other legal representatives thereof, or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled (but solely
out of the assets of the fund of which such shareholder or former shareholder is
or was the holder of shares) to be held harmless from and indemnified against
all loss and expense arising from such liability.
The Declaration of Trust also provides that the Trust may maintain appropriate
insurance (for example, fidelity bond and errors and omissions insurance) for
the protection of the Trust, its shareholders, Trustees, officers, employees and
agents
Statement of Additional Information - [Date], 2010 Page 160
covering possible tort and other liabilities. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which both inadequate insurance existed and the Trust itself
was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Trust are not
binding upon the Trustees individually, but only upon the assets and property of
the Trust, and that the Trustees will not be liable for any action or failure to
act, errors of judgment, or mistakes of fact or law, but nothing in the
Declaration of Trust or other agreement with a Trustee protects a Trustee
against any liability to which he or she would otherwise be subject by reason of
his or her willful bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his or her office. By becoming a shareholder
of the fund, each shareholder shall be expressly held to have assented to and
agreed to be bound by the provisions of the Declaration of Trust.
TABLE 25. FUND HISTORY TABLE FOR RIVERSOURCE FAMILY OF FUNDS
FISCAL
DATE OF DATE BEGAN FORM OF STATE OF YEAR
FUND* ORGANIZATION OPERATIONS ORGANIZATION ORGANIZATION END DIVERSIFIED**
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE BOND SERIES, 4/29/81, 4/8/86(1) Corporation NV/MN 7/31
INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate 2/16/06 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Income 6/19/03 Yes
Opportunities Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Inflation 3/4/04 No
Protected Securities Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration 6/19/03 Yes
Bond Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE CALIFORNIA TAX- 4/7/86 Business Trust MA 8/31(10)
EXEMPT TRUST
----------------------------------------------------------------------------------------------------------------------
RiverSource California Tax- 8/18/86 No
Exempt Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE DIMENSIONS SERIES, 2/20/68, 4/8/86(1) Corporation NV/MN 7/31
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 5/18/06 Yes
and Mid Cap Equity Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 2/16/06 Yes
Cap Value Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE DIVERSIFIED INCOME 6/27/74, 4/8/86(1) Corporation NV/MN 8/31
SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond 10/3/74 Yes
Fund(3)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE EQUITY SERIES, 3/18/57, 4/8/86(1) Corporation NV/MN 11/30
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth 6/4/57 Yes
Fund(4)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE GLOBAL SERIES, 10/28/88 Corporation MN 10/31
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return 6/15/06 Yes
Currency and Income Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets 2/16/06 No
Bond Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond Fund 3/20/89 No
----------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Markets 11/13/96 Yes
Fund(4),(5),(11)
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 5/29/90 Yes
Fund(5),(6),(11)
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity 8/1/08 Yes
Income Fund
----------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended 8/1/08 Yes
Alpha Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE GOVERNMENT INCOME 3/12/85 Corporation MN 5/31
SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration 8/19/85 Yes
U.S. Government Fund(3)
----------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government 2/14/02 Yes
Mortgage Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE GOVERNMENT MONEY 6/29/76 1/31/77 Corporation MD 12/31 Yes
MARKET FUND, INC.(17)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE HIGH YIELD INCOME 8/17/83 Corporation MN 5/31
SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond 12/8/83 Yes
Fund(3)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE INCOME SERIES, 2/10/45; 4/8/86(1) Corporation NV/MN 1/31(7)
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 2/16/06 Yes
Basic Income Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 2/16/06 Yes
Enhanced Income Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder 2/16/06 Yes
Moderate Income Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL 5/9/01 Corporation MN 10/31
MANAGERS SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners 9/28/01 Yes
International Select Growth
Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners 9/28/01 Yes
International Select Value
Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners 10/3/02 Yes
International Small Cap
Fund(11)
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 161
FISCAL
DATE OF DATE BEGAN FORM OF STATE OF YEAR
FUND* ORGANIZATION OPERATIONS ORGANIZATION ORGANIZATION END DIVERSIFIED**
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE INTERNATIONAL 7/18/84 Corporation MN 10/31
SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined 5/18/06 Yes
International Equity Fund
----------------------------------------------------------------------------------------------------------------------
Threadneedle Asia Pacific 7/15/09 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
Threadneedle European Equity 6/26/00 Yes
Fund(5),(11)
----------------------------------------------------------------------------------------------------------------------
Threadneedle International 11/15/84 Yes
Opportunity Fund(4),(5),(11)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE INVESTMENT SERIES, 1/18/40; 4/8/86(1) Corporation NV/MN 9/30
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Balanced Fund(4) 4/16/40 Yes
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 5/17/07 Yes
Cap Growth Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 8/1/08 Yes
Cap Value Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Diversified 10/15/90 Yes
Equity Income Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value 2/14/02 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP SERIES, 5/21/70, 4/8/86(1) Corporation NV/MN 7/31
INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined 4/24/03 Yes
Equity Fund(4)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE MANAGERS SERIES, 3/20/01 Corporation MN 5/31
INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners 4/24/03 Yes
Aggressive Growth Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners 6/18/01 Yes
Fundamental Value Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select 3/8/02 Yes
Value Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 3/8/02 Yes
Cap Equity Fund(4),(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 6/18/01 Yes
Cap Value Fund(11)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE MARKET ADVANTAGE 8/25/89 Corporation MN 1/31
SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Conservative Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Moderate Conservative Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Moderate Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Moderate Aggressive Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Aggressive Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder 3/4/04 Yes
Total Equity Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index 10/25/99 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Small Company 8/19/96 Yes
Index Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE MONEY MARKET 8/22/75; 4/8/86(1) Corporation NV/MN 7/31
SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Cash Management 10/6/75 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE SECTOR SERIES, 3/25/88 Corporation MN 6/30
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Dividend 8/1/88 Yes
Opportunity Fund(8)
----------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate Fund 3/4/04 No
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE SELECTED SERIES, 10/5/84 Corporation MN 3/31
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Precious Metals 4/22/85 No
and Mining Fund(9)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE SERIES TRUST(14) 1/27/06 Business Trust MA 4/30
----------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 Contrarian 10/18/07 Yes
Equity Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Recovery and 2/19/09 No
Infrastructure Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2010 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2015 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2020 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2025 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2030 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2035 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2040 Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Retirement Plus 5/18/06 Yes
2045 Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE SHORT TERM 4/23/68, 4/8/86(1) Corporation NV/MN 7/31
INVESTMENTS SERIES, INC.(15)
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 162
FISCAL
DATE OF DATE BEGAN FORM OF STATE OF YEAR
FUND* ORGANIZATION OPERATIONS ORGANIZATION ORGANIZATION END DIVERSIFIED**
----------------------------------------------------------------------------------------------------------------------
RiverSource Short-Term Cash 9/26/06 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE SPECIAL TAX-EXEMPT 4/7/86 Business Trust MA 8/31(10)
SERIES TRUST
----------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax- 8/18/86 No
Exempt Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax- 8/18/86 No
Exempt Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE STRATEGIC 10/9/84 Corporation MN 9/30
ALLOCATION SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic 1/23/85 Yes
Allocation Fund(4)
----------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income 5/17/07 Yes
Allocation Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE STRATEGY SERIES, 1/24/84 Corporation MN 3/31
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value Fund 5/14/84 Yes
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small 1/24/01 Yes
Cap Growth Fund(11)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE TAX-EXEMPT INCOME 12/21/78; 4/8/86(1) Corporation NV/MN 11/30
SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High 5/7/79 Yes
Income Fund(4)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE TAX-EXEMPT MONEY 2/29/80, 4/8/86(1) Corporation NV/MN 12/31
MARKET SERIES, INC.(2)
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money 8/5/80 Yes
Market Fund(4)
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE TAX-EXEMPT SERIES, 9/30/76, 4/8/86(1) Corporation NV/MN 11/30
INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax- 11/13/96 Yes
Exempt Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond 11/24/76 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
RIVERSOURCE VARIABLE SERIES 9/11/07 Business Trust MA 12/31
TRUST(12)
----------------------------------------------------------------------------------------------------------------------
Disciplined Asset Allocation 5/1/08 Yes
Portfolios - Aggressive
----------------------------------------------------------------------------------------------------------------------
Disciplined Asset Allocation 5/1/08 Yes
Portfolios - Conservative
----------------------------------------------------------------------------------------------------------------------
Disciplined Asset Allocation 5/1/08 Yes
Portfolios - Moderate
----------------------------------------------------------------------------------------------------------------------
Disciplined Asset Allocation 5/1/08 Yes
Portfolios - Moderately
Aggressive
----------------------------------------------------------------------------------------------------------------------
Disciplined Asset Allocation 5/1/08 Yes
Portfolios - Moderately
Conservative
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Variable 5/1/06 Yes
Portfolio - Fundamental
Value Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Variable 2/4/04 Yes
Portfolio - Select Value
Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Partners Variable 8/14/01 Yes
Portfolio - Small Cap Value
Fund(11)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 4/30/86 Yes
Portfolio - Balanced Fund(4)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 10/31/81 Yes
Portfolio - Cash Management
Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 9/10/04 Yes
Portfolio - Core Equity Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 10/13/81 Yes
Portfolio - Diversified Bond
Fund(3)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 9/15/99 Yes
Portfolio - Diversified
Equity Income Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 10/13/81 Yes
Portfolio - Dynamic Equity
Fund(5),(16)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 5/1/96 No
Portfolio - Global Bond Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 9/13/04 No
Portfolio - Global Inflation
Protected Securities
Fund(13)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 5/1/96 Yes
Portfolio - High Yield Bond
Fund(3)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 6/1/04 Yes
Portfolio - Income
Opportunities Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 5/1/01 Yes
Portfolio - Mid Cap Growth
Fund(4)
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 5/2/05 Yes
Portfolio - Mid Cap Value
Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 5/1/00 Yes
Portfolio - S&P 500 Index
Fund
----------------------------------------------------------------------------------------------------------------------
RiverSource Variable 9/15/99 Yes
Portfolio - Short Duration
U.S. Government Fund(3)
----------------------------------------------------------------------------------------------------------------------
Seligman Variable 9/15/99 Yes
Portfolio - Growth Fund(16)
----------------------------------------------------------------------------------------------------------------------
Seligman Variable 02/4/04 Yes
Portfolio - Larger-Cap Value
Fund(16)
----------------------------------------------------------------------------------------------------------------------
Seligman Variable 9/15/99 Yes
Portfolio - Smaller-Cap
Value Fund(16)
----------------------------------------------------------------------------------------------------------------------
Threadneedle Variable 5/1/00 Yes
Portfolio - Emerging Markets
Fund(4),(5),(11)
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 163
FISCAL
DATE OF DATE BEGAN FORM OF STATE OF YEAR
FUND* ORGANIZATION OPERATIONS ORGANIZATION ORGANIZATION END DIVERSIFIED**
----------------------------------------------------------------------------------------------------------------------
Threadneedle Variable 1/13/92 Yes
Portfolio - International
Opportunity Fund(4),(5),(11)
----------------------------------------------------------------------------------------------------------------------
SELIGMAN CAPITAL FUND, INC. 10/21/68 10/9/69 Corporation MD 12/31 Yes
----------------------------------------------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND 10/8/82 6/23/83 Corporation MD 12/31 Yes
INFORMATION FUND, INC.
----------------------------------------------------------------------------------------------------------------------
SELIGMAN FRONTIER FUND, INC. 7/9/84 12/10/84 Corporation MD 10/31 Yes
----------------------------------------------------------------------------------------------------------------------
SELIGMAN GLOBAL FUND SERIES, 11/22/91 Corporation MD 10/31
INC.
----------------------------------------------------------------------------------------------------------------------
Seligman Global Smaller 9/9/92 Yes
Companies Fund
----------------------------------------------------------------------------------------------------------------------
Seligman Global Technology 5/23/94 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
SELIGMAN GROWTH FUND, INC. 1/26/37 4/1/37 Corporation MD 12/31 Yes
----------------------------------------------------------------------------------------------------------------------
SELIGMAN LASALLE REAL ESTATE 5/30/03 Corporation MD 12/31
FUND SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
RiverSource LaSalle Global 12/29/06 No
Real Estate Fund(17)
----------------------------------------------------------------------------------------------------------------------
RiverSource LaSalle Monthly 7/16/03 Yes
Dividend Real Estate
Fund(17)
----------------------------------------------------------------------------------------------------------------------
SELIGMAN MUNICIPAL FUND 8/8/83 Corporation MD 9/30
SERIES, INC.
----------------------------------------------------------------------------------------------------------------------
Seligman National Municipal 12/31/83 Yes
Class
----------------------------------------------------------------------------------------------------------------------
Seligman Minnesota Municipal 12/30/83 No
Class
----------------------------------------------------------------------------------------------------------------------
Seligman New York Municipal 1/3/84 No
Class
----------------------------------------------------------------------------------------------------------------------
SELIGMAN MUNICIPAL SERIES 7/25/84 Business Trust MA 9/30
TRUST
----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 11/20/84 No
High-Yield Series
----------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 11/20/84 No
Quality Series
----------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. 7/1/87 Corporation MD 12/31
----------------------------------------------------------------------------------------------------------------------
Seligman Capital Portfolio 6/21/88 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman Cash Management 6/21/88 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Common Stock 6/21/88 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Communications and 10/11/94 Yes
Information Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Global Technology 5/1/96 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman International Growth 5/3/93 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Investment Grade 6/21/88 Yes
Fixed Income Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Large-Cap Value 5/1/98 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
Seligman Smaller-Cap Value 5/1/98 Yes
Portfolio
----------------------------------------------------------------------------------------------------------------------
SELIGMAN TARGETHORIZON ETF 7/6/05 Corporation MD 9/30
PORTFOLIOS, INC.
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 10/3/05 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 10/3/05 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 10/2/06 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 10/2/06 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core 10/3/05 Yes
----------------------------------------------------------------------------------------------------------------------
SELIGMAN VALUE FUND SERIES, 1/27/97 Corporation MD 12/31
INC.
----------------------------------------------------------------------------------------------------------------------
Seligman Large-Cap Value Fund 4/25/97 Yes
----------------------------------------------------------------------------------------------------------------------
Seligman Smaller-Cap Value 4/25/97 Yes
Fund
----------------------------------------------------------------------------------------------------------------------
* Effective Oct. 1, 2005 American Express Funds changed its name to
RiverSource funds and the names Threadneedle and Partners were removed
from fund names.
** If a Non-diversified fund is managed as if it were a diversified fund
for a period of three years, its status under the 1940 Act will convert
automatically from Non-diversified to diversified. A diversified fund
may convert to Non-diversified status only with shareholder approval.
(1) Date merged into a Minnesota corporation incorporated on April 8, 1986.
(2) Effective April 21, 2006, AXP Discovery Series, Inc. changed its name
to RiverSource Bond Series, Inc.; AXP Fixed Income Series, Inc. changed
its name to RiverSource Diversified Income Series, Inc.; AXP Growth
Series, Inc. changed its name to RiverSource Large Cap Series, Inc.;
AXP High Yield Tax-Exempt Series, Inc. changed its name to RiverSource
Tax-Exempt Income Series, Inc.; AXP Managed Series, Inc. changed its
name to RiverSource Strategic Allocation Series, Inc.; AXP Partners
International Series, Inc. changed its name to RiverSource
International Managers Series, Inc.; AXP Partners Series, Inc. changed
its name to RiverSource Managers Series, Inc.; AXP Tax-Free Money
Series, Inc. changed its name to RiverSource Tax-Exempt Money Market
Series, Inc.; and for all other corporations and business trusts, AXP
was replaced with RiverSource in the registrant name.
Statement of Additional Information - [Date], 2010 Page 164
(3) Effective June 27, 2003, Bond Fund changed its name to Diversified Bond
Fund, Federal Income Fund changed its name to Short Duration U.S.
Government Fund and Extra Income Fund changed its name to High Yield
Bond Fund, Variable Portfolio - Bond Fund changed its name to Variable
Portfolio - Diversified Bond Fund, Variable Portfolio - Extra Income
Fund changed its name to Variable Portfolio - High Yield Bond Fund and
Variable Portfolio - Federal Income Fund changed its name to Variable
Portfolio - Short Duration U.S. Government Fund.
(4) Effective Oct. 1, 2005, Equity Select Fund changed its name to Mid Cap
Growth Fund, High Yield Tax-Exempt Fund changed its name to Tax-Exempt
High Income Fund, Managed Allocation Fund changed its name to Strategic
Allocation Fund, Mutual changed its name to Balanced Fund, Partners
Growth Fund changed its name to Fundamental Growth Fund, Partners
International Core Fund changed its name to International Equity Fund,
Partners Small Cap Core Fund changed its name to Small Cap Equity Fund,
Quantitative Large Cap Equity Fund changed its name to Disciplined
Equity Fund, Tax-Free Money Fund changed its name to Tax-Exempt Money
Market Fund, and Threadneedle International Fund changed its name to
International Opportunity Fund. Variable Portfolio - Equity Select Fund
changed its name to Variable Portfolio - Mid Cap Growth Fund, Variable
Portfolio - Threadneedle Emerging Markets Fund changed its name to
Variable Portfolio - Emerging Markets Fund, Variable
Portfolio - Threadneedle International Fund changed its name to
Variable Portfolio - International Opportunity Fund, and Variable
Portfolio - Managed Fund changed its name to Variable
Portfolio - Balanced Fund.
(5) Effective July 9, 2004, Emerging Markets Fund changed its name to
Threadneedle Emerging Markets Fund, European Equity Fund changed its
name to Threadneedle European Equity Fund, Global Equity Fund changed
its name to Threadneedle Global Equity Fund, and International Fund
changed its name to Threadneedle International Fund, Variable
Portfolio - Capital Resource Fund changed its name to Variable
Portfolio - Large Cap Equity Fund, Variable Portfolio - Emerging
Markets Fund changed its name to Variable Portfolio - Threadneedle
Emerging Markets Fund and Variable Portfolio - International Fund
changed its name to Variable Portfolio - Threadneedle International
Fund.
(6) Effective Oct. 20, 2003, Global Growth Fund changed its name to Global
Equity Fund.
(7) Effective Jan. 31, 2008, the fiscal year end was changed from May 31 to
Jan. 31.
(8) Effective Feb. 18, 2004, Utilities Fund changed its name to Dividend
Opportunity Fund.
(9) Effective Nov. 1, 2006, Precious Metals Fund changed its name to
Precious Metals and Mining Fund.
(10) Effective April 13, 2006, the fiscal year end was changed from June 30
to Aug. 31.
(11) Effective March 31, 2008, RiverSource Emerging Markets Fund changed its
name to Threadneedle Emerging Markets Fund; RiverSource Global Equity
Fund changed its name to Threadneedle Global Equity Fund; RiverSource
European Equity Fund changed its name to Threadneedle European Equity
Fund; RiverSource International Opportunity Fund changed its name to
Threadneedle International Opportunity Fund; RiverSource International
Aggressive Growth Fund changed its name to RiverSource Partners
International Select Growth Fund; RiverSource International Select
Value Fund changed its name to RiverSource Partners International
Select Value Fund; RiverSource International Small Cap Fund changed its
name to RiverSource Partners International Small Cap Fund; RiverSource
Aggressive Growth Fund changed its name to RiverSource Partners
Aggressive Growth Fund; RiverSource Fundamental Value Fund changed its
name to RiverSource Partners Fundamental Value Fund; RiverSource Select
Value Fund changed its name to RiverSource Partners Select Value Fund;
RiverSource Small Cap Equity Fund changed its name to RiverSource
Partners Small Cap Equity Fund; RiverSource Small Cap Value Fund
changed its name to RiverSource Partners Small Cap Value Fund;
RiverSource Small Cap Growth Fund changed its name to RiverSource
Partners Small Cap Growth Fund; RiverSource Variable
Portfolio - Fundamental Value Fund changed its name to RiverSource
Partners Variable Portfolio - Fundamental Value Fund; RiverSource
Variable Portfolio - Select Value Fund changed its name to RiverSource
Partners Variable Portfolio - Select Value Fund; and RiverSource
Variable Portfolio - Small Cap Value Fund changed its name to
RiverSource Partners Variable Portfolio - Small Cap Value Fund.
(12) Prior to January 2008, the assets of the funds in RiverSource Variable
Series Trust were held by funds organized under six separate Minnesota
Corporations.
(13) Effective June 8, 2005, Variable Portfolio - Inflation Protected
Securities Fund changed its name to Variable Portfolio - Global
Inflation Protected Securities Fund.
(14) Prior to September 11, 2007, RiverSource Series Trust was known as
RiverSource Retirement Series Trust.
(15) Prior to April 21, 2006, RiverSource Short Term Investments Series,
Inc. was known as AXP Stock Series, Inc.
(16) Effective May 1, 2009, RiverSource Variable Portfolio - Growth Fund
changed its name to Seligman Variable Portfolio - Growth Fund,
RiverSource Variable Portfolio - Large Cap Equity Fund changed its name
to RiverSource Variable Portfolio - Dynamic Equity Fund, RiverSource
Variable Portfolio - Large Cap Value Fund changed its name to Seligman
Variable Portfolio - Larger-Cap Value Fund, and RiverSource Variable
Portfolio - Small Cap Advantage Fund changed its name to Seligman
Variable Portfolio - Smaller-Cap Value Fund.
(17) Effective Sept. 25, 2009, Seligman Cash Management Fund, Inc. changed
its name to RiverSource Government Money Market Fund, Inc.; Seligman
LaSalle Global Real Estate Fund changed its name to RiverSource LaSalle
Global Real Estate Fund; and Seligman LaSalle Monthly Dividend Real
Estate Fund changed its name to RiverSource LaSalle Monthly Dividend
Real Estate Fund.
Statement of Additional Information - [Date], 2010 Page 165
BOARD MEMBERS AND OFFICERS
Shareholders elect a Board that oversees a fund's operations. The Board appoints
officers who are responsible for day-to-day business decisions based on policies
set by the Board. The following is a list of each fund's Board members. The
RiverSource Family of Funds consists of 132 funds, which includes 100
RiverSource funds and 32 Seligman funds. Under current Board policy, members may
serve until the next regular shareholders' meeting, until he or she reaches the
mandatory retirement age established by the Board, or the fifteenth anniversary
of the first Board meeting they attended as members of the Board.
On Nov. 7, 2008, RiverSource Investments announced the closing of its
acquisition of J. & W. Seligman & Co. Incorporated (the "Seligman Acquisition").
In connection with the Seligman Acquisition, Messrs. Leroy C. Richie and John F.
Maher, who were members of the Seligman funds' Board prior to Nov. 7, 2008,
began service on the Board after the Seligman Acquisition, which resulted in an
overall increase from ten directors to twelve for all funds.
TABLE 26. BOARD MEMBERS
INDEPENDENT BOARD MEMBERS
POSITION HELD
WITH FUNDS AND
LENGTH OF PRINCIPAL OCCUPATION OTHER COMMITTEE
NAME, ADDRESS, AGE SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS MEMBERSHIPS
----------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member Chief Justice, Minnesota None Board Governance,
901 S. Marquette Ave. since 2006 Supreme Court, 1998-2006; Compliance,
Minneapolis, MN 55402 Attorney Investment Review,
Age 55 Audit
----------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member Chair, RiverSource Family of None Board Governance,
901 S. Marquette Ave. since 1999 Funds, 1999-2006; former Compliance,
Minneapolis, MN 55402 Governor of Minnesota Contracts,
Age 75 Executive,
Investment Review
----------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member President, Springboard-Partners None Distribution,
901 S. Marquette Ave. since 2007 in Cross Cultural Leadership Investment Review,
Minneapolis, MN 55402 (consulting company) Audit
Age 55
----------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member Trustee Professor of Economics None Board Governance,
901 S. Marquette Ave. since 2004 and Management, Bentley Contracts,
Minneapolis, MN 55402 University; former Dean, Investment Review
Age 59 McCallum Graduate School of
Business, Bentley University
----------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member Attorney and Consultant None Board Governance,
901 S. Marquette Ave. since 1985 Compliance,
Minneapolis, MN 55402 Executive,
Age 74 Investment Review,
Audit
----------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member Former Managing Director, American Progressive Distribution,
901 S. Marquette Ave. since 2005 Shikiar Asset Management Insurance Executive,
Minneapolis, MN 55402 Investment Review,
Age 74 Audit
----------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the President Emeritus and Valmont Industries, Board Governance,
901 S. Marquette Ave. Board since Professor of Economics, Inc. (manufactures Compliance,
Minneapolis, MN 55402 2007, Board Carleton College irrigation systems) Contracts,
Age 70 member since Executive,
2002 Investment Review
----------------------------------------------------------------------------------------------------------------------
John F. Maher Board member Retired President and Chief None Distribution,
901 S. Marquette Ave. since 2008 Executive Officer and former Investment Review,
Minneapolis, MN 55402 Director, Great Western Audit
Age 66 Financial Corporation
(financial services), 1986-1997
----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 166
POSITION HELD
WITH FUNDS AND
LENGTH OF PRINCIPAL OCCUPATION OTHER COMMITTEE
NAME, ADDRESS, AGE SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS MEMBERSHIPS
----------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member Director, Enterprise Asset None Board Governance,
901 S. Marquette Ave. since 2004 Management, Inc. (private real Compliance,
Minneapolis, MN 55402 estate and asset management Contracts,
Age 57 company) Executive,
Investment Review
----------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. Digital Ally, Inc. Contracts,
901 S. Marquette Ave. since 2008 since 1987; Vice President and (digital imaging); Distribution,
Minneapolis, MN 55402 General Counsel, Automotive Infinity, Inc. (oil Investment Review
Age 68 Legal Affairs, Chrysler and gas exploration
Corporation, 1990-1997 and production); OGE
Energy Corp. (energy
and energy services)
----------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member Chief Executive Officer and Idera Pharmaceuticals, Contracts,
901 S. Marquette Ave. since 2002 Director, RiboNovix, Inc. since Inc. (biotechnology); Distribution,
Minneapolis, MN 55402 2003 (biotechnology); former Healthways, Inc. Executive,
Age 65 President, Aquila (health management Investment Review
Biopharmaceuticals programs)
----------------------------------------------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
POSITION HELD
WITH FUNDS AND
LENGTH OF PRINCIPAL OCCUPATION COMMITTEE
NAME, ADDRESS, AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS MEMBERSHIPS
--------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member President - U.S. Asset Management and None None
53600 Ameriprise Financial since 2001, Vice Chief Investment Officer, Ameriprise
Center President since Financial, Inc. since 2005; President,
Minneapolis, MN 55474 2002 Chairman of the Board and Chief
Age 49 Investment Officer, RiverSource
Investments, LLC since 2001; Director,
President and Chief Executive Officer,
Ameriprise Certificate Company since
2006; Chairman of the Board and Chief
Executive Officer, RiverSource
Distributors, Inc. since 2006 and of
RiverSource Fund Distributors, Inc.
since 2008; and Senior Vice
President - Chief Investment Officer,
Ameriprise Financial, Inc., 2001-2005
--------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an
officer, director, security holder and/or employee of RiverSource
Investments or Ameriprise Financial.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
funds' other officers are:
TABLE 27. FUND OFFICERS
POSITION HELD
WITH FUNDS AND
LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS, AGE SERVICE DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since Director and Senior Vice President - Asset
172 Ameriprise Financial Center 2006 Management, Products and Marketing,
Minneapolis, MN 55474 RiverSource Investments, LLC and Director and
Age 44 Vice President - Asset Management, Products
and Marketing, RiverSource Distributors, Inc.
since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Managing
Director and Global Head of Product, Morgan
Stanley Investment Management, 2004-2006;
President, Touchstone Investments, 2002-2004
--------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 167
POSITION HELD
WITH FUNDS AND
LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS, AGE SERVICE DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President Executive Vice President - Equity and Fixed
172 Ameriprise Financial Center since 2004 Income, Ameriprise Financial, Inc. and
Minneapolis, MN 55474 RiverSource Investments, LLC since 2006; Vice
Age 45 President - Investments, Ameriprise
Certificate Company since 2003; Senior Vice
President - Fixed Income, Ameriprise
Financial, Inc., 2002-2006 and RiverSource
Investments, LLC, 2004-2006
--------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President Chief Administrative Officer, RiverSource
5228 Ameriprise Financial Center since 2006 Investments, LLC since 2009; Vice
Minneapolis, MN 55474 President - Asset Management and Trust Company
Age 44 Services, RiverSource Investments, LLC, 2006-
2009; Vice President - Operations and
Compliance, RiverSource Investments, LLC,
2004-2006; Director of Product
Development - Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
--------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since Vice President - Investment Accounting,
105 Ameriprise Financial Center 2002 Ameriprise Financial, Inc. since 2002; Chief
Minneapolis, MN 55474 Financial Officer, RiverSource Distributors,
Age 54 Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008
--------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel - Asset
5228 Ameriprise Financial Center General Counsel Management, Ameriprise Financial, Inc. since
Minneapolis, MN 55474 and Secretary 2005; Chief Counsel, RiverSource Distributors,
Age 50 since 2006 Inc. and Chief Legal Officer and Assistant
Secretary, RiverSource Investments, LLC since
2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President,
General Counsel and Secretary, Ameriprise
Certificate Company since 2005; Vice
President - Asset Management Compliance,
Ameriprise Financial, Inc., 2004-2005; Senior
Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
--------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource
100 Park Avenue Officer since Investments, LLC, Ameriprise Certificate
New York, NY 10010 2009 Company and RiverSource Service Corporation
Age 58 since 2009; Chief Compliance Officer for each
of the Seligman funds since 2004; Anti Money
Laundering Prevention Officer and Identity
Theft Prevention Officer for each of the
Seligman funds, 2008-2009; Managing Director,
J. & W. Seligman & Co. Incorporated and Vice-
President for each of the Seligman funds,
2004-2008.
--------------------------------------------------------------------------------------------------
Neysa M. Alecu Anti-Money Vice President - Compliance, Ameriprise
2934 Ameriprise Financial Center Laundering Financial, Inc. since 2008; Anti-Money
Minneapolis, MN 55474 Prevention Laundering Officer, Ameriprise Financial, Inc.
Age 45 Officer since since 2005; Compliance Director, Ameriprise
2004 and Financial, Inc., 2004-2008.
Identity Theft
Prevention
Officer since
2008
--------------------------------------------------------------------------------------------------
RESPONSIBILITIES OF BOARD WITH RESPECT TO FUND MANAGEMENT
The Board initially approves an Investment Management Services Agreement and
other contracts with the investment manager and its affiliates, and other
service providers. Once the contracts are approved, the Board monitors the level
and quality of services including commitments of service providers to achieve
expected levels of investment performance and shareholder services. In addition,
the Board oversees that processes are in place to assure compliance with
applicable rules, regulations and investment policies and addresses possible
conflicts of interest. Annually, the Board evaluates the services received under
the contracts by receiving reports covering investment performance, shareholder
services, marketing, and the investment manager's profitability in order to
determine whether to continue existing contracts or negotiate new contracts.
COMMITTEES OF THE BOARD
The Board has organized the following standing committees to facilitate its
work: Board Governance Committee, Compliance Committee, Contracts Committee,
Distribution Committee, Executive Committee, Investment Review Committee and
Audit Committee. These Committees are comprised solely of Independent Directors
(persons who are not "interested persons" of the fund as that term is defined in
the 1940 Act. The table above describing each Director also includes their
respective committee memberships. The duties of these committees are described
below.
Statement of Additional Information - [Date], 2010 Page 168
Mr. Lewis, as Chair of the Board, acts as a point of contact between the
Independent Directors and the investment manager between Board meetings in
respect of general matters.
BOARD GOVERNANCE COMMITTEE -- Recommends to the Board the size, structure and
composition of the Board and its committees; the compensation to be paid to
members of the Board; and a process for evaluating the Board's performance. The
committee also reviews candidates for Board membership including candidates
recommended by shareholders. The committee also makes recommendations to the
Board regarding responsibilities and duties of the Board, oversees proxy voting
and supports the work of the Board Chair in relation to furthering the interests
of the Funds and their shareholders on external matters. The committee also
reviews candidates for Board membership, including candidates recommended by
shareholders.
To be considered as a candidate for director, recommendations must include a
curriculum vitae and be mailed to the Chair of the Board, RiverSource Family of
Funds, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. To be
timely for consideration by the committee, the submission, including all
required information, must be submitted in writing not less than 120 days before
the date of the proxy statement for the previous year's annual meeting of
stockholders, if such a meeting is held. The committee will consider only one
candidate submitted by such a shareholder or group for nomination for election
at a meeting of shareholders. The committee will not consider self-nominated
candidates or candidates nominated by members of a candidate's family, including
such candidate's spouse, children, parents, uncles, aunts, grandparents, nieces
and nephews.
The committee will consider and evaluate candidates submitted by the nominating
shareholder or group on the basis of the same criteria as those used to consider
and evaluate candidates submitted from other sources. The committee may take
into account a wide variety of factors in considering director candidates,
including (but not limited to): (i) the candidate's knowledge in matters
relating to the investment company industry; (ii) any experience possessed by
the candidate as a director or senior officer of other public or private
companies; (iii) the candidate's educational background; (iv) the candidate's
reputation for high ethical standards and personal and professional integrity;
(v) any specific financial, technical or other expertise possessed by the
candidate, and the extent to which such expertise would complement the Board's
existing mix of skills and qualifications; (vi) the candidate's perceived
ability to contribute to the ongoing functions of the Board, including the
candidate's ability and commitment to attend meetings regularly, work
collaboratively with other members of the Board and carry out his or her duties
in the best interests of the fund; (vii) the candidate's ability to qualify as
an independent director; and (viii) such other criteria as the committee
determines to be relevant in light of the existing composition of the Board and
any anticipated vacancies or other factors.
COMPLIANCE COMMITTEE -- Supports the funds' maintenance of a strong compliance
program by providing a forum for Independent Directors to consider compliance
matters impacting the Funds or their key service providers; developing and
implementing, in coordination with the funds' Chief Compliance Officer (CCO), a
process for the review and consideration of compliance reports that are provided
to the Boards; and providing a designated forum for the funds' CCO to meet with
Independent Directors on a regular basis to discuss compliance matters.
CONTRACTS COMMITTEE -- Reviews and oversees the contractual relationships with
service providers. Receives and analyzes reports covering the level and quality
of services provided under contracts with the fund and advises the Board
regarding actions taken on these contracts during the annual review process.
DISTRIBUTION COMMITTEE -- Reviews and supports product development, marketing,
sales activity and practices related to the funds and will report to the Board
as appropriate.
EXECUTIVE COMMITTEE -- Acts for the Board between meetings of the Board.
INVESTMENT REVIEW COMMITTEE -- Reviews and oversees the management of the funds'
assets. Considers investment management policies and strategies; investment
performance; risk management techniques; and securities trading practices and
reports areas of concern to the Board.
AUDIT COMMITTEE -- Oversees the accounting and financial reporting processes of
the funds and internal controls over financial reporting. Oversees the quality
and integrity of the funds' financial statements and independent audits as well
as the funds' compliance with legal and regulatory requirements relating to the
funds' accounting and financial reporting, internal controls over financial
reporting and independent audits. The committee also makes recommendations
regarding the selection of the funds' independent auditor and reviews and
evaluates the qualifications, independence and performance of the auditor.
Statement of Additional Information - [Date], 2010 Page 169
This table shows the number of times the committees met during each fund's most
recent fiscal period. The table is organized by fiscal year end. You can find
your fund's fiscal year end in Table 1.
TABLE 28. COMMITTEE MEETINGS
BOARD INVESTMENT
GOVERNANCE COMPLIANCE CONTRACTS DISTRIBUTION EXECUTIVE REVIEW AUDIT
FISCAL PERIOD COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 3 3 5 5
January 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 3 3 6 6
March 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
April 30
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
May 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
June 30
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
July 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
August 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 4 6 6
September 30
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 3 6 6
October 31
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 4 3 6 6
November 30
-----------------------------------------------------------------------------------------------------------------------
For funds with fiscal period ending 5 5 6 3 3 5 5
December 31
-----------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 170
BOARD MEMBER HOLDINGS
The following table shows the Board members' dollar range of equity securities
beneficially owned on Dec. 31, 2008 of each individual fund owned by a Board
member, and the aggregate dollar range of equity securities of all funds
overseen by the Board members.
TABLE 29. BOARD MEMBER HOLDINGS
Based on net asset values as of Dec. 31, 2008:
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz RiverSource Absolute Return Currency and $10,001-$50,000 Over $100,000
Income
------------------------------------------------------------------------
RiverSource Dividend Opportunity Over $100,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Partners Small Cap Growth $10,001-$50,000
------------------------------------------------------------------------
RiverSource Partners Small Cap Value $10,001-$50,000
------------------------------------------------------------------------
RiverSource Precious Metals and Mining $10,001-$50,000
------------------------------------------------------------------------
RiverSource Real Estate $10,001-$50,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
RiverSource Strategic Allocation Over $100,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $10,001-$50,000
------------------------------------------------------------------------
Threadneedle International Opportunity $50,001-$100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson RiverSource Cash Management $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Disciplined Equity $10,001-$50,000
------------------------------------------------------------------------
RiverSource Disciplined International $10,001-$50,000
Equity
------------------------------------------------------------------------
RiverSource Dividend Opportunity $10,001-$50,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Partners International Select $0-$10,000
Value
------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate $50,001-$100,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $10,001-$50,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 171
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton RiverSource Absolute Return Currency and $0-$10,000 $50,001-$100,000
Income
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government $50,001-$100,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn RiverSource Growth* $10,001-$50,000 Over $100,000**
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate $50,001-$100,000
Aggressive*
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Strategic Allocation* Over $100,000
------------------------------------------------------------------------
Tri-Continental Corporation $10,001-$50,000
---------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones RiverSource Disciplined Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Diversified Bond $10,001-$50,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource Global Bond Over $100,000
------------------------------------------------------------------------
RiverSource Growth Fund $0-$10,000
------------------------------------------------------------------------
RiverSource High Yield Bond Over $100,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government Over $100,000
------------------------------------------------------------------------
RiverSource Small Company Index Over $100,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $50,001-$100,000
------------------------------------------------------------------------
Threadneedle Global Equity $10,001-$50,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind RiverSource Cash Management Over $100,000 Over $100,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 172
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000**
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $10,001-$50,000
Income
------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth $10,001-$50,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income Over $100,000
------------------------------------------------------------------------
RiverSource Dividend Opportunity $10,001-$50,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Mid Cap Growth $0-$10,000
------------------------------------------------------------------------
RiverSource Portfolio Builder Total Equity $10,001-$50,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $10,001-$50,000
------------------------------------------------------------------------
Seligman Communications and Information $10,001-$50,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $10,001-$50,000
------------------------------------------------------------------------
Threadneedle Global Equity Income $10,001-$50,000
------------------------------------------------------------------------
Threadneedle International Opportunity $50,001-$100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 173
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
John F. Maher RiverSource Equity Value $0-$10,000 Over $100,000**
------------------------------------------------------------------------
RiverSource LaSalle Global Real Estate $10,001-$50,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource LaSalle Monthly Dividend Real $0-$10,000
Estate
------------------------------------------------------------------------
Seligman Capital $10,001-$50,000
------------------------------------------------------------------------
Seligman Common Stock $0-$10,000
------------------------------------------------------------------------
Seligman Communications and Information $10,001-$50,000
------------------------------------------------------------------------
Seligman Core Fixed Income $0-$10,000
------------------------------------------------------------------------
Seligman Emerging Markets $0-$10,000
------------------------------------------------------------------------
Seligman Frontier $10,001-$50,000
------------------------------------------------------------------------
Seligman Global Growth $0-$10,000
------------------------------------------------------------------------
Seligman Global Smaller Companies $0-$10,000
------------------------------------------------------------------------
Seligman Global Technology $0-$10,000
------------------------------------------------------------------------
Seligman Growth $0-$10,000
------------------------------------------------------------------------
Seligman High-Yield $0-$10,000
------------------------------------------------------------------------
Seligman Income and Growth $0-$10,000
------------------------------------------------------------------------
Seligman International Growth $10,001-$50,000
------------------------------------------------------------------------
Seligman Large-Cap Value $10,001-$50,000
------------------------------------------------------------------------
Seligman National Municipal $0-$10,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Seligman Smaller-Cap Value $0-$10,000
------------------------------------------------------------------------
Seligman U.S. Government Securities $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $50,001-$100,000
---------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia RiverSource Cash Management Over $100,000 Over $100,000**
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity Over $100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 174
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie RiverSource LaSalle International Real $0-$10,000 Over $100,000
Estate
------------------------------------------------------------------------
Seligman Capital $0-$10,000
------------------------------------------------------------------------
Seligman Common Stock $0-$10,000
------------------------------------------------------------------------
Seligman Communications and Information $0-$10,000
------------------------------------------------------------------------
Seligman Core Fixed Income $0-$10,000
------------------------------------------------------------------------
Seligman Emerging Markets $0-$10,000
------------------------------------------------------------------------
Seligman Frontier $0-$10,000
------------------------------------------------------------------------
Seligman Global Growth $0-$10,000
------------------------------------------------------------------------
Seligman Global Smaller Companies $0-$10,000
------------------------------------------------------------------------
Seligman Global Technology $0-$10,000
------------------------------------------------------------------------
Seligman Growth $0-$10,000
------------------------------------------------------------------------
Seligman High-Yield $0-$10,000
------------------------------------------------------------------------
Seligman Income and Growth $0-$10,000
------------------------------------------------------------------------
Seligman International Growth $0-$10,000
------------------------------------------------------------------------
Seligman Large-Cap Value $0-$10,000
------------------------------------------------------------------------
Seligman Michigan Municipal $0-$10,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
Seligman Smaller-Cap Value $0-$10,000
------------------------------------------------------------------------
Seligman U.S. Government Securities $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation Over $100,000
---------------------------------------------------------------------------------------------------------------------------------
Alison Taunton Rigby RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $50,001-$100,000
Income
------------------------------------------------------------------------
RiverSource Cash Management Over $100,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource Growth Fund $50,001-$100,000
------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income Over 100,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $1-$10,000
Estate
------------------------------------------------------------------------
RiverSource Mid Cap Value $10,001-$50,000
------------------------------------------------------------------------
RiverSource Partners International Select $50,001-$100,000
Growth
------------------------------------------------------------------------
RiverSource Partners Small Cap Value $10,001-$50,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $50,001-$100,000
------------------------------------------------------------------------
Seligman Select Municipal $1-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $50,001-$100,000
------------------------------------------------------------------------
Tri Continental Corporation $1-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 175
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
William F. Truscott RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $50,001-$100,000
Income
------------------------------------------------------------------------
RiverSource Cash Management $0-$10,000
------------------------------------------------------------------------
RiverSource Disciplined Equity Over $100,000
------------------------------------------------------------------------
RiverSource Disciplined International Over $100,000
Equity
------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap $10,001-$50,000
Equity
------------------------------------------------------------------------
RiverSource Diversified Bond Over $100,000
------------------------------------------------------------------------
RiverSource Dividend Opportunity Over $100,000
------------------------------------------------------------------------
RiverSource Emerging Markets Bond $10,001-$50,000
------------------------------------------------------------------------
RiverSource Floating Rate Over $100,000
------------------------------------------------------------------------
RiverSource Global Bond Over $100,000
------------------------------------------------------------------------
RiverSource Global Technology $10,001-$50,000
------------------------------------------------------------------------
RiverSource Growth $50,001- $100,000
------------------------------------------------------------------------
RiverSource High Yield Bond $10,001-$50,000
------------------------------------------------------------------------
RiverSource Income Opportunities $50,001- $100,000
------------------------------------------------------------------------
RiverSource Inflation Protected Securities $10,001-$50,000
------------------------------------------------------------------------
RiverSource LaSalle International Real $0-$10,000
Estate
------------------------------------------------------------------------
RiverSource Mid Cap Value $50,001-$100,000
------------------------------------------------------------------------
RiverSource Partners International Select Over $100,000
Growth
------------------------------------------------------------------------
RiverSource Partners International Select $10,001-$50,000
Value
------------------------------------------------------------------------
RiverSource Partners Small Cap Equity Over $100,000
------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate $50,001-$100,000
Aggressive
------------------------------------------------------------------------
RiverSource Retirement Plus 2035 $10,001-$50,000
------------------------------------------------------------------------
Seligman Select Municipal $0-$10,000
------------------------------------------------------------------------
RiverSource Strategic Allocation Over $100,000
------------------------------------------------------------------------
Strategic Income Allocation Over $100,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity Over $100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
* Deferred compensation invested in share equivalents:
A. Flynn RiverSource Growth................... $10,001-$50,000
RiverSource Portfolio Builder $50,001-$100,000
Moderate Aggressive..................
RiverSource Strategic Allocation..... Over $100,000
Statement of Additional Information - [Date], 2010 Page 176
B. Lewis RiverSource Absolute Return Currency $10,001-$50,000
and Income...........................
RiverSource Disciplined Large Cap $10,001-$50,000
Growth...............................
RiverSource Diversified Equity $50,001-$100,000
Income...............................
RiverSource Portfolio Builder Total $10,001-$50,000
Equity...............................
Threadneedle Emerging Markets........ $10,001-$50,000
Threadneedle International $50,001-$100,000
Opportunity..........................
C. Maher RiverSource Equity Value............. $0-$10,000
Seligman Capital..................... $0-$10,000
Seligman Communications & $10,001-$50,000
Information..........................
Seligman Frontier.................... $10,001-$50,000
Seligman International Growth........ $0-$10,000
Seligman Large-Cap Value............. $10,001-$50,000
RiverSource LaSalle Global Real $0-$10,000
Estate...............................
Tri-Continental Corporation.......... $10,001-$50,000
D. Paglia Threadneedle Global Equity........... Over $100,000
** Total includes deferred compensation invested in share equivalents.
This table shows the Board members' dollar range of equity securities
beneficially owned on Sept. 30, 2009 of each individual fund owned by a Board
member, and the aggregate dollar range of equity securities of all RiverSource
funds overseen by the Board member.
TABLE 29A. BOARD MEMBER HOLDINGS -- AS OF QUARTER END
Based on net asset values as of Sept. 30, 2009:
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz RiverSource Absolute Return Currency and $50,001-$100,000 Over $100,000
Income
------------------------------------------------------------------------
RiverSource Dividend Opportunity Over $100,000
------------------------------------------------------------------------
RiverSource Income Opportunities Fund $10,001-$50,000
------------------------------------------------------------------------
RiverSource Partners Small Cap Growth $10,001-$50,000
------------------------------------------------------------------------
RiverSource Partners Small Cap Value $10,001-$50,000
------------------------------------------------------------------------
RiverSource Precious Metals and Mining $10,001-$50,000
------------------------------------------------------------------------
RiverSource Real Estate $50,001-$100,000
------------------------------------------------------------------------
RiverSource Strategic Allocation Over $100,000
------------------------------------------------------------------------
Seligman Communication and Information Fund $10,001-$50,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Fund $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $10,001-$50,000
------------------------------------------------------------------------
Threadneedle International Opportunity $50,001-$100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 177
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Arne Carlson RiverSource Dividend Opportunity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate $10,001-$50,000
------------------------------------------------------------------------
RiverSource Recovery and Infrastructure $10,001-$50,000
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government $10,001-$50,000
------------------------------------------------------------------------
Seligman Communications and Information $10,001-$50,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $10,001-$50,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Pamela Carlton RiverSource Absolute Return Currency and $0-$10,000 Over $100,000**
Income
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource Floating Rate* $0-$10,000
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government $50,001-$100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn RiverSource Portfolio Builder Moderate $50,001-$100,000 Over $100,000**
Aggressive*
------------------------------------------------------------------------
RiverSource Strategic Allocation* Over $100,000
------------------------------------------------------------------------
Seligman Growth* $50,001-$100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Threadneedle International Opportunity* $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $10,001-$50,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 178
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones RiverSource Disciplined Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Diversified Bond $10,001-$50,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource Global Bond Over $100,000
------------------------------------------------------------------------
RiverSource High Yield Bond Over $100,000
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government Over $100,000
------------------------------------------------------------------------
RiverSource Small Company Index Over $100,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $50,001-$100,000
------------------------------------------------------------------------
Seligman Growth $10,001-$50,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity $10,001-$50,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind RiverSource 120/20 Contrarian Equity $50,001-$100,000 Over $100,000
------------------------------------------------------------------------
RiverSource Cash Management Over $100,000
------------------------------------------------------------------------
RiverSource Dividend Opportunity $50,001-$100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000**
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $10,001-$50,000
Income*
------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth* $10,001-$50,000
------------------------------------------------------------------------
RiverSource Diversified Bond* $50,001-$100,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income* Over $100,000
------------------------------------------------------------------------
RiverSource Dividend Opportunity $10,001-$50,000
------------------------------------------------------------------------
RiverSource Mid Cap Growth $10,001-$50,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $10,001-$50,000
------------------------------------------------------------------------
Seligman Communications and Information* $50,001-$100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets* $50,001-$100,000
------------------------------------------------------------------------
Threadneedle Global Equity Income $10,001-$50,000
------------------------------------------------------------------------
Threadneedle International Opportunity* $50,001-$100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 179
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
John F. Maher RiverSource Diversified Equity Income $10,001-$50,000 Over $100,000**
------------------------------------------------------------------------
RiverSource Equity Value $10,001-$50,000
------------------------------------------------------------------------
Seligman Communications and Information* Over $100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $10,001-$50,000
---------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia RiverSource Floating Rate* Over $100,000 Over $100,000**
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie RiverSource Balanced $0-$10,000 Over $100,000
------------------------------------------------------------------------
RiverSource Disciplined Equity $0-$10,000
------------------------------------------------------------------------
RiverSource Diversified Bond $0-$10,000
------------------------------------------------------------------------
RiverSource High Yield Bond $0-$10,000
------------------------------------------------------------------------
RiverSource Partners International Select $0-$10,000
Growth
------------------------------------------------------------------------
RiverSource Short Duration U.S. Government $0-$10,000
------------------------------------------------------------------------
Seligman Capital $0-$10,000
------------------------------------------------------------------------
Seligman Communications and Information $0-$10,000
------------------------------------------------------------------------
Seligman Frontier $0-$10,000
------------------------------------------------------------------------
Seligman Global Smaller Companies $0-$10,000
------------------------------------------------------------------------
Seligman Global Technology $0-$10,000
------------------------------------------------------------------------
Seligman Growth $0-$10,000
------------------------------------------------------------------------
Seligman Large-Cap Value $0-$10,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Seligman Smaller-Cap Value $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $0-$10,000
------------------------------------------------------------------------
Threadneedle Global Equity $0-$10,000
------------------------------------------------------------------------
Tri-Continental Corporation Over $100,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 180
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Alison Taunton Rigby RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $50,001-$100,000
Income
------------------------------------------------------------------------
RiverSource Diversified Equity Income $10,001-$50,000
------------------------------------------------------------------------
RiverSource Income Builder Enhanced Income Over 100,000
------------------------------------------------------------------------
RiverSource Mid Cap Value $50,001-$100,000
------------------------------------------------------------------------
RiverSource Partners International Select $50,001-$100,000
Growth
------------------------------------------------------------------------
RiverSource Partners Small Cap Value $50,001-$100,000
------------------------------------------------------------------------
RiverSource Strategic Allocation $50,001-$100,000
------------------------------------------------------------------------
Seligman Communications and Information $10,001-$50,000
------------------------------------------------------------------------
Seligman Growth $50,001-$100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $1-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $50,001-$100,000
------------------------------------------------------------------------
Tri-Continental Corporation $1-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 181
AGGREGATE DOLLAR RANGE
OF SHARES OWNED
DOLLAR RANGE OF SHARES IN THE RIVERSOURCE
BOARD MEMBER FUND OWNED IN THE FUND FAMILY OF FUNDS
---------------------------------------------------------------------------------------------------------------------------------
Ted Truscott RiverSource 120/20 Contrarian Equity $10,001-$50,000 Over $100,000
------------------------------------------------------------------------
RiverSource Absolute Return Currency and $50,001-$100,000
Income
------------------------------------------------------------------------
RiverSource Cash Management $0-$10,000
------------------------------------------------------------------------
RiverSource Disciplined Equity Over $100,000
------------------------------------------------------------------------
RiverSource Disciplined International Over $100,000
Equity
------------------------------------------------------------------------
RiverSource Disciplined Large Cap Growth $10,001-$50,000
------------------------------------------------------------------------
RiverSource Disciplined Large Cap Value $50,001-$100,000
------------------------------------------------------------------------
RiverSource Disciplined Small and Mid Cap $10,001-$50,000
Equity
------------------------------------------------------------------------
RiverSource Diversified Bond Over $100,000
------------------------------------------------------------------------
RiverSource Diversified Equity Income $0-$10,000
------------------------------------------------------------------------
RiverSource Dividend Opportunity $10,001-$50,000
------------------------------------------------------------------------
RiverSource Emerging Markets Bond $10,001-$50,000
------------------------------------------------------------------------
RiverSource Global Bond Over $100,000
------------------------------------------------------------------------
RiverSource High Yield Bond Over $100,000
------------------------------------------------------------------------
RiverSource Income Opportunities $50,001- $100,000
------------------------------------------------------------------------
RiverSource Inflation Protected Securities $10,001-$50,000
------------------------------------------------------------------------
RiverSource Limited Duration Bond Over $100,000
------------------------------------------------------------------------
RiverSource Mid Cap Value $50,001-$100,000
------------------------------------------------------------------------
RiverSource Partners International Select Over $100,000
Growth
------------------------------------------------------------------------
RiverSource Partners International Select $10,001-$50,000
Value
------------------------------------------------------------------------
RiverSource Partners Small Cap Equity Over $100,000
------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate $50,001-$100,000
Aggressive
------------------------------------------------------------------------
RiverSource Retirement Plus 2035 $10,001-$50,000
------------------------------------------------------------------------
RiverSource Strategic Allocation Over $100,000
------------------------------------------------------------------------
RiverSource Strategic Income Allocation Over $100,000
------------------------------------------------------------------------
Seligman Communications and Information $10,001-$50,000
------------------------------------------------------------------------
Seligman Global Technology $10,001-$50,000
------------------------------------------------------------------------
Seligman Growth Over $100,000
------------------------------------------------------------------------
Seligman LaSalle International Real Estate $0-$10,000
------------------------------------------------------------------------
Seligman National Municipal Class $0-$10,000
------------------------------------------------------------------------
Threadneedle Emerging Markets $10,001-$50,000
------------------------------------------------------------------------
Threadneedle Global Equity Over $100,000
------------------------------------------------------------------------
Tri-Continental Corporation $0-$10,000
---------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 182
* Deferred compensation invested in share equivalents:
A. Carlton RiverSource Floating Rate............ $0-$10,000
B. Flynn Seligman Growth...................... $50,001-$100,000
RiverSource Portfolio Builder $50,001-$100,000
Moderate Aggressive..................
RiverSource Strategic Allocation..... $50,001-$100,000
Threadneedle International $0-$10,000
Opportunity..........................
C. Lewis RiverSource Absolute Return Currency $10,001-$50,000
and Income...........................
RiverSource Disciplined Large Cap $10,001-$50,000
Growth...............................
RiverSource Diversified Bond......... $50,001-$100,000
RiverSource Diversified Equity $50,001-$100,000
Income...............................
Seligman Communications and $10,001-$50,000
Information..........................
Threadneedle Emerging Markets........ $10,001-$50,000
Threadneedle International $50,001-$100,000
Opportunity..........................
D. Maher Seligman Communications and Over $100,000
Information..........................
E. Paglia RiverSource Floating Rate............ Over $100,000
** Total includes deferred compensation invested in share equivalents.
As of 30 days prior to the date of this SAI, the Board members and officers as a
group owned 1.35% of RiverSource Retirement Plus 2035 Fund Class A. The Board
members and officers as a group owned less than 1% of the outstanding shares of
any class of any other fund in the RiverSource Family of Funds.
COMPENSATION OF BOARD MEMBERS
TOTAL COMPENSATION. The following table shows the total compensation paid to
independent Board members from all the funds in the last fiscal period.
TABLE 30. BOARD MEMBER COMPENSATION - ALL FUNDS
TOTAL CASH COMPENSATION FROM
BOARD MEMBER(a) FUNDS PAID TO BOARD MEMBER
----------------------------------------------------------------------------------------------
Kathleen Blatz $167,500
----------------------------------------------------------------------------------------------
Arne H. Carlson 172,500
----------------------------------------------------------------------------------------------
Pamela G. Carlton 155,000(b)
----------------------------------------------------------------------------------------------
Patricia M. Flynn 160,000(b)
----------------------------------------------------------------------------------------------
Anne P. Jones 167,500
----------------------------------------------------------------------------------------------
Jeffrey Laikind 155,000
----------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. 400,000(b)
----------------------------------------------------------------------------------------------
John F. Maher 150,000(b)
----------------------------------------------------------------------------------------------
Catherine James Paglia 172,500(b)
----------------------------------------------------------------------------------------------
Leroy Richie 160,000
----------------------------------------------------------------------------------------------
Alison Taunton-Rigby 160,000
----------------------------------------------------------------------------------------------
(a) Board member compensation is a combination of a base fee and meeting
fees, with the exception of the Chair of the Board, who receives a base
annual compensation. Payment of compensation is administered by a
company providing limited administrative services to the funds and to
the Board.
(b) Ms. Carlton, Ms. Flynn, Mr. Lewis, Mr. Maher and Ms. Paglia elected to
defer a portion of the total cash compensation payable during the period
in the amount of $56,833, $49,938, $60,000, $138,375 and $11,625,
respectively. Amount deferred by fund is set forth in Table 31.
Additional information regarding the deferred compensation plan is
described below.
The Independent Directors determine the amount of compensation that they
receive, including the amount paid to the Chair of the Board. In determining
compensation for the Independent Directors, the Independent Directors take into
account a variety of factors including, among other things, their collective
significant work experience (e.g., in business and finance, government or
academia). The Independent Directors also recognize that these individuals'
advice and counsel are in demand by other organizations, that these individuals
may reject other opportunities because the time demands of their duties as
Independent Directors, and that they undertake significant legal
responsibilities. The Independent Directors also consider the compensation paid
to independent board members of other mutual fund complexes of comparable size.
In determining the compensation paid to the Chair, the Independent Directors
take into account, among other things, the Chair's significant additional
responsibilities (e.g., setting the agenda for Board meetings, communicating or
meeting regularly with the Funds' Chief Compliance Officer, Counsel to the
Independent Directors, and the Funds' service providers) which result in a
Statement of Additional Information - [Date], 2010 Page 183
significantly greater time commitment required of the Board Chair. The Chair's
compensation, therefore, has generally been set at a level between 2.5 and 3
times the level of compensation paid to other independent Board members.
Effective Jan. 1, 2008, independent Board members are paid an annual retainer of
$95,000. Committee and sub- committee Chairs each receive an additional annual
retainer of $5,000. In addition, independent Board members are paid the
following fees for attending Board and committee meetings: $5,000 per day of in-
person Board meetings and $2,500 per day of in-person committee or sub-committee
meetings (if such meetings are not held on the same day as a Board meeting).
Independent Board members are not paid for special meetings conducted by
telephone. In 2008, the Board's Chair will receive total annual cash
compensation of $400,000.
The Independent Directors may elect to defer payment of up to 100% of the
compensation they receive in accordance with a Deferred Compensation Plan (the
Deferred Plan). Under the Deferred Plan, a Board member may elect to have his or
her deferred compensation treated as if they had been invested in shares of one
or more funds in the RiverSource Family of Funds and the amount paid to the
Board member under the Deferred Plan will be determined based on the performance
of such investments. Distributions may be taken in a lump sum or over a period
of years. The Deferred Plan will remain unfunded for federal income tax purposes
under the Internal Revenue Code of 1986, as amended. It is anticipated that
deferral of Board member compensation in accordance with the Deferred Plan will
have, at most, a negligible impact on fund assets and liabilities.
COMPENSATION FROM EACH FUND. The following table shows the compensation paid to
independent Board members from each fund during its last fiscal period.
TABLE 31. BOARD MEMBER(a) Compensation -- Individual Funds
AGGREGATE COMPENSATION FROM FUND
----------------------------------------------
FUND BLATZ CARLSON CARLTON FLYNN JONES
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
-----------------------------------------------------------------------
RiverSource Income * * * * *
Builder Basic Income
-----------------------------------------------------------------------
RiverSource Income * * * * *
Builder Enhanced Income
-----------------------------------------------------------------------
RiverSource Income * * * * *
Builder Moderate Income
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Aggressive
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Conservative
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Moderate
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Moderate
Aggressive
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Moderate
Conservative
-----------------------------------------------------------------------
RiverSource Portfolio * * * * *
Builder Total Equity
-----------------------------------------------------------------------
RiverSource S&P 500 $ 391 $ 398 $ 366 $ 375 $ 391
Index -- total
Amount deferred 0 0 14 180 0
-----------------------------------------------------------------------
RiverSource Small 1,310 1,331 1,225 1,254 1,310
Company Index -- total
Amount deferred 0 0 44 604 0
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
-----------------------------------------------------------------------
RiverSource Equity 1,924 1,967 1,800 1,855 1,924
Value -- total
Amount deferred 0 0 129 860 0
-----------------------------------------------------------------------
RiverSource Partners 329 336 308 317 329
Small Cap
Growth -- total
Amount deferred 0 0 21 147 0
-----------------------------------------------------------------------
RiverSource Precious 270 279 254 265 270
Metals and
Mining -- total
Amount deferred 0 0 25 119 0
-----------------------------------------------------------------------
AGGREGATE COMPENSATION FROM FUND
-------------------------------------------------------------
TAUNTON-
FUND LAIKIND LEWIS MAHER PAGLIA RICHIE RIGBY
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
--------------------------------------------------------------------------------------
RiverSource Income * * * * * *
Builder Basic Income
--------------------------------------------------------------------------------------
RiverSource Income * * * * * *
Builder Enhanced Income
--------------------------------------------------------------------------------------
RiverSource Income * * * * * *
Builder Moderate Income
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Aggressive
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Conservative
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Moderate
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Moderate
Aggressive
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Moderate
Conservative
--------------------------------------------------------------------------------------
RiverSource Portfolio * * * * * *
Builder Total Equity
--------------------------------------------------------------------------------------
RiverSource S&P 500 $ 364 $ 903 $ 58 $ 380 $ 90 $ 371
Index -- total
Amount deferred 0 138 36 337 0 0
--------------------------------------------------------------------------------------
RiverSource Small 1,220 3,024 181 1,273 287 1,241
Company Index -- total
Amount deferred 0 462 111 1,140 0 0
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MARCH 31
--------------------------------------------------------------------------------------
RiverSource Equity 1,787 4,319 428 1,876 621 1,829
Value -- total
Amount deferred 0 669 322 1,493 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 306 739 70 319 102 312
Small Cap
Growth -- total
Amount deferred 0 114 53 257 0 0
--------------------------------------------------------------------------------------
RiverSource Precious 251 626 81 265 108 260
Metals and
Mining -- total
Amount deferred 0 98 63 191 0 0
--------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 184
AGGREGATE COMPENSATION FROM FUND
----------------------------------------------
FUND BLATZ CARLSON CARLTON FLYNN JONES
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
-----------------------------------------------------------------------
RiverSource 120/20 100 102 93 96 99
Contrarian
Equity -- total
Amount deferred 0 0 10 42 0
-----------------------------------------------------------------------
RiverSource Recovery 29 32 27 30 29
and
Infrastructure -- total
Amount deferred 0 0 11 9 0
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2010
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2015
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2020
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2025
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2030
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2035
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2040
-----------------------------------------------------------------------
RiverSource Retirement * * * * *
Plus 2045
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
-----------------------------------------------------------------------
RiverSource High Yield 2,858 2,939 2,658 2,760 2,858
Bond -- total
Amount deferred 0 0 399 1,153 0
-----------------------------------------------------------------------
RiverSource Partners 1,019 1,042 947 978 1,019
Aggressive
Growth -- total
Amount deferred 0 0 113 424 0
-----------------------------------------------------------------------
RiverSource Partners 1,679 1,718 1,561 1,613 1,679
Fundamental
Value -- total
Amount deferred 0 0 189 697 0
-----------------------------------------------------------------------
RiverSource Partners 757 775 704 728 756
Select Value -- total
Amount deferred 0 0 94 311 0
-----------------------------------------------------------------------
RiverSource Partners 394 403 367 379 394
Small Cap
Equity -- total
Amount deferred 0 0 45 164 0
-----------------------------------------------------------------------
RiverSource Partners 913 935 849 878 913
Small Cap
Value -- total
Amount deferred 0 0 109 377 0
-----------------------------------------------------------------------
RiverSource Short
Duration U.S.
Government -- total 2,066 2,127 1,922 2,003 2,066
Amount deferred 0 0 282 838 0
-----------------------------------------------------------------------
RiverSource U.S.
Government
Mortgage -- total 959 987 892 929 959
Amount deferred 0 0 129 390 0
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
-----------------------------------------------------------------------
RiverSource Dividend 3,044 3,122 2,834 2,939 3,044
Opportunity -- total
Amount deferred 0 0 497 1,193 0
-----------------------------------------------------------------------
RiverSource Real 407 417 380 392 407
Estate -- total
Amount deferred 0 0 63 161 0
-----------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
-----------------------------------------------------------------------
RiverSource Cash 12,299 12,654 11,462 11,931 12,300
Management -- total
Amount deferred 0 0 2,287 4,694 0
-----------------------------------------------------------------------
RiverSource Disciplined 5,709 5,852 5,322 5,512 5,709
Equity -- total
Amount deferred 0 0 1,019 2,194 0
-----------------------------------------------------------------------
AGGREGATE COMPENSATION FROM FUND
-------------------------------------------------------------
TAUNTON-
FUND LAIKIND LEWIS MAHER PAGLIA RICHIE RIGBY
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING APRIL 30
--------------------------------------------------------------------------------------
RiverSource 120/20 92 225 31 97 43 95
Contrarian
Equity -- total
Amount deferred 0 34 26 65 0 0
--------------------------------------------------------------------------------------
RiverSource Recovery 27 67 27 32 30 30
and
Infrastructure -- total
Amount deferred 0 10 27 0 0 0
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2010
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2015
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2020
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2025
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2030
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2035
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2040
--------------------------------------------------------------------------------------
RiverSource Retirement * * * * * *
Plus 2045
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING MAY 31
--------------------------------------------------------------------------------------
RiverSource High Yield 2,658 6,516 1,161 2,817 1,508 2,738
Bond -- total
Amount deferred 0 990 999 1,609 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 947 2,273 338 984 461 971
Aggressive
Growth -- total
Amount deferred 0 346 282 638 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 1,561 3,739 574 1,635 783 1,600
Fundamental
Value -- total
Amount deferred 0 569 473 1,054 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 704 1,702 283 739 370 722
Select Value -- total
Amount deferred 0 259 234 454 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 367 880 136 383 183 375
Small Cap
Equity -- total
Amount deferred 0 134 112 246 0 0
--------------------------------------------------------------------------------------
RiverSource Partners 849 2,042 328 891 436 871
Small Cap
Value -- total
Amount deferred 0 311 272 559 0 0
--------------------------------------------------------------------------------------
RiverSource Short
Duration U.S.
Government -- total 1,922 4,646 846 2,069 1,151 1,983
Amount deferred 0 709 706 1,201 0 0
--------------------------------------------------------------------------------------
RiverSource U.S.
Government
Mortgage -- total 892 2,156 388 956 523 920
Amount deferred 0 329 324 559 0 0
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JUNE 30
--------------------------------------------------------------------------------------
RiverSource Dividend 2,834 6,877 1,442 3,178 1,835 2,913
Opportunity -- total
Amount deferred 0 1,047 1,241 1,681 0 0
--------------------------------------------------------------------------------------
RiverSource Real 380 921 183 423 227 389
Estate -- total
Amount deferred 0 140 158 234 0 0
--------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
--------------------------------------------------------------------------------------
RiverSource Cash 11,462 26,969 6,321 12,902 8,362 11,817
Management -- total
Amount deferred 0 4,115 5,468 6,102 0 0
--------------------------------------------------------------------------------------
RiverSource Disciplined 5,322 12,387 2,781 5,955 3,649 5,464
Equity -- total
Amount deferred 0 1,887 2,415 2,947 0 0
--------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 185
AGGREGATE COMPENSATION FROM FUND
--------------------------------------------------------------------------------------------------
TAUNTON-
FUND BLATZ CARLSON CARLTON FLYNN JONES LAIKIND LEWIS MAHER PAGLIA RICHIE RIGBY
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small $ 383 $ 396 $ 356 $ 373 $ 383 $ 356 $ 865 $ 262 $ 403 $ 319 $ 370
and Mid Cap Equity -- total
Amount deferred 0 0 98 133 0 0 132 233 118 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Small 118 122 109 114 118 110 265 76 123 91 113
Cap Value -- total
Amount deferred 0 0 29 41 0 0 40 68 39 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Floating 1,003 1,030 934 969 1,003 935 2,213 525 1,045 671 962
Rate -- total
Amount deferred 0 0 201 375 0 0 336 475 458 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Income 905 934 843 876 905 843 2,049 600 944 726 871
Opportunities -- total
Amount deferred 0 0 243 309 0 0 310 562 250 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation 2,105 2,161 1,961 2,035 2,105 1,961 4,589 1,054 2,201 1,390 2,017
Protected Securities -- total
Amount deferred 0 0 385 805 0 0 700 916 1,062 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Limited Duration 506 519 471 489 506 471 1,112 277 528 359 485
Bond -- total
Amount deferred 0 0 106 187 0 0 169 248 218 0 0
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource California Tax- 444 457 412 429 444 412 1,003 263 465 335 426
Exempt -- total
Amount deferred 0 0 98 161 0 0 153 234 179 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified 9,578 9,858 8,910 9,270 9,578 8,910 21,784 5,758 10,028 7,302 9,191
Bond -- total
Amount deferred 0 0 2,180 3,449 0 0 3,315 5,171 3,715 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota Tax- 830 855 772 804 830 772 1,887 502 870 636 797
Exempt -- total
Amount deferred 0 0 189 299 0 0 287 450 321 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource New York Tax- 147 151 137 142 147 137 334 88 154 112 141
Exempt -- total
Amount deferred 0 0 33 53 0 0 51 79 57 0 0
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced -- total 1,543 1,585 1,436 1,491 1,543 1,436 3,469 1,042 1,614 1,297 1,477
Amount deferred 0 0 392 534 0 0 529 940 477 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 952 977 883 913 952 882 2,194 730 988 850 908
Cap Growth -- total
Amount deferred 0 0 291 304 0 0 332 691 163 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined Large 330 339 305 315 330 305 770 277 341 308 314
Cap Value -- total
Amount deferred 0 0 116 97 0 0 116 273 18 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Equity 11,145 11,437 10,376 10,768 11,145 10,376 24,962 7,460 11,656 9,314 10,667
Income -- total
Amount deferred 0 0 2,800 3,875 0 0 3,806 6,697 3,540 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap 4,836 4,960 4,498 4,664 4,836 4,498 10,838 3,287 5,051 4,070 4,622
Value -- total
Amount deferred 0 0 1,242 1,665 0 0 1,651 2,970 1,461 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic 3,493 3,591 3,253 3,382 3,493 3,253 7,846 2,335 3,661 2,928 3,350
Allocation -- total
Amount deferred 0 0 873 1,219 0 0 1,197 2,091 1,124 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic Income 544 559 505 523 544 506 1,238 397 567 475 520
Allocation -- total
Amount deferred 0 0 155 179 0 0 188 369 123 0 0
----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 186
AGGREGATE COMPENSATION FROM FUND
--------------------------------------------------------------------------------------------------
TAUNTON-
FUND BLATZ CARLSON CARLTON FLYNN JONES LAIKIND LEWIS MAHER PAGLIA RICHIE RIGBY
----------------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal $ 86 $ 89 $ 79 $ 75 $ 86 $ 80 $ 194 $ 74 $ 73 $ 82 $ 82
High-Yield -- total
Amount deferred 0 0 25 20 0 0 25 68 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman California Municipal 101 105 93 88 101 94 228 87 86 97 97
Quality -- total
Amount deferred 0 0 30 23 0 0 29 20 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman Minnesota 170 176 156 148 170 157 382 146 145 162 162
Municipal -- total
Amount deferred 0 0 50 39 0 0 0 134 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman National 625 643 582 587 624 582 1,494 528 615 600 600
Municipal -- total
Amount deferred 0 0 221 171 0 0 216 517 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman New York
Municipal -- total 187 194 173 165 187 173 425 162 164 179 179
Amount deferred 0 0 57 44 0 0 55 150 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 61 62 56 52 61 56 134 52 50 58 58
2015 -- total
Amount deferred 0 0 17 14 0 0 16 47 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 69 71 64 60 69 64 154 59 58 66 66
2025 -- total
Amount deferred 0 0 20 16 0 0 19 54 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 18 19 17 16 19 17 42 16 16 18 18
2035 -- total
Amount deferred 0 0 0 0 0 0 5 15 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 10 10 9 8 10 9 23 9 9 10 10
2045 -- total
Amount deferred 0 0 3 2 0 0 0 8 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 136 140 125 116 136 125 301 116 112 129 129
Core -- total
Amount deferred 0 0 39 30 0 0 37 105 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return
Currency and Income -- total 1,356 1,410 1,252 1,322 1,356 1,252 3,201 1,017 1,446 1,306 1,306
Amount deferred 0 0 366 459 0 0 490 891 364 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined
International Equity -- total 908 931 840 873 908 840 2,166 699 951 863 863
Amount deferred 0 0 260 297 0 0 331 625 206 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Markets
Bond -- total 465 477 430 447 465 430 1,118 363 486 443 442
Amount deferred 0 0 137 150 0 0 170 330 94 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Global 1,293 1,329 1,196 1,246 1,293 1,196 3,068 970 1,361 1,232 1,232
Bond -- total
Amount deferred 0 0 361 428 0 0 469 866 318 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
International Select
Growth -- total 903 929 836 870 903 836 2,159 703 947 861 861
Amount deferred 0 0 266 293 0 0 329 637 186 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
International Select
Value -- total 2,143 2,201 1,983 2,062 2,143 1,983 5,121 1,674 2,245 2,042 2,042
Amount deferred 0 0 633 693 0 0 780 1,518 432 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners
International Small
Cap -- total 124 128 115 120 124 115 299 98 130 119 119
Amount deferred 0 0 37 40 0 0 46 89 24 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman Frontier -- total 89 92 83 77 89 82 205 76 75 85 85
Amount deferred 0 0 26 20 0 0 26 70 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Seligman Global
Technology -- total 673 691 622 595 672 622 1,581 583 594 640 640
Amount deferred 0 0 209 162 0 0 210 545 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 187
AGGREGATE COMPENSATION FROM FUND
--------------------------------------------------------------------------------------------------
TAUNTON-
FUND BLATZ CARLSON CARLTON FLYNN JONES LAIKIND LEWIS MAHER PAGLIA RICHIE RIGBY
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Asia
Pacific(a) -- total $ 22 $ 22 $ 20 $ 21 $ 22 $ 20 $ 60 $ 20 $ 22 $ 20 $ 20
Amount deferred 0 0 8 6 0 0 9 20 0 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging
Markets -- total 878 898 814 841 878 814 2,144 703 912 835 835
Amount deferred 0 0 275 276 0 0 325 656 137 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle European
Equity -- total 161 166 149 155 161 149 385 125 169 153 153
Amount deferred 0 0 47 52 0 0 59 113 34 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global 1,092 1,124 1,010 1,052 1,092 1,010 2,613 855 1,145 1,043 1,043
Equity -- total
Amount deferred 0 0 325 352 0 0 398 780 213 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity
Income -- total 54 55 50 52 54 50 131 44 56 52 52
Amount deferred 0 0 17 17 0 0 20 41 7 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Extended
Alpha -- total 16 16 14 15 16 15 38 12 16 15 15
Amount deferred 0 0 5 5 0 0 6 11 3 0 0
----------------------------------------------------------------------------------------------------------------------------------
Threadneedle International
Opportunity -- total 902 927 835 869 902 835 2,163 709 945 861 861
Amount deferred 0 0 268 291 0 0 329 642 178 0 0
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate
Tax-Exempt -- total 220 227 203 211 219 203 527 195 228 210 210
Amount deferred 0 0 75 66 0 0 80 181 16 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap
Growth -- total 1,441 1,479 1,332 1,375 1,441 1,332 3,423 1,277 1,489 1,370 1,370
Amount deferred 0 0 495 430 0 0 517 1,193 94 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
Bond -- total 1,649 1,703 1,526 1,586 1,649 1,526 3,963 1,467 1,715 1,580 1,580
Amount deferred 0 0 560 499 0 0 599 1,353 126 0 0
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
High Income -- total 5,635 5,818 5,215 5,420 5,635 5,215 13,540 5,012 5,860 5,399 5,399
Amount deferred 0 0 1,915 1,705 0 0 2,046 4,627 427 0 0
----------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
----------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt
Money Market -- total 340 344 317 325 340 317 757 25 333 69 321
Amount deferred 0 0 0 161 0 0 116 0 326 0 0
----------------------------------------------------------------------------------------------------------------------------------
* Funds-of-Funds do not pay additional compensation to the Board members
for attending meetings. Compensation is paid directly from the
underlying funds in which each Fund-of-Funds invests.
(a) For the period from July 15, 2009 (when shares became publicly
available) to Oct. 31, 2009.
The funds in the RiverSource Family of Funds, RiverSource Investments,
unaffiliated and affiliated subadvisers, and RiverSource Fund Distributors have
each adopted a Code of Ethics (collectively, the "Codes") and related procedures
reasonably designed to prevent violations of Rule 204A-1 under the Investment
Advisers Act of 1940 and Rule 17j-1 under the 1940 Act. The Codes contain
provisions reasonably necessary to prevent a fund's access persons from engaging
in any conduct prohibited by paragraph (b) of Rule 17j-1, which indicates that
it is unlawful for any affiliated person of or principal underwriter for a fund,
or any affiliated persons of an investment adviser of or principal underwriter
for a fund, in connection with the purchase or sale, directly or indirectly, by
the person of a security held or to be acquired by a fund (i) to employ any
device, scheme or artifice to defraud a fund; (ii) to make any untrue statement
of a material fact to a fund or omit to state a material fact necessary in order
to make the statements made to a fund, in light of the circumstance under which
they are made, not misleading; (iii) to engage in any act, practice or course of
business that operates or would operate as a fraud
Statement of Additional Information - [Date], 2010 Page 188
or deceit on a fund; or (iv) to engage in any manipulative practice with respect
to a fund. The Codes prohibit personnel from engaging in personal investment
activities that compete with or attempt to take advantage of planned portfolio
transactions for the funds.
Copies of the Codes are on public file with the SEC and can be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. The information on
the operation of the SEC's Public Reference Room may be obtained by calling the
SEC at 1-202-942-8090. Copies of the Codes are also available on the EDGAR
Database on the SEC's Internet site at www.sec.gov. Copies of the Codes may also
be obtained, after paying a duplicating fee, by electronic request at the
following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public
Reference Section, Washington, DC 20549-0102.
Statement of Additional Information - [Date], 2010 Page 189
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table identifies those investors who, as of 30 days after the end
of the fund's fiscal period, owned 5% or more of any class of a fund's shares
and those investors who owned 25% or more of a fund's shares (all share classes
taken together). Investors who own more than 25% of a fund's shares are presumed
under securities laws to control the fund and would be able to determine the
outcome of most issues that are submitted to shareholders for vote. The table is
organized by fiscal year end. You can find your fund's fiscal year end in Table
1.
TABLE 32. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of 30 days after the end of the fund's fiscal period:
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING JANUARY 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Charles Schwab & Co., Inc. (Charles Class A 29.57% --
Income Schwab) a brokerage firm in San
Francisco, CA
------------------------------------------------------------------------------------------
RiverSource Investments, LLC Class R4 100.00% --
(RiverSource Investments), Minneapolis,
MN
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Charles Schwab Class A 34.70% 29.83%
Income Class R4 92.71%
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 7.29% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Charles Schwab Class A 35.06% 30.11%
Income Class R4 47.05%
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 52.95% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class R4 90.68% --
Aggressive
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 9.32% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class A 6.23% --
Conservative Class R4 59.37%
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 40.63% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class R4 90.34% --
Moderate
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 9.66% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class R4 84.07% --
Moderate Aggressive
------------------------------------------------------------------------------------------
Fifth Third Bank TTEE, Cincinnati, OH Class R4 14.67% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class R4 64.94% --
Moderate Conservative
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 35.06% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Charles Schwab Class R4 91.86% --
Total Equity
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 8.14% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource S&P 500 Index Charles Schwab Class D 100.00% --
Class E 19.56%
------------------------------------------------------------------------------------------
Wachovia Bank NA (Wachovia Bank), Class E 80.41% 65.12%
Charlotte, NC
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Small Company Index Charles Schwab Class A 6.62% --
Class R4 6.67%
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 90.66% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 190
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING MARCH 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Equity Value Charles Schwab Class A 7.49% --
------------------------------------------------------------------------------------------
John C. Mullarkey, Willowbrook, IL Class C 5.31% --
------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith (MLP Class C 5.23% --
Fenner & Smith), Jacksonville, FL
------------------------------------------------------------------------------------------
RiverSource Investments Class I 100.00% --
Class R2 100.00%
Class R5 100.00%
Class W 100.00%
------------------------------------------------------------------------------------------
John Hancock Life Insurance Company, Class R4 70.10% --
Buffalo, NY
------------------------------------------------------------------------------------------
Wachovia Bank Class R3 97.73% --
Class R4 25.20%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Charles Schwab Class A 7.48% --
Small Cap Growth Class R4 98.31%
------------------------------------------------------------------------------------------
RiverSource Investments Class R2 100.00% 36.12%(a)
Class R3 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 17.44% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 25.22% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 30.71% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.95% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 17.18% --
Equity Fund
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Precious Charles Schwab Class A 12.49% --
Metals and Mining Class R4 98.30%
------------------------------------------------------------------------------------------
RiverSource Investments Class I 100.00% --
------------------------------------------------------------------------------------------
Richard L. Venable and Susan Angela Class C 6.32% --
Venable, Argyle, TX
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING APRIL 30
--------------------------------------------------------------------------------------------------------------------------------
RiverSource 120/20 RiverSource Investments Class I 100.00% --
Contrarian Equity Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 47.75% 39.07%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Recovery RiverSource Investments Class I 100.00% --
and Infrastructure Class R2 100.00%
Class R3 100.00%
Class R4 51.43%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 73.21% 64.08%
Class R4 48.57%
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 191
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 100.00% --
Plus 2010 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class A 7.59% --
Inc.
(American Enterprise Investment
Services),
Minneapolis, MN
------------------------------------------------------------------------------------------
Charles Schwab Class A 5.52% --
------------------------------------------------------------------------------------------
Jagdish N. and Madhuri J. Sheth, Class A 10.77% --
Atlanta, GA
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 100.00% 59.76%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 100.00% --
Plus 2015 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class A 5.52% --
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 100.00% 72.74%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 31.88% --
Plus 2020 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
David T. Matthiesen, Littleton, CO Class A 9.44% --
------------------------------------------------------------------------------------------
Matrix Capital Bank MSCS (Matrix Class R2 68.11% --
Capital),
Denver, CO
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 100.00% 79.30%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 18.65% --
Plus 2025 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Anthony D. and Rebecca H. Marken, Class A 6.20% --
Lexington, MA
------------------------------------------------------------------------------------------
Matrix Capital Class R2 81.34% --
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 100.00% 88.61%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 41.48% --
Plus 2030 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Dimitris Bertsimas, Belmont, MA Class A 50.21% --
------------------------------------------------------------------------------------------
John C. Bukowski, Suffern, NY Class A 5.09% --
------------------------------------------------------------------------------------------
Applied Reliability Engineering, Denver, Class R2 58.52% --
CO
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 99.99% 79.01%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 100.00% --
Plus 2035 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Gary L. and Karen L. Fournier, Class A 8.32% --
Vicksburg, MS
------------------------------------------------------------------------------------------
Richard and Stefanie A. Nelson, Class A 5.96% --
Hot Springs, SD
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 99.44% 90.38%
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 192
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 33.50% --
Plus 2040 Class R3 14.05%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Matrix Capital Class R2 66.49% --
------------------------------------------------------------------------------------------
GWFS Equities Inc. (GWFS Equities), Class R3 85.95% --
Greenwood Village, CO
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 98.75% 85.86%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Retirement RiverSource Investments Class R2 100.00% --
Plus 2045 Class R3 100.00%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Anthony D. and Rebecca H. Marken, Class A 6.45% --
Lexington, MA
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 100.00% 86.84%
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING MAY 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource High Yield Bond RiverSource Investments Class R2 27.22% --
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 29.71% --
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 24.42% --
Income
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 39.22% --
Income
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.82% --
Inc. Minneapolis, MN
------------------------------------------------------------------------------------------
Charles Schwab Class A 12.31% --
Class R4 20.13%
------------------------------------------------------------------------------------------
ING Life Insurance and Annuity, Class R3 91.93% --
Hartford, CT
Class R4 79.48%
------------------------------------------------------------------------------------------
Applied Reliability Engineering, Denver, Class R2 72.76% --
CO
------------------------------------------------------------------------------------------
Wachovia Bank Class R3 7.76% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners RiverSource Investments Class R3 20.20% --
Aggressive Growth Class R4 5.34%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 17.76% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 24.95% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 30.59% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.47% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 17.97% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class R4 87.93% --
------------------------------------------------------------------------------------------
GWFS Equities Inc. Class R2 95.37% --
------------------------------------------------------------------------------------------
Body Masters, Inc., Denver, CO Class R3 52.41% --
------------------------------------------------------------------------------------------
Central Jersey Collision, Denver, CO Class R3 29.39% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 193
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Fundamental RiverSource Portfolio Builder Aggressive Class I 17.95% 25.99%(a)
Value Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 25.18% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 30.44% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.45% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 17.77% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 10.14% --
Class R4 95.38%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Select Value RiverSource Investments Class R4 12.91% --
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 17.74% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 24.83% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 31.01% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.42% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 17.79% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 5.76% --
Class R4 87.09%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Equity RiverSource Investments Class I 100.00% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 5.89% --
Class R4 5.19%
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 94.49% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Small Cap Value RiverSource Investments Class R3 8.30% --
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 17.22% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 24.12% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 32.85% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.31% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 17.33% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 11.88% --
Class R4 92.22%
------------------------------------------------------------------------------------------
Hartford Life Insurance Company Class R2 99.33% --
(Hartford Life),
Weatogue, CT Class R3 91.70%
------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Kansas City, MO Class R5 99.97% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Short Duration U.S. RiverSource Investments Class W 100.00% --
Government
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Class I 59.22% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 40.78% --
Conservative Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 11.99% --
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 97.47% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 194
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource U.S. Government Mortgage RiverSource Income Builder Basic Income Class I 33.50% 66.83%(a)
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 17.22% --
Income
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 49.28% --
Income
------------------------------------------------------------------------------------------
RiverSource Life Insurance Company, Class R4 14.85% --
Minneapolis, MN
------------------------------------------------------------------------------------------
Charles Schwab Class A 16.85% --
Class R4 44.59%
------------------------------------------------------------------------------------------
Matrix Capital Class R4 20.60% --
------------------------------------------------------------------------------------------
Ury & Moskow, LLC Retirement Plan, Class R4 19.96% --
Fargo, ND
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING JUNE 30
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Dividend RiverSource Investments Class R2 100.00% --
Opportunity Class R3 100.00%
Class R5 56.75%
Class W 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 10.91% --
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 9.28% --
Income
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 22.66% --
Income
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 10.17% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 14.33% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 17.47% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 10.22% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 18.63% --
Class R4 100.00% --
------------------------------------------------------------------------------------------
Securian Financial Services, St. Paul, Class R5 43.25% --
MN
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Real Estate RiverSource Investments Class R4 7.19% 65.51%(a)
Class W 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 22.74% --
Income
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 18.62% --
Income
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 5.86% --
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 6.95% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 15.85% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 14.73% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 5.92% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 5.80% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 11.06% --
Class R4 92.81%
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 195
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
FOR FUNDS WITH FISCAL PERIOD ENDING JULY 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Cash RiverSource Investments Class R2 100.00% --
Management Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 23.30% --
Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 15.23% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Class I 23.02% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 20.90% --
Conservative Fund
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.91% --
------------------------------------------------------------------------------------------
J. Haley Stephens, Calhoun, GA Class C 8.42% --
------------------------------------------------------------------------------------------
Wachovia Bank Class Y 96.49% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class R2 100.00% --
Equity Class R3 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 5.51% --
Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 7.70% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 9.53% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 13.56% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 16.40% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 9.55% --
Equity Fund
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.96% --
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 99.88% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class R4 82.97% 13.03%(a)
Small and Mid Cap Equity
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Class I 7.49% --
Portfolios - Aggressive
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Class I 19.66% --
Portfolios - Moderate
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Class I 15.96% --
Portfolios - Moderately Aggressive
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Class I 9.78% --
Portfolios - Moderately Conservative
------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2015 Fund Class I 5.45% --
------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2020 Fund Class I 5.84% --
------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2025 Fund Class I 7.56% --
------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2030 Fund Class I 8.07% --
------------------------------------------------------------------------------------------
RiverSource Retirement Plus 2035 Fund Class I 5.36% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.98% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 16.28% --
Class R4 17.03%
------------------------------------------------------------------------------------------
Canio A. and Susan A. Petruzzi, Class B 5.89% --
Thomaston, CT
------------------------------------------------------------------------------------------
Lloyd E. Hackman, Fort Meyers, FL Class C 31.33% --
------------------------------------------------------------------------------------------
Jennifer Woolbright, Reston, VA Class C 8.36% --
------------------------------------------------------------------------------------------
Carl L. and Vicki L. Ulepich, Frontenac, Class C 6.42% --
KS
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 196
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class A 62.34% 79.68%(a)
Small Cap Value Class C 8.07%
Class R2 100.00%
Class R3 77.57%
Class R4 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 34.53% --
Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 19.47% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 45.98% --
Income Fund
------------------------------------------------------------------------------------------
Mary Ann Maloney, Hillsdale, MI Class B 6.31% --
------------------------------------------------------------------------------------------
Sanford A. Greentree, Westlake Vlg, CA Class C 24.89% --
------------------------------------------------------------------------------------------
Jill Thompson, Moundsview, MN Class C 11.67% --
------------------------------------------------------------------------------------------
Bea Vande Merwe, Salt Lake City, UT Class C 11.38% --
------------------------------------------------------------------------------------------
Richard T. Castiano, Fort Myers, FL Class C 9.81% --
------------------------------------------------------------------------------------------
Timothy E. Releford, New York, NY Class C 8.29% --
------------------------------------------------------------------------------------------
Eric C. Stewart, East Dubuque, IL Class C 7.14% --
------------------------------------------------------------------------------------------
Mary K. Hall, Springport, IN Class C 6.78% --
------------------------------------------------------------------------------------------
Matthew M. Harrison, Richmond, IN Class C 6.06% --
------------------------------------------------------------------------------------------
MG Trust Company, Denver, CO Class R3 22.43% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Floating Rate RiverSource Investments Class R4 7.75% 27.06%(a)
Class R5 100.00%
Class W 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 11.90% --
Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 21.50% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 39.46% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 11.27% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 7.12% --
Aggressive Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 33.73% --
Class R4 92.25%
------------------------------------------------------------------------------------------
Prudential Investment Management Class A 14.75% --
Services LLC, Newark, NJ
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Income RiverSource Portfolio Builder Aggressive Class I 9.17% --
Fund
------------------------------------------------------------------------------------------
Opportunities RiverSource Portfolio Builder Moderate Class I 39.99% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 28.96% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.12% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Enhanced Class I 6.30% --
Income Fund
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 7.70% --
Income Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 42.46% --
Class R4 38.02%
------------------------------------------------------------------------------------------
GWFS Equities Class R4 58.43% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 16.26% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 197
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Inflation RiverSource Life Insurance Company Class R4 13.67% 28.57%(a)
------------------------------------------------------------------------------------------
Protected Securities RiverSource Portfolio Builder Aggressive Class I 5.17% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Class I 11.99% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 32.83% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 20.63% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 16.29% --
Conservative Fund
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.96% --
Inc.
------------------------------------------------------------------------------------------
Charles Schwab Class A 24.12% --
Class R4 21.26%
------------------------------------------------------------------------------------------
Citigroup Global Markets (Citigroup Class C 12.04% --
Global Markets), Owings Mills, MD
------------------------------------------------------------------------------------------
Matrix Capital Bank MSCS, Denver, Co Class R4 56.89% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 9.23% --
Class R2 67.70%
------------------------------------------------------------------------------------------
Beverly J. Barren, Dickson City, PA Class R2 5.83% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Limited RiverSource Investments Class W 100.00% 42.05%(a)
------------------------------------------------------------------------------------------
Duration Bond RiverSource Portfolio Builder Class I 42.99% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 12.36% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.12% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 36.97% --
Conservative Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 28.37% --
Class R4 95.29%
------------------------------------------------------------------------------------------
Prudential Investment Management Class A 8.71% --
Services
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 21.84% --
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING AUGUST 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource California Charles Schwab Class A 5.50% --
------------------------------------------------------------------------------------------
Tax-Exempt Anna M. Hunt Woods, Playa Vista, CA Class B 5.52% --
------------------------------------------------------------------------------------------
Wells Fargo Investments LLC, Class C 13.62% --
Minneapolis, MN
------------------------------------------------------------------------------------------
Robert W. Baird & Co. Inc., Milwaukee, Class C 6.60% --
WI
------------------------------------------------------------------------------------------
First Clearing, LLC, Buza Family Trust, Class C 5.22% --
Cardiff, CA
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 198
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified Bond RiverSource Investments Class R2 12.90% --
Class R3 100.00%
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.96% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 7.77% --
------------------------------------------------------------------------------------------
Citigroup Global Markets Class C 18.12% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 8.71% --
Class R2 10.60%
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Class I 6.60% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 36.40% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 21.02% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 13.84% --
Conservative Fund
------------------------------------------------------------------------------------------
Frontier Trust Company (Frontier Trust Class R2 41.37% --
Company) FBO Thomas J. King, Fargo, ND
------------------------------------------------------------------------------------------
MG Trust Company FBO Cardinal Buses Class R2 11.67% --
Inc., Denver, CO
------------------------------------------------------------------------------------------
MG Trust Company FBO Andreini Bros. Class R2 6.59% --
Inc., Denver, CO
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 98.54% --
------------------------------------------------------------------------------------------
Patricks Plain LLC, Easton, MD Class R5 67.87% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class R5 28.83% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Minnesota None None N/A --
Tax-Exempt
--------------------------------------------------------------------------------------------------------------------------------
RiverSource New York Charles Schwab Class A 11.22% --
------------------------------------------------------------------------------------------
Tax-Exempt Emmanuel and Nina Santos, Johnstown, NY Class B 6.98% --
------------------------------------------------------------------------------------------
Leroy and Janice M. Clark, Newburgh, NY Class B 5.64% --
------------------------------------------------------------------------------------------
Thomas W. and Susan M. Noonan, Clifton Class C 13.91% --
Park, NY
------------------------------------------------------------------------------------------
Ena S. Ryan, Brooklyn, NY Class C 6.85% --
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING SEPTEMBER 30
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Balanced RiverSource Investments Class R5 38.56% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 7.66% --
Class R2 80.66%
------------------------------------------------------------------------------------------
Citigroup Global Markets Class C 5.88% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO B&L Class R2 14.39% --
Corporation
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 99.98% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class R5 57.76% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 199
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class R2 100.00% 29.22%(a)
Large Cap Growth Class R3 100.00%
Class R4 73.56%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 14.51% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 19.98% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 23.99% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 5.01% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 14.91% --
Equity Fund
------------------------------------------------------------------------------------------
Matrix Capital Class R4 26.44% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 47.00% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.99% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class B 13.40% --
Large Cap Value Class C 28.20%
Class R2 100.00%
Class R3 100.00%
Class R4 56.29%
Class R5 100.00%
------------------------------------------------------------------------------------------
RiverSource Income Builder Basic Income Class I 18.55% --
------------------------------------------------------------------------------------------
RiverSource Income Builder Moderate Class I 11.47% --
Income
------------------------------------------------------------------------------------------
RiverSource Disciplined Asset Allocation Class I 17.40% --
Portfolio Moderate
------------------------------------------------------------------------------------------
RiverSource Disciplined Asset Allocation Class I 13.26% --
Portfolio Moderately Aggressive
------------------------------------------------------------------------------------------
RiverSource Disciplined Asset Allocation Class I 7.55% --
Portfolio Moderately Conservative
------------------------------------------------------------------------------------------
RiverSource Disciplined Asset Allocation Class I 6.44% --
Portfolio Aggressive
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class W 99.99% --
Inc.
------------------------------------------------------------------------------------------
Charles Schwab Class A 5.22% --
Class R4 43.71%
------------------------------------------------------------------------------------------
Paul W. Eastman, Dublin, OH Class A 7.20% --
------------------------------------------------------------------------------------------
Michael G. and Kristine M. Boland, Inver Class A 6.73% --
Grove, MN
------------------------------------------------------------------------------------------
Richard L. and Ann Gail Monnett, Mc Class A 6.44% --
Lean, VA
------------------------------------------------------------------------------------------
Paul D. Mattingly, Brandenburg, KY Class B 25.36% --
------------------------------------------------------------------------------------------
Tseng-Yen Yen, Fullerton, CA Class B 20.47% --
------------------------------------------------------------------------------------------
Alan R. and Michael S. Vinacke, Class B 19.00% --
Chuluota, FL
------------------------------------------------------------------------------------------
Jane J. Haash, Milwaukee, WI Class B 6.33% --
------------------------------------------------------------------------------------------
Joseph M. Aquilar, Denver, CO Class C 19.21% --
------------------------------------------------------------------------------------------
Charles P. and Judith G. Price, Aurora, Class C 15.16% --
CO
------------------------------------------------------------------------------------------
Gregory L. Norgaard, Aurora, CO Class C 14.00% --
------------------------------------------------------------------------------------------
Anthony and Jeanne M. Vernell, Athens, Class C 13.16% --
OH
------------------------------------------------------------------------------------------
Dean Gabbert, Dorchester, MA Class C 5.50% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 200
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Diversified RiverSource Investments Class W 100.00% --
------------------------------------------------------------------------------------------
Equity Income RiverSource Portfolio Builder Aggressive Class I 18.11% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 24.95% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 29.91% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.26% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 18.60% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 21.38% --
------------------------------------------------------------------------------------------
Hartford Life Class R2 61.20% --
------------------------------------------------------------------------------------------
Hartford Securities Distribution Company Class R2 12.22% --
Inc., Hartford, CT
------------------------------------------------------------------------------------------
GWFS Equities Class R3 80.99% --
Class R4 9.55%
------------------------------------------------------------------------------------------
Wachovia Bank Class R2 17.75% --
Class R3 8.52%
Class R4 30.99%
Class R5 29.75%
------------------------------------------------------------------------------------------
Wells Fargo Bank Class R4 25.70% --
------------------------------------------------------------------------------------------
American Century Investments, Kansas Class R4 6.24% --
City, MO
------------------------------------------------------------------------------------------
ING Class R4 12.55% --
Class R5 32.31%
------------------------------------------------------------------------------------------
Ameriprise Trust Company Class R5 7.85% --
------------------------------------------------------------------------------------------
Taynik & Co., Boston, MA Class R5 7.73% --
------------------------------------------------------------------------------------------
Mercer Trust Company FBO Johnson Class R5 7.45% --
Outdoors Inc., Norwood, MA
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 201
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Value RiverSource Investments Class W 100.00% --
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Aggressive Class I 18.14% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 25.01% --
Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 29.79% --
Aggressive Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Moderate Class I 6.26% --
Conservative Fund
------------------------------------------------------------------------------------------
RiverSource Portfolio Builder Total Class I 18.62% --
Equity Fund
------------------------------------------------------------------------------------------
Charles Schwab Class A 31.64% --
Class R5 6.65%
------------------------------------------------------------------------------------------
Prudential Investment Management Class A 15.08% --
Services LLC, Newark, NJ
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 17.57% --
Class R5 5.28%
------------------------------------------------------------------------------------------
Citigroup Global Markets Class C 5.60% --
------------------------------------------------------------------------------------------
Hartford Life Class R2 75.44% --
Class R3 14.09%
------------------------------------------------------------------------------------------
Hartford Securities Distribution Company Class R2 5.41% --
Inc., Hartford, CT
------------------------------------------------------------------------------------------
JPMorgan Chase Bank, New York, NY Class R3 12.25% --
------------------------------------------------------------------------------------------
GWFS Equities Class R3 44.59% --
------------------------------------------------------------------------------------------
Wachovia Bank Class R3 6.31% --
Class R4 16.63%
------------------------------------------------------------------------------------------
ING Class R4 28.31% --
Class R5 12.08%
------------------------------------------------------------------------------------------
John Hancock Life Insurance Company, Class R4 22.85% --
Buffalo, NY
------------------------------------------------------------------------------------------
NFS LLC FEBO, Chicago, IL Class R5 12.73% --
------------------------------------------------------------------------------------------
PIMS/Prudential Retirement, Greenville, Class R5 9.64% --
SC
------------------------------------------------------------------------------------------
Standard Insurance Company, Portland, OR Class R5 17.20% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic RiverSource Investments Class I 100.00% --
Allocation Class R2 100.00%
Class R3 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 7.60% --
Class R4 91.62%
------------------------------------------------------------------------------------------
Fifth Third Bank TTEE FBO Speng Nath SE Class R4 8.21% --
PS, Cincinnati, OH
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Strategic RiverSource Investments Class R2 100.00% --
Income Allocation Class R3 100.00%
Class R4 6.90%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 41.85% --
Class R4 93.10%
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 202
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
Seligman California Citigroup Global Markets Class A 5.60% --
Municipal High-Yield Class C 11.36%
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 6.44% --
Class C 16.88%
------------------------------------------------------------------------------------------
Morgan Stanley & Co. (Morgan Stanley), Class A 5.86% --
Jersey
City, NJ Class C 14.95%
------------------------------------------------------------------------------------------
Christopher Ranch LLC, Gilroy, CA Class C 10.00% --
--------------------------------------------------------------------------------------------------------------------------------
Seligman California MLP Fenner & Smith Class A 5.64% --
Municipal Quality Class C 74.10%
------------------------------------------------------------------------------------------
Morgan Stanley Class A 10.89% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 8.05% --
--------------------------------------------------------------------------------------------------------------------------------
Seligman Minnesota MLP Fenner & Smith Class C 12.78% --
------------------------------------------------------------------------------------------
Municipal American Enterprise Investment Services Class C 7.46% --
Inc.
------------------------------------------------------------------------------------------
UBS Financial Services Inc. FBO Ethelyn Class C 6.14% --
C. Engel, Cold Spring, MN
--------------------------------------------------------------------------------------------------------------------------------
Seligman National Citigroup Global Markets Class A 6.91% --
Municipal Class C 11.91%
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 8.50% --
Class C 17.89%
------------------------------------------------------------------------------------------
Morgan Stanley Class C 6.73% --
--------------------------------------------------------------------------------------------------------------------------------
Seligman New York Citigroup Global Markets Class A 5.16% --
Municipal Class C 16.99%
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 8.03% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 14.31% --
--------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2015 MLP Fenner & Smith Class A 20.65% --
Class C 20.29%
Class R2 41.53%
------------------------------------------------------------------------------------------
AST Trust Company FBO Jamaica Anesthesia Class A 11.05% --
Assocs., Phoenix, AZ
------------------------------------------------------------------------------------------
Wilmington Trust FBO Medisys Health Class A 7.41% --
Network Inc., Phoenix, AZ
------------------------------------------------------------------------------------------
AST Trust Company FBO Medisys Health Class A 5.72% --
Network Inc.J, Phoenix, AZ
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Andreini Bros Class R2 17.52% --
Inc. Empl. PS Plan
------------------------------------------------------------------------------------------
Frontier Trust Company FBO SGCGJ Class R2 13.90% --
Retirement Plan
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Dearborn Mid Class R2 11.61% --
West Co. 401K
------------------------------------------------------------------------------------------
MG Trust Company FBO Plastic Coating Class R2 10.46% --
Corporation, Denver, CO
------------------------------------------------------------------------------------------
NFS LLC FEBO FMT CO Cust FBO Mark Stuart Class R5 79.44% --
Shulman, Sudbury, MA
------------------------------------------------------------------------------------------
RiverSource Investments Class R5 19.68% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 203
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2025 MLP Fenner & Smith Class A 23.76% --
Class C 28.53%
Class R2 85.82%
------------------------------------------------------------------------------------------
AST Trust Company FBO Medisys Health Class A 10.22% --
Network Inc.J, Phoenix, AZ
------------------------------------------------------------------------------------------
Frontier Trust Company FBO S.W.E.A. PC Class A 8.68% --
401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO SGCGJ Class R2 8.93% --
Retirement Plan
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class R5 89.81% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2035 RiverSource Investments Class R5 94.33% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 23.94% --
Class C 44.56%
Class R2 42.36%
------------------------------------------------------------------------------------------
Reliance Trust Co. FBO Time Acquisition Class A 27.12% --
Holding 401K, Atlanta, GA
------------------------------------------------------------------------------------------
Reliance Trust Co. FBO Finn Dixon & Class A 19.02% --
Herling 401K Plan, Atlanta, GA
------------------------------------------------------------------------------------------
New York Life Trust Company, Parsippany, Class A 5.57% --
NJ
------------------------------------------------------------------------------------------
First Clearing, LLC A/C James Drake, Class C 5.92% --
Westville, IN
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Dearborn Mid Class R2 25.67% --
West Co. 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO SGCGJ Class R2 19.90% --
Retirement Plan
--------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund 2045 RiverSource Investments Class R5 44.80% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 33.51% --
Class C 62.30%
Class R2 78.86%
------------------------------------------------------------------------------------------
Reliance Trust Co. FBO Time Acquisition Class A 20.62% --
Holding 401K, Atlanta, GA
------------------------------------------------------------------------------------------
New York Life Trust Company, Parsippany, Class A 9.87% --
NJ
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Wamore, Inc. Class R2 9.01% --
401K
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class R5 52.51% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Seligman TargETFund Core RiverSource Investments Class R5 11.58% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 21.61% --
Class C 40.42%
Class R2 77.82%
------------------------------------------------------------------------------------------
Fifth Third Bank TTEE FBO Bankwest Inc., Class A 7.27% --
Cincinnati, OH
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Dearborn Mid Class R2 11.10% --
West Co. 401K
------------------------------------------------------------------------------------------
American Enterprise Investment Services Class R5 87.88% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 204
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING OCTOBER 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Absolute Return RiverSource Investments Class R4 100.00% --
Currency and Income Class R5 100.00%
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Class I 7.69% --
Conservative Fund
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Moderate Class I 7.28% --
Fund
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Moderately Class I 7.76% --
Conservative Fund
------------------------------------------------------------------------------------------
Income Builder Basic Income Fund Class I 16.00% --
------------------------------------------------------------------------------------------
Income Builder Enhanced Income Fund Class I 11.65% --
------------------------------------------------------------------------------------------
Income Builder Moderate Income Fund Class I 43.91% --
------------------------------------------------------------------------------------------
American Enterprise Class W 99.91% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 60.74% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 9.32% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Disciplined RiverSource Investments Class R2 100.00% 28.08%(a)
International Equity Class R3 100.00%
Class R4 8.28%
Class R5 100.00%
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Moderate Class I 11.85% --
Fund
------------------------------------------------------------------------------------------
Disciplined Asset Allocation Moderately Class I 7.92% --
Aggressive Fund
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 8.11% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 11.33% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 13.48% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 8.31% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class W 99.98% --
Inc.
------------------------------------------------------------------------------------------
Charles Schwab Class A 10.66% --
Class R4 91.72%
------------------------------------------------------------------------------------------
Daniel and Linda Miklovic, St. Louis, MO Class C 6.39% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Emerging Disciplined Asset Allocation Moderate Class I 5.28% 40.87%(a)
Markets Bond Fund
Income Builder Enhanced Income Fund Class I 23.71%
------------------------------------------------------------------------------------------
Income Builder Moderate Income Fund Class I 42.49% --
------------------------------------------------------------------------------------------
Income Builder Basic Income Fund Class I 11.78% --
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 44.59% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class W 99.97% --
Inc.
------------------------------------------------------------------------------------------
Charles Schwab Class A 38.45% --
Class R4 27.29%
------------------------------------------------------------------------------------------
Matrix Capital Class R4 28.12% --
------------------------------------------------------------------------------------------
Morgan Stanley Class A 12.85% --
------------------------------------------------------------------------------------------
First Clearing, LLC, Rochester, NY Class C 7.58% --
------------------------------------------------------------------------------------------
Morgan Stanley Class C 7.30% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class C 6.12% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 205
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Global Bond Portfolio Builder Aggressive Fund Class I 7.10% 32.99%(a)
------------------------------------------------------------------------------------------
Portfolio Builder Conservative Fund Class I 7.65% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 30.72% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 26.31% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 13.68% --
Fund
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class W 99.95% --
Inc.
------------------------------------------------------------------------------------------
Charles Schwab Class A 12.28% --
Class R4 100.00%
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Charles Schwab Class A 10.95% 47.03%(a)
International Select Growth Class R4 82.52%
------------------------------------------------------------------------------------------
New York Life Trust Company Class R4 16.27% --
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 17.97% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 25.12% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 29.80% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.29% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 18.39% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 9.08% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO U.S. Tank Class R2 38.15% --
Alliance, Inc.
------------------------------------------------------------------------------------------
Frontier Trust Company FBO B&L Class R2 18.63% --
Corporation 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Financial Class R2 13.69% --
Audit, LLC 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO C. Anthony Class R2 8.86% --
Phillips Accountants
------------------------------------------------------------------------------------------
MG Trust Company FBO Claudina A. Bonilla Class R2 5.90% --
MD FCCP PA, Denver, CO
------------------------------------------------------------------------------------------
Patricks Plain LLC, Easton, MD Class R5 97.22% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Charles Schwab Class A 12.19% --
International Select Value Class R4 98.90%
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 17.99% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 25.11% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 29.76% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.30% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 18.41% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Partners Portfolio Builder Aggressive Fund Class I 17.83% 50.85%(a)
------------------------------------------------------------------------------------------
International Small Cap Portfolio Builder Moderate Fund Class I 25.47% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 30.16% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.33% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 17.77% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 9.01% --
Class R4 11.78%
------------------------------------------------------------------------------------------
Morgan Stanley Class C 14.62% --
------------------------------------------------------------------------------------------
Taynik & Co., Boston, MA Class R4 48.66% --
------------------------------------------------------------------------------------------
Massachusetts Mutual Life Insurance Co., Class R4 36.89% --
Springfield, MA
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 206
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
Seligman Frontier RiverSource Investments Class R2 9.37% --
Class R3 100.00% --
Class R4 51.23% --
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 99.50% --
------------------------------------------------------------------------------------------
Charles Schwab Class R4 48.77% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 9.02% --
Class C 21.88%
Class R2 63.03%
------------------------------------------------------------------------------------------
Citigroup Global Markets Class B 7.06% --
------------------------------------------------------------------------------------------
State Street Bank and Trust as Class B 5.48% --
Custodian,
Miami, FL
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Class R2 14.43% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Financial Class R2 6.59% --
Network Audit, LLC
------------------------------------------------------------------------------------------
Frontier Trust Company FBO C. Anthony Class R2 6.18% --
Phillps
Accountantcy 401
------------------------------------------------------------------------------------------
Gramma Fisher Foundation, Easton, MD Class R5 67.75% --
------------------------------------------------------------------------------------------
Patricks Plain LLC, Easton, MD Class R5 29.23% --
--------------------------------------------------------------------------------------------------------------------------------
Seligman Global Technology RiverSource Investments Class R3 100.00% --
Class R5 100.00%
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 18.03% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 25.13% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 29.99% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.24% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 18.44% --
------------------------------------------------------------------------------------------
Charles Schwab Class R4 93.18% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class A 8.81% --
Class B 10.15%
Class C 20.21%
Class R2 12.22%
------------------------------------------------------------------------------------------
Citigroup Global Markets Class C 5.27% --
------------------------------------------------------------------------------------------
Hartford Life Insurance Co., Hartford, Class R2 73.45% --
CT
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Deaerborn Mid Class R2 7.17% --
West Conveyor
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle Emerging Portfolio Builder Aggressive Fund Class I 18.43% --
------------------------------------------------------------------------------------------
Markets Portfolio Builder Moderate Fund Class I 25.71% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 30.55% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.51% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 18.78% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 13.50% --
Class R4 100.00%
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 39.64% --
Class R2 88.30%
------------------------------------------------------------------------------------------
RiverSource Investments Class R4 100.00% --
------------------------------------------------------------------------------------------
Patricks Plain LLC, Easton, MD Class R5 87.00% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 207
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle European RiverSource Investments Class I 100.00% --
Equity Class R4 16.14% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 9.89% --
------------------------------------------------------------------------------------------
Marilyn O. Matthews, Pasadena, CA Class C 5.48% --
------------------------------------------------------------------------------------------
MG Trust Company Cust. FBO Class R4 79.53% --
Urologic Surgery, P.C.
401K, Denver, CO
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity RiverSource Investments Class R2 45.30% --
Class R3 100.00%
Class R5 27.38%
Class W 100.00%
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 13.68% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 29.50% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 35.14% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 7.43% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 11.65% --
------------------------------------------------------------------------------------------
Charles Schwab Class A 10.22% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 7.39% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO C. Anthony Class R2 18.43% --
Phillps
Accountantcy 401
------------------------------------------------------------------------------------------
Frontier Trust Company FBO EFK Moen 401K 11.56% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Financial 11.09% --
Network Audit, LLC
------------------------------------------------------------------------------------------
MG Trust Company Cust. FBO Applied 10.24% --
Reliability
Engineering, Denver, CO
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 95.89% --
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class R5 72.62% --
Inc.
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global Equity RiverSource Investments Class I 100.00% --
Income Class R2 100.00%
Class R3 100.00%
Class R4 81.26%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 16.66% --
Class R4 18.74%
------------------------------------------------------------------------------------------
Michael A. And Mary N. Brockman, Class C 10.63% --
Fort Madison, IA
------------------------------------------------------------------------------------------
David L. and Diane M Cooper, Prescott, Class C 9.56% --
AZ
------------------------------------------------------------------------------------------
Janet K. Zimmer, Warsaw, IN Class C 7.05% --
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 208
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle Global RiverSource Investments Class C 6.99% 58.96%(a)
Extended Alpha Class I 100.00%
Class R2 100.00%
Class R3 100.00%
Class R4 12.01%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 45.04% --
Class R4 87.99%
------------------------------------------------------------------------------------------
American Enterprise Investment Services, Class B 61.97% --
Inc.
------------------------------------------------------------------------------------------
William F. and Naorma M. Paden, Yuba Class C 21.81% --
City, CA
------------------------------------------------------------------------------------------
Ronald J. Oberdick, Morristown, NJ Class C 18.56% --
------------------------------------------------------------------------------------------
Pershing LLC, Jersey City, NJ Class C 15.60% --
------------------------------------------------------------------------------------------
Michael Selig, Arlington, VA Class C 10.77% --
------------------------------------------------------------------------------------------
Poonam and Pradeep Singh, McLean, VA Class C 10.15% --
------------------------------------------------------------------------------------------
Jennifer S. Carter, Washington, D.C. Class C 8.29% --
------------------------------------------------------------------------------------------
Jon Paul and Rachel Colquitt, Clifton, Class C 7.83% --
VA
--------------------------------------------------------------------------------------------------------------------------------
Threadneedle International RiverSource Investments Class R2 100.00% 28.96%(a)
Opportunity Class R3 100.00%
Class R5 100.00%
------------------------------------------------------------------------------------------
Charles Schwab Class A 7.77% --
Class R4 80.39%
------------------------------------------------------------------------------------------
Matrix Capital Class R4 19.61% --
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 18.02% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 25.06% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 29.80% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.27% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 18.42% --
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Ed's Supply Class R2 20.34% --
Co.
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Sales West Class R2 12.03% --
Partners Inc. 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Horne Bros. Class R2 11.09% --
Construction 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Kingchem, Class R2 10.59% --
Inc. 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Natural Class R2 9.91% --
Habitat Adventures
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Tofel Class R2 9.72% --
Employee 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Woburn Daily Class R2 9.04% --
Times, Inc. 401K
------------------------------------------------------------------------------------------
Frontier Trust Company FBO Tremont Class R2 8.06% --
Electric 401K
--------------------------------------------------------------------------------------------------------------------------------
Statement of Additional Information - [Date], 2010 Page 209
FUND SHARES
---------------------
SHARE PERCENT OF FUND
FUND SHAREHOLDER NAME, CITY AND STATE CLASS PERCENTAGE (if greater than 25%)
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING NOVEMBER 30
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Intermediate Tax Exempt Charles Schwab Class A 8.06% --
------------------------------------------------------------------------------------------
First Clearing LLC, A/C T. J. Class C 5.36% --
Househmandzadeh, Cerritos, CA
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Mid Cap Growth Charles Schwab Class A 7.03% --
Class R4 9.07%
------------------------------------------------------------------------------------------
Portfolio Builder Aggressive Fund Class I 16.45% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Fund Class I 27.43% --
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Aggressive Class I 31.54% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Moderate Conservative Class I 6.84% --
Fund
------------------------------------------------------------------------------------------
Portfolio Builder Total Equity Fund Class I 15.38% --
------------------------------------------------------------------------------------------
MLP Fenner & Smith Class C 6.87% --
------------------------------------------------------------------------------------------
Morgan Stanley Class C 5.20% --
------------------------------------------------------------------------------------------
Wachovia Bank Class R4 82.55% --
------------------------------------------------------------------------------------------
US Bank NA, Milwaukee, WI Class R4 8.20% --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Bond None N/A N/A --
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt High Income None N/A N/A --
--------------------------------------------------------------------------------------------------------------------------------
FUNDS WITH FISCAL PERIOD ENDING DECEMBER 31
--------------------------------------------------------------------------------------------------------------------------------
RiverSource Tax-Exempt Money Market Lawrence Garner, Woodstock, GA and Class A 6.67% --
Ronald J. Garner, Wyckoff, NJ
------------------------------------------------------------------------------------------
Charles Schwab Class A 6.25% --
--------------------------------------------------------------------------------------------------------------------------------
(a) Combination of all share classes of RiverSource Investments initial
capital and affiliated funds-of-funds' investments in Class I shares.
A fund may serve as an underlying investment of funds-of-funds that principally
invest in shares of other funds in the RiverSource Family of Funds (the
underlying funds). The underlying funds and the funds-of-funds share the same
officers, Board members, and investment manager, RiverSource Investments. The
funds-of-funds do not invest in an underlying fund for the purpose of exercising
management or control; however, from time to time, investments by the funds-of-
funds in a fund may represent a significant portion of a fund. Because the
funds-of-funds may own a substantial portion of the shares of a fund, procedures
have been put into place to assure that public shareholders will determine the
outcome of all actions taken at underlying fund shareholder meetings. In proxy
voting, the funds-of-funds will vote on each proposal in the same proportion
that other shareholders vote on the proposal.
In addition, RiverSource Investments or an affiliate may own shares of a fund as
a result of an initial capital investment at the inception of the fund or class.
To the extent RiverSource Investments, as manager of the funds-of-funds, may be
deemed a beneficial owner of the shares of an underlying fund held by the funds-
of-funds, and such shares, together with any initial capital investment by
RiverSource Investments or an affiliate, represent more than 25% of a fund,
RiverSource Investments and its affiliated companies may be deemed to control
the fund.
INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs
Statement of Additional Information - [Date], 2010 Page 210
voluntarily agreed to transfer this case to the United States District Court for
the District of Minnesota (the "District Court"). In response to defendants'
motion to dismiss the complaint, the District Court dismissed one of plaintiffs'
four claims and granted plaintiffs limited discovery. Defendants moved for
summary judgment in April 2007. Summary judgment was granted in the defendants'
favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth
Circuit Court of Appeals (the "Eighth Circuit") on Aug. 8, 2007. On April 8,
2009, the Eighth Circuit reversed summary judgment and remanded to the District
Court for further proceedings. On August 6, 2009, defendants filed a writ of
certiorari with the U.S. Supreme Court, asking the U.S. Supreme Court to stay
the District Court proceedings while the U.S. Supreme Court considers and rules
in a case captioned Jones v. Harris Associates, which involves issues of law
similar to those presented in the Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Family of Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J.&W. Seligman & Co., Inc. ("Seligman"). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the "Seligman Funds"); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York ("NYAG").
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (which is now known as
RiverSource Fund Distributors, Inc.), Seligman Data Corp. and Brian T. Zino
(collectively, the "Seligman Parties"), alleging, in substance, that the
Seligman Parties permitted various persons to engage in frequent trading and, as
a result, the prospectus disclosure used by the registered investment companies
then managed by Seligman was and had been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman paid $11.3 million to four Seligman
Funds. This settlement resolved all outstanding matters between the Seligman
Parties and the NYAG. In addition to the foregoing matter, the New York staff of
the SEC indicated in September 2005 that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds.
Seligman responded to the staff in October 2005 that it believed that any action
would be both inappropriate and unnecessary, especially in light of the fact
that Seligman had previously resolved the underlying issue with the Independent
Directors of the Seligman Funds and made recompense to the affected Seligman
Funds. There have been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
Statement of Additional Information - [Date], 2010 Page 211
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
For RiverSource funds, the financial statements for the fiscal years ended on or
after July 31, 2007, and for Seligman funds, the financial statements for the
fiscal years ended on or after Sept. 30, 2009 contained in a fund's Annual
Report were audited by the independent registered public accounting firm, Ernst
& Young LLP, 220 South 6th Street, Suite 1400, Minneapolis, MN 55402. The
independent registered public accounting firm also provides other accounting and
tax-related services as requested by the funds. For RiverSource funds, the
financial statements for periods ended on or before June 30, 2007 were audited
by other auditors. For Seligman funds, the financial statements for periods
ended on or before Oct. 31, 2008 were audited by Deloitte & Touche LLP.
Statement of Additional Information - [Date], 2010 Page 212
APPENDIX A
DESCRIPTION OF RATINGS
STANDARD & POOR'S LONG-TERM DEBT RATINGS.
A Standard & Poor's corporate or municipal debt rating is a current assessment
of the creditworthiness of an obligor with respect to a specific obligation.
This assessment may take into consideration obligors such as guarantors,
insurers, or lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or obtained
by S&P from other sources it considers reliable. S&P does not perform an audit
in connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in, or unavailability of such information or based on other
circumstances.
The ratings are based, in varying degrees, on the following considerations:
- Likelihood of default capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation.
- Nature of and provisions of the obligation.
- Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
Debt rated AAA has the highest rating assigned by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong.
Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the highest rated issues only in a small degree.
Debt rated A has a strong capacity to pay interest and repay principal, although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher-rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
also is used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
Debt rated CCC has a currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
Debt rated CC typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
Debt rated C typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued.
The rating CI is reserved for income bonds on which no interest is being paid.
Statement of Additional Information - [Date], 2010 A-1
Debt rated D is in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
MOODY'S LONG-TERM DEBT RATINGS
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risk appear somewhat larger than in Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment some time in the future.
Baa - Bonds that are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative elements - their
future cannot be considered as well- assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH'S LONG-TERM DEBT RATINGS
Fitch's bond ratings provide a guide to investors in determining the credit risk
associated with a particular security. The ratings represent Fitch's assessment
of the issuer's ability to meet the obligations of a specific debt issue in a
timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guaranties unless otherwise indicated.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings
do not comment on the adequacy of market price, the suitability of any security
for a particular investor, or the tax-exempt nature of taxability of payments
made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information.
Ratings may be changed, suspended, or withdrawn as a result of changes in, or
the unavailability of, information or for other reasons.
INVESTMENT GRADE
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
Statement of Additional Information - [Date], 2010 A-2
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
SPECULATIVE GRADE
BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified, which could assist the
obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D: Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
SHORT-TERM RATINGS
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market.
Ratings are graded into several categories, ranging from A-1 for the highest
quality obligations to D for the lowest. These categories are as follows:
A-1 This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
B Issues are regarded as having only speculative capacity for timely
payment.
C This rating is assigned to short-term debt obligations with doubtful
capacity for payment.
D Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.
STANDARD & POOR'S MUNI BOND AND NOTE RATINGS
An S&P municipal bond or note rating reflects the liquidity factors and market-
access risks unique to these instruments. Notes maturing in three years or less
will likely receive a note rating. Notes maturing beyond three years will most
likely receive a long-term debt rating.
Statement of Additional Information - [Date], 2010 A-3
Note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined to possess
very strong characteristics are given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of
the notes.
SP-3 Speculative capacity to pay principal and interest.
Municipal bond rating symbols and definitions are as follows:
Standard & Poor's rating SP-1 indicates very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
Standard & Poor's rating SP-2 indicates satisfactory capacity to pay principal
and interest.
Standard & Poor's rating SP-3 indicates speculative capacity to pay principal
and interest.
MOODY'S SHORT-TERM RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Issuers rated Prime-1 (or supporting institutions) have a superior ability for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics: (i) leading market
positions in well-established industries, (ii) high rates of return on funds
employed, (iii) conservative capitalization structure with moderate reliance on
debt and ample asset protection, (iv) broad margins in earnings coverage of
fixed financial charges and high internal cash generation, and (v) well
established access to a range of financial markets and assured sources of
alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above, but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or supporting institutions) have an acceptable ability
for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
MOODY'S SHORT-TERM MUNI BONDS AND NOTES
Short-term municipal bonds and notes are rated by Moody's. The ratings reflect
the liquidity concerns and market access risks unique to notes.
Moody's MIG 1/VMIG 1 indicates the best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
Moody's MIG 2/VMIG 2 indicates high quality. Margins of protection are ample
although not so large as in the preceding group.
Moody's MIG 3/VMIG 3 indicates favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
Moody's MIG 4/VMIG 4 indicates adequate quality. Protection commonly regarded as
required of an investment security is present and although not distinctly or
predominantly speculative, there is specific risk.
FITCH'S SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes. The
Statement of Additional Information - [Date], 2010 A-4
short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment
default.
Statement of Additional Information - [Date], 2010 A-5
APPENDIX B
STATE TAX-EXEMPT FUNDS
STATE RISK FACTORS
The State Tax-Exempt Funds invest primarily in the municipal securities issued
by a single state and political sub-divisions that state. Each Fund will be
particularly affected by political and economic conditions and developments in
the state in which it invests. This vulnerability to factors affecting the
state's tax- exempt investments will be significantly greater than that of more
geographically diversified funds, which may result in greater losses and
volatility. Because of the relatively small number of issuers of tax-exempt
securities, the Fund may invest a higher percentage of assets in a single issuer
and, therefore, be more exposed to the risk of loss by investing in a few
issuers than a fund that invests more broadly. At times, the Fund and other
accounts managed by the investment manager may own all or most of the debt of a
particular issuer. This concentration of ownership may make it more difficult to
sell, or to determine the fair value of, these investments. In addition, a Fund
may concentrate in a segment of the tax-exempt debt market, such as revenue
bonds for health care facilities, housing or airports. These investments may
cause the value of a fund's shares to change more than the values of funds'
shares that invest in more diversified investments. The yields on the securities
in which the Fund invests generally are dependent on a variety of factors,
including the financial condition of the issuer or other obligor, the revenue
source from which the debt service is payable, general economic and monetary
conditions, conditions in the relevant market, the size of a particular issue,
the maturity of the obligation, and the rating of the issue. In addition to such
factors, geographically concentrated securities will experience particular
sensitivity to local conditions, including political and economic changes,
adverse conditions to an industry significant to the area, and other
developments within a particular locality. Because many tax-exempt bonds may be
revenue or general obligations of local governments or authorities, ratings on
tax-exempt bonds may be different from the ratings given to the general
obligation bonds of a particular state.
Certain events may adversely affect all investments within a particular market
segment of the market. Examples include litigation, legislation or court
decisions, concerns about pending or contemplated litigation, legislation or
court decisions, or lower demand for the services or products provided by a
particular market segment. Investing mostly in state-specific tax-exempt
investments makes the Fund more vulnerable to that state's economy and to
factors affecting tax-exempt issuers in that state than would be true for more
geographically diversified funds. These risks include, among others:
- the inability or perceived inability of a government authority to collect
sufficient tax or other revenues to meet its payment obligations;
- natural disasters and ecological or environmental concerns;
- the introduction of constitutional or statutory limits on a tax-exempt
issuer's ability to raise revenues or increase taxes;
- the inability of an issuer to pay interest on or repay principal or
securities in which the funds invest during recessionary periods; and
- economic or demographic factors that may cause a decrease in tax or other
revenues for a government authority or for private operators of publicly
financed facilities.
More information about state specific risks may be available from official state
resources.
Statement of Additional Information - [Date], 2010 B-1
APPENDIX C
RIVERSOURCE S&P 500 INDEX FUND
ADDITIONAL INFORMATION ABOUT THE S&P 500 INDEX
The fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, express or implied, to the shareholders of the Fund
or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the S&P 500
Index to track general stock market performance. S&P's only relationship to the
Fund is the licensing of certain trademarks and trade names of S&P and of the
S&P 500 Index, which are determined, composed and calculated by S&P without
regard to the Fund. S&P has no obligation to take the needs of the Fund or its
shareholders into consideration in determining, composing or calculating the S&P
500 Index. S&P is not responsible for and has not participated in the
determination of the prices and amount of the Fund or the timing of the issuance
or sale of the Fund or in the determination or calculation of the equation by
which the Fund's shares are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of Fund
shares.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN (THE S&P INDEX) AND S&P SHALL HAVE NO LIABILITY FOR
ANY ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, ITS SHAREHOLDERS OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Statement of Additional Information - [Date], 2010 C-1
APPENDIX D
CLASS A - CALCULATION OF THE SALES CHARGE
Sales charges are determined as shown in the following tables. The first table
is organized by investment category. You can find your fund's investment
category in Table 1.
TABLE 9. CLASS A INITIAL SALES CHARGE
For all funds EXCEPT Absolute Return Currency and Income, Floating Rate,
Inflation Protected Securities, Intermediate Tax-Exempt, Limited Duration Bond
and Short Duration U.S. Government:
---------------------------------------------------------------------------------
FUND-OF-FUNDS - FIXED
INCOME, STATE TAX-EXEMPT
FIXED INCOME, TAXABLE FIXED
BALANCED, EQUITY, FUND-OF- INCOME, TAX-EXEMPT FIXED
FUNDS - EQUITY INCOME
----------------------------------------------------------
FUND CATEGORY SALES CHARGE(a) AS A PERCENTAGE OF:
---------------------------------------------------------------------------------
PUBLIC PUBLIC
OFFERING NET AMOUNT OFFERING NET AMOUNT
TOTAL MARKET VALUE PRICE(b) INVESTED PRICE(b) INVESTED
---------------------------------------------------------------------------------
Up to $49,999 5.75% 6.10% 4.75% 4.99%
---------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.99% 4.25% 4.44%
---------------------------------------------------------------------------------
$100,000 - $249,999 3.50% 3.63% 3.50% 3.63%
---------------------------------------------------------------------------------
$250,000 - $499,999 2.50% 2.56% 2.50% 2.56%
---------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 2.04% 2.00% 2.04%
---------------------------------------------------------------------------------
$1,000,000 or
more(c),(d) 0.00% 0.00% 0.00% 0.00%
---------------------------------------------------------------------------------
For Absolute Return Currency and Income, Floating Rate, Inflation Protected
Securities, Intermediate Tax-Exempt, Limited Duration Bond and Short Duration
U.S. Government:
-----------------------------------------------------------------------------------------
SALES CHARGE(a) AS A
PERCENTAGE OF SALES CHARGE(a) AS A
PUBLIC OFFERING PERCENTAGE OF
TOTAL MARKET VALUE PRICE(b) NET AMOUNT INVESTED
-----------------------------------------------------------------------------------------
Up to $49,999 3.00% 3.09%
-----------------------------------------------------------------------------------------
$50,000 - $99,999 3.00% 3.09%
-----------------------------------------------------------------------------------------
$100,000 - $249,999 2.50% 2.56%
-----------------------------------------------------------------------------------------
$250,000 - $499,999 2.00% 2.04%
-----------------------------------------------------------------------------------------
$500,000 - $999,999 1.50% 1.52%
-----------------------------------------------------------------------------------------
$1,000,000 or more(c),(d) 0.00% 0.00%
-----------------------------------------------------------------------------------------
(a) Because of rounding in the calculation of purchase price, the portion of
the sales charge retained by the distributor may vary and the actual
sales charge you pay may be more or less than the sales charge
calculated using these percentages.
(b) Purchase price includes the sales charge.
(c) Although there is no sales charge for purchases with a total market
value over $1,000,000, and therefore no re-allowance, the distributor
may pay a financial intermediary the following out of its own resources:
a sales commission of up to 1.00% for a sale of $1,000,000 to
$3,999,999; a sales commission up to 0.50% for a sale of $4,000,000 to
$49,999,999; and a sales commission up to 0.25% for a sale of
$50,000,000 or more.
(d) For certain eligible employee benefit plans defined under section
401(a), 401(k), 457 and 403(b) which meet eligibility rules for the
waiver of applicable sales charges, the distributor may pay the
following out of its own resources: a sale commission of 1.00% for a
sale of $1 to $3,999,999 received in eligible employee benefit plans; a
sales commission of up to 0.50% for a sale of $4,000,000 to $49,999,999;
and a sales commission up to 0.25% for a sale of $50,000,000 or more.
See "Initial Sales Charge -- Waivers of the sales charge for Class A
shares" for employee benefit plan eligibility rules.
S-6500 CG (1/10)
Statement of Additional Information - [Date], 2010 D-1
PART C. OTHER INFORMATION
Item 28. Exhibits
(a)(1) Articles of Incorporation, as amended Nov. 14, 1991, filed as
Exhibit 1 to Registrant's Post-Effective Amendment No. 34 to
Registration Statement No. 2-54516, are incorporated by reference.
(a)(2) Articles of Amendment, dated June 16, 1999, filed as Exhibit (a)(2)
to Registrant's Post-Effective Amendment No. 53 to Registration
Statement No. 2-54516, are incorporated by reference.
(a)(3) Articles of Amendment, dated Nov. 14, 2002, filed electronically as
Exhibit (a)(3) to Registrant's Post-Effective Amendment No. 55 to
Registration Statement No. 2-54516, are incorporated by reference.
(a)(4) Articles of Amendment, dated April 21, 2006, filed electronically on
or about Sept. 27, 2006 as Exhibit (a)(4) to Registrant's
Post-Effective Amendment No. 61 to Registration Statement No.
2-54516 are incorporated by reference.
(a)(5) Certificate of Designation, dated Oct. 5, 2006, filed electronically
on or about Sept. 26, 2007 as Exhibit (a)(5) to Registrant's
Post-Effective Amendment No. 63 to Registration Statement No.
2-54516 is incorporated by reference.
(a)(6) Certificate of Designation, dated Feb. 23, 2009, filed
electronically on or about Sept. 25, 2009 as Exhibit (a)(6) to
Registrant's Post-Effective Amendment No. 67 to Registration
Statement No. 2-54516 is incorporated by reference.
(a)(7) Certificate of Designation to reflect the addition of Class Z shares
to be filed by Amendment.
(b) By-laws, as amended April 13, 2006, filed electronically on or about
Sept. 25, 2008 as Exhibit (b) to Registrant's Post-Effective
Amendment No. 64 to Registration Statement No. 2-54516 are
incorporated by reference.
(c) Stock certificate, filed as Exhibit No. 4 to Registrant's Amendment
No. 12 to Registration Statement No. 2-54516, dated Sept. 18, 1982,
is incorporated by reference.
(d) Investment Management Services Agreement, dated May 1, 2006, between
Registrant and RiverSource Investments, LLC filed electronically on
or about Sept. 27, 2006 as Exhibit (d) to Registrant's
Post-Effective Amendment No. 61 to Registration Statement No.
2-54516 is incorporated by reference.
(e)(1) Distribution Agreement, effective Nov. 7, 2008, amended and restated
Sept. 14, 2009, between Registrant and RiverSource Fund
Distributors, Inc. filed electronically on or about Sept. 25, 2009
as Exhibit (e)(1) to RiverSource Large Cap Series, Inc.
Post-Effective Amendment No. 86 to Registration Statement No.
2-38355 is incorporated by reference.
(e)(2) Form of Service Agreement 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.
(e)(3) 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.
(f) 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.
(g) Form of Master Global Custody Agreement with JPMorgan Chase Bank,
N.A. filed electronically on or about Dec. 23, 2008 as Exhibit (g)
to RiverSource International Managers Series, Inc. Post-Effective
Amendment No. 18 to Registration Statement No. 333-64010 is
incorporated by reference.
(h)(1) Administrative Services Agreement, dated Oct. 1, 2005, amended and
restated Sept. 14, 2009, between Registrant and Ameriprise
Financial, Inc. filed electronically on or about Sept. 25, 2009 as
Exhibit (h)(1) to RiverSource Large Cap Series, Inc. Post-Effective
Amendment No. 86 to Registration Statement No. 2-38355 is
incorporated by reference.
(h)(2) Transfer Agency Agreement, dated Oct. 1, 2005, amended and restated
Sept. 14, 2009, between Registrant and RiverSource Service
Corporation filed electronically on or about Sept. 25, 2009 as
Exhibit (h)(2) to RiverSource Large Cap Series, Inc. Post-Effective
Amendment No. 86 to Registration Statement No. 2-38355 is
incorporated by reference.
(h)(3) Plan Administration Services Agreement, dated Dec. 1, 2006, amended
and restated Sept. 14, 2009, between Registrant and RiverSource
Service Corporation filed electronically on or about Sept. 25, 2009
as Exhibit (h)(3) to RiverSource Large Cap Series, Inc.
Post-Effective Amendment No. 86 to Registration Statement No.
2-38355 is incorporated by reference.
(h)(4) Plan and Agreement of Merger, dated April 10, 1986, filed as Exhibit
No. 9 to Registrant's Post-Effective Amendment No. 19 to
Registration Statement No. 2-54516, is incorporated by reference.
(h)(5) Agreement and Plan of Reorganization, dated Sept. 8, 1994, between
IDS Cash Management Fund, a series of IDS Money Market Series, Inc.
and IDS Planned Investment Account, also a series of IDS Money
Market Series, Inc., filed electronically as Exhibit 4 to
Registrant's Pre-Effective Amendment No. 1 on Form N-14, is
incorporated by reference.
(h)(6) Master Fee Cap/Fee Waiver Agreement, dated Oct. 1, 2005, amended and
restated Sept. 14, 2009 between RiverSource Investments, LLC,
Ameriprise Financial, Inc., RiverSource Service Corporation,
RiverSource Fund Distributors, Inc. and the Registrant filed
electronically on or about Sept. 25, 2009 as Exhibit (h)(11) to
RiverSource Large Cap Series, Inc. Post-Effective Amendment No. 86
to Registration Statement No. 2-38355 is incorporated by reference.
(h)(7) License Agreement, effective May 1, 2006, amended and restated as of
Nov. 12, 2008, between Ameriprise Financial, Inc. and RiverSource
Family 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.
(i) Opinion and consent of counsel as to the legality of the securities
being registered to be filed by Amendment.
(j) Consent of Independent Registered Public Accounting Firm (Ernst &
Young LLP): N/A.
(k) Omitted Financial Statements: Not Applicable.
(l) Initial Capital Agreement: Not Applicable.
(m) Plan of Distribution and Agreement of Distribution, effective Nov.
7, 2008, amended and restated Sept. 14, 2009, between Registrant and
RiverSource Fund Distributors, Inc. filed electronically on
or about Sept. 25, 2009 as Exhibit (m) to RiverSource Large Cap
Series, Inc. Post-Effective Amendment No. 86 to Registration
Statement No. 2-38355 is incorporated by reference.
(n) Rule 18f - 3(d) Plan, amended and restated as of Sept. 14, 2009,
filed electronically on or about Sept. 25, 2009 as Exhibit (n) to
RiverSource Large Cap Series, Inc. Post-Effective Amendment No. 86
to Registration Statement No. 2-38355 is incorporated by reference.
(o) Reserved.
(p)(1) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically on or about Feb. 27, 2009 as Exhibit (p)(1) to
RiverSource Variable Series Trust Post-Effective Amendment No. 4 to
Registration Statement No. 333-146374 is incorporated by reference.
(p)(2) 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.
(p)(3) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
adviser, dated Nov. 15, 2009, filed electronically on or about Nov.
30, 2009 as Exhibit (p)(3) to RiverSource Tax-Exempt Income Series,
Inc. Post-Effective Amendment No. 51 to Registration Statement No.
2-63552 is incorporated by reference.
(q) Directors/Trustees Power of Attorney to sign Amendments to this
Registration Statement, dated Jan. 8, 2009, filed electronically on
or about Feb. 20, 2009 as Exhibit (q) to Registrant's Post-Effective
Statement No. 66 to Registration Statement No. 2-54516 is
incorporated by reference.
Item 29. Persons Controlled by or Under Common Control with Registrant:
RiverSource Investments, LLC, as sponsor of the RiverSource Funds, may
make initial capital investments in RiverSource funds (seed accounts).
RiverSource Investments also serves as investment manager of certain
RiverSource funds-of-funds that invest primarily in Class I shares of
affiliated RiverSource funds (the "underlying funds"). RiverSource
Investments does not make initial capital investments or invest in
underlying funds for the purpose of exercising control. However, since
these ownership interests may be significant, in excess of 25%, such
that RiverSource Investments may be deemed to control certain
RiverSource funds, 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 Boards of Directors or
Trustees of the RiverSource funds-of-funds (which votes proxies for
the RiverSource funds-of-funds) vote on each proposal in the same
proportion that other shareholders vote on the proposal.
Item 30. 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.
Item 31. Business and Other Connections of the Investment Adviser (RiverSource
Investments, LLC)
The following are directors and principal officers of RiverSource Investments,
LLC who are directors and/or officers of one or more other companies:
Name and Title Other Companies Address* Title within other companies
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