N-14 1 c49430cnv14.txt FORM N-14 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] [ ] Post-Effective Amendment No. [ ] (Check Appropriate Box or Boxes) RiverSource High Yield Income Series, Inc. ------------------------------------------------- (Exact Name of Registrant as Specified in Charter) (612) 671-1947 -------------------------------- (Area Code and Telephone Number) 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 ------------------------------------------------------------------------------- (Address of Principal Executive Offices: Number, Street, City, State, Zip Code) Scott R. Plummer ------------------------------------- (Name and Address of Agent for Service) 5228 Ameriprise Financial Center Minneapolis MN 55474 ----------------------------------------------------- (Number and Street) (City) (State) (Zip Code) Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the Registration Statement. Title of Securities Being Registered: Common Stock No filing fee is due because of reliance on Section 24(f) of the Investment Company Act of 1940. Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. It is proposed that this filing will become effective on April 1, 2009. SELIGMAN FUNDS 734 Ameriprise Financial Center Minneapolis, Minnesota 55474 NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS SELIGMAN CORE FIXED INCOME FUND, INC. SELIGMAN GLOBAL FUND SERIES, INC. Seligman Emerging Markets Fund Seligman Global Growth Fund Seligman International Growth Fund SELIGMAN INCOME AND GROWTH FUND, INC. SELIGMAN HIGH INCOME FUND SERIES Seligman High-Yield Fund Seligman U.S. Government Securities Fund TO BE HELD JUNE 2, 2009 A Joint Special Meeting of Shareholders (the "Meeting") of each of the Seligman Funds listed above will be held at 10:00 a.m. CDT on June 2, 2009, at The Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota 55402 in the Room on the floor. At the Meeting, shareholders will consider the following proposals with respect to their Selling Fund: THE REORGANIZATION PROPOSALS: Shareholders of each Selling Fund will vote separately to approve an Agreement and Plan of Reorganization by and among each Selling Fund, its corresponding Buying Fund and RiverSource Investments, LLC (each an "Agreement and Plan of Reorganization"), as shown below:
PROPOSAL SELLING FUND BUYING FUND 1. Seligman Core Fixed Income Fund, Inc. RiverSource Diversified Bond Fund 2. Seligman Emerging Markets Fund Threadneedle Emerging Markets Fund 3. Seligman Global Growth Fund Threadneedle Global Equity Fund 4. Seligman High-Yield Fund RiverSource High Yield Bond Fund 5. Seligman Income and Growth Fund, Inc. RiverSource Balanced Fund 6. Seligman International Growth Fund RiverSource Partners International Select Growth Fund 7. Seligman U.S. Government Securities Fund RiverSource Short Duration U.S. Government Fund
Pursuant to each Agreement and Plan of Reorganization, each Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. THE MANAGER OF MANAGERS PROPOSALS: Shareholders of each Seligman Subadvised Fund, as listed below, will consider the following proposal with respect to their Seligman Subadvised Fund:
PROPOSAL SELIGMAN SUBADVISED FUND 8. Seligman Emerging Markets Fund To approve a policy authorizing RiverSource ----------------------------------------------------- Investments, LLC, with the approval of the 9. Seligman Global Growth Fund Board of Directors, to retain and to replace subadvisers, or to modify subadvisory agreements, without obtaining shareholder approval. ----------------------------------------------------- 10. Seligman International Growth Fund
Please take some time to read the combined proxy statement/prospectus. It discusses these proposals in more detail. If you were a shareholder on April 3, 2009, you may vote at the Meeting or at any adjournment or postponement of the Meeting. We hope you can attend the Meeting. If you cannot attend, please vote by telephone, internet or mail. Just follow the instructions on the enclosed proxy card. If you have questions, please call toll free at (866) 438-8932. It is important that you vote. The Board of Directors/Trustees of each Selling Fund and Seligman Subadvised Fund recommends that you vote FOR the proposal(s) applicable to it. The combined proxy statement/prospectus is expected to be mailed to shareholders on or about April 4, 2009. By order of the Boards of Directors/Trustees Scott R. Plummer, Secretary April 4, 2009 SELIGMAN CORE FIXED INCOME FUND, INC. SELIGMAN GLOBAL FUND SERIES, INC. Seligman Emerging Markets Fund Seligman Global Growth Fund Seligman International Growth Fund SELIGMAN INCOME AND GROWTH FUND, INC. SELIGMAN HIGH INCOME FUND SERIES Seligman High-Yield Fund Seligman U.S. Government Securities Fund COMBINED PROXY STATEMENT/PROSPECTUS DATED APRIL 4, 2009 This document is a proxy statement for each Selling Fund and each Seligman Subadvised Fund (each as defined below), and a prospectus for each Buying Fund (as defined below). The address and telephone number of each Selling Fund and Buying Fund is 734 Ameriprise Financial Center, Minneapolis, Minnesota 55474 and (888) 791-3380. This combined proxy statement/prospectus and the enclosed proxy card are expected to be mailed to shareholders ("shareholders" or "stockholders") beginning on or about April 4, 2009. This combined proxy statement/prospectus contains information you should know before voting on the following proposal(s) with respect to your Fund (as indicated below):
TO BE VOTED ON PROPOSAL BY SHAREHOLDERS OF: --------------------------------------------------------------------------------------------------------------------------- 1. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Core Fixed Income Fund, Inc. and among Seligman Core Fixed Income Fund, Inc. ("Seligman Core Fixed Income Fund" or the "Selling Fund"), RiverSource Diversified Bond Fund (the "Buying Fund"), a series of RiverSource Diversified Income Series, Inc., and RiverSource Investments, LLC ("RiverSource Investments"). Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 --------------------------------------------------------------------------------------------------------------------------- 2. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Emerging Markets Fund and among Seligman Emerging Markets Fund (the "Selling Fund"), a series of Seligman Global Fund Series, Inc., Threadneedle Emerging Markets Fund (the "Buying Fund"), a series of RiverSource Global Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 ---------------------------------------------------------------------------------------------------------------------------
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TO BE VOTED ON PROPOSAL BY SHAREHOLDERS OF: --------------------------------------------------------------------------------------------------------------------------- 3. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Global Growth Fund and among Seligman Global Growth Fund (the "Selling Fund"), a series of Seligman Global Fund Series, Inc., Threadneedle Global Equity Fund (the "Buying Fund"), a series of RiverSource Global Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 --------------------------------------------------------------------------------------------------------------------------- 4. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman High-Yield Fund and among Seligman High-Yield Fund (the "Selling Fund"), a series of Seligman High Income Fund Series, RiverSource High Yield Bond Fund (the "Buying Fund"), a series of RiverSource High Yield Income Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 --------------------------------------------------------------------------------------------------------------------------- 5. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman Income and Growth Fund, Inc. and among Seligman Income and Growth Fund, Inc. ("Seligman Income and Growth Fund" or the "Selling Fund"), RiverSource Balanced Fund (the "Buying Fund"), a series of RiverSource Investment Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 ---------------------------------------------------------------------------------------------------------------------------
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TO BE VOTED ON PROPOSAL BY SHAREHOLDERS OF: --------------------------------------------------------------------------------------------------------------------------- 6. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman International Growth Fund and among Seligman International Growth Fund (the "Selling Fund"), a series of Seligman Global Fund Series, Inc., RiverSource Partners International Select Growth Fund (the "Buying Fund"), a series of RiverSource International Managers Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 Class I* Class R5 --------------------------------------------------------------------------------------------------------------------------- 7. To approve the Agreement and Plan of Reorganization (the "Agreement") by Seligman U.S. Government Securities Fund and among Seligman U.S. Government Securities Fund (the "Selling Fund"), a series of Seligman High Income Fund Series, RiverSource Short Duration U.S. Government Fund (the "Buying Fund"), a series of RiverSource Government Income Series, Inc., and RiverSource Investments, LLC. Under this Agreement, the Selling Fund will transfer all of its assets attributable to each class of its shares to the corresponding Buying Fund, as indicated below, in exchange for shares of the corresponding class of the Buying Fund and the assumption by the Buying Fund of all of the liabilities of the Selling Fund. The Buying Fund shares will be distributed proportionately to shareholders of the relevant class of the Selling Fund. Selling Fund Buying Fund Class A Class A Class B Class B Class C Class C Class R* Class R2 --------------------------------------------------------------------------------------------------------------------------- 8. To approve a policy authorizing RiverSource Investments, LLC, the Seligman Emerging Markets Fund investment adviser to Seligman Emerging Markets Fund (a "Seligman Subadvised Fund" and a "Seligman Fund"), with the approval of the Board of Directors (the "Board") to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). --------------------------------------------------------------------------------------------------------------------------- 9. To approve a policy authorizing RiverSource Investments, LLC, the Seligman Global Growth Fund investment adviser to Seligman Global Growth Fund (a "Seligman Subadvised Fund" and a "Seligman Fund"), with the approval of the Board of Directors (the "Board") to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). --------------------------------------------------------------------------------------------------------------------------- 10. To approve a policy authorizing RiverSource Investments, LLC, the Seligman International Growth Fund investment adviser to Seligman International Growth Fund (a "Seligman Subadvised Fund" and a "Seligman Fund"), with the approval of the Board of Directors (the "Board") to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). ---------------------------------------------------------------------------------------------------------------------------
* Effective May 9, 2009, the Class R and Class I shares of the Seligman Funds will be redesignated as Class R2 and Class R5 shares, respectively. However, for convenience of reference, this combined proxy statement/prospectus refers to each class of shares by its designation as of the date of this proxy statement/prospectus. These proposals will be considered by shareholders of the Selling Funds (including the Seligman Subadvised Funds) at a joint special meeting of such shareholders (the "Meeting") that will be held at 10:00 a.m. CDT on June 2, 2009, at The Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota 55402 in the Room on the floor. Each of the Selling Funds and the Buying Funds (collectively, the "Funds") is a registered open-end management investment company (or a series thereof) and is part of the RiverSource Group of Funds, which includes funds branded "RiverSource," "RiverSource Partners," "Threadneedle" and "Seligman." Please read this combined proxy statement/prospectus and keep it for future reference. The Board of Directors/Trustees of each Selling Fund (including the Seligman Subadvised Funds) (the "Board" or the "Board of Directors/Trustees") has reviewed these proposals and recommends that you approve them. Although the Board of each Selling Fund recommends that shareholders approve the reorganization of each Selling Fund with the corresponding Buying Fund (each a "Reorganization"), the Reorganization of each Selling Fund is not conditioned upon 3 the Reorganization of any other Selling Fund (or upon approval of the Manager of Managers Proposal by any Seligman Subadvised Fund). Accordingly, if shareholders of one Selling Fund approve its Reorganization, but shareholders of another Selling Fund do not approve that Selling Fund's Reorganization, it is expected that the Reorganization of the first Selling Fund will take place as described in this combined proxy statement/prospectus. Similarly, although the Board recommends that shareholders of each Seligman Subadvised Fund approve the Manager of Managers Proposal, each Manager of Managers Proposal is not conditioned upon the approval of the Manager of Managers Proposal for any other Seligman Subadvised Fund (or upon approval of the Reorganization of the Seligman Subadvised Fund). HOW EACH REORGANIZATION WILL WORK - Each Selling Fund will transfer all of its assets to the corresponding Buying Fund in exchange for shares of the corresponding Buying Fund ("Reorganization Shares") and the assumption by the Buying Fund of all of the Selling Fund's liabilities. - Each Buying Fund will issue Reorganization Shares in an amount equal to the value of the assets that it receives from the Selling Fund, less the liabilities it assumes. The Reorganization Shares of each class will be distributed to the Selling Fund's shareholders of the corresponding class in proportion to their holdings in such class of the Selling Fund. For example, holders of Class A shares of a Selling Fund will receive Class A shares of the corresponding Buying Fund with the same aggregate net asset value as their Selling Fund Class A shares at the time of the Reorganization. You will not pay any sales charge in connection with this distribution of Reorganization Shares. If you already have a Buying Fund account with the exact registration as the Selling Fund account, shares distributed in the Reorganization are typically added to that account. As a result, when average cost is calculated for federal income tax purposes, the cost of the shares in the two accounts you owned will be combined. WHERE TO GET MORE INFORMATION The following documents have been filed with the Securities and Exchange Commission (the "SEC") and are incorporated into this combined proxy statement/prospectus by reference: - the prospectus of Seligman Core Fixed Income Fund, dated Feb. 2, 2009, as supplemented to date; - the prospectuses of Seligman Global Growth Fund, Seligman Emerging Markets Fund and Seligman International Growth Fund, each dated March 2, 2009, as supplemented to date; - the prospectuses of Seligman U.S. Government Securities Fund, Seligman High- Yield Fund and Seligman Income and Growth Fund, each dated May 1, 2008, as supplemented to date; - the Statement of Additional Information of Seligman Core Fixed Income Fund, dated Feb. 2, 2009, as supplemented to date; - the Statement of Additional Information of Seligman Global Growth Fund, Seligman Emerging Markets Fund and Seligman International Growth Fund, each dated March 2, 2009, as supplemented to date; - the Statement of Additional Information of Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, dated May 1, 2008, as supplemented to date; - the Statement of Additional Information of Seligman Income and Growth Fund, dated May 1, 2008, as supplemented to date; - the Statement of Additional Information relating to the Reorganizations, dated April 4, 2009 (the "Reorganization SAI"); - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of Seligman Core Fixed Income Fund, for the period ended Sept. 30, 2008; - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of Seligman Global Growth Fund, Seligman Emerging Markets Fund and Seligman International Growth Fund, for the period ended Oct. 31, 2008; - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of Seligman High-Yield Fund for the period ended Dec. 31, 2008; - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of Seligman Income and Growth Fund, for the period ended Dec. 31, 2008; - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of Seligman U.S. Government Securities Fund for the period ended Dec. 31, 2008. - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of RiverSource Diversified Bond Fund, for the period ended Aug. 31, 2008; 4 - the Reports of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Reports to Shareholders of Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund and RiverSource Partners International Select Growth Fund, each for the period ended Oct. 31, 2008; - the Reports of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Reports to Shareholders of RiverSource High Yield Bond Fund and RiverSource Short Duration U.S. Government Fund each for the period ended May 30, 2008 and the unaudited financial statements included in the Semiannual Reports to Shareholders of RiverSource High Yield Bond Fund and RiverSource Short Duration U.S. Government Fund, each for the period ended Nov. 30, 2008; and - the Report of the Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of RiverSource Balanced Fund, for the period ended Sept. 30, 2008. For a copy, at no charge, of any of the documents listed above and/or to ask questions about this combined proxy statement/prospectus, please call your Fund's proxy solicitor toll free at (866) 438-8932. Each of the Funds is subject to the information requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and files reports, proxy materials and other information with the SEC. These reports, proxy materials and other information can be inspected and copied at the Public Reference Room maintained by the SEC. Copies may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing to the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549-0102. In addition, copies of these documents may be viewed on-line or downloaded from the SEC's website at www.sec.gov. Please note that the Funds are not bank deposits, are not federally insured, are not endorsed by any bank or government agency and are not guaranteed to achieve their investment objectives. As with all mutual funds, the SEC has not approved or disapproved these securities or passed on the adequacy of this combined proxy statement/prospectus. Any representation to the contrary is a criminal offense. 5 TABLE OF CONTENTS
PAGE ---- SECTION A -- REORGANIZATION PROPOSALS............................................ 9 SUMMARY........................................................................ 9 How Each Reorganization Will Work............................................ 9 Tax Consequences............................................................. 9 Fees and Expenses............................................................ 10 Proposal 1. Reorganization of Seligman Core Fixed Income Fund into RiverSource Diversified Bond Fund........................................ 10 Proposal 2. Reorganization of Seligman Emerging Markets Fund into Threadneedle Emerging Markets Fund....................................... 13 Proposal 3. Reorganization of Seligman Global Growth Fund into Threadneedle Global Equity Fund....................................................... 15 Proposal 4. Reorganization of Seligman High-Yield Fund into RiverSource High Yield Bond Fund..................................................... 17 Proposal 5. Reorganization of Seligman Income and Growth Fund into RiverSource Balanced Fund................................................ 19 Proposal 6. Reorganization of Seligman International Growth Fund into RiverSource Partners International Select Growth Fund.................... 21 Proposal 7. Reorganization of Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund.......................... 24 PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE DIVERSIFIED BOND FUND........................................................ 26 Comparison of Investment Objectives.......................................... 26 Comparison of Principal Investment Strategies................................ 26 Comparison of Fundamental Policies........................................... 29 Comparison of Nonfundamental Policies and Related Investment Strategies...... 30 Comparison of Principal Risk Factors......................................... 31 Performance.................................................................. 32 PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE EMERGING MARKETS FUND........................................................ 36 Comparison of Investment Objectives.......................................... 36 Comparison of Principal Investment Strategies................................ 36 Comparison of Fundamental Policies........................................... 38 Comparison of Nonfundamental Policies and Related Investment Strategies...... 39 Comparison of Principal Risk Factors......................................... 40 Performance.................................................................. 42 PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE GLOBAL EQUITY FUND........................................................... 47 Comparison of Investment Objectives.......................................... 47 Comparison of Principal Investment Strategies................................ 47 Comparison of Fundamental Policies........................................... 49 Comparison of Nonfundamental Policies and Related Investment Strategies...... 50 Comparison of Principal Risk Factors......................................... 51 Performance.................................................................. 52
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PAGE ---- PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH YIELD BOND FUND.............................................................. 57 Comparison of Investment Objectives.......................................... 57 Comparison of Principal Investment Strategies................................ 57 Comparison of Fundamental Policies........................................... 59 Comparison of Nonfundamental Policies and Related Investment Strategies...... 61 Comparison of Principal Risk Factors......................................... 61 Performance.................................................................. 63 PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE BALANCED FUND................................................................ 68 Comparison of Investment Objectives.......................................... 68 Comparison of Principal Investment Strategies................................ 68 Comparison of Fundamental Policies........................................... 71 Comparison of Nonfundamental Policies and Related Investment Strategies...... 73 Comparison of Principal Risk Factors......................................... 73 Performance.................................................................. 75 PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND........................ 79 Comparison of Investment Objectives.......................................... 79 Comparison of Principal Investment Strategies................................ 79 Comparison of Fundamental Policies........................................... 81 Comparison of Nonfundamental Policies and Related Investment Strategies...... 82 Comparison of Principal Risk Factors......................................... 83 Performance.................................................................. 85 PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND.............................. 89 Comparison of Investment Objectives.......................................... 89 Comparison of Principal Investment Strategies................................ 89 Comparison of Fundamental Policies........................................... 90 Comparison of Nonfundamental Policies and Related Investment Strategies...... 92 Comparison of Principal Risk Factors......................................... 92 Performance.................................................................. 93 ADDITIONAL INFORMATION ABOUT EACH REORGANIZATION............................... 96 Terms of the Reorganizations................................................. 96 Conditions to Closing Each Reorganization.................................... 96 Termination of the Agreement................................................. 96 Tax Status of the Reorganizations............................................ 96 Reasons for the Proposed Reorganizations and Board Deliberations............. 100 Board Determinations......................................................... 103 Board Recommendation and Required Vote....................................... 103 SECTION B -- MANAGER OF MANAGERS PROPOSALS....................................... 105 PROPOSAL 8. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN EMERGING MARKETS FUND.... 105 PROPOSAL 9. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN GLOBAL GROWTH FUND....... 105
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PAGE ---- PROPOSAL 10. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN INTERNATIONAL GROWTH FUND......................................................................... 105 Additional Information About Each Manager of Managers Proposal............... 105 Comparison of Present and Proposed Selection Process for Subadvisers......... 106 Board Recommendation and Required Vote....................................... 107 SECTION C -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION.................... 108 SECTION D -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND FINANCIAL HIGHLIGHTS... 110 Capitalization of Selling Funds and Buying Funds............................. 110 Ownership of Shares of Selling Funds, including Seligman Subadvised Funds, and Buying Funds........................................................... 114 Financial Highlights......................................................... 120 EXHIBITS A. Form of Agreement and Plan of Reorganization.................................. A.1 B. Additional Information Applicable to the Buying Funds......................... B.1 C. Summary of Integration Related Changes........................................ C.1 D. Massachusetts Appraisal Rights................................................ D.1 E. Comparison of Organizational Documents........................................ E.1
8 SECTION A -- REORGANIZATION PROPOSALS The following information describes each proposed Reorganization. SUMMARY This combined proxy statement/prospectus is being used by each Selling Fund to solicit proxies to vote at a joint special meeting of shareholders. Shareholders of each Selling Fund will consider a proposal to approve the Agreement and Plan of Reorganization (the "Agreement") providing for the Reorganization of their Selling Fund into the corresponding Buying Fund. The form of the Agreement is attached as Exhibit A. The following is a summary. More complete information appears later in this combined proxy statement/prospectus. You should read the entire combined proxy statement/prospectus and the exhibits because they contain details that are not included in the summary. HOW EACH REORGANIZATION WILL WORK - Each Selling Fund will transfer all of its assets to the corresponding Buying Fund in exchange for shares of the corresponding Buying Fund ("Reorganization Shares") and the assumption by the corresponding Buying Fund of all of the Selling Fund's liabilities. - Each Buying Fund will issue Reorganization Shares with an aggregate net asset value equal to the aggregate value of the assets that it receives from the corresponding Selling Fund, less the liabilities it assumes from the corresponding Selling Fund. Reorganization Shares of each class of each Buying Fund will be distributed to the shareholders of the corresponding class of the corresponding Selling Fund in proportion to their holdings of such class of such Selling Fund. For example, holders of Class A shares of a Selling Fund will receive Class A shares of the corresponding Buying Fund with the same aggregate net asset value as the aggregate net asset value of their Selling Fund Class A shares on the business day immediately preceding the closing of the Reorganization of the Selling Fund. If you already have a Buying Fund account with the exact registration as the Selling Fund account, shares distributed in the Reorganization are typically added to that account. As a result, when average cost is calculated for federal income tax purposes, the cost of the shares in the two accounts you owned will be combined. - As part of the Reorganization, systematic transactions (such as bank authorizations and systematic payouts) currently set up for your Selling Fund account may be transferred to your new Buying Fund account. Please contact your financial institution for additional details. - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any sales charge in connection with its Reorganization. - After a Reorganization is completed, Selling Fund shareholders will be shareholders of the corresponding Buying Fund, and the Selling Fund will be dissolved. TAX CONSEQUENCES Each Reorganization is expected to be tax-free for federal income tax purposes and will not take place unless the Selling Fund and the corresponding Buying Fund receive a satisfactory opinion of tax counsel substantially to that effect. Accordingly, no gain or loss is expected to be recognized by the Selling Fund or its shareholders as a direct result of a Reorganization. Some or all of the portfolio assets of a Selling Fund may be sold in connection with its Reorganization. The actual tax impact of such sales will depend on the difference between the price at which such portfolio assets are sold and the Selling Fund's tax basis in such assets. Any net capital gains recognized in these sales will be distributed to shareholders as capital-gain dividends (to the extent of net realized long-term capital gains over net realized short-term capital losses) and/or ordinary dividends (to the extent of net realized short- term capital gains over net realized long-term capital losses) during or with respect to the year of sale, and such distributions will be taxable to shareholders. Additionally, because each Reorganization will end the tax year of the applicable Selling Fund, it will accelerate distributions to shareholders from the Selling Fund for its short tax year ending on the date of the Reorganization. Those tax year-end distributions will be taxable and will include any capital gains resulting from portfolio turnover prior to the Reorganization that were not previously distributed. At any time prior to a Reorganization, a shareholder may redeem shares of a Selling Fund. This would likely result in the recognition of gain or loss to the shareholder for federal income tax purposes if the shareholder holds the shares in a taxable account. The tax basis and holding period of the shareholders' Selling Fund shares are expected to carry over to the shareholders' Reorganization Shares in the Buying Fund. For more information about the federal income tax consequences of the Reorganizations, see the section entitled "Tax Status of the Reorganizations." 9 FEES AND EXPENSES The following tables describe the fees and expenses that you pay if you buy and hold shares of a Selling Fund or shares of a Buying Fund. The tables also show pro forma expenses of each Buying Fund assuming the proposed Reorganization relating to such Buying Fund had been effective at the beginning of the most recent fiscal year. The tables reflect adjustments to fees and expenses that were approved by the Board Jan. 8, 2009, a summary of which is included in Exhibit C. The expenses shown in the tables do not include any one time costs, including any expenses related to the Reorganizations that may be borne by the Funds. See "Reasons for the Proposed Reorganizations and Board Deliberations" for more information. PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE DIVERSIFIED BOND FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(a)(b) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None(d) None RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING CLASS R2 AND FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA CLASS R2 AND COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None
(a) Effective May 9, 2009, the maximum front-end sales charge for Class A shares will increase from 4.50% to 4.75%. (b) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (d) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). 10 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 0.50% 0.50% 0.50% 0.50% 0.50% Distribution and/or service (12b-1) fees 0.25% 1.00% 0.98% 0.50% 0.00% Other expenses(a)(b) 1.26% 1.27% 1.27% 1.34% 1.09% Total annual fund operating expenses 2.01% 2.77% 2.75% 2.34% 1.59% Fee waiver/expense reimbursement 0.76% 0.77% 0.77% 0.84% 0.59% Total annual (net) fund operating expenses(a) 1.25% 2.00% 1.98% 1.50% 1.00% RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees 0.45% 0.45% 0.45% 0.45% 0.45% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(c) 0.25% 0.26% 0.25% 0.39% 0.14% Total annual fund operating expenses 0.95% 1.71% 1.70% 1.34% 0.59% Fee waiver/expense reimbursement 0.12% 0.12% 0.12% 0.07% 0.07% Total annual (net) fund operating expenses(d) 0.83% 1.59% 1.58% 1.27% 0.52%
RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees 0.45% 0.45% 0.45% 0.45% 0.45% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(c) 0.23% 0.24% 0.24% 0.40% 0.15% Total annual fund operating expenses 0.93% 1.69% 1.69% 1.35% 0.60% Fee waiver/expense reimbursement 0.10% 0.10% 0.11% 0.08% 0.08% Total annual (net) fund operating expenses(d) 0.83% 1.59% 1.58% 1.27% 0.52%
(a) Through at least Jan. 31, 2010, RiverSource Investments has contractually agreed to waive its management fee and/or to reimburse Seligman Core Fixed Income Fund's expenses to the extent that the Fund's "other expenses" (i.e., those expenses other than management fees, 12b-1 fees, interest on borrowings, and extraordinary expenses, including litigation expenses) exceed 0.50% per annum of the Fund's average daily net assets. (b) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). (c) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. (d) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Aug. 31, 2009, unless sooner terminated at the discretion of the RiverSource Diversified Bond Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), will not exceed 0.83% for Class A, 1.59% for Class B, 1.58% for Class C, 1.27% for Class R2 and 0.52% for Class R5. 11 EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $596 $1,006 $1,441 $2,649 Class B $703(b) $1,087(b) $1,597(b) $2,864(c) Class C $301(b) $ 781 $1,387 $3,028 Class R $153 $ 650 $1,175 $2,617 Class I $102 $ 444 $ 811 $1,845 RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $556 $ 752 $ 965 $1,580 Class B $662(b) $ 827(b) $1,118(b) $1,812(c) Class C $261(b) $ 524 $ 913 $2,004 Class R2 $129 $ 418 $ 728 $1,612 Class R5 $ 53 $ 182 $ 323 $ 734 RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $556 $ 748 $ 957 $1,559 Class B $662(b) $ 823(b) $1,109(b) $1,792(c) Class C $261(b) $ 522 $ 908 $1,994 Class R2 $129 $ 420 $ 733 $1,622 Class R5 $ 53 $ 184 $ 328 $ 746
(a) Includes a 4.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $203 $787 $1,397 $2,864(a) Class C $201 $781 $1,387 $3,028 RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $162 $527 $ 918 $1,812(a) Class C $161 $524 $ 913 $2,004 RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $162 $523 $ 909 $1,792(a) Class C $161 $522 $ 908 $1,994
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 12 PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE EMERGING MARKETS FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None(c) None THREADNEEDLE EMERGING MARKETS FUND (ACTUAL)(BUYING CLASS R2 AND FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA CLASS R2 AND COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None
(a) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (c) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I SELIGMAN EMERGING MARKETS FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 1.25% 1.25% 1.25% 1.25% 1.25% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(a)(b) 0.88% 0.89% 0.91% 0.81% 0.56% Total annual fund operating expenses 2.38% 3.14% 3.16% 2.56% 1.81% Fee waiver/expense reimbursement 0.03% 0.04% 0.06% 0.00% 0.00% Total annual (net) fund operating expenses(a) 2.35% 3.10% 3.10% 2.56% 1.81%
THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 1.16% 1.16% 1.16% 1.16% 1.16% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.46% 0.46% 0.47% 0.57% 0.31% Total annual fund operating expenses 1.87% 2.62% 2.63% 2.23% 1.47% THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 1.16% 1.16% 1.16% 1.16% 1.16% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.48% 0.49% 0.49% 0.56% 0.31% Total annual fund operating expenses 1.89% 2.65% 2.65% 2.22% 1.47%
(a) Through at least Feb. 28, 2010, RiverSource Investments has contractually agreed to waive its management fee and/or to reimburse Seligman Emerging Market Fund's expenses to the extent that the Fund's "other expenses" (i.e., those expenses other than management fees, 12b-1 fees, interest on borrowings, and extraordinary expenses, including litigation expenses) exceed 0.85% per annum of the Fund's average daily net assets. (b) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5 and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. 13 (c) Includes the impact of a performance incentive adjustment fee that increased the management fee by 0.08% for the most recent fiscal year. The adjustment is computed by measuring the percentage differences over a rolling 12-month period between the performance of the Fund and the performance of an index of comparable funds published by Lipper Inc. The index against which the Threadneedle Emerging Market Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Emerging Markets Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.12% of the Fund's average net assets on an annual basis. See Fund Management and Compensation in Exhibit B for more information. Additional information on the calculation methodology is set forth in the Reorganization SAI. (d) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. Other expenses for Class R2 are based on estimated amounts for the current fiscal year. EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $799 $1,272 $1,771 $3,137 Class B $813(b) $1,265(b)$1,842(b)$3,273(c) Class C $413(b) $ 969 $1,650 $3,465 Class R (to be known as R2) $259 $ 797 $1,361 $2,899 Class I (to be known as R5) $184 $ 570 $ 981 $2,132 THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $754 $1,129 $1,529 $2,644 Class B $765(b) $1,115(b)$1,591(b)$2,775(c) Class C $366(b) $ 818 $1,396 $2,967 Class R2 $226 $ 697 $1,196 $2,569 Class R5 $150 $ 465 $ 804 $1,762 THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $756 $1,135 $1,538 $2,664 Class B $768(b) $1,124(b)$1,606(b)$2,803(c) Class C $368(b) $ 824 $1,406 $2,987 Class R2 $225 $ 694 $1,191 $2,559 Class R5 $150 $ 465 $ 804 $1,762
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $313 $965 $1,642 $3,273(a) Class C $313 $969 $1,650 $3,465 THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $265 $815 $1,391 $2,775(a) Class C $266 $818 $1,396 $2,967 THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $268 $824 $1,406 $2,803(a) Class C $268 $824 $1,406 $2,987
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 14 PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE GLOBAL EQUITY FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I (TO BE KNOWN (TO BE KNOWN SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None(c) None THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING CLASS R2 AND FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None CLASS R2 AND THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None
(a) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (c) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I (TO BE KNOWN (TO BE KNOWN SELIGMAN GLOBAL GROWTH FUND (ACTUAL) AS AS (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 1.00% 1.00% 1.00% 1.00% 1.00% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(a)(b) 0.84% 0.85% 0.84% 0.84% 0.59% Total annual fund operating expenses 2.09% 2.85% 2.84% 2.34% 1.59% THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 0.83% 0.83% 0.83% 0.83% 0.83% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.38% 0.40% 0.39% 0.46% 0.21% Total annual fund operating expenses 1.46% 2.23% 2.22% 1.79% 1.04% THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 0.83% 0.83% 0.83% 0.83% 0.83% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.37% 0.39% 0.38% 0.46% 0.21% Total annual fund operating expenses 1.45% 2.22% 2.21% 1.79% 1.04%
(a) Through at least Feb. 28, 2010, RiverSource Investments has contractually agreed to waive its management fee and/or to reimburse Seligman Global Growth Fund's expenses to the extent that the Fund's "other expenses" (i.e., those expenses other than management fees, 12b-1 fees, interest on borrowings, and extraordinary expenses, including litigation expenses) exceed 0.85% per annum of the Fund's average daily net assets. (b) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). (c) Includes the impact of a performance incentive adjustment fee that increased the management fee by 0.06% for the most recent fiscal year. The adjustment is computed by measuring the percentage differences over a rolling 12-month period between the performance of the Fund and the performance of an index of comparable funds published by Lipper Inc. The index against which the Threadneedle Global Equity Fund's performance is measured for purposes of determining the performance incentive 15 adjustment is the Lipper Global Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.12% of the Fund's average net assets on an annual basis. See Fund Management and Compensation in Exhibit B for more information. Additional information on the calculation methodology is set forth in the Reorganization SAI. (d) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B, and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $775 $1,192 $1,635 $2,861 Class B $788(b) $1,183(b)$1,704(b)$2,999(c) Class C $387(b) $ 880 $1,499 $3,170 Class R (to be known as R2) $237 $ 731 $1,251 $2,680 Class I (to be known as R5) $162 $ 502 $ 867 $1,894 THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $715 $1,010 $1,328 $2,226 Class B $726(b) $ 997(b)$1,396(b)$2,374(c) Class C $325(b) $ 694 $1,191 $2,559 Class R2 $182 $ 564 $ 971 $2,110 Class R5 $106 $ 331 $ 575 $1,276 THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $714 $1,008 $1,323 $2,215 Class B $725(b) $ 994(b)$1,391(b)$2,364(c) Class C $324(b) $ 691 $1,186 $2,549 Class R2 $182 $ 564 $ 971 $2,110 Class R5 $106 $ 331 $ 575 $1,276
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $288 $883 $1,504 $2,999(a) Class C $287 $880 $1,499 $3,170 THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $226 $697 $1,196 $2,374(a) Class C $225 $694 $1,191 $2,559 THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $225 $694 $1,191 $2,364(a) Class C $224 $691 $1,186 $2,549
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 16 PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH YIELD BOND FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I (TO BE KNOWN (TO BE KNOWN SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(a)(b) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None(d) None RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING CLASS R2 AND FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None CLASS R2 AND RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None
(a) Effective May 9, 2009, the maximum front-end sales charge for Class A shares will increase from 4.50% to 4.75%. (b) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (d) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I SELIGMAN HIGH-YIELD FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 0.65% 0.65% 0.65% 0.65% 0.65% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(a) 0.42% 0.43% 0.43% 0.47% 0.22% Total annual fund operating expenses 1.32% 2.08% 2.08% 1.62% 0.87% RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees 0.58% 0.58% 0.58% 0.58% 0.58% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(b) 0.30% 0.31% 0.30% 0.43% 0.20% Total annual fund operating expenses 1.13% 1.89% 1.88% 1.51% 0.78% Fee waiver/expense reimbursement 0.11% 0.11% 0.11% 0.06% 0.08% Total annual (net) fund operating expenses(c) 1.02% 1.78% 1.77% 1.45% 0.70% RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees 0.58% 0.58% 0.58% 0.58% 0.58% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(b) 0.27% 0.28% 0.28% 0.44% 0.19% Total annual fund operating expenses 1.10% 1.86% 1.86% 1.52% 0.77% Fee waiver/expense reimbursement 0.08% 0.08% 0.09% 0.07% 0.07% Total annual (net) fund operating expenses(c) 1.02% 1.78% 1.77% 1.45% 0.70%
(a) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. 17 Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. (b) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B, and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. (c) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until May 31, 2009, unless sooner terminated at the discretion of the RiverSource High Yield Bond Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), will not exceed 1.02% for Class A, 1.78% for Class B, 1.77% for Class C, 1.45% for Class R2 and 0.70% for Class R5. EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $603 $874 $1,165 $1,994 Class B $711(b) $952(b) $1,320(b) $2,220(c) Class C $311(b) $652 $1,120 $2,415 Class R (to be known as R2) $165 $511 $ 882 $1,927 Class I (to be known as R5) $ 89 $278 $ 483 $1,077 RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $574 $807 $1,059 $1,780 Class B $681(b) $884(b) $1,212(b) $2,009(c) Class C $280(b) $581 $1,007 $2,197 Class R2 $148 $472 $ 819 $1,802 Class R5 $ 72 $241 $ 426 $ 963 RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $574 $801 $1,046 $1,749 Class B $681(b) $877(b) $1,199(b) $1,979(c) Class C $280(b) $576 $ 998 $2,177 Class R2 $148 $474 $ 823 $1,812 Class R5 $ 72 $239 $ 422 $ 952
(a) Includes a 4.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $211 $652 $1,120 $2,220(a) Class C $211 $652 $1,120 $2,415 RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $181 $584 $1,012 $2,009(a) Class C $180 $581 $1,007 $2,197 RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $181 $577 $ 999 $1,979(a) Class C $180 $576 $ 998 $2,177
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 18 PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE BALANCED FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None(c) None CLASS R2 AND RIVERSOURCE BALANCED FUND (ACTUAL)(BUYING FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None CLASS R2 AND RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None
(a) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (c) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (TO BE KNOWN AS (TO BE KNOWN AS (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 0.60% 0.60% 0.60% 0.60% 0.60% Distribution and/or service (12b-1) fees 0.24% 1.00% 1.00% 0.50% 0.00% Other expenses(a) 0.60% 0.61% 0.60% 0.72% 0.47% Total annual fund operating expenses 1.44% 2.21% 2.20% 1.82% 1.07% RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(b) 0.44% 0.44% 0.44% 0.44% 0.44% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(c) 0.26% 0.27% 0.27% 0.42% 0.17% Total annual fund operating expenses 0.95% 1.71% 1.71% 1.36% 0.61% RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(b) 0.44% 0.44% 0.44% 0.44% 0.44% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(c) 0.25% 0.26% 0.25% 0.42% 0.17% Total annual fund operating expenses 0.94% 1.70% 1.69% 1.36% 0.61%
(a) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. (b) Includes the impact of a performance incentive adjustment fee that decreased the management fee by 0.09% for the most recent fiscal year. The adjustment is computed by measuring the percentage differences over a rolling 12-month period between the performance of the Fund and the performance of an index of comparable funds published by Lipper Inc. The index against which the RiverSource Balanced Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Balanced Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.08% of the Fund's average net assets on an annual basis. See Fund Management and Compensation in Exhibit B for more information. Additional information on the calculation methodology is set forth in the Reorganization SAI. 19 (c) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B, and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. Other expenses for Class R2 and Class R5 are based on estimated amounts for the current fiscal year. EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $713 $1,005 $1,318 $2,205 Class B $724(b) $ 991(b) $1,386(b) $2,356(c) Class C $323(b) $ 688 $1,181 $2,539 Class R (to be known as R2) $185 $ 573 $ 986 $2,142 Class I (to be known as R5) $109 $ 341 $ 591 $1,310 RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $666 $ 861 $1,071 $1,679 Class B $674(b) $ 839(b) $1,129(b) $1,822(c) Class C $274(b) $ 539 $ 929 $2,024 Class R2 $138 $ 431 $ 746 $1,640 Class R5 $ 62 $ 196 $ 341 $ 766 RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $665 $ 858 $1,066 $1,667 Class B $673(b) $ 836(b) $1,124(b) $1,811(c) Class C $272(b) $ 533 $ 919 $2,003 Class R2 $138 $ 431 $ 746 $1,640 Class R5 $ 62 $ 196 $ 341 $ 766
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $224 $691 $1,186 $2,356(a) Class C $223 $688 $1,181 $2,539 RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $174 $539 $ 929 $1,822(a) Class C $174 $539 $ 929 $2,024 RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $173 $536 $ 924 $1,811(a) Class C $172 $533 $ 919 $2,003
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 20 PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R CLASS I SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING (TO BE KNOWN (TO BE KNOWN FUND) CLASS A CLASS B CLASS C AS R2) AS R5) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None(c) None RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND CLASS R2 AND (ACTUAL)(BUYING FUND) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND CLASS R2 AND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R5 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75%(a) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(b) 5% 1% None
(a) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (b) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (c) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). 21 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R CLASS I SELIGMAN INTERNATIONAL GROWTH FUND (TO BE KNOWN AS (TO BE KNOWN AS (ACTUAL) (SELLING FUND) CLASS A CLASS B CLASS C CLASS R2) CLASS R5) Management fees 0.98% 0.98% 0.98% 0.98% 0.98% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(a)(b) 0.72% 0.73% 0.73% 0.73% 0.48% Total annual fund operating expenses 1.95% 2.71% 2.71% 2.21% 1.46%
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 0.92% 0.92% 0.92% 0.92% 0.92% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.39% 0.40% 0.40% 0.47% 0.22% Total annual fund operating expenses 1.56% 2.32% 2.32% 1.89% 1.14% Fee waiver/expense reimbursement 0.18% 0.17% 0.18% 0.15% 0.15% Total annual (net) fund operating expenses(e) 1.38% 2.15% 2.14% 1.74% 0.99%
RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 CLASS R5 Management fees(c) 0.92% 0.92% 0.92% 0.92% 0.92% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% 0.00% Other expenses(d) 0.39% 0.41% 0.40% 0.47% 0.22% Total annual fund operating expenses 1.56% 2.33% 2.32% 1.89% 1.14% Fee waiver/expense reimbursement 0.18% 0.18% 0.18% 0.15% 0.15% Total annual (net) fund operating expenses(e) 1.38% 2.15% 2.14% 1.74% 0.99%
(a) Through at least Feb 28, 2010, RiverSource Investments has contractually agreed to waive its management fee and/or to reimburse Seligman International Growth Fund's expenses to the extent that the Fund's "other expenses" (i.e., those expenses other than management fees, 12b-1 fees, interest on borrowings, and extraordinary expenses, including litigation expenses) exceed 0.85% per annum of the Fund's average daily net assets. (b) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). (c) Includes the impact of a performance incentive adjustment fee that decreased the management fee by 0.06% for the most recent fiscal year. The adjustment is computed by measuring the percentage differences over a rolling 12-month period between the performance of the Fund and the performance of an index of comparable funds published by Lipper Inc. The index against which the RiverSource Partners International Select Growth Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper International Multi-Cap Growth Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.12% of the Fund's average net assets on an annual basis. See Fund Management and Compensation in Exhibit B for more information. Additional information on the calculation methodology is set forth in the Reorganization SAI. (d) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B, and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. Other expenses for Class R2 and Class R5 are based on estimated amounts for the current fiscal year. (e) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Oct. 31, 2009, unless sooner terminated at the discretion of the RiverSource Partners International Select Growth Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.44% for Class A, 2.21% for Class B, 2.20% for Class C, 1.80% for Class R2 and 1.05% for Class R5. 22 EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $762 $1,152 $1,568 $2,724 Class B $774(b) $1,142(b) $1,635(b) $2,862(c) Class C $374(b) $ 842 $1,435 $3,045 Class R (to be known as R2) $224 $ 691 $1,186 $2,549 Class I (to be known as R5) $149 $ 462 $ 798 $1,751 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $707 $1,023 $1,361 $2,315 Class B $718(b) $1,008(b) $1,426(b) $2,457(c) Class C $317(b) $ 707 $1,225 $2,647 Class R2 $177 $ 580 $1,008 $2,204 Class R5 $101 $ 348 $ 614 $1,378 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $707 $1,023 $1,361 $2,315 Class B $718(b) $1,011(b) $1,430(b) $2,464(c) Class C $317(b) $ 707 $1,225 $2,647 Class R2 $177 $ 580 $1,008 $2,204 Class R5 $101 $ 348 $ 614 $1,378
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $274 $842 $1,435 $2,862(a) Class C $274 $842 $1,435 $3,045 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $218 $708 $1,226 $2,457(a) Class C $217 $707 $1,225 $2,647 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $218 $711 $1,230 $2,464(a) Class C $217 $707 $1,225 $2,647
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 23 PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING (TO BE KNOWN FUND) CLASS A CLASS B CLASS C AS R2) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%(a)(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None(d) RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 3.00%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 3.00%(b) None None None Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) None(c) 5% 1% None
(a) Effective May 9, 2009, the maximum front-end sales charge for Class A shares will increase from 4.50% to 4.75%. (b) This charge may be reduced depending on the total value of your investments in the RiverSource Group of Funds. See Exhibit B "Sales Charges." (c) A 1% contingent deferred sales charge ("CDSC") may be assessed on Class A shares purchased without an initial sales charge and sold within 18 months after purchase. See Exhibit B "Sales Charges." (d) Effective May 9, 2009, the 1% CDSC will be eliminated on Class R (to be known as Class R2). ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS R SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING (TO BE KNOWN AS FUND) CLASS A CLASS B CLASS C CLASS R2) Management fees 0.50% 0.50% 0.50% 0.50% Distribution and/or service (12b-1) fees 0.24% 1.00% 1.00% 0.50% Other expenses(a) 0.56% 0.57% 0.57% 0.55% Total annual fund operating expenses 1.30% 2.07% 2.07% 1.55% RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING FUND) CLASS A CLASS B CLASS C CLASS R2 Management fees 0.48% 0.48% 0.48% 0.48% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% Other expenses(b) 0.31% 0.32% 0.32% 0.42% Total annual fund operating expenses 1.04% 1.80% 1.80% 1.40% Fee waiver/expense reimbursement 0.15% 0.15% 0.15% 0.09% Total annual (net) fund operating expenses(c) 0.89% 1.65% 1.65% 1.31% RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA COMBINED) CLASS A CLASS B CLASS C CLASS R2 Management fees 0.48% 0.48% 0.48% 0.48% Distribution and/or service (12b-1) fees 0.25% 1.00% 1.00% 0.50% Other expenses(b) 0.31% 0.32% 0.32% 0.42% Total annual fund operating expenses 1.04% 1.80% 1.80% 1.40% Fee waiver/expense reimbursement 0.15% 0.15% 0.15% 0.09% Total annual (net) fund operating expenses(c) 0.89% 1.65% 1.65% 1.31%
(a) Effective May 9, 2009, Class R will be redesignated Class R2, Class I will be redesignated Class R5, and a new transfer agent agreement and a new plan administration services agreement (Class R2 only) will be in effect with new fee structures. Other expenses include the transfer agency fee, custody fee, other nonadvisory expenses and a plan administrative services fee (Class R2 only). (b) Other expenses include an administrative services fee, a transfer agency fee, a custody fee, other nonadvisory expenses, and a plan administration services fee (for Class R2), and have been adjusted to reflect the impact of a new per account transfer agency fee (Class A, Class B, and Class C direct at fund accounts only), effective May 9, 2009. Other expenses may also include fees and expenses of affiliated and unaffiliated funds (acquired funds) which the Fund indirectly bears when it invests in 24 the acquired funds. The impact of these acquired fund fees and expenses for the most recent fiscal period was less than 0.01%. Because acquired funds will have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred by the Fund with respect to such investments will vary. Other expenses for Class R2 are based on estimated amounts for the current fiscal year. (c) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until May 31, 2009, unless sooner terminated at the discretion of the RiverSource Short Duration U.S. Government Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), will not exceed 0.89% for Class A, 1.65% for Class B, 1.65% for Class C and 1.31% for Class R2. EXPENSE EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the applicable Fund for the time periods indicated and then redeem all of your shares at the end of those periods both under the current arrangements and, for the Buying Fund, assuming the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $600 $868 $1,155 $1,973 Class B $710(b) $949(b) $1,314(b) $2,210(c) Class C $310(b) $649 $1,114 $2,405 Class R (to be known as R2) $158 $490 $ 846 $1,851 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $388 $607 $ 844 $1,524 Class B $668(b) $852(b) $1,162(b) $1,908(c) Class C $268(b) $552 $ 962 $2,109 Class R2 $133 $435 $ 758 $1,677 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $388 $607 $ 844 $1,524 Class B $668(b) $852(b) $1,162(b) $1,908(c) Class C $268(b) $552 $ 962 $2,109 Class R2 $133 $435 $ 758 $1,677
(a) Includes a 4.75% sales charge for the Selling Fund and a 3.00% sales charge for the Buying Fund (Actual and Pro Forma Combined). (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. If you owned or will own any class of shares other than Class B or Class C, you would pay the same costs shown in the tables above if you did not redeem your shares at the end of the periods indicated. If you owned or will own Class B or Class C shares, you would pay the following costs if you did not redeem your shares at the end of the periods indicated, which may be different than the costs shown in the tables above.
SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $210 $649 $1,114 $2,210(a) Class C $210 $649 $1,114 $2,405 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING FUND) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $168 $552 $ 962 $1,908(a) Class C $168 $552 $ 962 $2,109 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA COMBINED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class B $168 $552 $ 962 $1,908(a) Class C $168 $552 $ 962 $2,109
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. 25 PROPOSAL 1. REORGANIZATION OF SELIGMAN CORE FIXED INCOME FUND INTO RIVERSOURCE DIVERSIFIED BOND FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks a high level of current income consistent with prudent exposure to risk or conservation of investment value. Seligman Core Fixed Income Fund also seeks capital appreciation as a secondary objective. The investment objectives for the Funds are as follows: SELLING FUND: Seligman Core Fixed Income Fund seeks to produce a high level of current income consistent with prudent exposure to risk. Capital appreciation is a secondary objective. BUYING FUND: RiverSource Diversified Bond Fund seeks to provide shareholders with a high level of current income while conserving the value of the investment for the longest period of time. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund invests predominantly in U.S. dollar-denominated fixed-income securities of U.S. issuers. Under normal market conditions, the Selling Fund intends to maintain at least 70% of its net assets in investment grade fixed- income securities and may invest up to 30% of its net assets in non-investment grade, high yield securities. The Buying Fund invests at least 50% of its assets in securities like those in its benchmark index (the Barclays Capital U.S. Aggregate Bond Index), which are exclusively investment grade securities, and may therefore invest up to 50% of its assets in non-investment grade securities. The Selling Fund may invest up to 20% of its net assets in non-U.S. dollar- denominated fixed-income securities of U.S. or foreign issuers. The Buying Fund may invest up to 25% of its net assets in foreign investments. The Buying Fund targets an average portfolio duration within one year of that of its benchmark index but is not restricted with regards to duration. The Selling Fund, which may invest in securities of any duration, is currently targeting the same average portfolio duration as the Buying Fund. The Selling Fund does not have any portfolio maturation limitations on its investments and, therefore, may invest in securities with short, medium or long maturities. The Selling Fund and the Buying Fund seek to maintain an effective dollar-weighted average maturity of ten years or less on their portfolios of fixed-income securities but are not restricted to such limit. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN CORE FIXED INCOME FUND (SELLING FUND) The Fund will invest at least 80% of its net assets in fixed-income securities. Under normal market conditions, the Fund intends to maintain at least 70% of its net assets in investment grade fixed-income securities ("Investment Grade Securities") and may invest up to 30% of its net assets in non-investment grade, high yield securities ("High Yield Securities"). The proportion of the Fund's assets invested in each type of security will vary from time to time based on the investment manager's assessment of general market and economic conditions. The Fund may invest in securities of any duration. The Fund does not have any portfolio maturation limitations on its investments and, therefore, may invest in securities with short, medium or long maturities. However, the Fund expects to maintain an effective dollar-weighted average maturity of ten years or less on its portfolio of fixed-income securities. Although the Fund expects the maturity of its portfolio of fixed-income securities to be within the above limit, the Fund is not restricted to such limit. The Fund will invest its net assets primarily in U.S. dollar-denominated fixed- income securities of U.S. issuers. However, the Fund may also invest in U.S. dollar-denominated fixed-income securities of foreign issuers, including foreign governments or their agencies or instrumentalities, foreign banks and foreign corporations. The Fund may also invest up to 20% of its net assets in non-U.S. dollar-denominated fixed-income securities of U.S. or foreign issuers. The Fund's investment limitations and credit ratings restrictions (e.g., those of Fitch Ratings ("Fitch"), Moody's Investors Service ("Moody's") and Standard & Poor's Ratings Services ("S&P")) will apply at the time securities are purchased. The Fund is not required to sell a security if it no longer complies with these limitations or restrictions as a result of a change in rating or other event. INVESTMENT GRADE SECURITIES Investment Grade Securities are those rated within the four highest rating categories by Moody's or S&P, or, if unrated, deemed by the Fund's investment manager to be of comparable quality. 26 HIGH-YIELD SECURITIES High-Yield Securities (many of which are commonly known as "junk bonds") carry noninvestment grade ratings (Ba or below by Moody's or BB or below by Fitch or S&P) or are securities deemed to be below investment grade by the Fund's investment manager. Although High-Yield Securities have the potential to offer higher yields than higher rated fixed-income securities with similar maturities, High-Yield Securities are subject to greater risk of loss of principal and interest than higher rated Investment Grade Securities. INVESTMENTS IN INVESTMENT GRADE SECURITIES AND HIGH-YIELD SECURITIES The Fund may invest in all types of Investment Grade Securities and High Yield Securities, including, but not limited to: - Senior and subordinated corporate debt obligations of both U.S. and non-U.S. issuers (including, for example, debentures, loan participations and floating rate notes); - Mortgage-backed and other asset-backed securities (mortgage backed securities include collateralized mortgage obligations, mortgage pass-through securities and stripped mortgage backed securities); - Convertible securities, preferred stock, capital securities, structured securities and loan participations of U.S. and non-U.S. issuers; - Obligations of non-U.S. governments and their agencies, and non-U.S. private institutions; - Municipal securities; - Repurchase agreements; - Capital appreciation bonds, including zero coupon (interest payments accrue until maturity) and pay-in-kind securities (interest payments are made in additional securities); - Restricted securities that may be offered and sold only to "qualified institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule 144A Securities"); and - Eurodollar bonds. Investment Grade Securities also include, but are not limited to: - Obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities; - Obligations of government sponsored enterprises (e.g., the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae)); - Income-producing cash equivalents (e.g., certificates of deposit, commercial paper, discount notes and treasury bills); and - Other securities deemed by the investment manager to be of investment grade quality. High Yield Securities also include, but are not limited to: - Securities that are rated in default by a nationally recognized statistical rating organization; - Warrants, rights and other equity securities that are acquired in connection with the Fund's investments in High Yield Securities; and - Other securities deemed by the investment manager to be of non-investment grade quality. INVESTMENT PROCESS Investment Grade Securities. In pursuit of the Fund's objective, the investment manager chooses Investment Grade Securities by: - Evaluating the Investment Grade Securities portion of the portfolio's exposure to sectors, industries and securities relative to the Barclays Capital U.S. Aggregate Bond Index (the "Index"). - Analyzing factors such as credit quality, interest rate outlook and price in seeking to select the most attractive securities within each sector. - Targeting an average portfolio duration within one year of the duration of the Index which, as of Jan. 31, 2009, was 4.18 years. In evaluating whether to sell an Investment Grade Security, the investment manager considers, among other factors: - Identification of more attractive investments based on relative value. - The portfolio's total exposure to sectors, industries and securities relative to the Index. - Whether a security's rating has changed or is vulnerable to a change. 27 - Whether a sector or industry is experiencing change. - Changes in the interest rate or economic outlook. High Yield Securities. In pursuit of the Fund's objective, the investment manager chooses High Yield Securities by: - Reviewing interest rate and economic forecasts. - Reviewing credit characteristics and capital structures of companies, including an evaluation of any outstanding bank loans or corporate debt securities a company has issued, its relative position in its industry, and its management team's capabilities. - Identifying companies that: - have medium and low quality ratings or, in the investment manager's opinion, have similar qualities to companies with medium or low quality ratings, even though they are not rated, or have been given a different rating by a rating agency, - have growth potential, or - have the potential to increase in value as their credit ratings improve. - Buying debt instruments that are expected to outperform other debt instruments. In evaluating whether to sell High Yield Securities, the investment manager considers, among other factors, whether: - The interest rate or economic outlook changes. - A sector or industry is experiencing change. - A security's rating is changed. - The security is overvalued relative to alternative investments. - The company no longer meets the investment manager's performance expectations. - The investment manager wishes to lock in profits. - The investment manager identifies a more attractive opportunity. - The issuer or the security continues to meet the other standards described above. The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold within seven days at approximately the Fund's value of the securities) including funding agreements issued by domestic insurance companies. Rule 144A Securities deemed to be liquid by the Fund's investment manager are not included in this limitation. The Fund may purchase securities on a when issued or forward commitment basis (delivery of securities and payment of the purchase price takes place after the commitment to purchase the securities). RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND) Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Barclays Capital U.S. Aggregate Bond Index (the "Index"), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk in an effort to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. Up to 25% of the Fund's net assets may be invested in foreign investments, which may include investments in emerging markets. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. The selection of debt obligations is the primary decision in building the investment portfolio. In pursuit of the Fund's objective, the investment manager chooses investments by: - Evaluating the portfolio's total exposure to sectors, industries and securities relative to the Index. - Analyzing factors such as credit quality, interest rate outlook and price in seeking to select the most attractive securities within each sector. - Investing in lower-quality (junk) bonds and foreign investments as attractive opportunities arise. - Targeting an average portfolio duration within one year of the duration of the Index which, as of Jan. 31, 2009, was 4.18 years. Duration measures the sensitivity of bond prices to changes in interest rates. The longer the duration of a bond, the longer it will take to repay the principal and interest obligations and the more sensitive it will be to changes in interest rates. For example, a five-year duration means a bond is expected to decrease in value by 5% if interest rates rise 1% and increase in value by 5% if interest rates fall 1%. 28 In evaluating whether to sell a security, the investment manager considers, among other factors: - Identification of more attractive investments based on relative value. - The portfolio's total exposure to sectors, industries and securities relative to the Index. - Whether a security's rating has changed or is vulnerable to a change. - Whether a sector or industry is experiencing change. - Changes in the interest rate or economic outlook. The investment manager may use derivatives such as futures, options, forward contracts and swaps, including credit default swaps, in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, or to obtain or reduce credit exposure. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
-------------------------------------------------------------------------------------------------------- SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND FUNDAMENTAL POLICY (SELLING FUND) (BUYING FUND) -------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite securities The Fund may not act as an underwriter of other issuers except insofar as the (sell securities for others). However, Fund technically may be deemed an under the securities laws, the Fund may underwriter under the Securities Act of be deemed to be an underwriter when it 1933 (the "1933 Act"), as amended, in purchases securities directly from the selling portfolio securities. issuer and later resells them. -------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except The Fund may not lend securities or that the acquisition of bonds, participate in an interfund lending debentures or other corporate fixed- program if the total of all such loans income securities and investment in would exceed 33 1/3% of the Fund's government obligations, commercial total assets except this fundamental paper, pass-through instruments, investment policy shall not prohibit certificates of deposit, bankers the Fund from purchasing money market acceptances, repurchase agreements or securities, loans, loan participation any similar instruments shall not be or other debt securities, or from deemed to be the making of a loan, and entering into repurchase agreements. except further that the Fund may lend its portfolio securities; and except that the Fund may lend cash to any other mutual fund (or series thereof) in the Seligman Group to the extent permitted by applicable law or regulation, or any order that may be obtained from the SEC relating to borrowing and lending among Seligman- branded mutual funds. -------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except that the Fund may (i) borrow from banks for temporary purposes (not for (as defined in the 1940 Act)) in leveraging or investment) in an amount amounts up to 33 1/3% of its total not exceeding 33 1/3% of its total assets (including the amount borrowed), assets (including the amount borrowed) (ii) borrow up to an additional 5% of less liabilities (other than its total assets for temporary purposes borrowings) immediately after the (iii) obtain such short-term credit as borrowings. may be necessary for the clearance of purchases and sales of portfolio securities, (iv) purchase securities on margin to the extent permitted by applicable law and (v) borrow cash from any other mutual fund (or series thereof) in the Seligman Group to the extent permitted by any order that may be obtained from the SEC relating to borrowing and lending among mutual funds in the Seligman Group. The Fund may not pledge its assets other than to secure such borrowings or, to the extent permitted by the Fund's investment policies as set forth in the Prospectuses and the SAI, as they may be amended from time to time, in connection with hedging transactions, short sales, when-issued and forward commitment transactions and similar investment strategies. -------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior SECURITIES securities. securities, except as permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. --------------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------------------- SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND FUNDAMENTAL POLICY (SELLING FUND) (BUYING FUND) -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or sell real The Fund will not buy or sell real estate, except that the Fund may invest estate, unless acquired as a result of in securities directly or indirectly ownership of securities or other secured by real estate or interests instruments, except this shall not therein or issued by companies which prevent the Fund from investing in invest in real estate or interests securities or other instruments backed therein. by real estate or securities of companies engaged in the real estate business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. -------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and the Fund's instruments, except this shall not prospectuses and SAI, as they may be prevent the Fund from buying or selling amended from time to time, and without options and futures contracts or from registering as a commodity pool investing in securities or other operator under the Commodity Exchange instruments backed by, or whose value Act. is derived from, physical commodities. -------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, taken at market one industry. According to the present value, in the securities of issuers in interpretation by the SEC, this means any particular industry, except that up to 25% of the Fund's total securities issued or guaranteed by the assets, based on current market value U.S. government and its agencies and at time of purchase, can be invested in instrumentalities. any one industry. -------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. -------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its net assets would be so invested. --------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- FOREIGN SECURITIES The Fund may invest up to 20% of its The Fund may invest up to 25% of its net assets in non-U.S. dollar- net assets in foreign investments. denominated fixed-income securities of U.S. or foreign issuers. --------------------------------------------------------------------------------------------------------- SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. ---------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN CORE FIXED INCOME FUND RIVERSOURCE DIVERSIFIED BOND FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- RIGHTS AND The Fund may invest in common stock The Fund does not intend to invest WARRANTS rights and warrants that are acquired directly in common stock rights and in connection with its investments in warrants but is not restricted from High-Yield Securities, as defined in acquiring them in connection with its the Fund's Prospectuses. The Fund may investments in convertible securities. not invest in rights and warrants if, at the time of acquisition, the investment in rights and warrants would exceed 5% of the Fund's net assets, valued at the lower of cost or market. In addition, no more than 2% of net assets may be invested in warrants not listed on the New York or American Stock Exchanges. For purposes of this restriction, rights and warrants acquired by the Fund as part of a unit or attached to securities may be deemed to have been purchased without cost. ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or a note. If the Fund purchases unrated securities, or if the rating of a security is reduced after purchase, the Fund will depend on the investment manager's analysis of credit risk more heavily than usual. Non-investment grade securities, commonly called high yield or junk bonds, may react more to perceived changes in the ability of the issuing entity to pay interest and principal when due than to changes in interest rates. Non-investment grade securities have greater price fluctuations and are more likely to experience a default than investment grade bonds. - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based outside the United States. An issuer is deemed to be based outside the United States if it is organized under the laws of another country. Foreign securities are primarily denominated in foreign currencies. In addition to the risks normally associated with domestic securities of the same type, foreign securities are subject to the following foreign risks: Country risk includes the political, economic and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social and political) in these countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners and hostile relations with neighboring countries. - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices: when interest rates rise, bond prices fall. In general, the longer the maturity or duration of a bond, the greater its sensitivity to changes in interest rates. 31 - LIQUIDITY RISK. The risk associated from a lack of marketability of securities which may make it difficult or impossible to sell at desirable prices in order to minimize loss. The Fund may have to lower the selling price, sell other investments, or forego another, more appealing investment opportunity. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that a bond or other security might be called or otherwise converted, prepaid, or redeemed before maturity. This risk is primarily associated with asset-backed securities, including mortgage-backed securities. If a security is converted, prepaid, or redeemed before maturity, particularly during a time of declining interest rates, the investment manager may not be able to reinvest in securities providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise, the likelihood of prepayment decreases. The investment manager may be unable to capitalize on securities with higher interest rates because the Fund's investments are locked in at a lower rate for a longer period of time. In addition to the risks described above, the Buying Fund is subject to the additional principal investment risk set forth below. While this additional risk may also be a risk of the Selling Fund, it is not stated as a principal investment risk of the Selling Fund. For more information regarding the Selling Fund's principal investment risks, see "Principal Risks" in the Selling Fund's prospectus. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including counterparty credit risk, hedging risk, correlation risk, liquidity risk and leverage risk. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging Risk is the risk that derivative instruments used to hedge against an opposite position, may offset losses, but they may also offset gains. Correlation Risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity Risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage Risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first tables show total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman Core Fixed Income Fund. The second table shows total returns from hypothetical investments in Class A, 32 Class B, Class C, Class R2 and Class R5 shares of the RiverSource Diversified Bond Fund. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and 4.75% for Class A shares of the Buying Fund; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class R2, Class R5 and Class I shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge in Class A shares of the Selling Fund is 4.50%. Although for all periods presented the Selling Fund's Class A share returns reflect the 4.50% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been lower if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented the Selling Fund's Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN CORE FIXED INCOME FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +8.55% +4.13% +2.34% +0.92% +3.34% +4.79% -3.43% 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +5.45% (quarter ended Sept. 30, 2002) and the lowest return for a calendar quarter was -2.74% (quarter ended Sept. 30, 2008). The performance of other classes may vary from that shown because of differences in expenses. RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) -0.22% +7.03% +7.33% +5.63% +4.61% +4.41% +2.09% +5.37% +5.08% -6.42% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +3.49% (quarter ended Sept. 30, 2006) and the lowest return for a calendar quarter was -3.30% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. 33 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE SINCE INCEPTION INCEPTION INCEPTION 1 YEAR 5 YEARS (CLASSES A, B, C) (CLASS R*) (CLASS I*) SELIGMAN CORE FIXED INCOME FUND (SELLING FUND): Class A Return before taxes -7.74% +0.63% +2.06%(a) N/A N/A Return after taxes on distributions -9.07% -0.69% +0.66%(a) N/A N/A Return after taxes on distributions and sale of Fund shares -5.01% -0.21% +0.94%(a) N/A N/A Class B Return before taxes -8.78% +0.45% +1.96%(a) N/A N/A Class C Return before taxes -5.05% +0.80% +1.96%(a) N/A N/A Class R* Return before taxes -4.45% +1.35% N/A +1.48%(b) N/A Class I* Return before taxes -3.18% +1.80% N/A N/A +2.97%(c) Barclays Capital U.S. Aggregate Bond Index** +5.24% +4.65% +5.15%(d) +4.43%(e) +5.20%(f) Barclays Capital U.S. Universal Index** +2.38% +4.30% +5.11%(d) +4.28%(e) +5.14%(f) Lipper Intermediate Investment-Grade Debt Funds Average -4.42% +1.74% +3.03%(g) +1.92%(e) +2.96%(f) SINCE SINCE INCEPTION INCEPTION (CLASSES R2 1 YEAR 5 YEARS 10 YEARS (CLASS C) AND R5) RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND): Class A Return before taxes -10.82% +1.03% +2.88% N/A N/A Return after taxes on distributions -12.20% -0.45% +1.01% N/A N/A Return after taxes on distributions and sale of Fund shares -7.00% +0.04% +1.31% N/A N/A Class B Return before taxes -11.61% +0.89% +2.63% N/A N/A Class C Return before taxes -7.82% +1.24% N/A +3.20%(h) N/A Class R2 Return before taxes -6.40% N/A N/A N/A -0.60%(j) Class R5 Return before taxes -5.94% N/A N/A N/A -0.09%(j) Barclays Capital U.S. Aggregate Bond Index +5.24% +4.65% +5.63% +6.33%(i) +5.68%(k) Lipper Intermediate Investment Grade Index -4.71% +2.28% +4.24% +4.78%(i) +0.03%(k)
(a) Inception date is Oct. 1, 2001. (b) Inception date is April 30, 2003. (c) Inception date is Nov. 30, 2001. (d) Measurement period started Oct. 1, 2001. (e) Measurement period started April 30, 2003. (f) Measurement period started Nov. 30, 2001. (g) Measurement period started Sept. 30, 2001. (h) Inception date is June 26, 2000. (i) Measurement period started June 26, 2000. (j) Inception date is Dec. 11, 2006. (k) Measurement period started Dec. 11, 2006. * Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. ** Effective Nov. 7, 2008, to better align the primary benchmark index with the investment strategy of the Fund, the Barclays Capital U.S. Universal Index was replaced with the Barclays Capital U.S. Aggregate Bond Index, which will be used as the primary benchmark for the Fund. The Barclays Capital U.S. Aggregate Bond Index, an unmanaged index, is made up of a representative list of government, corporate, asset backed and mortgage- backed securities. The index is frequently used as a general measure of bond market performance. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. 34 The Barclays Capital U.S. Universal Index, an unmanaged index, measures the performance of U.S. dollar-denominated, taxable bonds that are rated either investment grade or below investment grade. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Intermediate Investment-Grade Debt Funds Average measures the performance of mutual funds that invest at least 65% of their assets in investment-grade debt issues rated in the top four grades with dollar-weighted average maturities of five to ten years. The average is an unmanaged benchmark that assumes the reinvestment of all distributions and does not reflect any sales charges or taxes. The Lipper Intermediate Investment Grade Index includes the 30 largest investment grade funds tracked by Lipper Inc. The index's returns include net reinvested dividends. Investors cannot invest directly in an average or index. 35 PROPOSAL 2. REORGANIZATION OF SELIGMAN EMERGING MARKETS FUND INTO THREADNEEDLE EMERGING MARKETS FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks long-term capital appreciation and invests predominantly in equity securities of emerging markets companies. The investment objectives for the Funds are as follows: SELLING FUND: Seligman Emerging Markets Fund seeks long-term capital appreciation. BUYING FUND: Threadneedle Emerging Markets Fund seeks to provide shareholders with long-term capital growth. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund invests primarily in equity securities of emerging markets companies. Each Fund may enter into forward foreign currency exchange contracts as part of its principal investment strategies. RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser, which provides day-to- day management of the Fund. The Selling Fund is subadvised by Wellington Management Company, LLP ("Wellington") and the Buying Fund is subadvised by Threadneedle International Limited ("Threadneedle"), an indirect wholly-owned subsidiary of Ameriprise Financial, Inc. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN EMERGING MARKETS FUND (SELLING FUND) The Fund generally invests at least 80% of its net assets in equity securities of companies that conduct their principal business activities in emerging markets, are organized under the laws of or maintain their principal place of business in emerging markets, or whose securities are traded principally on exchanges in emerging markets. The Fund will focus its investments in those emerging markets in which the investment manager believes the economies are developing strongly and markets are becoming more liquid, or other emerging markets that meet the portfolio manager's criteria for investability. The Fund seeks to benefit from policies of economic development being adopted in many emerging markets. These policies include domestic price reform, reducing internal budget deficits, privatization, encouraging foreign investments, and developing capital markets. The Fund combines a bottom-up investment style with top-down analysis of regions, countries and sectors. This means the portfolio manager concentrates first on analysis of individual companies and then on analysis of individual sectors, countries and regions. In selecting individual securities, the portfolio manager looks to identify companies that it believes display one or more of the following: - Operate in growing markets - Attractive valuations relative to cash earnings forecasts or other valuation criteria - Unique sustainable competitive advantages (e.g., market share, proprietary products) - Improving industry or country fundamentals Following stock selection, the portfolio manager then focuses on portfolio construction that considers top-down risk control based on such factors as: - Relative economic growth potential of the various economies and securities markets - Political, financial, and social conditions influencing investment opportunities - Relative rates of earnings growth - Interest rate outlook and expected levels of inflation - Market prices relative to historic averages The Fund generally sells a stock if the portfolio manager believes its target price has been reached, its earnings are disappointing, its revenue growth has slowed, its underlying fundamentals have deteriorated, or there are deteriorating industry or country fundamentals. The Fund may also sell or trim a stock if the portfolio manager believes, from a risk control perspective, the stock's position size is inappropriate for the portfolio. Also, stocks may be sold when negative country, currency, or general industry factors affect a company's outlook, or to meet cash requirements. The Fund may invest in all types of securities, many of which will be denominated in currencies other than the U.S. dollar. The securities may be listed on a U.S. or foreign stock exchange or traded in U.S. or foreign over- the-counter markets. The 36 Fund normally concentrates its investments in common stocks; however, it may invest in other types of equity securities, including securities convertible into or exchangeable for common stock, depositary receipts, and rights and warrants to purchase common stock. The Fund also may invest up to 20% of its assets in preferred stock and investment-grade or comparable quality debt securities. The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold), and may from time to time enter into forward foreign currency exchange contracts in an attempt to manage the risk of adverse changes in currencies. The Fund may also purchase put options in an attempt to hedge against a decline in the price of securities it holds in its portfolio. A put option gives the Fund the right to sell an underlying security at a particular price during a fixed period of time. Forward foreign currency exchange contracts and put options on securities may not be available to the Fund on reasonable terms in many situations, and the Fund may frequently choose not to enter into such contracts or purchase such options even when they are available. The Fund may also invest up to 10% of its assets in exchange-traded funds ("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they represent baskets of securities that seek to track the performance of certain indices. The indices include not only broad-market indexes but more specific indices as well, including those relating to particular sectors, countries and regions. The Fund may invest in ETFs for short-term cash management purposes or as part of its overall investment strategy. THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) The Fund's assets are primarily invested in equity securities of emerging markets companies. Emerging markets are countries characterized as developing or emerging by either the World Bank or the United Nations. Under normal market conditions, at least 80% of the Fund's net assets will be invested in securities of companies that are located in emerging markets countries, or that earn 50% or more of their total revenues from goods or services produced in emerging markets countries or from sales made in emerging markets countries. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. RiverSource Investments serves as the investment manager to the Fund and is responsible for oversight of Threadneedle, the Fund's subadviser. Threadneedle chooses investments by: - Deploying an integrated approach to equity research that incorporates regional analyses, a global sector strategy, and stock specific perspectives. - Conducting detailed research on companies in a consistent strategic and macroeconomic framework. - Looking for catalysts of change and identifying the factors driving markets, which will vary over economic and market cycles. - Implementing rigorous risk control processes that seek to ensure that the risk and return characteristics of the Fund's portfolio are consistent with established portfolio management parameters. The Fund's portfolio management team constructs the portfolio by selecting what it considers to be the best stocks in each industry sector, based on return on invested capital analysis, growth and valuation. The Fund's sector exposure generally reflects the global macroeconomic environment, the outlook for each sector and the relative valuation of the stocks among the sectors. The Fund's portfolio management team constructs the portfolio by investing in most of the stocks on two core lists of holdings: the Largest Companies List and the Preferred List. In addition, the portfolio will hold other securities selected by the portfolio management team. These discretionary holdings will typically make up a much smaller portion of the Fund. - The Largest Companies List includes the largest stocks in the Fund's benchmark, the Morgan Stanley Capital International ("MSCI") Emerging Markets Index. Threadneedle's research on sectors and specific companies is used to determine recommended weightings for each stock. - The Preferred List includes the stocks not included in the Largest Companies List that represent the best ideas generated by Threadneedle's research analysts. Stocks on the Preferred List are selected by: - Analyzing returns on invested capital for the largest companies within each sector; - Assessing valuations; and - Evaluating one or more of the following: balance sheets and cash flows, the demand for a company's products or services, its competitive position, or its management. 37 The Fund will normally be overweight in the stocks on the Preferred List compared to the benchmark. - Discretionary holdings are selected by the individual portfolio management team based on the same criteria used to generate the Preferred List. These stocks are assigned ratings based on their perceived ability to outperform within their sector. The team typically selects the highest rated stocks outside the core category. A number of factors may prompt the portfolio management team to sell securities. A sale may result from a change in the composition of the Fund's benchmark or a change in sector strategy. A sale may also be prompted by factors specific to a stock, such as valuation or company fundamentals. The Fund will normally have exposure to foreign currencies. The portfolio management team closely monitors the Fund's exposure to foreign currency. From time to time the team may use forward currency transactions or other derivative instruments to hedge against currency fluctuations. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
--------------------------------------------------------------------------------------------------------- SELIGMAN EMERGING MARKETS FUND (SELLING THREADNEEDLE EMERGING MARKETS FUND FUNDAMENTAL POLICY FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund will not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. --------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund will not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's exemptions therefrom which may be total assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. --------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except The Fund will not borrow money, except as permitted by the 1940 Act or any for temporary purposes (not for rule thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act less liabilities (other than permits a fund to borrow up to 33 1/3% borrowings) immediately after the of its total assets (including the borrowings. amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. --------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund will not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations SEC or SEC staff interpretations thereunder and any applicable exemptive thereof or any exemptions therefrom relief. which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate, except the Fund may invest estate, unless acquired as a result of in securities secured by real estate or ownership of securities or other interests therein or issued by persons instruments, except this shall not (including real estate investment prevent the Fund from investing in trusts) which deal in real estate or securities or other instruments backed interests therein. by real estate or securities of companies engaged in the real estate business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options and futures contracts or from Commodities below. investing in securities or other instruments backed by, or whose value is derived from, physical commodities. --------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, at market value, in one industry. According to the present the securities of issuers in any interpretation by the SEC, this means particular industry, provided that this that up to 25% of the Fund's total limitation shall exclude securities assets, based on current market value issued or guaranteed by the U.S. at time of purchase, can be invested in government or any of its agencies or any one industry. instrumentalities. ---------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- SELIGMAN EMERGING MARKETS FUND (SELLING THREADNEEDLE EMERGING MARKETS FUND FUNDAMENTAL POLICY FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin, except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its total assets would be invested in such agreements and in restricted and other illiquid securities. --------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or retain the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer (other than AND TRUSTEES the shares of the Fund), if to the Fund's knowledge, those directors and officers of Seligman Global Fund Series, Inc. (of which the Fund is a series) and the directors and officers of the investment manager or subadviser, who individually own beneficially more than 1/2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. ---------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN EMERGING MARKETS FUND THREADNEEDLE EMERGING MARKETS FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- BORROWING The Fund may not borrow more than 15% Not applicable. See the fundamental RESTRICTIONS of the value of its total assets. investment policy on Borrowing Money Borrowings may be secured by a above. mortgage or pledge of the Fund's assets. See also the fundamental investment policy on Borrowing Money above. --------------------------------------------------------------------------------------------------------- SECURITIES OF The Fund may not acquire any Not applicable. OPEN-END securities of a registered open-end INVESTMENT investment company or a registered COMPANIES unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in the Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. Approval of the Board of Directors must be granted for a Fund to invest in any new type of commodity if it is of a type the Fund has not previously utilized. See also fundamental investment policy on Commodities above. --------------------------------------------------------------------------------------------------------- EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable TRADED FUNDS assets in ETFs. investment strategy for the Fund, however, the Fund does not have a stated policy limiting these types of investments, other than as otherwise permitted by the 1940 Act. ---------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN EMERGING MARKETS FUND THREADNEEDLE EMERGING MARKETS FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- PREFERRED STOCK The Fund may invest up to 20% of its The Fund may invest in preferred stock AND DEBT net assets in preferred stock and debt and debt securities to the extent SECURITIES securities, including investment grade permitted by its investment strategy. debt securities and high-yield bonds. For capital appreciation, the Fund may invest up to 5% of its assets in governmental and corporate debt securities that, at the time of purchase by the Fund, are rated Baa or lower by Moody's and BBB or lower by S&P or, if unrated, deemed to be of comparable quality. The Fund will not invest in debt securities rated lower than C by Moody's or C by S&P or, if unrated, deemed to be of comparable quality. --------------------------------------------------------------------------------------------------------- DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to only for hedging or investment the extent permitted by its investment purposes. The Fund will not invest in strategy. derivatives for speculative purposes, which means where the derivative investment exposes the Fund to undue risk of loss, such as where the risk of loss is greater than the cost of the investment. --------------------------------------------------------------------------------------------------------- WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable Fund may be invested in warrants not investment strategy for the Fund. listed on the New York or American Stock Exchanges. --------------------------------------------------------------------------------------------------------- ACCESS TRADES The Fund may participate in access The Fund may invest in access trades trades, but its exposure is limited to and other derivative instruments to 5% of total assets of the Fund at the the extent permitted by its investment time of purchase and to dealing with strategy. counterparties believed to be reputable. --------------------------------------------------------------------------------------------------------- INVESTMENTS FOR The Fund may not invest for the Not applicable, other than as PURPOSES OF purpose of controlling or managing any otherwise permitted by the 1940 Act. MANAGEMENT company. OR CONTROL --------------------------------------------------------------------------------------------------------- ILLIQUID The Fund does not currently expect to No more than 15% of the Fund's net SECURITIES invest more than 5% of its net assets assets will be held in securities and in illiquid securities, including other instruments that are illiquid. restricted securities (i.e., securities not readily marketable without registration under the 1933 Act) and other securities that are not readily marketable. ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including counterparty credit risk, hedging risk, correlation risk, liquidity risk and leverage risk. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. 40 Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based outside the United States. An issuer is deemed to be based outside the United States if it is organized under the laws of another country. Foreign securities are primarily denominated in foreign currencies. In addition to the risks normally associated with domestic securities of the same type, foreign securities are subject to the following foreign risks: Country risk includes the political, economic and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social and political) in these countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners, and hostile relations with neighboring countries. - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures or other factors. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid- sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. - SECTOR RISK. Investments that are concentrated in a particular issuer, geographic region or sector will be more susceptible to changes in price. The more a fund diversifies across sectors, the more it spreads risk and potentially reduces the risks of loss and volatility. - SMALL AND MID-SIZED COMPANY RISK. Investments in small and medium companies often involve greater risks than investments in larger, more established companies because small and medium companies may lack the management experience, financial resources, product diversification, experience and competitive strengths of larger companies. Additionally, in many instances the securities of small and medium companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less and may be more volatile than is typical of larger companies. In addition to the risks described above, the Buying Fund is subject to the additional principal investment risk set forth below. While this additional risk may also be a risk of the Selling Fund, it is not stated as a principal investment risk of the Selling Fund. For more information regarding the Selling Fund's principal investment risks, see "Principal Risks" in the Selling Fund's prospectus. - GEOGRAPHIC CONCENTRATION RISK. The Fund may be particularly susceptible to economic, political or regulatory events affecting companies and countries within the specific geographic region in which the Fund focuses its investments. Currency devaluations could occur in countries that have not yet experienced currency devaluation to date, or could continue to occur in countries that have already experienced such devaluations. As a result, the Fund may be more volatile than a more geographically diversified fund. 41 In addition to the risks described above, the Selling Fund is subject to the risks associated with investing in debt securities, including high-yield bonds (junk bonds), including the risks set forth below. While these additional risks may also be risks of the Buying Fund, they are not stated as principal investment risks of the Buying Fund. For more information regarding the Buying Fund's principal investment risks, see "Principal Risks" in the Buying Fund's prospectus. - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or a note. If the Fund purchases unrated securities, or if the rating of a security is reduced after purchase, the Fund will depend on the investment manager's analysis of credit risk more heavily than usual. Non-investment grade securities, commonly called high yield or junk bonds, may react more to perceived changes in the ability of the issuing entity to pay interest and principal when due than to changes in interest rates. Non-investment grade securities have greater price fluctuations and are more likely to experience a default than investment grade bonds. - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices: when interest rates rise, bond prices fall. In general, the longer the maturity or duration of a bond, the greater its sensitivity to changes in interest rates. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman Emerging Markets Fund. The second table shows total returns from hypothetical investments in Class A, Class B and Class C shares of the Threadneedle Emerging Markets Fund. The inception date for Class R2 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for that class is not shown. Class R5 of the Buying Fund has not been in existence for a full calendar year and therefore performance for that class is not shown. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 5.75%* for Class A shares; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class I shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge on investments in Class A shares of the Selling Fund is 5.75%. Although for all periods presented, the Selling Fund's Class A share returns reflect the 5.75% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been higher if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented in the tables the Selling Funds' Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. 42 The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN EMERGING MARKETS FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +60.69% -44.60% -1.44% -6.46% +57.68% +22.88% +32.37% +30.94% +42.16% -51.62% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +33.99% (quarter ended Dec. 31, 1999) and the lowest return for a calendar quarter was -26.57% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. 43 THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +79.03% -33.03% -3.85% -3.06% +40.60% +24.44% +34.10% +34.25% +37.23% -54.91% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +37.49% (quarter ended Dec. 31, 1999) and the lowest return for a calendar quarter was -29.68% (quarter ended Sept. 30, 2008). The performance of other classes may vary from that shown because of differences in expenses. The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement where the Buying Fund invested all of its assets in a corresponding "master" fund with an identical investment objective and investment strategies. As of Nov. 8, 2005, the Buying Fund became a stand-alone fund that invests directly in a portfolio of securities. The information shown in the table and in the financial highlights for the Buying Fund includes the activity of the Buying Fund when it was a feeder in a master/feeder arrangement. 44 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE SINCE INCEPTION INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**) SELIGMAN EMERGING MARKETS FUND (SELLING FUND): Class A Return before taxes -54.39% +6.67% +5.98% N/A N/A N/A Return after taxes on distributions -55.20% +4.80% +5.05% N/A N/A N/A Return after taxes on distributions and sale of Fund shares -34.43% +5.75% +5.25% N/A N/A N/A Class B Return before taxes -54.03% +6.86% +5.96%* N/A N/A N/A Class C Return before taxes -52.18% +7.26% N/A +4.63%(a) N/A N/A Class R** Return before taxes -51.82% +8.02% N/A N/A +15.54%(b) N/A Class I** Return before taxes -51.42% +8.69% N/A N/A N/A +13.37%(c) Morgan Stanley Capital International (MSCI) Emerging Markets Index -53.18% +8.01% +9.30% +7.14%(d) +15.28%(e) +12.68%(f) Lipper Emerging Markets Funds Average -55.41% +6.20% +9.38% +7.23%(g) +13.65%(e) +11.47%(f)
Prior to March 31, 2000, J. & W. Seligman & Co. Incorporated (the predecessor investment manager) employed subadvisers that were responsible for providing certain portfolio management services with respect to the investments of the Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund were managed exclusively by Seligman. Since Sept. 15, 2003, Wellington Management Company, LLP has been employed as subadviser to provide portfolio management services to the Fund.
SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND): Class A Return before taxes -57.50% +5.49% +7.54% N/A Return after taxes on distributions -57.50% +3.10% +6.29% N/A Return after taxes on distributions and sale of Fund shares -37.38% +4.62% +6.60% N/A Class B Return before taxes -57.48% +5.66% +7.26% N/A Class C Return before taxes -55.68% +5.95% N/A +3.16%(h) MSCI Emerging Markets Index -53.18% +8.02% +9.31% +5.78%(i) Lipper Emerging Markets Funds Index -54.76% +6.30% +8.64% +5.08%(i)
(a) Inception date is May 27, 1999. (b) Inception date is April 30, 2003. (c) Inception date is Nov. 30, 2001. (d) Measurement period started May 31, 1999. (e) Measurement period started April 30, 2003. (f) Measurement period started Nov. 30, 2001. (g) Measurement period started May 27, 1999. (h) Inception date is June 26, 2000. (i) Measurement period started June 26, 2000. * The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. ** Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. The MSCI Emerging Markets Index, an unmanaged market capitalization weighted index, is designed to measure equity market performance in the global emerging markets. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Emerging Markets Funds Average comprises mutual funds which seek long-term capital appreciation by investing at least 65% of total assets in emerging market equity securities, where "emerging market" is defined by a country's gross national product (GNP) per capita or other economic measures. The average is an unmanaged benchmark that assumes the reinvestment of all distributions, if any, and excludes the effect of fees, sales charges and taxes. The Lipper Emerging Markets Funds Index includes the 30 largest emerging markets funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Buying Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See Fund Management and Compensation in Exhibit B for more information. Investors cannot invest directly in an average or index. 45 The inception date for Class R2 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for that class is not shown. Class R5 of the Buying Fund has not been in existence for a full calendar year and therefore performance for that class is not shown. 46 PROPOSAL 3. REORGANIZATION OF SELIGMAN GLOBAL GROWTH FUND INTO THREADNEEDLE GLOBAL EQUITY FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks long-term capital appreciation and invests predominantly in equity securities. The investment objectives for the Funds are as follows: SELLING FUND: Seligman Global Growth Fund seeks long-term capital appreciation. BUYING FUND: Threadneedle Global Equity Fund seeks to provide shareholders with long-term capital growth. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, the Selling Fund invests at least 40% of its net assets in the securities of non-U.S. companies (as described below), while the Buying Fund has no similar restrictions. The Selling Fund may invest up to 15% of its assets in emerging market equities and up to 25% of its assets in preferred stock and investment grade or comparable quality debt securities, while the Buying Fund has no comparable restrictions. Each Fund may enter into forward foreign currency exchange contracts or use derivatives as part of its principal investment strategies. RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser, which provides day-to- day management of the Fund. The Selling Fund is subadvised by Wellington Wellington and the Buying Fund is subadvised by Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial, Inc. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN GLOBAL GROWTH FUND (SELLING FUND) The Fund invests primarily in equity securities of non-U.S. and U.S. growth companies that have the potential to benefit from global economic or social trends. The Fund may invest in high quality, large and mid-capitalization companies that are considered leaders in their industries, emphasizing those industries that are growing on a global basis. Typically, the Fund will invest in several countries in different geographic regions. Additionally, the Fund may invest up to 15% in emerging market equities. Under normal market conditions, the Fund generally will invest at least 40% of its net assets in companies that maintain their principal place of business or conduct their principal business activities outside the U.S., have their securities traded on non-U.S. exchanges or have been formed under the laws of non-U.S. countries. The portfolio manager may reduce this 40% minimum investment amount to 30% if it believes that market conditions for these types of companies or specific foreign markets are unfavorable. The Fund considers a company to conduct its principal business activities outside the U.S. if it derives at least 50% of its revenue from business outside the U.S. or has at least 50% of its assets outside the U.S. The Fund uses an investment process that emphasizes bottom-up research with a focus on companies with improving fundamentals exemplified by identifiable catalysts and strong earnings growth. In selecting individual securities, the portfolio manager looks to identify companies that it believes display one or more of the following: - Accelerating fundamentals or earnings growth with consideration paid to valuations - Quality management - Strong possibility of multiple expansion - Unique competitive advantages (e.g., market share, proprietary products) - Potential for improvement in overall operations The Fund generally sells a stock if the portfolio manager believes its target price has been reached, its earnings are disappointing, its revenue or earnings growth has slowed, or the stock's or industry's underlying fundamentals have deteriorated. The Fund may also sell a stock if the portfolio manager believes that negative country or regional factors or shifts in global trends may negatively affect a company's outlook, or to meet cash requirements. The Fund may invest in all types of securities, many of which will be denominated in currencies other than the U.S. dollar. The Fund normally concentrates its investments in common stocks; however, it may invest in other types of equity securities, including securities convertible into or exchangeable for common stock, depositary receipts, and rights and warrants to purchase common stock. The Fund also may invest up to 25% of its assets in preferred stock and investment grade or comparable quality debt securities. 47 The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold), and may from time to time enter into forward foreign currency exchange contracts in an attempt to manage the risk of adverse changes in currencies. The Fund may also purchase put options in an attempt to hedge against a decline in the price of securities it holds in its portfolio. A put option gives the Fund the right to sell an underlying security at a particular price during a fixed period of time. Forward foreign currency exchange contracts and put options on securities may not be available to the Fund on reasonable terms in many situations, and the Fund may frequently choose not to enter into such contracts or purchase such options even when they are available. The Fund may also invest up to 10% of its assets in exchange-traded funds ("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they represent baskets of securities that seek to track the performance of certain indices. The indices include not only broad-market indexes but more specific indices as well, including those relating to particular sectors, countries and regions. The Fund may invest in ETFs for short-term cash management purposes or as part of its overall investment strategy. THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND) Under normal market conditions, at least 80% of the Fund's net assets will be invested in equity securities, including companies located in developed and emerging countries. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. RiverSource Investments serves as the investment manager to the Fund and is responsible for oversight of Threadneedle, the Fund's subadviser. Threadneedle chooses investments by: - Deploying an integrated approach to equity research that incorporates regional analyses, a global sector strategy, and stock specific perspectives. - Conducting detailed research on companies in a consistent strategic and macroeconomic framework. - Looking for catalysts of change and identifying the factors driving markets, which will vary over economic and market cycles. - Implementing rigorous risk control processes that seek to ensure that the risk and return characteristics of the Fund's portfolio are consistent with established portfolio management parameters. Using the global sector strategy, Threadneedle constructs the portfolio by investing in most of the stocks on two core lists of holdings: the Largest Companies List and the Preferred List. In addition, the portfolio will hold other securities selected by the portfolio management team. These discretionary holdings will typically make up a much smaller portion of the Fund. - The Largest Companies List includes the largest stocks in the Fund's benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index. Threadneedle's research on regions, sectors, and specific companies is used to determine recommended weightings for each stock. - The Preferred List includes the stocks not included in the Largest Companies List that represent the best ideas generated by Threadneedle's research area. Stocks on the Preferred List are selected by: - Evaluating the opportunities and risks within regions and sectors; - Assessing valuations; and - Evaluating one or more of the following: balance sheets and cash flows, the demand for a company's products or services, its competitive position, or its management. The Fund will normally be overweight in the stocks on the Preferred List compared to the benchmark. - Discretionary holdings are selected by the individual portfolio management team based on the same criteria used to generate the Preferred List. These stocks are assigned ratings based on their perceived ability to outperform within their sector. The team typically selects the highest rated stocks outside the core category. A number of factors may prompt Threadneedle to sell securities. A sale may result from a change in the composition of the Fund's benchmark or a change in sector strategy. A sale may also be prompted by factors specific to a stock, such as valuation or company fundamentals. The Fund will normally have exposure to foreign currencies. Threadneedle closely monitors the Fund's exposure to foreign currency. From time to time the team may use forward currency transactions or other derivative instruments to hedge against currency fluctuations. 48 COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
-------------------------------------------------------------------------------------------------------- SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUNDAMENTAL POLICY FUND) FUND) -------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund will not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. -------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund will not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's total exemptions therefrom which may be assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. -------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except as The Fund will not borrow money, except permitted by the 1940 Act or any rule for temporary purposes (not for thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act permits less liabilities (other than borrowings) a fund to borrow up to 33 1/3% of its immediately after the borrowings. total assets (including the amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. -------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund will not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any SEC the 1940 Act, the rules and regulations or SEC staff interpretations thereof or thereunder and any applicable exemptive any exemptions therefrom which may be relief. granted by the SEC. -------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate, except the Fund may invest estate, unless acquired as a result of in securities secured by real estate or ownership of securities or other interests therein or issued by persons instruments, except this shall not (including real estate investment prevent the Fund from investing in trusts) which deal in real estate or securities or other instruments backed interests therein. by real estate or securities of companies engaged in the real estate business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. -------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options and futures contracts or from Commodities below. investing in securities or other instruments backed by, or whose value is derived from, physical commodities. -------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any one CONCENTRATION its total assets, at market value, in industry. According to the present the securities of issuers in any interpretation by the SEC, this means particular industry, provided that this that up to 25% of the Fund's total limitation shall exclude securities assets, based on current market value at issued or guaranteed by the U.S. time of purchase, can be invested in any government or any of its agencies or one industry. instrumentalities. -------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% of inconsistent with the Fund's its total assets in securities of any classification as a diversified company company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------------------- SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUNDAMENTAL POLICY FUND) FUND) -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin, except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. -------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its total assets would be invested in such agreements and in restricted and other illiquid securities. -------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or retain the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer (other than the AND TRUSTEES shares of the Fund), if to the Fund's knowledge, those directors and officers of Seligman Global Fund Series, Inc. (of which the Fund is a series) and the directors and officers of the investment manager or subadviser, who individually own beneficially more than 1/2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. --------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
------------------------------------------------------------------------------------------------------ NONFUNDAMENTAL SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING POLICY FUND) FUND) ------------------------------------------------------------------------------------------------------ BORROWING The Fund may not borrow more than 15% Not applicable. See the fundamental RESTRICTIONS of the value of its total assets. investment policy above on Borrowing Borrowings may be secured by a mortgage Money above. or pledge of the Fund's assets. See also the fundamental investment policy on Borrowing Money above. ------------------------------------------------------------------------------------------------------ SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12 (d)(1) of the 1940 Act. ------------------------------------------------------------------------------------------------------ COMMODITIES The Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in the Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. Approval of the Board of Directors must be granted for a Fund to invest in any new type of commodity if it is of a type the Fund has not previously utilized. See also fundamental investment policy on Commodities above. ------------------------------------------------------------------------------------------------------ EXCHANGE TRADED The Fund may invest up to 10% of its Investing in ETFs is an allowable FUNDS assets in ETFs. investment strategy for the Fund, however, the Fund does not have a stated policy limiting these types of investments, other than as otherwise permitted by the 1940 Act. ------------------------------------------------------------------------------------------------------ PREFERRED STOCK The Fund may invest up to 25% of its The Fund may invest in preferred stock AND DEBT net assets in preferred stock and debt and debt securities to the extent SECURITIES securities. The Fund will invest only permitted by its investment strategy. in "investment grade" debt securities or, in the case of unrated securities, debt securities that are deemed to be of equivalent quality to "investment- grade" securities. "Investment-grade" debt securities are rated within the four highest rating categories as determined by Moody's or S&P. ------------------------------------------------------------------------------------------------------ DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to only for hedging or investment the extent permitted by its investment purposes. The Fund will not invest in strategy. derivatives for speculative purposes, which means where the derivative investment exposes the Fund to undue risk of loss, such as where the risk of loss is greater than the cost of the investment. ------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------ NONFUNDAMENTAL SELIGMAN GLOBAL GROWTH FUND (SELLING THREADNEEDLE GLOBAL EQUITY FUND (BUYING POLICY FUND) FUND) ------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable Fund may be invested in warrants not investment strategy for the Fund. listed on the New York or American Stock Exchanges. ------------------------------------------------------------------------------------------------------ ACCESS TRADES The Fund may participate in access The Fund may invest in access trades trades, but its exposure is limited to and other derivative instruments to the 5% of total assets of the Fund at the extent permitted by its investment time of purchase and to dealing with strategy. counterparties believed to be reputable. ------------------------------------------------------------------------------------------------------ INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise PURPOSES OF of controlling or managing any company. permitted by the 1940 Act. MANAGEMENT OR CONTROL ------------------------------------------------------------------------------------------------------ ILLIQUID SECURITIES The Fund does not currently expect to No more than 15% of the Fund's net invest more than 5% of its net assets assets will be held in securities and in illiquid securities, including other instruments that are illiquid. restricted securities (i.e., securities not readily marketable without registration under the 1933 Act) and other securities that are not readily marketable. ------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including correlation risk, counterparty credit risk, hedging risk, leverage risk and liquidity risk. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based outside the United States. An issuer is deemed to be based outside the United States if it is organized under the laws of another country. Foreign securities are primarily denominated in foreign currencies. In addition to the risks normally associated with domestic securities of the same type, foreign securities are subject to the following foreign risks: Country risk includes the political, economic and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), 51 the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social and political) in these countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners, and hostile relations with neighboring countries. - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures or other factors. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid- sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. In addition to the risks described above, the Buying Fund is subject to the additional principal investment risk set forth below. While this additional risk may also be a risk of the Selling Fund, it is not stated as a principal investment risk of the Selling Fund. For more information regarding the Selling Fund's principal investment risks, see "Principal Risks" in the Selling Fund's prospectus. - GEOGRAPHIC CONCENTRATION RISK. The Fund may be particularly susceptible to economic, political or regulatory events affecting companies and countries within the specific geographic region in which the Fund focuses its investments. Currency devaluations could occur in countries that have not yet experienced currency devaluation to date, or could continue to occur in countries that have already experienced such devaluations. As a result, the Fund may be more volatile than a more geographically diversified fund. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman Global Growth Fund. The second table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R2 and Class R5 shares of the Threadneedle Global Equity Fund. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 5.75%* for Class A shares; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class R2, Class R5 and Class I shares; and 52 - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge on investments in Class A shares of the Selling Fund is 5.75%. Although for all periods presented, the Selling Fund's Class A share returns reflect the 5.75% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been higher if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented in the tables the Selling Funds' Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN GLOBAL GROWTH FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +42.80% -17.17% -21.53% -31.10% +29.96% +17.52% +1.15% +12.85% +23.77% -53.11% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +24.43% (quarter ended Dec. 31, 1999) and the lowest return for a calendar quarter was -27.07% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. 53 THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +37.02% -23.37% -22.29% -23.38% +25.16% +16.08% +18.41% +19.15% +13.60% -42.15% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +32.17% (quarter ended Dec. 31, 1999) and the lowest return for a calendar quarter was -19.76% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement where the Buying Fund invested all of its assets in a corresponding "master" fund with an identical investment objective and investment strategies. As of Nov. 8, 2005, the Buying Fund became a stand-alone fund that invests directly in a portfolio of securities. The information shown in the table and in the financial highlights for the Buying Fund includes the activity of the Buying Fund when it was a feeder in a master/feeder arrangement. 54 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE SINCE INCEPTION INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**) SELIGMAN GLOBAL GROWTH FUND (SELLING FUND): Class A Return before taxes -55.82% -6.01% -4.82% N/A N/A N/A Return after taxes on distributions -55.82% -6.01% -5.36% N/A N/A N/A Return after taxes on distributions and sale of Fund shares -36.28% -5.01% -3.78% N/A N/A N/A Class B Return before taxes -55.77% -5.96% -4.81%* N/A N/A N/A Class C Return before taxes -53.91% -5.61% N/A -5.48%(a) N/A N/A Class R** Return before taxes -53.70% -5.11% N/A N/A -0.70%(b) N/A Class I** Return before taxes -52.91% -4.35% N/A N/A N/A -4.42%(c) Morgan Stanley Capital International (MSCI) World Index -40.33% +0.00% -0.19% -0.59%(d) +4.62%(e) +1.13%(f) MSCI World Growth Index -40.90% -0.84% -2.29% -2.32%(d) +3.17%(e) -0.06%(f) Lipper Global Large-Cap Growth Funds Average -44.46% -1.73% +0.35% -0.10%(g) +3.01%(e) -0.31%(f) Lipper Global Funds Average -41.06% -0.49% +0.88% +0.51%(g) +4.38%(e) +0.97%(f)
Prior to March 31, 2000, J. & W. Seligman & Co. Incorporated (the predecessor investment manager) employed subadvisers that were responsible for providing certain portfolio management services with respect to the investments of the Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund were managed exclusively by Seligman. Since Sept. 15, 2003, Wellington Management Company LLP has been employed as subadviser to provide portfolio management services to the Fund.
SINCE SINCE INCEPTION INCEPTION (CLASSES R2 1 YEAR 5 YEARS 10 YEARS (CLASS C) & R5) THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND): Class A Return before taxes -45.46% +0.28% -2.21% N/A N/A Return after taxes on distributions -45.62% +0.07% -2.91% N/A N/A Return after taxes on distributions and sale of Fund shares -29.55% +0.13% -1.99% N/A N/A Class B Return before taxes -45.52% +0.30% -2.46% N/A N/A Class C Return before taxes -43.16% +0.73% N/A -5.62%(h) N/A Class R2 Return before taxes -42.08% N/A N/A N/A -18.02%(j) Class R5 Return before taxes -41.82% N/A N/A N/A -17.60%(j) MSCI All Country World Index -41.85% +0.44% +0.23% -2.10%(i) -18.26%(k) Lipper Global Funds Index -38.78% +0.42% +1.23% -1.93%(i) -17.35%(k)
(a) Inception date is May 27, 1999. (b) Inception date is April 30, 2003. (c) Inception date is Nov. 30, 2001. (d) Measurement period started May 31, 1999. (e) Measurement period started April 30, 2003. (f) Measurement period started Nov. 30, 2001. (g) Measurement period started May 27, 1999. (h) Inception date is June 26, 2000. (i) Measurement period started June 26, 2000. (j) Inception date is Dec. 11, 2006. (k) Measurement period started Dec. 11, 2006. * The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. ** Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. 55 The MSCI World Index, an unmanaged index, is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The MSCI World Growth Index, an unmanaged index, is a free float-adjusted market capitalization-weighted equity index representing "growth" (high price to book value) securities in the world's developed stock markets. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Global Large-Cap Growth Funds Average comprises mutual funds that, by portfolio practice, invest at least 75% of their equity assets in companies both inside and outside of the United States with market capitalizations (on a three- year weighted basis) above Lipper's global large-cap floor. Global large-cap growth funds typically have an above-average price-to-cash flow ratio, price-to- book ratio, and three-year sales-per-share growth value compared to their large- cap-specific subset of the S&P/Citigroup World Broad Market Index (BMI). Lipper currently classifies the Selling Fund as a Global Large-Cap Growth Fund. The average is an unmanaged benchmark that assumes reinvestment of all distributions, if any, and excludes the effect of fees, sales charges and taxes. The Lipper Global Funds Average comprises mutual funds which invest at least 25% of their portfolio in securities traded outside the United States, and may own U.S. securities as well. The average is an unmanaged benchmark that assumes reinvestment of all distributions, if any, and excludes the effect of fees, sales charges and taxes. The MSCI All Country World Index, an unmanaged index of equity securities, is designed to measure equity market performance in the global developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Global Funds Index includes the 30 largest global funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Buying Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See Fund Management and Compensation in Exhibit B for more information. Investors cannot invest directly in an average or index. 56 PROPOSAL 4. REORGANIZATION OF SELIGMAN HIGH-YIELD FUND INTO RIVERSOURCE HIGH YIELD BOND FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks a high level of current income, with capital appreciation as a secondary objective. The investment objectives for the Funds are as follows: SELLING FUND: Seligman High-Yield Fund seeks a high level of current income and may also consider the potential for capital appreciation consistent with prudent investment management. BUYING FUND: RiverSource High Yield Bond Fund seeks to provide shareholders with high current income as its primary objective and, as its secondary objective, capital growth. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund invests predominantly in non-investment grade, high yield securities. The Selling Fund may invest up to 10% of its assets in equity-linked securities (each, an "ELS"), while the Buying Fund has no similar limitation. The Buying Fund may invest up to 25% of its assets in high yield debt instruments of foreign issuers. Although the Selling Fund does not include it as a principal investment strategy, the Selling Fund may invest up to 10% of its net assets in debt securities of foreign issuers. The Buying Fund counts American Depositary Receipts ("ADRs") toward its 25% limit, but ADRs are excluded from the Selling Fund's 10% limitation. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN HIGH-YIELD FUND (SELLING FUND) The Fund invests 80% of its net assets in non-investment grade, high yield securities ("High Yield Securities"). High Yield Securities (many of which are commonly known as junk bonds) carry non-investment grade ratings (Ba or below by Moody's or BB or below by Fitch or S&P) or are securities deemed to be below investment grade by the investment manager. High Yield Securities have the potential to offer higher yields than investment grade securities with higher ratings and similar maturities. High Yield Securities are subject to greater risk of loss of principal and interest than higher rated investment grade securities. The Fund may invest in all types of High Yield Securities including: - Senior and subordinated corporate debt obligations of both U.S. and non-U.S. issuers (including, for example debentures, loan participations and floating rate notes); - Mortgage and other asset-backed securities; - Capital appreciation bonds, including zero coupon and pay-in-kind securities; - Convertible securities, preferred stock, structured securities and loan participations; - Municipal securities; - Obligations of foreign governments; - Securities that are rated in default by a nationally recognized statistical rating organization; - Repurchase agreements relating to the above instruments; - Warrants, rights and other equity securities that are acquired in connection with the Fund's investments in High Yield Securities; and - Restricted securities that may be offered and sold only to "qualified institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule 144A Securities"). In addition, the Fund may invest up to 20% of its net assets in (i) securities of higher quality, including: short-term money market instruments, including certificates of deposit of FDIC member banks having total assets of $1 billion or more; bankers' acceptances and interest-bearing savings or time deposits of such banks; commercial paper; investment grade fixed-income securities; securities issued, guaranteed or insured by the U.S. government, its agencies or instrumentalities as well as any government sponsored enterprise; and other income-producing cash items and (ii) warrants, rights and other equity securities that are not acquired in connection with the Fund's investments in High Yield Securities. The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold). Rule 144A Securities deemed to be liquid by the investment manager are not included in this limitation. The Fund does not have any portfolio maturity limitation, and may invest its assets in instruments with short, medium or long maturities. 57 In pursuit of the Fund's objectives, the investment manager chooses investments by: - Reviewing interest rate and economic forecasts. - Reviewing credit characteristics and capital structures of companies, including an evaluation of any outstanding bank loans or corporate debt securities a company has issued, its relative position in its industry, and its management team's capabilities. - Identifying companies that: - have medium and low quality ratings or, in the investment manager's opinion, have similar qualities to companies with medium or low quality ratings, even though they are not rated, or have been given a different rating by a rating agency, - have growth potential, or - have the potential to increase in value as their credit ratings improve. - Buying debt instruments that are expected to outperform other debt instruments. In evaluating whether to sell an investment, the investment manager considers, among other factors, whether: - The interest rate or economic outlook changes. - A sector or industry is experiencing change. - A security's rating is changed. - The security is overvalued relative to alternative investments. - The company no longer meets the investment manager's performance expectations. - The investment manager wishes to lock in profits. - The investment manager identifies a more attractive opportunity. - The issuer or the security continues to meet the other standards described above. The Fund may also invest up to 10% of its assets in ELSs as part of its overall investment strategy. An ELS is a debt instrument whose value is based on the value of a single equity security, basket of equity securities or an index of equity securities (each, an "Underlying Equity"). An ELS typically provides interest income, thereby offering a yield advantage over investing directly in an Underlying Equity. However, the holder of an ELS may have limited or no benefit from any appreciation in the Underlying Equity, but is exposed to downside market risk. The Fund may purchase ELSs that trade on a securities exchange or those that trade on the over-the-counter markets, including Rule 144A Securities. The Fund may also purchase an ELS in a privately negotiated transaction with the issuer of the ELS (or its broker-dealer affiliate). RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) Under normal market conditions, the Fund will invest at least 80% of its net assets in high yield debt instruments (commonly referred to as junk bonds). These high yield debt instruments include corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. Corporate debt securities in which the Fund invests are typically unsecured, with a fixed-rate of interest, and are usually issued by companies or similar entities to provide financing for their operations, or other activities. Bank loans (which may commonly be referred to as "floating rate loans"), which are another form of financing, are typically secured, with interest rates that adjust or "float" periodically (normally on a daily, monthly, quarterly or semiannual basis by reference to a base lending rate, such as LIBOR (London Interbank Offered Rate), plus a premium). Secured debt instruments are ordinarily secured by specific collateral or assets of the issuer or borrower such that holders of these instruments will have claims senior to the claims of other parties who hold unsecured instruments. In pursuit of the Fund's objectives, the investment manager chooses investments by: - Reviewing interest rate and economic forecasts. - Reviewing credit characteristics and capital structures of companies, including an evaluation of any outstanding bank loans or corporate debt securities a company has issued, its relative position in its industry, and its management team's capabilities. - Identifying companies that: - have medium and low quality ratings or, in the investment manager's opinion, have similar qualities to companies with medium or low quality ratings, even though they are not rated, or have been given a different rating by a rating agency, 58 - have growth potential, or - have the potential to increase in value as their credit ratings improve. - Buying debt instruments that are expected to outperform other debt instruments. In evaluating whether to sell an investment, the investment manager considers, among other factors, whether: - The interest rate or economic outlook changes. - A sector or industry is experiencing change. - A security's rating is changed. - The security is overvalued relative to alternative investments. - The company no longer meets the investment manager's performance expectations. - The investment manager wishes to lock in profits. - The investment manager identifies a more attractive opportunity. - The issuer or the security continues to meet the other standards described above. For bank loans, the investment manager's process includes a review of the legal documentation supporting the loan, including an analysis of the covenants and the rights and remedies of the lender. The investment manager may use derivatives such as futures, options, forward contracts and swaps, including credit default swaps, in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, or to obtain or reduce credit exposure. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
--------------------------------------------------------------------------------------------------------- RIVERSOURCE HIGH YIELD BOND FUND FUNDAMENTAL POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. --------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund may not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's exemptions therefrom which may be total assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. Under current Board policy, the Fund has no current intention to lend to a material extent. --------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except as permitted by the 1940 Act or any for temporary purposes (not for rule thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act less liabilities (other than permits a fund to borrow up to 33 1/3% borrowings) immediately after the of its total assets (including the borrowings. amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. --------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations SEC or SEC staff interpretations thereunder and any applicable exemptive thereof or any exemptions therefrom relief. which may be granted by the SEC. ---------------------------------------------------------------------------------------------------------
59
--------------------------------------------------------------------------------------------------------- RIVERSOURCE HIGH YIELD BOND FUND FUNDAMENTAL POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate including limited estate, unless acquired as a result of partnership interests in real property, ownership of securities or other except that the Fund may invest in debt instruments, except this shall not securities secured by real estate or prevent the Fund from investing in interests therein or issued by securities or other instruments backed companies which invest in real estate by real estate or securities of or interests therein, including real companies engaged in the real estate estate investment trusts ("REITs"). business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options and futures contracts or from Commodities below. investing in securities or other instruments backed by, or whose value is derived from, physical commodities. --------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, at market value, in one industry. According to the present any one industry, except that 25% interpretation by the SEC, this means limitation on industry concentration that up to 25% of the Fund's total does not apply to securities issued or assets, based on current market value guaranteed by the U.S. government or at time of purchase, can be invested in any of its agencies or any one industry. instrumentalities (which may include mortgage-related securities). --------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin, except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its total assets would be invested in such agreements and in restricted and other illiquid securities. --------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or hold the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer, if to its AND TRUSTEES knowledge, Trustees or officers of Seligman High Income Fund Series (of which the Fund is a series) individually owning beneficially more than 0.5% of the securities of that other company own in the aggregate more than 5% of such securities. The Fund may not engage in transactions with its Trustees and officers, or firms they are associated with, in connection with the purchase or sale of securities, except as broker. ---------------------------------------------------------------------------------------------------------
60 COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL RIVERSOURCE HIGH YIELD BOND FUND POLICY SELIGMAN HIGH-YIELD FUND (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- COMMODITIES Each Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in a Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. The investment manager must seek Board approval to invest in any type of commodity or commodity contract if it is of the type a Fund has not previously utilized. See also fundamental investment policy on Commodities above. --------------------------------------------------------------------------------------------------------- SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. --------------------------------------------------------------------------------------------------------- EQUITY LINKED The Fund may invest up to 10% of its The Fund may invest in equity-linked SECURITIES assets in equity-linked securities as securities to the extent permitted by part of its overall investment its investment strategy. strategy. --------------------------------------------------------------------------------------------------------- FOREIGN SECURITIES The Fund may invest up to 10% of its The Fund may invest up to 25% of its net assets in debt securities of net assets in foreign investments foreign issuers (not including ADRs). (including ADRs). --------------------------------------------------------------------------------------------------------- PREFERRED STOCK The Fund may invest up to 10% of its The Fund may invest in preferred stock total assets in preferred stock, to the extent permitted by its including non-investment grade investment strategy. preferred stock. --------------------------------------------------------------------------------------------------------- INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise PURPOSES OF of controlling or managing any company. permitted by the 1940 Act. MANAGEMENT OR CONTROL --------------------------------------------------------------------------------------------------------- SHORT SALES The Fund may not sell securities short The Fund is not prohibited from or maintain a short position. engaging in short sales, however, the Fund will seek Board approval prior to utilizing short sales as an active part of its investment strategy. ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objectives. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - CREDIT RISK. Credit risk is the risk that the borrower of a loan or the issuer of another debt instrument will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a loan. Rating agencies assign credit ratings to certain loans and other debt securities to indicate their credit risk. The price of a loan or other debt security generally will fall if the borrower or the issuer defaults on its obligation to pay principal or interest, the rating agencies downgrade the borrower's or the issuer's credit rating or other news affects the market's perception of the borrower's or the issuer's credit risk. If the borrower of a floating rate loan declares or is declared bankrupt, there may be a delay before the Fund can act on the collateral securing the loan, which may adversely affect the Fund. Further, here is a risk that a court could take action with respect to a floating rate loan adverse to the holders of the loan, such as invalidating the loan, the lien on the collateral, the priority status of the loan, or ordering the refund of interest previously paid by the borrower. Any such actions by a court could adversely affect the Fund's performance. If the Fund purchases unrated loans or other debt securities, or if the rating of a loan or security is reduced after purchase, the Fund will depend on the investment 61 manager's analysis of credit risk more heavily than usual. Non-investment grade loans or securities, commonly called high yield or junk, may react more to perceived changes in the ability of the borrower or issuing entity to pay interest and principal when due than to changes in interest rates. Non- investment grade loans or securities have greater price fluctuations and are more likely to experience a default than investment grade loans or securities. A default or expected default of a floating rate loan could also make it difficult for the Fund to sell the loan at a price approximating the value previously placed on it. - HIGHLY LEVERAGED TRANSACTIONS RISK. The high yield debt instruments in which the Fund invests substantially consist of transactions involving refinancings, recapitalizations, mergers and acquisitions and other financings for general corporate purposes. The Fund's investments also may include senior obligations of a borrower issued in connection with a restructuring pursuant to Chapter 11 of the U.S. Bankruptcy Code (commonly known as "debtor-in-possession" financings), provided that such senior obligations are determined by the Fund's investment manager upon its credit analysis to be a suitable investment by the Fund. In such highly leveraged transactions, the borrower assumes large amounts of debt in order to have the financial resources to attempt to achieve its business objectives. Such business objectives may include but are not limited to: management's taking over control of a company (leveraged buy-out); reorganizing the assets and liabilities of a company (leveraged recapitalization); or acquiring another company. Loans or securities that are part of highly leveraged transactions involve a greater risk (including default and bankruptcy) than other investments. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including hedging risk, correlation risk, liquidity risk and leverage risk. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. - INTEREST RATE RISK. The securities in the Fund are subject to the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with the fixed-income securities in the Fund: when interest rates rise, the prices of fixed-income securities generally fall. In general, the longer the maturity or duration of a fixed-income security, the greater its sensitivity to changes in interest rates. Securities with floating interest rates can be less sensitive to interest rate changes, but may decline in value if their interest rates do not rise as much as interest rates in general. Because rates on certain floating rate loans and other debt securities reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause fluctuations in the Fund's net asset value. Interest rate changes also may increase prepayments of debt obligations, which in turn would increase prepayment risk. - LIQUIDITY RISK. Liquidity risk is the risk associated from a lack of marketability of securities which may make it difficult or impossible to sell the security at desirable prices in order to minimize loss. The Fund may have to lower the selling price, sell other investments, or forego another, more appealing investment opportunity. Floating rate loans generally are subject to legal or contractual restrictions on resale. Floating rate loans also may trade infrequently on the secondary market. The value of the loan to the Fund may be impaired in the event that the Fund needs to liquidate such loans. Other debt securities in which the Fund invests may be traded in the over-the counter market rather than on an organized exchange and therefore may be more difficult to purchase or sell at a fair price. The inability to purchase or sell floating rate loans and other debt securities at a fair price may have a negative impact on the Fund's performance. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that a loan, bond or other security might be called or otherwise converted, prepaid or redeemed before maturity. This risk is primarily associated with asset- backed 62 securities, including mortgage backed securities and floating rate loans. If a loan or security is converted, prepaid or redeemed before maturity, particularly during a time of declining interest rates or declining spreads, the portfolio managers may not be able to reinvest the prepayment proceeds in securities or loans providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise or spreads widen, the likelihood of prepayment decreases. The portfolio managers may be unable to capitalize on securities with higher interest rates or wider spreads because the Fund's investments are locked in at a lower rate for a longer period of time. - FOREIGN/EMERGING MARKETS RISK. The following are all components of foreign/emerging markets risk: Country risk includes the political, economic and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social and political) in these countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners and hostile relations with neighboring countries. - COUNTERPARTY RISK. Counterparty risk is the risk that a counterparty to a financial instrument entered into by the Fund or held by a special purpose or structured vehicle becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund will typically enter into financial instrument transactions with counterparties whose credit rating is investment grade, or, if unrated, determined to be of comparable quality by the investment manager. - IMPAIRMENT OF COLLATERAL RISK. The value of collateral, if any, securing a floating rate loan can decline, and may be insufficient to meet the borrower's obligations or difficult to liquidate. In addition, the Fund's access to collateral may be limited by bankruptcy or other insolvency laws. Further, certain floating rate loans may not be fully collateralized and may decline in value. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How the Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman High-Yield Fund. The second table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R2 and Class R5 shares of the RiverSource High Yield Bond Fund. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and 4.75% for Class A shares of the Buying Fund; 63 - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class R2, Class R5 and Class I shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge in Class A shares of the Selling Fund is 4.50%. Although for all periods presented the Selling Fund's Class A share returns reflect the 4.50% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been lower if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented the Selling Fund's Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN HIGH-YIELD FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +0.09% -10.02% -15.91% -5.35% +21.84% +7.03% +1.57% +9.74% +0.81% -32.24% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +6.84% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -22.00% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. 64 RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +7.06% -10.31% +4.80% -7.04% +25.81% +11.76% +4.36% +10.76% +2.07% -24.59% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +9.41% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -18.37% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement where the Buying Fund invested all of its assets in a corresponding "master" fund with an identical investment objective and investment strategies. As of Oct. 18, 2005, the Buying Fund became a stand-alone fund that invests directly in a portfolio of securities. The information shown in the table and in the financial highlights for the Buying Fund includes the activity of the Buying Fund when it was a feeder in a master/feeder arrangement. 65 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE SINCE INCEPTION INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**) SELIGMAN HIGH-YIELD FUND (SELLING FUND): Class A Return before taxes -35.30% -4.91% -3.78% N/A N/A N/A Return after taxes on distributions -37.56% -7.51% -6.78% N/A N/A N/A Return after taxes on distributions and sale of Fund shares -22.55% -5.18% -4.41% N/A N/A N/A Class B Return before taxes -35.84% -4.99% -3.91%* N/A N/A N/A Class C Return before taxes -33.63% -4.80% N/A -4.35%(a) N/A N/A Class R** Return before taxes -33.03% -4.25% N/A N/A -1.97%(b) N/A Class I** Return before taxes -31.99% -3.62% N/A N/A N/A -0.62%(c) JP Morgan Global High Yield Index*** Barclays Capital U.S. Corporate High-Yield 2% Issuer Capped Index*** -25.88% -0.84% +2.28% +2.12%(d) +1.44%(e) +2.93%(f) Lipper High Current Yield Funds Average -26.01% -1.53% +1.19% +0.89%(g) +0.73%(e) +1.81%(f) SINCE SINCE INCEPTION INCEPTION (CLASSES R2 1 YEAR 5 YEARS 10 YEARS (CLASS C) & R5) RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND): Class A Return before taxes -28.19% -1.08% +1.06% N/A N/A Return after taxes on distributions -30.32% -3.62% -2.11% N/A N/A Return after taxes on distributions and sale of Fund shares -18.08% -2.14% -0.88% N/A N/A Class B Return before taxes -28.99% -1.26% +0.76% N/A N/A Class C Return before taxes -26.09% -1.00% N/A +0.60%(h) N/A Class R2 Return before taxes -25.11% N/A N/A N/A -12.11%(i) Class R5 Return before taxes -24.33% N/A N/A N/A -11.47%(i) JP Morgan Global High Yield Index -26.83% -0.72% +2.58% +2.79%(j) -12.73%(k) Lipper High Current Yield Bond Funds Index -28.84% -1.87% +0.49% +0.26%(j) -14.23%(k)
(a)Inception date is May 27, 1999. (b)Inception date is April 30, 2003. (c)Inception date is Nov. 30, 2001. (d)Measurement period started May 28, 1999. (e)Measurement period started April 30, 2003. (f)Measurement period started Nov. 30, 2001. (g)Measurement period started May 27, 1999. (h)Inception date is June 26, 2000. (i)Inception date is Dec. 11, 2006. (j)Measurement period started June 26, 2000. (k)Measurement period started Dec. 11, 2006. *The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. **Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. ***Effective Nov. 7, 2008, to better align the primary benchmark index with the investment strategy of the Fund, the Barclays Capital U.S. High-Yield 2% Issuer Capped Index was replaced with the JP Morgan Global High Yield Index, which will be used as the primary benchmark for the Fund going forward. The JP Morgan Global High Yield Index is an unmanaged index used to mirror the investable universe of the U.S. dollar global high yield corporate debt market of both developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. 66 The Barclays Capital U.S. Corporate High-Yield 2% Issuer Capped Index, an unmanaged index, covers the U.S. corporate bond market of high-yield bonds denominated in U.S. dollars, and is constrained from having greater than 2% of the securities of a single issuer. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper High Current Yield Funds Average is an average of funds that aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt instruments. The average is an unmanaged benchmark that assumes reinvestment of all distributions, if any, and excludes the effect of fees, taxes and sales charges. The Lipper High Current Yield Bond Funds Index includes the 30 largest high yield bond funds tracked by Lipper Inc. The index's returns include net reinvested dividends. Investors cannot invest directly in an average or index. 67 PROPOSAL 5. REORGANIZATION OF SELIGMAN INCOME AND GROWTH FUND INTO RIVERSOURCE BALANCED FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund generally seeks a combination of capital appreciation and current income. The investment objectives for the Funds are as follows: SELLING FUND: Seligman Income and Growth Fund seeks total return through a combination of capital appreciation and income consistent with what is believed to be a prudent allocation between equity and fixed-income securities. BUYING FUND: RiverSource Balanced Fund seeks to provide shareholders with a balance of growth of capital and current income. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund invests predominantly in a combination of equity and fixed-income securities. The Selling Fund may invest 10% of its assets in equity-linked securities (each, an "ELS"). The Buying Fund has no similar restriction with respect to investments in ELSs. The Selling Fund may invest up to 10% of total assets in foreign securities; the Buying Fund may invest up to 25% of the Fund's net assets in foreign investments. The Buying Fund counts American Depositary Receipts ("ADRs") toward its 25% limit, but ADRs are excluded from the Selling Fund's 10% limitation. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN INCOME AND GROWTH FUND (SELLING FUND) The Fund allocates its assets between equity securities and fixed-income securities. Securities are carefully selected in light of the Fund's investment objective and are diversified among many different types of securities and market sectors. As of Dec. 31, 2008, approximately 67% of the Fund's portfolio was invested in equity securities and approximately 33% was invested in fixed- income securities. However, the proportion of the Fund's assets invested in each type of security will vary from time to time based on the investment manager's assessment of general market and economic conditions. EQUITY SECURITIES Equity securities in which the Fund may invest include: common stocks, including real estate investment trusts ("REITs"); securities convertible into common stocks; preferred stocks; and ADRs. The Fund usually invests in the common stock of larger U.S. companies; however, it may invest in companies of any size. REITs are companies that invest primarily in income-producing real estate or real estate related loans or interests. ADRs are publicly traded instruments generally issued by domestic banks or trust companies that represent securities of foreign issuers. Equity securities are chosen using an investment philosophy rooted in the belief that a disciplined, systematic, value-oriented approach to investing primarily in large-cap companies provides investors with an excellent opportunity for long-term growth of capital. In pursuit of the Fund's objective, RiverSource Investments chooses equity investments by seeking to: - Select companies that are undervalued based on a variety of measures, including, but not limited to price-to-earnings ratios, price-to-book ratios, price-to-free cash flow, current and projected dividends, sum-of-the parts or breakup value and historic relative price valuations. - Identify companies with moderate growth potential based on: - effective management, as demonstrated by overall performance; - financial strength; and - underappreciated potential for improvement in industry and thematic trends. In evaluating whether to sell an equity security, the investment manager considers, among other factors, whether: - The security is overvalued relative to alternative investments. - The security has reached the investment manager's price objective. - The company has met the investment manager's earnings and/or growth expectations. - The security exhibits unacceptable correlation characteristics with other portfolio holdings. - The company or the security continues to meet the other standards described above. 68 FIXED-INCOME SECURITIES Investment grade fixed-income securities are those rated within the four highest rating categories by Moody's Investors Service ("Moody's"), Standard & Poor's Rating Services ("S&P") or Fitch Ratings, or are securities deemed by the investment manager to be of comparable quality (collectively, "Investment Grade Securities"). They include obligations issued and guaranteed by the U.S. government or its agencies or instrumentalities, corporate bonds and other obligations, mortgage-backed and other asset-backed securities, obligations of non-U.S. government agencies and private institutions, and income-producing cash equivalents, including repurchase agreements. Mortgage-backed securities include collateralized mortgage obligations, mortgage pass-through securities and stripped mortgage-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it may assume some credit risk in an effort to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds which carry non-investment grade ratings (Ba or below by Moody's or BB or below by Fitch Ratings or S&P) or are securities deemed to be below investment grade by the investment manager ("High-Yield Securities"). Although High Yield Securities have the potential to offer higher yields than Investment Grade Securities with higher ratings and similar maturities, High Yield Securities are subject to greater risk of loss of principal and interest than Investment Grade Securities. The Fund may invest in all types of High Yield Securities including: - Senior and subordinated corporate debt obligations of both U.S. and non-U.S. issuers (including, for example, debentures, loan participations and floating rate loans); - Mortgage and other asset-backed securities; - Capital appreciation bonds, including zero coupon and pay-in-kind securities; - Convertible securities, preferred stock, structured securities and loan participations; - Municipal securities; - Obligations of foreign governments; - Securities that are rated in default by a nationally recognized statistical rating organization; - Repurchase agreements relating to the above instruments; - Warrants, rights and other equity securities that are acquired in connection with the Fund's investments in High Yield Securities; and - Restricted securities that may be offered and sold only to "qualified institutional buyers" under Rule 144A of the Securities Act of 1933 ("Rule 144A Securities"). The Fund does not have any portfolio maturation limitation, and may invest its assets in High Yield Securities of short, medium or long maturities. Investment Grade Securities. In pursuit of the Fund's objective, the investment manager chooses Investment Grade Securities by: - Evaluating the Investment Grade Securities portion of the portfolio's total exposure to sectors, industries and securities relative to the Barclays Capital U.S. Aggregate Bond Index (the "Barclays Index"). - Analyzing factors such as credit quality, interest rate outlook and price in seeking to select the most attractive securities within each sector. - Targeting an average portfolio duration within one year of the duration of the Barclays Index which, as of Jan. 31, 2009, was 4.18 years. Duration measures the sensitivity of bond prices to changes in interest rates. The longer the duration of a bond, the longer it will take to repay the principal and interest obligations and the more sensitive it will be to changes in interest rates. For example, a five-year duration means a bond is expected to decrease in value by 5% if interest rates rise 1% and increase in value by 5% if interest rates fall 1%. In evaluating whether to sell Investment Grade Securities, the investment manager considers, among other factors: - Identification of more attractive investments based on relative value. - The portfolio's total Investment Grade Securities exposure to sectors, industries and securities relative to the Barclays Index. - Whether a security's rating has changed or is vulnerable to a change. - Whether a sector or industry is experiencing change. - Changes in the interest rate or economic outlook. High-Yield Securities. In pursuit of the Fund's objective, the investment manager chooses High Yield Securities by: - Reviewing interest rate and economic forecasts. 69 - Reviewing credit characteristics and capital structures of companies, including an evaluation of any outstanding bank loans or corporate debt securities a company has issued, its relative position in its industry, and its management team's capabilities. - Identifying companies that: - have medium and low quality ratings or, in the investment manager's opinion, have similar qualities to companies with medium or low quality ratings, even though they are not rated, or have been given a different rating by a rating agency, - have growth potential, or - have the potential to increase in value as their credit ratings improve. - Buying debt instruments that are expected to outperform other debt instruments. In evaluating whether to sell High Yield Securities, the investment manager considers, among other factors, whether: - The interest rate or economic outlook changes. - A sector or industry is experiencing change. - A security's rating is changed. - The security is overvalued relative to alternative investments. - The company no longer meets the investment manager's performance expectations. - The investment manager wishes to lock in profits. - The investment manager identifies a more attractive opportunity. - The issuer or the security continues to meet the other standards described above. OTHER STRATEGIES The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold) including funding agreements issued by domestic insurance companies and may invest up to 10% of its total assets directly in foreign securities. The limit on foreign securities does not apply to ADRs or commercial paper and certificates of deposit issued by foreign banks. The Fund may also invest up to 10% of its assets in exchange-traded funds ("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they represent baskets of securities that seek to track the performance of certain indices. The indices include not only broad-market indices but more specific indices as well, including those relating to particular sectors, countries and regions. The Fund may invest in ETFs for short-term cash management purposes or as part of its overall investment strategy. The Fund may also invest up to 10% of its assets in ELSs as part of its overall investment strategy. An ELS is a debt instrument whose value is based on the value of a single equity security, basket of equity securities or an index of equity securities (each, an "Underlying Equity"). An ELS typically provides interest income, thereby offering a yield advantage over investing directly in an Underlying Equity. However, the holder of an ELS may have limited or no benefit from any appreciation in the Underlying Equity, but is exposed to downside market risk. The Fund may purchase ELSs that trade on a securities exchange or those that trade on the over-the-counter markets, including Rule 144A Securities. The Fund may also purchase an ELS in a privately negotiated transaction with the issuer of the ELS (or its broker-dealer affiliate). RIVERSOURCE BALANCED FUND (BUYING FUND) The Fund invests primarily in a combination of common and preferred stocks, bonds and other debt securities. Under normal market conditions, at least 40% of the Fund's total assets are invested in common stocks and no less than 25% of the Fund's total assets are invested in debt securities. Equity securities may provide income, offer the opportunity for long-term capital appreciation, or both. The Fund can invest in any economic sector and, at times, it may emphasize one or more particular sectors. Although the Fund emphasizes high- and medium- quality securities for the debt portion of its portfolio, it may buy lower- quality bonds (junk bonds). The Fund may invest up to 25% of its net assets in foreign investments. The Fund's equity investment philosophy is rooted in the belief that a disciplined, systematic, value-oriented approach to investing primarily in large-cap companies provides investors with an excellent opportunity for long- term growth of capital. In pursuit of the Fund's objective, RiverSource Investments chooses equity investments by seeking to: - Select companies that are undervalued based on a variety of measures, including, but not limited to price-to-earnings ratios, price-to-book ratios, price-to-free cash flow, current and projected dividends, sum-of-the parts or breakup value and historic relative price valuations. 70 - Identify companies with moderate growth potential based on: - effective management, as demonstrated by overall performance; - financial strength; and - underappreciated potential for improvement in industry and thematic trends. In evaluating whether to sell an equity security, the investment manager considers, among other factors, whether: - The security is overvalued relative to alternative investments. - The security has reached the investment manager's price objective. - The company has met the investment manager's earnings and/or growth expectations. - The security exhibits unacceptable correlation characteristics with other portfolio holdings. - The company or the security continues to meet the other standards described above. In pursuit of the Fund's objective, the investment manager chooses debt investments by: - Evaluating the debt portion of the portfolio's total exposure to sectors, industries and securities relative to the Barclays Capital U.S. Aggregate Bond Index (the "Index"). - Analyzing factors such as credit quality, interest rate outlook and price to select the most attractive securities within each sector. - Targeting an average duration for the debt portion of the portfolio within one year of the duration of the Index which, as of Jan. 31, 2009 was 4.18 years. Duration measures the sensitivity of bond prices to changes in interest rates. The longer the duration of a bond, the longer it will take to repay the principal and interest obligations and the more sensitive it will be to changes in interest rates. For example, a five-year duration means a bond is expected to decrease in value by 5% if interest rates rise 1% and increase in value by 5% if interest rates fall 1%. In evaluating whether to sell a debt security, the investment manager considers, among other factors: - The debt portion of the portfolio's total exposure to sectors, industries and securities relative to the Index. - Whether a security's rating is changed or is vulnerable to a change. - Whether a sector or industry is experiencing change. - Changes in the interest rate or economic outlook. - Whether the investment manager identifies a more attractive opportunity. The investment manager may use derivatives such as futures, options, forward contracts and swaps, including credit default swaps, in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, or to obtain or reduce credit exposure. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
--------------------------------------------------------------------------------------------------------- SELIGMAN INCOME AND GROWTH FUND FUNDAMENTAL POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. --------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund may not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's exemptions therefrom which may be total assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. ---------------------------------------------------------------------------------------------------------
71
--------------------------------------------------------------------------------------------------------- SELIGMAN INCOME AND GROWTH FUND FUNDAMENTAL POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except as permitted by the 1940 Act or any for temporary purposes (not for rule thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act less liabilities (other than permits a fund to borrow up to 33 1/3% borrowings) immediately after the of its total assets (including the borrowings. amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. --------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations SEC or SEC staff interpretations thereunder and any applicable exemptive thereof or any exemptions therefrom relief. which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate, except the Fund may invest estate, unless acquired as a result of in securities secured by real estate or ownership of securities or other interests therein or issued by persons instruments, except this shall not (including real estate investment prevent the Fund from investing in trusts) which deal in real estate or securities or other instruments backed interests therein. by real estate or securities of companies engaged in the real estate business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options and futures contracts or from Commodities below. investing in securities or other instruments backed by, or whose value is derived from, physical commodities. --------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, at market value, in one industry. According to the present the securities of issuers in any interpretation by the SEC, this means particular industry, provided that this that up to 25% of the Fund's total limitation shall exclude securities assets, based on current market value issued or guaranteed by the U.S. at time of purchase, can be invested in government or any of its agencies or any one industry. instrumentalities. --------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its net assets would be so invested. --------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or retain the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer (other than AND TRUSTEES the shares of a Fund), if to the Fund's knowledge, those directors and officers of the Fund individually own beneficially more than 1/2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. The Fund may not deal with its directors or officers, or firms they are associated with, in the purchase or sale of securities of other issuers, except as broker. ---------------------------------------------------------------------------------------------------------
72 COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN INCOME AND GROWTH FUND POLICY (SELLING FUND) RIVERSOURCE BALANCED FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- FOREIGN The Fund may invest up to 10% of total Up to 25% of the Fund's net assets may INVESTMENTS assets in foreign securities. The limit be invested in foreign investments. on foreign securities does not apply to ADRs or commercial paper and certificates of deposit issued by foreign banks. --------------------------------------------------------------------------------------------------------- BORROWING The Fund may not borrow more than 15% See the fundamental investment policy RESTRICTIONS of the value of its total assets. on Borrowing Money above. Borrowings may be secured by a mortgage or pledge of the Fund's assets. See also the fundamental investment policy on Borrowing Money above. --------------------------------------------------------------------------------------------------------- SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in the Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. The investment manager must seek Board approval to invest in any type of commodity or commodity contract if it is of the type the Fund has not previously utilized. See also fundamental investment policy on Commodities above. --------------------------------------------------------------------------------------------------------- SHORT SALES The Fund may not sell "short" or The Fund is not prohibited from maintain a "short position". engaging in short sales, however, the Fund will seek Board approval prior to utilizing short sales as an active part of its investment strategy. --------------------------------------------------------------------------------------------------------- EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable TRADED FUNDS assets in ETFs. investment strategy for the Fund, however, the Fund does not have a stated policy limiting these types of investments, other than as otherwise permitted by the 1940 Act. --------------------------------------------------------------------------------------------------------- EQUITY LINKED The Fund may invest up to 10% of its The Fund may invest in equity linked SECURITIES assets in equity-linked securities securities to the extent permitted by (ELS) as part of its overall investment its investment strategy. strategy. --------------------------------------------------------------------------------------------------------- PREFERRED The Fund may invest in preferred The Fund may invest in preferred stock SECURITIES securities believed by the investment to the extent permitted by its manager to offer capital appreciation investment strategy. opportunities. --------------------------------------------------------------------------------------------------------- ACCESS TRADES The Fund may participate in access The Fund may invest in access trades trades, but its exposure is limited to and other derivative instruments to the 5% of total assets of the Fund at the extent permitted by its investment time of purchase and to dealing with strategy. counterparties believed to be reputable. --------------------------------------------------------------------------------------------------------- INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise PURPOSES OF of controlling or managing any company. permitted by the 1940 Act. MANAGEMENT OR CONTROL ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or a note. If the Fund purchases unrated securities, or if the rating of a security is reduced after purchase, the Fund will depend on the investment 73 manager's analysis of credit risk more heavily than usual. Non-investment grade securities, commonly called high yield or junk bonds, may react more to perceived changes in the ability of the issuing entity to pay interest and principal when due than to changes in interest rates. Non-investment grade securities have greater price fluctuations and are more likely to experience a default than investment grade bonds. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including correlation risk, counterparty credit risk, hedging risk and leverage risk. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based outside the United States. An issuer is deemed to be based outside the United States if it is organized under the laws of another country. Foreign securities are primarily denominated in foreign currencies. In addition to the risks normally associated with domestic securities of the same type, foreign securities are subject to the following foreign risks: Country risk includes the political, economic, and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices: when interest rates rise, bond prices fall. In general, the longer the maturity or duration of a bond, the greater its sensitivity to changes in interest rates. - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures or other factors. - LIQUIDITY RISK. The risk associated from a lack of marketability of securities which may make it difficult or impossible to sell at desirable prices in order to minimize loss. The Fund may have to lower the selling price, sell other investments, or forego another, more appealing investment opportunity. - 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. 74 - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that a bond or other security might be called or otherwise converted, prepaid, or redeemed before maturity. This risk is primarily associated with asset-backed securities, including mortgage-backed securities. If a security is converted, prepaid, or redeemed before maturity, particularly during a time of declining interest rates, the investment manager may not be able to reinvest in securities providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise, the likelihood of prepayment decreases. The investment manager may be unable to capitalize on securities with higher interest rates because the Fund's investments are locked in at a lower rate for a longer period of time. - SECTOR RISK. If a fund emphasizes one or more economic sectors, it may be more susceptible to the financial, market or economic events affecting the particular issuers and industries in which it invests than funds that do not emphasize particular sectors. The more a fund diversifies, the more it spreads risk and potentially reduces the risks of loss and volatility. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman Income and Growth Fund. The second table shows total returns from hypothetical investments in Class A, Class B and Class C shares of the RiverSource Balanced Fund. The inception date for Class R2 and Class R5 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for those classes is not shown. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 5.75%* for Class A shares; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class I shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge on investments in Class A shares of the Selling Fund is 5.75%. Although for all periods presented, the Selling Fund's Class A share returns reflect the 5.75% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been higher if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented in the tables the Selling Funds' Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. 75 SELIGMAN INCOME AND GROWTH FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) -1.76% -3.09% -3.90% -11.96% +16.24% +8.18% +1.07% +15.80% -2.43% -37.84% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +9.39% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -19.41% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. RIVERSOURCE BALANCED FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +7.36% -11.03% -12.70% -15.34% +19.51% +9.32% +3.56% +14.97% +1.64% -29.64% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +12.28% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -16.19% (quarter ended Dec. 31, 2008). The performance of other classes may vary from that shown because of differences in expenses. The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement where the Buying Fund invested all of its assets in a corresponding "master" fund with an identical investment objective and investment strategies. As of Jan. 12, 2006, the Buying Fund became a stand-alone fund that invests directly in a portfolio of securities. The information shown in the table and in the financial highlights for the Buying Fund includes the activity of the Buying Fund when it was a feeder in a master/feeder arrangement. 76 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R AND I**) SELIGMAN INCOME AND GROWTH FUND (SELLING FUND): Class A Return before taxes -41.41% -6.26% -3.82% N/A N/A Return after taxes on distributions -42.19% -6.97% -4.60% N/A N/A Return after taxes on distributions and sale of Fund shares -26.76% -5.28% -3.39% N/A N/A Class B Return before taxes -41.28% -6.18% -3.81%* N/A N/A Class C Return before taxes -38.84% -5.84% N/A -4.09%(a) N/A Class R** Return before taxes -38.53% -5.33% N/A N/A -2.72%(b) Class I** Return before taxes -37.62% -5.04% N/A N/A -2.42%(b) Russell 1000 Value Index*** -36.85% -0.79% +1.36% +0.58% +3.38% Standard & Poor's 500 Composite Stock Price (S&P 500 Index)*** -36.99% -2.19% -1.38% -1.92%(c) +1.67%(d) Barclays Capital U.S. Aggregate Bond Index*** +5.24% +4.65% N/A N/A +4.43% Barclays Capital U.S. Government/Credit Index*** +5.70% +4.64% +5.64% +6.09%(c) +4.43%(d) Blended Index*** -20.01% +1.39% +3.07% +2.74% +3.80% Blended Index (Selling Fund old)*** -22.17% -1.30% -0.81% -1.13%(c) +1.02%(d) Lipper Mixed-Asset Target Allocation Growth Funds Average -29.75% -0.66% +0.85% +0.55%(c) +2.35%(d)
SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) RIVERSOURCE BALANCED FUND (BUYING FUND): Class A Return before taxes -33.68% -2.59% -2.89% N/A Return after taxes on distributions -34.43% -3.44% -3.86% N/A Return after taxes on distributions and sale of Fund shares -21.81% -2.59% -2.82% N/A Class B Return before taxes -33.57% -2.57% -3.14% N/A Class C Return before taxes -30.84% -2.18% N/A -3.97%(e) Russell 1000 Index -36.85% -0.79% +1.36% +0.91%(f) Barclays Capital U.S. Aggregate Bond Index +5.24% +4.65% +5.63% +6.33%(f) Blended Index -21.96% +1.57% +3.34% +3.34%(f) Lipper Balanced Funds Index -26.18% +0.12% +1.53% +0.58%(f)
(a)Inception date is May 27, 1999. (b)Inception date is April 30, 2003. (c)Measurement period started May 27, 1999. (d)Measurement period started April 30, 2003. (e)Inception date is June 26, 2000. (f)Measurement period started June 26, 2000. *The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. **Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. ***Effective Nov. 7, 2008, to better align the primary benchmark index with the investment strategy of the Fund, the S&P 500 Index was replaced with the Russell 1000 Value Index. In addition, the Barclays Capital U.S. Government/Credit Index was replaced with the Barclays Capital U.S. Aggregate Bond Index and the Blended Index (Selling Fund old), comprised of a 60% weighting in the S&P 500 Index and a 40% weighting in the Barclays Capital U.S. Government/Credit Index, was replaced with the Blended Index, comprised of a 60% weighting in the Russell 1000 Value Index and 40% in the Barclays Capital U.S. Aggregate Bond Index. The Russell 1000 Value Index, an unmanaged index, measures the performance of those stocks in the Russell 1000 Index with lower price-to book ratios and lower forecasted growth values. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. 77 The S&P 500 Index, an unmanaged index, measures the performance of 500 of the largest U.S. companies based on market capitalization. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Barclays Capital U.S. Aggregate Bond Index, an unmanaged index, is made up of a representative list of government, corporate, asset-backed and mortgage backed securities. The index is frequently used as a general measure of bond market performance. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Barclays Capital U.S. Government/Credit Index, an unmanaged index, is comprised of all bonds that are investment grade (rated Baa or higher by Moody's or BBB or higher by S&P, if unrated by Moody's) with at least one year to maturity. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Blended Index is comprised of a 60% weighting in the Russell 1000 Value Index and 40% in the Barclays Capital U.S. Aggregate Bond Index. The index is an unmanaged benchmark that reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Blended Index (Selling Fund old) is comprised of a 60% weighting in the S&P 500 Index and a 40% weighting in the Barclays Capital U.S. Government/Credit Index. The index is an unmanaged benchmark that reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Mixed-Asset Target Allocation Growth Funds Average measures the performance of funds, that by portfolio practice, maintain a mix of between 60%- 80% equity securities, with the remainder invested in bonds, cash and cash equivalents. The average is an unmanaged benchmark that assumes the reinvestment of all distributions, if any, and does not reflect any fees, sales charges or taxes. The Lipper Balanced Funds Index includes the 30 largest balanced funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Buying Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See Fund Management and Compensation in Exhibit B for more information. Investors cannot invest directly in an average or index. The inception date for Class R2 and Class R5 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for those classes is not shown. 78 PROPOSAL 6. REORGANIZATION OF SELIGMAN INTERNATIONAL GROWTH FUND INTO RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks long-term capital appreciation and invests predominantly in equity securities of foreign issuers that are believed to be growth companies. The investment objectives for the Funds are as follows: SELLING FUND: Seligman International Growth Fund seeks long-term capital appreciation. BUYING FUND: RiverSource Partners International Select Growth Fund seeks to provide shareholders with long-term capital growth. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund may invest in common stock of companies in any country. However, the Selling Fund typically will not invest in companies located in the United States. The Buying Fund's assets are primarily invested in equity securities of foreign issuers. The Selling Fund may invest up to 25% of its assets in preferred stock and investment-grade or comparable quality debt securities and generally invests less than 25% of its assets in emerging markets, while the Buying Fund has no similar restrictions. Both Funds may use forward foreign currency exchange contracts or purchase put options as part of their principal investment strategies. RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser(s) which provide day-to- day management of the Fund. The Selling Fund is subadvised by Wellington and the Buying Fund is subadvised by Columbia Wanger Asset Management, L.P. ("Columbia WAM") and Principal Global Investors, LLC ("Principal Global") (collectively, the "Subadvisers"). DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) The Fund invests primarily in high quality, large- and mid capitalization growth companies ($1 billion or more at the time of initial purchase by the Fund) that are considered leaders in their industries, emphasizing those industries that are growing on a global basis. The Fund may invest in any country; however, it typically will not invest in the United States. It generally invests in several countries in different geographic regions. The Fund generally invests in the common stock of medium- to large- sized companies in the principal international markets. However, it may also invest in companies with a lower market capitalization or in smaller regional or emerging markets (representation in the emerging markets will generally be less than 25% of assets). In selecting individual securities, the portfolio manager looks to identify companies that it believes display one or more of the following: - Attractive valuations relative to earnings and revenue forecasts or other valuation criteria (e.g., return on equity) - Quality management - Unique competitive advantages (e.g., market share, proprietary products) - Strong possibility of multiple expansion - Potential for improvement in overall operations (hidden/unappreciated value) The Fund generally sells a stock if the portfolio manager believes its target price has been reached, there is a decelerating trend of earnings growth, deteriorating industry fundamentals, management change or failure, its revenue growth has slowed, or its underlying fundamentals have deteriorated. The Fund may invest in all types of securities, many of which will be denominated in currencies other than the U.S. dollar. The securities may be listed on a U.S. or foreign stock exchange or traded in U.S. or foreign over- the-counter markets. The Fund normally concentrates its investments in common stocks; however, it may invest in other types of equity securities, including securities convertible into or exchangeable for common stock, depositary receipts, and rights and warrants to purchase common stock. The Fund also may invest up to 25% of its assets in preferred stock and investment-grade or comparable quality debt securities. The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that cannot be readily sold), and may from time to time enter into forward foreign currency exchange contracts in an attempt to manage the risk of adverse changes in currencies. The Fund may also purchase put options in an attempt to hedge against a 79 decline in the price of securities it holds in its portfolio. A put option gives the Fund the right to sell an underlying security at a particular price during a fixed period of time. Forward foreign currency exchange contracts and put options on securities may not be available to the Fund on reasonable terms in many situations, and the Fund may frequently choose not to enter into such contracts or purchase such options even when they are available. The Fund may also invest up to 10% of its assets in exchange-traded funds ("ETFs"). ETFs are traded, like individual stocks, on an exchange, but they represent baskets of securities that seek to track the performance of certain indices. The indices include not only broad-market indexes but more specific indices as well, including those relating to particular sectors, countries and regions. The Fund may invest in ETFs for short-term cash management purposes or as part of its overall investment strategy. RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) The Fund's assets are primarily invested in equity securities of foreign issuers that are believed to offer strong growth potential. The Fund may invest in both developed and emerging markets. RiverSource Investments serves as the investment manager to the Fund and is responsible for the oversight of the Fund's Subadvisers, who provide day-to-day management for the Fund. Each of the Subadvisers acts independently of the other and uses its own methodology for selecting investments. RiverSource Investments, subject to the oversight of the Fund's Board of Directors (Board), decides the proportion of the Fund assets to be managed by each subadviser, and may change these proportions at any time. RiverSource Investments currently intends to allocate a majority of the Fund's assets to Principal Global, although this could change. Each of the Subadvisers employs an active investment strategy that focuses on companies that the Subadvisers believe will increase in value over time. COLUMBIA WAM Columbia WAM invests primarily in stocks of small- and medium sized companies based both outside and in the U.S. with capitalizations of less than $5 billion at the time of purchase. As long as the stock continues to meet the Fund's other investment criteria, Columbia WAM may choose to hold the stock even if it grows beyond that capitalization limit. Columbia WAM believes that smaller companies -- particularly outside the U.S. -- which are not as well known by financial analysts and which dominate a part of the market may offer higher return potential than the stocks of larger companies. Columbia WAM invests in the stocks of foreign companies based in developed markets and also emerging markets. In making investments for the Fund, Columbia WAM typically looks for companies with: - A strong business franchise that offers growth potential. - Products and services that give a company a competitive advantage. - A stock price that Columbia WAM believes is reasonable relative to the assets and earning power of the company. Columbia WAM relies primarily on independent, internally generated research to uncover companies that may be less well known than the more popular names. To find these companies, Columbia WAM looks for growth potential, financial strength, and fundamental value. Columbia WAM may identify what it believes are important economic, social, or technological trends (for example, the growth of outsourcing as a business strategy, or the productivity gains from the increasing use of technology) and try to identify companies it thinks will benefit from these trends.
----------------------------------------------------------------------------------------------------- GROWTH POTENTIAL FINANCIAL STRENGTH FUNDAMENTAL VALUE ----------------------------------------------------------------------------------------------------- superior technology low debt reasonable stock price relative to growth potential ----------------------------------------------------------------------------------------------------- innovative marketing adequate working capital valuable assets ----------------------------------------------------------------------------------------------------- managerial skill conservative accounting practices ----------------------------------------------------------------------------------------------------- market niche adequate profit margin ----------------------------------------------------------------------------------------------------- good earnings prospects ------------------------------------------------------------------- strong demand for product -------------------------------------------------------------------
Columbia WAM believes that if the growth potential is realized, it may provide a basis for the company to outperform its peers. A strong balance sheet gives management greater flexibility to pursue strategic objectives and is essential to maintaining a competitive advantage. Once Columbia WAM uncovers an attractive company, it identifies a price that it believes would also make the stock a good value. Columbia WAM may use foreign currency futures contracts or foreign currency forward contracts, with terms of up to one year in an effort to hedge existing positions, interest rate fluctuations or currency fluctuations. Columbia WAM also may purchase foreign currency for immediate settlement in order to purchase foreign securities. 80 PRINCIPAL GLOBAL Principal Global's equity investment philosophy is based on the belief that superior stock selection and disciplined risk management provide consistent outperformance. Principal Global focuses on companies with improving and sustainable business fundamentals, rising investor expectations and attractive relative valuations. To support their stock selection skills, which are believed to be the primary drivers of relative performance, Principal Global seeks to leverage technology in a research-driven approach and neutralize unintended portfolio risks. Principal Global selects securities for the Fund based on its own global investment research. The research process is comprised of the following components: - A proprietary and customized information management and screening framework, providing high-quality, real-time breadth of research coverage and peer rankings encompassing more than 10,000 companies worldwide. - A systematic evaluation of companies based on objective measures such as accelerating profitability, discounted cash flow valuation and market confirmation. - The portfolio managers and research analysts team working together to build systematic quantitative fundamental models that reflect the critical drivers of performance. These models produce relative rankings for each stock within their appropriate peer group that differentiate the most attractive from the least attractive stocks. Stocks that appear to be attractive based on initial screening and analysis are subjected to more rigorous examination by the research analysts. The analysts then seek to validate or confirm the attractive characteristics identified by the research process, as well as apply more qualitative analysis to issues such as evaluating the sustainability of fundamental changes. As part of the research process, the research analysts meet with company management, conduct on-site due diligence visits, attend industry conferences, as well as interact with sell-side equity analysts on a daily basis. Principal Global's stock selection process is complemented by disciplined portfolio risk controls. The portfolio risk management ensures any excess returns come from stock selection skills and not from influences such as large sector or country exposures. This is designed to enhance the consistency of Principal Global's investment process and to minimize the risk of unexpected negative surprises. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
--------------------------------------------------------------------------------------------------------- SELIGMAN INTERNATIONAL GROWTH FUND RIVERSOURCE PARTNERS INTERNATIONAL FUNDAMENTAL POLICY (SELLING FUND) SELECT GROWTH FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. --------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund may not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's exemptions therefrom which may be total assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. --------------------------------------------------------------------------------------------------------- BORROWING The Fund may not borrow money, except The Fund may not borrow money, except MONEY as permitted by the 1940 Act or any for temporary purposes (not for rule thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act less liabilities (other than permits a fund to borrow up to 33 1/3% borrowings) immediately after the of its total assets (including the borrowings. amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. --------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations SEC or SEC staff interpretations thereunder and any applicable exemptive thereof or any exemptions therefrom relief. which may be granted by the SEC. ---------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- SELIGMAN INTERNATIONAL GROWTH FUND RIVERSOURCE PARTNERS INTERNATIONAL FUNDAMENTAL POLICY (SELLING FUND) SELECT GROWTH FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate, except the Fund may invest estate, unless acquired as a result of in securities secured by real estate or ownership of securities or other interests therein or issued by persons instruments, except this shall not (including real estate investment prevent the Fund from investing in trusts) which deal in real estate or securities or other instruments backed interests therein. by real estate or securities of companies engaged in the real estate business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options, futures contracts and foreign Commodities below. currency or from investing in securities or other instruments backed by, or whose value is derived from, physical commodities. --------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, at market value, in one industry. According to the present the securities of issuers in any interpretation by the SEC, this means particular industry, provided that this that up to 25% of the Fund's total limitation shall exclude securities assets, based on current market value issued or guaranteed by the U.S. at time of purchase, can be invested in government or any of its agencies or any one industry. instrumentalities. --------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its total assets would be invested in such agreements and in restricted and other illiquid securities. --------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or retain the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer (other than AND TRUSTEES the shares of the Fund), if to the Fund's knowledge, those directors and officers of Seligman Global Fund Series, Inc. (of which the Fund is a series) and the directors and officers of the investment manager or subadviser, who individually own beneficially more than 1/2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. ---------------------------------------------------------------------------------------------------------
COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- RIVERSOURCE PARTNERS INTERNATIONAL NONFUNDAMENTAL SELIGMAN INTERNATIONAL GROWTH FUND SELECT GROWTH FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- BORROWING The Fund may not borrow more than 15% See the fundamental investment policy RESTRICTIONS of the value of its total assets. on Borrowing Money above. Borrowings may be secured by a mortgage or pledge of the Fund's assets. See also the fundamental investment policy on Borrowing Money above. ---------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- RIVERSOURCE PARTNERS INTERNATIONAL NONFUNDAMENTAL SELIGMAN INTERNATIONAL GROWTH FUND SELECT GROWTH FUND POLICY (SELLING FUND) (BUYING FUND) --------------------------------------------------------------------------------------------------------- SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in the Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. Approval of the Board of Directors must be granted for the Fund to invest in any new type of commodity if it is of a type the Fund has not previously utilized. See also fundamental investment policy on Commodities above. --------------------------------------------------------------------------------------------------------- EMERGING MARKET The Fund will generally invest less The Fund may invest in both developed SECURITIES than 25% of its assets in securities of and emerging markets. emerging markets. --------------------------------------------------------------------------------------------------------- EXCHANGE The Fund may invest up to 10% of its Investing in ETFs is an allowable TRADED FUNDS assets in ETFs. investment strategy for the Fund, however, the Fund does not have a stated policy limiting these types of investments, other than as otherwise permitted by the 1940 Act. --------------------------------------------------------------------------------------------------------- PREFERRED The Fund may invest up to 25% of its The Fund may invest in preferred stock STOCK AND DEBT net assets in preferred stock and debt and debt securities to the extent SECURITIES securities. The Fund will invest only permitted by its investment strategy. in "investment grade" debt securities or, in the case of unrated securities, debt securities that are deemed to be of equivalent quality to "investment- grade" securities. "Investment-grade" debt securities are rated within the four highest rating categories as determined by Moody's or S&P. --------------------------------------------------------------------------------------------------------- DERIVATIVES The Fund will invest in derivatives The Fund may invest in derivatives to only for hedging or investment the extent permitted by its investment purposes. The Fund will not invest in strategy. derivatives for speculative purposes, which means where the derivative investment exposes the Fund to undue risk of loss, such as where the risk of loss is greater than the cost of the investment. --------------------------------------------------------------------------------------------------------- WARRANTS No more than 2% of net assets of the Investing in warrants is an allowable Fund may be invested in warrants not investment strategy for the Fund. listed on the New York or American Stock Exchanges. --------------------------------------------------------------------------------------------------------- ACCESS TRADES The Fund may participate in access The Fund may invest in access trades trades, but its exposure is limited to and other derivative instruments to the 5% of total assets of the Fund at the extent permitted by its investment time of purchase and to dealing with strategy. counterparties believed to be reputable. --------------------------------------------------------------------------------------------------------- INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise PURPOSES OF of controlling or managing any company. permitted by the 1940 Act. MANAGEMENT OR CONTROL --------------------------------------------------------------------------------------------------------- ILLIQUID SECURITIES The Fund does not currently expect to No more than 15% of the Fund's net invest more than 5% of its net assets assets will be held in securities and in illiquid securities, including other instruments that are illiquid. restricted securities (i.e., securities not readily marketable without registration under the 1933 Act and other securities that are not readily marketable. ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. Because the Buying Fund invests primarily in small- and medium-sized companies whereas the Selling Fund invests primarily in medium- to large-sized companies, the Buying Fund is subject to greater small-sized company risk. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment 83 objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - RISKS OF FOREIGN INVESTING. Foreign securities are securities of issuers based outside the United States. An issuer is deemed to be based outside the United States if it is organized under the laws of another country. Foreign securities are primarily denominated in foreign currencies. In addition to the risks normally associated with domestic securities of the same type, foreign securities are subject to the following foreign risks: Country risk includes the political, economic and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times, it may be difficult to sell foreign securities at desirable prices. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add to or subtract from the value of the investment. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social and political) in these countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners, and hostile relations with neighboring countries. - ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid- sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. - SECTOR RISK. Companies that operate in different but closely related industries are sometimes described as being in the same broad economic sector. The values of stocks of many different companies in a market sector may be similarly affected by particular economic or market events. Although the Fund's principal investment strategies do not involve focusing on any particular sector, at times the investment manager's asset management strategy may cause the Fund to invest a large portion of its assets in a particular sector. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to Principal Risks to which it is otherwise exposed, and may expose the Fund to additional risks, including counterparty credit risk, leverage risk, hedging risk, correlation risk, and liquidity risk. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a 84 lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. In addition to the risks described above, the Buying Fund is subject to the additional principal investment risks set forth below. While these additional risks may also be risks of the Selling Fund, they are not stated as principal investment risks of the Selling Fund. For more information regarding the Selling Fund's principal investment risks, see "Principal Risks" in the Selling Fund's prospectus. - SMALL AND MID-SIZED COMPANY RISK. Investments in small and medium companies often involve greater risks than investments in larger, more established companies because small and medium companies may lack the management experience, financial resources, product diversification, experience and competitive strengths of larger companies. Additionally, in many instances the securities of small and medium companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less and may be more volatile than is typical of larger companies. - QUANTITATIVE MODEL RISK. Securities selected using quantitative methods may perform differently from the market as a whole for many reasons, including the factors used in building the quantitative analytical framework, the weights placed on each factor, and changing sources of market returns, among others. There can be no assurance that these methodologies will enable the Fund to achieve its objective. Quantitative model risk relates to the portion of the Buying Fund's portfolio that is managed by Principal Global. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C, Class R and Class I shares of Seligman International Growth Fund. The second table shows total returns from hypothetical investments in Class A, Class B and Class C shares of the RiverSource Partners International Select Growth Fund. The inception date for Class R2 and Class R5 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for those classes is not shown. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 5.75%* for Class A shares; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C** and Class R shares; - no sales charge for Class I shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge on investments in Class A shares of the Selling Fund is 5.75%. Although for all periods presented, the Selling Fund's Class A share returns reflect the 5.75% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been higher if a 4.75% maximum initial sales charge then in effect was incurred. ** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented in the tables the Selling Funds' Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. 85 AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +25.29% -36.49% -28.09% -20.41% +29.57% +23.39% +5.53% +22.47% +22.04% -57.92% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +16.96% (quarter ended Dec. 31, 1999) and the lowest return for a calendar quarter was -27.75% (quarter ended Sept. 30, 2008). The performance of other classes may vary from that shown because of differences in expenses. RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) -16.62% +35.92% +21.93% +16.56% +26.22% +13.77% -45.64% 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +18.31% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -24.78% (quarter ended Sept. 30, 2008). The performance of other classes may vary from that shown because of differences in expenses. 86 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE SINCE INCEPTION INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) (CLASS I**) SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND): Class A Return before taxes -60.34% -5.04% -7.56% N/A N/A N/A Return after taxes on distributions -60.34% -5.70% -8.03% N/A N/A N/A Return after taxes on distributions and sale of Fund shares -39.22% -4.01% -5.86% N/A N/A N/A Class B Return before taxes -60.37% -4.96% -7.52%* N/A N/A N/A Class C Return before taxes -58.63% -4.60% N/A -7.92%(a) N/A N/A Class R** Return before taxes -58.48% -4.13% N/A N/A +0.75%(b) N/A Class I** Return before taxes -57.62% -3.19% N/A N/A N/A -1.34%(c) Morgan Stanley Capital International (MSCI) EAFE (Europe, Australasia, Far East) Index -43.06% +2.10% +1.18% +1.21%(d) +7.77%(e) +3.89%(f) MSCI EAFE Growth Index -42.46% +1.77% -1.01% -0.56%(d) +6.68%(e) +2.91%(f) Lipper International Multi-Cap Growth Funds Average -46.85% +1.14% +1.46% +0.99%(g) +6.69%(e) +2.55%(f) Lipper International Funds Average -44.23% +1.27% +1.74% +1.40%(g) +6.62%(e) +3.08%(f)
Prior to March 31, 2000, Seligman employed subadvisers that were responsible for providing certain portfolio management services with respect to the investments of the Fund. From March 31, 2000 until Sept. 15, 2003, the assets of the Fund were managed exclusively by Seligman. Since Sept. 15, 2003, Wellington Management Company LLP has been employed as subadviser to provide portfolio management services to the Fund.
SINCE INCEPTION 1 YEAR 5 YEARS (CLASS C) RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND): Class A Return before taxes -48.77% +0.90% +3.39%(h) Return after taxes on distributions -48.80% -0.70% +2.25%(h) Return after taxes on distributions and sale of Fund shares -31.70% +0.76% +2.91%(h) Class B Return before taxes -48.81% +1.02% +3.42%(h) Class C Return before taxes -46.65% +1.31% +3.42%(h) MSCI EAFE Growth Index -42.46% +1.77% +4.11%(i) Lipper International Multi-Cap Growth Funds Index -46.54% +2.13% +4.05%(i)
(a) Inception date is May 27, 1999. (b) Inception date is April 30, 2003. (c) Inception date is Nov. 30, 2001. (d) Measurement period started May 31, 1999. (e) Measurement period started April 30, 2003 (f) Measurement period started Nov. 30, 2001 (g) Measurement period started May 27, 1999. (h) Inception date is Sept. 28, 2001. (i) Measurement period started Sept. 28, 2001. * The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. ** Class R and Class I of the Selling Fund are to be redesignated Class R2 and Class R5, respectively, in connection with the Reorganization. The MSCI EAFE Index, an unmanaged index, is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States and Canada. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The MSCI EAFE Growth Index, an unmanaged index, is compiled from a composite of securities markets in Europe, Australia and the Far East. The index represents the growth half of the market capitalizations of each country index, determined by price/book value, from the standard MSCI country indices. The index covers the full range of developed, emerging and MSCI All Country indices, including Free indices where applicable. The Country Growth indices are aggregated into regional Growth indices to create the composite. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. 87 The Lipper International Multi-Cap Growth Funds Average measures the performance of mutual funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have 25% to 75% of their assets invested in companies strictly outside of the U.S. with market capitalizations (on a three-year weighted basis) greater than the 250th-largest company in the S&P/Citigroup World ex-U.S. Broad Market Index ("BMI"). Multi-cap growth funds typically have an above-average price-to- cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared to the S&P/Citigroup World ex-U.S. BMI. The average is an unmanaged benchmark that assumes reinvestment of all distributions, if any, and excludes the effect of fees, sales charges and taxes. The Lipper International Funds Average measures the performance of mutual funds which invest in equity securities whose primary trading markets are outside the U.S. Lipper currently classifies the Fund as an International Multi-Cap Growth Fund. The average is an unmanaged benchmark that assumes reinvestment of all distributions, if any, and excludes the effect of fees, sales charges and taxes. The Lipper International Multi-Cap Growth Funds Index includes the 10 largest international multi-cap growth funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Buying Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See Fund Management and Compensation in Exhibit B for more information. Investors cannot invest directly in an average or index. The inception date for Class R2 and Class R5 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for those classes is not shown. 88 PROPOSAL 7. REORGANIZATION OF SELIGMAN U.S. GOVERNMENT SECURITIES FUND INTO RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND COMPARISON OF INVESTMENT OBJECTIVES Each Fund seeks to provide a high level of current income consistent with prudent risk or safety of principal and, in the case of the RiverSource Short Duration U.S. Government Fund, consistent with investment in U.S. government and agency securities. The investment objectives for the Funds are as follows: SELLING FUND: Seligman U.S. Government Securities Fund seeks to provide a high level of current income consistent with prudent investment risk. BUYING FUND: RiverSource Short Duration U.S. Government Fund seeks to provide shareholders with a high level of current income and safety of principal consistent with investment in U.S. government and government agency securities. Because any investment involves risk, there is no assurance the Fund's objective can be achieved. Only shareholders can change the Fund's objective. COMPARISON OF PRINCIPAL INVESTMENT STRATEGIES Each Fund invests predominantly in debt securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or government-sponsored enterprises. In favorable market conditions, the Buying Fund may also invest in debt securities that are not issued by the U.S. government, its agencies or instrumentalities, or that are denominated in currencies other than the U.S. dollar. Under normal market conditions the Buying Fund will maintain an average portfolio duration of one to three years while the Selling Fund's strategy does not specify an average duration target range. At Jan. 31, 2009, the average portfolio duration was years for the Selling Fund and years for the Buying Fund. DETAILED STRATEGIES FOR THE SELLING FUND AND THE BUYING FUND ARE SET FORTH BELOW: SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) The Fund will invest at least 80% of its net assets in U.S. government securities which are debt securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or government sponsored enterprises. Although certain of the securities in which the Fund may invest are backed by the full faith and credit of the U.S. government (and thus involve minimal credit risk), other securities in which the Fund may invest are backed only by the credit of a U.S. federal agency, instrumentality or government sponsored enterprise that issued the security (and thus may have increased credit risk). Securities backed by the full faith and credit of the U.S. government include direct obligations of the U.S. Treasury (including bills, notes, and bonds) and mortgage-backed securities guaranteed by the Government National Mortgage Association (GNMA). Examples of securities not backed by the full faith and credit of the U.S. government include securities issued by the Student Loan Marketing Association (Sallie Mae), the Federal Home Loan Banks (FHLBs), Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae). In pursuit of the Fund's objectives, the investment manager chooses investments by: - Reviewing credit characteristics and the interest rate outlook. - Identifying and buying securities that are high quality or have similar qualities, in the investment manager's opinion, even though they are not rated or have been given a lower rating by a rating agency. In evaluating whether to sell a security, the investment manager considers, among other factors, whether: - The security is overvalued relative to alternative investments. - The investment manager wishes to lock-in profits. - Changes in the interest rate or economic outlook. - The investment manager identifies a more attractive opportunity. The Fund intends to comply with Rule 4.5 of the Commodity Futures Trading Commission (CFTC), under which a mutual fund is exempt from the definition of a "commodity pool operator." The Fund, therefore, is not subject to registration or regulation as a pool operator, meaning that the Fund may invest in futures contracts without registering with the CFTC. RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) Under normal market conditions, at least 80% of the Fund's net assets are invested in debt securities issued or guaranteed as to principal and interest by the U.S. government, or its agencies or instrumentalities. Shareholders will be given at least 60 days' notice of any change in the 80% policy. The Fund invests in direct obligations of the U.S. government, such as 89 Treasury bonds, bills, and notes, and of its agencies and instrumentalities. The Fund may invest to a substantial degree in securities issued by various entities sponsored by the U.S. government, such as Fannie Mae and Freddie Mac. These issuers are chartered or sponsored by acts of Congress; however, their securities are neither issued nor guaranteed by the United States Treasury. When market conditions are favorable, the Fund may also invest in debt securities that are not issued by the U.S. government, its agencies or instrumentalities, or that are denominated in currencies other than the U.S. dollar. In pursuit of the Fund's objectives, the investment manager chooses investments by: - Reviewing credit characteristics and the interest rate outlook. - Identifying and buying securities that are high quality or have similar qualities, in the investment manager's opinion, even though they are not rated or have been given a lower rating by a rating agency. Under normal market conditions, the Fund will seek to maintain an average portfolio duration of one to three years. Duration measures the sensitivity of bond prices to changes in interest rates. The longer the duration of a bond, the longer it will take to repay the principal and interest obligations and the more sensitive it will be to changes in interest rates. For example, a three year duration means a bond is expected to decrease in value by 3% if interest rates rise 1% and increase in value by 3% if interest rates fall 1%. In evaluating whether to sell a security, the investment manager considers, among other factors, whether: - The security is overvalued relative to alternative investments. - The investment manager wishes to lock-in profits. - Changes in the interest rate or economic outlook. - The investment manager identifies a more attractive opportunity. The investment manager may use derivatives such as futures, options, forward contracts and swaps, including credit default swaps, in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, or to obtain or reduce credit exposure. COMPARISON OF FUNDAMENTAL POLICIES If the Reorganization occurs, the combined Fund will be subject to the fundamental investment policies of the Buying Fund. RiverSource Investments does not believe that the differences between the fundamental investment policies of the Funds result in any material difference in the way the Funds are managed. For purposes of this discussion, a "fundamental" investment policy is one that may not be changed without a shareholder vote. The Funds' fundamental investment policies are set forth below:
--------------------------------------------------------------------------------------------------------- SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S. FUNDAMENTAL POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- UNDERWRITING The Fund may not underwrite the The Fund may not act as an underwriter securities of other issuers, except (sell securities for others). However, insofar as the Fund may be deemed an under the securities laws, the Fund may underwriter under the 1933 Act in be deemed to be an underwriter when it disposing of a portfolio security or in purchases securities directly from the connection with investments in other issuer and later resells them. investment companies. --------------------------------------------------------------------------------------------------------- LENDING The Fund may not make loans, except as The Fund may not lend securities or permitted by the 1940 Act or any rule participate in an interfund lending thereunder, any SEC or SEC staff program if the total of all such loans interpretations thereof or any would exceed 33 1/3% of the Fund's exemptions therefrom which may be total assets except this fundamental granted by the SEC. investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. --------------------------------------------------------------------------------------------------------- BORROWING MONEY The Fund may not borrow money, except The Fund may not borrow money, except as permitted by the 1940 Act or any for temporary purposes (not for rule thereunder, any SEC or SEC staff leveraging or investment) in an amount interpretations thereof or any not exceeding 33 1/3% of its total exemptions therefrom which may be assets (including the amount borrowed) granted by the SEC. The 1940 Act less liabilities (other than permits a fund to borrow up to 33 1/3% borrowings) immediately after the of its total assets (including the borrowings. amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. ---------------------------------------------------------------------------------------------------------
90
--------------------------------------------------------------------------------------------------------- SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S. FUNDAMENTAL POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- ISSUING SENIOR The Fund may not issue senior The Fund may not issue senior SECURITIES securities, except as permitted by the securities, except as permitted under 1940 Act or any rule thereunder, any the 1940 Act, the rules and regulations SEC or SEC staff interpretations thereunder and any applicable exemptive thereof or any exemptions therefrom relief. which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REAL ESTATE The Fund may not purchase or hold any The Fund will not buy or sell real real estate including limited estate, unless acquired as a result of partnership interests in real property, ownership of securities or other except the Fund may invest in debt instruments, except this shall not securities secured by real estate or prevent the Fund from investing in interests therein or issued by securities or other instruments backed companies which invest in real estate by real estate or securities of or interests therein, including real companies engaged in the real estate estate investment trusts ("REITs"). business or real estate investment trusts. For purposes of this policy, real estate includes real estate limited partnerships. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may not purchase or sell The Fund will not buy or sell physical commodities or commodity contracts, commodities unless acquired as a result except to the extent permissible under of ownership of securities or other applicable law and interpretations, as instruments, except this shall not they may be amended from time to time. prevent the Fund from buying or selling See also nonfundamental policy on options and futures contracts or from Commodities below. investing in securities or other instruments backed by, or whose value is derived from, physical commodities. --------------------------------------------------------------------------------------------------------- INDUSTRY The Fund may not invest 25% or more of The Fund will not concentrate in any CONCENTRATION its total assets, at market value, in one industry. According to the present any one industry, except that this 25% interpretation by the SEC, this means limitation on industry concentration that up to 25% of the Fund's total does not apply to securities issued or assets, based on current market value guaranteed by the U.S. government or at time of purchase, can be invested in any of its agencies or any one industry. instrumentalities (which may include mortgage-related securities). --------------------------------------------------------------------------------------------------------- DIVERSIFICATION The Fund may not make any investment The Fund will not invest more than 5% inconsistent with the Fund's of its total assets in securities of classification as a diversified company any company, government, or political under the 1940 Act. subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. The Fund will not purchase more than 10% of the outstanding voting securities of an issuer, except that up to 25% of the Fund's assets may be invested without regard to this 10% limitation. --------------------------------------------------------------------------------------------------------- MARGIN The Fund may not purchase securities on No fundamental policy. See fundamental margin, except as permitted by the 1940 policy on Lending above. Act or any rule thereunder, any SEC or SEC staff interpretations thereof or any exemptions therefrom which may be granted by the SEC. --------------------------------------------------------------------------------------------------------- REPURCHASE The Fund will not enter into repurchase No fundamental policy. AGREEMENTS agreements of more than one week's duration if more than 10% of its total assets would be invested in such agreements and in restricted and other illiquid securities. --------------------------------------------------------------------------------------------------------- DEALINGS WITH The Fund may not purchase or hold the No fundamental policy. DIRECTORS, OFFICERS securities of any issuer, if to its AND TRUSTEES knowledge, Trustees or officers of Seligman High Income Fund Series (of which the Fund is a series) individually owning beneficially more than 0.5% of the securities of that other company own in the aggregate more than 5% of such securities. The Fund may not engage in transactions with its Trustees and officers, or firms they are associated with, in connection with the purchase or sale of securities, except as broker. ---------------------------------------------------------------------------------------------------------
91 COMPARISON OF NONFUNDAMENTAL POLICIES AND RELATED INVESTMENT STRATEGIES The following highlights the differences in the Funds' nonfundamental investment policies (policies that may be changed without a shareholder vote):
--------------------------------------------------------------------------------------------------------- NONFUNDAMENTAL SELIGMAN U.S. GOVERNMENT SECURITIES RIVERSOURCE SHORT DURATION U.S. POLICY FUND (SELLING FUND) GOVERNMENT FUND (BUYING FUND) --------------------------------------------------------------------------------------------------------- SECURITIES OF OPEN- The Fund may not acquire any securities Not applicable. END INVESTMENT of a registered open-end investment COMPANIES company or a registered unit investment trust in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act. --------------------------------------------------------------------------------------------------------- COMMODITIES The Fund may purchase and sell See fundamental investment policy on commodities and commodity contracts Commodities above. only to the extent that such activities do not result in the Fund being a "commodity pool" as defined in the Commodity Exchange Act and the Commodity Futures Trading Commission's regulations and interpretations thereunder. The investment manager must seek Board approval to invest in any type of commodity or commodity contract if it is of a type the Fund has not previously utilized. See also fundamental investment policy on Commodities above. --------------------------------------------------------------------------------------------------------- INVESTMENTS FOR The Fund may not invest for the purpose Not applicable, other than as otherwise PURPOSES OF of controlling or managing any company. permitted by the 1940 Act. MANAGEMENT OR CONTROL --------------------------------------------------------------------------------------------------------- SHORT SALES The Fund may not sell securities short The Fund is not prohibited from or maintain a short position. engaging in short sales, however, the Fund will seek Board approval prior to utilizing short sales as an active part of its investment strategy. ---------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISK FACTORS Although the Funds describe them differently, the principal investment risks associated with the Buying Fund and the Selling Fund are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund's portfolio and on market conditions, both of which change over time. Both Funds are subject to the principal investment risks described below. - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to select securities and to make investment decisions that are suited to achieving the Fund's investment objectives. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - CREDIT RISK. Credit risk is the risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable or unwilling to honor a financial obligation, such as payments due on a bond or a note. If the Fund purchases unrated securities, or if the rating of a security is reduced after purchase, the Fund will depend on the investment manager's analysis of credit risk more heavily than usual. - INTEREST RATE RISK. Interest rate risk is the risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices: when interest rates rise, bond prices fall. In general, the longer the maturity or duration of a bond, the greater its sensitivity to changes in interest rates. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. - PREPAYMENT AND EXTENSION RISK. Prepayment and extension risk is the risk that a bond or other security might be called or otherwise converted, prepaid, or redeemed before maturity. This risk is primarily associated with asset-backed securities, including mortgage-backed securities. If a security is converted, prepaid, or redeemed before maturity, particularly during a time of declining interest rates, the investment managers may not be able to reinvest in securities providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise, the likelihood of prepayment decreases. The investment managers may be unable to capitalize on securities with higher interest rates because the Fund's investments are locked in at a lower rate for a longer period of time. 92 In addition to the risks described above, the Buying Fund is subject to the additional principal investment risk set forth below. While this additional risk may also be a risk of the Selling Fund, it is not stated as a principal investment risk of the Selling Fund. For more information regarding the Selling Fund's principal investment risks, see "Principal Risks" in the Selling Fund's prospectus. - DERIVATIVES RISK. Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Gains or losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial gain or loss for the Fund. Derivative instruments in which the Fund invests will typically increase the Fund's exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including counterparty credit risk, hedging risk, correlation risk, liquidity risk and leverage risk. Counterparty credit risk is the risk that a counterparty to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses. Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate, which may cause the Fund to be in a position to do something the investment manager would not otherwise choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing another, more appealing investment opportunity. Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument. Certain derivatives have the potential for unlimited losses, regardless of the size of the initial investment. PERFORMANCE The following bar charts and tables provide some illustration of the risks of investing in the Funds by showing, respectively: - how each Fund's performance has varied for each full calendar year shown in the bar chart; and - how each Fund's average annual total returns compare to indexes shown in the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How a Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. Bar Charts. Class A share information is shown in the bar charts; the sales charge for Class A shares is not reflected in the bar charts. If sales charges were included, the returns would be lower. Tables. The first table shows total returns from hypothetical investments in Class A, Class B, Class C and Class R shares of Seligman U.S. Government Securities Fund. The second table shows total returns from hypothetical investments in Class A, Class B and Class C shares of the RiverSource Short Duration U.S. Government Fund. The inception date for Class R2 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for that class is not shown. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge of 4.50% for Class A shares of the Selling Fund* and the maximum sales charge for Class A shares of the Buying Fund** at the beginning of each period; - sales at the end of the period and deduction of the applicable contingent deferred sales charge ("CDSC") for Class B, Class C*** and Class R shares; and - with the exception of Class A shares, no adjustments for taxes paid by an investor on the reinvested income and capital gains. * Effective Jan. 7, 2008, the maximum initial sales charge in Class A shares of the Selling Fund is 4.50%. Although for all periods presented the Selling Fund's Class A share returns reflect the 4.50% maximum initial sales charge, the actual returns for periods prior to Jan. 7, 2008 would have been lower if a 4.75% maximum initial sales charge then in effect was incurred. 93 ** On March 3, 2008, the maximum sales charge for Class A shares of the Buying Fund changed from 4.75% to 3.00%. Class A share performance for the Buying Fund for each period of five years, ten years and since inception reflects the maximum sales charge of 4.75%, which was in effect at the beginning of each of those periods. Class A share performance for the Buying Fund for the one year period reflects the maximum sales charge of 3.00%, which was in effect at the beginning of that period. *** Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares of the Selling Fund. Although for all periods presented the Selling Fund's Class C share returns do not reflect an initial sales charge, the actual returns for periods prior to June 4, 2007 would have been lower if a 1.00% maximum initial sales charge then in effect was incurred. AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) -3.63% +12.26% +5.95% +10.45% +0.55% +1.09% +0.00% +2.33% +6.10% +8.76% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +6.54% (quarter ended Sept. 30, 2002) and the lowest return for a calendar quarter was -2.87% (quarter ended June 30, 2004). The performance of other classes may vary from that shown because of differences in expenses. RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) (BAR CHART) +1.13% +5.90% +6.77% +5.94% +1.03% +0.82% +1.33% +3.95% +5.28% -1.53% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
During the periods shown in the bar chart, the highest return for a calendar quarter was +3.53% (quarter ended Sept. 30, 2001) and the lowest return for a calendar quarter was -1.49% (quarter ended March 31, 2000). The performance of other classes may vary from that shown because of differences in expenses. The Buying Fund formerly was a "feeder" fund in a master/feeder arrangement where the Buying Fund invested all of its assets in a corresponding "master" fund with an identical investment objective and investment strategies. As of Oct. 18, 2005, the Buying Fund became a stand-alone fund that invests directly in a portfolio of securities. The information shown in the table and in the financial highlights for the Buying Fund includes the activity of the Buying Fund when it was a feeder in a master/feeder arrangement. 94 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2008)
SINCE SINCE INCEPTION INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) (CLASS R**) SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND): Class A Return before taxes +3.82% +2.66% +3.80% N/A N/A Return after taxes on distributions +2.77% +1.50% +2.33% N/A N/A Return after taxes on distributions and sale of Fund shares +2.45% +1.57% +2.33% N/A N/A Class B Return before taxes +3.08% +2.47% +3.66%* N/A N/A Class C Return before taxes +6.94% +2.83% N/A +3.98%(a) N/A Class R** Return before taxes +7.50% +3.33% N/A N/A +2.92%(b) Barclays Capital Government Bond Index +12.39% +6.06% +6.16% +6.67%(c) +5.48%(d) Blended Index +10.46% +5.83% +6.12% +6.46%(c) +5.36%(d) Lipper General U.S. Government Funds Average +7.27% +4.18% +4.68% +5.12%(c) +3.63%(d)
SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS (CLASS C) RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND): Class A Return before taxes -6.24% +0.97% +2.50% N/A Return after taxes on distributions -7.34% -0.20% +0.99% N/A Return after taxes on distributions and sale of Fund shares -4.05% +0.15% +1.20% N/A Class B Return before taxes -7.04% +0.82% +2.25% N/A Class C Return before taxes -3.22% +1.18% N/A +2.64%(e) Barclays Capital 1-3 Year Government Index +6.66% +4.11% +4.81% +4.97%(f) Lipper Short U.S. Government Funds Index +3.46% +3.13% +3.98% +4.05%(f)
(a) Inception date is May 27, 1999. (b) Inception date is April 30, 2003. (c) Measurement period started May 27, 1999. (d) Measurement period started April 30, 2003. (e) Inception date is June 26, 2000. (f) Measurement period started June 26, 2000. * The ten-year return for Class B shares reflects automatic conversion to Class A shares approximately eight years after their date of purchase. ** Class R of the Selling Fund is to be redesignated Class R2 in connection with the Reorganization. The Barclays Capital Government Bond Index, an unmanaged index, is a benchmark index made up of the Treasury Bond Index and the Agency Bond Index as well as the 1-3 Year Government Index and 20+ Year Treasury Index. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Blended Index is an unmanaged index consists of a fifty percent equal weighting in the Barclays Capital Government Bond Index and the Barclays Capital Fixed-Rate Mortgage Backed Securities Index (the "MBS Index"), which covers the fixed-rate agency mortgage-backed pass-through securities of the GNMA, Fannie Mae and Freddie Mac. The Selling Fund is actively managed and its holdings are subject to change. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper General U.S. Government Funds Average includes funds that invest at least 65% of their assets in U.S. government and government agency issues. The average is an unmanaged benchmark that assumes reinvestment of dividends, if any, and excludes the effect of fees, taxes and sales charges. The Barclays Capital 1-3 Year Government Index, an unmanaged index, is made up of all publicly issued, nonconvertible domestic debt of the U.S. government, or agency thereof, or any quasi-federal corporation. The index also includes corporate debt guaranteed by the U.S. government. Only notes and bonds with a minimum maturity of one year up to a maximum maturity of 2.9 years are included. The index reflects reinvestment of all distributions and changes in market prices and reflects no deduction for fees, expenses or taxes. The Lipper Short U.S. Government Funds Index includes the 30 largest short U.S. government funds tracked by Lipper Inc. The index's returns include net reinvested dividends. Investors cannot invest directly in an average or index. The inception date for Class R2 of the Buying Fund is expected to be in the third quarter of 2009 and therefore performance information for that class is not shown. 95 ADDITIONAL INFORMATION ABOUT EACH REORGANIZATION TERMS OF THE REORGANIZATIONS The Board has approved the Agreement, the form of which is attached as Exhibit A. The Agreement provides for Reorganizations on the following terms: - Each Reorganization is expected to occur before the end of the third quarter of 2009, pending shareholder approval, receipt of any necessary regulatory approvals and satisfaction of any other conditions to closing. However, following shareholder approval, each Reorganization may happen at any time agreed to by the applicable Selling Fund and the corresponding Buying Fund. - Each Selling Fund will transfer all of its assets to the corresponding Buying Fund and, in exchange, the corresponding Buying Fund will assume all the Selling Fund's liabilities and will issue to the Selling Fund, as applicable, Class A, Class B, Class C, Class R2, and Class R5 shares with an aggregate net asset value on the business day immediately preceding the closing of the Reorganization equal to the value of the assets that it receives from the Selling Fund, less the liabilities assumed by the corresponding Buying Fund in the transaction. The Reorganization Shares will immediately be distributed to the Selling Fund shareholders in proportion to their holdings of shares of the Selling Fund. As a result, shareholders of the Selling Fund will become, as applicable, Class A, Class B, Class C, Class R2, and/or Class R5 shareholders of the corresponding Buying Fund. - No Selling Fund and no shareholders of any Selling Fund will pay any sales charge in connection with its Reorganization. - The net asset value of each Selling Fund and the corresponding Buying Fund will be computed as of 3:00 p.m., Central time, or close of business, on the business day immediately preceding the closing date of the applicable Reorganization. - After its Reorganization, each Selling Fund will be dissolved. CONDITIONS TO CLOSING EACH REORGANIZATION The completion of each Reorganization is subject to certain conditions described in the Agreement, including: - The Selling Fund will have declared and paid a dividend that will distribute all of the Selling Fund's net investment income and net capital gains, if any, to the shareholders of the Selling Fund for the taxable years ending on or prior to the closing date of the Reorganization. - The Funds will have received any approvals, consents or exemptions from the SEC or any other regulatory body necessary to carry out the Reorganization. - A registration statement on Form N-14 relating to the Reorganization will have been filed with the SEC and declared effective. - The shareholders of the Selling Fund will have approved the Agreement. - The Selling Fund will have received an opinion of tax counsel to the effect that, although not entirely free from doubt, the shareholders of the Selling Fund will not recognize gain or loss for federal income tax purposes upon the exchange of their Selling Fund shares for the corresponding Buying Fund shares in connection with the Reorganization. TERMINATION OF THE AGREEMENT The Agreement and the transactions contemplated by it may be terminated and abandoned with respect to any Reorganization by resolution of the Board at any time prior to the closing date thereof. In the event of a termination, RiverSource will bear all costs associated with the Reorganization. TAX STATUS OF THE REORGANIZATIONS Each Reorganization is intended to qualify for federal income tax purposes as a tax-free reorganization under section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). As a condition to the closing of each Reorganization, each Selling Fund and Buying Fund will receive an opinion from Ropes & Gray LLP to the effect that, although not free from doubt, on the basis of existing provisions of the Code, U.S. Treasury regulations issued thereunder, current administrative rules, pronouncements and court decisions, for federal income tax purposes: - The transfer of the Selling Fund's assets to the Buying Fund in exchange for Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund and the assumption by the Buying Fund of the Selling Fund's liabilities, followed by the distribution of those Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, to the Selling Fund's shareholders and the termination of the Selling Fund, will be a "reorganization" within the meaning of Section 368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each be a "party to the reorganization" within the meaning of Section 368(b) of the Code. 96 - Under Section 361 of the Code, no gain or loss will be recognized by the Selling Fund upon the transfer of all of its assets to the Buying Fund or on the distribution by the Selling Fund of Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund to Selling Fund shareholders in liquidation. - Under Section 354 of the Code, the shareholders of the Selling Fund will not recognize gain or loss upon the exchange of their Class A, Class B, Class C, Class R and/or Class I shares, as applicable, of the Selling Fund solely for Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund as part of the Reorganization. - Under Section 358 of the Code, the aggregate tax basis of the Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will be the same as the aggregate tax basis of the Class A, Class B, Class C, Class R and/or Class I shares, as applicable, of the Selling Fund exchanged therefor. - Under Section 1223(1) of the Code, the holding period for the Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will include the period for which he or she held the Class A, Class B, Class C, Class R and/or Class I shares, as applicable, of the Selling Fund exchanged therefor, provided that on the date of the exchange he or she held such Selling Fund shares as capital assets. - Under Section 1032 of the Code, no gain or loss will be recognized by the Buying Fund upon the receipt of the Selling Fund's assets solely in exchange for the issuance of the Buying Fund's Class A, Class B, Class C, Class R2 and/or Class R5 shares, as applicable, to the Selling Fund and the assumption of all of the Selling Fund's liabilities by the Buying Fund. - Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets that the Buying Fund received from the Selling Fund will be the same as the Selling Fund's tax basis in those assets immediately prior to the transfer. - Under Section 1223(2) of the Code, the Buying Fund's holding periods in the assets received from the Selling Fund will include the Selling Fund's holding periods in such assets. - The Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. Ropes & Gray LLP will express no view with respect to the effect of a Reorganization on any transferred asset as to which any unrealized gain or loss is required to be recognized under federal income tax principles (i) at the end of a taxable year or upon the termination thereof, or (ii) upon the transfer of such asset regardless of whether such a transfer would otherwise be a non- taxable transaction. The opinion will be based on certain factual certifications made by the officers of the Selling Fund and the Buying Fund and will also be based on customary assumptions. The opinion will note and distinguish certain published precedent, and it is possible that the Internal Revenue Service (the "IRS") could disagree with Ropes & Gray LLP's opinion. Opinions of counsel are not binding upon the IRS or the courts. If a Reorganization is consummated but does not qualify as a tax-free reorganization under the Code, a shareholder of the Selling Fund would recognize a taxable gain or loss equal to the difference between his or her tax basis in his or her Selling Fund shares and the fair market value of the shares of the Buying Fund he or she received. Shareholders of a Selling Fund should consult their tax advisors regarding the effect, if any, of the Reorganization in light of their individual circumstances. In the case of some of the Selling Funds, portfolio manager substitutions independent of the Reorganizations have occurred and resulted in substantial portfolio turnover. In addition, a portion or all of the portfolio assets of any Selling Fund may be sold in connection with its Reorganization. The actual tax impact of such sales depends on the difference between the price at which such portfolio assets are sold and the Selling Fund's tax basis in such assets. Any net capital gains recognized in these sales will be distributed to Selling Fund shareholders as capital gain dividends (to the extent of net realized long-term capital gains over net realized short-term capital losses) and/or ordinary dividends (to the extent of net realized short-term capital gains over net realized long-term capital losses) during or with respect to the year of sale, and such distributions will be taxable to shareholders. Because each Reorganization will end the tax year of the applicable Selling Fund, it will accelerate distributions to shareholders from the Selling Fund for its short tax year ending on the date of the Reorganization. Those tax year-end distributions will be taxable and will include any capital gains resulting from portfolio turnover prior to the Reorganization. Prior to the closing of each Reorganization, the Selling Fund will, and the Buying Fund may, declare a distribution to shareholders, which, together with all previous distributions, will have the effect of distributing to shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt income, if any, and net realized capital gains, if any, through the closing of the Reorganization. These distributions will be taxable to shareholders. 97 A Fund's ability to carry forward capital losses and to use them to offset future gains may be limited. First, a Fund's "pre-acquisition losses" (including capital loss carryforwards, net current-year capital losses, and unrealized losses that exceed certain thresholds) may become unavailable to offset gains of the combined Fund. Second, one Fund's pre-acquisition losses cannot be used to offset unrealized gains in another Fund that are "built in" at the time of the Reorganization and that exceed certain thresholds ("non-de minimis built-in gains") for five tax years. Third, a Selling Fund's loss carryforwards, as limited under the previous two rules, are permitted to offset only that portion of the income of the Buying Fund for the taxable year of the Reorganization that is equal to the portion of the Buying Fund's taxable year that follows the date of the Reorganization (prorated according to number of days). Therefore, in certain circumstances, shareholders of a Fund may pay taxes sooner, or pay more taxes, than they would have had a Reorganization not occurred. In addition, the combined Fund resulting from each Reorganization will have tax attributes that reflect a blending of the tax attributes of the two Funds at the time of the Reorganization (including as affected by the rules set forth above). Therefore, the shareholders of the Selling Fund will in each case receive a proportionate share of any "built-in" (unrealized) gains in the Buying Fund's assets, as well as any taxable gains realized by the Buying Fund but not distributed to its shareholders prior to the Reorganization, when such gains are eventually distributed by the Buying Fund. As a result, shareholders of a Selling Fund may receive a greater amount of taxable distributions than they would have had the Reorganization not occurred. And any pre-acquisition losses of the Selling Fund (whether realized or unrealized) remaining after the operation of the limitation rules described above will become available to offset capital gains realized after the Reorganization and thus may reduce subsequent capital gain distributions to a broader group of shareholders than would have been the case absent such Reorganization, such that the benefit of those losses to Selling Fund shareholders may be further reduced relative to what the benefit would have been had the Reorganization not occurred. The impact of the rules described above will depend on the relative sizes of, and the losses and gains (both realized and unrealized) in, each Fund at the time of its Reorganization and thus cannot be calculated precisely prior to the Reorganization. The realized and unrealized gains and losses of each Fund at the time of its Reorganization will determine the extent to which the combining Funds' respective losses, both realized and unrealized, will be available to reduce gains realized by the combined Fund following the Reorganization, and consequently the extent to which the combined Fund may be required to distribute gains to its shareholders earlier than would have been the case absent the Reorganization. The following paragraphs provide a brief summary of the tax impact of each Reorganization had it occurred on October 31, 2008. As noted above, the tax impact of a Reorganization depends on each Fund's relative tax situation at the time of the Reorganization, which situation will be different than the tax situation on October 31, 2008, and cannot be calculated precisely prior to the Reorganization. Due to the significant portfolio turnover of certain of the Funds resulting from RiverSource Investments' purchase of Seligman and portfolio manager substitutions made independent of the Reorganizations, and the substantial volatility in the marketplace, the actual tax impacts of the Reorganizations could differ substantially from those described below. Proposal 1; Reorganization of Seligman Core Fixed Income Fund into RiverSource Diversified Bond Fund. As of October 31, 2008, Seligman Core Fixed Income Fund (Selling Fund) and RiverSource Diversified Bond Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to approximately 5.7% and 3.9% of net assets, respectively. If the Reorganization had occurred on October 31, 2008, the loss limitation rules would not have affected the combined Fund's ability to use Selling Fund losses to offset gains recognized by the combined Fund. Selling Fund's losses would thus have been available to reduce subsequent capital gain distributions to shareholders of the combined Fund, spreading the tax benefit of such losses over a larger group of shareholders than if the Reorganization had not occurred. Subsequent to October 31, 2008, Selling Fund experienced significant portfolio turnover. The recognition of gain and loss resulting from such portfolio turnover could increase the potential tax cost of the Reorganization to Selling Fund shareholders relative to the costs described above. Proposal 2; Reorganization of Seligman Emerging Markets Fund into Threadneedle Emerging Markets Fund. As of October 31, 2008, Seligman Emerging Markets Fund (Selling Fund) had a very small amount of net realized gain (0.06% of its net assets) and no capital loss carryforwards but had net unrealized losses equal to approximately 48.3% of its net assets. Threadneedle Emerging Markets Fund (Buying Fund) had no capital loss carryforwards and net realized losses equal to approximately 3.7% of its net assets and unrealized losses equal to approximately 57.1% of its net assets. If the Reorganization had occurred on that date, Selling Fund shareholders might have benefited from the use of Buying Fund's losses to offset gains of the combined Fund. However, to the extent Selling Fund realizes its unrealized losses, such losses will be subject to the loss limitation rules and might cause Selling Fund shareholders to experience a greater tax cost than if the Reorganization had not occurred. Proposal 3; Reorganization of Seligman Global Growth Fund into Threadneedle Global Equity Fund. As of October 31, 2008, Seligman Global Growth Fund (Selling Fund) and Threadneedle Global Equity Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to approximately 237.4% and 94.2% of net assets, respectively, and had net unrealized losses equal to approximately 36.6% and 37.3% of net assets, respectively. If the Reorganization had occurred on 98 October 31, 2008, the limitation on the use of Selling Fund's realized losses to offset gains of the combined Fund would not have had a significant negative impact on Selling Fund shareholders because most of Selling Fund's realized losses likely would have expired unused had the Reorganization not occurred. However, to the extent Selling Fund realizes its unrealized losses, such losses will be subject to the loss limitation rules and might cause Selling Fund shareholders to experience a greater tax cost than if the Reorganization had not occurred. Proposal 4; Reorganization of Seligman High-Yield Fund into RiverSource High Yield Bond Fund. As of October 31, 2008, Seligman High-Yield Fund (Selling Fund) and RiverSource High Yield Bond Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to approximately 760.8% and 126.2% of net assets, respectively, and had net unrealized losses equal to approximately 52.2% and 35.9% of net assets, respectively. If the Reorganization had occurred on October 31, 2008, the limitation on the use of Selling Fund's realized losses to offset gains of the combined Fund would not have had a significant negative impact on Selling Fund shareholders because nearly all of Selling Fund's realized losses likely would have expired unused had the Reorganization not occurred. Subsequent to October 31, 2008, Selling Fund experienced significant portfolio turnover, causing the recognition of additional losses subject to the loss limitation rules, which could result in an increase of the potential tax cost due to the Reorganization relative to the costs described above. Additionally, to the extent Selling Fund further realizes its unrealized losses, the application of the loss limitation rules to such losses might cause a further increase in the potential tax cost to Selling Fund shareholders. Proposal 5; Reorganization of Seligman Income and Growth Fund into RiverSource Balanced Fund. As of October 31, 2008, Seligman Income and Growth Fund (Selling Fund) and RiverSource Balanced Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to approximately 31.0% and 119.6% of net assets, respectively, and had net unrealized losses equal to approximately 59.2% and 21.7% of net assets, respectively. If the Reorganization had occurred on October 31, 2008, the loss limitation rules would have significantly limited the ability to use Selling Fund losses to offset gain of the combined Fund. However, Selling Fund shareholders might have benefited from the use of Buying Fund's losses to offset gains of the combined Fund., Subsequent to October 31, 2008, Selling Fund experienced significant portfolio turnover, causing the recognition of additional losses subject to the loss limitation rules, which could result in an increase of the potential tax cost due to the Reorganization relative to the costs described above. Additionally, to the extent Selling Fund further realizes its unrealized losses, the application of the loss limitation rules to such losses might cause a further increase in the potential tax cost to Selling Fund shareholders. Proposal 6; Reorganization of Seligman International Growth Fund into RiverSource Partners International Select Growth Fund. As of October 31, 2008, Seligman International Growth Fund (Selling Fund) and RiverSource Partners International Select Growth Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to 33.3% and 15.3% of net assets, respectively, and had net unrealized losses equal to approximately 14.5% and 40.5% of net assets, respectively. If the Reorganization had occurred on October 31, 2008, the loss limitation rules would not likely have prevented the use of Selling Fund's losses to offset gains of the combined Fund. However, to the extent Selling Fund realizes its unrealized losses, based on the amount of unrealized losses as of October 31, 2008, prior to the Reorganization, such losses will be subject to the loss limitation rules and might cause Selling Fund shareholders to experience a greater tax cost than if the Reorganization had not occurred. Proposal 7; Reorganization of Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund. As of October 31, 2008, Seligman U.S. Government Securities Fund (Selling Fund) and RiverSource Short Duration U.S. Government Fund (Buying Fund) had net realized losses (including capital loss carryforwards) equal to approximately 8.8% and 8.1% of net assets, respectively. If the Reorganization had occurred on October 31, 2008, the loss limitation rules would not have affected the combined Fund's ability to use Selling Fund losses to offset gains recognized by the combined Fund. Selling Fund's losses would thus have been available to reduce subsequent capital gain distributions to shareholders of the combined Fund, spreading the tax benefit of such losses over a larger group of shareholders than if the Reorganization had not occurred. Subsequent to October 31, 2008, Selling Fund experienced significant portfolio turnover. The recognition of gain and loss resulting from such portfolio turnover could increase the potential tax cost of the Reorganization to Selling Fund shareholders relative to the costs described above. The tax principles described above are not expected to change. However, their application and, at a minimum, the specific percentages noted above will change prior to each Reorganization because of market developments and the substantial volatility in the marketplace, any pre-Reorganization realignments or other sales of portfolio securities that might occur or that already have occurred, and shareholder activity in the Funds, among other changes. 99 Shareholders of a Selling Fund should consult their tax advisors regarding the effect, if any, of the Reorganization in light of their individual circumstances. Because the foregoing discussion relates only to the federal income tax consequences of the Reorganizations, shareholders of a Selling Fund should also consult their tax advisors as to the state, local and foreign tax consequences, if any, of the Reorganizations. REASONS FOR THE PROPOSED REORGANIZATIONS AND BOARD DELIBERATIONS The Board believes that each proposed Reorganization will be advantageous to Selling Fund and Buying Fund shareholders based on its consideration of the following matters: - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and conditions of each Reorganization as described in the previous paragraphs. - TAX CONSEQUENCES. The Board considered the tax-free nature of each Reorganization. The Board also considered the relative tax situations of each Fund and the resulting tax impact of the Reorganization to Selling Fund shareholders, and believes that the benefits of each Reorganization should outweigh any resulting tax cost to shareholders. - CONTINUITY OF INVESTMENT. The Board took into account the fact that each Selling Fund and the corresponding Buying Fund have similar or identical investment objectives and, except as noted below and as discussed in more detail under each proposal, similar investment strategies. In particular, for each Reorganization: Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond Fund: The Board considered that the Funds have similar investment objectives of providing a high level of current income consistent with prudent risk or conservation of investment value. The Board considered that Seligman Core Fixed Income Fund seeks capital appreciation as a secondary objective. The Board noted the similarity of the Funds' investment strategies: Seligman Core Fixed Income Fund invests 80% of its net assets in fixed-income securities, while RiverSource Diversified Bond Fund invests 80% of its net assets in bonds and other debt securities. The Board observed that the Funds share a common benchmark, the Barclays Capital U.S. Aggregate Bond Index. Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets Fund: The Board considered that the Funds have a virtually identical objective of seeking long-term growth of capital. The Board considered that each of the Funds invests at least 80% of its net assets in securities of companies that are located in emerging markets countries. The Board also considered that RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser which provides day-to- day management of the Fund, and that Seligman Emerging Markets Fund is subadvised by Wellington and Threadneedle Emerging Markets Fund is subadvised by Threadneedle. The Board further observed that the Funds share a common benchmark, the Morgan Stanley Capital International ("MSCI") Emerging Markets Index. Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund: The Board considered that the Funds have a virtually identical objective of seeking long-term growth of capital. The Board considered that Seligman Global Growth Fund may invest up to 15% of its assets in emerging market equities, while Threadneedle Global Equity Fund has no similar restrictions. The Board also considered that under normal market conditions, Seligman Global Growth Fund invests at least 40% of its net assets in the securities of non-U.S. companies, while Threadneedle Global Equity Fund has no similar restrictions. The Board also noted that RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser which provides day-to-day management of the Fund, and that Seligman Global Growth Fund is subadvised by Wellington and Threadneedle Global Equity Fund is subadvised by Threadneedle. The Board observed that the Funds use similar benchmarks with the Selling Fund using the MSCI World Index, which is designed to measure global developed market equity performance and the Buying Fund using the MSCI All Country World Index, which is intended to measure equity market performance in the global developed and emerging markets. Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The Board considered that the Funds have similar investment objectives of seeking a high level of current income, with capital appreciation as a secondary objective. The Board considered the similarity in the Funds' investment strategies of investing at least 80% of their net assets in high-yield debt instruments. The Board further observed that the Funds share a common benchmark, the JP Morgan Global High Yield Index. Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The Board considered that the Funds have a virtually identical objective of seeking a combination of capital appreciation and current income. The Board considered that each Fund invests predominantly in a combination of equity and fixed- income securities. Also, Seligman Income and Growth Fund may invest up to 10% of total assets in foreign securities (excluding ADRs); RiverSource Balanced Fund may invest up to 25% of the Fund's net assets in foreign investments (including ADRs). The Board further observed that the Funds share two benchmarks, the Barclays Capital U.S. Aggregate Bond Index and the Blended Index. 100 Proposal 6. Seligman International Growth Fund into RiverSource Partners International Select Growth Fund: The Board considered that the Funds have a virtually identical objective of seeking long-term capital growth and invest predominantly in equity securities of foreign issuers that are believed to be growth companies. The Board considered that Seligman International Growth Fund primarily invests in common stocks of medium- to large-sized companies outside of the United States, whereas RiverSource Partners International Select Growth Fund invests primarily in stocks of small- and medium-sized companies, based both outside and in the United States. The Board considered that Seligman International Growth Fund generally invests less than 25% of its assets in emerging markets, while RiverSource Partners International Select Growth Fund has no similar restrictions. The Board also noted that RiverSource Investments serves as the investment manager for each Fund and is responsible for the oversight of each Fund's subadviser which provides day-to-day management of the Fund, and that Seligman International Growth Fund is subadvised by Wellington and RiverSource Partners International Select Growth Fund is subadvised by Columbia WAM and Principal Global. The Board observed that the Funds share a common benchmark, the MSCI Europe, Australasia, Far East Growth Index. Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund: The Board considered that the Funds share similar investment objectives with Seligman U.S. Government Securities Fund seeking to provide a high level of current income consistent with prudent investment risk and RiverSource Short Duration U.S. Government Fund seeking to provide a high level of current income and safety of principal consistent with investment in U.S. government and government agency securities. The Board considered the similarity in the Funds' investment strategies of investing at least 80% of their net assets in U.S. government securities, which include debt securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. The Board also noted that the RiverSource Short Duration U.S. Government Fund normally seeks to maintain an average portfolio duration of one to three years while the Seligman U.S. Government Securities Fund has no similar stated intention. Although the Funds use different benchmarks, the Board observed that the Barclays Capital Government Bond Index, which Seligman U.S. Government Securities Fund uses, is a blended index that incorporates the Barclays Capital 1-3 Year Government Index, which RiverSource Short Duration U.S. Government Fund uses. - EXPENSE RATIOS. The Board considered the relative expenses of the Funds. Specifically, the Board considered that, as of the end of each Fund's most recent fiscal year, the gross expense ratio and net expense ratio (reflecting any fee waiver or expense reimbursement because of voluntary or contractual expense caps) for each Selling Fund's Class A, Class B, Class C, Class R (to be known as Class R2), and Class I (to be known as Class R5) shares (before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses) was higher than the gross expense ratio and net expense ratio for the corresponding Buying Fund's Class A, Class B, Class C, Class R2 and Class R5 shares (before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses adjustment). The Board also evaluated the anticipated expense ratio impacts to other share classes of the Buying Funds not involved in the Reorganization. The Board determined that there would be a decrease in expense ratio for each share class of each Selling Fund as a result of its respective Reorganization, but noted that the level of this reduction would vary by share class. In particular, for each Reorganization (unless otherwise specified), expense impacts, with respect to a Fund's Class A shares are discussed below: Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond Fund: The Board considered that the expenses of Seligman Core Fixed Income Fund are expected to decline by approximately 1.08% on a gross expense basis and by 0.42% on a net expense basis (based on current commitments of the investment manager and its affiliates to waive fees and cap expenses), as a result of the Reorganization. Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets Fund: The Board considered that Seligman Emerging Markets Fund is currently subject to a commitment by the investment manager and its affiliates to waive fees or cap expenses, and that the expenses of the Fund are expected to decline by approximately 0.57% on a gross expense basis and by 0.54% on a net expense basis (before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses), as a result of the Reorganization. Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund: The Board considered that the expenses of Seligman Global Growth Fund are expected to decline by approximately 0.70% (before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses), as a result of the Reorganization. Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The Board considered that that the expenses of Seligman High-Yield Fund are expected to decline by approximately 0.22% on a gross expense basis and by 0.30% on a net expense basis (based on current commitments of the investment manager and its affiliates to waive fees and cap expenses), as a result of the Reorganization. Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The Board considered that the expenses of Seligman Income and Growth Fund are expected to decline by approximately 0.41% (before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses), as a result of the Reorganization. 101 Proposal 6. Seligman International Growth Fund into RiverSource Partners International Select Growth Fund: The Board considered that the expenses of Seligman International Growth Fund are expected to decline by approximately 0.33% on a gross expense basis and by 0.51% on a net expense basis (based on current commitments of the investment manager and its affiliates to waive fees and cap expenses, and before giving effect to any applicable performance incentive adjustment and excluding certain other fees and expenses), as a result of the Reorganization. Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund: The Board considered that the expenses of Seligman U.S. Government Securities Fund are expected to decline by approximately 0.26% on a gross expense basis and by 0.41% on a net expense basis (based on current commitments of the investment manager and its affiliates to waive fees and cap expenses), as a result of the Reorganization. - ECONOMIES OF SCALE. The Board observed that by combining the Funds, in addition to potential immediate economies of scale of a larger fund, the combined Fund would be able take advantage of other economies of scale associated with a larger fund. For example, a larger fund may realize breakpoints more quickly, it may have an enhanced ability to effect portfolio transactions on more favorable terms and may have greater investment flexibility. Furthermore, the Board also considered that higher aggregate net assets resulting from each Reorganization and the opportunity for net cash inflows (or reduced outflows) may reduce the risk that, if net assets of the Selling Fund fail to grow, or diminish, its total expense ratio could rise from current levels as fixed expenses, such as audit expenses and accounting expenses that are charged on a per Fund basis, become a larger percentage of net assets. - COSTS. The Board considered the fact that a portion of the costs of effecting each Reorganization (including professional fees and expenses related to printing and mailing proxy/prospectus materials and solicitation of shareholders) may be allocated to and borne by the Selling Fund, to the extent that such costs are specifically allocable to the Selling Fund. Costs of the Reorganization that are not specifically allocable to the Selling Fund will be divided equally between the Buying Fund and the Selling Fund. Following this initial allocation, the investment manager has agreed to limit the expenses actually allocated to a Selling Fund to anticipated reductions in expenses borne by that Fund over the first year following the Reorganization, less the cost borne by the Selling Fund related to other integration-related activity. Any out-of-pocket expenses not allocable to a Selling Fund as a result of these limitations and any out-of-pocket expenses allocable to a Buying Fund will be borne by the investment manager. - DILUTION. The Board considered the fact that the Reorganizations will not dilute the interests of the current shareholders because it would be effected on the basis of the relative net asset value per share of the Selling Fund and Buying Fund, respectively. Thus, for example, a Class A shareholder of a Selling Fund will receive Class A shares of the corresponding Buying Fund equal in value to his or her Class A shares in the Selling Fund at the time of the Reorganizations. - PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance records of each of the Funds, noting, however, that past performance is no guarantee of future results. The Board also considered the fact that the Reorganizations should allow for a more concentrated selling effort by the Funds' underwriter, thereby potentially benefiting each of the Funds, and that reduced outflows or increased inflows could help the Buying Fund shareholders achieve further economies of scale (see "Economies of Scale" above). The Board further took into account the investment manager's belief that each Selling Fund, as a stand-alone fund, was less likely to experience any growth in assets from investor inflows in the near term. In particular, for each Reorganization: Proposal 1. Seligman Core Fixed Income Fund into RiverSource Diversified Bond Fund: The Board noted that the performance of RiverSource Diversified Bond Fund was generally stronger than the performance of Seligman Core Fixed Income Fund. The Board noted the weak asset level of Seligman Core Fixed Income Fund and its relatively weak prospects for asset growth, particularly compared to RiverSource Diversified Bond Fund. The Board accorded particular weight to the fact that RiverSource Diversified Bond Fund has substantially greater assets than Seligman Core Fixed Income Fund, noting that RiverSource Diversified Bond Fund was more than 150 times the size of Seligman Core Fixed Income Fund. Proposal 2. Seligman Emerging Markets Fund into Threadneedle Emerging Markets Fund: The Board observed that the performance of Threadneedle Emerging Markets Fund was competitive (top half of the Lipper peer group), though not as good as the performance of Seligman Emerging Markets Fund. The Board noted the Threadneedle Emerging Markets Fund's stronger 10 year track record. The Board also noted Seligman Emerging Markets Fund's relatively weak prospects for asset growth, particularly compared to Threadneedle Emerging Markets Fund. The Board observed that the Threadneedle Emerging Markets Fund was more than four times the size of the Seligman Emerging Markets Fund. Proposal 3. Seligman Global Growth Fund into Threadneedle Global Equity Fund: The Board noted that the performance of Threadneedle Global Equity Fund was generally stronger than the performance of Seligman Global Growth Fund (both on a relative basis and when compared to their respective peer groups). The Board noted the weak asset level of Seligman Global Growth Fund and its relatively weak prospects for asset growth, particularly compared to Threadneedle Global Equity Fund. The Board accorded particular weight to the fact that Threadneedle Global Equity Fund has substantially greater assets than 102 Seligman Global Growth Fund, noting that Threadneedle Global Equity Fund was more than 20 times the size of Seligman Global Growth Fund. Proposal 4. Seligman High-Yield Fund into RiverSource High Yield Bond Fund: The Board noted that the performance of RiverSource High Yield Bond Fund was generally stronger than the performance of Seligman High-Yield Fund (both on a relative basis and when compared to their respective peer groups). The Board noted the weak asset level of Seligman High-Yield Fund and its relatively weak prospects for asset growth, particularly compared to RiverSource High Yield Bond Fund. The Board accorded particular weight to the fact that RiverSource High Yield Bond Fund has substantially greater assets than Seligman High-Yield Fund, noting that RiverSource High Yield Bond Fund was more than five times the size of Seligman High-Yield Fund. Proposal 5. Seligman Income and Growth Fund into RiverSource Balanced Fund: The Board noted that the performance of RiverSource Balanced Fund was generally stronger than the performance of Seligman Income and Growth Fund (both on a relative basis and when compared to their respective peer groups). The Board noted the weak asset level of Seligman Income and Growth Fund and its relatively weak prospects for asset growth, particularly compared to RiverSource Balanced Fund. The Board accorded particular weight to the fact that RiverSource Balanced Fund has substantially greater assets than Seligman Income and Growth Fund, noting that RiverSource Balanced Fund was more than 13 times the size of Seligman Income and Growth Fund. Proposal 6. Seligman International Growth Fund into RiverSource Partners International Select Growth Fund: The Board noted that the performance of RiverSource Partners International Select Growth Fund was generally stronger than the performance of Seligman International Growth Fund (both on a relative basis and when compared to their respective peer groups). The Board noted the weak asset level of Seligman International Growth Fund and its relatively weak prospects for asset growth, particularly compared to RiverSource Partners International Select Growth Fund. The Board accorded particular weight to the fact that RiverSource Partners International Select Growth Fund has substantially greater assets than Seligman International Growth Fund, noting that RiverSource Partners International Select Growth Fund was more than eight times the size of Seligman International Growth Fund. Proposal 7. Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund: The Board observed the generally stronger track record of Seligman U.S. Government Securities Fund, but noted that both Seligman U.S. Government Securities Fund and RiverSource Short Duration U.S. Government Fund are currently run by the same management team and, thus, their respective performance, going forward, absent the Reorganization, would be substantially similar. The Board also noted the weak asset level of Seligman U.S. Government Securities Fund and its relatively weak prospects for asset growth, particularly compared to RiverSource Short Duration U.S. Government Fund. The Board accorded particular weight to the fact that RiverSource Short Duration U.S. Government Fund has substantially greater assets than Seligman U.S. Government Securities Fund, noting that RiverSource Short Duration U.S. Government Fund was more than nine times the size of Seligman U.S. Government Securities Fund. - POTENTIAL BENEFITS TO THE INVESTMENT MANAGER AND ITS AFFILIATES. The Board considered the potential benefits from the Reorganizations that could be realized by the investment manager and its affiliates, including the elimination of expenses incurred in duplicative efforts to administer separate Funds. The Board also noted, however, that shareholders of each Selling Fund are expected to benefit over time from the decrease in overall operating expense ratios resulting from the proposed Reorganizations as well as the other benefits discussed above. BOARD DETERMINATIONS After considering the factors described above and other relevant information, at a meeting held on Jan. 8, 2009, the Board of each Selling Fund, including a majority of the independent Board members, determined that participation in the relevant Reorganization is in the best interests of each Fund and that the interests of existing shareholders of the Fund will not be diluted as a result of the Reorganization. The Board of Directors of each Buying Fund approved the Agreement at a meeting held on Jan. 8, 2009. Among other factors, the Board members considered the terms of the Agreement, the provisions intended to avoid the dilution of shareholder interests and the anticipated tax consequences of the Reorganization. The Board found that participation in each Reorganization is in the best interest of the Buying Fund and that the interest of the existing shareholders of the Buying Fund will not be diluted as a result of the Reorganization. BOARD RECOMMENDATION AND REQUIRED VOTE THE BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH SELLING FUND APPROVE THE PROPOSED AGREEMENT. The Agreement must be approved by the affirmative vote of a majority of the outstanding voting securities of each Selling Fund. A vote of a majority of the outstanding voting securities of a Selling Fund is defined in the 1940 Act, as a vote of the 103 lesser of (a) 67% or more of the shares of the Selling Fund that are present or represented by proxy at the Meeting, if more than 50% of the outstanding shares are present in person or by proxy at the Meeting; or (b) more than 50% of the outstanding shares of the Fund. If the Agreement is not approved for any Selling Fund, the Board will consider what further action should be taken with respect to such Selling Fund. The approval of the Reorganization of one Selling Fund is not conditioned upon the approval of the Reorganization of any other Selling Fund. If shareholders approve the Reorganization of their Selling Fund, it is anticipated to occur before the end of the third quarter of 2009. 104 SECTION B -- MANAGER OF MANAGERS PROPOSALS PROPOSAL 8. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN EMERGING MARKETS FUND The Board has approved, and recommends that shareholders approve, a policy authorizing RiverSource Investments, the investment adviser to Seligman Emerging Markets Fund (a "Seligman Subadvised Fund"), with the approval of the Board to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). PROPOSAL 9. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN GLOBAL GROWTH FUND The Board has approved, and recommends that shareholders approve, a policy authorizing RiverSource Investments, the investment adviser to Seligman Global Growth Fund (a "Seligman Subadvised Fund"), with the approval of the Board to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). PROPOSAL 10. MANAGER OF MANAGERS PROPOSAL FOR SELIGMAN INTERNATIONAL GROWTH FUND The Board has approved, and recommends that shareholders approve, a policy authorizing RiverSource Investments, the investment adviser to Seligman International Growth Fund (a "Seligman Subadvised Fund"), with the approval of the Board to enter into and materially amend a subadvisory agreement, without obtaining shareholder approval (the "Manager of Managers Proposal"). ADDITIONAL INFORMATION ABOUT EACH MANAGER OF MANAGERS PROPOSAL RiverSource Investments serves as the investment adviser to the Seligman Subadvised Funds. However, RiverSource Investments does not make the day-to-day investment decisions for the Seligman Subadvised Funds. Instead, RiverSource Investments establishes an investment program for the Seligman Subadvised Funds, and selects, compensates and evaluates the Seligman Subadvised Funds' subadvisers. The subadvisers, in turn, make the day-to-day investment decisions for the Seligman Subadvised Funds. For each of the Seligman Subadvised Funds, RiverSource Investments, with the approval of the Board, may wish to hire, add or change a subadviser to handle the day-to-day investment decisions. Shareholder Approval of Subadvisory Agreements. Federal securities laws generally require that shareholders approve agreements with a fund's subadviser, as well as with the investment adviser. Shareholder action also is required if the terms of existing agreements are changed materially or if there is a change in control of the subadviser. In order to obtain shareholder approval, the Seligman Subadvised Funds must call and conduct shareholder meetings, prepare and distribute proxy materials and solicit votes from shareholders. The process is costly and time-consuming. The Board believes that it is in shareholders' best interests if the Board represents their interests in approving or rejecting recommendations made by RiverSource Investments regarding subadvisers. This approach will avoid the cost and delay associated with holding shareholder meetings to obtain approval for the changes. SEC Exemptive Order. On July 16, 2002, the SEC granted RiverSource Investments an order exempting it from the federal securities law requirements to obtain shareholder approval regarding unaffiliated subadvisers (the "SEC Order"). The SEC Order permits RiverSource Investments to hire new subadvisers, to rehire existing subadvisers that have experienced a change in control and to modify subadvisory agreements, without the approval of shareholders, provided shareholders adopt a policy authorizing RiverSource Investments, with the approval of the Board, to take such action. Under the SEC Order, the Seligman Subadvised Funds and RiverSource Investments are subject to several conditions imposed by the SEC to ensure that the interests of the Seligman Subadvised Funds' shareholders are adequately protected. In addition, within 90 days of hiring a new subadviser, RiverSource Investments will provide you with an information statement that contains substantially the same information about the subadviser, the subadvisory agreement and the subadvisory fee that the Seligman Subadvised Fund would be required to send to you in a proxy statement. Shareholder approval of this proposal will not result in an increase or decrease in the total amount of investment advisory fees paid by the Seligman Subadvised Funds to RiverSource Investments. RiverSource Investments, directly or through subadvisers, will continue to provide the same level of advisory and administrative services to the Seligman Subadvised Funds as it currently provides. The SEC Order applies to at least the following situations: - RiverSource Investments recommends that a Seligman Subadvised Fund's day-to- day management be diversified by adding another subadviser; 105 - RiverSource Investments recommends that a subadviser be removed for substandard performance and replaced with a different subadviser; or - There is a change of control of a subadviser. COMPARISON OF PRESENT AND PROPOSED SELECTION PROCESS FOR SUBADVISERS Under both the current process for approval of subadvisory agreements and under the proposed process, any change in a subadvisory agreement requires approval by the Board. In considering whether to appoint a subadviser for any Seligman Subadvised Fund, the Board will analyze the factors it considers relevant, including: - The nature, extent and quality of services provided by a subadviser to investment companies comparable to the Seligman Subadvised Fund, including: - a subadviser's organization, - a subadviser's history, reputation, qualification and background, as well as the qualifications of its personnel, - a subadviser's expertise in providing portfolio management services to other similar portfolios and the performance history of those portfolios, - a subadviser's proposed investment strategy for the Seligman Subadvised Fund, and - a subadviser's compliance program; - A subadviser's long- and short-term performance relative to comparable mutual funds, other managed accounts and unmanaged indexes; - A subadviser's costs of services provided with respect to mutual funds or other managed accounts that are comparable to the Seligman Subadvised Fund; and - Other factors that the Board considers relevant to the subadviser's performance as an investment adviser. The Board believes that it is in the best interest of the Seligman Subadvised Funds and their shareholders to allow RiverSource Investments the flexibility to provide investment advisory services to each Fund through one or more subadvisers that have particular expertise in the type of investments on which a Fund focuses. Without the ability to utilize the SEC Order, in order for RiverSource Investments to appoint a new subadviser or modify a subadvisory agreement materially, the Board must call and hold a shareholder meeting of that Seligman Subadvised Fund, create and distribute proxy materials and solicit votes from the Seligman Subadvised Fund's shareholders. This process is time consuming and costly. Without the delay inherent in holding shareholder meetings, RiverSource Investments would be able to act more quickly to appoint a new subadviser if and when the Board and RiverSource Investments feel that the appointment would benefit the Seligman Subadvised Fund. The Board believes that granting RiverSource Investments, subject to the review and approval of the Board, maximum flexibility to select, to supervise and to evaluate subadvisers, without incurring the otherwise necessary delay or expense of obtaining further shareholder approval, is in the best interest of the shareholders because it will allow each Fund to operate more efficiently. In addition, the Board believes that it is appropriate to vest the selection, supervision and evaluation of the subadvisers in RiverSource Investments (subject to review by the Board) in light of RiverSource Investments' investment advisory expertise and its ability to select the most appropriate subadviser(s). RiverSource Investments believes that if in the future it becomes appropriate to change a subadviser to your Seligman Subadvised Fund, it can use this experience and expertise in evaluating and choosing subadvisers that can add the most value to your investment in the Seligman Subadvised Fund. Finally, the Board provides oversight of each Seligman Subadvised Fund's subadvisory arrangements to ensure that shareholders' interests are protected whenever RiverSource Investments seeks to select a subadviser or modify a subadvisory agreement. The Board will continue to evaluate and to approve all new subadvisory agreements as well as any modification to existing subadvisory agreements. Members of the Board will analyze such factors that they consider to be relevant to the determination, including the nature, quality and scope of services provided by the subadvisers. The Board will also evaluate the subadviser's investment performance and will consider the subadviser's code of ethics as well as its compliance program. As with the Fund's Investment Management Services Agreement, the terms of each subadvisory agreement will include those required by all applicable provisions of the 1940 Act, except for the specific provisions of the 1940 Act from which the SEC Order provides relief. 106 BOARD RECOMMENDATION AND REQUIRED VOTE THE BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH SELIGMAN SUBADVISED FUND APPROVE THEIR RESPECTIVE MANAGER OF MANAGERS PROPOSAL. The Manager of Managers Proposal must be approved by the affirmative vote of a majority of the outstanding voting securities of each Seligman Subadvised Fund. A vote of a majority of the outstanding voting securities of a Selling Fund is defined in the 1940 Act as a vote of the lesser of (a) 67% or more of the shares of the Seligman Subadvised Fund that are present or represented by proxy at the Meeting, if more than 50% of the outstanding shares are present in person or by proxy at the Meeting; or (b) more than 50% of the outstanding shares of the Fund. The approval of the Manager of Managers Proposal of one Seligman Subadvised Fund is not conditioned upon the approval of the Manager of Managers Proposal of any other Seligman Subadvised Fund or the Reorganization of that Fund. If shareholders approve the Manager of Managers Proposal, it will take effect shortly after the Meeting. If the Manager of Managers Proposal is not approved for any Seligman Subadvised Fund it will continue to require shareholder approval of changes in subadvisory relationships (other than the termination of an existing subadviser). 107 SECTION C -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION Reference to the "Fund" in this section is a reference to each Selling Fund, including the Seligman Subadvised Funds. VOTING. Shareholders of record on April 3, 2009 are entitled to vote based on the number of shares they own in the Fund irrespective of which class they own. Unless otherwise restricted by the 1940 Act or by applicable state law, all share classes of a Fund will vote together as a class on its proposal(s). A quorum is required to take action at the Meeting. Except with respect to Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, the presence at the Meeting, in person or by proxy, of shareholders entitled to cast one-third of all shares outstanding and entitled to be cast at the Meeting shall constitute a quorum. With respect to each of Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, the presence at the Meeting, in person or by proxy, of shareholders of record holding a majority of the shares outstanding and entitled to vote shall constitute a quorum. All votes count toward a quorum, regardless of how they are voted (For, Against or Abstain). Broker non-votes will be counted toward a quorum, but not toward the approval of any proposal. (Broker non-votes are shares for which the underlying owner has not voted and the broker holding the shares does not have the authority to vote.) PROXY SOLICITATION. If you properly authorize your proxy by internet, telephone or facsimile, or by executing and returning the enclosed proxy card by mail, and your proxy is not subsequently revoked, your votes will be cast at the Meeting, and at any postponement or adjournment thereof. If you give instructions, your votes will be cast in accordance with your instructions. If you return your signed proxy card without instructions, your votes will be cast in favor of the proposal(s) of your Fund. REVOKING YOUR PROXY. If you execute, date and submit a proxy card in respect of your Fund, you may revoke your proxy or change it by providing written notice to your Fund (Attention: Secretary) at 734 Ameriprise Financial Center, Minneapolis, Minnesota 55474, by submitting a subsequently executed and dated proxy card, by authorizing your proxy by internet, telephone or facsimile on a later date or by attending the Meeting and casting your vote in person. If you authorize your proxy by internet, telephone or facsimile, you may revoke it by authorizing a subsequent proxy by internet, telephone or facsimile or by completing, signing and returning a proxy card dated as of a date that is later than your last internet, telephone or facsimile proxy authorization or by attending the Meeting and casting your vote in person. Merely attending the Meeting without voting will not revoke your prior proxy. SIMULTANEOUS MEETINGS. The meeting for each Fund will be held simultaneously with the meeting for each other Fund, with each proposal being voted on separately by the shareholders of the relevant Fund. If any shareholder objects to the holding of simultaneous meetings, the shareholder may move for an adjournment of his or her Fund's meeting to a time after the Meeting so that a meeting of that Fund may be held separately. If a shareholder makes this motion, the persons named as proxies will take into consideration the reasons for the objection in deciding whether to vote in favor of the adjournment, and may vote for or against the adjournment in their discretion. SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote as promptly as possible. The expenses of the solicitation will be paid by RiverSource Investments and by certain Selling Funds (see discussion of Costs under "Reasons for the Proposed Reorganizations and Board Deliberations"). Supplementary solicitations may be made by Internet, telephone or facsimile, or by personal contact. Computershare Fund Services has been engaged to assist in the solicitation of proxies, at an aggregate estimated cost of $39,923. SHAREHOLDER PROPOSALS. No proposals were received from shareholders. The Funds do not hold annual meetings of shareholders. Shareholders who wish to make a proposal at a Fund's next special meeting, which may not be included in the Fund's proxy materials, must notify the relevant Fund a reasonable amount of time before the Fund begins to print and mail its proxy materials. The fact that a Fund receives a shareholder proposal in a timely manner does not ensure inclusion of the proposal in the proxy materials, as there are other requirements in the proxy rules relating to such inclusion. APPRAISAL RIGHTS. Shareholders of Seligman U.S. Government Securities Fund and Seligman High-Yield Fund may be entitled to assert appraisal rights under the Massachusetts Business Corporation Act (the "MBCA"), applicable to such Selling Funds due to a provision in the Declaration of Trust for such funds, in connection with each such Selling Fund's Reorganization and obtain payment of the "fair value" of their shares, provided that they comply with the requirements of Massachusetts law. A copy of the relevant provisions of the MBCA is attached as Exhibit D. Notwithstanding the provisions of Massachusetts law, the SEC has taken the position that the use of state appraisal procedures by a mutual fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that no mutual fund may redeem its shares other than at net asset value next computed after receipt of a request for redemption. It is the SEC's position that Rule 22c-1 supersedes appraisal provisions in state statutes. In the interest of ensuring equal valuation for all shareholders, appraisal rights will be determined in accordance with the SEC's interpretation. As a result, if any shareholder of either Seligman U.S. Government Securities Fund or Seligman High-Yield Fund elects to exercise appraisal rights under Massachusetts law, the relevant Selling Fund intends to submit this 108 question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. In addition, Section 13.02(a)(3) of the MBCA provides for an exception to appraisal rights for which we believe, in light of the rationale expressed in the Comments of The Task Force on the Revision of the Massachusetts Business Corporation Law accompanying the MBCA, a reasonable argument exists for applying such exception to a transaction involving an open-end mutual fund. If any shareholder of either Seligman U.S. Government Securities Fund or Seligman High- Yield Fund elects to exercise appraisal rights under Massachusetts law, the relevant Selling Fund, in connection with submitting the question of the supremacy of Rule 22c-1 to a court of competent jurisdiction, may also argue that appraisal rights under Massachusetts law do not apply. OTHER BUSINESS. The Board does not know of any matters to be presented at the Meeting other than the Reorganization proposals and the Manager of Managers proposals. If other business should properly come before the Meeting, the persons named as proxies will vote thereon in their discretion. ADJOURNMENT. With respect to each Selling Fund, including the Seligman Subadvised Funds, other than Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, in the event that not enough votes are received by the time scheduled for the Meeting, or, even if a quorum is present, if sufficient votes in favor of any proposal(s) are not received and tabulated prior to the time scheduled for the Meeting, the chairman of the Meeting may adjourn the Meeting, with no notice other than an announcement at the Meeting, to a date not later than the 120th day after the original record date for the Meeting to allow further solicitation of shareholders on the proposal(s). With respect to each Selling Fund, including the Seligman Subadvised Funds, other than Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, shareholders also may adjourn the Meeting, subject to the same conditions as apply to the chairman of the Meeting, with no notice other than an announcement at the Meeting. For each of Seligman U.S. Government Securities Fund and Seligman High-Yield Fund, if a quorum is not present or represented at the Meeting, the holders of a majority of the shares of a Selling Fund present at the Meeting, in person or by proxy, shall have power to adjourn the Meeting, without notice other than announcement at the Meeting, until the requisite number of shares entitled to vote at the Meeting is present. The persons named as proxies will vote in favor of adjournment those shares they have been instructed to vote in favor of a proposal, or for which they have received a proxy but no voting instructions. They will vote against any adjournment those shares they have been instructed to vote against a proposal. A shareholder vote may be taken on one or more proposals discussed in this combined proxy statement/prospectus prior to adjournment of the Meeting if sufficient votes have been received with respect to that particular proposal(s), and may adjourn with respect to those proposals for which sufficient votes have not yet been received. 109 SECTION D -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND FINANCIAL HIGHLIGHTS This section contains the following information about the Funds:
TABLE CONTENT (all information is shown for the last fiscal year unless noted otherwise) D-1 Actual and pro forma capitalization of each Selling Fund and each Buying Fund D-2 Actual and pro forma ownership of Fund shares D-3 Financial Highlights of each Buying Fund
THE FUNDS' INVESTMENT MANAGER AND DISTRIBUTORS. RiverSource Investments, LLC, 200 Ameriprise Financial Center, Minneapolis, MN 55474, a wholly-owned subsidiary of Ameriprise Financial, Inc., is the investment manager for each Fund. RiverSource Distributors, Inc., 50611 Ameriprise Financial Center, Minneapolis, MN 55474, a wholly-owned subsidiary of Ameriprise Financial, Inc., and RiverSource Fund Distributors, Inc., 100 Park Avenue, New York, NY 10017, an indirect wholly-owned subsidiary of RiverSource Investments, LLC, are the distributors for each RiverSource Fund. RiverSource Fund Distributors, Inc. is also the distributor for each Seligman Fund. CAPITALIZATION OF SELLING FUNDS AND BUYING FUNDS The following table shows the capitalization of the Funds as of Jan. 31, 2009 and on a pro forma basis, assuming the proposed Reorganization had taken place. The pro forma combined table includes the impact of non-recurring estimated Reorganization costs expected to be borne by certain Selling Funds. The pro forma combined net assets are determined by adding the net assets, less any Reorganization costs, of the Selling Fund and the net assets of the Buying Fund. The pro forma combined shares outstanding are determined by dividing the net assets, less any Reorganization costs, of the Selling Fund by the net asset value per share of the Buying Fund and adding the actual shares outstanding of the Buying Fund. For the Reorganization of Seligman High-Yield Fund into RiverSource High Yield Bond Fund, the Reorganization costs reduced pro forma combined net assets by $113,336 for Class A, $12,878 for Class B, $6,234 for Class C, $500 for Class R2 and $760 for Class R5. For the Reorganization of Seligman Income and Growth Fund into RiverSource Balanced Fund, the Reorganization costs reduced pro forma combined net assets by $56,567 for Class A, $2,272 for Class B, $995 for Class C, $10 for Class R2 and $55 for Class R5. For the Reorganization of Seligman U.S. Government Securities Fund into RiverSource Short Duration U.S. Government Fund, the Reorganization costs reduced pro forma combined net assets by $63,478 for Class A, $13,673 for Class B, $3,315 for Class C and $452 for Class R2. TABLE D-1. ACTUAL AND PRO FORMA CAPITALIZATION OF EACH SELLING FUND AND EACH BUYING FUND
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING --------------------------------------------------------------------------------------------------------- SELIGMAN CORE FIXED INCOME FUND (ACTUAL) (SELLING FUND) Class A $ 5,963,978 $6.53 914,001 Class B 1,292,397 6.53 197,986 Class C 2,832,378 6.53 433,979 Class R (to be known as Class R2) 97,804 6.53 14,979 Class I (to be known as Class R5) 8,579,550 6.53 1,314,463 RIVERSOURCE DIVERSIFIED BOND FUND (ACTUAL) (BUYING FUND) Class A $1,822,345,833 $4.38 416,175,104 Class B 226,877,802 4.38 51,823,274 Class C 33,397,639 4.38 7,625,946 Class R2 10,793 4.38 2,463 Class R5 9,034 4.37 2,066 RIVERSOURCE DIVERSIFIED BOND FUND (PRO FORMA COMBINED) Class A $1,828,309,811 $4.38 417,536,743 Class B 228,170,199 4.38 52,118,342 Class C 36,230,017 4.38 8,272,608 Class R2 108,597 4.38 24,793 Class R5 8,588,584 4.37 1,965,350
110
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING -------------------------------------------------------------------------------------------------------- SELIGMAN EMERGING MARKETS FUND (ACTUAL) (SELLING FUND) Class A $ 29,651,204 $6.02 4,929,245 Class B 1,770,982 5.17 342,564 Class C 16,121,834 5.22 3,091,298 Class R (to be known as Class R2) 7,544,797 6.01 1,255,046 Class I (to be known as Class R5) 5,002,442 6.55 763,968 THREADNEEDLE EMERGING MARKETS FUND (ACTUAL) (BUYING FUND) Class A $209,553,284 $4.45 47,082,645 Class B 23,746,887 3.97 5,975,420 Class C 3,015,394 3.98 757,174 Class R5 2,470 4.62 535 THREADNEEDLE EMERGING MARKETS FUND (PRO FORMA COMBINED) Class A $239,204,488 $4.45 53,745,837 Class B 25,517,869 3.97 6,421,511 Class C 19,137,228 3.98 4,807,886 Class R2* 7,544,797 4.45 1,695,460 Class R5 5,004,912 4.62 1,083,315
*The inception date for Class R2 is expected to be in the third quarter of 2009.
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING -------------------------------------------------------------------------------------------------------- SELIGMAN GLOBAL GROWTH FUND (ACTUAL) (SELLING FUND) Class A $ 10,026,253 $4.89 2,051,475 Class B 918,019 4.37 209,902 Class C 4,469,788 4.38 1,021,443 Class R (to be known as Class R2) 92,542 4.83 19,174 Class I (to be known as Class R5) 630,716 5.10 123,659 THREADNEEDLE GLOBAL EQUITY FUND (ACTUAL) (BUYING FUND) Class A $330,456,373 $4.68 70,643,833 Class B 36,332,716 4.40 8,249,681 Class C 4,180,829 4.36 958,507 Class R2 4,608 4.69 982 Class R5 2,977 4.70 634 THREADNEEDLE GLOBAL EQUITY FUND (PRO FORMA COMBINED) Class A $340,482,626 $4.68 72,786,195 Class B 37,250,735 4.40 8,458,322 Class C 8,650,617 4.36 1,983,688 Class R2 97,150 4.69 20,714 Class R5 633,693 4.70 134,829
111
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING ------------------------------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD FUND (ACTUAL) (SELLING FUND) Class A $ 89,868,340 $2.05 43,904,727 Class B 7,686,193 2.05 3,752,823 Class C 35,177,803 2.06 17,114,832 Class R (to be known as Class R2) 3,921,706 2.05 1,913,724 Class I (to be known as Class R5) 5,967,402 2.05 2,910,168 RIVERSOURCE HIGH YIELD BOND FUND (ACTUAL) (BUYING FUND) Class A $800,259,615 $2.01 398,398,633 Class B 93,456,296 2.01 46,550,611 Class C 13,785,783 2.00 6,908,037 Class R2 5,953 2.02 2,954 Class R5 3,407 2.01 1,695 RIVERSOURCE HIGH YIELD BOND FUND (PRO FORMA COMBINED)* Class A $890,014,619 $2.01 443,052,864 Class B 101,129,611 2.01 50,368,181 Class C 48,957,352 2.00 24,493,821 Class R2 3,927,159 2.02 1,944,145 Class R5 5,970,049 2.01 2,970,173
*RiverSource High Yield Bond Fund (Pro Forma Combined) includes Reorganization costs which reduced net assets.
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING -------------------------------------------------------------------------------------------------------- SELIGMAN INCOME AND GROWTH FUND (ACTUAL) (SELLING FUND) Class A $ 29,197,966 $7.43 3,927,553 Class B 1,108,099 7.39 150,033 Class C 5,881,836 7.39 796,268 Class R (to be known as Class R2) 87,594 7.45 11,759 Class I (to be known as Class R5) 478,977 7.50 63,882 RIVERSOURCE BALANCED FUND (ACTUAL) (BUYING FUND) Class A $463,947,879 $7.02 66,082,844 Class B 18,701,733 6.97 2,681,826 Class C 2,791,074 6.96 400,864 RIVERSOURCE BALANCED FUND (PRO FORMA COMBINED)* Class A $493,089,278 $7.02 70,234,040 Class B 19,807,560 6.97 2,840,481 Class C 8,671,915 6.96 1,245,812 Class R2** 87,584 7.02 12,476 Class R5** 478,922 7.02 68,223
*RiverSource Balanced Fund (Pro Forma Combined) includes Reorganization costs which reduced net assets. **The inception date for Class R2 and Class R5 is expected to be in the third quarter of 2009. 112
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING -------------------------------------------------------------------------------------------------------- SELIGMAN INTERNATIONAL GROWTH FUND (ACTUAL) (SELLING FUND) Class A $ 15,620,461 $6.75 2,313,947 Class B 1,652,146 5.83 283,597 Class C 9,531,279 5.84 1,633,062 Class R (to be known as Class R2) 449,912 6.67 67,476 Class I (to be known as Class R5) 8,927,279 7.25 1,231,791 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (ACTUAL) (BUYING FUND) Class A $158,122,446 $4.24 37,315,801 Class B 24,858,271 4.07 6,110,877 Class C 2,651,793 4.06 653,608 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (PRO FORMA COMBINED) Class A $173,742,907 $4.24 40,999,872 Class B 26,510,417 4.07 6,516,810 Class C 12,183,072 4.06 3,001,214 Class R2* 449,912 4.24 106,111 Class R5* 8,927,279 4.28 2,085,813
*The inception date for Class R2 and Class R5 is expected to be in the third quarter of 2009.
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING ------------------------------------------------------------------------------------------------------- SELIGMAN U.S. GOVERNMENT SECURITIES FUND (ACTUAL) (SELLING FUND) Class A $ 47,974,261 $7.25 6,615,230 Class B 9,176,529 7.27 1,262,734 Class C 20,315,550 7.26 2,797,121 Class R (to be known as Class R2) 4,383,428 7.26 604,160 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (ACTUAL) (BUYING FUND) Class A $567,705,767 $4.55 124,797,434 Class B 123,437,574 4.55 27,134,850 Class C 11,838,327 4.55 2,602,361 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (PRO FORMA COMBINED)* Class A $615,616,550 $4.55 135,327,276 Class B 132,600,430 4.55 29,148,665 Class C 32,150,562 4.55 7,066,588 Class R2** 4,382,976 4.55 963,291
*RiverSource Short Duration U.S. Government Fund (Pro Forma Combined) includes Reorganization costs which reduced net assets. **The inception date for Class R2 is expected to be in the third quarter of 2009. 113 OWNERSHIP OF SHARES OF SELLING FUNDS, INCLUDING SELIGMAN SUBADVISED FUNDS, AND BUYING FUNDS The following table provides information on shareholders who owned more than 5% of any class of each Fund's outstanding shares as of Jan. 31, 2009. As of Jan. 31, 2009, officers and directors/trustees of each Fund, as a group, owned less than 1% of the outstanding shares of any class of any Fund. TABLE D-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ---------------------------------------------------------------------------------------------------------------------- SELIGMAN CORE FIXED INCOME FUND (SELLING FUND) Class A Merrill Lynch, Pierce Fenner & Smith Inc. (MLPF&S), Jacksonville, FL 17.69% N/A State Street Bank & Trust Co. -- Seligman Asset Allocation Balanced Fund, Kansas City, MO 15.24% N/A Class B CitiGroup Global House Account, New York, NY 27.01% N/A MLPF&S 13.59% N/A Pershing LLC, Jersey City, NJ 8.18% N/A Class C MLPF&S 16.84% N/A UBS Financial Servies Inc. FBO UBS-FINSVC CDN FBO Mr. George V. Butcher, Weehawken, NY 11.69% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) State Street Bank & Trust Co. FBO North Carolina College Savings Program -- NCBG, Westwood, MA 34.98% N/A State Street Bank & Trust Co. FBO North Carolina College Savings Program -- NCBF, Westwood, MA 24.02% N/A State Street Bank & Trust Co. FBO North Carolina College Savings Program -- NCBE, Westwood, MA 17.86% N/A State Street Bank & Trust Co. FBO North Carolina College Savings Program -- NCBH, Westwood, MA 8.31% N/A RIVERSOURCE DIVERSIFIED BOND FUND (BUYING FUND) Class A Charles Schwab & Co., Inc. (Charles Schwab) a brokerage firm in San Francisco, CA 8.08% 8.04% MLPF&S, (Jacksonville, FL) N/A 0.06% State Street Bank & Trust -- Seligman Asset Allocation Balanced Fund Kansas City, KA N/A 0.05% Class B CitiGroup Global House Account, New York, NY N/A 0.15% MLPF&S N/A 0.07% Pershing LLC, Jersey City, NJ N/A 0.04% Class C Citigroup Global Markets, Owings Mills, MD 25.29% 23.20% MLPF&S N/A 1.32% UBS Financial Services Inc. FBO UBS-FINSVC CDN FBO Mr. George V. Butcher, Weehawken, NJ N/A 0.91% Class R2 RiverSource Investments LLC (RiverSource Investments), Minneapolis, MN 83.88% 8.33% Applied Reliability Engineering, Denver, CO 16.12% 1.60% Class R5 RiverSource Investments 100.00% 0.11% State Street Bank & Trust Co FBO North Carolina College Savings Program -- NCBG, Westwood, MA N/A 34.96% State Street Bank & Trust Co FBO North Carolina College Savings Program -- NCB, Westwood, MA N/A 24.01% State Street Bank & Trust Co FBO North Carolina College Savings Program -- NCBE, Westwood, MA N/A 17.85% State Street Bank & Trust Co FBO North Carolina College Savings Program -- NCBH, Westwood, MA N/A 8.30%
114
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION --------------------------------------------------------------------------------------------------------------------- SELIGMAN EMERGING MARKETS FUND (SELLING FUND) Class A Morgan Stanley & Co (Morgan Stanley), Jersey City, NJ 24.94% N/A MLPF&S, Jacksonville, FL 7.68% N/A State Street Bank & Trust Co -- Seligman Asset Allocation Growth Fund, Kansas City, MO 5.71% N/A Class B Morgan Stanley 6.08% N/A MLPF&S 5.12% N/A Class C MLPF&S 51.23% N/A CitiGroup Global House Account, New York, NY 5.09% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA 36.76% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBD, Westwood, MA 22.13% N/A Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC 14.90% N/A Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC 13.09% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA 9.45% N/A THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) Class A Charles Schwab & Co., Inc., a brokerage firm in San Francisco, CA 13.68% 11.98% Morgan Stanley N/A 3.10% MLPF&S N/A 0.96% State Street Bank & Trust Co -- Seligman Asset Allocation Growth Fund, Kansas City, MO N/A 0.71% Class B Morgan Stanley N/A 0.42% MLPF&S N/A 0.35% Class C MLPF&S N/A 43.19% CitiGroup Global House Account, New York, NY N/A 4.29% Class R2 None N/A N/A Class R5 RiverSource Investments 100.00% 0.05% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA N/A 36.76% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBD, Westwood, MA N/A 22.12% Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC N/A 14.89% Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC N/A 13.08% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA N/A 9.45%
Note: Class R2 is being added to Threadneedle Emerging Markets Fund in connection with the Reorganization. 115
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ---------------------------------------------------------------------------------------------------------------------- SELIGMAN GLOBAL GROWTH FUND (SELLING FUND) Class A MLPF&S 16.15% N/A Class B MLPF&S 15.28% N/A Morgan Stanley 8.62% N/A Class C MLPF&S 16.82% N/A CitiGroup Global House Account, New York, NY 6.26% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC 89.33% N/A Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC 10.56% N/A THREADNEEDLE GLOBAL EQUITY FUND (BUYING FUND) Class A Charles Schwab & Co., Inc., a brokerage firm in San Francisco, CA 12.43% 12.06% MLPF&S N/A 0.48% Class B MLPF&S N/A 0.37% Morgan Stanley N/A 0.21% Class C MLPF&S N/A 8.70% CitiGroup Global House Account, New York, NY N/A 3.24% Class R2 RiverSource Investments 64.55% 3.06% Applied Reliability Engineering, Fargo, ND 35.45% 1.68% Class R5 RiverSource Investments 100.00% 0.47% Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC N/A 88.90% Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC N/A 10.51%
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ----------------------------------------------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD FUND (SELLING FUND) Class A MLPF&S, Jacksonville, FL 10.24% N/A CitiGroup Global House Account, New York, NY 5.20% N/A Class B MLPF&S 13.21% N/A Morgan Stanley & Co, Jersey City, NJ 10.64% N/A CitiGroup Global House Account, New York, NY 8.31% N/A Class C MLPF&S 22.54% N/A CitiGroup Global House Account, New York, NY 6.76% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA 26.18% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA 21.53% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBG, Westwood, MA 20.01% N/A Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC 10.90% N/A Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC 8.89% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBH, Westwood, MA 5.84% N/A
116
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ----------------------------------------------------------------------------------------------------------------------- RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) Class A Charles Schwab & Co., Inc., a brokerage firm in San Francisco, CA 10.00% 8.99% MLPF&S N/A 1.04% CitiGroup Global House Account, New York, NY N/A 0.53% Class B MLPF&S N/A 0.93% Morgan Stanley & Co, Jersey City, NJ N/A 0.75% CitiGroup Global House Account, New York, NY N/A 0.59% Class C MLPF&S N/A 16.15% CitiGroup Global House Account, New York, NY N/A 4.84% Class R2 RiverSource Investments, Minneapolis, MN 57.38% 0.09% Applied Reliability Engineering, Fargo, ND 42.58% 0.06% Class R5 RiverSource Investments 100.00% 0.06% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA N/A 26.16% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA N/A 21.52% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBG, Westwood, MA N/A 19.99% Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC N/A 10.89% Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC N/A 8.88% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBH, Westwood, MA N/A 5.84%
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION --------------------------------------------------------------------------------------------------------------------- SELIGMAN INCOME AND GROWTH FUND (SELLING FUND) Class A None N/A N/A Class B MLPF&S, Jacksonville, FL 8.88% N/A Class C MLPF&S 9.52% N/A CitiGroup Global House Account, New York, NY 8.24% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC 77.21% N/A Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC 22.54% N/A RIVERSOURCE BALANCED FUND (BUYING FUND) Class A None N/A N/A Class B MLPF&S N/A 0.48% Class C MLPF&S 11.80% 10.25% CitiGroup Global House Account, New York, NY N/A 5.58% Class R2 None N/A N/A Class R5 Patterson & Co. FBO J. & W. Seligman Matched Accumulation Plan, Charlotte, NC N/A 77.23% Patterson & Co. FBO Seligman Data Corp 401(K) Thrift Plan, Charlotte, NC N/A 22.54%
Note: Class R2 and Class R5 are being added to RiverSource Balanced Fund in connection with the Reorganization. 117
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ---------------------------------------------------------------------------------------------------------------------- SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) Class A State Street Bank & Trust Co -- Seligman Asset Allocation Moderate Growth Fund, Kansas City, MO 11.41% N/A State Street Bank & Trust Co -- Seligman Asset Allocation Balanced Fund, Kansas City, MO 5.85% N/A State Street Bank & Trust Co -- Seligman Asset Allocation Growth Fund, Kansas City, MO 5.39% N/A Class B Morgan Stanley 23.28% N/A CitiGroup Global House Account, New York, NY 10.03% N/A MLPF&S 5.81% N/A Class C MLPF&S 10.10% N/A CitiGroup Global House Account, New York, NY 5.06% N/A Class R (to be known as Class R2) None N/A N/A Class I (to be known as Class R5) State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA 34.20% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA 17.58% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBG, Westwood, MA 17.44% N/A State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBD, Westwood, MA 11.71% N/A RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND)* Class A Charles Schwab & Co., Inc., a brokerage firm in San Francisco, CA 14.39% 13.09% State Street Bank & Trust Co -- Seligman Asset Allocation Moderate Growth Fund, Kansas City, MO N/A 1.03% State Street Bank & Trust Co -- Seligman Asset Allocation Balanced Fund, Kansas City, MO N/A 0.53% State Street Bank & Trust Co -- Seligman Asset Allocation Growth Fund, Kansas City, MO N/A 0.48% Class B Morgan Stanley N/A 1.44% CitiGroup Global House Account, New York, NY N/A 0.62% MLPF&S N/A 0.36% Class C MLPF&S N/A 7.92% CitiGroup Global House Account, New York, NY N/A 3.97% Class R2 None N/A N/A Class R5 State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBE, Westwood, MA N/A 34.21% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBF, Westwood, MA N/A 17.59% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBG, Westwood, MA N/A 17.45% State Street Bank & Trust Company FBO North Carolina College Savings Program -- NCBD, Westwood, MA N/A 11.71%
*The combination of RiverSource Investments' initial capital investment (seed accounts) and RiverSource Portfolio Builder Funds (affiliated "funds- of-funds"), investment in Class I shares of RiverSource Partners International Select Growth Fund, represents aggregate ownership of 41.54% of the Fund. RiverSource Investments (investment manager of RiverSource Partners International Select Growth Fund and the funds-of-funds) do not invest in the Fund for the purposes of exercising control. However, since these ownership interests may be significant, in excess of 25% of the Fund, such that these entities may be deemed to control the Fund, procedures have been put in place to assure that public shareholders determine the outcome of all actions taken at shareholder meetings. Specifically, RiverSource Investments (which votes proxies for the seed accounts) and the funds-of- funds' Boards of Directors (which votes proxies for the funds-of-funds) vote on each proposal in the same proportion that other shareholders vote on the proposal. If the Reorganization is approved, RiverSource Investments and the funds-of-funds will own 38.73% of RiverSource Partners International Select Growth Fund. Note: Class R2 and Class R5 are being added to RiverSource Partners International Select Growth Fund in connection with the Reorganization. 118
PERCENT PERCENT OF SHARES OF SHARES HELD FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION ---------------------------------------------------------------------------------------------------------------------- SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) Class A MLPF&S 8.57% N/A Class B MLPF&S 9.88% N/A Morgan Stanley 5.38% N/A Class C MLPF&S 26.54% N/A Class R (to be known as Class R2) None N/A N/A RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) Class A Charles Schwab & Co., Inc., a brokerage firm in San Francisco, CA 13.74% 12.66% MLPF&S N/A 0.67% Class B MLPF&S N/A 0.67% Morgan Stanley N/A 0.37% Class C MLPF&S N/A 16.82% Class R2 None N/A N/A
Note: Class R2 is being added to RiverSource Short Duration U.S. Government Fund in connection with the Reorganization. 119 FINANCIAL HIGHLIGHTS THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE BUYING FUNDS' FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE BUYING FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN A BUYING FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THE INFORMATION FOR THE RIVERSOURCE BUYING FUNDS' FISCAL PERIODS ENDING IN 2008 OR 2009, AS APPLICABLE, HAS BEEN AUDITED BY ERNST & YOUNG LLP, WHOSE REPORT, ALONG WITH SUCH BUYING FUND'S FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS, IS INCLUDED IN SUCH BUYING FUND'S MOST RECENT ANNUAL REPORT. THE INFORMATION FOR CERTAIN PRIOR PERIODS HAS BEEN AUDITED BY OTHER AUDITORS, AS INDICATED IN THE TABLES BELOW. UNAUDITED INFORMATION FOR THE MOST RECENT FISCAL HALF-YEAR FOR RIVERSOURCE HIGH YIELD BOND FUND AND RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND IS ALSO PROVIDED. THE AUDITORS' REPORTS, FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS FOR EACH BUYING FUND ARE AVAILABLE UPON REQUEST. TABLE C-3. FINANCIAL HIGHLIGHTS OF EACH BUYING FUND RiverSource Diversified Bond Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $4.81 $4.77 $4.89 $4.87 $4.78 ---------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .22(b) .21(b) .19 .18 .18 Net gains (losses) (both realized and unrealized) (.17) .05 (.11) .03 .08 ---------------------------------------------------------------------------------------------------- Total from investment operations .05 .26 .08 .21 .26 ---------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.21) (.21) (.20) (.19) (.17) Tax return of capital -- (.01) -- -- -- ---------------------------------------------------------------------------------------------------- Total distributions (.21) (.22) (.20) (.19) (.17) ---------------------------------------------------------------------------------------------------- Net asset value, end of period $4.65 $4.81 $4.77 $4.89 $4.87 ---------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,920 $1,937 $2,013 $1,774 $1,933 ---------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) .95% .97% .99% 1.02% 1.00% ---------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(f) .89% .89% .89% .94% .98% ---------------------------------------------------------------------------------------------------- Net investment income (loss) 4.68% 4.43% 4.09% 3.67% 3.55% ---------------------------------------------------------------------------------------------------- Portfolio turnover rate(g) 226% 295% 281% 300% 279% ---------------------------------------------------------------------------------------------------- Total return(h) .93% 5.54% 1.64% 4.38% 5.54% ----------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (f) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Aug. 31, 2008 were less than 0.01% of average net assets. (g) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were excluded, the portfolio turnover would have been 122% for the year ended Aug. 31, 2008. (h) Total return does not reflect payment of a sales charge. 120 RiverSource Diversified Bond Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $4.81 $4.77 $4.89 $4.88 $4.78 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .19(b) .18(b) .16 .15 .14 Net gains (losses) (both realized and unrealized) (.18) .04 (.12) .01 .09 ------------------------------------------------------------------------------------------------------------ Total from investment operations .01 .22 .04 .16 .23 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.18) (.16) (.15) (.13) Tax return of capital -- (.00)(c) -- -- -- ------------------------------------------------------------------------------------------------------------ Total distributions (.17) (.18) (.16) (.15) (.13) ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $4.65 $4.81 $4.77 $4.89 $4.88 ------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $254 $304 $402 $484 $628 ------------------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(d),(e) 1.71% 1.73% 1.76% 1.78% 1.75% ------------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(e),(f),(g) 1.65% 1.65% 1.65% 1.70% 1.73% ------------------------------------------------------------------------------------------------------------ Net investment income (loss) 3.91% 3.66% 3.31% 2.92% 2.78% ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate(h) 226% 295% 281% 300% 279% ------------------------------------------------------------------------------------------------------------ Total return(i) .16% 4.74% .88% 3.39% 4.95% ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (g) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Aug. 31, 2008 were less than 0.01% of average net assets. (h) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were excluded, the portfolio turnover would have been 122% for the year ended Aug. 31, 2008. (i) Total return does not reflect payment of a sales charge. 121 RiverSource Diversified Bond Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Aug. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $4.81 $4.77 $4.90 $4.88 $4.78 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .19(b) .18(b) .16 .15 .14 Net gains (losses) (both realized and unrealized) (.18) .04 (.13) .02 .09 -------------------------------------------------------------------------------------------------------------- Total from investment operations .01 .22 .03 .17 .23 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.18) (.16) (.15) (.13) Tax return of capital -- (.00)(c) -- -- -- -------------------------------------------------------------------------------------------------------------- Total distributions (.17) (.18) (.16) (.15) (.13) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.65 $4.81 $4.77 $4.90 $4.88 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $32 $17 $17 $18 $21 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.70% 1.73% 1.76% 1.79% 1.75% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(f),(g) 1.65% 1.65% 1.66% 1.70% 1.73% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.93% 3.67% 3.31% 2.93% 2.79% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(h) 226% 295% 281% 300% 279% -------------------------------------------------------------------------------------------------------------- Total return(i) .16% 4.73% .66% 3.60% 4.95% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (g) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Aug. 31, 2008 were less than 0.01% of average net assets. (h) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were excluded, the portfolio turnover would have been 122% for the year ended Aug. 31, 2008. (i) Total return does not reflect payment of a sales charge. 122 RiverSource Diversified Bond Fund - Class R2
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Aug. 31, 2008 2007(b) Net asset value, beginning of period $4.80 $4.81 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .21 .14 Net gains (losses) (both realized and unrealized) (.16) (.02) -------------------------------------------------------------------------------------------------------------- Total from investment operations .05 .12 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.20) (.13) Total return of capital -- (.00)(d) -------------------------------------------------------------------------------------------------------------- Total distributions (.20) (.13) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.65 $4.80 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(e),(f) 1.34% 1.32%(g) -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f),(h),(i) 1.08% 1.32%(g) -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 4.53% 4.06%(g) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(j) 226% 295% -------------------------------------------------------------------------------------------------------------- Total return .84% 2.70%(k) --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to Aug. 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Rounds to zero. (e) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (f) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (g) Adjusted to an annual basis. (h) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (i) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Aug. 31, 2008 were less than 0.01% of average net assets. (j) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were excluded, the portfolio turnover would have been 122% for the year ended Aug. 31, 2008. (k) Not annualized. 123 RiverSource Diversified Bond Fund - Class R5
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Aug. 31, 2008 2007(b) Net asset value, beginning of period $4.80 $4.81 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .24 .17 Net gains (losses) (both realized and unrealized) (.18) (.02) -------------------------------------------------------------------------------------------------------------- Total from investment operations .06 .15 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.22) (.16) Total return of capital -- (.00)(d) -------------------------------------------------------------------------------------------------------------- Total distributions (.22) (.16) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.64 $4.80 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(e),(f) .59% .59%(g) -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f),(h),(i) .58% .57%(g) -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 5.02% 4.81%(g) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(j) 226% 295% -------------------------------------------------------------------------------------------------------------- Total return 1.22% 3.25%(k) --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to Aug. 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Rounds to zero. (e) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (f) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (g) Adjusted to an annual basis. (h) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (i) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Aug. 31, 2008 were less than 0.01% of average net assets. (j) Includes mortgage dollar rolls. If mortgage dollar rolls transactions were excluded, the portfolio turnover would have been 122% for the year ended Aug. 31, 2008. (k) Not annualized. 124 Threadneedle Emerging Markets Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $14.99 $11.32 $8.23 $6.27 $5.46 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .08(b) .04(b) .01 .04 .03 Net gains (losses) (both realized and unrealized) (7.24) 6.27 3.10 1.95 .84 -------------------------------------------------------------------------------------------------------------- Total from investment operations (7.16) 6.31 3.11 1.99 .87 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.18) -- (.02) (.03) (.06) Distributions from realized gains (2.69) (2.64) -- -- -- -------------------------------------------------------------------------------------------------------------- Total distributions (2.87) (2.64) (.02) (.03) (.06) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.96 $14.99 $11.32 $8.23 $6.27 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $250 $661 $425 $295 $191 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.87% 1.83% 1.81% 1.79% 1.83% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(f) 1.87% 1.83% 1.81% 1.79% 1.83% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .78% .31% .19% .54% .41% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 133% 125% 145% 124% 128% -------------------------------------------------------------------------------------------------------------- Total return(g) (57.79%) 68.21% 37.85% 31.83% 16.09% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (g) Total return does not reflect payment of a sales charge. 125 Threadneedle Emerging Markets Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $13.73 $10.63 $7.77 $5.95 $5.19 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .00(b),(c) (.05)(b) (.05) (.01) (.02) Net gains (losses) (both realized and unrealized) (6.53) 5.79 2.91 1.83 .81 -------------------------------------------------------------------------------------------------------------- Total from investment operations (6.53) 5.74 2.86 1.82 .79 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) -- -- -- (.03) Distributions from realized gains (2.69) (2.64) -- -- -- -------------------------------------------------------------------------------------------------------------- Total distributions (2.77) (2.64) -- -- (.03) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.43 $13.73 $10.63 $7.77 $5.95 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $28 $94 $77 $74 $73 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.62% 2.58% 2.57% 2.55% 2.59% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(f),(g) 2.62% 2.58% 2.57% 2.55% 2.59% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .02% (.48%) (.55%) (.24%) (.32%) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 133% 125% 145% 124% 128% -------------------------------------------------------------------------------------------------------------- Total return(h) (58.08%) 66.95% 36.81% 30.59% 15.18% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (h) Total return does not reflect payment of a sales charge. 126 Threadneedle Emerging Markets Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $13.78 $10.66 $7.79 $5.97 $5.20 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .00(b),(c) (.05)(b) (.06) -- (.01) Net gains (losses) (both realized and unrealized) (6.54) 5.81 2.93 1.82 .81 -------------------------------------------------------------------------------------------------------------- Total from investment operations (6.54) 5.76 2.87 1.82 .80 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.11) -- -- -- (.03) Distributions from realized gains (2.69) (2.64) -- -- -- -------------------------------------------------------------------------------------------------------------- Total distributions (2.80) (2.64) -- -- (.03) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.44 $13.78 $10.66 $7.79 $5.97 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $8 $5 $3 $1 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.63% 2.59% 2.58% 2.56% 2.60% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(f),(g) 2.63% 2.59% 2.58% 2.56% 2.60% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .03% (.48%) (.57%) (.19%) (.34%) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 133% 125% 145% 124% 128% -------------------------------------------------------------------------------------------------------------- Total return(h) (58.15%) 67.03% 36.84% 30.54% 15.37% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (h) Total return does not reflect payment of a sales charge. 127 Threadneedle Emerging Markets Fund - Class R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008(b) Net asset value, beginning of period $9.32 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .03 Net gains (losses) (both realized and unrealized) (4.22) -------------------------------------------------------------------------------------------------------------- Total from investment operations (4.19) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.13 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- -------------------------------------------------------------------------------------------------------------- Total expenses(d),(e),(f) 1.47%(g) -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.57%(g) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 133% -------------------------------------------------------------------------------------------------------------- Total return (44.96%)(h) --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Aug. 1, 2008 (when shares became publicly available) to Oct. 31, 2008. (c) Per share amount has been calculated using the average shares outstanding method. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (g) Adjusted to an annual basis. (h) Not annualized. 128 Threadneedle Global Equity Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $9.61 $7.52 $6.23 $5.16 $4.62 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05(b) .02(b) .01 .02 -- Net gains (losses) (both realized and unrealized) (4.41) 2.13 1.30 1.08 .54 -------------------------------------------------------------------------------------------------------------- Total from investment operations (4.36) 2.15 1.31 1.10 .54 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.06) (.02) (.03) -- -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.21 $9.61 $7.52 $6.23 $5.16 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $380 $737 $608 $446 $364 -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.46% 1.39% 1.51% 1.57% 1.41% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .65% .28% .23% .33% .07% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 97% 100% 112% 93% 104% -------------------------------------------------------------------------------------------------------------- Total return(e) (45.55%) 28.82% 21.01% 21.48% 11.72% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Total return does not reflect payment of a sales charge. 129 Threadneedle Global Equity Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $9.02 $7.06 $5.88 $4.87 $4.40 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.03) Net gains (losses) (both realized and unrealized) (4.14) 2.00 1.19 1.03 .50 -------------------------------------------------------------------------------------------------------------- Total from investment operations (4.15) 1.96 1.18 1.01 .47 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- .00(c) -- -- -- -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.87 $9.02 $7.06 $5.88 $4.87 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $42 $104 $110 $102 $104 -------------------------------------------------------------------------------------------------------------- Total expenses(d),(e) 2.23% 2.15% 2.28% 2.34% 2.18% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.11%) (.45%) (.54%) (.41%) (.66%) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 97% 100% 112% 93% 104% -------------------------------------------------------------------------------------------------------------- Total return(f) (46.01%) 27.81% 20.07% 20.74% 10.68% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Total return does not reflect payment of a sales charge. 130 Threadneedle Global Equity Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $8.93 $7.02 $5.85 $4.85 $4.38 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01)(b) (.04)(b) (.01) (.02) (.02) Net gains (losses) (both realized and unrealized) (4.09) 1.98 1.18 1.03 .49 ----------------------------------------------------------------------------------------------------------------- Total from investment operations (4.10) 1.94 1.17 1.01 .47 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.03) -- (.01) -- ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.83 $8.93 $7.02 $5.85 $4.85 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $5 $8 $6 $2 $1 ----------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 2.22% 2.15% 2.27% 2.33% 2.19% ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.09%) (.48%) (.50%) (.53%) (.69%) ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 97% 100% 112% 93% 104% ----------------------------------------------------------------------------------------------------------------- Total return(e) (45.91%) 27.76% 20.03% 20.89% 10.73% -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Total return does not reflect payment of a sales charge. 131 Threadneedle Global Equity Fund - Class R2
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Oct. 31, 2008 2007(B) Net asset value, beginning of period $9.62 $7.89 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .05 (.01) Net gains (losses) (both realized and unrealized) (4.42) 1.84 ----------------------------------------------------------------------------------------------------------------- Total from investment operations (4.37) 1.83 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.10) ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.23 $9.62 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- ----------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.79% 1.74%(f) ----------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.54% 1.74%(f) ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) .57% (.13%)(f) ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 97% 100% ----------------------------------------------------------------------------------------------------------------- Total return (45.48%) 23.41%(i) -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (i) Not annualized. 132 Threadneedle Global Equity Fund - Class R5
PER SHARE INCOME AND CAPITAL CHANGES(A) Fiscal period ended Oct. 31, 2008 2007(B) Net asset value, beginning of period $9.69 $7.89 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .08 .05 Net gains (losses) (both realized and unrealized) (4.45) 1.85 ----------------------------------------------------------------------------------------------------------------- Total from investment operations (4.37) 1.90 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.10) ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.25 $9.69 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- ----------------------------------------------------------------------------------------------------------------- Total expenses(d),(e) 1.04% .99%(f) ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.07% .62%(f) ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 97% 100% ----------------------------------------------------------------------------------------------------------------- Total return (45.40%) 24.33%(g) -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to Oct. 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) Not annualized. 133 RiverSource High Yield Bond Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(A) 2008(L- Fiscal period ended May 31, ) 2008 2007 2006 2005 Net asset value, beginning of period $2.74 $3.02 $2.89 $2.86 $2.74 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .11(b) .22(b) .20 .20 .19 Net gains (losses) (both realized and unrealized) (.82) (.29) .15 .03 .12 ------------------------------------------------------------------------------------------------------------ Total from investment operations (.71) (.07) .35 .23 .31 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.11) (.21) (.22) (.20) (.19) Tax return of capital -- (.00)(c) -- -- -- ------------------------------------------------------------------------------------------------------------ Total distributions (.11) (.21) (.22) (.20) (.19) ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.92 $2.74 $3.02 $2.89 $2.86 ------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $713 $1,134 $1,463 $1,535 $1,735 ------------------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(d),(e) 1.14%(f) 1.13% 1.08% 1.08% 1.04% ------------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(e),(g),(h) 1.02%(f) 1.10% 1.08% 1.08% 1.04% ------------------------------------------------------------------------------------------------------------ Net investment income (loss) 8.75%(f) 7.71% 6.94% 6.78% 6.67% ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 28% 64% 95% 93% 105% ------------------------------------------------------------------------------------------------------------ Total return(i) (26.6- 8%)(j) (2.40%) 12.77%(k) 8.27% 11.56% ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Nov. 30, 2008 and for the year ended May 31, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower by 0.01%. (l) Six months ended Nov. 30, 2008 (Unaudited). 134 RiverSource High Yield Bond Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(A) 2008(L- Fiscal period ended May 31, ) 2008 2007 2006 2005 Net asset value, beginning of period $2.74 $3.02 $2.89 $2.86 $2.74 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10(b) .19(b) .18 .18 .17 Net gains (losses) (both realized and unrealized) (.82) (.29) .15 .03 .12 ------------------------------------------------------------------------------------------------------------ Total from investment operations (.72) (.10) .33 .21 .29 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.10) (.18) (.20) (.18) (.17) Tax return of capital -- (.00)(c) -- -- -- ------------------------------------------------------------------------------------------------------------ Total distributions (.10) (.18) (.20) (.18) (.17) ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.92 $2.74 $3.02 $2.89 $2.86 ------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $90 $174 $321 $433 $629 ------------------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(d),(e) 1.89%(f) 1.89% 1.84% 1.83% 1.79% ------------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(e),(g),(h) 1.78%(f) 1.86% 1.84% 1.83% 1.79% ------------------------------------------------------------------------------------------------------------ Net investment income (loss) 7.90%(f) 6.92% 6.18% 6.00% 5.92% ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 28% 64% 95% 93% 105% ------------------------------------------------------------------------------------------------------------ Total return(i) (27.0- 6%)(j) (3.17%) 11.91%(k) 7.45% 10.72% ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Nov. 30, 2008 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.85% for the year ended May 31, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower by 0.01%. (l) Six months ended Nov. 30, 2008 (Unaudited). 135 RiverSource High Yield Bond Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(A) 2008(L- Fiscal period ended May 31, ) 2008 2007 2006 2005 Net asset value, beginning of period $2.72 $3.00 $2.87 $2.84 $2.73 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10(b) .19(b) .18 .18 .17 Net gains (losses) (both realized and unrealized) (.81) (.29) .15 .03 .11 ------------------------------------------------------------------------------------------------------------ Total from investment operations (.71) (.10) .33 .21 .28 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.10) (.18) (.20) (.18) (.17) Tax return of capital -- (.00)(c) -- -- -- ------------------------------------------------------------------------------------------------------------ Total distributions (.10) (.18) (.20) (.18) (.17) ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.91 $2.72 $3.00 $2.87 $2.84 ------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $12 $19 $26 $28 $36 ------------------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(d),(e) 1.89%(f) 1.88% 1.83% 1.83% 1.79% ------------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(e),(g),(h) 1.77%(f) 1.86% 1.83% 1.83% 1.79% ------------------------------------------------------------------------------------------------------------ Net investment income (loss) 7.99%(f) 6.95% 6.18% 6.02% 5.92% ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 28% 64% 95% 93% 105% ------------------------------------------------------------------------------------------------------------ Total return(i) (26.8- 1%)(j) (3.21%) 11.95%(k) 7.47% 10.35% ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Rounds to zero. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Nov. 30, 2008 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.85% for the year ended May 31, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) During the year ended May 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower by 0.01%. (l) Six months ended Nov. 30, 2008 (Unaudited). 136 RiverSource High Yield Bond Fund - Class R2
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended May 31, 2008(j) 2008 2007(b) Net asset value, beginning of period $2.74 $3.02 $2.95 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .10(c) .21(c) .11 Net gains (losses) (both realized and unrealized) (.82) (.29) .05 -------------------------------------------------------------------------------------------------------------- Total from investment operations (.72) (.08) .16 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) (.20) (.09) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $1.92 $2.74 $3.02 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.55%(f) 1.51% 1.45%(f) -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.37%(f) 1.25% 1.45%(f) -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 8.68%(f) 7.63% 6.58%(f) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 64% 95% -------------------------------------------------------------------------------------------------------------- Total return (26.85%)(i) (2.75%) 5.72%(i) --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to May 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Nov. 30, 2008 and for the year ended May 31, 2008. (i) Not annualized. (j) Six months ended Nov. 30, 2008 (Unaudited). 137 RiverSource High Yield Bond Fund - Class R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended May 31, 2008(j) 2008 2007(b) Net asset value, beginning of period $2.74 $3.02 $2.95 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .11(c) .22(c) .12 Net gains (losses) (both realized and unrealized) (.82) (.28) .05 -------------------------------------------------------------------------------------------------------------- Total from investment operations (.71) (.06) .17 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.11) (.22) (.10) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $1.92 $2.74 $3.02 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) .78%(f) .78% .71%(f) -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .70%(f) .75% .71%(f) -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 9.12%(f) 8.06% 7.33%(f) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 64% 95% -------------------------------------------------------------------------------------------------------------- Total return (26.56%)(i) (2.06%) 6.09%(i) --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to May 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Nov. 30, 2008 and for the year ended May 31, 2008. (i) Not annualized. (j) Six months ended Nov. 30, 2008 (Unaudited). 138 RiverSource Balanced Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004 Net asset value, beginning of period $11.46 $10.52 $9.84 $9.25 $8.47 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .30(b) .26(b) .24 .21 .19 Net gains (losses) (both realized and unrealized) (2.42) .95 .68 .61 .77 -------------------------------------------------------------------------------------------------------------- Total from investment operations (2.12) 1.21 .92 .82 .96 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.28) (.27) (.24) (.23) (.18) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.06 $11.46 $10.52 $9.84 $9.25 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $634 $929 $959 $990 $1,077 -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) .95% 1.07% 1.01% 1.03% 1.01% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.86% 2.31% 2.42% 2.13% 2.01% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(e) 105% 124% 126% 130% 131% -------------------------------------------------------------------------------------------------------------- Total return(f) (18.73%) 11.57% 9.46% 8.86% 11.32% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Sept. 30, 2008 were less than 0.01% of average daily net assets. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 86% for the year ended Sept. 30, 2008. (f) Total return does not reflect payment of a sales charge. 139 RiverSource Balanced Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004 Net asset value, beginning of period $11.39 $10.45 $9.78 $9.19 $8.41 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .22(b) .17(b) .16 .14 .11 Net gains (losses) (both realized and unrealized) (2.40) .95 .67 .59 .77 -------------------------------------------------------------------------------------------------------------- Total from investment operations (2.18) 1.12 .83 .73 .88 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.20) (.18) (.16) (.14) (.10) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.01 $11.39 $10.45 $9.78 $9.19 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $26 $52 $70 $81 $113 -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.71% 1.84% 1.78% 1.81% 1.78% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.10% 1.53% 1.63% 1.35% 1.23% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(e) 105% 124% 126% 130% 131% -------------------------------------------------------------------------------------------------------------- Total return(f) (19.35%) 10.78% 8.54% 8.02% 10.51% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Sept. 30, 2008 were less than 0.01% of average daily net assets. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 86% for the year ended Sept. 30, 2008. (f) Total return does not reflect payment of a sales charge. 140 RiverSource Balanced Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Sept. 30, 2008 2007 2006 2005 2004 Net asset value, beginning of period $11.38 $10.44 $9.77 $9.19 $8.41 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .22(b) .17(b) .16 .14 .12 Net gains (losses) (both realized and unrealized) (2.41) .96 .67 .59 .77 -------------------------------------------------------------------------------------------------------------- Total from investment operations (2.19) 1.13 .83 .73 .89 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.20) (.19) (.16) (.15) (.11) -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.99 $11.38 $10.44 $9.77 $9.19 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $4 $5 $4 $3 $3 -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.71% 1.82% 1.78% 1.81% 1.78% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.11% 1.57% 1.61% 1.35% 1.25% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(e) 105% 124% 126% 130% 131% -------------------------------------------------------------------------------------------------------------- Total return(f) (19.41%) 10.86% 8.58% 7.97% 10.57% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Sept. 30, 2008 were less than 0.01% of average daily net assets. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 86% for the year ended Sept. 30, 2008. (f) Total return does not reflect payment of a sales charge. 141 RiverSource Partners International Select Growth Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $10.54 $9.42 $8.05 $6.85 $5.80 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07(b) .04(b) .02 .02 -- Net gains (losses) (both realized and unrealized) (5.00) 2.70 2.04 1.33 1.05 -------------------------------------------------------------------------------------------------------------- Total from investment operations (4.93) 2.74 2.06 1.35 1.05 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.13) (.17) (.06) (.01) -- Distributions from realized gains (.81) (1.45) (.63) (.14) -- -------------------------------------------------------------------------------------------------------------- Total distributions (.94) (1.62) (.69) (.15) -- -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.67 $10.54 $9.42 $8.05 $6.85 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $190 $418 $294 $216 $151 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.56% 1.61% 1.61% 1.79% 1.85% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(f) 1.49% 1.61% 1.61% 1.74% 1.75% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .91% .45% .23% .37% .17% -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 104% 124% 67% 87% -------------------------------------------------------------------------------------------------------------- Total return(g) (50.70%)(h) 33.56% 27.21% 19.89% 18.15% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (g) Total return does not reflect payment of a sales charge. (h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower. 142 Partners International Select Growth Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $10.15 $9.12 $7.82 $6.69 $5.71 -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) (.03)(b) (.05) (.02) (.02) Net gains (losses) (both realized and unrealized) (4.80) 2.61 1.99 1.29 1.00 -------------------------------------------------------------------------------------------------------------- Total from investment operations (4.79) 2.58 1.94 1.27 .98 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.10) (.01) -- -- Distributions from realized gains (.81) (1.45) (.63) (.14) -- -------------------------------------------------------------------------------------------------------------- Total distributions (.87) (1.55) (.64) (.14) -- -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.49 $10.15 $9.12 $7.82 $6.69 -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $30 $75 $67 $58 $44 -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 2.32% 2.37% 2.37% 2.56% 2.62% -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(f) 2.25% 2.37% 2.37% 2.51% 2.51% -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .15% (.30%) (.53%) (.39%) (.59%) -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 104% 124% 67% 87% -------------------------------------------------------------------------------------------------------------- Total return(g) (51.01%)(h) 32.54% 26.19% 19.13% 17.16% --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (g) Total return does not reflect payment of a sales charge. (h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower. 143 Partners International Select Growth Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended Oct. 31, 2008 2007 2006 2005 2004 Net asset value, beginning of period $10.14 $9.12 $7.81 $6.69 $5.71 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) (.03)(b) (.04) (.02) (.02) Net gains (losses) (both realized and unrealized) (4.79) 2.61 1.99 1.28 1.00 ----------------------------------------------------------------------------------------------------------------- Total from investment operations (4.78) 2.58 1.95 1.26 .98 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.11) (.01) -- -- Distributions from realized gains (.81) (1.45) (.63) (.14) -- ----------------------------------------------------------------------------------------------------------------- Total distributions (.88) (1.56) (.64) (.14) -- ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.48 $10.14 $9.12 $7.81 $6.69 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $7 $4 $3 $3 ----------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 2.32% 2.36% 2.37% 2.55% 2.61% ----------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(f) 2.25% 2.36% 2.37% 2.51% 2.51% ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) .18% (.31%) (.53%) (.41%) (.60%) ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 104% 124% 67% 87% ----------------------------------------------------------------------------------------------------------------- Total return(g) (50.99%)(h) 32.56% 26.34% 18.98% 17.16% -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Oct. 31, 2008 were less than 0.01% of average net assets. (g) Total return does not reflect payment of a sales charge. (h) During the year ended Oct. 31, 2008, the Investment Manager reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return would have been lower. 144 RiverSource Short Duration U.S. Government Fund - Class A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005 Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .08(b) .19(b) .19 .15 .12 Net gains (losses) (both realized and unrealized) (.19) .01 .05 (.10) (.03) ----------------------------------------------------------------------------------------------------------------- Total from investment operations (.11) .20 .24 .05 .09 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) (.19) (.19) (.16) (.12) ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $586 $539 $514 $641 $894 ----------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.03%(e) 1.04% 1.03% 1.06% 1.01% ----------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .89%(e) .89% .89% .89% .93% ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 3.47%(e) 3.93% 3.99% 3.27% 2.49% ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(h) 118% 209% 168% 194% 169% ----------------------------------------------------------------------------------------------------------------- Total return(i) (2.30%)(j) 4.27% 5.12% 1.00% 1.92% -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (g) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Nov. 30, 2008 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.88% for the year ended May 31, 2008. (h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 42% for the six months ended Nov. 30, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Nov. 30, 2008 (Unaudited). 145 RiverSource Short Duration U.S. Government Fund - Class B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005 Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06(b) .15(b) .15 .12 .08 Net gains (losses) (both realized and unrealized) (.19) .01 .05 (.11) (.03) ----------------------------------------------------------------------------------------------------------------- Total from investment operations (.13) .16 .20 .01 .05 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.15) (.15) (.12) (.08) ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $130 $159 $216 $338 $588 ----------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.79%(e) 1.80% 1.79% 1.82% 1.76% ----------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) 1.65%(e) 1.65% 1.64% 1.64% 1.68% ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.72%(e) 3.18% 3.23% 2.50% 1.73% ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(h) 118% 209% 168% 194% 169% ----------------------------------------------------------------------------------------------------------------- Total return(i) (2.67%)(j) 3.48% 4.34% .26% 1.16% -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (g) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Nov. 30, 2008 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.64% for the year ended May 31, 2008. (h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 42% for the six months ended Nov. 30, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Nov. 30, 2008 (Unaudited). 146 RiverSource Short Duration U.S. Government Fund - Class C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended May 31, 2008(k) 2008 2007 2006 2005 Net asset value, beginning of period $4.74 $4.73 $4.68 $4.79 $4.82 ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06(b) .15(b) .15 .12 .08 Net gains (losses) (both realized and unrealized) (.19) .02 .05 (.11) (.03) ----------------------------------------------------------------------------------------------------------------- Total from investment operations (.13) .17 .20 .01 .05 ----------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.16) (.15) (.12) (.08) ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.55 $4.74 $4.73 $4.68 $4.79 ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $12 $10 $10 $15 $24 ----------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.79%(e) 1.80% 1.80% 1.83% 1.77% ----------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) 1.65%(e) 1.65% 1.64% 1.64% 1.68% ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.70%(e) 3.18% 3.24% 2.51% 1.73% ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(h) 118% 209% 168% 194% 169% ----------------------------------------------------------------------------------------------------------------- Total return(i) (2.67%)(j) 3.49% 4.34% .26% 1.16% -----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (g) Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Nov. 30, 2008 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.64% for the year ended May 31, 2008. (h) Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 42% for the six months ended Nov. 30, 2008. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Nov. 30, 2008 (Unaudited). 147 EXHIBIT A FORM OF AGREEMENT AND PLAN OF REORGANIZATION This Agreement and Plan of Reorganization dated as of , 2009 (the "Agreement") is between each selling entity identified in Schedule A hereto (each a "Selling Corporation")(1), on behalf of each series thereof identified in Schedule A hereto as a Selling Fund (each a "Selling Fund"), each corresponding buying entity identified in Schedule A hereto (each a "Buying Corporation")(2), on behalf of each series thereof identified in Schedule A hereto as the corresponding Buying Fund (each a "Buying Fund"), and RiverSource Investments, LLC (solely for the purposes of Sections 3c and 11 of the Agreement). This Agreement shall be treated for all purposes as if each reorganization between a Selling Fund and its corresponding Buying Fund contemplated hereby had been the subject of a separate agreement. As context requires a Buying Corporation or Selling Corporation that is not organized as a series fund and that may not be considered or meet the definition of "Buying Fund" and "Selling Fund" as set forth above, may be referred to as a "Buying Fund" or a "Selling Fund," respectively, for purposes of this Agreement. In consideration of their mutual promises, the parties agree as follows: 1. SHAREHOLDER APPROVAL. Each Selling Fund will call a meeting of its shareholders for the purpose of approving the Agreement and the transactions it contemplates (each a "Reorganization"). Each Buying Fund agrees to furnish data and information, as reasonably requested, for the proxy statement to be furnished to shareholders of the corresponding Selling Fund. 2. REORGANIZATION. a. Plan of Reorganization. Each Reorganization will be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). At the Closing, each Selling Corporation will convey all of the assets of each Selling Fund to the corresponding Buying Fund. Each Buying Fund will assume all liabilities of the corresponding Selling Fund. At the Closing, each Buying Corporation will deliver shares of each Buying Fund, including fractional shares, to the corresponding Selling Corporation on behalf of the corresponding Selling Fund. The number of shares will be determined by dividing the value of the net assets attributable to each class of shares of each Selling Fund, computed as described in paragraph 3(a), by the net asset value of one share of the corresponding class of the corresponding Buying Fund, computed as described in paragraph 3(b). Each Selling Fund will not pay a sales charge on the receipt of the corresponding Buying Fund's shares in exchange for the assets of such Selling Fund. In addition, the shareholders of each Selling Fund will not pay a sales charge on distribution to them of shares of the corresponding Buying Fund. b. Closing and Effective Time of the Reorganization. The Reorganization and all related acts necessary to complete the Reorganization (the "Closing") will occur on the first day on which the New York Stock Exchange (the "NYSE") is open for business following approval of shareholders of each Selling Fund and receipt of all necessary regulatory approvals, or such later date as the officers of the Selling Corporation and Buying Corporation may agree. 3. VALUATION OF NET ASSETS. a. The net asset value of each Selling Fund will be computed as of the close of regular trading on the NYSE on the business day immediately preceding the day of Closing (the "Valuation Date") using the valuation procedures set forth in the corresponding Buying Fund's then current prospectus. b. The net asset value per share of shares of each Buying Fund will be determined as of the close of regular trading on the NYSE on the Valuation Date, using the valuation procedures in each Buying Fund's then current prospectus. c. At the Closing, each Selling Fund will provide the corresponding Buying Fund with a copy of the computation showing the valuation of the net asset value per share of such Selling Fund on the Valuation Date, and each Buying Fund will provide the corresponding Selling Fund with a copy of the computation showing the determination of the net asset value per share of such Buying Fund on the Valuation Date. Both computations will be certified by an officer of RiverSource Investments, LLC, the investment manager. ---------- (1) The Selling Corporation for the Reorganization of Seligman Emerging Markets Fund, Seligman Global Growth Fund and Seligman International Growth Fund is a Maryland corporation. The Selling Corporation for the Reorganization of Seligman High-Yield Fund and Seligman U.S. Government Securities Fund is a Massachusetts business trust. Seligman Core Fixed Income Fund, Inc. and Seligman Income and Growth Fund, Inc. are each Maryland Corporations. (2) The Buying Corporation for each Buying Fund, RiverSource Diversified Bond Fund, Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund, RiverSource High Yield Bond Fund, RiverSource Balanced Fund, RiverSource Partners International Select Growth Fund and RiverSource Short Duration U.S. Government Fund, is a Minnesota corporation. A.1 4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND. a. On the date of the Closing, each Selling Corporation will liquidate each Selling Fund and distribute shares of each class of the corresponding Buying Fund to the shareholders of record of such Selling Fund's corresponding class. Each Buying Fund will establish shareholder accounts in the names of each corresponding Selling Fund shareholder, representing the respective pro rata number of full and fractional shares of such class of the Buying Fund due to each such shareholder. All issued and outstanding shares of each Selling Fund will simultaneously be cancelled on the books of each Selling Corporation. Each Buying Fund or its transfer agent will establish shareholder accounts in accordance with instructions from the corresponding Selling Corporation. b. Immediately after the close of business on the Valuation Date, the share transfer books of each Selling Corporation relating to each Selling Fund will be closed and no further transfer of shares will be made. c. Promptly after the Closing, each Buying Fund or its transfer agent will notify each shareholder of the corresponding Selling Fund of the number of shares distributed to the shareholder and confirm the registration in the shareholder's name. d. As promptly as practicable after the Closing, and in no event later than twelve months from the date of the Closing, each Selling Fund will be dissolved. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION. With respect to each Reorganization, the Buying Corporation represents and warrants to the Selling Fund as follows: a. Organization, Existence, etc. The Buying Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Buying Corporation, or in the case of separate series funds, the buying Corporation, of which the Buying Fund is a series, is registered under the Investment Company Act of 1940 (the "1940 Act") as an open-end, management investment company. c. Capitalization. The Buying Corporation has authorized capital of 10,000,000,000 shares of common stock, par value $0.01 per share. All of the outstanding shares of the Buying Corporation have been duly authorized and are validly issued, fully paid and non-assessable. Since the Buying Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The Buying Fund's audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi- annual financial statements, if any (the "Buying Fund Financial Statements"), fairly present the financial position of the Buying Fund and the results of its operations and changes in its net assets for the periods shown. e. Shares to be Issued Upon Reorganization. The shares to be issued in connection with the Reorganization will be duly authorized and, at the time of the Closing, will be validly issued, fully paid and non- assessable. f. Authority Relative to the Agreement. The Buying Corporation has the power to enter into and carry out the obligations described in this Agreement. The Agreement and the transactions contemplated by it have been duly authorized by the Board of Directors of the Buying Corporation and no other proceedings by the Buying Corporation or the Buying Fund are necessary. g. No Violation. The Buying Corporation is not in violation of its Articles of Incorporation or By-Laws (the "Articles") or in default in the performance of any material agreement to which it is a party. The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with, or constitute a breach of, any material contract or other instrument to which the Buying Fund is subject. The transactions will not result in any violation of the provisions of the Articles or any law, administrative regulation or administrative or court decree applicable to the Buying Fund. h. Liabilities. The Buying Fund has no known liabilities of a material amount, contingent or otherwise, other than liabilities disclosed in the Buying Fund Financial Statements, liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi- annual financial statements, or liabilities previously disclosed to the Selling Fund. i. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Buying Fund, threatened, that would materially and adversely affect the Buying Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Buying Fund knows of no facts that might form the basis for the A.2 institution of any such litigation, proceeding or investigation and the Buying Fund is not a party to or subject to the provisions of any order, decree or judgment. j. Contracts. Except for contracts and agreements previously disclosed to the Selling Corporation, the Buying Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. k. Regulated Investment Company Qualification. The Buying Fund has qualified and met the requirements for treatment as a "regulated investment company" within the meaning of Section 851 of the Code with respect to each taxable year since commencement of its operations and will continue to meet such requirements and to so qualify at all times through the Closing. l. Taxes. As of the Closing, the Buying Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Selling Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Selling Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. m. Registration Statement. The Buying Fund will file a registration statement on Form N-14 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933 (the "1933 Act") relating to the shares to be issued in the Reorganization. At the time the Registration Statement becomes effective, at the time of the shareholders' meeting described in paragraph 1 and at the Closing, the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. However, none of the representations and warranties in this subsection apply to statements in, or omissions from, the Registration Statement made in reliance on information furnished by the Selling Fund for use in the Registration Statement. n. Business Activities. The Buying Fund will operate its business in the ordinary course between the date hereof and the date of the Closing, it being understood that such ordinary course of business will include regular and customary periodic dividends and distributions and any other distribution that may be advisable. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION. With respect to each Reorganization, the Selling Corporation represents and warrants to the Buying Fund as follows: a. Organization, Existence, etc. For Seligman Core Fixed Income Fund, Inc., Seligman Income and Growth Fund, Inc., Seligman Emerging Markets Fund, Seligman Global Growth Fund and Seligman International Growth Fund, the Selling Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Maryland and has the power to carry on its business as it is now being conducted. For Seligman High-Yield Fund and Seligman U.S. Government Securities Fund, the Selling Corporation is a business trust duly organized, validly existing and in good standing under the laws of the commonwealth of Massachusetts and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Selling Corporation, or in the case of a separate series funds, the Selling Corporation, of which the Selling Fund is a series, is registered under the 1940 Act as an open- end, management investment company. c. Capitalization. The Selling Corporation has authorized capital as follows: Seligman Core Fixed Income Fund, Inc. has 1,000,000,000 shares of common stock, par value $0.001 per share; Seligman Global Fund Series, Inc. has 2,000,000,000 shares of common stock, par value $0.001, of which 400,000,000 shares are authorized for each of Seligman Emerging Markets Fund, Seligman Global Growth Fund and Seligman International Growth Fund; Seligman Income and Growth Fund, Inc. has 500,000,000 shares of common stock, par value $1.00; and Seligman High-Yield Fund and Seligman U.S. Government Securities Fund each have an unlimited number of shares of common stock, par value $0.001. All of the outstanding shares have been duly authorized and are validly issued, fully paid and non-assessable. Since the Selling Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The Selling Fund's audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi- annual financial statements, if any (the "Selling Fund Financial Statements"), fairly present the financial position of the Selling Fund, and the results of its operations and changes in its net assets for the periods shown. e. Authority Relative to the Agreement. The Selling Corporation has the power to enter into and to carry out its obligations under this Agreement. The Agreement and the transactions contemplated by it have been duly authorized A.3 by the Board of Directors of the Selling Corporation and no other proceedings by the Selling Corporation or the Selling Fund are necessary, other than the approval of shareholders contemplated in paragraph 1. f. No Violation. The Selling Corporation is not in violation of its Articles or Declaration of Trust, as applicable, or in default in the performance of any material agreement to which it is a party or in default in the performance of any material agreement to which it is a party). The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with or constitute a breach of, any material contract to which the Selling Fund is subject. The transactions will not result in any violation of the provisions of the Articles or Declaration of Trust, as the case may be, or any law, administrative regulation or administrative or court decree applicable to the Selling Fund. g. Liabilities. The Selling Fund has no known liabilities of a material amount, contingent or otherwise, other than liabilities disclosed in the Selling Fund Financial Statements, liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi- annual financial statements, or liabilities previously disclosed to the Buying Fund. h. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Selling Fund, threatened, that would materially and adversely affect the Selling Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Selling Fund knows of no facts that might form the basis for the institution of any such litigation, proceeding or investigation and is not a party to or subject to the provisions of any order, decree or judgment. i. Contracts. Except for contracts and agreements previously disclosed to the Buying Corporation, the Selling Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. j. Regulated Investment Company Qualification. The Selling Fund has qualified and met the requirements for treatment as a "regulated investment company" within the meaning of Section 851 of the Code with respect to each taxable year since commencement of its operations and will continue to meet such requirements and to so qualify at all times through the Closing. k. Taxes. As of the Closing, the Selling Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Buying Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Buying Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. l. Fund Securities. All securities listed in the schedule of investments of the Selling Fund as of the Closing will be owned by the Selling Fund free and clear of any encumbrances, except as indicated in the schedule. m. Registration Statement. The Selling Fund will cooperate with the Buying Fund and will furnish information relating to the Selling Corporation and the Selling Fund required in the Registration Statement. At the time the Registration Statement becomes effective, at the time of the shareholders' meeting described in paragraph 1 and at the Closing, the Registration Statement, as it relates to the Selling Corporation or the Selling Fund, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. However, the representations and warranties in this subsection apply only to statements in or omissions from the Registration Statement made in reliance upon information furnished by the Selling Corporation or the Selling Fund for use in the Registration Statement. n. Provision of Books and Records. The Selling Fund will provide its books and records to the corresponding Buying Fund for purposes of preparing any tax returns required by law to be filed after the Closing date, including (1) the tax return for the period ending on the Closing date, and (2) the tax return for the period beginning the day after the Closing and ending the earlier of the current fiscal year-end of the corresponding Buying Fund and the taxable year end chosen by the corresponding Buying Fund following the Reorganization. o. Business Activities. The Selling Fund will operate its business in the ordinary course between the date hereof and the date of the Closing, it being understood that such ordinary course of business will include regular and customary periodic dividends and distributions and any other distribution that may be advisable. 7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of the Buying Corporation with respect to each Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. A.4 b. Representations, Warranties and Agreements. The Selling Corporation and the Selling Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the date of the Closing. An officer of the Selling Corporation will provide a certificate to each Buying Fund confirming that, as of the Closing, the representations and warranties set forth in Section 6 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the corresponding Selling Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Selling Corporation, and delivered to such Buying Fund on the date of the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Sections 5(m) and 6(m) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Opinion of Counsel. The Buying Corporation will have received an opinion of counsel for the Selling Corporation, dated as of the date of the Closing, to the effect that: (i) the Selling Corporation is a corporation duly organized and validly existing under the laws of the state of Maryland; (ii) each Selling Fund is a series of the Selling Corporation, an open-end management investment company registered under the 1940 Act, as applicable; (iii) this Agreement and the Reorganization has been duly authorized and approved by all requisite action of the Selling Corporation and each Selling Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Selling Corporation. e. Declaration of Dividend. The Selling Fund will have declared, prior to the Closing, a dividend or dividends, which, together with all previous such dividends, shall have the effect of distributing to the Selling Fund shareholders (i) all of the excess of (x) the Selling Fund's investment income excludable from gross income under Section 103 of the Code over (y) the Selling Fund's deductions disallowed under Sections 265 and 171 of the Code, (ii) all of the Selling Fund's investment company taxable income as defined in Section 852 of the Code (in each case computed without regard to any deduction for dividends paid) and (iii) all of the Selling Fund's net capital gain realized (after reduction for any capital loss carryover), in each case for the current taxable year (which will end on the Closing date) and any preceding taxable years for which such a dividend is eligible to be made under Section 855 of the Code. 8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations of the Selling Corporation with respect to each Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. b. Representations, Warranties and Agreements. The Buying Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the date of the Closing. An officer of the Buying Corporation will provide a certificate to each Selling Fund confirming that, as of the Closing, the representations and warranties set forth in Section 5 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the corresponding Buying Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Buying Corporation, and delivered to such Selling Fund on or prior to the last business day before the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Sections 5(m) and 6(m) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Opinion of Counsel. The Selling Corporation will have received the opinion of counsel for the Buying Corporation, dated as of the date of the Closing, to the effect that: (i) the Buying Corporation is a corporation duly organized and validly existing under the laws of the state of Minnesota; (ii) each Buying Fund is a series of the Buying Corporation, an open-end management investment company registered under the 1940 Act; (iii) this Agreement and the Reorganization has been authorized and approved by all requisite action of the Buying Corporation and each Buying Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Buying Corporation; and (iv) the shares to be issued in the Reorganization are duly authorized and upon issuance in accordance with this Agreement will be validly issued, fully paid and non-assessable shares of each Buying Fund. A.5 9. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION AND THE BUYING CORPORATION. The obligations of each of the Selling Corporation and the Buying Corporation with respect to each Reorganization are subject to the satisfaction of the following conditions: Tax Opinion. With respect to the Reorganization between a Selling Fund and its corresponding Buying Fund, the Selling Fund shall have received an opinion of Ropes & Gray LLP satisfactory to such Selling Fund, and the Buying Fund shall have received an opinion of Ropes & Gray LLP satisfactory to such Buying Fund, each substantially to the effect that, on the basis of existing provisions of the Code, Treasury regulations promulgated thereunder, current administrative rules, pronouncements and court decisions, although the matter is not free from doubt, generally for federal income tax purposes: a. The acquisition by the Buying Fund of the assets of the Selling Fund in exchange for the Buying Fund's assumption of all liabilities of the Selling Fund and delivery to the Selling Fund of the acquisition shares, followed by the distribution by the Selling Fund of the acquisition shares to the shareholders of the Selling Fund in exchange for their Selling Fund shares, all as provided in paragraph 2(a) and 4(a) hereof, will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Selling Fund and the Buying Fund will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code; b. No gain or loss will be recognized by the Selling Fund upon (i) the transfer of its assets to the Buying Fund in exchange for the acquisition shares and the assumption by the Buying Fund of all liabilities of the Selling Fund or (ii) the distribution of the acquisition shares by the Selling Fund to its shareholders in liquidation, as contemplated in paragraph 4(a) hereof; c. No gain or loss will be recognized by the Buying Fund upon receipt of the assets of the Selling Fund in exchange for acquisition shares and the assumption by the Buying Fund of all liabilities of the Selling Fund as contemplated in paragraph 2(a) hereof; d. The tax basis in the hands of the Buying Fund of the assets of the Selling Fund transferred to the Buying Fund in the Reorganization will be the same as the tax basis of such assets in the hands of the Selling Fund immediately prior to the transfer; e. The holding periods of the assets of the Selling Fund in the hands of the Buying Fund will include the periods during which such assets were held by the Selling Fund; f. No gain or loss will be recognized by the Selling Fund's shareholders upon the exchange of their shares of the Selling Fund for the acquisition shares; g. The aggregate tax basis of the acquisition shares the Selling Fund shareholder receives in the Reorganization will be the same as the aggregate tax basis of his or her Selling Fund's shares exchanged therefor; h. The Selling Fund shareholder's holding period for the acquisition shares will include the period for which he or she held the Selling Fund's shares exchanged therefor, provided that the shareholder held such Selling Fund's shares as capital assets on the date of the exchange; and i. The Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. Ropes & Gray LLP will express no view with respect to the effect of the Reorganization on any transferred asset as to which any unrealized gain or loss is required to be recognized under federal income tax principles (i) at the end of a taxable year or upon the termination thereof or (ii) upon the transfer of such asset regardless of whether such a transfer would otherwise be a non-taxable transaction. Each opinion will be based on certain factual certifications made by officers of the Selling Fund and the Buying Fund, and will also be based on customary assumptions. 10. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS. a. This Agreement may be amended in writing if authorized by the respective Boards of Directors. The Agreement may be so amended at any time before or after the shareholder approval contemplated by paragraph 1 is obtained. b. At any time prior to the Closing, any of the parties may waive in writing (i) any inaccuracies in the representations and warranties made to it and (ii) compliance with any of the covenants or conditions made for its benefit. c. Each party hereto may terminate this Agreement at any time prior to the Closing by notice to the other party if a material condition to its performance or a material covenant of the other party is not fulfilled on or before the date specified for its fulfillment or a material breach of this Agreement is made by the other party and is not cured. A.6 d. This Agreement may be terminated by any party at any time prior to the Closing, whether before or after approval by the shareholders of each Selling Fund, without any liability on the part of any party or its respective directors, officers, or shareholders, on written notice to the other party, and shall be terminated without liability as of the close of business on , 2009, or a later date agreed upon by the officers of the Selling Corporation and the Buying Corporation, if the Closing is not effected on or prior to that date. e. The representations, warranties and covenants contained in this Agreement, or in any document delivered in connection with this Agreement, will survive the Reorganization. 11. EXPENSES. All fees paid to governmental authorities for the registration or qualification of the acquisition shares and all transfer agency costs related to the acquisition shares shall be allocated to the relevant Buying Fund. All (i) legal, accounting and other fees and expenses associated with the preparation, printing and mailing of any shareholder communications, including the proxy statement/prospectus that forms a part of the Registration Statement, and any filings with the Securities and Exchange Commission and/or other governmental authorities in connection with the Reorganization and (ii) all fees and expenses of any proxy solicitation firm retained in connection with the Reorganization shall be allocated to the relevant Selling Fund. All of the other expenses of each Reorganization, including without limitation all other accounting, legal and custodial expenses, shall be allocated equally between each Selling Fund and the corresponding Buying Fund. Notwithstanding the foregoing, the fees and expenses allocated to any Selling Fund will not exceed the excess of (i) the total anticipated reduction in fees and expenses expected to be borne by such Selling Fund over the first twelve months following its Reorganization over (ii) the cost expected to be borne by such Selling Fund related to the discontinuance of operations of Seligman Data Corp. Any fees and expenses that would have been allocable to a Selling Fund but for the preceding sentence and all expenses allocable to a Buying Fund related to the Reorganization, as described above, will be borne by RiverSource Investments, LLC. Each Selling Fund will bear the full cost of any brokerage or other transaction costs associated with the sale or purchase of portfolio securities in connection with its Reorganization. Should any Reorganization fail to occur, RiverSource Investments, LLC will bear all costs associated with the Reorganization. 12. GENERAL. a. Headings. The headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement. Nothing in this Agreement is intended to confer upon any other person any rights or remedies by reason of this Agreement. b. Governing Law. This Agreement will be governed by the laws of the state of Minnesota. IN WITNESS WHEREOF, each of the parties, individually and not jointly, has caused this Agreement to be signed. SELIGMAN CORE FIXED INCOME FUND, INC. SELIGMAN GLOBAL FUND SERIES, INC., on behalf of Seligman Emerging Markets Fund Seligman Global Growth Fund Seligman International Growth Fund SELIGMAN HIGH INCOME FUND SERIES, on behalf of Seligman High-Yield Fund Seligman U.S. Government Securities Fund SELIGMAN INCOME AND GROWTH FUND, INC. By: -------------------------- Name: Patrick T. Bannigan Title: President A.7 RIVERSOURCE DIVERSIFIED INCOME SERIES, INC., on behalf of RiverSource Diversified Bond Fund RIVERSOURCE GLOBAL SERIES, INC., on behalf of Threadneedle Emerging Markets Fund Threadneedle Global Equity Fund RIVERSOURCE HIGH YIELD INCOME SERIES, INC., on behalf of RiverSource High Yield Bond Fund RIVERSOURCE INVESTMENT SERIES, INC., on behalf of RiverSource Balanced Fund RIVERSOURCE INTERNATIONAL MANAGERS SERIES, INC., on behalf of RiverSource Partners International Select Growth Fund RIVERSOURCE GOVERNMENT INCOME SERIES, INC., on behalf of RiverSource Short Duration U.S. Government Fund By: -------------------------- Name: Patrick T. Bannigan Title: President The undersigned is a party to this Agreement for the purposes of Section 3c and 11 only. RIVERSOURCE INVESTMENTS, LLC By: -------------------------- Name: William F. Truscott Title: President and Chief Investment Officer A.8 SCHEDULE A
---------------------------------------------------------------------------------------------------------- SELLING ENTITY SELLING FUND BUYING ENTITY BUYING FUND ---------------------------------------------------------------------------------------------------------- Seligman Core Seligman Core Fixed Income RiverSource Diversified RiverSource Diversified Fixed Income Fund, Inc. Income Series, Inc. Bond Fund Fund, Inc. ---------------------------------------------------------------------------------------------------------- Seligman Global Seligman Emerging Markets RiverSource Global Series, Threadneedle Emerging Fund Series, Fund Inc. Markets Fund Inc. ---------------------------------------------------------------------------------------------------------- Seligman Global Seligman Global Growth RiverSource Global Series, Threadneedle Global Equity Fund Series, Fund Inc. Fund Inc. ---------------------------------------------------------------------------------------------------------- Seligman High Seligman High-Yield Fund RiverSource High Income RiverSource High Yield Income Fund Series, Inc. Bond Fund Series (a Massachusetts business trust) ---------------------------------------------------------------------------------------------------------- Seligman Income Seligman Income and Growth RiverSource Investment RiverSource Balanced Fund and Growth Fund, Fund, Inc. Series, Inc. Inc. ---------------------------------------------------------------------------------------------------------- Seligman Global Seligman International RiverSource International RiverSource Partners Fund Series, Growth Fund Managers Series, Inc. International Select Inc. Growth Fund ---------------------------------------------------------------------------------------------------------- Seligman High Seligman U.S. Government RiverSource Government RiverSource Short Duration Income Fund Securities Fund Income Series, Inc. U.S. Government Fund Series (a Massachusetts business trust) ----------------------------------------------------------------------------------------------------------
A.9 THIS PAGE LEFT BLANK INTENTIONALLY EXHIBIT B ADDITIONAL INFORMATION APPLICABLE TO THE BUYING FUNDS Below is information regarding the Buying Funds. All references to a Fund or the Funds refer to a Buying Fund or the Buying Funds, respectively. OTHER INVESTMENT STRATEGIES AND RISKS Other Investment Strategies. In addition to the principal investment strategies previously described, the Fund may utilize investment strategies that are not principal investment strategies, including investment in affiliated and nonaffiliated pooled investment vehicles (including mutual funds and exchange traded funds ("ETFs"), also referred to as "acquired funds") ownership of which results in the Fund bearing its proportionate share of the acquired funds' fees and expenses. Although ETFs are designed to replicate the price and yield of a specified market index, there is no guarantee that an ETF will track its specified market index, which may result in a loss. For more information on strategies and holdings, and the risks of such strategies, including derivative instruments that the Fund may use, see the Fund's annual and semiannual reports and the Reorganization SAI. Unusual Market Conditions. During unusual market conditions, the Fund may temporarily invest more of its assets in money market securities than during normal market conditions. Although investing in these securities would serve primarily to attempt to avoid losses, this type of investing also could prevent the Fund from achieving its investment objective. During these times, the portfolio managers may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. Instead of investing in money market securities directly, the Fund may invest in shares of an affiliated money market fund. See "Cash Reserves" under the section "General Information" for more information. For RiverSource Partners International Select Growth Fund: Change in Subadviser(s). From time to time, the investment manager may add or change unaffiliated subadvisers. See "Additional Management Information, Manager of Managers Exemption." The date the current Subadviser(s) began serving the Fund is set forth under "Fund Management and Compensation, Investment Manager." When applicable, performance of the Fund prior to the date the current Subadviser(s) began serving was achieved by different subadviser(s). Similarly, the portfolio turnover rate shown in the "Financial Highlights" applies to the subadviser(s) serving during the relevant time- period. A change in subadviser(s) may result in increased portfolio turnover, as noted under "Portfolio Turnover." Multi-Manager Risk. While RiverSource Investments, as the Fund's investment manager, monitors each subadviser and the overall management of the Fund, to the extent the Fund has multiple subadvisers, each subadviser makes investment decisions independently from the other subadvisers. It is possible that the security selection process of one subadviser will not complement that of the other subadvisers. As a result, the Fund's exposure to a given security, industry, sector or market capitalization could be smaller or larger than if the Fund were managed by a single subadviser, which could affect the Fund's performance. Securities Transaction Commissions. Securities transactions involve the payment by the Fund of brokerage commissions to broker-dealers, on occasion as compensation for research or brokerage services (commonly referred to as "soft dollars"), as the portfolio managers buy and sell securities for the Fund in pursuit of its objective. A description of the policies governing the Fund's securities transactions and the dollar value of brokerage commissions paid by the Fund are set forth in the Reorganization SAI. Funds that invest primarily in fixed income securities, including RiverSource Diversified Bond Fund, RiverSource High Yield Bond Fund and RiverSource Short Duration U.S. Government Fund, do not typically generate brokerage commissions that are used to pay for research or brokerage services. The brokerage commissions set forth in the Reorganization SAI do not include implied commissions or mark-ups (implied commissions) paid by the Fund for principal transactions (transactions made directly with a dealer or other counterparty), including most fixed income securities (and certain other instruments, including derivatives). Brokerage commissions do not reflect other elements of transaction costs, including the extent to which the Fund's purchase and sale transactions may cause the market to move and change the market price for an investment. Although brokerage commissions and implied commissions are not reflected in the expense table under "Fees and Expenses," they are reflected in the total return of the Fund. Portfolio Turnover. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of brokerage commissions paid or mark-ups to broker-dealers that the Fund pays when it buys and sells securities. For RiverSource Partners International Select Growth Fund, a change in a subadviser may result in increased portfolio turnover, which increase may be substantial, as the new subadviser realigns the portfolio, or if the subadviser(s) trades portfolio securities more frequently. A realignment or more active strategy could produce higher than expected capital gains. Capital gains and increased brokerage commissions or mark-ups paid to broker-dealers may adversely B.1 affect a fund's performance. The Fund's historical portfolio turnover rate, which measures how frequently the Fund buys and sells investments from year-to- year, is shown in the "Financial Highlights." Directed Brokerage. The Fund's Board has adopted a policy prohibiting the investment manager, or any subadviser, from considering sales of shares of the Fund as a factor in the selection of broker-dealers through which to execute securities transactions. Additional information regarding securities transactions can be found in the Reorganization SAI. FUND MANAGEMENT AND COMPENSATION INVESTMENT MANAGER RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is the investment manager to the RiverSource funds, and is a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise Financial is a financial planning and financial services company that has been offering solutions for clients' asset accumulation, income management and protection needs for more than 110 years. In addition to managing investments for all of the RiverSource funds, RiverSource Investments manages investments for itself and its affiliates. For institutional clients, RiverSource Investments and its affiliates provide investment management and related services, such as separate account asset management, and institutional trust and custody, as well as other investment products. For all of its clients, RiverSource Investments seeks to allocate investment opportunities in an equitable manner over time. See the Reorganization SAI for more information. The Fund pays RiverSource Investments a fee for managing its assets. Under the Investment Management Services Agreement ("IMS Agreement"), the fee for the most recent fiscal year was the following percentage of the Fund's average daily net assets:
PERCENTAGE OF FUND'S FUND AVERAGE DAILY NET ASSETS RiverSource Diversified Bond Fund 0.45% Threadneedle Emerging Markets Fund 1.16% Threadneedle Global Equity Fund 0.83% RiverSource High Yield Bond Fund 0.58% RiverSource Balanced Fund 0.44% RiverSource Partners International Select Growth Fund 0.92% RiverSource Short Duration U.S. Government Fund 0.48%
For Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund, RiverSource Balanced Fund and RiverSource Partners International Select Growth Fund, the fee includes an adjustment under the terms of a performance incentive arrangement. The adjustment is computed by comparing the Fund's performance to the performance of an index of comparable funds published by Lipper Inc. The index against which the Funds' performance is currently measured for purposes of the performance incentive adjustment is the Lipper Emerging Markets Funds Index for Threadneedle Emerging Markets Fund, Lipper Global Funds Index for Threadneedle Global Equity Fund, Lipper Balanced Funds Index for RiverSource Balanced Fund and Lipper International Multi-Cap Growth Funds Index for RiverSource Partners International Select Growth Fund. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.08% of the Fund's average net assets on an annual basis for RiverSource Balanced Fund and 0.12% for Threadneedle Emerging Markets Fund, Threadneedle Global Equity Fund and RiverSource Partners International Select Growth Fund. Under the IMS Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. A discussion regarding the basis for the Board approving the IMS Agreement is available in the Fund's most recent annual or semiannual shareholder report. For Threadneedle Emerging Markets Fund and Threadneedle Global Equity Fund, RiverSource Investments contracts with and compensates Threadneedle International Limited (the "Subadviser" or "Threadneedle") to manage the investment of the Fund's assets. RiverSource Investments monitors the compliance of Threadneedle with the investment objectives and related policies of the Fund, reviews the performance of Threadneedle, and reports periodically to the Board. Threadneedle manages the Fund's assets based upon its experience managing funds with investment goals and strategies substantially similar to those of the Fund. For RiverSource Partners International Select Growth Fund, RiverSource Investments selects, contracts with and compensates Columbia Wanger Asset Management, L.P. ("Columbia WAM") and Principal Global Investors, LLC ("Principal Global") (each a "Subadviser" and together, the "Subadvisers") to manage the investment of the Fund's assets. RiverSource Investments monitors the compliance of Subadvisers with the investment objectives and related policies of the Fund, reviews the performance of Subadvisers, and reports periodically to the Board. Each Subadviser manages the Fund's assets based upon its B.2 experience in managing funds with investment goals and strategies substantially similar to those of the Fund. Columbia WAM, which has served as subadviser to the Fund since September 2001, is located at 227 West Monroe, Suite 3000, Chicago, Illinois. Columbia WAM, subject to the supervision of RiverSource Investments, provides day-to-day management of a portion of the Fund's portfolio, as well as investment research and statistical information under a Subadvisory Agreement with RiverSource Investments. Principal Global, which has served as subadviser to the Fund since April 2006, is located at 801 Grand Avenue, Des Moines, Iowa. Principal Global, subject to the supervision of RiverSource Investments, provides day-to-day management of a portion of the Fund's portfolio, as well as investment research and statistical information under a Subadvisory Agreement with RiverSource Investments. RiverSource Diversified Bond Fund portfolio managers: The portfolio managers responsible for the day-to-day management of the Fund are: Jamie Jackson, CFA, Portfolio Manager - Managed the Fund since 2003. - Leader of the liquid assets sector team. - Joined RiverSource Investments in 2003. - Co-head of U.S. Investment Grade Fixed Income, UBS Global Asset Management, 1997 to 2003. - Began investment career in 1988. - MBA, Marquette University. Tom Murphy, CFA, Portfolio Manager - Managed the Fund since 2003. - Leader of the investment grade corporate bond sector team. - Joined RiverSource Investments in 2002. - Managing Director and Portfolio Manager, BlackRock Financial Management, 2002; various positions, Zurich Scudder, 1992 to 2002. - Began investment career in 1986. - MBA, University of Michigan. Scott Schroepfer, CFA, Portfolio Manager - Managed the Fund since 2008. - Member of the high yield corporate sector team. - Joined RiverSource Investments in 1990. - Began investment career in 1986. - MBA, University of Minnesota. Todd White, Portfolio Manager - Managed the Fund since 2008. - Leader of the structured assets sector team. - Joined RiverSource Investments in 2008. - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed Securities businesses, and North American Head of the Interest Rate business, HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass- Through and Options, Lehman Brothers, 2000 to 2004. - Began investment career in 1986. - BS, Indiana University. The fixed income department of RiverSource Investments is divided into six specialized teams (sector teams), each focused on a specific sector of the fixed income market: liquid assets, high yield corporates, investment grade corporates, municipals, global, and structured assets. Each sector team includes a portfolio manager or portfolio managers and several analysts that select securities and other fixed income instruments within the sector. The Fund's portfolio managers lead or are members of one of these sector teams and also serve on a strategy committee responsible for implementation of the Fund's overall investment strategy, including determination of the Fund's sector allocation and portfolio duration. B.3 Threadneedle Emerging Markets Fund portfolio managers: The portfolio managers who lead the team responsible for the day-to-day management of the Fund are: Julian A.S. Thompson, Portfolio Manager - Managed the Fund since 2000. - Joined Threadneedle in 2003. - Began investment career in 1993 as an Investment Manager for Stewart Ivory, a Scottish investment company, 1993 to 1999. Portfolio Manager, American Express Asset Management International, 1999 to 2003. - BA and Ph.D., Magdalene College, Cambridge University. Jules Mort, Deputy Portfolio Manager - Deputy managed the Fund since 2003. - Joined Threadneedle in 2001 as a fund manager. - Began investment career in 1997 as an Analyst and Portfolio Manager, Baillie Gifford & Co., 1997 to 2001. - BA (Hons), Oxford University 1996. Threadneedle Global Equity Fund portfolio managers: The portfolio managers who lead the team responsible for the day-to-day management of the Fund are: Stephen Thornber, Portfolio Manager - Head of global oil sector. - Managed the Fund since 2003. - Joined Threadneedle in 1993 as a fund manager. - Began investment career in 1987. - BA, Plymouth Polytechnic. Andrew Holliman, CFA, Deputy Portfolio Manager - Deputy managed the Fund since 2008. - Joined Threadneedle in 2004 as a fund manager. - Began investment career in 1997 as an investment analyst and portfolio manager, Baillie Gifford & Co., 1997 to 2004. - BCom (Hons), University of Edinburgh; MSc, University of Stirling. RiverSource High Yield Bond Fund portfolio managers: The portfolio manager responsible for the day-to-day management of the Fund is: Scott Schroepfer, CFA, Portfolio Manager - Managed the Fund since 1999. - Member of the high yield sector team. - Joined RiverSource Investments in 1990. - Began investment career in 1986. - MBA, University of Minnesota. The fixed income department of RiverSource Investments is divided into six sector teams, each of which includes a portfolio manager or portfolio managers and several analysts, and each of which specializes in a specific sector of the fixed income market. Mr. Schroepfer is a member of the team that specializes in the sector in which the Fund primarily invests. The team, led by Jennifer Ponce de Leon, collectively determines portfolio strategy. Ms. Ponce de Leon, who holds an MBA from DePaul University, began her investment career in 1989 and joined RiverSource Investments in 1997. She has been leader of the high yield sector team since 2003. B.4 RiverSource Balanced Fund portfolio managers: The Fund is allocated among equity and fixed income asset classes. The portfolio managers responsible for the day- to-day management of the equity portion of the Fund are: Warren Spitz, Senior Portfolio Manager - Managed the Fund since 2008. - Joined RiverSource Investments in 2000 as a Senior Portfolio Manager. - Portfolio Manager, Prudential Global Asset Management, 1987 to 2000. - Began investment career in 1984. - MBA, Wharton School, University of Pennsylvania. Steve Schroll, Portfolio Manager - Managed the Fund since 2008. - Joined RiverSource Investments in 1998 as a Senior Security Analyst. - Senior Equity Analyst, Piper Jaffray, 1988 to 1998; Equity Analyst, First Asset Management, 1985 to 1988; Equity Analyst, Dain Rauscher, 1981 to 1985. - Began investment career in 1981. - MBA, University of Minnesota. Laton Spahr, CFA, Portfolio Manager - Managed the Fund since 2008. - Joined RiverSource Investments in 2001 as a Security Analyst. - Sector Analyst, Holland Capital Management, 2000 to 2001; Statistical Research Intern, Friess Associates, 1998 to 1999. - Began investment career in 1998. - MS, University of Wisconsin, Applied Security Analysis Program. Paul Stocking, Portfolio Manager - Managed the Fund since 2008. - Joined RiverSource Investments in 1995 as a Senior Equity Analyst. - Vice President, JP Morgan Securities, 1987 to 1995; Investment Banking. - Began investment career in 1987. - MBA, University of Chicago. The portfolio managers responsible for the day-to-day management of the fixed income portion of the Fund are: Jamie Jackson, CFA, Portfolio Manager - Managed the Fund since 2003. - Leader of the liquid assets sector team. - Joined RiverSource Investments in 2003. - Co-head of U.S. Investment Grade Fixed Income, UBS Global Asset Management, 1997 to 2003. - Began investment career in 1988. - MBA, Marquette University. Tom Murphy, CFA, Portfolio Manager - Managed the Fund since 2003. - Leader of the investment grade corporate bond sector team. - Joined RiverSource Investments in 2002. - Managing Director and Portfolio Manager, BlackRock Financial Management, in 2002, and various positions at Zurich Scudder from 1992 to 2002. - Began investment career in 1986. - MBA, University of Michigan. B.5 Scott Schroepfer, CFA, Portfolio Manager - Managed the Fund since 2008. - Member of the high yield corporate sector team. - Joined RiverSource Investments in 1990. - Began investment career in 1986. - MBA, University of Minnesota. Todd White, Portfolio Manager - Managed the Fund since 2008. - Leader of the structured assets sector team. - Joined RiverSource Investments in 2008. - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed Securities businesses, and North American Head of the Interest Rate business, HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass- Through and Options, Lehman Brothers, 2000 to 2004. - Began investment career in 1986. - BS, Indiana University. The fixed income department of RiverSource Investments is divided into six specialized teams (sector teams), each focused on a specific sector of the fixed income market: liquid assets, high yield corporates, investment grade corporates, municipals, global, and structured assets. Each sector team includes a portfolio manager or portfolio managers and several analysts that select securities and other fixed income instruments within the sector. The Fund's portfolio managers lead or are members of one of these sector teams and also serve on a strategy committee responsible for implementation of the Fund's overall investment strategy, including determination of the Fund's sector allocation and portfolio duration. RiverSource Partners International Select Growth Fund portfolio managers: The portfolio managers responsible for the day-to-day management of the portion of the Fund allocated to Columbia WAM are: - P. Zachary Egan, co-portfolio manager, is a vice president of Columbia Acorn Trust. Mr. Egan is also the Director of International Research of Columbia WAM since December 2004. Mr. Egan has been a member of the international team since 1999 and a research fellow with the Robert Bosch Foundation in Stuttgart, Germany prior to that time. Mr. Egan is a CFA and earned his MA degree from the University of Chicago and his BA degree from Middlebury College. - Louis J. Mendes, co-portfolio manager, is a vice president of Columbia Acorn Trust. Mr. Mendes has been a member of the international team since 2001 and an analyst and portfolio manager with Merrill Lynch Investment Managers specializing in Asian equity markets prior to that time. Mr. Mendes is a CFA and earned his MA degree in International Management from the American Graduate School of International Management in Phoenix and BA degree from Columbia University. The portfolio managers responsible for the day-to-day management of the portion of the Fund allocated to Principal Global are: - John Pihlblad, CFA -- Portfolio Manager. Mr. Pihlblad is a portfolio manager at Principal Global Investors. He joined the firm in 2000 and led the development of Principal Global Investors' Global Research Platform. Mr. Pihlblad has over 29 years investment experience, including 17 years of experience in managing international equities. Previously, he was a partner and co-founder of GlobeFlex Capital in San Diego where he was responsible for developing and implementing the investment process for both domestic and international equity products. Prior to that, Mr. Pihlblad was a portfolio manager at Nicholas Applegate in San Diego, where he developed one of the first global systematic investment processes in the industry. Mr. Pihlblad was also director of equity research at Boatmen's Trust Company, Kansas City, Mo., where he developed a comprehensive quantitative portfolio management platform. Mr. Pihlblad received a bachelor's degree from Westminster College. He holds the Chartered Financial Analyst designation and is a member of the CFA Institute. - Steven Larson, CFA -- Portfolio Manager. Mr. Larson is a portfolio manager at Principal Global Investors. He is responsible for co-managing Principal's international growth and value equity portfolios. He is also active in company research with an emphasis on the utilities sector. Mr. Larson joined the firm in 2001 and participated in the early integration of the systematic (quantitative fundamental) and traditional fundamental (analyst-driven) research efforts, as well as the initial phase of backtesting research to determine which factors drive stock prices within each region and sector. Previously, Mr. Larson led the investment management oversight and sub-advisor selection process for the $80 billion Wells Fargo mutual fund family. Prior to joining Wells Fargo, he was vice president and manager of the Investment Analytics Group at First American Asset Management, U.S. Bancorp's institutional asset manager. Mr. Larson received an MBA in finance from the University of B.6 Minnesota's Carlson School of Management and a bachelor's degree in finance from Drake University. He holds the Chartered Financial Analyst designation and is a member of the CFA Institute. RiverSource Short Duration U.S. Government Fund portfolio managers: The portfolio managers responsible for the day-to-day management of the Fund are: Jamie Jackson, CFA, Portfolio Manager - Managed the Fund since 2003. - Leader of the liquid assets sector team. - Joined RiverSource Investments in 2003. - Co-head of U.S. Investment Grade Fixed Income, UBS Global Asset Management, 1997 to 2003. - Began investment career in 1988. - MBA, Marquette University. Todd White, Portfolio Manager - Managed the Fund since 2008. - Leader of the structured assets sector team. - Joined RiverSource Investments in 2008. - Managing Director, Global Head of the Asset-Backed and Mortgage-Backed Securities businesses, and North American Head of the Interest Rate business, HSBC, 2004 to 2008; Managing Director and Head of Business for Mortgage Pass- Through and Options, Lehman Brothers, 2000 to 2004. - Began investment career in 1986. - BS, Indiana University. The Reorganization SAI provides additional information about portfolio manager compensation, management of other accounts and ownership of shares in the Fund. B.7 THIS SERVICE SECTION IS EFFECTIVE MAY 9, 2009. RIVERSOURCE GROUP OF FUNDS THE RIVERSOURCE GROUP OF FUNDS (EACH INDIVIDUALLY A "FUND" AND, COLLECTIVELY, THE "FUNDS") INCLUDES "RIVERSOURCE" FUNDS, "RIVERSOURCE PARTNERS" FUNDS, "SELIGMAN" FUNDS AND "THREADNEEDLE" FUNDS. (THE RIVERSOURCE FUNDS, RIVERSOURCE PARTNERS FUNDS AND THREADNEEDLE FUNDS MAY BE COLLECTIVELY REFERRED TO AS THE "RIVERSOURCE FUNDS".) THE FUNDS SHARE THE SAME BOARD OF DIRECTORS/TRUSTEES (THE "BOARD") AND SAME POLICIES AND PROCEDURES INCLUDING THOSE SET FORTH IN THE SERVICE SECTION OF THIS PROSPECTUS. FOR EXAMPLE, FOR PURPOSES OF CALCULATING THE INITIAL SALES CHARGE ON THE PURCHASE OF CLASS A SHARES OF A FUND, AN INVESTOR OR FINANCIAL ADVISOR SHOULD CONSIDER THE COMBINED MARKET VALUE OF ALL FUNDS IN THE RIVERSOURCE GROUP OF FUNDS OWNED BY THE INVESTOR AS DEFINED UNDER "INITIAL SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA)." BUYING AND SELLING SHARES The funds are available directly and through broker-dealers, banks and other financial intermediaries or institutions (financial intermediaries), and through certain qualified and non-qualified plans, wrap fee products or other investment products sponsored by financial intermediaries. THESE FINANCIAL INTERMEDIARIES MAY CHARGE YOU ADDITIONAL FEES FOR THE SERVICES THEY PROVIDE AND THEY MAY HAVE DIFFERENT POLICIES NOT DESCRIBED IN THIS PROSPECTUS. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the financial intermediaries through which your shares of the fund are held. Since the fund (and its service providers) may not have a record of your account transactions, you should always contact the financial intermediary through which you purchased or at which you maintain your shares of the fund to make changes to your account or to give instructions concerning your account, or to obtain information about your account. The fund and its service providers, including the distributor and the transfer agent, are not responsible for the failure of one of these financial intermediaries to carry out its obligations to its customers. DESCRIPTION OF SHARE CLASSES INVESTMENT OPTIONS -- CLASSES OF SHARES The funds offer different classes of shares. There are differences among the fees and expenses for each share class. See the "Fees and Expenses" table for more information. Not everyone is eligible to buy every share class. After determining which share classes you are eligible to buy, decide which share class best suits your needs. Your financial advisor can help you with this decision. The following table shows the key features of each share class. B.8 INVESTMENT OPTIONS SUMMARY*
CONTINGENT DEFERRED SALES DISTRIBUTION AND PLAN AVAILABILITY(A) INITIAL SALES CHARGE CHARGE (CDSC) SERVICE FEE(B) ADMINISTRATION FEE ------------------------------------------------------------------------------------------------------------------------------ Class A Available to Yes. Payable at time No.(c) Yes. No. all investors. of purchase. Lower or 0.25% no sales charge for larger investments. ------------------------------------------------------------------------------------------------------------------------------ Class Available to No. Entire purchase Maximum 5% CDSC during Yes. No. B(d)(e)(f) all investors. price is invested in the first year 1.00% shares of the fund. decreasing to 0% after six years. ------------------------------------------------------------------------------------------------------------------------------ Class C(f) Available to No. Entire purchase 1% CDSC may apply if Yes. No. all investors. price is invested in you sell shares within 1.00% shares of the fund. one year after purchase. ------------------------------------------------------------------------------------------------------------------------------ Class I Limited to qualifying No. No. No. No. institutional investors. ------------------------------------------------------------------------------------------------------------------------------ Class R2 Limited to qualifying No. No. Yes. Yes. institutional 0.50% 0.25% investors. ------------------------------------------------------------------------------------------------------------------------------ Class R3 Limited to qualifying No. No. Yes. Yes. institutional 0.25% 0.25% investors. ------------------------------------------------------------------------------------------------------------------------------ Class R4 Limited to qualifying No. No. No. Yes. institutional 0.25% investors. ------------------------------------------------------------------------------------------------------------------------------ Class R5 Limited to qualifying No. No. No. No. institutional investors. ------------------------------------------------------------------------------------------------------------------------------ Class W Limited to qualifying No. No. Yes. No. discretionary managed 0.25% accounts. ------------------------------------------------------------------------------------------------------------------------------ Class Y Limited to qualifying No. No. No. Yes. institutional 0.15% investors. ------------------------------------------------------------------------------------------------------------------------------
* RiverSource Tax-Exempt Money Market Fund offers only Class A shares (a) See "Buying and Selling Shares, Determining which class of shares to purchase" for more information on availability of share classes and eligible investors. See "Buying and Selling Shares, Opening an Account" for information on minimum investment and account balance requirements. (b) For each of Class A, Class B, Class C, Class R2, Class R3 and Class W shares, as applicable, each fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940, as amended, that allows it to pay distribution and shareholder servicing-related expenses for the sale of shares and the servicing of shareholders. This plan has been reviewed and approved by the Board. Because these fees are paid out of fund assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution (sales) or servicing charges. (c) A 1% CDSC may be assessed on Class A shares sold within 18 months after purchase. See "Buying and Selling Shares, Sales Charges, Class A -- contingent deferred sales charge" for more information. For all funds except RiverSource Cash Management Fund, RiverSource Tax-Exempt Money Market Fund and [Seligman Cash Management Fund.] (d) Class B shares automatically convert to Class A hares. See "Buying and Selling Shares, Sales Charges, Class B and Class C -- CDSC alternative" for more information on the timing of conversion of Class B shares to Class A shares. Timing of conversion will vary depending on the date of your original purchase of the Class B shares. (e) Class B shares of RiverSource Short Duration U.S. Government Fund is closed to new investors and new purchases. Existing shareholders in this fund may continue to own Class B shares and make exchanges into and out of existing accounts where Class B shares of this fund are maintained. (f) RiverSource Cash Management Fund [and Seligman Cash Management Fund] offers Class B and Class C shares only to facilitate exchanges with other RiverSource funds offering Class B and Class C shares, respectively. DISTRIBUTION AND SERVICE FEES The distribution and shareholder servicing fees for Class A, Class B, Class C, Class R2, Class R3 and Class W shares are subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended, and are used to reimburse the distributor for certain expenses it incurs in connection with distributing the fund's shares and directly or indirectly providing services to fund shareholders. These expenses include payment of distribution and shareholder servicing fees to financial intermediaries that sell shares of the fund or provide services to fund shareholders, up to 0.50% of the average daily net assets of Class R2 shares sold and held through them and up to 0.25% of the average daily net assets of Class A, Class B*, Class C, Class R3 and Class W shares sold and held through them. For Class A, Class B, Class R2, Class R3 and Class W shares, the distributor begins to pay these fees immediately after purchase. For Class C shares, the distributor pays these fees in advance for the first 12 months. Financial intermediaries also receive distribution fees up to 0.75% of the average daily net assets of Class C shares sold and held through them, which the distributor begins to pay 12 months after purchase. For Class B shares, and, for the first 12 months following the sale of Class C shares, the fund's distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to financial intermediaries, and to pay for other distribution related expenses. Financial intermediaries may compensate their financial advisors with the shareholder servicing and distribution fees paid to them by the B.9 distributor. IF YOU MAINTAIN SHARES OF THE FUND WITH THE FUND, WITHOUT WORKING DIRECTLY WITH A FINANCIAL INTERMEDIARY OR FINANCIAL ADVISOR, DISTRIBUTION AND SERVICE FEES MAY BE RETAINED BY THE DISTRIBUTOR. * For RiverSource Cash Management Fund [and Seligman Cash Management Fund], the distributor has currently agreed not to be reimbursed by the fund for distribution (12b-1) fees equal to 0.10% of the stated amount for Class B shares. PLAN ADMINISTRATION FEE Class R2, Class R3, Class R4 and Class Y shares pay an annual plan administration services fee for the provision of various administrative, recordkeeping, communication and educational services. The fee for Class R2, Class R3 and Class R4 shares is equal on an annual basis to 0.25% of average daily net assets attributable to the respective class. The fee for Class Y shares is equal on an annual basis to 0.15% of average daily net assets attributable to the class. DETERMINING WHICH CLASS OF SHARES TO PURCHASE Each of the fund's classes represent an interest in the same portfolio of investments. However, as set forth above, each class has its own sales charge schedule, and its ongoing distribution and shareholder service fees may differ from other classes. When deciding which class of shares to buy, you should consider, among other things: - The amount you plan to invest. - How long you intend to remain invested in the fund or another fund in the RiverSource Group of Funds. - Whether you may be eligible for reduced or no sales charges when you buy or sell shares. Your authorized financial intermediary or financial advisor will be able to help you decide which class of shares best meets your needs. CLASS A, CLASS B AND CLASS C SHARES* New purchases of Class B shares will not be permitted if your rights of accumulation are $50,000 or higher, and new purchases of Class C shares will not be permitted if your rights of accumulation are $1,000,000 or higher. See "Sales Charges, Initial Sales Charge -- Rights of Accumulation" for information on rights of accumulation. Class B shares have a higher annual distribution fee than Class A shares and a contingent deferred sales charge (CDSC) for six years. Class B shares convert to Class A shares in the ninth year of ownership. Class B shares purchased through reinvested dividends and distributions will convert to Class A shares in the same proportion as the other Class B shares. See "Class B and Class C -- CDSC alternative" for information on timing of Class B share conversion to Class A shares. Class C shares have a higher annual distribution fee than Class A shares and a CDSC for one year. Class C shares have no sales charge if you hold the shares for longer than one year. Unlike Class B shares, Class C shares do not convert to Class A shares. As a result, you will pay a distribution fee for as long as you hold Class C shares. If you choose a share class with a CDSC (Class B or Class C), you should consider the length of time you intend to hold your shares. To help you determine which investment is best for you, consult your financial intermediary or financial advisor. * For RiverSource Cash Management Fund and [Seligman Cash Management Fund], new investments must be made in Class A shares of the fund. The fund offers Class B and Class C shares only to facilitate exchanges between classes of these shares in other funds in the RiverSource Group of Funds. CLASS I SHARES. The following eligible investors may purchase Class I shares: - Any fund distributed by the distributor, if the fund seeks to achieve its investment objective by investing primarily in shares of funds in the RiverSource Group of Funds. Class I shares may be purchased, sold or exchanged only through the distributor or an authorized financial intermediary. CLASS R SHARES. The following eligible institutional investors may purchase Class R2, Class R3, Class R4 and Class R5 shares: - Qualified employee benefit plans. - Trust companies or similar institutions, and charitable organizations that meet the definition in Section 501(c)(3) of the Internal Revenue Code. - Non-qualified deferred compensation plans whose participants are included in a qualified employee benefit plan described above. - State sponsored college savings plans established under Section 529 of the Internal Revenue Code. - Health Savings Accounts created pursuant to public law 108-173. Additionally, if approved by the distributor, the following eligible institutional investors may purchase Class R5 shares: - Institutional or corporate accounts above a threshold established by the distributor (currently $1 million per fund or $10 million in all funds in the RiverSource Group of Funds). B.10 - Bank trust departments. Class R shares generally are not available to retail non-retirement accounts, traditional and Roth IRAs, Coverdell Educational Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs and individual 403(b) plans. Class R shares may be purchased, sold or exchanged only through the distributor or an authorized financial intermediary. CLASS W SHARES. The following eligible investors may purchase Class W shares: - Investors purchasing through authorized investment programs managed by investment professionals, including discretionary managed account programs. Class W shares may be purchased, sold or exchanged only through the distributor or an authorized financial intermediary. Shares originally purchased in a discretionary managed account may continue to be held in Class W outside of a discretionary managed account, but no additional Class W purchases may be made and no exchanges to Class W shares of another fund may be made outside of a discretionary managed account. IN ADDITION, FOR CLASS I, CLASS R AND CLASS W SHARES, THE DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY ACCEPT OR AUTHORIZE FINANCIAL INTERMEDIARIES TO ACCEPT INVESTMENTS FROM OTHER PURCHASERS NOT LISTED ABOVE. Please consult your financial advisor for assistance in selecting the appropriate class of shares. For more information, see the SAI. SALES CHARGES CLASS A -- INITIAL SALES CHARGE ALTERNATIVE: Your purchase price for Class A shares is generally the net asset value (NAV) plus a front-end sales charge. The distributor receives the sales charge and re- allows a portion of the sales charge to the financial intermediary through which you purchased the shares. The distributor retains the balance of the sales charge. The distributor retains the full sales charge you pay when you purchase shares of the fund directly (not through a separately authorized financial intermediary). Sales charges vary depending on the amount of your purchase. INITIAL SALES CHARGE(A) FOR CLASS A SHARES For equity funds and funds-of-funds (equity)
MAXIMUM REALLOWANCE AS A % OF AS A % OF AS A % OF TOTAL MARKET VALUE PURCHASE PRICE(B) NET AMOUNT INVESTED PURCHASE PRICE --------------------------------------------------------------------------------------------------------------- Up to $49,999 5.75% 6.10% 5.00% $50,000--$99,999 4.74 4.99 4.00 $100,000--$249,999 3.50 3.63 3.00 $250,000--$499,999 2.50 2.56 2.15 $500,000--$999,999 2.00 2.04 1.75 $1,000,000 or more 0.00 0.00 0.00(c),(d)
For fixed income funds except those listed below and funds-of-funds (fixed income)
MAXIMUM REALLOWANCE AS A % OF AS A % OF AS A % OF TOTAL MARKET VALUE PURCHASE PRICE(B) NET AMOUNT INVESTED PURCHASE PRICE --------------------------------------------------------------------------------------------------------------- Up to $49,999 4.75% 4.99% 4.00% $50,000--$99,999 4.25 4.44 3.50 $100,000--$249,999 3.50 3.63 3.00 $250,000--$499,999 2.50 2.56 2.15 $500,000--$999,999 2.00 2.04 1.75 $1,000,000 or more 0.00 0.00 0.00(c),(d)
B.11 For RiverSource Short Duration U.S. Government Fund
MAXIMUM REALLOWANCE AS A % OF AS A % OF AS A % OF TOTAL MARKET VALUE PURCHASE PRICE(B) NET AMOUNT INVESTED PURCHASE PRICE --------------------------------------------------------------------------------------------------------------- Up to $49,999 3.00% 3.09% 2.50% $50,000--$99,999 3.00 3.09 2.50 $100,000--$249,999 2.50 2.56 2.15 $250,000--$499,999 2.00 2.04 1.75 $500,000--$999,999 1.50 1.52 1.25 $1,000,000 or more 0.00 0.00 0.00(c),(d)
(a) Because of rounding in the calculation of the offering price, the portion of the sales charge retained by the distributor may vary and the actual sales charge you pay may be more or less than the sales charge calculated using these percentages. (b) Purchase price includes the sales charge. (c) Although there is no sales charge for purchases with a total market value over $1,000,000, and therefore no re-allowance, the distributor may pay a financial intermediary the following out of its own resources: a sales commission of up to 1.00% for a sale of $1,000,000 to $3,999,999; a sales commission up to 0.50% for a sale of $4,000,000 to $49,999,999; and a sales commission up to 0.25% for a sale of $50,000,000 or more. (d) For certain eligible employee benefit plans defined under section 401(a), 401(k), 457 and 403(b) which meet eligibility rules for the waiver of applicable sales charges, the distributor may pay the following out of its own resources: a sales commission of 1.00% for a sale of $1 to $3,999,999 received in eligible employee benefit plans; a sales commission up to 0.50% for a sale of $4,000,000 to $49,999,999; and a sales commission up to 0.25% for a sale of $50,000,000 or more. See "Initial Sales Charge -- Waivers of the sales charge for Class A shares" for employee benefit plan eligibility rules. There is no initial sales charge on reinvested dividends or capital gain distributions. INITIAL SALES CHARGE -- RIGHTS OF ACCUMULATION (ROA). You may be able to reduce the sales charge on Class A shares, based on the combined market value of accounts in your ROA group. Your ROA group includes the current market values of the following investments which are eligible to be added together for purposes of determining the sales charge on your next purchase: - Your current investment in a fund; and - Previous investments you and members of your household have made in Class A, Class B or Class C shares in the fund and other funds in the RiverSource Group of Funds, provided your investment was subject to a sales charge. Your household consists of you, your spouse or domestic partner and your unmarried children under age 21 sharing a mailing address. The following accounts are eligible to be included in your ROA group in order to determine the sales charge on your purchase: - Individual or joint accounts; - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are invested in Class A, Class B or Class C shares that were subject to a sales charge; - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; - Revocable trust accounts for which you or a member of your household, individually, is the beneficial owner/grantor; - Accounts held in the name of your, your spouse's, or your domestic partner's sole proprietorship or single owner limited liability company or S corporation; and - Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan. The following accounts are NOT eligible to be included in your ROA group in order to determine the sales charge on your purchase: - Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); - Investments in Class A shares where the sales charge is waived, for example, purchases through wrap accounts; - Investments in Class I, Class R2, Class R3, Class R4, Class R5, Class W or Class Y shares; - Investments in 529 plans, donor advised funds, variable annuities, variable life insurance products, wrap accounts or managed separate accounts; and - Charitable and irrevocable trust accounts. If you purchase fund shares through different financial intermediaries, and you want to include those assets toward a reduced sales charge, you must inform your financial intermediary in writing about the other accounts when placing your purchase order. Contact your financial intermediary to determine what information is required. B.12 Unless you provide your financial intermediary in writing with information about all of the accounts that may count toward a sales charge reduction, there can be no assurance that you will receive all of the reductions for which you may be eligible. You should request that your financial intermediary provide this information to the fund when placing your purchase order. For more information on ROA, please see the SAI. INITIAL SALES CHARGE -- LETTER OF INTENT (LOI). Generally, if you intend to invest $50,000 or more (including any existing ROA) over a period of up to 13 months, you may be able to reduce the front-end sales charge(s) for investments in Class A shares by completing and filing an LOI. The required form of LOI may vary by financial intermediary. Existing ROA can be included in your LOI. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI. Five percent of the commitment amount will be placed in escrow. At the end of the 13-month period, the LOI will end and the shares will be released from escrow. If you do not invest the commitment amount by the end of the 13 months, the remaining unpaid sales charge will be redeemed from the escrowed shares and the remaining balance released from escrow. Existing ROA Example. Shareholder currently has $60,000 ROA in the funds. Shareholder completes an LOI to invest $100,000 in the funds (ROA eligible accounts). Shareholder only needs to invest an additional $40,000 in the funds' Class A shares (any non-money market fund in the RiverSource Group of Funds) in order to fulfill the LOI commitment and receive reduced front-end sales charge(s) over the next 13 months. Notification Obligation. You must request the reduced sales charge when you buy shares. If you do not complete and file an LOI, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. You should request that your financial intermediary provide this information to the fund when placing your purchase order. For more detail on LOIs, please contact your financial intermediary or see the SAI. INITIAL SALES CHARGE -- WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES. Sales charges do not apply to: - current or retired Board members, officers or employees of the funds or RiverSource Investments or its affiliates, their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - current or retired Ameriprise Financial Services, Inc. financial advisors, employees of financial advisors, their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - registered representatives and other employees of affiliated or unaffiliated financial intermediaries having a selling agreement with the distributor, including their spouses, domestic partners, children, parents and their spouse's or domestic partner's parents. - portfolio managers employed by subadvisers of the funds, including their spouses or domestic partners, children, parents and their spouse's or domestic partner's parents. - partners and employees of outside legal counsel to the funds or the funds' directors or trustees who regularly provide advice and services to the funds, or to their directors or trustees. - direct rollovers from qualified employee benefit plans, provided that the rollover involves a transfer to Class A shares in the same fund. - purchases made: - - with dividend or capital gain distributions from a fund or from the same class of another fund in the RiverSource Group of Funds; - - through or under a wrap fee product or other investment product sponsored by a financial intermediary that charges an account management fee that has, or that clear trades through a financial intermediary that has, a selling agreement with the distributor; - - through state sponsored college savings plans established under Section 529 of the Internal Revenue Code; or - - through bank trust departments. - - to separate accounts established and maintained by an insurance company which are exempt from registration under Section 3(c)(11) of the 1940 Act. - purchases made through "employee benefit plans" created under section 401(a), 401(k), 457 and 403(b) which: - - have at least $1 million in plan assets at the time of investment; and - - have a plan level or omnibus account that is maintained with the fund or its transfer agent; and - - transact directly with the fund or its transfer agent through a third party administrator or third party recordkeeper. For more information regarding waivers of sales charge for Class A purchases, please see the SAI. The distributor may, in its sole discretion, authorize the waiver of sales charges for additional classes of investors. Policies related to reducing or waiving the sales charge may be modified or withdrawn at any time. B.13 Unless you provide your financial intermediary with information in writing about all of the factors that may count toward a waiver of the sales charge, there can be no assurance that you will receive all of the waivers for which you may be eligible. You should request that your financial intermediary provide this information to the fund when placing your purchase order. Because the current prospectus is available on the funds' website at riversource.com or seligman.com free of charge, information regarding breakpoint discounts is not separately disclosed on the website. CLASS A -- CONTINGENT DEFERRED SALES CHARGE For Class A shares purchased without a sales charge where a commission was separately paid by the distributor, a 1% CDSC may be charged if you sell your shares within 18 months after purchase. A CDSC will be based on the original purchase cost or the current market value of the shares being sold, whichever is less. CDSC -- WAIVERS OF THE CDSC FOR CLASS A SHARES. The CDSC will be waived on sales of shares: - to which no sales commission or transaction fee was paid to an authorized financial intermediary at the time of purchase. - purchased through reinvestment of dividends and capital gain distributions. - in the event of the shareholder's death. - from a monthly, quarterly or annual systematic redemption plan of up to an annual amount of 12% of the account value on a per fund basis. - in an account that has been closed because it falls below the minimum account balance. - that result from required minimum distributions taken from retirement accounts upon the shareholders attainment of age 70 1/2. - that result from returns of excess contributions or excess deferral amounts made to a retirement plan participant. - of RiverSource funds purchased prior to Dec. 1, 2008. - initially purchased by an employee benefit plan that is not connected with a plan level termination. The distributor may, in its sole discretion, authorize the waiver of the CDSC for additional classes of investors. Policies relating to waiving the CDSC may be modified or withdrawn at any time. CLASS B AND CLASS C -- CDSC ALTERNATIVE RiverSource Cash Management Fund and [Seligman Cash Management Fund] offers Class B and Class C shares only to facilitate exchanges with other RiverSource funds offering Class B and Class C shares, respectively. For example, if you own Class B or Class C shares of another RiverSource fund, but want to hold your money in a money market fund, you may exchange into Class B or Class C shares of RiverSource Cash Management Fund and [Seligman Cash Management Fund]. RiverSource Tax-Exempt Money Market Fund does not offer Class B or Class C shares. RiverSource funds that offer Class B and Class C shares have limitations on the amount you may invest in those share classes. If you are considering purchasing Class B or Class C shares of another RiverSource fund, please see the prospectus for that fund for any effective purchase limitations. Although you may not purchase Class B and Class C shares of RiverSouce Cash Management Fund and [Seligman Cash Management Fund] directly, if you exchange into Class B or Class C shares of RiverSource Cash Management Fund and [Seligman Cash Management Fund] from another RiverSource fund, you will be subject to the rules governing CDSC set forth in this section. To minimize the amount of CDSC you may pay when you sell your shares, the fund assumes that shares acquired through reinvested dividends and capital gain distributions (which are not subject to CDSC) are sold first. Shares that have been in your account long enough so that they are not subject to a CDSC are sold next. After these shares are exhausted, shares will be sold in the order they were purchased (earliest to latest). FOR CLASS B, the CDSC is based on the sale amount and the number of years between purchase and sale. The following table shows how CDSC percentages on sales decline:
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:* First year 5% Second year 4% Third year 3%** Fourth year 3% Fifth year 2% Sixth year 1% Seventh or eighth year 0%
* Because of rounding in the calculation, the portion of the CDSC retained by the distributor may vary and the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. B.14 ** For shares purchased in a RiverSource fund prior to May 8, 2009, the CDSC percentage for the Third year is 4%. Although there is no front-end sales charge when you buy Class B shares, the distributor pays a sales commission of 4% to financial intermediaries that sell Class B shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class B shares. You may not make additional purchases of Class B shares if your ROA exceeds $49,999.99. Class B shares purchased in a RiverSource fund prior to May 21, 2005 age on a calendar year basis. Purchases made beginning May 21, 2005 age on a daily basis. For example, a purchase made on Nov. 12, 2004 completed its first year on Dec. 31, 2004 under calendar year aging. However, a purchase made on Nov. 12, 2005 completed its first year on Nov. 11, 2006 under daily aging. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to May 8, 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 May 9, 2009 will convert to Class A shares one month after the completion of the eighth year of ownership. FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year after purchase. Although there is no front-end sales charge when you buy Class C shares, the distributor pays a total amount up to 1% (including sales commission and advance of service fees) to financial intermediaries that sell Class C shares. See "Buying and Selling Shares -- Distribution and Service Fees." A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class C shares. You may not make additional purchases of Class C shares if your ROA exceeds $999,999.99. For both Class B and Class C, if the amount you sell causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC will be based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you do not have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. EXAMPLE Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 3 1/2 years, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 3% because the sale was made during the fourth year after the purchase. CDSC -- WAIVERS OF THE CDSC FOR CLASS B SHARES. The CDSC will be waived on sales of shares: - in the event of the shareholder's death. - that result from required minimum distributions taken from retirement accounts upon the shareholders attainment of age 70 1/2. - selling under an approved substantially equal periodic payment arrangement. - by certain other investors, including certain institutions as set forth in more detail in the SAI. The distributor may, in its sole discretion, authorize the waiver of the CDSC for additional classes of investors. Policies relating to waiving the CDSC may be modified or withdrawn at any time. CDSC -- WAIVERS OF THE CDSC FOR CLASS C SHARES. The CDSC will be waived on sales of shares: - in the event of the shareholder's death. - to which no sales commission or transaction fee was paid to an authorized financial intermediary at the time of purchase. - that result from required minimum distributions taken from retirement accounts upon the shareholders attainment of age 70 1/2. - initially purchased by an eligible employee benefit plan that are not connected with a plan level termination. - by certain other investors, including certain institutions as set forth in more detail in the SAI. The distributor may, in its sole discretion, authorize the waiver of the CDSC for additional classes of investors. Policies relating to waiving the CDSC may be modified or withdrawn at any time. CLASS I, CLASS R2, CLASS R3, CLASS R4, CLASS R5 AND CLASS W -- NO SALES CHARGE. For each of Class I, Class R2, Class R3, Class R4, Class R5 and Class W there is no initial sales charge or CDSC. B.15 The fund's Board believes that no conflict of interest currently exists between the fund's classes of shares. On an ongoing basis, the Board, in the exercise of its fiduciary duties seeks to ensure that no such conflicts arise. OPENING AN ACCOUNT Financial institutions are required by law to obtain certain personal information from each person who opens an account in order to verify the identity of the person. As a result, when you open an account you will be asked to provide your name, permanent street address, date of birth, and Social Security Number 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. METHODS OF PURCHASING SHARES These methods of purchasing shares generally apply to Class A, Class B, and Class C shares. CLASS B SHARES OF RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND ARE CLOSED TO NEW INVESTORS AND NEW PURCHASES. EXISTING SHAREHOLDERS IN THIS FUND MAY CONTINUE TO OWN CLASS B SHARES AND MAKE EXCHANGES INTO AND OUT OF EXISTING ACCOUNTS WHERE CLASS B SHARES OF THIS FUND ARE MAINTAINED. ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INTERMEDIARY ALL REQUESTS The financial intermediary through which you buy shares may have different policies not described in this prospectus, including different minimum investment amounts and minimum account balances. -------------------------------------------------------------------------------- ACCOUNT ESTABLISHED WITH THE FUND BY MAIL You or the financial intermediary through which you buy shares may establish an account with the fund. To establish an account in this fashion, complete a fund account application with your financial advisor or investment professional, and mail the account application to the address below. Account applications may be obtained at riversource.com or seligman.com or may be requested by calling ________. Make your check payable to the fund. The fund does not accept cash, credit card convenience checks, money orders, traveler's checks, starter checks, third or fourth party checks, or other cash equivalents. Mail your check and completed application to: REGULAR MAIL RIVERSOURCE GROUP OF FUNDS [ ] EXPRESS MAIL RIVERSOURCE GROUP OF FUNDS [ ] If you already have an account, include your name, account number, and the name of the fund and class of shares you wish to purchase along with your check. You can make scheduled investments in the fund by moving money from your checking account or savings account. See the Minimum Investment and Account Balance chart below for more information regarding scheduled investment plans. -------------------------------------------------------------------------------- BY WIRE OR ACH Fund shares purchased in an account established and maintained with the fund may be paid for by federal funds wire. Before sending a wire, call _________ to notify the fund's transfer agent of the wire and to receive further instructions. If you are establishing an account with a wire purchase, you are required to send a signed account application to the address above. Please include the wire control number or your new account number on the application. Your bank or financial intermediary may charge additional fees for wire transactions. -------------------------------------------------------------------------------- BY EXCHANGE Call _________ or send signed written instructions to the address above. -------------------------------------------------------------------------------- B.16 MINIMUM INVESTMENT AND ACCOUNT BALANCE
FOR ALL FUNDS, CLASSES AND ACCOUNTS EXCEPT THOSE LISTED TO THE RIGHT (NONQUALIFIED) TAX QUALIFIED ACCOUNTS CLASS W ---------------------------------------------------------------------------------------------------------------- INITIAL INVESTMENT $2,000 $1,000 $500 ---------------------------------------------------------------------------------------------------------------- ADDITIONAL INVESTMENTS $100 $100 None ---------------------------------------------------------------------------------------------------------------- ACCOUNT BALANCE* $300(a) None $500
*If your fund account balance falls below the minimum account balance for any reason, including a market decline, you may be asked to increase it to the minimum account balance or establish a scheduled investment plan. If you do not do so within 30 days, your shares may be automatically redeemed and the proceeds mailed to you. (a)Money Market is $1,000 ------------------------------------------------------------------------------- MINIMUM INVESTMENT AND ACCOUNT BALANCE -- SCHEDULED INVESTMENT PLANS
FOR ALL FUNDS, CLASSES AND ACCOUNTS EXCEPT THOSE LISTED TO THE RIGHT (NONQUALIFIED) TAX QUALIFIED ACCOUNTS CLASS W ---------------------------------------------------------------------------------------------------------------- INITIAL INVESTMENT $100(b) $100(a) $500 ---------------------------------------------------------------------------------------------------------------- ADDITIONAL INVESTMENTS $100 $50 None ---------------------------------------------------------------------------------------------------------------- ACCOUNT BALANCE** None(a) None $500
**If your fund account balance is below the minimum initial investment described above, you must make payments at least monthly. (a)Money Market is $1,000 (b)Money Market is $2,000 ------------------------------------------------------------------------------- These minimums may be waived for accounts that are managed by an investment professional, for accounts held in approved discretionary or non-discretionary wrap programs, for accounts that are a part of an employer-sponsored retirement plan, or for other account types if approved by the distributor. The fund reserves the right to modify its minimum account requirements at any time, with or without prior notice. Please contact your financial intermediary for information regarding wire or electronic funds transfer. IMPORTANT: Payments set 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 10 days of purchase, this may cause your sale request to fail to process if the requested amount includes unguaranteed funds. EXCHANGING OR SELLING SHARES You may exchange or sell shares by having your financial intermediary process your transaction. If you maintain your account directly with your financial intermediary, you must contact that financial intermediary to exchange or sell shares of the fund. If your account was established with the fund, there are a variety of methods you may use to exchange or sell shares of the fund. WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES ACCOUNT ESTABLISHED WITH YOUR FINANCIAL INTERMEDIARY ALL REQUESTS You can exchange or sell shares by having your financial intermediary process your transaction. The financial intermediary through which you purchased shares may have different policies not described in this prospectus, including different transaction limits, exchange policies and sale procedures. -------------------------------------------------------------------------------- ACCOUNT ESTABLISHED WITH THE FUND By mail Mail your exchange or sale request to: REGULAR MAIL RIVERSOURCE GROUP OF FUNDS [ ] EXPRESS MAIL RIVERSOURCE GROUP OF FUNDS [ ] Include in your letter: - your name ------------------------------------------------------------------------------- B.17 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED) ACCOUNT ESTABLISHED WITH THE FUND (CONT.) BY MAIL (CONT.) - 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 yourself. - Your address has changed within the last 30 days. - You want the check mailed to an address other than the address of record. - You want the proceeds sent to a bank account not on file. - You are the beneficiary of the account and the account owner is deceased (additional documents may be required). A Medallion Signature Guarantee assures that a signature is genuine and not a forgery. The financial intermediary providing the Guarantee is financially liable for the transaction if the signature is a forgery. Eligible guarantors include commercial banks, trust companies, savings associations, and credit unions as defined by the Federal Deposit Insurance Act. NOTE: A GUARANTEE FROM A NOTARY PUBLIC IS NOT ACCEPTABLE. NOTE: Any express mail delivery charges you pay will vary depending on domestic or international delivery instructions. -------------------------------------------------------------------------------- BY TELEPHONE Call _________. 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 or qualified retirement accounts. 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 $150,000 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 _________ 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. -------------------------------------------------------------------------------- B.18 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES (CONTINUED) ACCOUNT ESTABLISHED WITH THE FUND (CONT.) BY SCHEDULED You may elect to receive regular periodic payments through an PAYOUT PLAN automatic sale of shares. See the SAI for more information. -------------------------------------------------------------------------------- EXCHANGES Generally, you may exchange your fund shares for shares of the same class of any other publicly offered fund in the RiverSource Group of Funds without a sales charge. Exchanges into RiverSource Tax-Exempt Money Market Fund may be made only from Class A shares. For complete information on the fund you are exchanging into, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after your transaction request is received in good order. You may be subject to a sales charge if you exchange from a money market fund into an equity or fixed income fund. IF YOU HOLD YOUR FUND SHARES IN AN ACCOUNT WITH AMERIPRISE FINANCIAL SERVICES, YOU MAY HAVE LIMITED EXCHANGEABILITY WITHIN THE RIVERSOURCE GROUP OF FUNDS. MARKET TIMING SHORT-TERM TRADING AND OTHER SO-CALLED MARKET TIMING PRACTICES ARE FREQUENT TRADING PRACTICES BY CERTAIN SHAREHOLDERS INTENDED TO PROFIT AT THE EXPENSE OF OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND SHORTLY AFTER PURCHASE. MARKET TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE BY PREVENTING THE INVESTMENT MANAGER FROM FULLY INVESTING THE ASSETS OF THE FUND, DILUTING THE VALUE OF SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING THE FUND'S TRANSACTION COSTS. FOR A FUND ORGANIZED AS A FUND-OF-FUND, ITS ASSETS CONSIST PRIMARILY OF SHARES OF THE UNDERLYING FUNDS IN WHICH IT INVESTS. THE UNDERLYING FUNDS MAY BE MORE SUSCEPTIBLE TO THE RISKS OF MARKET TIMING. FUNDS THAT INVEST DIRECTLY IN SECURITIES THAT TRADE INFREQUENTLY MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF INEFFICIENCIES IN THE SECURITIES MARKETS. FUNDS AND THE UNDERLYING FUNDS THAT INVEST IN SECURITIES THAT TRADE ON OVERSEAS SECURITIES MARKETS MAY BE VULNERABLE TO MARKET TIMERS WHO SEEK TO TAKE ADVANTAGE OF CHANGES IN THE VALUES OF SECURITIES BETWEEN THE CLOSE OF OVERSEAS MARKETS AND THE CLOSE OF U.S. MARKETS, WHICH IS GENERALLY THE TIME AT WHICH A FUND'S NAV IS CALCULATED. TO THE EXTENT THAT A FUND OR UNDERLYING FUND HAS SIGNIFICANT HOLDINGS OF SMALL CAP STOCKS, FLOATING RATE LOANS, HIGH YIELD BONDS, TAX-EXEMPT SECURITIES OR FOREIGN SECURITIES, THE RISKS OF MARKET TIMING MAY BE GREATER FOR THE FUND THAN FOR OTHER FUNDS. SEE "PRINCIPAL INVESTMENT STRATEGIES" FOR A DISCUSSION OF THE TYPES OF SECURITIES IN WHICH YOUR FUND INVESTS. SEE "PRICING AND VALUING OF FUND SHARES" FOR A DISCUSSION OF THE FUNDS' POLICY ON FAIR VALUE PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE FREQUENCY AND EFFECT OF MARKET TIMING. THE FUNDS' BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER MARKET TIMING THAT MAY BE HARMFUL TO THE FUNDS. EACH FUND SEEKS TO ENFORCE THIS POLICY THROUGH ITS SERVICE PROVIDERS AS FOLLOWS: - The fund tries to distinguish market timing from trading that it believes is not harmful, such as periodic rebalancing for purposes of asset allocation or dollar cost averaging or other purchase and exchange transactions not believed to be inconsistent with the best interest of fund shareholders or the Board's policy. The fund uses a variety of techniques to monitor for and detect abusive trading practices. These techniques may vary depending on the type of fund, the class of shares and where the shares are maintained. Under the fund's procedures, there is no set number of transactions in the fund that constitutes market timing. Even one purchase and subsequent sale by related accounts may be market timing. Generally, the fund seeks to restrict the exchange privilege of an investor who makes more than three exchanges into or out of the fund in any 90-day period. Accounts held by a retirement plan or a financial intermediary for the benefit of its participants or clients, which typically engage in daily transactions, are not subject to this limit, although the fund may seek the assistance of financial intermediaries in applying similar restrictions on their participants or clients. The fund's ability to monitor and discourage abusive trading practices in omnibus accounts is more limited. - The fund may rely on the monitoring policy of a financial intermediary, for example, a retirement plan administrator or similar financial intermediary authorized to distribute the funds, if it determines the policy and procedures of such financial intermediaries are sufficient to protect the fund and its shareholders. - If an investor's trading activity is determined to be market timing or otherwise harmful to existing shareholders, the fund reserves the right to modify or discontinue the investor's exchange privilege or reject the investor's purchases or exchanges, including purchases or exchanges accepted by a financial intermediary. The fund may treat accounts it believes to be under common control as a single account for these purposes, although it may not be able to identify all such accounts. - Although the fund does not knowingly permit market timing, it cannot guarantee that it will be able to identify and restrict all short-term trading activity. The fund receives purchase and sale orders through financial intermediaries where market timing activity may not always be successfully detected. B.19 Other exchange policies: - Exchanges must be made into the same class of shares of the share class being exchanged out of. - Exchanges into RiverSource Tax-Exempt Money Market Fund may be made only from Class A shares. - If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. - Once the fund receives your exchange request, you cannot cancel it after the market closes. - Shares of the purchased fund may not be used on the same day for another exchange or sale. - New investments in RiverSource Tax-Exempt Money Market Fund, RiverSource Cash Management Fund and [Seligman Cash Management Fund] Class A shares may be exchanged for either Class A, Class B or Class C shares of any other publicly offered fund in the RiverSource Group of Funds. - If you exchange shares from RiverSource Cash Management Fund [or Seligman Cash Management Fund] to another fund in the RiverSource Group of Funds, any further exchanges must be between shares of the same class. For example, you may not exchange from Class B shares of another RiverSource fund into Class A shares of RiverSource Cash Management Fund [or Seligman Cash Management Fund]. Exchange rules for RiverSource Cash Management Fund [and Seligman Cash Management Fund] are illustrated in the following tables. - Shares of Class W originally purchased, but no longer held in a discretionary managed account, may not be exchanged for Class W shares of another fund. You may continue to hold these shares in the fund. Changing your investment to a different fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new fund. - If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original fund and ends when you sell the shares of the fund you exchanged to.
---------------------------------------------------------------------------------------------------------------- TO OTHER RIVERSOURCE FUNDS FROM RIVERSOURCE CASH MANAGEMENT FUND [OR SELIGMAN CASH MANAGEMENT FUND] CLASS A CLASS B CLASS C ---------------------------------------------------------------------------------------------------------------- CLASS A Yes Yes Yes ---------------------------------------------------------------------------------------------------------------- CLASS B No Yes No ---------------------------------------------------------------------------------------------------------------- CLASS C No No Yes
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---------------------------------------------------------------------------------------------------------------- TO RIVERSOURCE CASH MANAGEMENT FUND [OR SELIGMAN CASH MANAGEMENT FUND] FROM OTHER RIVERSOURCE FUNDS CLASS A CLASS B CLASS C ---------------------------------------------------------------------------------------------------------------- CLASS A Yes No No ---------------------------------------------------------------------------------------------------------------- CLASS B No Yes No ---------------------------------------------------------------------------------------------------------------- CLASS C No No Yes ----------------------------------------------------------------------------------------------------------------
If your initial investment was in a money market fund and you exchange into an equity or fixed income fund, you will pay an initial sales charge if you exchange into Class A and be subject to a CDSC if you exchange into Class B or Class C. If your initial investment was in Class A shares of an equity or fixed income fund and you exchange shares into a money market fund, you may exchange that amount to another fund, including dividends earned on that amount, without paying a sales charge. SELLING SHARES You may sell your shares at any time. The payment will be sent within seven days after your request is received in good order. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is received in good order, minus any applicable CDSC. REPURCHASES. You can change your mind after requesting a sale of shares and use all or part of the sale proceeds to purchase new shares of a fund in the RiverSource Group of Funds. If your original purchase was in Class A or Class B, you may use all or part of the sale proceeds to purchase new Class A shares in any fund account linked together for ROA purposes. Your repurchase will be in Class A shares at NAV, up to the amount of the sale proceeds. For a Class A repurchase on shares that were originally charged a CDSC, the amount of the CDSC will be reinvested at the NAV on the date the repurchase is processed. Repurchases of Class B shares will also be in Class A shares at NAV. Any CDSC paid upon redemption of your B.20 Class B shares will not be reimbursed. If your original purchase was in Class C, you will be allowed to reinvest in the same Class C account and fund you originally purchased. In a Class C repurchase, the CDSC you paid will be reinvested and the shares will be deemed to have the original cost and purchase date for purposes of applying the CDSC (if any) to subsequent redemptions. Systematic withdrawals and purchases will be excluded from this policy. In order for you to take advantage of this repurchase waiver, you must notify your financial intermediary or the fund's transfer agent if your account is held at the fund within 90 days of the date your sale request was processed. Contact your financial intermediary for information on required documentation. The repurchase privilege may be modified or discontinued at any time and use of this option may have tax consequences. The fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. PRICING AND VALUING OF FUND SHARES For classes of shares sold with an initial sales charge, the public offering or purchase price is the net asset value plus the sales charge. For funds or classes of shares sold without an initial sales charge, the public offering price is the NAV. Orders in good form are priced at the NAV next determined after you place your order. Good form or good order means that your instructions have been received in the form required by the fund. This may include, for example, providing the fund name and account number, the amount of the transaction and all required signatures. The NAV is the value of a single share of the fund. The NAV is determined by dividing the value of the fund's assets, minus any liabilities, by the number of shares outstanding. The NAV is calculated as of the close of business on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that the NYSE is open. For a fund organized as a fund-of-fund, the assets will consist primarily of shares of the underlying funds, which are valued at their NAVs. Securities are valued primarily on the basis of market quotations and floating rate loans are valued primarily on the basis of indicative bids. Both market quotations and indicative bids are obtained from outside pricing services approved and monitored under procedures adopted by the Board. Certain short-term securities with maturities of 60 days or less are valued at amortized cost. When reliable market quotations or indicative bids are not readily available, investments are priced at fair value based on procedures adopted by the Board. These procedures are also used when the value of an investment held by a fund or underlying fund is materially affected by events that occur after the close of a securities market but prior to the time as of which the fund's or underlying fund's NAV is determined. Valuing investments at fair value involves reliance on judgment. The fair value of an investment is likely to differ from any available quoted or published price. To the extent that a fund or an underlying fund has significant holdings of small cap stocks, high yield bonds, floating rate loans, tax-exempt securities or foreign securities that may trade infrequently, fair valuation may be used more frequently than for other funds. The funds use an unaffiliated service provider to assist in determining fair values for foreign securities. Foreign investments are valued in U.S. dollars. Some of a fund's or an underlying fund's securities may be listed on foreign exchanges that trade on weekends or other days when the fund does not price its shares. In that event, the NAV of the fund's or underlying fund's shares may change on days when shareholders will not be able to purchase or sell the fund's or underlying fund's shares. For money markets -- The fund's investments are valued at amortized cost, which approximates market value, as explained in the SAI. Although the Fund cannot guarantee it will always be able to maintain a constant net asset value of $1 per share, it will use its best efforts to do so. DISTRIBUTIONS AND TAXES As a shareholder you are entitled to your share of your fund's net income and net gains. Each fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS Your fund's net investment income is distributed to you as dividends. Dividends may be composed of qualified dividend income, which is eligible for preferential tax rates under current tax law, as well as other ordinary dividend income, which may include dividends which are non-qualified dividends, interest income and short-term capital gains. Because of the types of income earned by fixed income funds, it is unlikely the funds will distribute qualified dividend income. Generally, capital gains are realized when a security is sold for a higher price than was paid for it. Generally, capital losses are realized when a 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 B.21 capital gains, if any, are distributed by the end of the calendar year as capital gain distributions. If the fund's distributions exceed its current and accumulated earnings and profits, that portion of the fund's distributions will be treated as a return of capital to the shareholders to the extent of their basis in their shares. A return of capital will generally not be taxable; however, any amounts received in excess of basis are treated as capital gain. Forms 1099 sent to shareholders report any return of capital. Certain derivative instruments subject the fund to special tax rules, the effect of which may be to accelerate income to the fund, defer fund losses, cause adjustments in the holding periods of fund securities, convert capital gains into ordinary income and convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the fund unless you request distributions in cash. The financial intermediary through which you purchased shares may have different policies. Distributions are reinvested at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. TAXES If you buy shares shortly before the record date of a distribution, you may pay taxes on money earned by the fund before you were a shareholder. You will pay the full pre-distribution price for the shares, then receive a portion of your investment back as a distribution, which may be taxable. For tax purposes, an exchange is considered a sale and purchase, and may result in a gain or loss. A sale is a taxable transaction. Generally, if you sell shares for less than their cost, the difference is a capital loss or if you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). You may not create a tax loss or reduce a tax gain, based on paying a sales charge, by exchanging shares before the 91st day after the day of purchase. If you buy Class A shares and exchange into another fund before the 91st day after the day of purchase, you may not be able to include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of the second fund you purchased. For more information, see the SAI. FOR TAXABLE FUNDS. Distributions related to shares not held in IRAs or other retirement accounts are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. Shares held in an IRA or qualified retirement account are generally subject to different tax rules. Taking a distribution from your IRA or qualified retirement plan may subject you to federal taxes, withholding, penalties and reporting requirements. Please consult your tax advisor. Income received by a fund may be subject to foreign tax and withholding. Tax conventions between certain countries and the U.S. may reduce or eliminate these taxes. FOR TAX-EXEMPT FUNDS. Dividends distributed from interest earned on tax-exempt securities (exempt-interest dividends) are exempt from federal income taxes but may be subject to state and local taxes and potentially the alternative minimum tax. Dividends distributed from net capital gains, if any, and other income earned are not exempt from federal income taxes. Any taxable distributions are taxable in the year the fund declares them regardless of whether you take them in cash or reinvest them. Interest on certain private activity bonds is a preference item for purposes of the individual and corporate alternative minimum tax. To the extent the fund earns such income, it will flow through to its shareholders and may affect those shareholders who are subject to the alternative minimum tax. See the SAI for more information. For a fund organized as a fund-of-fund, because most of the fund's investments are shares of underlying funds, the tax treatment of the fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the fund invested directly in the types of securities held by the underlying funds or the fund shareholders invested directly in the underlying funds. As a result, fund shareholders may recognize higher amounts of capital gain distributions or ordinary income dividends than they otherwise would. Because interest on municipal bonds and notes is tax-exempt for federal income tax purposes, any interest on money you borrow that is used directly or indirectly to purchase fund shares is not deductible on your federal income tax return. You should consult a tax advisor regarding its deductibility for state and local income tax purposes. B.22 IMPORTANT: This information is a brief and selective summary of some of the tax rules that apply to an investment in a fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. GENERAL INFORMATION AVAILABILITY AND TRANSFERABILITY OF FUND SHARES Please consult with your financial intermediary to determine the availability of the funds. The funds may only be purchased or sold directly or through financial intermediaries authorized by the distributor to offer the funds. NOT ALL FINANCIAL INSTITUTIONS ARE AUTHORIZED TO SELL THE RIVERSOURCE GROUP OF FUNDS. If you set up an account at a financial intermediary that does not have, and is unable to obtain, a selling agreement with the distributor, you will not be able to transfer fund holdings to that account. In that event, you must either maintain your fund holdings with your current financial intermediary, find another financial intermediary with a selling agreement, or sell your shares, paying any applicable CDSC. Please be aware that transactions in taxable accounts are taxable events and may result in income tax liability. ADDITIONAL SERVICES AND COMPENSATION In addition to acting as the fund's investment manager, RiverSource Investments and its affiliates also receive compensation for providing other services to the funds. Administration Services. Ameriprise Financial, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, provides or compensates others to provide administrative services to the funds. These services include administrative, accounting, treasury, and other services. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." Distribution and Shareholder Services. RiverSource Distributors, Inc., 50611 Ameriprise Financial Center, Minneapolis, Minnesota 55474, and RiverSource Fund Distributors, Inc., 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474, (collectively, the distributor), provide underwriting and distribution services to the RiverSource funds. Under the Distribution Agreement and related distribution and shareholder servicing plans, the distributor receives distribution and shareholder servicing fees. The distributor may retain a portion of these fees to support its distribution and shareholder servicing activity. The distributor reallows the remainder of these fees (or the full fee) to the financial intermediaries that sell fund shares and provide services to shareholders. Fees paid by a fund for these services are set forth under "Distribution and/or service (12b-1) fees" in the expense table under "Fees and Expenses." More information on how these fees are used is set forth under "Investment Options -- Classes of Shares" and in the SAI. The distributor also administers any sales charges paid by an investor at the time of purchase or at the time of sale. See "Shareholder Fees (fees paid directly from your investment)" under "Fees and Expenses" for the scheduled sales charge of each share class. See "Buying and Selling Shares, Sales Charges" for variations in the scheduled sales charges, and for how these sales charges are used by the distributor. See "Other Investment Strategies and Risks" for the funds' policy regarding directed brokerage. Transfer Agency Services. RiverSource Service Corporation, 734 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or RiverSource Service Corporation), provides or compensates others to provide transfer agency services to the funds. The funds pay the transfer agent a fee that varies by class, as set forth in the SAI, and reimburses the transfer agent for its out-of-pocket expenses incurred while providing these transfer agency services to the funds. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." RiverSource Service Corporation pays a portion of these fees to financial intermediaries that provide sub-recordkeeping and other services to fund shareholders. The SAI provides additional information about the services provided and the fee schedules for the transfer agent agreements. Plan Administration Services. Under a Plan Administration Services Agreement the fund pays for plan administration services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account recordkeeping, education services and administration to various plan types, including 529 plans, retirement plans and Health Savings Accounts. Fees paid by a fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." PAYMENTS TO FINANCIAL INTERMEDIARIES The distributor and its affiliates make or support additional cash payments out of their own resources (including profits earned from providing services to the fund) to financial intermediaries, in connection with agreements between the distributor and financial intermediaries pursuant to which these financial intermediaries sell fund shares and provide services to their clients 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. B.23 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 Group of Funds, in aggregate) currently held in customer accounts of the affiliated broker-dealers, the distributor and its affiliates, in the aggregate, pay significantly more in absolute dollars than other third-party fund sponsors pay to the affiliated broker-dealers for the sale and servicing of their sponsored funds. This level of payment creates potential conflicts of interest which the affiliated broker- dealers seek to mitigate by disclosure and implementation of internal controls, as well as the rules and regulations of applicable regulators. From time to time, to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations, the distributor and its affiliates may make other reimbursements or payments to financial intermediaries or their registered representatives, including non-cash compensation, in the form of gifts of nominal value, occasional meals, tickets, or other entertainment, support for due diligence trips, training and educational meetings or conference sponsorships, support for recognition programs, and other forms of non-cash compensation permissible under regulations to which these financial intermediaries and their representatives are subject. To the extent these are made as payments instead of reimbursement, they may provide profit to the financial intermediary to the extent the cost of such services was less than the actual expense of the service. The financial intermediary through which you are purchasing or own shares of the fund has been authorized directly or indirectly by the distributor to sell the fund and/or to provide services to you as a shareholder of the fund. Investors and current shareholders may wish to take such payment arrangements into account when considering and evaluating any recommendations they receive relating to fund shares. If you have questions regarding the specific details regarding the 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. B.24 The payments described in this section are in addition to fees paid by the fund to the distributor under 12b-1 plans, which fees may be used to compensate financial intermediaries for the distribution of fund shares and the servicing of fund shareholders, or paid by the fund to the transfer agent under the transfer agent agreement or plan administration agreement, which fees may be used to support networking or servicing fees to compensate financial intermediaries for supporting shareholder account maintenance, sub-accounting, plan recordkeeping or other services provided directly by the financial intermediary to shareholders or plans and plan participants, including retirement plans, 529 plans, Health Savings Account plans, or other plans, where participants beneficially own shares of the fund. Financial institutions may separately charge you additional fees. See "Buying and Selling Shares." ADDITIONAL MANAGEMENT INFORMATION AFFILIATED PRODUCTS. RiverSource Investments serves as investment manager to all funds in the RiverSource Group of Funds that are structured to provide asset- allocation services to shareholders of those funds by investing in shares of other funds in the RiverSource Group of Funds (Funds of Funds) and to discretionary managed accounts that invest exclusively in funds in the RiverSource Group of Funds (collectively referred to as "affiliated products"). These affiliated products, individually or collectively, may own a significant percentage of the fund's outstanding shares. The fund may experience relatively large purchases or redemptions from the affiliated products. Although RiverSource Investments may seek to minimize the impact of these transactions, for example, by structuring them over a reasonable period of time or through other measures, the fund may experience increased expenses as it buys and sells securities to manage transactions for the affiliated products. In addition, because the affiliated products may own a substantial portion of the fund, a redemption by one or more affiliated products could cause the fund's expense ratio to increase as the fund's fixed costs would be spread over a smaller asset base. RiverSource Investments monitors expense levels and is committed to offering funds that are competitively priced. RiverSource Investments reports to the Board on the steps it has taken to manage any potential conflicts. See the SAI for information on the percent of the fund owned by affiliated products. FUND-OF-FUNDS. RiverSource Investments seeks to balance potential conflicts between the fund and the underlying funds in which it invests. For example, the fund may seek to minimize the impact of its purchase and redemption of shares of the underlying funds, which may cause the underlying funds to incur transactions costs by implementing such transactions over a reasonable time frame. This delay may result in the fund paying more or less for shares of the underlying funds than if the transactions were executed in one transaction. In addition, because RiverSource Investments earns different fees from the underlying funds, in determining the allocation of the fund's assets among the underlying funds, RiverSource Investments may have an economic conflict of interest. RiverSource Investments reports to the fund's Board on the steps it has taken to manage any potential conflicts. CASH RESERVES. A fund may invest its daily cash balance in a money market fund selected by RiverSource Investments, including but not limited to RiverSource Short-Term Cash Fund (Short-Term Cash Fund), a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. While Short-Term Cash Fund does not pay an advisory fee to RiverSource Investments, it does incur other expenses, and is expected to operate at a very low expense ratio. A fund will invest in Short-Term Cash Fund or any other money market fund selected by RiverSource Investments only to the extent it is consistent with the fund's investment objectives and policies. Short-Term Cash Fund is not insured or guaranteed by the FDIC or any other government agency. FUND HOLDINGS DISCLOSURE. The Board has adopted policies and procedures that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by a fund. A description of these policies and procedures is included in the SAI. LEGAL PROCEEDINGS. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the fund. Information regarding certain pending and settled legal proceedings may be found in the fund's shareholder reports and in the SAI. Additionally, Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. B.25 EXHIBIT C SUMMARY OF INTEGRATION RELATED CHANGES At its Jan. 8, 2009 meeting, the Board approved certain changes to the Seligman Funds' share class structure, service provider arrangements and shareholder service policies, including: SHARE CLASS STRUCTURE. Approval of the redesignation of each Seligman Fund's Class R shares as Class R2 shares and Class I shares as Class R5 shares, as applicable, with a shareholder servicing and pricing structure consistent with Class R2 and Class R5 shares offered by other funds in the RiverSource Group of Funds, discussed below. INVESTMENT MANAGEMENT AND ADMINISTRATION. Approval of changes to each Seligman Fund that is a Buying Fund's (i) Administrative Services Agreement to add a fee schedule consistent with the fee schedules for other, comparable funds in the RiverSource Group of Funds, and (ii) Investment Management Services ("IMS") Agreement to reduce the fee by an amount at least equal to the amount of the increase in the fee under the Administrative Services Agreement. (IMS and Administration Agreements for Seligman Funds that are Selling Funds were not considered at this time.) TRANSFER AGENCY AND SHAREHOLDER SERVICING, AND PLAN ADMINISTRATION. Approval of a transition to RiverSource Service Corporation ("RSC") as the Seligman Funds' transfer and shareholder servicing agent, including adoption of the fee structure paid by other funds in the RiverSource Group of Funds. The Seligman Funds' previous transfer and shareholder servicing agent allocated 100% of its expenses to the Seligman Funds that benefited from the services it provided. Under the new pricing structure, fees are either asset based (Class R2 and Class R5) or account based (Class A, Class B and Class C). See the Reorganization SAI for more information. For Seligman Funds' Class R shares (to be redesignated as Class R2 shares), approval of this pricing structure included adoption of a Plan Administration Agreement, which includes an asset based fee. CUSTODY AND SECURITIES LENDING. Approval of a transition from State Street Bank & Trust, Co. to JPMorgan Bank, N.A. ("JPMorgan") as custodian, and approval of JPMorgan as securities lending agent. (The Seligman Funds did not previously have securities lending arrangements.) SHAREHOLDER SERVICE POLICIES. Approval of changes to certain shareholder service policies establishing a consistent shareholder experience across the combined RiverSource Group of Funds. Certain of these changes are described below (newly applicable shareholder service policies are set forth in Exhibit B): Class A at Net Asset Value. Adopt a uniform set of investor classes eligible for waiver of Class A share front-end sales load across RiverSource Group of Funds. Class A Front-End Sales Load and Breakpoint Structure. Adopt (i) a uniform breakpoint schedule for fixed-income and equity funds, increasing the first and second breakpoint from fixed-income and equity funds, respectively, from 4.50% to 4.75%, and (ii) a uniform dealer reallowance structure, paying out to financial intermediaries a maximum of 2.15% instead of 2.25% at the fourth breakpoint (no impact to shareholders). Class B Contingent Deferred Sales Charge Waivers. Adopt a uniform set of investor class waivers of CDSC on Class B shares across RiverSource Group of Funds. Class B Conversion to Class A. Adopt a uniform time horizon for automatic conversion from Class B shares to Class A shares in the month after the eighth year of ownership. For Class B shares sold prior to the change, previous conversion rules apply. Class C Contingent Deferred Sale Charge Waivers. Adopt a uniform set of investor class waivers of CDSC on Class C shares across RiverSource Group of Funds. Class R (redesignated Class R2) Contingent Deferred Sales Charge. Eliminate the CDSC on Class R (redesignated Class R2) shares. Repurchase Policy. Adopt repurchase policy of 90 days and require that, for Class B shares sold, repurchases will be put into Class A shares at net asset value. C.1 EXHIBIT D MASSACHUSETTS APPRAISAL RIGHTS Massachusetts law requires that we provide shareholders of Seligman U.S. Government Securities Fund and Seligman High-Yield Fund with a copy of the state law on appraisal rights. Notwithstanding the provisions of the law set out below, the SEC has taken the position that use of state appraisal procedures by a registered mutual fund such as either such Fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. As a result, if any shareholder elects to exercise appraisal rights under Massachusetts law, the relevant Fund intends to submit this question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. In addition, Section 13.02(a)(3) of the MBCA provides for an exception to appraisal rights for which we believe, in light of the rationale expressed in the Comments of The Task Force on the Revision of the Massachusetts Business Corporation Law accompanying the MBCA, a reasonable argument exists for applying such exception to a transaction involving an open-end mutual fund. If any shareholder of either Seligman U.S. Government Securities Fund or Seligman High- Yield Fund elects to exercise appraisal rights under Massachusetts law, the relevant Selling Fund, in connection with submitting the question of the supremacy of Rule 22c-1 to a court of competent jurisdiction, may also argue that appraisal rights under Massachusetts law do not apply. CHAPTER 156D. BUSINESS CORPORATIONS PART 13 SUBDIVISION A -- RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES SECTION 13.01. DEFINITIONS In this part the following words shall have the following meanings unless the context requires otherwise: "Affiliate", any person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control of or with another person. "Beneficial shareholder", the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. "Corporation", the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in sections 13.22 to 13.31, inclusive, includes the surviving entity in a merger. "Fair value", with respect to shares being appraised, the value of the shares immediately before the effective date of the corporate action to which the shareholder demanding appraisal objects, excluding any element of value arising from the expectation or accomplishment of the proposed corporate action unless exclusion would be inequitable. "Interest", interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. "Marketable securities", securities held of record by, or by financial intermediaries or depositories on behalf of, at least 1,000 persons and which were (a) listed on a national securities exchange, (b) designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or (c) listed on a regional securities exchange or traded in an interdealer quotation system or other trading system and had at least 250,000 outstanding shares, exclusive of shares held by officers, directors and affiliates, which have a market value of at least $5,000,000. "Officer", the chief executive officer, president, chief operating officer, chief financial officer, and any vice president in charge of a principal business unit or function of the issuer. "Person", any individual, corporation, partnership, unincorporated association or other entity. "Record shareholder", the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. "Shareholder", the record shareholder or the beneficial shareholder. D.1 SECTION 13.02. RIGHT TO APPRAISAL (a) A shareholder is entitled to appraisal rights, and obtain payment of the fair value of his shares in the event of, any of the following corporate or other actions: (1) consummation of a plan of merger to which the corporation is a party if shareholder approval is required for the merger by section 11.04 or the articles of organization or if the corporation is a subsidiary that is merged with its parent under section 11.05, unless, in either case, (A) all shareholders are to receive only cash for their shares in amounts equal to what they would receive upon a dissolution of the corporation or, in the case of shareholders already holding marketable securities in the merging corporation, only marketable securities of the surviving corporation and/or cash and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the merger other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the merging or the surviving corporation or of any affiliate of the surviving corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate; (2) consummation of a plan of share exchange in which his shares are included unless: (A) both his existing shares and the shares, obligations or other securities to be acquired are marketable securities; and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the share exchange other than in his capacity as (i) a shareholder of the corporation whose shares are to be exchanged, (ii) a director, officer, employee or consultant of either the corporation whose shares are to be exchanged or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation whose shares are to be exchanged in the aggregate; (3) consummation of a sale or exchange of all, or substantially all, of the property of the corporation if the sale or exchange is subject to section 12.02, or a sale or exchange of all, or substantially all, of the property of a corporation in dissolution, unless: (i) his shares are then redeemable by the corporation at a price not greater than the cash to be received in exchange for his shares; or (ii) the sale or exchange is pursuant to court order; or (iii) in the case of a sale or exchange of all or substantially all the property of the corporation subject to section 12.02, approval of shareholders for the sale or exchange is conditioned upon the dissolution of the corporation and the distribution in cash or, if his shares are marketable securities, in marketable securities and/or cash, of substantially all of its net assets, in excess of a reasonable amount reserved to meet unknown claims under section 14.07, to the shareholders in accordance with their respective interests within one year after the sale or exchange and no director, officer or controlling shareholder has a direct or indirect material financial interest in the sale or exchange other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the corporation or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate; (4) an amendment of the articles of organization that materially and adversely affects rights in respect of a shareholder's shares because it: (i) creates, alters or abolishes the stated rights or preferences of the shares with respect to distributions or to dissolution, including making non-cumulative in whole or in part a dividend theretofore stated as cumulative; (ii) creates, alters or abolishes a stated right in respect of conversion or redemption, including any provision relating to any sinking fund or purchase, of the shares; (iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities; (iv) excludes or limits the right of the holder of the shares to vote on any matter, or to cumulate votes, except as such right may be limited by voting rights given to new shares then being authorized of an existing or new class; or D.2 (v) reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under section 6.04; (5) the articles of organization or of the bylaws or the entering into by the corporation of any agreement to which the shareholder is not a party that adds restrictions on the transfer or registration or any outstanding shares held by the shareholder or amends any pre-existing restrictions on the transfer or registration of his shares in a manner which is materially adverse to the ability of the shareholder to transfer his shares; (6) any corporate action taken pursuant to a shareholder vote to the extent the articles of organization, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to appraisal; (7) consummation of a conversion of the corporation to nonprofit status pursuant to subdivision B of PART 9; or (8) consummation of a conversion of the corporation into a form of other entity pursuant to subdivision D of PART 9. (b) Except as otherwise provided in subsection (a) of section 13.03, in the event of corporate action specified in clauses (1), (2), (3), (7) or (8) of subsection (a), a shareholder may assert appraisal rights only if he seeks them with respect to all of his shares of whatever class or series. (c) Except as otherwise provided in subsection (a) of section 13.03, in the event of an amendment to the articles of organization specified in clause (4) of subsection (a) or in the event of an amendment of the articles of organization or the bylaws or an agreement to which the shareholder is not a party specified in clause (5) of subsection (a), a shareholder may assert appraisal rights with respect to those shares adversely affected by the amendment or agreement only if he seeks them as to all of such shares and, in the case of an amendment to the articles of organization or the bylaws, has not voted any of his shares of any class or series in favor of the proposed amendment. (d) The shareholder's right to obtain payment of the fair value of his shares shall terminate upon the occurrence of any of the following events: (i) the proposed action is abandoned or rescinded; or (ii) a court having jurisdiction permanently enjoins or sets aside the action; or (iii) the shareholder's demand for payment is withdrawn with the written consent of the corporation. (e) A shareholder entitled to appraisal rights under this chapter may not challenge the action creating his entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. SECTION 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS (a) A record shareholder may assert appraisal rights as to fewer than all the shares registered in the record shareholder's name but owned by a beneficial shareholder only if the record shareholder objects with respect to all shares of the class or series owned by the beneficial shareholder and notifies the corporation in writing of the name and address of each beneficial shareholder on whose behalf appraisal rights are being asserted. The rights of a record shareholder who asserts appraisal rights for only part of the shares held of record in the record shareholder's name under this subsection shall be determined as if the shares as to which the record shareholder objects and the record shareholder's other shares were registered in the names of different record shareholders. (b) A beneficial shareholder may assert appraisal rights as to shares of any class or series held on behalf of the shareholder only if such shareholder: (1) submits to the corporation the record shareholder's written consent to the assertion of such rights no later than the date referred to in subclause (ii) of clause (2) of subsection (b) of section 13.22; and (2) does so with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder. SUBDIVISION B. -- PROCEDURE FOR EXERCISE OF APPRAISAL RIGHTS SECTION 13.20. NOTICE OF APPRAISAL RIGHTS (a) If proposed corporate action described in subsection (a) of section 13.02 is to be submitted to a vote at a shareholders' meeting or through the solicitation of written consents, the meeting notice or solicitation of consents shall state that the corporation has concluded that shareholders are, are not or may be entitled to assert appraisal rights under this chapter and refer to the necessity of the shareholder delivering, before the vote is taken, written notice of his intent to demand payment and to the requirement that he not vote his shares in favor of the proposed action. If the corporation concludes that appraisal rights are or may be available, a copy of this chapter shall accompany the meeting notice sent to those record shareholders entitled to exercise appraisal rights. D.3 (b) In a merger pursuant to section 11.05, the parent corporation shall notify in writing all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice shall be sent within 10 days after the corporate action became effective and include the materials described in section 13.22. SECTION 13.21. NOTICE OF INTENT TO DEMAND PAYMENT (a) If proposed corporate action requiring appraisal rights under section 13.02 is submitted to vote at a shareholders' meeting, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares: (1) shall deliver to the corporation before the vote is taken written notice of the shareholder's intent to demand payment if the proposed action is effectuated; and (2) shall not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed action. (b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to payment under this chapter. SECTION 13.22. APPRAISAL NOTICE AND FORM (a) If proposed corporate action requiring appraisal rights under subsection (a) of section 13.02 becomes effective, the corporation shall deliver a written appraisal notice and form required by clause (1) of subsection (b) to all shareholders who satisfied the requirements of section 13.21 or, if the action was taken by written consent, did not consent. In the case of a merger under section 11.05, the parent shall deliver a written appraisal notice and form to all record shareholders who may be entitled to assert appraisal rights. (b) The appraisal notice shall be sent no earlier than the date the corporate action became effective and no later than 10 days after such date and must: (1) supply a form that specifies the date of the first announcement to shareholders of the principal terms of the proposed corporate action and requires the shareholder asserting appraisal rights to certify (A) whether or not beneficial ownership of those shares for which appraisal rights are asserted was acquired before that date and (B) that the shareholder did not vote for the transaction; (2) state: (i) where the form shall be sent and where certificates for certificated shares shall be deposited and the date by which those certificates shall be deposited, which date may not be earlier than the date for receiving the required form under subclause (ii); (ii) a date by which the corporation shall receive the form which date may not be fewer than 40 nor more than 60 days after the date the subsection (a) appraisal notice and form are sent, and state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by such specified date; (iii) the corporation's estimate of the fair value of the shares; (iv) that, if requested in writing, the corporation will provide, to the shareholder so requesting, within 10 days after the date specified in clause (ii) the number of shareholders who return the forms by the specified date and the total number of shares owned by them; and (v) the date by which the notice to withdraw under section 13.23 shall be received, which date shall be within 20 days after the date specified in subclause (ii) of this subsection; and (3) be accompanied by a copy of this chapter. SECTION 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW (a) A shareholder who receives notice pursuant to section 13.22 and who wishes to exercise appraisal rights shall certify on the form sent by the corporation whether the beneficial owner of the shares acquired beneficial ownership of the shares before the date required to be set forth in the notice pursuant to clause (1) of subsection (b) of section 13.22. If a shareholder fails to make this certification, the corporation may elect to treat the shareholder's shares as after-acquired shares under section 13.25. In addition, a shareholder who wishes to exercise appraisal rights shall execute and return the form and, in the case of certificated shares, deposit the shareholder's certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to subclause (ii) of clause (2) of subsection (b) of section 13.22. Once a shareholder deposits that shareholder's certificates or, in the case of uncertificated shares, returns the executed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to said subsection (b). (b) A shareholder who has complied with subsection (a) may nevertheless decline to exercise appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal D.4 notice pursuant to subclause (v) of clause (2) of subsection (b) of section 13.22. A shareholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the corporation's written consent. (c) A shareholder who does not execute and return the form and, in the case of certificated shares, deposit that shareholder's share certificates where required, each by the date set forth in the notice described in subsection (b) of section 13.22, shall not be entitled to payment under this chapter. SECTION 13.24. PAYMENT (a) Except as provided in section 13.25, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, the corporation shall pay in cash to those shareholders who complied with subsection (a) of section 13.23 the amount the corporation estimates to be the fair value of their shares, plus interest. (b) The payment to each shareholder pursuant to subsection (a) shall be accompanied by: (1) financial statements of the corporation that issued the shares to be appraised,0 consisting of a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders' equity for that year, and the latest available interim financial statements, if any; (2) a statement of the corporation's estimate of the fair value of the shares, which estimate shall equal or exceed the corporation's estimate given pursuant to subclause (iii) of clause (2) of subsection (b) of section 13.22; and (3) a statement that shareholders described in subsection (a) have the right to demand further payment under section 13.26 and that if any such shareholder does not do so within the time period specified therein, such shareholder shall be deemed to have accepted the payment in full satisfaction of the corporation's obligations under this chapter. SECTION 13.25. AFTER-ACQUIRED SHARES (a) A corporation may elect to withhold payment required by section 13.24 from any shareholder who did not certify that beneficial ownership of all of the shareholder's shares for which appraisal rights are asserted was acquired before the date set forth in the appraisal notice sent pursuant to clause (1) of subsection (b) of section 13.22. (b) If the corporation elected to withhold payment under subsection (a), it must, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, notify all shareholders who are described in subsection (a): (1) of the information required by clause (1) of subsection (b) of section 13.24; (2) of the corporation's estimate of fair value pursuant to clause (2) of subsection (b) of said section 13.24; (3) that they may accept the corporation's estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under section 13.26; (4) that those shareholders who wish to accept the offer shall so notify the corporation of their acceptance of the corporation's offer within 30 days after receiving the offer; and (5) that those shareholders who do not satisfy the requirements for demanding appraisal under section 13.26 shall be deemed to have accepted the corporation's offer. (c) Within 10 days after receiving the shareholder's acceptance pursuant to subsection(b), the corporation shall pay in cash the amount it offered under clause (2) of subsection (b) to each shareholder who agreed to accept the corporation's offer in full satisfaction of the shareholder's demand. (d) Within 40 days after sending the notice described in subsection (b), the corporation must pay in cash the amount if offered to pay under clause (2) of subsection (b) to each shareholder deserved in clause (5) of subsection (b). SECTION 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER (a) A shareholder paid pursuant to section 13.24 who is dissatisfied with the amount of the payment shall notify the corporation in writing of that shareholder's estimate of the fair value of the shares and demand payment of that estimate plus interest, less any payment under section 13.24. A shareholder offered payment under section 13.25 who is dissatisfied with that offer shall reject the offer and demand payment of the shareholder's stated estimate of the fair value of the shares plus interest. (b) A shareholder who fails to notify the corporation in writing of that shareholder's demand to be paid the shareholder's stated estimate of the fair value plus interest under subsection (a) within 30 days after receiving the corporation's payment or offer of payment under section 13.24 or section 13.25, respectively, waives the right to demand payment under this section and shall be entitled only to the payment made or offered pursuant to those respective sections. D.5 SUBDIVISION C. -- JUDICIAL APPRAISAL OF SHARES SECTION 13.30. COURT ACTION (a) If a shareholder makes demand for payment under section 13.26 which remains unsettled, the corporation shall commence an equitable proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the 60-day period, it shall pay in cash to each shareholder the amount the shareholder demanded pursuant to section 13.26 plus interest. (b) The corporation shall commence the proceeding in the appropriate court of the county where the corporation's principal office, or, if none, its registered office, in the commonwealth is located. If the corporation is a foreign corporation without a registered office in the commonwealth, it shall commence the proceeding in the county in the commonwealth where the principal office or registered office of the domestic corporation merged with the foreign corporation was located at the time of the transaction. (c) The corporation shall make all shareholders, whether or not residents of the commonwealth, whose demands remain unsettled parties to the proceeding as an action against their shares, and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law or otherwise as ordered by the court. (d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint 1 or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them, or in any amendment to it. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. (e) Each shareholder made a party to the proceeding is entitled to judgment (i) for the amount, if any, by which the court finds the fair value of the shareholder's shares, plus interest, exceeds the amount paid by the corporation to the shareholder for such shares or (ii) for the fair value, plus interest, of the shareholder's shares for which the corporation elected to withhold payment under section 13.25. SECTION 13.31. COURT COSTS AND COUNSEL FEES (a) The court in an appraisal proceeding commenced under section 13.30 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess cost against all or some of the shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court finds such shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter. (b) The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (1) against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of sections 13.20, 13.22, 13.24 or 13.25; or (2) against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter. (c) If the court in an appraisal proceeding finds that the services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the shareholders who were benefited. (d) To the extent the corporation fails to make a required payment pursuant to sections 13.24, 13.25, or 13.26, the shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from the corporation all costs and expenses of the suit, including counsel fees. D.6 EXHIBIT E COMPARISON OF ORGANIZATIONAL DOCUMENTS This chart highlights material differences between the terms of the Declarations of Trust/ Articles of Incorporation and By-Laws of: RiverSource Diversified Income Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource Diversified Bond Fund is a series, RiverSource Global Series (a "RiverSource Minnesota Corporation"), of which each of Threadneedle Emerging Markets Fund and Threadneedle Global Equity Fund is a series, RiverSource High Income Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource High Yield Bond Fund is a series, RiverSource Government Income Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource Short Duration U.S. Government Securities Fund is a series, RiverSource International Managers Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource Partners International Select Growth Fund is a series, and RiverSource Investment Series, Inc. (a "RiverSource Minnesota Corporation"), of which RiverSource Balanced Fund is a series; Seligman Core Fixed Income Fund, Inc. (a "Seligman Maryland Corporation"); Seligman Global Fund Series, Inc. (a "Seligman Maryland Corporation"), of which each of Seligman Emerging Markets Fund, Seligman Global Growth Fund and Seligman International Growth Fund is a series; Seligman High Income Fund Series (a "Seligman Massachusetts Business Trust"), of which each of Seligman High-Yield Fund and Seligman U.S. Government Securities Fund is a series; and Seligman Income and Growth Fund, Inc. (a "Seligman Maryland Corporation").
------------------------------------------------------- SHAREHOLDER LIABILITY ------------------------------------------------------- SELIGMAN The shareholders of a Massachusetts MASSACHUSET- business trust could, under certain TS BUSINESS circumstances, be held personally TRUSTS liable as partners for its obligations. However, the declaration of trust contains express disclaimers of shareholder liability for acts, obligations or affairs of the trust. The declaration of trust also provides for indemnification and reimbursement of expenses out of a series' assets for any shareholder held personally liable for obligations of such series. Therefore, the possibility that a shareholder could be held liable would be limited to a situation in which the assets of the applicable series had been exhausted. ------------------------------------------------------- SELIGMAN Under the Maryland General Corporation MARYLAND Law ("MGCL"), a stockholder of a CORPORATIONS corporation is not obligated to the corporation or its creditors with respect to the stock, except to the extent that the subscription price or other agreed upon price for the stock has not been paid or liability is otherwise imposed under the MGCL. ------------------------------------------------------- RIVERSOURCE Under Minnesota law, a shareholder's MINNESOTA liability to the corporation or its CORPORATIONS creditors is limited to paying the amount agreed to be paid for the shares which the shareholder holds or has agreed to purchase. ------------------------------------------------------- SHAREHOLDER VOTING RIGHTS ------------------------------------------------------- SELIGMAN At all meetings, shareholders of record MASSACHUSET- entitled to vote have one vote for each TS BUSINESS share (and each fractional share shall TRUSTS be entitled to a proportionate fractional vote) standing in his name on the books of the trust on the record date, either in person or by proxy. The shareholders have the power to vote (i) for the election of trustees, (ii) with respect to any investment advisory contract, (iii) with respect to termination of the trust, (iv) with respect to any amendment of the declaration of trust, (v) with respect to any merger, consolidation or sale of assets, (vi) with respect to incorporation of the trust, (vii) to the same extent as stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the trust or shareholder, and (viii) with respect to such additional matters relating to the trust as required by law, the declaration of trust, the bylaws or any registration of the trust with the SEC (or any successor agency) or any state, or as and when the trustees may consider necessary or desirable. There is no cumulative voting in the election of trustees. On any matter submitted to a vote of shareholders of the trust, all shares entitled to vote will be voted by individual shares, except that (1) when required by the 1940 Act, shares will be voted in the aggregate and not by individual series, and (2) when the trustees have determined that the matter affects only the interests of shareholders of a limited number of series, then only the shareholders of such series will be entitled to vote on the matter. Classes within a series shall vote with all other shares of the series except that the trustees may provide that any class shall vote separately as a class as to any matter when (i) required by law, rule or exemptive order, (ii) they determine that such matter affects only the interests of shares of such class or affects the interests of shares of such class in a manner different from that of the other classes or (iii) they otherwise determine that to do so is desirable and in the best interests of the shareholders of such class under the circumstances. -------------------------------------------------------
E.1
------------------------------------------------------- SELIGMAN On each matter submitted to vote of the MARYLAND stockholders, each holder of a share of CORPORATIONS any series or class issued by the corporation ("Common Stock") is entitled to one vote for each share standing held irrespective of the series of Common Stock ("Series") and all shares of all Series will vote as a single class ("Single Class Voting"); except, that (a) as to any matter requiring a separate vote of any Series by the 1940 Act or would be required under the MGCL, the requirements as to a separate vote by that Series apply in lieu of Single Class Voting as described above; (b) in the event that the separate vote requirements referred to in (a) above apply with respect to one or more Series, then, subject to (c) below, the shares of all other Series will vote as a single class; and (c) as to any matter which does not affect the interest of a particular Series, only the holders of shares of the one or more affected Series will be entitled to vote. Holders of shares of Common Stock of the corporation are not be entitled to cumulative voting in the election of directors or on any other matter. As to any matter with respect to which a separate vote of any class is required by the 1940 Act or by MGCL (including, without limitation, approval of any plan, agreement or other arrangement relating to expenses), such requirement as to a separate vote by the class applies in lieu of single class voting, and, if permitted by the 1940 Act or any rules, regulations or orders thereunder and MGCL, all classes of a particular Series vote together as a single class on any matter that has the same effect on each class of that Series. As to any matter that does not affect the interest of a particular class, only the holders of shares of the affected class are entitled to vote. ------------------------------------------------------- RIVERSOURCE Shareholders have the power to vote (i) MINNESOTA for the election of directors; (ii) on CORPORATIONS most amendments to the corporation's articles of incorporation and on certain amendments to the corporation's bylaws; (iii) on certain proposed mergers and exchanges to which the corporation is a party; (iv) on the proposed sale of all or substantially all of the corporation's property and assets not in the usual and regular course of its business; and (v) on the proposed dissolution of the corporation. Each shareholder of record entitled to vote at a shareholder meeting shall be entitled to one vote for each dollar of net asset value (number of shares owned times net asset value per share) of stock standing in her or his name and entitled to vote at such meeting, and each fractional dollar amount shall be entitled to a proportionate fractional vote. At all elections of directors, each shareholder shall be entitled to as many votes as shall equal the number of dollars of net asset value of shares owned multiplied by the number of directors to be elected and may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them. The standard form of certifying resolution creating rights and preferences for series of capital stock provides that each share may be voted by series (i) as required by the provisions of the 1940 Act, as amended, and all rules and regulations promulgated thereunder; (ii) when the Board determines that a matter affects series in a materially different way; or (iii) when the Board determines a matter affects only one or some of the series. In addition, under Minnesota law, shareholders are entitled to vote as separate series or classes with respect to certain amendments to the corporation's articles of incorporation and on certain mergers and exchanges to which the corporation is a party. ------------------------------------------------------- SHAREHOLDER MEETINGS ------------------------------------------------------- SELIGMAN The declaration of trust and bylaws do MASSACHUSET- not address annual shareholder TS BUSINESS meetings. Regular shareholder meetings TRUSTS are not required for business trusts under the General Laws of Massachusetts. Special or extraordinary meetings of the shareholders may be called by the chairman or a majority of the trustees, and will be called by the secretary upon receipt of the request signed by shareholders holding not less than 25% of the shares issued and outstanding and entitled to vote. The shareholders must send written notice to the secretary and other procedural requirements must be met. The secretary shall inform such shareholders of the reasonably estimated costs of preparing and mailing such notice of meeting and upon payment to the trust of such costs, the secretary shall give notice stating the purpose or purposes of the meeting as required in the declaration of trust and bylaws to all shareholders entitled to notice of such meeting. A special meeting may not be called by the request of the holders of shares entitled to cast less than a majority of all votes entitled to be cast at such meeting to consider any matter which is substantially the same as a matter voted upon at any special meeting of shareholders held during the preceding twelve months. -------------------------------------------------------
E.2
------------------------------------------------------- SELIGMAN Regular stockholder meetings are not MARYLAND required, unless stockholders are CORPORATIONS required to meet for the purposes of electing directors pursuant to the 1940 Act. The chairman of the Board of Directors, president, chief executive officer or Board of Directors may call a special meeting of the stockholders. In addition, a special meeting of stockholders shall be called by the secretary of the corporation on the written request of stockholders holding at least a majority of the voting power of all shares entitled to vote. The stockholders must send written notice to the secretary and other procedural requirements must be met. The secretary of the Corporation will also call a special meeting of the stockholders on the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. Any stockholder of record seeking to have stockholders request a special meeting must send written notice to the secretary (the "Record Date Request Notice") requesting the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the "Request Record Date"). The Record Date Request Notice must state the purpose of the meeting and the matters proposed to be acted on it, signed by one or more stockholders of record as of the date of signature, bear the date of signature of each such stockholder (or their agent) and state all information that must be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date that may not precede and also not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the secretary. In order for any stockholder to request a special meeting, one or more written requests for a special meeting signed by stockholders of record (or their agents) as of the Request Record Date entitled to cast not less than a majority (the "Special Meeting Percentage") of all of the votes entitled to be cast at such meeting (the "Special Meeting Request") must be delivered to the secretary. Additionally, the Special Meeting Request (a) shall set forth the purpose of the meeting and the matters proposed to be acted on at it (which is limited to the lawful matters set forth in the Record Date Request Notice received by the secretary), (b) shall bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) shall set forth the name and address, as they appear in the Corporation's books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed) and the class, series and number of all shares of stock of the Corporation which are owned by each such stockholder, and the nominee holder for, and number of, shares owned by such stockholder beneficially but not of record, (d) shall be sent to the secretary by registered mail, return receipt requested, and (e) shall be received by the secretary within 60 days after the Request Record Date. Any stockholder requesting a special stock holder meeting may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary. The secretary will inform the requesting stockholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the corporation's proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the aforementioned documents, the secretary receives payment of such reasonably estimated cost prior to the mailing of any notice of the meeting. Any special meeting to be held pursuant to stockholders' request may not be held more than 90 days after the record date for the meeting. . ------------------------------------------------------- RIVERSOURCE If a regular meeting of shareholders MINNESOTA has not been held during the CORPORATIONS immediately preceding 15 months, a shareholder or shareholders holding three percent or more of the voting power of all shares entitled to vote may demand a regular meeting of shareholders by written notice of demand given to the chief executive officer or chief financial officer. Within 30 days after receipt of the demand by one of those officers, the Board of Directors must cause a regular meeting of shareholders to be called and held on notice no later than 90 days after receipt of the demand, all at the expense of the Fund. In addition, a special meeting of shareholders may be called at any time by a shareholder or shareholders holding ten percent or more of the voting power of all shares entitled to vote, except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or effect a business combination must be called by 25% or more of the voting power of all shares entitled to vote. ------------------------------------------------------- SHAREHOLDER QUORUM ------------------------------------------------------- SELIGMAN The presence in person or by proxy of MASSACHUSET- the holders of record of a majority of TS BUSINESS the shares of the trust issued and TRUSTS outstanding and entitled to vote constitutes a quorum at all meetings of the shareholders. -------------------------------------------------------
E.3
------------------------------------------------------- SELIGMAN The presence in person or by proxy of MARYLAND the holders of record of one-third of CORPORATIONS the shares of all Series and classes issued and outstanding and entitled to vote at a meeting constitute a quorum except as otherwise provided by law or the articles of incorporation. Where the holders of shares of any Series or class are entitled to vote separately as a class, the presence in person or by proxy of the holders of one-third of the shares of that separate class issued and outstanding and entitled to vote at the meeting constitutes a quorum for that vote. If a quorum is not present or represented at the meeting, the holders of a majority of the shares present in person or by proxy and entitled to vote have the power to adjourn the meeting without notice other than announcement at the meeting, until a quorum is present. If, however, such quorum shall not be present at any meeting of the stockholders, the stockholders or the chairman of the meeting shall have the power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At any adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. The absence from any meeting of stockholders of the number of shares in excess of one-third of the shares of all Series and classes, or of the affected Series, class or classes, as the case may be, which may be required by the laws of the State of Maryland, the 1940 Act or any other applicable law or the Articles of Incorporation, for action upon any given matter will not prevent action of such meeting upon any other matter or matters which may properly come before the meeting, if there shall be present thereat, in person or by proxy, holders of the number of shares required for action in respect of such other matter or matters. Notwithstanding any provision of law requiring any action to be taken or authorized by the holders of a greater proportion than a majority of the shares of all Series and classes or of the shares of a particular Series, class or classes, as the case may be, entitled to vote thereon, such action will be valid and effective if taken or authorized by the affirmative vote of the holders of a majority of the shares of all Series and classes or of such particular Series, Class or classes, as the case may be, outstanding and entitled to vote thereon. The stockholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. ------------------------------------------------------- RIVERSOURCE 10% of the shares entitled to vote. MINNESOTA CORPORATIONS ------------------------------------------------------- SHAREHOLDER CONSENT ------------------------------------------------------- SELIGMAN Except as otherwise provided by law, MASSACHUSET- the declaration of trust and the TS BUSINESS bylaws, any action required or TRUSTS permitted to be taken at any meeting of shareholders may be taken without a meeting if a majority of the shareholders entitled to vote consent to the action in writing and the consents are filed with the records of the trust. The consent will be treated for all purposes as a vote taken at a meeting of shareholders. ------------------------------------------------------- SELIGMAN Under the MGCL, if authorized by the MARYLAND charter of the corporation, the holders CORPORATIONS of common stock entitled to vote generally in the election of directors may take action or consent to any action by delivering a consent in writing or by electronic transmission of the stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a stockholders meeting. The corporation's charter does not authorize such action; therefore, any action required or permitted of stockholders must be taken at a meeting. ------------------------------------------------------- ------------------------------------------------------- RIVERSOURCE An action required or permitted to be MINNESOTA taken at a shareholder meeting may be CORPORATIONS taken by written action signed, or consented to by authorized electronic communication, by all of the shareholders entitled to vote on that action. Such a written action is not effective if it is signed or consented to by fewer than all the shareholders entitled to vote on the action. ------------------------------------------------------- NOTICE TO SHAREHOLDERS OF RECORD DATE ------------------------------------------------------- SELIGMAN In general, stockholders entitled to MASSACHUSET- vote at or notice of a stockholder TS BUSINESS meeting must be given written notice of TRUSTS at least 10 days and not more than 90 days before the meeting. The trustees may set a record date for the purpose of determining the shareholders entitled to notice of or to vote at a stockholder meeting. The record date cannot be more than 90 days or less than 10 days before the date of the meeting. -------------------------------------------------------
E.4
------------------------------------------------------- SELIGMAN In general, stockholders entitled to MARYLAND vote at or notice of a stockholder CORPORATIONS meeting must be given written notice of at least 10 days and not more than 90 days before the meeting. Unless otherwise required by statute, any business may be conducted at the annual meeting without being designated in the notice. No business may be transacted at a special meeting of stockholders except as specifically designated in the notice. The directors may set a record date for the purpose of determining the stockholders entitled to notice of or to vote at a stockholder meeting. The record date cannot be more than 90 days or less than 10 days before the date of the meeting. Instead of fixing a record date, the Board of Directors may close the stock transfer books for not more than 20 days. If the stock transfer books are closed for this purpose, they must be closed for at least 10 days before the date of the meeting. ------------------------------------------------------- RIVERSOURCE In general, shareholders who are MINNESOTA entitled to vote at a shareholder CORPORATIONS meeting must be given notice of the meeting at least ten and not more than 60 days before the meeting. In certain cases, the notice of meeting must include specified information required by Minnesota law. The Board of Directors can establish a record date for determining the shareholders who are entitled to vote at a shareholder meeting. The record date cannot be more than 60 days before the date of the meeting. ------------------------------------------------------- SHAREHOLDER PROXIES ------------------------------------------------------- SELIGMAN Shareholders may vote in person or by MASSACHUSET- proxy. TS BUSINESS TRUSTS No proxy is valid eleven months after its date. Pursuant to a resolution of a majority of the trustees, proxies may be solicited in the name of one or more trustees or officers of the trust. ------------------------------------------------------- SELIGMAN A stockholder may cast the votes by the MARYLAND stockholder in person or by proxy CORPORATIONS executed by the stockholder or by the stockholder's duly authorized agent in any manner permitted or not prohibited by law. The proxy or evidence of authorization of the proxy must be filed with the secretary of the corporation before or at the meeting. No proxy is valid more than eleven months after its date unless otherwise provided in the proxy. ------------------------------------------------------- RIVERSOURCE At each shareholder meeting, the polls MINNESOTA may be opened and closed, the proxies CORPORATIONS and ballots may be received and taken in charge, and all questions touching the qualification of voters, the validity of proxies, and acceptances or rejections of votes may be decided by two (2) inspectors of election. Minnesota law provides that shareholders can submit proxies in writing or by telephonic transmission or authenticated electronic communication. It also provides that the Board of Directors can establish procedures whereby a record holder can certify in writing that another person is the beneficial owner of shares, and the beneficial owner then can vote the shares or appoint a proxy. ------------------------------------------------------- DIRECTORS' POWER TO AMEND ARTICLES OF INCORPORATION / TRUSTEES' POWER TO AMEND DECLARATION OF TRUST ------------------------------------------------------- SELIGMAN The trustees may amend the declaration MASSACHUSET- of trust without the vote or consent of TS BUSINESS shareholders to change the name of the TRUSTS trust, to supply any omission, to cure, correct or supplement any ambiguous, defective or inconsistent provision of the declaration of trust, to conform the declaration of trust to the requirements of, or to reduce or eliminate the payment of taxes by the trust or any series thereof under, applicable federal or state laws or regulations or the requirements of the regulated investment company provisions of the Internal Revenue Code of 1986, as amended, but the trustees will not be liable for failing to do so. ------------------------------------------------------- SELIGMAN The corporation may amend the articles MARYLAND of incorporation if a majority of all CORPORATIONS the outstanding shares of all classes or the affected class or classes entitled to vote, vote in favor of the amendment, or consent in writing to such amendment. ------------------------------------------------------- RIVERSOURCE The Board of Directors, acting without MINNESOTA shareholder approval, can amend the CORPORATIONS corporation's articles of incorporation to (i) change the name of the corporation; (ii) increase or decrease, but not below the number of then- outstanding shares, the aggregate number of shares the corporation has authority to issue, including shares of any class or series; and (iii) amend or cancel a certificate fixing the rights and preferences of a class or series of shares, but only when no shares of that class or series are outstanding. In all other cases, the corporation's articles of incorporation only can be amended with the approval of the requisite shareholders. ------------------------------------------------------- TERMINATION OF CORPORATION / TRUST ------------------------------------------------------- SELIGMAN The trust may be terminated: (i) by the MASSACHUSET- affirmative vote of the holders of at TS BUSINESS least two-thirds of the shares TRUSTS outstanding and entitled to vote at any shareholder meeting, or (ii) by a written instrument, without a meeting, signed by a majority of the trustees and consented to by at least two-thirds of the shares outstanding and entitled to vote, or by another vote established by the trustees with respect to any class or series of shares, or (iii) by the trustees by notice to the shareholders of the trust. -------------------------------------------------------
E.5
------------------------------------------------------- SELIGMAN Under the MGCL, a majority of the MARYLAND entire Board of Directors of the CORPORATIONS corporation proposing to dissolve the corporation shall (1) adopt a resolution which declares that dissolution of the corporation is advisable; and (2) direct that the proposed dissolution be submitted for consideration at either an annual or a special meeting of the stockholders. The proposed dissolution shall be approved by the stockholders of the corporation by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter. ------------------------------------------------------- RIVERSOURCE In order to dissolve a Minnesota MINNESOTA corporation, the affirmative vote of a CORPORATIONS majority of the voting power of all shares entitled to vote is required. In order to discontinue an individual class or series of shares without dissolving the corporation, an amendment to the corporation's articles of incorporation would be required. In order to adopt such an amendment, shareholders would have to approve the amendment by the affirmative vote of the greater of (i) a majority of the voting power of the shares of that class or series present and entitled to vote or (ii) a majority of the voting power of the minimum number of shares of such class or series entitled to vote that would constitute a quorum for the transaction of business at the meeting (a "Minnesota Statutory Vote"). The Board of Directors, acting without a shareholder vote, does not have the power to dissolve the corporation or to discontinue an individual class or series of shares. ------------------------------------------------------- MERGER OR CONSOLIDATION OF TRUST / CORPORATION ------------------------------------------------------- SELIGMAN Any merger, consolidation or sale or MASSACHUSET- exchange of assets of the trust TS BUSINESS requires the affirmative vote of at TRUSTS least two-thirds of shares outstanding and entitled to vote, or by an instrument(s) in writing without a meeting, consented to by the holders of not less than two-thirds of shares outstanding and entitled to vote, or by such other vote as may be established by the trustees with respect to any series or class of shares; provided, however, that, if such merger or consolidation is recommended by the trustees, then a majority shareholder vote shall be sufficient authorization. With respect to any merger or consolidation, all shareholders are entitled to the same appraisal rights as a stockholder of a Massachusetts business corporation. In the event of a merger, consolidation, sale or exchange of assets, appraisal rights will be the exclusive remedy for any dissenting shareholder. ------------------------------------------------------- SELIGMAN Under the MGCL, any consolidation, MARYLAND merger, share exchange, or transfer CORPORATIONS requires the affirmative vote of two- thirds of all the votes entitled to be cast on the matter. A stockholder who has not received payment for his stock in connection with a merger, consolidation, share exchange or transfer may petition a court of equity in the county where the principal office of the corporation is located or where the resident agent of the successor is located, for an appraisal to determine the fair value of the stock. ------------------------------------------------------- RIVERSOURCE In most cases, any merger or exchange MINNESOTA in which a Minnesota corporation is not CORPORATIONS the continuing entity, and any sale of all or substantially all of the corporation's property and assets not in the usual and regular course of its business, requires the affirmative vote of a majority of the voting power of all shares entitled to vote. Any sale of the assets belonging to an individual series of shares of a Minnesota corporation in exchange for shares of another corporation or trust or shares of another series of the corporation, while leaving other series of the corporation outstanding, would require an amendment to the corporation's articles of incorporation. In order to adopt such an amendment, shareholders of that series would have to approve the amendment by a Minnesota Statutory Majority. ------------------------------------------------------- REMOVAL OF DIRECTORS / TRUSTEES ------------------------------------------------------- SELIGMAN Any of the trustees may be removed MASSACHUSET- (provided the aggregate number of TS BUSINESS trustees after removal is not less than TRUSTS two) with cause, by the consent of two- thirds of the remaining trustees. Upon the incapacity or death of any trustee, his legal representative must execute and deliver on his behalf all documents demanded by the remaining trustees. ------------------------------------------------------- SELIGMAN Under the MGCL, stockholders of the MARYLAND corporation may remove any director, CORPORATIONS with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast generally for the election of directors. ------------------------------------------------------- ------------------------------------------------------- RIVERSOURCE Under Minnesota law, the Board of MINNESOTA Directors can remove a director by a CORPORATIONS majority vote of the remaining directors, but only if the director was appointed by the Board of Directors to fill a vacancy and has not subsequently been elected by shareholders. In all other cases, a director can only be removed by shareholder vote. In general, such removal requires the affirmative vote of the holders of a majority of the voting power of all shares entitled to vote at an election of directors. However, where a corporation has cumulative voting (as do the Funds), unless the entire Board is removed simultaneously, a director is not removed from the Board if there are cast against removal of the director the votes of a proportion of the voting power sufficient to elect the director at an election of the entire Board of Directors under cumulative voting. -------------------------------------------------------
E.6
------------------------------------------------------- DIRECTOR / TRUSTEE COMMITTEES ------------------------------------------------------- SELIGMAN The trustees, by the majority vote of MASSACHUSET- all the trustees, may appoint from the TS BUSINESS trustees committees which must consist TRUSTS of at least two trustees and will have and may exercise powers as the trustees may determine in the resolution appointing them. A majority of all the members of any committee may determine its action and fix the time and place of its meetings, unless the trustees otherwise provide. The trustees have power at any time to change the members and powers of any such committee, to fill vacancies and to discharge any such committee. ------------------------------------------------------- SELIGMAN The Board of Directors may appoint from MARYLAND among its members an Executive CORPORATIONS Committee, an Audit Committee, a Board Operations Committee, a Nominating Committee and other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. Any director may give notice to the Board of Directors at any time of his or her resignation from any committee on which he or she serves. The Board of Directors may delegate to committees appointed pursuant to the articles of incorporation any of the powers of the Board of Directors, except as prohibited by law. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent to such action in writing or by electronic transmission is given by each member of the committee and filed with the minutes of proceedings of such committee. Subject to the previous sections, the Board of Directors has the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee. Subject to the power of the Board of Directors, the members of a committee have the power to fill any vacancies on such committee. ------------------------------------------------------- RIVERSOURCE The Corporation's bylaws provide that MINNESOTA the Board may, by resolution passed by CORPORATIONS a majority of the whole Board, designate an Executive Committee of two or more directors, which may meet at stated times or on notice to all by any of their number during intervals between meetings of the Board. The Executive Committee shall advise with and aid the officers of the Fund in all matters concerning its interests and the management of its business, and generally perform such duties and exercise such powers as may be delegated to it from time to time by the Board of Directors. The Board of Directors also may, by resolution passed by a majority of the whole Board, appoint any other committee or committees for any purpose or purposes, which committee or committees shall have such powers as shall be specified in the resolution of appointment. The quorum for such committee established by the Board of Directors is two members regardless of the number of members serving on the committee. Under Minnesota law, the members of such other committees do not need to be directors. ------------------------------------------------------- DIRECTOR / TRUSTEE LIABILITY ------------------------------------------------------- SELIGMAN No trustee will be subject to any MASSACHUSET- personal liability, other than to the TS BUSINESS trust or its shareholders in connection TRUSTS with the trust property or the affairs of the trust, except for conduct involving bad faith, wilful misfeasance, gross negligence or reckless disregard for his duties. Additionally, no trustee will be liable for any action or failure to act, including the failure to compel a present or former trustee to redress any breach of trust. All persons must look solely to the trust property for satisfaction of claims of any nature arising in connection with the affairs of the trust. ------------------------------------------------------- SELIGMAN The Fund's Articles of Incorporation MARYLAND provide that a director or officer of CORPORATIONS the corporation will not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted by law (including the 1940 Act). Under the MGCL, the foregoing provision is not effective to eliminate a director's personal liability to the Funds or its shareholders for, among other things, any act or omission of the director that was material to the matter giving rise to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative ("Proceeding"), and (1) was committed in bad faith; or (2) was the result of active and deliberate dishonesty; or (ii) the director actually received an improper personal benefit in money, property, or services; or (iii) in the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. Under the MGCL, the charter of a Maryland corporation may include any provision expanding or limiting the liability of its directors to the corporation or its stockholders for money damages, but may not include any provision that restricts or limits the liability of its directors to the corporation or its stockholders: (A) to the extent that it is proved that the person actually received an improper benefit or profit in money, property, or services for the amount of the benefit or profit in money, property, or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. -------------------------------------------------------
E.7
------------------------------------------------------- RIVERSOURCE The Corporation's articles of MINNESOTA incorporation provide that, to the full CORPORATIONS extent permitted by the laws of the State of Minnesota, as now existing or hereafter amended, no director of the Fund shall be liable to the Fund or to its shareholders for monetary damages for breach of fiduciary duty as a director but such limit on liability shall be permitted only to the extent allowable under the provisions of the 1940 Act. Under Minnesota law, the foregoing provision is not effective to eliminate a director's personal liability to the Funds or its shareholders for, among other things, (i) any breach of the director's duty of loyalty to the corporation or its shareholders; (ii) acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law; or (iii) any transaction from which the director derived an improper personal benefit. ------------------------------------------------------- DIRECTOR / TRUSTEE INDEMNIFICATION ------------------------------------------------------- SELIGMAN A representative of the trust will be MASSACHUSET- indemnified by the trust with respect TS BUSINESS to each proceeding against him or her, TRUSTS except for a proceeding brought by or on behalf of the trust, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the representative in connection with the proceeding, provided that the representative acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the trust and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner in which he reasonably believed to be in or not opposed to the best interests of the trust and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful. A representative of the trust will be indemnified by the trust, with respect to each proceeding brought by or on behalf of the trust to obtain a judgment or decree in its favor, against expenses (including attorneys' fees) actually and reasonable incurred by him in connection with the defense or settlement of such proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the trust; except that no indemnification will be made in respect of any claim, issue, or matter as to which such representative has been adjudged to be liable for negligence or misconduct in the performance of his duty to the trust, unless and only to the extent that the court in which the proceeding was brought, or a court of equity in the county in which the trust has its principal office, despite the adjudication of liability but in view of all circumstances of the case, the representative is fairly and reasonably entitled to indemnity for the expenses which the court considers proper. To the extent that the representative of the trust has been successful on the merits or otherwise in defense of any proceeding referred to in the preceding two paragraphs, or in defense of any claim, issue or matter therein, the trust will indemnify him against all expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the proceeding. Except as provided above, any indemnification under the first two provisions of this section (unless ordered by a court) will be made by the trust only as authorized in the specific case upon a determination that indemnification of the representative of the trust is proper in the circumstances because he has met the applicable standard of conduct set forth in the paragraphs. The determination will be made (1) by the trustees by a majority vote of a quorum consisting of trustees who were not parties to the proceeding, or (2) if a quorum is not obtainable or if a quorum of disinterested trustees so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. Expenses (including attorneys' fees) incurred in defending a proceeding may be paid by the trust in advance of the final disposition if (1) authorized by the trustees in the specific case, and (2) the trust receives and undertaking by or on behalf of the representative of the trust to repay the advance if it is not ultimately determined that he is entitled to the indemnified by the trust as authorized by the above. The indemnification provided above is not exclusive of any other rights that a representative of the trust or other person may be entitled under any agreement, vote of shareholders or disinterested trustees or otherwise, both as to action in his official capacity and as to action in another capacity while holding the office, and will continue as to a person who has ceased to be a trustee, officer, employee or agent and inure to the benefit of his heirs and personal representatives. -------------------------------------------------------
E.8
------------------------------------------------------- SELIGMAN The corporation will indemnify to the MARYLAND fullest extent permitted by law any CORPORATIONS person made or threatened to be made a party to any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person is or was a director, officer or employee of the corporation or serves or served at the request of the corporation any other enterprise as a director, officer or employee. To the fullest extent permitted by law, expenses incurred by any such person in defending any such action, suit or proceeding will be paid or reimbursed by the corporation promptly, provided that such person agrees to repay such expenses if it is ultimately determined that such person is not entitled to be indemnified by the corporation. The articles of incorporation may not be amended to adversely affect this protection. These provisions do not waive compliance with the Securities Act of 1933 or the 1940 Act or other valid rule, regulation or order of the SEC. Under the MGCL, a corporation may indemnify a director made a party to any Proceeding by reason of service in that capacity unless found liable under provisions (1) and (2) under "Director/ Trustee Liability". Indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the director in connection with the proceeding. However, if the proceeding was one by or in the right of the corporation, indemnification may not be made in respect of any proceeding in which the director shall have been adjudged to be liable to the corporation. The Corporation's By-Laws provide to the maximum extent permitted by Maryland law, as in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in any such capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, or a real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in any such capacity. The Corporation may, with the approval of its Board of Directors or any duly authorized committee thereof, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The termination of any claim, action, suit or other proceeding involving any person, by judgment, settlement (whether with or without court approval) or conviction or upon a plea of guilty or nolo contendere, or its equivalent, shall not create a presumption that such person did not meet the standards of conduct required for indemnification or payment of expenses to be required or permitted under Maryland law, the By-laws or the charter of the Corporation. Any indemnification or advance of expenses made pursuant to the By-laws shall be subject to applicable requirements of the 1940 Act. The indemnification and payment of expenses provided in the Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise. -------------------------------------------------------
E.9
------------------------------------------------------- RIVERSOURCE Under Minnesota law, a corporation is MINNESOTA required to indemnify and advance CORPORATIONS expenses to present and former directors against judgments, penalties, fines, settlements and reasonable expenses, including attorneys' fees and disbursements, if they are made parties to a legal proceeding by virtue of their position as directors. However, indemnification and advances are not required or permitted if a director engaged in specified disabling conduct. The Corporation's articles of incorporation and bylaws provide that each person made or threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding whether civil, criminal, administrative, arbitration, or investigative, including a proceeding by or in the right of the Fund by reason of the former or present capacity as a director or officer of the Fund or who, while a director or officer of the Fund, is or was serving at the request of the Fund or whose duties as a director or officer involve or involved service as a director, officer, partner, trustee or agent of another organization or employee benefit plan, whether the basis of any proceeding is alleged action in an official capacity or in any capacity while serving as a director, officer, partner, trustee or agent, shall be indemnified and held harmless by the Fund to the full extent authorized by the Minnesota Business Corporation Act, as the same or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Fund to provide broader indemnification rights than the law permitted the Fund to provide prior to such amendment), or by any other applicable law as then in effect, against judgments, penalties, fines including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements and reasonable expenses, including attorneys' fees and disbursements, incurred in connection therewith and such indemnification shall continue as to any person who has ceased to be a director or officer and shall inure to the benefit of the person's heirs, executors and administrators provided, however, in an action brought against the Fund to enforce rights to indemnification, the director or officer shall be indemnified only if the action was authorized by the Board of Directors of the Fund. The right to indemnification conferred by this Section shall be a contract right and shall include the right to be paid by the Fund in advance of the final disposition of a proceeding for expenses incurred in connection therewith provided, however, such payment of expenses shall be made only upon receipt of a written undertaking by the director or officer to repay all amounts so paid if it is ultimately determined that the director or officer is not entitled to indemnification. Each person who upon written request to the Fund has not received payment within thirty days may at any time thereafter bring suit against the Fund to recover any unpaid amount and, to the extent successful, in whole or in part, shall be entitled to be paid the expenses of prosecuting such suit. Each person shall be presumed to be entitled to indemnification upon filing a written request for payment and the Fund shall have the burden of proof to overcome the presumption that the director or officer is not so entitled. Neither the determination by the Fund, whether by the Board of Directors, special legal counsel or by shareholder, nor the failure of the Fund to have made any determination shall be a defense or create the presumption that the director or officer is not entitled to indemnification. The right to indemnification and to the payment of expenses prior to any final determination shall not be exclusive of any other right which any person may have or hereinafter acquire under any statute, provision of the articles of incorporation, bylaw, agreement, vote of shareholders or otherwise and notwithstanding any provisions in these bylaws, the Fund is not obligated to make any payment with respect to any claim for which payment is required to be made to or on behalf of the director or officer under any insurance policy, except with respect to any excess beyond the amount of required payment under such insurance and no indemnification will be made in violation of the provisions of the 1940 Act. ------------------------------------------------------- DIVIDENDS ------------------------------------------------------- SELIGMAN The trustees, in their discretion, may MASSACHUSET- distribute proportionately among the TS BUSINESS shareholders any share of the profits, TRUSTS surplus (including paid-in surplus) capital or assets held by the trustees. ------------------------------------------------------- SELIGMAN The Board of Directors may declare and MARYLAND pay dividends and distributions from CORPORATIONS income and capital gains, accrued or unrealized, from the assets belonging to a Series, at such times and in such manner as they may determine in their discretion. Dividends and distributions on shares of a particular class may be paid to the holders of shares of that class at such times, in such manner and from such of the income and capital gains, accrued or realized, from the assets belonging to that class, after providing for actual and accrued liabilities belonging to that class, as the Board of Directors may determine. Dividends and other distributions upon the stock of the corporation may be authorized by the Board of Directors, subject to the provisions of law and the charter of the corporation. Dividends and other distributions may be paid in cash, property or stock of the corporation, subject to the provisions of law and the charter. ------------------------------------------------------- RIVERSOURCE The Corporation's articles of MINNESOTA incorporation provide that the CORPORATIONS directors may declare and pay dividends in their discretion at any time and from time to time to the extent and from such sources as permitted by the laws of the State of Minnesota. Under Minnesota law, the Board of Directors can authorize a dividend if it determines that the corporation will be able to pay its debts in the ordinary course of business after paying the dividend. ------------------------------------------------------- CAPITALIZATION ------------------------------------------------------- SELIGMAN The interest of the beneficiaries will MASSACHUSET- be divided into transferrable shares of TS BUSINESS beneficial interest of $.001 par value. TRUSTS The number of shares of beneficial interest authorized is unlimited. -------------------------------------------------------
E.10
------------------------------------------------------- SELIGMAN The Board of Directors has power and MARYLAND authority to increase or decrease the CORPORATIONS number of shares of stock, series or class of stock, that the corporation has the authority to issue. With respect to Seligman Core Fixed Income Fund, Inc., the total number of shares of capital stock of all classes which the corporation has authority to issue is 1,000,000,000 shares of the par value of $.001 per share, having an aggregate par value of $1,000,000. With respect to Seligman Global Fund Series, Inc., the total number of shares of all classes of stock which the Corporation has authority to issue is 2,000,000,000 shares of common stock of the par value of $.001 each having an aggregate par value of $2,000,000.00. With respect to Seligman Income and Growth Fund, Inc., the total number of shares of capital stock of all classes which the corporation has authority to issue is 500,000,000 shares of capital stock (par value $1.00 per share), amounting to an aggregate par value of $500,000,000. ------------------------------------------------------- RIVERSOURCE The Corporation's articles of MINNESOTA incorporation authorize the issuance of CORPORATIONS up to 10,000,000,000 shares of stock with a par value of $.01 per share. The Board of Directors can authorize the issuance of shares in such classes or series with such designations, preferences and relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, as are stated in the Board resolution establishing the class or series. The Board of Directors can, without shareholder approval, increase or decrease the total number of authorized shares, or the authorized shares of a class or series, in the manner and to the extent set forth under "Directors' Power to Amend Articles of Incorporation/Trustees' Power to Amend Declaration of Trust" above. ------------------------------------------------------- NUMBER OF DIRECTORS / TRUSTEES AND VACANCIES ------------------------------------------------------- SELIGMAN There may be no less than two nor more MASSACHUSET- than twenty trustees. TS BUSINESS TRUSTS The term of office of a trustee will terminate and a vacancy will occur in the event of the death, resignation, removal, bankruptcy, adjudicated incompetence, or other incapacity to perform the duties of the office of a trustee. In the case of any vacancy of a trustee for any reason other than an increase in the number of trustees, a majority of the remaining trustees, although a majority is less than a quorum, by an affirmative vote, or the sole remaining trustee, may elect a successor to hold office. ------------------------------------------------------- SELIGMAN The number of directors will never be MARYLAND less than the greater of three and the CORPORATIONS minimum number required by the MGCL (one), nor more than 20, and the tenure of a directorship will not be affected by any decrease in the number of directors. Any vacancy occurring in the Board of Directors for any cause other than by reason of an increase in the number of directors may be filled by a majority of the remaining members of the Board of Directors, even if such majority is less than a quorum. Any vacancy occurring by reason of an increase in the number of directors may be filled by a majority of the entire Board of Directors then in office. A director elected by the Board of Directors to fill a vacancy will be elected to hold office until the next annual meeting of stockholders and until his or her successor is elected and qualifies. ------------------------------------------------------- RIVERSOURCE The Corporation's articles of MINNESOTA incorporation require there to be at CORPORATIONS least two and not more than 15 directors, as determined from time to time by the Board of Directors. If there is a vacancy on the Board by reason of death, resignation or otherwise, the vacancy can be filled for the unexpired term by a majority vote of the remaining directors, even if the remaining number of directors is less than a quorum. ------------------------------------------------------- INDEPENDENT CHAIR OF THE BOARD ------------------------------------------------------- SELIGMAN The declaration of trust and bylaws do MASSACHUSET- not require an independent chair of the TS BUSINESS Board of Trustees. TRUSTS ------------------------------------------------------- SELIGMAN The articles of incorporation and MARYLAND bylaws do not require an independent CORPORATIONS chair of the Board of Directors. ------------------------------------------------------- RIVERSOURCE The Corporation's bylaws require the MINNESOTA Board of Directors to elect one CORPORATIONS independent member to serve as Chair of the Board of directors whose duties shall include serving as the lead independent director. ------------------------------------------------------- INSPECTION OF BOOKS AND RECORDS ------------------------------------------------------- SELIGMAN The declaration of trust and bylaws do MASSACHUSET- not give shareholders any right to TS BUSINESS inspect the books and records of the TRUSTS trust. -------------------------------------------------------
E.11
------------------------------------------------------- SELIGMAN Under the MGCL, any stockholder or his MARYLAND agent may inspect and copy during usual CORPORATIONS business hours the corporation's By- laws, minutes of the proceedings of the stockholders, annual statements of affairs, and voting trust agreements on file at the corporation's principal office. In addition, one or more persons who together are and for at least six months have been stockholders of record of at least 5 percent of the outstanding stock of any class of the corporation may, in person or by agent, on written request, inspect and copy during usual business hours the corporation's books of account and its stock ledger, present to any officer or resident agent of the corporation a written request for a statement of its affairs, and in the case of any corporation which does not maintain the original or a duplicate stock ledger at its principal office, present to any officer or resident agent of the corporation a written request for a list of its stockholders. The corporation's charter provides that a stockholder with the right, under applicable law, to inspect the corporation's books of account, stock ledger, or other specified documents of the corporation has no right to make an inspection if the Board of Directors determines that the stockholder has an improper purpose for requesting the inspection. ------------------------------------------------------- RIVERSOURCE Minnesota law requires the Corporation MINNESOTA (each Fund) to keep (i) a share CORPORATIONS register containing the names and addresses of its shareholders and the number and classes of shares held by each; (ii) records of all proceedings of shareholders for the last three years; (iii) records of all proceedings of the Board of Directors for the last three years; (iv) its articles of incorporation and bylaws, as amended; (v) certain financial statements which Minnesota law requires the Corporation (each Fund) to prepare; (vi) all reports to shareholders generally within the last three years; and (vii) a statement of the names and usual business addresses of its directors and principal officers. The Funds' shareholders and beneficial owners have the right, upon written demand stating the purpose, at any reasonable time to examine and copy those records which are reasonably related to the stated purpose, provided that the stated purpose is reasonably related to the person's interest as a shareholder or beneficial owner. -------------------------------------------------------
E.12 PROXY SELIGMAN FUNDS PROXY NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 2, 2009 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS/TRUSTEES OF THE SELIGMAN FUND(S) LISTED BELOW. The undersigned hereby constitutes and appoints Stephen R. Lewis, Jr., Scott R. Plummer and Christopher O. Petersen, and each of them, as proxies for the undersigned, with full power of substitution and resubstitution, and hereby authorizes said proxies, and each of them, to represent and vote, as designated on the reverse side, all shares of the Seligman Fund(s) listed below held of record by the undersigned on April 3, 2009 at the Joint Special Meeting of Shareholders to be held on June 2, 2009 (the Meeting), and at any adjournment thereof. The undersigned hereby revokes any previous proxies with respect to such shares of the undersigned. THIS PROXY CARD, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S), AND, IN THE DISCRETION OF SUCH PROXIES, UPON ANY AND ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF, INCLUDING, BUT NOT LIMITED TO, PROPOSING AND/OR VOTING ON ADJOURNMENT OF THE MEETING WITH RESPECT TO THE PROPOSAL(S), INCLUDING, BUT NOT LIMITED TO, IN THE EVENT THAT SUFFICIENT VOTES IN FAVOR OF ANY PROPOSAL ARE NOT RECEIVED. IF THIS PROXY CARD IS SIGNED, DATED AND RETURNED WITH NO VOTING INSTRUCTION INDICATED AS TO THE PROPOSAL(S) ON WHICH SHARES REPRESENTED BY THE UNDERSIGNED ARE ENTITLED TO VOTE, SUCH SHARES SHALL BE VOTED FOR THE PROPOSAL(S). VOTE VIA TELEPHONE: 1-866-241-6192 VOTE VIA THE INTERNET: WWW.PROXY-DIRECT.COM 999 9999 9999 999 [_______________________] NOTE: Please sign exactly as your name appears on this Proxy Card and date it. If signing for estates, trusts or corporations, title or capacity should be stated. If shares are held jointly, each holder must sign. --------------------------------------------- Signature --------------------------------------------- Additional Signature (if held jointly) --------------------------------------------- Date RSF_19833_021109 FUND FUND ---- ---- Seligman Core Fixed Income Fund, Inc. Seligman Emerging Markets Fund Seligman Global Growth Fund Seligman High-Yield Fund Seligman Income and Growth Fund, Inc. Seligman International Growth Fund Seligman U. S. Government Securities Fund VOTING OPTIONS READ YOUR PROXY STATEMENT AND HAVE IT AT HAND WHEN VOTING. (GRAPHIC) (GRAPHIC) (GRAPHIC) (GRAPHIC) VOTE ON THE INTERNET VOTE BY PHONE VOTE BY MAIL VOTE IN PERSON LOG ON TO: CALL 1-866-241-6192 VOTE, SIGN AND DATE THIS PROXY ATTEND SHAREHOLDER MEETING WWW.PROXY-DIRECT.COM FOLLOW THE RECORDED CARD AND RETURN IN THE Marquette Hotel FOLLOW THE ON-SCREEN INSTRUCTIONS POSTAGE-PAID ENVELOPE 710 Marquette Ave INSTRUCTIONS AVAILABLE 24 HOURS MINNEAPOLIS, MN 55402 AVAILABLE 24 HOURS ON JUNE 2, 2009
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW. THIS PROXY CARD CONTAINS PROPOSALS RELATING TO MULTIPLE FUNDS. IF YOU DO NOT OWN SHARES OF A FUND, "NOT APPLICABLE" IS NOTED UNDER THAT PROPOSAL. YOU ARE ONLY PERMITTED TO VOTE ON PROPOSALS OF FUND(S) FOR WHICH YOU OWN SHARES. IF YOU DO NOT INDICATE YOUR VOTING INSTRUCTION FOR THE PROPOSALS THAT YOU ARE ENTITLED TO VOTE, YOUR PROXY WILL BE VOTED FOR EACH SUCH PROPOSAL THAT YOU ARE ENTITLED TO VOTE. PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [X] [ ] Mark this box to vote FOR ALL Proposals of fund(s) for which you own shares. (No other vote is necessary.) 1. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN CORE FIXED INCOME FUND, INC. AND RIVERSOURCE DIVERSIFIED BOND FUND. FOR AGAINST ABSTAIN Seligman Core Fixed Income Fund, Inc. [ ] [ ] [ ] 2. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN EMERGING MARKETS FUND AND THREADNEEDLE EMERGING MARKETS FUND. FOR AGAINST ABSTAIN Seligman Emerging Markets Fund [ ] [ ] [ ] 3. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN GLOBAL GROWTH FUND AND THREADNEEDLE GLOBAL EQUITY FUND. FOR AGAINST ABSTAIN Seligman Global Growth Fund [ ] [ ] [ ] 4. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN HIGH-YIELD FUND AND RIVERSOURCE HIGH YIELD BOND FUND. FOR AGAINST ABSTAIN Seligman High-Yield Fund [ ] [ ] [ ] 5. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN INCOME AND GROWTH FUND, INC. AND RIVERSOURCE BALANCED FUND. FOR AGAINST ABSTAIN Seligman Income and Growth Fund, Inc. [ ] [ ] [ ] 6. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN INTERNATIONAL GROWTH FUND AND RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND. FOR AGAINST ABSTAIN Seligman International Growth Fund [ ] [ ] [ ] 7. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SELIGMAN U.S. GOVERNMENT SECURITIES FUND AND RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND. FOR AGAINST ABSTAIN Seligman U.S. Government Securities Fund [ ] [ ] [ ] 8. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL. FOR AGAINST ABSTAIN Seligman Emerging Markets Fund [ ] [ ] [ ] 9. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL. FOR AGAINST ABSTAIN Seligman Global Growth Fund [ ] [ ] [ ] 10. TO APPROVE A POLICY AUTHORIZING RIVERSOURCE INVESTMENTS, LLC, WITH THE APPROVAL OF THE BOARD OF DIRECTORS, TO ENTER INTO AND MATERIALLY AMEND A SUBADVISORY AGREEMENT, WITHOUT OBTAINING SHAREHOLDER APPROVAL. FOR AGAINST ABSTAIN Seligman International Growth Fund [ ] [ ] [ ] IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SELIGMAN FUNDS SHAREHOLDER MEETING TO BE HELD ON JUNE 2, 2009. THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT HTTPS://WWW.PROXY-DIRECT.COM/RFS19833 EVERY VOTE IS IMPORTANT! PLEASE VOTE TODAY USING ONE OF THE FOUR AVAILABLE OPTIONS!
SELIGMAN CORE FIXED INCOME FUND, INC. SELIGMAN GLOBAL FUND SERIES, INC. Seligman Emerging Markets Fund Seligman Global Growth Fund Seligman International Growth Fund SELIGMAN INCOME AND GROWTH FUND, INC. SELIGMAN HIGH INCOME FUND SERIES Seligman High-Yield Fund Seligman U.S. Government Securities Fund Combined Proxy Statement/Prospectus April 4, 2009 HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR YOUR FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED COMBINED PROXY STATEMENT/PROSPECTUS. Q: WHY AM I BEING ASKED TO VOTE? Mutual funds are required to get shareholders' approval for certain kinds of changes, like the proposals in this combined proxy statement/prospectus. Q: IS MY VOTE IMPORTANT? Absolutely! While the Board of Directors/Trustees (the "Board" or the "Board of Directors/Trustees") of each Fund listed above has reviewed these proposals and recommends that you approve them, you have the right to voice your opinion. Until a Fund is sure that a quorum has been reached, it will continue to contact shareholders asking them to vote. Q: WHAT AM I BEING ASKED TO VOTE ON? Shareholders are being asked to vote on: THE REORGANIZATION PROPOSALS: The reorganization (each a "Reorganization") of each Selling Fund (each a "Selling Fund" and together, the "Selling Funds") into its corresponding Buying Fund (each a "Buying Fund" and together, the "Buying Funds"), as noted in the table below:
SELLING FUND BUYING FUND Seligman Core Fixed Income Fund, Inc. RiverSource Diversified Bond Fund Seligman Emerging Markets Fund Threadneedle Emerging Markets Fund Seligman Global Growth Fund Threadneedle Global Equity Fund Seligman High-Yield Fund RiverSource High Yield Bond Fund Seligman Income and Growth Fund, Inc. RiverSource Balanced Fund Seligman International Growth Fund RiverSource Partners International Select Growth Fund Seligman U.S. Government Securities Fund RiverSource Short Duration U.S. Government Fund
If the Reorganization of your Selling Fund is approved by shareholders and the other closing conditions are met, your shares of the Selling Fund will, in effect, be converted into shares of the corresponding Buying Fund with the same aggregate net asset value as your Selling Fund shares at the time of the Reorganization. (Selling Funds and Buying Funds may be individually or collectively referred to as a "Fund" or the "Funds.") THE MANAGER OF MANAGERS PROPOSALS: Shareholders of each of Seligman Emerging Markets Fund, Seligman Global Growth Fund and Seligman International Growth Fund (each a "Seligman Subadvised Fund" and together the "Seligman Subadvised Funds") are being asked to consider a proposal to approve a policy authorizing RiverSource Investments, LLC ("RiverSource Investments" or the "investment manager"), the Seligman Subadvised Funds' investment adviser, with the approval of the Board, to retain and to replace subadvisers, or to modify subadvisory agreements, without obtaining shareholder approval (each a "Manager of Managers Proposal" and together the "Manager of Managers Proposals"). The approval of each Manager of Managers Proposal will eliminate the need for shareholder meetings and related proxy solicitation if the Board determines that such retention, replacement or modification is appropriate, thereby reducing associated delays and costs. We encourage you to read the full text of the combined proxy statement/prospectus to obtain a more detailed understanding of the issues. Q: WHY ARE THE REORGANIZATIONS BEING PROPOSED? RiverSource Investments, a wholly-owned subsidiary of Ameriprise Financial, Inc. and the investment manager of the RiverSource Funds, recently purchased all of the outstanding capital stock of J. & W. Seligman & Co. Incorporated ("Seligman"), the former investment manager of the Seligman Funds, and became the investment manager of the Seligman Funds. In connection with the purchase of Seligman, the RiverSource Group of Funds now includes the Seligman Funds in addition to funds branded "RiverSource," "RiverSource Partners" and "Threadneedle". RiverSource Investments has proposed that the Selling Funds be reorganized into the Buying Funds. The Reorganization of each Selling Fund into the corresponding Buying Fund would result in a larger combined fund with the same or similar investment objectives, principal investment strategies and fundamental investment policies, which will allow for more focused distribution, potentially increasing sales of and economies of scale in the combined fund. Additionally, following each Reorganization, expenses of the larger combined fund are expected to be lower than the expenses would have been for the Selling Fund. Q: IF APPROVED, WHEN WILL THE REORGANIZATIONS HAPPEN? The Reorganizations will take place as soon as practicable following shareholder approval, and are expected to close before the end of the third quarter of 2009. Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE REORGANIZATION PROPOSALS? After careful consideration, the Board of each Selling Fund recommends that you vote FOR the Reorganization of your Selling Fund. Q: WHY ARE THE MANAGER OF MANAGERS PROPOSALS BEING PROPOSED? As explained above, in connection with its recent purchase of all of the outstanding capital stock of Seligman, RiverSource Investments became the investment manager of each of the Seligman Funds, including the Seligman Subadvised Funds. Shareholders of the Seligman Subadvised Funds are being asked to approve the Manager of Managers Proposals in order to conform the Seligman Subadvised Funds to the other subadvised funds managed by RiverSource Investments. The Manager of Managers Proposals will allow the investment manager, with the oversight and approval of the Board, the flexibility to appoint new subadvisers and/or materially modify subadvisory agreements without the delay and cost associated with holding a shareholder meeting. Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE MANAGER OF MANAGER PROPOSALS? After careful consideration, the Board of each Seligman Subadvised Fund recommends that you vote FOR the Manager of Managers proposal for your Seligman Subadvised Fund. Q: HOW DO I VOTE? You can vote in one of four ways: - By telephone - By internet - By mail with the enclosed proxy card - In person at the meeting Please refer to the enclosed proxy card for the telephone number and internet address. Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS? If you have questions about any of the proposals described in the combined proxy statement/prospectus or about voting procedures, please call the Funds' proxy solicitor, Computershare Fund Services, toll free at (866) 438-8932. STATEMENT OF ADDITIONAL INFORMATION RIVERSOURCE DIVERSIFIED INCOME SERIES, INC. RiverSource Diversified Bond Fund RIVERSOURCE GLOBAL SERIES, INC. Threadneedle Emerging Markets Fund Threadneedle Global Equity Fund RIVERSOURCE HIGH YIELD INCOME SERIES, INC. RiverSource High Yield Bond Fund RIVERSOURCE INVESTMENT SERIES, INC. RiverSource Balanced Fund RIVERSOURCE INTERNATIONAL MANAGERS SERIES, INC. RiverSource Partners International Select Growth Fund RIVERSOURCE GOVERNMENT INCOME SERIES, INC. RiverSource Short Duration U.S. Government Fund APRIL 4, 2009 This Statement of Additional Information ("SAI") incorporates by reference the following described Buying and Selling Fund documents, each of which has been previously filed and accompanies this SAI. 1. The most recent annual report for Seligman Core Fixed Income Fund, Inc. for the period ended Sept. 30, 2008 2. The most recent annual report for Seligman Emerging Markets Fund, for the period ended Oct. 31, 2008; 3. The most recent annual report for Seligman Global Growth Fund, for the period ended Oct. 31, 2008; 4. The most recent annual report for Seligman High-Yield Fund, Inc. for the period ended Dec. 31, 2008; 5. The most recent annual report for Seligman Income and Growth Fund, Inc. for the period ended Dec. 31, 2008; 6. The most recent annual report for Seligman International Growth Fund, for the period ended Oct. 31, 2008; 7. The most recent annual report for Seligman U.S. Government Securities Fund for the period ended Dec. 31, 2008; 8. The most recent annual report for RiverSource Balanced Fund, for the period ended Sept. 30, 2008. 9. The most recent annual report for RiverSource Diversified Bond Fund, for the period ended Aug. 31, 2008; 10. The most recent annual report for RiverSource High Yield Bond Fund for the period ended May 30, 2008 and semiannual report, for the period ended Nov. 30, 2008. 11. The most recent annual report for RiverSource Partners International Select Growth Fund, for the period ended Oct. 31, 2008; 12. The most recent annual report for RiverSource Short Duration U.S. Government Fund for the period ended May 30, 2008 and semiannual report, for the period ended Nov. 30, 2008. 13. The most recent annual report for Threadneedle Emerging Markets Fund, for the period ended Oct. 31, 2008; 14. The most recent annual report for Threadneedle Global Equity Fund, for the period ended Oct. 31, 2008; 15. The most recent SAI for the Buying Funds, dated Jan. 29, 2009. This SAI is not a prospectus. It should be read in conjunction with the proxy statement/prospectus, dated the same date as this SAI, which may be obtained by calling (866) 438-8932 or writing to RiverSource Funds, 734 Ameriprise Financial Center, Minneapolis, MN 55474. In accordance with Securities and Exchange Commission requirements, pro forma financial statements are not included for RiverSource Balanced Fund, RiverSource Diversified Bond Fund and Threadneedle Global Equity Fund since the net asset value of each Selling Fund is less than 10% of the net asset value of its corresponding Buying Fund. TABLE OF CONTENTS RIVERSOURCE HIGH YIELD BOND FUND PRO FORMA FINANCIALS Introduction to Proposed Fund Reorganization.................................. 3 Pro Forma Combining Statement of Assets and Liabilities....................... 4 Pro Forma Combining Statement of Operations................................... 5 Notes to Pro Forma Financial Statements....................................... 6 Combined Portfolio of Investments............................................. 8 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND PRO FORMA FINANCIALS Introduction to Proposed Fund Reorganization.................................. 21 Pro Forma Combining Statement of Assets and Liabilities....................... 22 Pro Forma Combining Statement of Operations................................... 23 Notes to Pro Forma Financial Statements....................................... 24 Combined Portfolio of Investments............................................. 26 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND PRO FORMA FINANCIALS Introduction to Proposed Fund Reorganization.................................. 41 Pro Forma Combining Statement of Assets and Liabilities....................... 42 Pro Forma Combining Statement of Operations................................... 43 Notes to Pro Forma Financial Statements....................................... 44 Combined Portfolio of Investments............................................. 46 THREADNEEDLE EMERGING MARKETS FUND PRO FORMA FINANCIALS Introduction to Proposed Fund Reorganization.................................. 57 Pro Forma Combining Statement of Assets and Liabilities....................... 58 Pro Forma Combining Statement of Operations................................... 59 Notes to Pro Forma Financial Statements....................................... 60 Combined Portfolio of Investments............................................. 62
2 RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) SELIGMAN HIGH-YIELD FUND (SELLING FUND) INTRODUCTION TO PROPOSED FUND REORGANIZATION Nov. 30, 2008 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements have been derived from financial statements prepared for the RiverSource High Yield Bond Fund and the Seligman High-Yield Fund as of Nov. 30, 2008. RiverSource High Yield Bond Fund invests primarily in high-yield debt instruments including corporate debt securities and bank loans rated below investment grade and may invest up to 25% of the Fund's net assets in high-yield debt instruments of foreign issuers. Seligman High-Yield Fund invests primarily in non-investment grade, high-yield securities which carry non-investment grade ratings or are securities deemed to be below investment grade by RiverSource Investments, LLC (the investment manager). Under the proposed Agreement and Plan of Reorganization, share classes of Seligman High-Yield Fund would be exchanged for share classes of RiverSource High Yield Bond Fund.
SELLING FUND BUYING FUND ------------------------------------------------------------------------------------------------------ Seligman High-Yield Fund Class A RiverSource High Yield Bond Fund Class A ------------------------------------------------------------------------------------------------------ Seligman High-Yield Fund Class B RiverSource High Yield Bond Fund Class B ------------------------------------------------------------------------------------------------------ Seligman High-Yield Fund Class C RiverSource High Yield Bond Fund Class C ------------------------------------------------------------------------------------------------------ Seligman High-Yield Fund Class R* RiverSource High Yield Bond Fund Class R2 ------------------------------------------------------------------------------------------------------ Seligman High-Yield Fund Class I* RiverSource High Yield Bond Fund Class R5 ------------------------------------------------------------------------------------------------------
* Effective May 9, 2009, the Class R and Class I shares of the Seligman High- Yield Fund will be redesignated as Class R2 and Class R5 shares, respectively. Note: RiverSource High Yield Bond Fund also offers Class I, Class R3, Class R4 and Class W shares. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource High Yield Bond Fund, as if the transaction had occurred at the beginning of the fiscal year ending Nov. 30, 2008. 3 RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) SELIGMAN HIGH-YIELD FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND BOND FUND HIGH YIELD HIGH-YIELD PRO FORMA PRO FORMA NOV. 30, 2008 (UNAUDITED) BOND FUND FUND ADJUSTMENTS COMBINED ASSETS Investments in securities, at cost Unaffiliated issuers $ 1,211,689,995 $ 163,289,838 $ -- $ 1,374,979,833 Affiliated money market fund $ 66,162,340 $ -- $ -- $ 66,162,340 Other affiliated issuers $ 13,076,335 $ -- $ -- $ 13,076,335 -------------------------------------------------------------- Investments in securities, at value Unaffiliated issuers $ 822,980,918 $ 127,106,462 $ -- $ 950,087,380 Affiliated money market fund $ 66,162,340 $ -- $ -- $ 66,162,340 Other affiliated issuers $ 11,527 $ -- $ -- $ 11,527 Cash -- 3,632 -- 3,632 Capital shares receivable 2,727,895 4,197 -- 2,732,092 Dividends and accrued interest receivable 24,621,619 3,901,780 -- 28,523,399 Receivable for investment securities sold 10,722,081 1,823,750 -- 12,545,831 Investment management services fees receivable (Note 2) -- -- 34,185(a) 34,185 Transfer agency fees receivable (Note 2) -- -- 392,580(b) 392,580 Receivable from RiverSource Investments, LLC (Note 2) -- -- 681,805(f) 681,805 Other receivable 220,452 -- -- 220,452 Prepaid expenses -- 108,057 -- 108,057 Other assets -- 31,087 -- 31,087 ---------------------------------------------------------------------------------------------------------------------- Total assets 927,446,832 132,978,965 1,108,570 1,061,534,367 ---------------------------------------------------------------------------------------------------------------------- LIABILITIES Dividends payable to shareholders 1,079,069 620,026 -- 1,699,095 Capital shares payable 1,174,736 416,745 -- 1,591,481 Payable for reorganization costs (Note 2) -- -- 133,709(g) 133,709 Payable for investment securities purchased 47,332,115 2,428,444 -- 49,760,559 Accrued investment management services fees (Note 2) 28,261 74,785 (103,046)(a) -- Accrued distribution fees 177,586 51,162 -- 228,748 Accrued transfer agency fees (Note 2) 10,097 135,884 (145,981)(b) -- Accrued administrative services fees (Note 2) 3,250 -- 136,428(c) 139,678 Accrued plan administration services fees (Note 2) 280 -- 11,230(d) 11,510 Other accrued expenses (Note 2) 195,332 142,408 (264,597)(e) 73,143 ---------------------------------------------------------------------------------------------------------------------- Total liabilities 50,000,726 3,869,454 (232,257) 53,637,923 ---------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 877,446,106 $ 129,109,511 $1,340,827 $ 1,007,896,444 ---------------------------------------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value for RiverSource High Yield Bond Fund and $.001 par value for Seligman High-Yield Fund (Note 3) $ 4,577,329 $ 69,634 $ 610,679 $ 5,257,642 Additional paid-in capital (Notes 2 and 3) 2,703,836,895 1,607,816,870 (744,388)(g)4,310,909,377 Undistributed (excess of distributions over) net investment income (Note 2) (1,038,245) 397,138 1,474,536 833,429 Accumulated net realized gain (loss) (1,428,376,440) (1,442,990,755) -- (2,871,367,195) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (401,553,433) (36,183,376) -- (437,736,809) ---------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 877,446,106 $ 129,109,511 $1,340,827 $ 1,007,896,444 ---------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding shares: Class A $ 713,352,124 $ 80,764,011 $ 838,750 $ 794,954,885 Class B $ 89,891,192 $ 7,772,228 $ 80,716 $ 97,744,136 Class C $ 11,662,478 $ 32,094,382 $ 333,306 $ 44,090,166 Class I $ 49,225,589 N/A $ -- $ 49,225,589 Class R2 $ 3,413 $ 3,465,127 $ 35,986 $ 3,504,526 Class R3 $ 503,624 N/A $ -- $ 503,624 Class R4 $ 876,565 N/A $ -- $ 876,565 Class R5 $ 3,253 $ 5,013,763 $ 52,069 $ 5,069,085 Class W $ 11,927,868 N/A $ -- $ 11,927,868 Shares outstanding (Note 3): Class A shares 372,021,638 43,609,141 -- 414,523,076 Class B shares 46,900,987 4,196,149 -- 50,991,062 Class C shares 6,121,775 17,254,169 -- 23,099,622 Class I shares 25,697,857 N/A -- 25,697,857 Class R2 shares 1,775 1,867,498 -- 1,825,271 Class R3 shares 261,213 N/A -- 261,213 Class R4 shares 457,103 N/A -- 457,103 Class R5 shares 1,695 2,706,982 -- 2,640,149 Class W shares 6,268,887 N/A -- 6,268,887 Net asset value per share of outstanding capital stock: Class A $ 1.92 $ 1.85 $ -- $ 1.92 Class B $ 1.92 $ 1.85 $ -- $ 1.92 Class C $ 1.91 $ 1.86 $ -- $ 1.91 Class I $ 1.92 N/A $ -- $ 1.92 Class R2 $ 1.92 $ 1.86 $ -- $ 1.92 Class R3 $ 1.93 N/A $ -- $ 1.93 Class R4 $ 1.92 N/A $ -- $ 1.92 Class R5 $ 1.92 $ 1.85 $ -- $ 1.92 Class W $ 1.90 N/A $ -- $ 1.90 ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 4 RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) SELIGMAN HIGH-YIELD FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF OPERATIONS
RIVERSOURCE RIVERSOURCE RIVERSOURCE SELIGMAN HIGH YIELD BOND HIGH YIELD BOND HIGH YIELD BOND HIGH-YIELD FUND PRO FORMA FUND PRO FORMA YEAR ENDED NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED INVESTMENT INCOME Income: Interest $ 124,067,760 $ 22,473,977 $ -- $ 146,541,737 Dividends -- 266,828 -- 266,828 Income distributions from affiliated money market fund 1,517,178 -- -- 1,517,178 Fee income from securities lending 22,882 -- -- 22,882 -------------------------------------------------------------------------------------------------------------------- Total income 125,607,820 22,740,805 -- 148,348,625 -------------------------------------------------------------------------------------------------------------------- Expenses: Investment management services fees (Note 2) 7,820,685 1,417,953 (137,231)(a) 9,101,407 Distribution fees Class A 2,638,990 335,142 -- 2,974,132 Class B 1,596,920 168,117 -- 1,765,037 Class C 175,066 533,476 -- 708,542 Class R2 41 22,363 -- 22,404 Class R3 183 -- -- 183 Class W 75,149 -- -- 75,149 Transfer agency fees (Note 2) Class A 1,796,231 541,812 (353,808)(b) 1,984,235 Class B 286,547 67,752 (45,432)(b) 308,867 Class C 30,617 214,354 (122,042)(b) 122,929 Class R2 4 18,132 (15,886)(b) 2,250 Class R3 37 -- -- 37 Class R4 444 -- -- 444 Class R5 3 5,071 (1,393)(b) 3,681 Class W 60,119 -- -- 60,119 Administrative services fees (Note 2) 878,544 -- 136,428(c) 1,014,972 Plan administration services fees (Note 2) Class R2 20 -- 11,230(d) 11,250 Class R3 183 -- -- 183 Class R4 2,218 -- -- 2,218 Compensation of board members (Note 2) 29,856 19,110 (14,254)(e) 34,712 Custodian fees (Note 2) 140,800 93,296 (70,396)(e) 163,700 Printing and postage (Note 2) 296,530 53,952 (5,724)(e) 344,758 Registration fees (Note 2) 99,374 109,010 (92,848)(e) 115,536 Professional fees (Note 2) 67,557 73,395 (62,407)(e) 78,545 Other (Note 2) 39,441 25,383 (18,968)(e) 45,856 -------------------------------------------------------------------------------------------------------------------- Total expenses 16,035,559 3,698,318 (792,731) 18,941,146 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (663,066) -- (681,805)(f) (1,344,871) Earnings and bank fee credits on cash balances (38,953) -- -- (38,953) -------------------------------------------------------------------------------------------------------------------- Total net expenses 15,333,540 3,698,318 (1,474,536) 17,557,322 -------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 110,274,280 19,042,487 1,474,536 130,791,303 -------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (117,233,769) (72,066,506) -- (189,300,275) Swap transactions (7,852,423) -- -- (7,852,423) -------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (125,086,192) (72,066,506) -- (197,152,698) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (312,462,142) (25,895,747) -- (338,357,889) -------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (437,548,334) (97,962,253) -- (535,510,587) -------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(327,274,054) $(78,919,766) $ 1,474,536 $(404,719,284) --------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 5 RIVERSOURCE HIGH YIELD BOND FUND (BUYING FUND) SELIGMAN HIGH-YIELD FUND (SELLING FUND) NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited as to Nov. 30, 2008) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements have been derived from financial statements prepared for the RiverSource High Yield Bond Fund and the Seligman High-Yield Fund as of Nov. 30, 2008. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: RiverSource High Yield Bond Fund invests primarily in high-yield debt instruments including corporate debt securities and bank loans rated below investment grade and may invest up to 25% of the Fund's net assets in high-yield debt instruments of foreign issuers. Seligman High-Yield Fund invests primarily in non-investment grade, high-yield securities which carry non-investment grade ratings or are securities deemed to be below investment grade by RiverSource Investments, LLC (the investment manager). The pro forma statements give effect to the proposed transfer of the assets and liabilities of Seligman High-Yield Fund in exchange for Class A, Class B, Class C, Class R2 and Class R5 shares of RiverSource High Yield Bond Fund under U.S. generally accepted accounting principles. The pro forma statements reflect estimates for the combined RiverSource High Yield Bond Fund based on the increased asset level of the Reorganization and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the Funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource High Yield Bond Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect the change in investment management services fee due to the Reorganization. (b) To reflect the change in transfer agent fees due to the Reorganization including adjusting for closed account fees for each Seligman High-Yield Fund shareholder account that will be closed on the system as a result of the Reorganization. (c) To reflect the change in administrative services fees due to the Reorganization. (d) To reflect the change in plan administration services fees due to the Reorganization. (e) To reflect the change in other fees due to the Reorganization. (f) To adjust the expense reimbursement to reflect the net reduction in fees resulting from the Reorganization per the agreement by RiverSource Investments, LLC and its affiliates to waive certain fees and absorb certain expenses following the Reorganization. (g) Includes the impact of estimated Reorganization costs of $133,709, none of which are recurring expenses. 6 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C, Class R2 and Class R5 shares of RiverSource High Yield Bond Fund as if the Reorganization were to have taken place on Nov. 30, 2008. The following table reflects the number of RiverSource High Yield Bond Fund shares assumed to be issued to the shareholders of the Seligman High-Yield Fund.
SELIGMAN RIVERSOURCE TOTAL HIGH-YIELD FUND HIGH YIELD BOND FUND PRO FORMA SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------ Class A 42,501,438 372,021,638 414,523,076 ------------------------------------------------------------------------------------------------------------------ Class B 4,090,075 46,900,987 50,991,062 ------------------------------------------------------------------------------------------------------------------ Class C 16,977,847 6,121,775 23,099,622 ------------------------------------------------------------------------------------------------------------------ Class I N/A 25,697,857 25,697,857 ------------------------------------------------------------------------------------------------------------------ Class R2* 1,823,496 1,775 1,825,271 ------------------------------------------------------------------------------------------------------------------ Class R3 N/A 261,213 261,213 ------------------------------------------------------------------------------------------------------------------ Class R4 N/A 457,103 457,103 ------------------------------------------------------------------------------------------------------------------ Class R5* 2,638,454 1,695 2,640,149 ------------------------------------------------------------------------------------------------------------------ Class W N/A 6,268,887 6,268,887 ------------------------------------------------------------------------------------------------------------------
* Effective May 9, 2009, the Class R and Class I shares of the Seligman High- Yield Fund will be redesignated as Class R2 and Class R5 shares, respectively. 7 COMBINED PORTFOLIO OF INVESTMENTS RiverSource High Yield Bond Fund NOV. 30, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
BONDS (80.0%) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED MORTGAGE-BACKED (0.2%)(F) Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2007-OH3 Cl A3 09/25/47 1.90% $ 8,876,968 $ -- $ 8,876,968(i) $ 2,073,730 $ -- $ 2,073,730 ------------------------------------------ AEROSPACE & DEFENSE (1.8%) Alion Science and Technology 02/01/15 10.25 10,600,000 1,300,000 11,900,000 5,830,000 721,500 6,551,500 L-3 Communications 06/15/12 7.63 983,000 -- 983,000 904,360 -- 904,360 07/15/13 6.13 2,035,000 -- 2,035,000 1,729,750 -- 1,729,750 01/15/15 5.88 -- 2,000,000 2,000,000 -- 1,630,000 1,630,000 L-3 Communications Series B 10/15/15 6.38 8,575,000 -- 8,575,000 7,117,250 -- 7,117,250 Moog Sr Sub Nts 06/15/18 7.25 629,000 -- 629,000(d) 484,330 -- 484,330 ------------------------------------------ Total 16,065,690 2,351,500 18,417,190 ------------------------------------------ AUTOMOTIVE (0.1%) Ford Motor Sr Unsecured 07/16/31 7.45 -- 4,250,000 4,250,000 -- 1,083,750 1,083,750 ------------------------------------------ BROKERAGE (0.1%) Lehman Brothers Holdings Sr Unsecured 05/02/18 6.88 6,150,000 -- 6,150,000(b,g,o) 615,000 -- 615,000 ------------------------------------------ BUILDING MATERIALS (0.8%) Gibraltar Inds Series B 12/01/15 8.00 11,907,000 1,590,000 13,497,000 7,441,875 1,001,700 8,443,575 ------------------------------------------ CHEMICALS (4.6%) Chemtura 06/01/16 6.88 14,736,000 2,285,000 17,021,000 8,104,800 1,268,175 9,372,975 Hexion US Finance/Nova Scotia Finance Sr Secured 11/15/14 9.75 6,881,000 -- 6,881,000 3,578,120 -- 3,578,120 INVISTA Sr Unsecured 05/01/12 9.25 16,861,000 2,685,000 19,546,000(d) 13,320,190 1,973,475 15,293,665 MacDermid Sr Sub Nts 04/15/17 9.50 7,518,000 1,000,000 8,518,000(d) 3,909,360 545,000 4,454,360 Momentive Performance Pay-in-kind 12/01/14 10.13 15,620,000 3,000,000 18,620,000(n) 4,607,900 930,525 5,538,425 NALCOnrg 11/15/11 7.75 3,370,000 -- 3,370,000 2,990,875 -- 2,990,875 11/15/13 8.88 5,155,000 825,000 5,980,000 4,124,000 664,125 4,788,125 ------------------------------------------ Total 40,635,245 5,381,300 46,016,545 ------------------------------------------ CONSUMER CYCLICAL SERVICES (0.8%) Service Corp Intl Sr Unsecured 06/15/17 7.00 -- 1,725,000 1,725,000 -- 1,250,625 1,250,625
8
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED West Corp 10/15/16 11.00 $14,909,000 $2,000,000 $ 16,909,000 $ 6,410,870 $ 870,000 $ 7,280,870 ------------------------------------------ Total 6,410,870 2,120,625 8,531,495 ------------------------------------------ CONSUMER PRODUCTS (2.1%) AAC Group Holding Sr Unsecured 10/01/12 10.25 5,800,000 -- 5,800,000(d) 5,220,000 -- 5,220,000 American Achievement Group Holding Sr Unsecured Pay-in-kind 10/01/12 14.75 1,632,455 -- 1,632,455(n) 1,552,873 -- 1,552,873 Jarden 05/01/17 7.50 7,263,000 1,335,000 8,598,000 4,720,950 874,425 5,595,375 Sealy Mattress 06/15/14 8.25 2,256,000 -- 2,256,000 1,229,520 -- 1,229,520 Visant Holding Sr Disc Nts (Zero coupon through 12- 01-08, thereafter 10.25%) 12/01/13 8.91 4,815,000 2,525,000 7,340,000(m) 3,514,950 1,862,188 5,377,138 Visant Holding Sr Nts 12/01/13 8.75 3,080,000 -- 3,080,000 2,217,600 -- 2,217,600 ------------------------------------------ Total 18,455,893 2,736,613 21,192,506 ------------------------------------------ ELECTRIC (5.7%) AES Sr Unsecured 09/15/10 9.38 -- 2,250,000 2,250,000 -- 1,946,250 1,946,250 Allegheny Energy Supply Sr Unsecured 03/15/11 7.80 -- 2,000,000 2,000,000 -- 1,910,000 1,910,000 Dynegy Holdings Sr Unsecured 02/15/12 8.75 -- 1,000,000 1,000,000 -- 847,500 847,500 05/01/16 8.38 4,852,000 2,500,000 7,352,000 3,372,140 1,750,000 5,122,140 05/15/18 7.13 8,020,000 -- 8,020,000 4,731,800 -- 4,731,800 Edison Mission Energy Sr Unsecured 06/15/16 7.75 1,672,000 -- 1,672,000 1,308,340 -- 1,308,340 05/15/17 7.00 -- 1,950,000 1,950,000 -- 1,472,250 1,472,250 Energy Future Holdings 11/15/14 5.55 -- 2,000,000 2,000,000 -- 968,514 968,514 11/01/17 10.88 10,711,000 955,000 11,666,000(d) 6,908,595 620,750 7,529,345 Midwest Generation LLC Pass-Through Ctfs Series A 07/02/09 8.30 -- 697,732 697,732 -- 668,078 668,078 Midwest Generation LLC Pass-Through Ctfs Series B 01/02/16 8.56 5,858,628 -- 5,858,628 5,360,644 -- 5,360,644 Mirant Americas Generation LLC Sr Unsecured 10/01/21 8.50 -- 500,000 500,000 -- 352,500 352,500 Mirant North America LLC 12/31/13 7.38 7,769,000 -- 7,769,000 6,720,185 -- 6,720,185 NRG Energy 02/01/16 7.38 -- 1,900,000 1,900,000 -- 1,548,500 1,548,500 01/15/17 7.38 14,165,000 -- 14,165,000 11,438,238 -- 11,438,238 Sierra Pacific Resources 03/15/14 8.63 -- 609,000 609,000 -- 567,571 567,571 Texas Competitive Electric Holdings LLC 11/01/15 10.25 7,395,000 -- 7,395,000(d) 4,732,800 -- 4,732,800 ------------------------------------------ Total 44,572,742 12,651,913 57,224,655 ------------------------------------------
9
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED ENTERTAINMENT (1.3%) AMC Entertainment 02/01/16 11.00 $ 5,748,000 $1,000,000 $ 6,748,000 $ 4,081,080 $ 715,000 $ 4,796,080 HRP Myrtle Beach Operations Sr Secured 04/01/12 0.00 -- 1,000,000 1,000,000(b,d) -- 445,000 445,000 United Artists Theatre Circuit Pass-Through Ctfs Series BB5 07/01/15 9.30 6,368,250 -- 6,368,250(k) 5,986,154 -- 5,986,154 United Artists Theatre Circuit Pass-Through Ctfs Series BC3 07/01/15 9.30 2,047,393 -- 2,047,393(k) 1,924,550 -- 1,924,550 ------------------------------------------ Total 11,991,784 1,160,000 13,151,784 ------------------------------------------ ENVIRONMENTAL (0.3%) Browning-Ferris Inds 09/15/35 7.40 -- 1,500,000 1,500,000 -- 1,087,500 1,087,500 Clean Harbors Sr Secured 07/15/12 11.25 957,000 -- 957,000 972,551 -- 972,551 Crown Cork & Seal Sr Unsecured 04/15/23 8.00 -- 1,500,000 1,500,000 -- 1,113,750 1,113,750 ------------------------------------------ Total 972,551 2,201,250 3,173,801 ------------------------------------------ FOOD AND BEVERAGE (4.0%) ASG Consolidated LLC/Finance Sr Disc Nts 11/01/11 11.50 19,195,000 1,500,000 20,695,000 16,411,725 1,290,000 17,701,725 Constellation Brands 12/01/11 8.38 -- 500,000 500,000 -- 437,500 437,500 Cott Beverages USA 12/15/11 8.00 16,541,000 2,200,000 18,741,000 9,759,190 1,309,000 11,068,190 Del Monte 12/15/12 8.63 -- 1,950,000 1,950,000 -- 1,774,500 1,774,500 02/15/15 6.75 -- 750,000 750,000 -- 615,000 615,000 Pinnacle Foods Finance LLC 04/01/15 9.25 -- 1,515,000 1,515,000 -- 1,007,475 1,007,475 04/01/17 10.63 13,508,000 -- 13,508,000 7,564,480 -- 7,564,480 Smithfield Foods Sr Unsecured 08/01/11 7.00 -- 650,000 650,000 -- 393,250 393,250 07/01/17 7.75 -- 1,000,000 1,000,000 -- 527,500 527,500 ------------------------------------------ Total 33,735,395 7,354,225 41,089,620 ------------------------------------------ GAMING (6.4%) Boyd Gaming Sr Sub Nts 02/01/16 7.13 15,590,000 2,175,000 17,765,000 8,808,350 1,239,750 10,048,100 Circus & Eldorado Jt Venture/Silver Legacy Capital 1st Mtge 03/01/12 10.13 9,215,000 -- 9,215,000 5,943,675 -- 5,943,675 Firekeepers Development Authority Sr Secured 05/01/15 13.88 7,160,000 -- 7,160,000(d) 4,725,600 -- 4,725,600 Fontainebleau Las Vegas Holdings LLC/Capital 2nd Mtge 06/15/15 10.25 14,586,000 -- 14,586,000(d) 1,896,180 -- 1,896,180 Indianapolis Downs LLC/Capital Sr Secured 11/01/12 11.00 7,040,000 1,495,000 8,535,000(d) 3,308,800 717,600 4,026,400 MGM Mirage 04/01/13 6.75 2,475,000 -- 2,475,000 1,287,000 -- 1,287,000 06/01/16 7.50 4,450,000 -- 4,450,000 2,291,750 -- 2,291,750 MGM Mirage Sr Secured 11/15/13 13.00 5,150,000 785,000 5,935,000(d) 4,377,500 659,400 5,036,900
10
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Pokagon Gaming Authority Sr Nts 06/15/14 10.38 $ 8,325,000 $1,000,000 $ 9,325,000(d) $ 7,034,625 $ 850,000 $ 7,884,625 San Pasqual Casino 09/15/13 8.00 -- 1,000,000 1,000,000(d) -- 745,000 745,000 Shingle Springs Tribal Gaming Authority Sr Nts 06/15/15 9.38 15,499,000 2,700,000 18,199,000(d) 7,362,025 1,228,500 8,590,525 Tunica-Biloxi Gaming Authority Sr Unsecured 11/15/15 9.00 10,245,000 -- 10,245,000(d) 8,759,475 -- 8,759,475 Wynn Las Vegas LLC/Capital 1st Mtge 12/01/14 6.63 3,700,000 1,000,000 4,700,000 2,617,750 712,500 3,330,250 ------------------------------------------ Total 58,412,730 6,152,750 64,565,480 ------------------------------------------ GAS DISTRIBUTORS (0.8%) Southwestern Energy Sr Nts 02/01/18 7.50 4,875,000 855,000 5,730,000(d) 4,119,375 726,750 4,846,125 Williams Partners LP/Finance Sr Unsecured 02/01/17 7.25 4,835,000 -- 4,835,000 3,795,475 -- 3,795,475 ------------------------------------------ Total 7,914,850 726,750 8,641,600 ------------------------------------------ GAS PIPELINES (0.7%) El Paso Sr Unsecured 06/15/17 7.00 -- 2,000,000 2,000,000 -- 1,433,986 1,433,986 Southern Star Central Sr Nts 03/01/16 6.75 6,815,000 -- 6,815,000 5,520,150 -- 5,520,150 ------------------------------------------ Total 5,520,150 1,433,986 6,954,136 ------------------------------------------ HEALTH CARE (6.1%) Community Health Systems 07/15/15 8.88 8,208,000 1,000,000 9,208,000 6,586,920 807,500 7,394,420 DaVita 03/15/13 6.63 4,421,000 -- 4,421,000 3,912,585 -- 3,912,585 03/15/15 7.25 4,236,000 1,500,000 5,736,000 3,664,140 1,305,000 4,969,140 HCA Sr Secured 11/15/14 9.13 -- 500,000 500,000 -- 407,500 407,500 11/15/16 9.25 1,255,000 500,000 1,755,000 1,019,688 407,500 1,427,188 HCA Sr Secured Pay-in-kind 11/15/16 9.63 2,860,000 415,000 3,275,000(n) 2,059,200 299,837 2,359,037 HCA Sr Unsecured 02/15/16 6.50 12,190,000 2,000,000 14,190,000 6,826,400 1,130,000 7,956,400 11/06/33 7.50 -- 1,900,000 1,900,000 -- 940,500 940,500 IASIS Healthcare LLC/Capital 06/15/14 8.75 -- 1,800,000 1,800,000 -- 1,377,000 1,377,000 NMH Holdings Sr Unsecured Pay-in-kind 06/15/14 9.94 5,927,654 -- 5,927,654(d,i,n) 4,208,634 -- 4,208,634 Omnicare 12/15/13 6.75 4,638,000 -- 4,638,000 3,872,730 -- 3,872,730 12/15/15 6.88 -- 1,350,000 1,350,000 -- 1,100,250 1,100,250 Omnicare Sr Sub Nts 06/01/13 6.13 3,765,000 -- 3,765,000 3,012,000 -- 3,012,000 Select Medical Sr Unsecured 09/15/15 8.83 15,812,000 2,250,000 18,062,000(i) 9,012,840 1,293,750 10,306,590
11
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Vanguard Health Holding I LLC (Zero coupon through 10- 01-09, thereafter 11.25%) 10/01/15 7.09 $ 2,955,000 $ -- $ 2,955,000(m) $ 2,275,350 $ -- $ 2,275,350 Vanguard Health Holding II LLC 10/01/14 9.00 6,532,000 1,000,000 7,532,000 5,225,600 805,000 6,030,600 ------------------------------------------ Total 51,676,087 9,873,837 61,549,924 ------------------------------------------ HOME CONSTRUCTION (1.4%) K Hovnanian Enterprises Sr Secured 05/01/13 11.50 7,930,000 875,000 8,805,000 6,066,450 673,750 6,740,200 Norcraft Holdings LP/Capital Sr Disc Nts 09/01/12 9.75 6,200,000 -- 6,200,000 4,960,000 -- 4,960,000 Toll Corp 12/01/11 8.25 -- 250,000 250,000 -- 206,250 206,250 William Lyon Homes 02/15/14 7.50 12,380,000 -- 12,380,000 2,352,200 -- 2,352,200 ------------------------------------------ Total 13,378,650 880,000 14,258,650 ------------------------------------------ INDEPENDENT ENERGY (6.0%) Chesapeake Energy 07/15/13 7.63 -- 3,050,000 3,050,000 -- 2,096,875 2,096,875 08/15/14 7.00 5,722,000 -- 5,722,000 4,348,720 -- 4,348,720 01/15/16 6.63 6,892,000 -- 6,892,000 4,807,170 -- 4,807,170 01/15/18 6.25 2,520,000 -- 2,520,000 1,650,600 -- 1,650,600 Compton Petroleum Finance 12/01/13 7.63 10,221,000 -- 10,221,000(c) 4,190,610 -- 4,190,610 Connacher Oil and Gas Sr Secured 12/15/15 10.25 9,160,000 1,485,000 10,645,000(c,d) 4,763,200 779,625 5,542,825 EXCO Resources 01/15/11 7.25 9,018,000 1,300,000 10,318,000 6,943,860 1,007,500 7,951,360 Forest Oil 06/15/19 7.25 -- 2,000,000 2,000,000 -- 1,380,000 1,380,000 Hilcorp Energy I LP/Finance Sr Unsecured 11/01/15 7.75 9,690,000 -- 9,690,000(d) 6,928,350 -- 6,928,350 PetroHawk Energy 07/15/13 9.13 -- 1,000,000 1,000,000 -- 770,000 770,000 Quicksilver Resources 08/01/15 8.25 6,324,000 -- 6,324,000 4,110,600 -- 4,110,600 04/01/16 7.13 3,900,000 1,700,000 5,600,000 2,242,500 986,000 3,228,500 Range Resources 05/15/16 7.50 3,250,000 -- 3,250,000 2,697,500 -- 2,697,500 05/01/18 7.25 2,010,000 1,000,000 3,010,000 1,602,975 798,750 2,401,725 SandRidge Energy Pay-in-kind 04/01/15 8.63 11,738,000 1,625,000 13,363,000(n) 7,453,630 1,040,000 8,493,630 ------------------------------------------ Total 51,739,715 8,858,750 60,598,465 ------------------------------------------ LODGING (0.3%) Felcor Lodging Sr Unsecured 06/01/11 9.00 -- 2,750,000 2,750,000 -- 1,918,125 1,918,125 Host Hotels & Resorts Sr Secured 06/01/16 6.75 -- 2,000,000 2,000,000 -- 1,340,000 1,340,000 ------------------------------------------ Total -- 3,258,125 3,258,125 ------------------------------------------ MEDIA CABLE (3.5%) Charter Communications Holdings I LLC/Capital Sr Secured 10/01/15 11.00 -- 720,000 720,000 -- 194,400 194,400 Charter Communications Holdings II LLC/Capital 10/01/13 10.25 7,680,000 -- 7,680,000 3,494,400 -- 3,494,400 10/01/13 10.25 2,860,000 415,000 3,275,000(d) 1,215,500 178,450 1,393,950
12
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Charter Communications Holdings II LLC/Capital Sr Unsecured 09/15/10 10.25 $ -- $1,500,000 $ 1,500,000 $ -- $ 768,750 $ 768,750 Charter Communications Holdings II LLC/Capital Sr Unsecured Series B 09/15/10 10.25 4,617,000 -- 4,617,000 2,193,075 -- 2,193,075 Charter Communications Operating LLC/Capital Sr Secured 04/30/14 8.38 4,056,000 2,000,000 6,056,000(d) 2,758,080 1,370,000 4,128,080 CSC Holdings Sr Unsecured 04/15/12 6.75 -- 1,000,000 1,000,000 -- 842,500 842,500 06/15/15 8.50 12,095,000 2,200,000 14,295,000(d) 9,676,000 1,787,500 11,463,500 Mediacom Broadband LLC Sr Unsecured 10/15/15 8.50 -- 1,000,000 1,000,000 -- 715,000 715,000 Mediacom LLC/Capital Sr Unsecured 01/15/13 9.50 7,220,000 -- 7,220,000 5,920,400 -- 5,920,400 Virgin Media Finance 04/15/14 8.75 5,145,000 800,000 5,945,000(c) 3,717,263 582,000 4,299,263 ------------------------------------------ Total 28,974,718 6,438,600 35,413,318 ------------------------------------------ MEDIA NON CABLE (9.1%) Dex Media Sr Disc Nts 11/15/13 9.00 4,505,000 3,225,000 7,730,000 585,650 435,375 1,021,025 Dex Media West LLC/Finance Sr Sub Nts Series B 08/15/13 9.88 3,819,000 500,000 4,319,000 840,180 111,250 951,430 DIRECTV Holdings LLC/Financing 06/15/15 6.38 5,175,000 1,675,000 6,850,000 4,204,688 1,369,313 5,574,001 05/15/16 7.63 7,266,000 -- 7,266,000 6,194,265 -- 6,194,265 EchoStar DBS 10/01/14 6.63 5,040,000 2,550,000 7,590,000 3,603,600 1,829,625 5,433,225 02/01/16 7.13 10,449,000 -- 10,449,000 7,418,790 -- 7,418,790 Intelsat Sr Unsecured 08/15/14 9.25 6,925,000 1,600,000 8,525,000(d) 5,886,250 1,388,000 7,274,250 Lamar Media 08/15/15 6.63 7,632,000 2,835,000 10,467,000 5,533,200 2,069,550 7,602,750 Lamar Media Series B 08/15/15 6.63 6,030,000 -- 6,030,000 4,371,750 -- 4,371,750 Lamar Media Series C 08/15/15 6.63 4,146,000 -- 4,146,000 3,005,850 -- 3,005,850 LBI Media Sr Sub Nts 08/01/17 8.50 5,112,000 1,000,000 6,112,000(d) 1,789,200 355,000 2,144,200 Liberty Media Sr Unsecured 07/15/29 8.50 -- 1,000,000 1,000,000 -- 624,720 624,720 Liberty Media LLC Sr Unsecured 05/15/13 5.70 19,626,000 2,740,000 22,366,000 13,167,966 1,852,089 15,020,055 LIN Television 05/15/13 6.50 2,655,000 1,000,000 3,655,000 1,234,575 470,000 1,704,575 LIN Television Series B 05/15/13 6.50 640,000 -- 640,000 297,600 -- 297,600 Nielsen Finance LLC 08/01/14 10.00 6,230,000 2,000,000 8,230,000 4,485,600 1,450,000 5,935,600 RadioOne 02/15/13 6.38 9,914,000 -- 9,914,000 3,370,760 -- 3,370,760 Rainbow Natl Services LLC 09/01/12 8.75 12,485,000 -- 12,485,000(d) 10,986,800 -- 10,986,800 09/01/14 10.38 3,003,000 -- 3,003,000(d) 2,597,595 -- 2,597,595
13
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED RH Donnelley Sr Unsecured 01/15/13 6.88 $ 1,579,000 $ -- $ 1,579,000 $ 205,270 $ -- $ 205,270 ------------------------------------------ Total 79,779,589 11,954,922 91,734,511 ------------------------------------------ METALS (1.6%) CII Carbon LLC 11/15/15 11.13 3,890,000 -- 3,890,000(d) 3,656,600 -- 3,656,600 Freeport-McMoRan Copper & Gold Sr Unsecured 04/01/15 8.25 7,965,000 -- 7,965,000 5,774,625 -- 5,774,625 04/01/17 8.38 1,350,000 2,000,000 3,350,000 958,500 1,421,888 2,380,388 Noranda Aluminum Acquisition Pay-in-kind 05/15/15 6.60 11,258,000 1,350,000 12,608,000(i,n) 3,658,850 445,500 4,104,350 Peabody Energy Series B 03/15/13 6.88 -- 500,000 500,000 -- 427,500 427,500 ------------------------------------------ Total 14,048,575 2,294,888 16,343,463 ------------------------------------------ NON CAPTIVE CONSUMER (1.8%) Triad Acquisition Sr Unsecured Series B 05/01/13 11.13 23,225,000 -- 23,225,000 18,115,500 -- 18,115,500 ------------------------------------------ NON CAPTIVE DIVERSIFIED (0.5%) Ford Motor Credit LLC Sr Unsecured 01/12/09 5.80 -- 1,600,000 1,600,000 -- 1,425,846 1,425,846 09/15/10 10.25 -- 1,500,000 1,500,000 -- 757,831 757,831 08/10/11 9.88 2,947,000 -- 2,947,000 1,414,560 -- 1,414,560 GMAC LLC Sr Unsecured 08/28/12 6.88 3,105,000 -- 3,105,000 1,086,964 -- 1,086,964 12/01/14 6.75 -- 1,000,000 1,000,000 -- 325,212 325,212 ------------------------------------------ Total 2,501,524 2,508,889 5,010,413 ------------------------------------------ OIL FIELD SERVICES (0.3%) Bristow Group 09/15/17 7.50 -- 1,000,000 1,000,000 -- 695,000 695,000 Helix Energy Solutions Group Sr Unsecured 01/15/16 9.50 3,068,000 950,000 4,018,000(d) 1,610,700 503,500 2,114,200 ------------------------------------------ Total 1,610,700 1,198,500 2,809,200 ------------------------------------------ OTHER FINANCIAL INSTITUTIONS (1.2%) Cardtronics 08/15/13 9.25 8,906,000 1,400,000 10,306,000 6,601,573 1,044,750 7,646,323 Cardtronics Series B 08/15/13 9.25 5,653,000 -- 5,653,000 4,190,286 -- 4,190,286 ------------------------------------------ Total 10,791,859 1,044,750 11,836,609 ------------------------------------------ OTHER INDUSTRY (0.7%) Chart Inds Sr Sub Nts 10/15/15 9.13 9,185,000 -- 9,185,000 6,567,275 -- 6,567,275 ------------------------------------------ PACKAGING (0.6%) Owens-Brockway Glass Container 05/15/13 8.25 -- 2,000,000 2,000,000(c) -- 1,890,000 1,890,000 Vitro 02/01/17 9.13 16,236,000 -- 16,236,000(c) 4,302,540 -- 4,302,540 ------------------------------------------ Total 4,302,540 1,890,000 6,192,540 ------------------------------------------ PAPER (2.5%) Boise Cascade LLC 10/15/14 7.13 6,482,000 -- 6,482,000 3,629,920 -- 3,629,920
14
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Cascades 02/15/13 7.25 $ 2,985,000 $ 500,000 $ 3,485,000(c) $ 1,671,600 $ 282,500 $ 1,954,100 Domtar 10/15/11 7.88 -- 1,000,000 1,000,000 -- 820,000 820,000 Georgia-Pacific LLC 01/15/17 7.13 4,918,000 -- 4,918,000(d) 3,614,730 -- 3,614,730 Georgia-Pacific LLC Sr Unsecured 05/15/31 8.88 -- 3,000,000 3,000,000 -- 1,890,000 1,890,000 Graham Packaging Intl 08/15/13 9.50 -- 500,000 500,000 -- 347,500 347,500 Jefferson Smurfit US Sr Unsecured 06/01/13 7.50 8,335,000 -- 8,335,000 2,417,150 -- 2,417,150 NewPage Sr Secured 05/01/12 10.00 11,127,000 1,565,000 12,692,000 6,008,580 852,925 6,861,505 Norampac 06/01/13 6.75 4,247,000 -- 4,247,000(c) 2,165,970 -- 2,165,970 Smurfit-Stone Container Enterprises Sr Unsecured 03/15/17 8.00 3,535,000 1,000,000 4,535,000 936,775 270,000 1,206,775 ------------------------------------------ Total 20,444,725 4,462,925 24,907,650 ------------------------------------------ PHARMACEUTICALS (1.0%) Warner Chilcott 02/01/15 8.75 9,902,000 1,000,000 10,902,000 8,738,515 887,500 9,626,015 ------------------------------------------ RETAILERS (0.3%) Neiman Marcus Group Pay-in-kind 10/15/15 9.00 5,605,000 1,000,000 6,605,000(n) 2,382,125 430,000 2,812,125 Toys "R" Us Sr Unsecured 10/15/18 7.38 -- 1,000,000 1,000,000 -- 415,000 415,000 ------------------------------------------ Total 2,382,125 845,000 3,227,125 ------------------------------------------ TECHNOLOGY (2.3%) Communications & Power Inds 02/01/12 8.00 9,130,000 1,700,000 10,830,000 7,486,600 1,402,500 8,889,100 CPI Intl Sr Unsecured 02/01/15 8.88 1,825,000 -- 1,825,000(i) 1,797,625 -- 1,797,625 Flextronics Sr Sub Nts 11/15/14 6.25 -- 2,000,000 2,000,000(c) -- 1,490,000 1,490,000 SS&C Technologies 12/01/13 11.75 3,414,000 -- 3,414,000 3,021,390 -- 3,021,390 SunGard Data Systems 08/15/13 9.13 -- 1,500,000 1,500,000 -- 1,170,000 1,170,000 08/15/15 10.25 10,890,000 -- 10,890,000 6,316,200 -- 6,316,200 ------------------------------------------ Total 18,621,815 4,062,500 22,684,315 ------------------------------------------ TRANSPORTATION SERVICES (0.8%) Hertz 01/01/14 8.88 2,930,000 1,635,000 4,565,000 1,512,613 852,244 2,364,857 01/01/16 10.50 9,479,000 -- 9,479,000 3,791,600 -- 3,791,600 Quality Distribution LLC/Capital 01/15/12 9.25 4,239,000 -- 4,239,000(i) 1,504,845 -- 1,504,845 ------------------------------------------ Total 6,809,058 852,244 7,661,302 ------------------------------------------ WIRELESS (4.7%) Centennial Communications Sr Nts 01/01/13 9.63 12,491,000 675,000 13,166,000(i) 11,679,085 634,500 12,313,585
15
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Cricket Communications 11/01/14 9.38 $ -- $1,000,000 $ 1,000,000 $ -- $ 798,750 $ 798,750 07/15/15 10.00 5,915,000 -- 5,915,000(d) 4,909,450 -- 4,909,450 MetroPCS Wireless 11/01/14 9.25 9,995,000 1,590,000 11,585,000 8,195,900 1,311,750 9,507,650 Nextel Communications Series D 08/01/15 7.38 22,311,000 1,930,000 24,241,000 8,924,400 772,363 9,696,763 Nextel Communications Series E 10/31/13 6.88 365,000 -- 365,000 153,300 -- 153,300 Sprint Capital 01/30/11 7.63 10,570,000 1,510,000 12,080,000 7,610,400 1,087,686 8,698,086 Sprint Nextel Sr Unsecured 12/01/16 6.00 -- 1,500,000 1,500,000 -- 833,623 833,623 ------------------------------------------ Total 41,472,535 5,438,672 46,911,207 ------------------------------------------ WIRELINES (5.6%) Citizens Communications Sr Unsecured 03/15/15 6.63 -- 650,000 650,000 -- 425,750 425,750 Fairpoint Communications Sr Unsecured 04/01/18 13.13 7,865,000 1,000,000 8,865,000(d) 4,011,150 515,000 4,526,150 Frontier Communications Sr Unsecured 03/15/19 7.13 9,705,000 -- 9,705,000 5,604,638 -- 5,604,638 GCI Sr Unsecured 02/15/14 7.25 4,930,000 -- 4,930,000 3,956,325 -- 3,956,325 Level 3 Communications Sub Nts 09/15/09 6.00 3,050,000 -- 3,050,000 2,806,000 -- 2,806,000 Level 3 Financing 03/15/13 12.25 5,525,000 1,665,000 7,190,000 3,176,875 965,700 4,142,575 Qwest Sr Unsecured 06/15/15 7.63 11,190,000 2,000,000 13,190,000 8,448,450 1,520,000 9,968,450 06/01/17 6.50 11,610,000 800,000 12,410,000 8,127,000 564,000 8,691,000 09/15/33 6.88 -- 500,000 500,000 -- 301,250 301,250 Qwest Communications Intl 02/15/09 5.65 -- 333,000 333,000(i) -- 331,335 331,335 Windstream 08/01/13 8.13 1,875,000 -- 1,875,000 1,546,875 -- 1,546,875 08/01/16 8.63 11,807,000 1,575,000 13,382,000 9,209,459 1,236,375 10,445,834 03/15/19 7.00 4,605,000 1,000,000 5,605,000 3,188,963 697,500 3,886,463 ------------------------------------------ Total 50,075,735 6,556,910 56,632,645 ------------------------------------------ TOTAL BONDS (Cost: $1,164,725,519) $686,849,745 $119,663,374 $806,513,119 --------------------------------------------------------------------------------------------------------------------------------
16
SENIOR LOANS (13.2%)(H) COUPON PRINCIPAL PRINCIPAL PRINCIPAL BORROWER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED AEROSPACE & DEFENSE (0.3%) Alion Science and Technology Term Loan TBD TBD 4,565,000 -- 4,565,000(g,p) 2,967,250 -- 2,967,250 ------------------------------------------ AUTOMOTIVE (0.8%) Ford Motor Term Loan TBD TBD 3,110,000 -- 3,110,000(g,p) 1,265,770 -- 1,265,770 12/15/13 4.43 8,257,975 -- 8,257,975 3,360,995 -- 3,360,995 Lear Term Loan TBD TBD 1,935,000 -- 1,935,000(g,p) 932,032 -- 932,032 3.59- 06/27/14 6.26 3,075,000 -- 3,075,000 1,481,135 -- 1,481,135 ------------------------------------------ Total 7,039,932 -- 7,039,932 ------------------------------------------ CHEMICALS (0.7%) Hexion Specialty Chemicals Tranche C Term Loan TBD TBD 13,162,520 -- 13,162,520(g,p) 7,019,967 -- 7,019,967 ------------------------------------------ CONSUMER CYCLICAL SERVICES (0.4%) West Corp Tranche B2 Term Loan TBD TBD 2,094,837 -- 2,094,837(g,p) 1,298,799 -- 1,298,799 3.77- 10/24/13 4.73 4,852,215 -- 4,852,215 3,008,373 -- 3,008,373 ------------------------------------------ Total 4,307,172 -- 4,307,172 ------------------------------------------ ENTERTAINMENT (0.3%) AMC Entertainment Pay-in-kind Term Loan 06/13/12 7.82 5,910,940 -- 5,910,940(n) 2,955,470 -- 2,955,470 ------------------------------------------ FOOD AND BEVERAGE (0.3%) Pinnacle Foods Finance LLC Term Loan 5.60- 04/02/14 6.80 3,823,901 -- 3,823,901 2,619,372 -- 2,619,372 ------------------------------------------ GAMING (1.4%) Fontainebleau Las Vegas Delayed Draw Term Loan TBD TBD 5,657,216 -- 5,657,216(g,p,q) 1,923,453 -- 1,923,453 Fontainebleau Las Vegas Tranche B Term Loan 06/06/14 6.07 11,314,432 -- 11,314,432 3,846,907 -- 3,846,907 Great Lakes Gaming of Michigan Term Loan 08/15/12 9.00 8,230,891 -- 8,230,891(k) 8,066,274 -- 8,066,274 ------------------------------------------ Total 13,836,634 -- 13,836,634 ------------------------------------------ HEALTH CARE (1.8%) HCA Tranche B Term Loan 11/17/13 6.01 11,595,783 -- 11,595,783 8,669,819 -- 8,669,819 IASIS Healthcare LLC Pay-in-kind Term Loan 06/13/14 8.76 17,913,812 -- 17,913,812(n) 8,956,906 -- 8,956,906 ------------------------------------------ Total 17,626,725 -- 17,626,725 ------------------------------------------ MEDIA CABLE (0.8%) Charter Communications Term Loan 3.63- 09/06/14 5.63 12,383,461 -- 12,383,461 8,342,118 -- 8,342,118 ------------------------------------------ MEDIA NON CABLE (1.0%) Dex Media West LLC Tranche B Term Loan TBD TBD 3,250,000 -- 3,250,000(g,p) 1,618,500 -- 1,618,500
17
SENIOR LOANS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL BORROWER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED Idearc Tranche B Term Loan 3.44- 11/17/14 5.77 $ 2,458,744 $ -- $ 2,458,744 $ 797,985 $ -- $ 797,985 Nielson Finance Term Loan TBD TBD 3,090,000 -- 3,090,000(c,g,p) 2,056,519 -- 2,056,519 3.77- 08/09/13 4.39 8,232,167 -- 8,232,167(c) 5,478,837 -- 5,478,837 ------------------------------------------ Total 9,951,841 -- 9,951,841 ------------------------------------------ METALS (--%) Noranda Aluminum Tranche B Term Loan TBD TBD 750,000 -- 750,000(g,p) 438,750 -- 438,750 ------------------------------------------ OIL FIELD SERVICES (1.2%) Dresser 2nd Lien Term Loan 05/04/15 7.99 20,560,000 -- 20,560,000 12,473,135 -- 12,473,135 ------------------------------------------ OTHER FINANCIAL INSTITUTIONS (0.5%) ACE Cash Express Tranche B Term Loan 10/05/13 6.77 9,565,855 -- 9,565,855 5,261,220 -- 5,261,220 ------------------------------------------ PAPER (0.4%) Georgia-Pacific Tranche B1 Term Loan TBD TBD 5,804,290 -- 5,804,290(g,p) 4,516,492 -- 4,516,492 ------------------------------------------ RETAILERS (1.2%) Neiman Marcus Group Term Loan 5,191,251(- TBD TBD 5,191,251 -- g,p) 3,263,065 -- 3,263,065 04/06/13 4.57 2,123,950 -- 2,123,950 1,335,051 -- 1,335,051 Toys "R" Us Tranche B Term Loan TBD TBD 1,870,000 -- 1,870,000(g,p) 1,095,502 -- 1,095,502 07/19/12 5.72 11,110,199 -- 11,110,199 6,508,688 -- 6,508,688 ------------------------------------------ Total 12,202,306 -- 12,202,306 ------------------------------------------ TECHNOLOGY (1.4%) Flextronics Intl Term Loan 6.13- 10/01/14 7.07 13,951,055 -- 13,951,055 9,486,718 -- 9,486,718 Flextronics Intl Tranche A1A Delayed Draw Term Loan 10/01/14 7.07 4,008,924 -- 4,008,924 2,726,068 -- 2,726,068 SunGard Data Systems Tranche B Term Loan TBD TBD 3,305,000 -- 3,305,000(g,p) 2,267,527 -- 2,267,527 ------------------------------------------ Total 14,480,313 -- 14,480,313 ------------------------------------------ WIRELINES (0.7%) Fairpoint Communications Tranche B Term Loan 03/08/15 6.56 11,558,000 -- 11,558,000 7,235,309 -- 7,235,309 ------------------------------------------ TOTAL SENIOR LOANS (Cost: $196,922,339) $133,274,006 $ -- $133,274,006 --------------------------------------------------------------------------------------------------------------------------------
18
COMMON STOCKS (--%) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED OIL, GAS & CONSUMABLE FUELS (--%) Link Energy LLC Unit 1,646,684 -- 1,646,684(b,j) $ 11,527 $ -- $ 11,527 ------------------------------------------ PAPER & FOREST PRODUCTS (--%) Crown Paper Escrow 29,470,000 -- 29,470,000(b,k) 29 -- 29 ------------------------------------------ TEXTILES, APPAREL & LUXURY GOODS (--%) Arena Brands 111,111 -- 111,111(b,k,l) 158,889 -- 158,889 ------------------------------------------ TOTAL COMMON STOCKS (Cost: $18,965,223) $ 170,445 $ -- $ 170,445 -------------------------------------------------------------------------------------------------------------------------------- OTHER (0.3%) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED OTHER FINANCIAL INSTITUTIONS Varde Fund V LP 25,000,000 -- 25,000,000(e,k,l) $ 2,698,250 $ -- $ 2,698,250 ------------------------------------------ TOTAL OTHER (Cost: $--) $ 2,698,250 $ -- $ 2,698,250 -------------------------------------------------------------------------------------------------------------------------------- MONEY MARKET FUNDS (7.3%) SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE HIGH YIELD HIGH YIELD RIVERSOURCE SELIGMAN BOND FUND RIVERSOURCE SELIGMAN BOND FUND HIGH YIELD HIGH YIELD PRO FORMA HIGH YIELD HIGH YIELD PRO FORMA BOND FUND FUND COMBINED BOND FUND FUND COMBINED RiverSource Short-Term Cash Fund, 0.69% 66,162,340 66,162,340(r) $ 66,162,340 -- $ 66,162,340 SSgA U.S. Treasury Money Market Fund -- 7,443,087 7,443,087 -- 7,443,087 7,443,087 ------------------------------------------ TOTAL MONEY MARKET FUNDS (Cost: $73,605,427) $ 66,162,340 $ 7,443,087 $ 73,605,427 ------------------------------------------ TOTAL INVESTMENTS IN SECURITIES $1,016,261,- (Cost: $1,454,218,508)(s) $889,154,786 $127,106,461 247 -------------------------------------------------------------------------------------------------------------------------------- NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
(A) Securities are valued by procedures described in Note 1 to the financial statements in the annual report. (B) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (C) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in U.S. dollar currency unless otherwise noted. At Nov. 30, 2008, the value of foreign securities represented 3.3% of net assets. (D) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Nov. 30, 2008, the value of these securities amounted to $160,159,644 of 15.9% of net assets. (E) The share amount for Limited Liability Companies (LLC) or Limited Partnerships (LP) represents capital contributions. (F) Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and collateralized mortgage obligations. These securities may be issued or guaranteed by U.S. government agencies or instrumentalities, or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. Unless otherwise noted, the coupon rates presented are fixed rates. (G) At Nov. 30, 2008, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $41,979,589. (H) Senior loans have rates of interest that float periodically based primarily on the London Interbank Offered Rate ("LIBOR") and other short-term rates. Remaining maturities of senior loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. (I) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Nov. 30, 2008. 19 (J) Investments representing 5% or more of the outstanding voting securities of the issuer. Transactions with companies that are or were affiliates during the six months ended Nov. 30, 2008 are as follows:
BEGINNING PURCHASE SALES ENDING DIVIDEND ISSUER COST COST COST COST INCOME VALUE(A) ------------------------------------------------------------------------------------------------------------------- Link Energy LLC Unit $13,076,335 -- -- $13,076,335 -- $11,527 -------------------------------------------------------------------------------------------------------------------
(K) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Nov. 30, 2008, is as follows:
ACQUISITION SECURITY DATES COST ------------------------------------------------------------------------------------------------------ Arena Brands Common 09-03-92 $5,888,888 Crown Paper Escrow Common 04-16-07 -- Great Lakes Gaming of Michigan Term Loan 9.00% 2012 03-01-07 thru 09-15-07 8,114,567 United Artists Theatre Circuit Pass-Through Ctfs Series BB5 9.30% 2015 12-08-95 thru 04-03-02 6,129,317 United Artists Theatre Circuit Pass-Through Ctfs Series BC3 9.30% 2015 12-06-01 1,684,496 Varde Fund V LP 04-27-00 thru 06-19-00 --*
* The original cost for this position in fiscal year 2004 was $25,000,000. From Sept. 29, 2004 through March 7, 2005, $25,000,000 was returned to the fund in the form of return of capital. (L) Security valued by management at fair value according to procedures approved, in good faith, by the Board. (M) For those zero coupon bonds that become coupon paying at a future date, the interest rate disclosed represents the annualized effective yield from the date of acquisition to maturity. (N) Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or in additional securities. The securities usually have the same terms as the original holdings. (O) On Sept. 15, 2008, Lehman Brothers Holdings filed a Chapter 11 bankruptcy petition. (P) Represents a senior loan purchased on a when-issued or delayed-delivery basis. Certain details associated with this purchase are not known prior to the settlement date of the transaction. In addition, senior loans typically trade without accrued interest and therefore a weighted average coupon rate is not available prior to settlement. At settlement, if still unknown, the borrower or counterparty will provide the Fund with the final weighted average coupon rate and maturity date. (Q) At Nov. 30, 2008, the Fund had unfunded senior loan commitments pursuant to the term of the loan agreement. The Fund receives a stated coupon rate until the borrower draws on the loan commitment, at which time the rate will become the stated rate in the loan agreement.
BORROWER UNFUNDED COMMITMENT -------------------------------------------------------------------------------------------- Fontainebleau Las Vegas Delayed Draw $5,509,045
(R) Affiliated Money Market Fund -- See Note 5 to the financial statements in the annual report. The rate shown is the seven-day current annualized yield at Nov. 30, 2008. (S) At Nov. 30, 2008, the approximate cost of securities for federal income tax purposes and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
RIVERSOURCE HIGH YIELD BOND FUND RIVERSOURCE SELIGMAN PRO FORMA HIGH YIELD BOND FUND HIGH YIELD FUND COMBINED Cost of securities for federal income tax purposes: $1,290,929,000 $163,289,000 $1,454,218,000 Unrealized appreciation $ 4,239,000 $ 52,000 $ 4,291,000 Unrealized depreciation (406,013,000) (36,235,000) (442,248,000) ---------------------------------------------------------------------------------------------------------------- Net unrealized depreciation $ (401,774,000) $(36,183,000) $ (437,957,000) ----------------------------------------------------------------------------------------------------------------
20 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) INTRODUCTION TO PROPOSED FUND REORGANIZATION Oct. 31, 2008 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements have been derived from financial statements prepared for the RiverSource Partners International Select Growth Fund and the Seligman International Growth Fund as of Oct. 31, 2008. RiverSource Partners International Select Growth Fund invests primarily in equity securities of foreign issuers, in both developed and emerging markets, that are believed to offer strong growth potential. Seligman International Growth Fund invests primarily in high-quality, large- and mid- capitalization growth companies with a market capitalization of $1 billion or more at the time of purchase and will invest in any country; however, it typically will not invest in the United States. Under the proposed Agreement and Plan of Reorganization, share classes of Seligman International Growth Fund would be exchanged for share classes of RiverSource Partners International Select Growth Fund.
SELLING FUND BUYING FUND ----------------------------------------------------------------------------------------------------------------------------- Seligman International Growth Fund Class A RiverSource Partners International Select Growth Fund Class A ----------------------------------------------------------------------------------------------------------------------------- Seligman International Growth Fund Class B RiverSource Partners International Select Growth Fund Class B ----------------------------------------------------------------------------------------------------------------------------- Seligman International Growth Fund Class C RiverSource Partners International Select Growth Fund Class C ----------------------------------------------------------------------------------------------------------------------------- Seligman International Growth Fund Class R(1) RiverSource Partners International Select Growth Fund Class R2(2) ----------------------------------------------------------------------------------------------------------------------------- Seligman International Growth Fund Class I(1) RiverSource Partners International Select Growth Fund Class R5(2) -----------------------------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R and Class I shares of the Seligman International Growth Fund will be redesignated as Class R2 and Class R5 shares, respectively. (2) The inception date for the RiverSource Partners International Select Growth Fund Class R2 and Class R5 shares is expected to be in the third quarter of 2009. Note: RiverSource Partners International Select Growth Fund also offers Class I and Class R4 shares. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Partners International Select Growth Fund, as if the transaction had occurred at the beginning of the fiscal year ending Oct. 31, 2008. 21 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS SELIGMAN INTERNATIONAL PARTNERS INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT GROWTH GROWTH PRO FORMA SELECT GROWTH FUND OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS PRO FORMA COMBINED ASSETS Investments in securities, at cost Unaffiliated issuers $ 519,162,871 $ 45,146,953 $ -- $ 564,309,824 Affiliated money market fund $ 11,780,597 $ -- $ -- $ 11,780,597 -------------------------------------------------------------------- Investments in securities, at value Unaffiliated issuers $ 365,979,624 $ 39,362,312 $ -- $ 405,341,936 Affiliated money market fund $ 11,780,597 $ -- $ -- $ 11,780,597 Cash -- 2,688,791 -- 2,688,791 Foreign currency holdings (identified cost $24 for Seligman International Growth Fund) -- 33 -- 33 Capital shares receivable 222,943 61,705 -- 284,648 Dividends and accrued interest receivable 1,232,232 112,553 -- 1,344,785 Receivable for investment securities sold 6,333,407 2,629,866 -- 8,963,273 Investment management services fees receivable (Note 2) -- -- 16,139(a) 16,139 Transfer agency fees receivable (Note 2) -- -- 139,352(b) 139,352 Other receivable (Note 2) -- -- 32,333(e) 32,333 Receivable from RiverSource Investments, LLC (Note 2) 272,508 -- 923,981(f) 1,196,489 Unrealized appreciation on forward foreign currency contracts 92,879 8,960 -- 101,839 Prepaid expenses -- 36,046 -- 36,046 Other assets -- 6,135 -- 6,135 ---------------------------------------------------------------------------------------------------------------------- Total assets 385,914,190 44,906,401 1,111,805 431,932,396 ---------------------------------------------------------------------------------------------------------------------- LIABILITIES Foreign currency overdraft 408,258 -- -- 408,258 Capital shares payable 337,883 194,926 -- 532,809 Payable for investment securities purchased 6,072,577 4,524,435 -- 10,597,012 Unrealized depreciation on forward foreign currency contracts 49,386 29,204 -- 78,590 Accrued investment management services fees (Note 2) 10,225 52,908 (63,133)(a) -- Accrued distribution fees 2,189 15,679 -- 17,868 Accrued transfer agency fees (Note 2) 1,989 -- (1,989)(b) -- Accrued administrative services fees (Note 2) 825 -- 62,281(c) 63,106 Accrued plan administration services fees (Note 2) 4 -- 1,404(d) 1,408 Other accrued expenses (Note 2) 127,787 108,855 (236,642)(e) -- ---------------------------------------------------------------------------------------------------------------------- Total liabilities 7,011,123 4,926,007 (238,079) 11,699,051 ---------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 378,903,067 $ 39,980,394 $1,349,884 $ 420,233,345 ---------------------------------------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value for RiverSource Partners International Select Growth Fund and $.001 par value for Seligman International Growth Fund (Note 3) $ 808,978 $ 5,287 $ 84,079 $ 898,344 Additional paid-in capital (Note 3) 593,834,837 74,630,032 (84,079) 668,380,790 Undistributed net investment income (Note 2) 393,561 19,115 1,349,884 1,762,560 Accumulated net realized gain (loss) (62,954,767) (28,895,024) -- (91,849,791) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (153,179,542) (5,779,016) -- (158,958,558) ---------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 378,903,067 $ 39,980,394 $1,349,884 $ 420,233,345 ---------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding shares: Class A $ 190,233,626 $ 17,996,886 $ 607,641 $ 208,838,153 Class B $ 29,647,619 $ 2,083,135 $ 70,334 $ 31,801,088 Class C $ 3,212,928 $ 10,403,453 $ 351,259 $ 13,967,640 Class I $ 155,259,864 N/A $ -- $ 155,259,864 Class R2 N/A $ 414,091 $ 13,981 $ 428,072 Class R4 $ 549,030 N/A $ -- $ 549,030 Class R5 N/A $ 9,082,829 $ 306,669 $ 9,389,498 Shares outstanding (Note 3): Class A shares 40,703,983 2,304,203 -- 44,687,822 Class B shares 6,606,389 308,402 -- 7,086,003 Class C shares 717,874 1,537,450 -- 3,118,479 Class I shares 32,753,046 N/A -- 32,753,046 Class R2 shares N/A 53,633 -- 91,664 Class R4 shares 116,504 N/A -- 116,504 Class R5 shares N/A 1,083,471 -- 1,980,907 Net asset value per share of outstanding capital stock: Class A $ 4.67 $ 7.81 $ -- $ 4.67 Class B $ 4.49 $ 6.75 $ -- $ 4.49 Class C $ 4.48 $ 6.77 $ -- $ 4.48 Class I $ 4.74 N/A $ -- $ 4.74 Class R2 N/A $ 7.72 $ -- $ 4.67 Class R4 $ 4.71 N/A $ -- $ 4.71 Class R5 N/A $ 8.38 $ -- $ 4.74 ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 22 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF OPERATIONS
RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS PARTNERS PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND SELECT GROWTH FUND SELECT GROWTH GROWTH PRO FORMA PRO FORMA YEAR ENDED OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED INVESTMENT INCOME Income: Dividends $ 16,167,508 $ 1,871,755 $ -- $ 18,039,263 Interest 12,456 15,962 -- 28,418 Income distributions from affiliated money market fund 739,119 -- -- 739,119 Fee income from securities lending 385,329 -- -- 385,329 Less foreign taxes withheld (1,602,354) (140,903) -- (1,743,257) ---------------------------------------------------------------------------------------------------------------------- Total income 15,702,058 1,746,814 -- 17,448,872 ---------------------------------------------------------------------------------------------------------------------- Expenses: Investment management services fees (Note 2) 5,965,413 813,827 (79,272)(a) 6,699,968 Distribution fees Class A 850,640 99,447 -- 950,087 Class B 586,365 55,984 -- 642,349 Class C 55,865 225,513 -- 281,378 Class R2 -- 2,810 -- 2,810 Transfer agency fees (Note 2) Class A 730,718 180,772 (75,778)(b) 835,712 Class B 133,231 24,550 (8,600)(b) 149,181 Class C 12,429 104,720 (52,298)(b) 64,851 Class R2 -- 2,737 (2,456)(b) 281 Class R4 569 -- --(b) 569 Class R5 -- 9,064 (2,209)(b) 6,855 Administrative services fees (Note 2) 511,522 -- 62,281(c) 573,803 Plan administration services fees (Note 2) Class R2 -- -- 1,404(d) 1,404 Class R4 2,845 -- -- 2,845 Compensation of board members (Note 2) 14,027 7,896 (6,106)(e) 15,817 Custodian fees (Note 2) 340,490 177,274 (133,818)(e) 383,946 Printing and postage (Note 2) 102,584 30,105 (17,013)(e) 115,676 Registration fees (Note 2) 66,850 64,770 (56,238)(e) 75,382 Professional fees (Note 2) 58,787 56,216 (48,713)(e) 66,290 Other (Note 2) 34,814 11,530 (7,087)(e) 39,257 ---------------------------------------------------------------------------------------------------------------------- Total expenses 9,467,149 1,867,215 (425,903) 10,908,461 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (277,382) (23,792) (923,981)(f) (1,225,155) Earnings and bank fee credits on cash balances (5,620) -- -- (5,620) ---------------------------------------------------------------------------------------------------------------------- Total net expenses 9,184,147 1,843,423 (1,349,884) 9,677,686 ---------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 6,517,911 (96,609) 1,349,884 7,771,186 ---------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (58,195,406) (30,998,937) -- (89,194,343) Foreign currency transactions (527,664) 1,929,320 -- 1,401,656 Payment from RiverSource Investments, LLC 272,508 -- -- 272,508 ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (58,450,562) (29,069,617) -- (87,520,179) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (346,344,916) (31,217,589) -- (377,562,505) ---------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (404,795,478) (60,287,206) -- (465,082,684) ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(398,277,567) $(60,383,815) $ 1,349,884 $(457,311,498) ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 23 RIVERSOURCE PARTNERS INTERNATIONAL SELECT GROWTH FUND (BUYING FUND) SELIGMAN INTERNATIONAL GROWTH FUND (SELLING FUND) NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited as to Oct. 31, 2008) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements have been derived from financial statements prepared for the RiverSource Partners International Select Growth Fund and the Seligman International Growth Fund as of Oct. 31, 2008. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: RiverSource Partners International Select Growth Fund invests primarily in equity securities of foreign issuers, in both developed and emerging markets, that are believed to offer strong growth potential. Seligman International Growth Fund invests primarily in high-quality, large- and mid-capitalization growth companies with a market capitalization of $1 billion or more at the time of purchase and will invest in any country; however, it typically will not invest in the United States. The pro forma statements give effect to the proposed transfer of the assets and liabilities of Seligman International Growth Fund in exchange for Class A, Class B, Class C, Class R2 and Class R5 shares of RiverSource Partners International Select Growth Fund under U.S. generally accepted accounting principles. The pro forma statements reflect estimates for the combined RiverSource Partners International Select Growth Fund based on the increased asset level of the Reorganization and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the Funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Partners International Select Growth Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect the change in investment management services fee due to the Reorganization. In addition, the Performance Incentive Adjustment (PIA) was calculated based on the combined average net assets of the two funds and the RiverSource Partners International Select Growth Fund PIA rate as of Oct. 31, 2008. (b) To reflect the change in transfer agent fees due to the Reorganization including adjusting for closed account fees for each Seligman International Growth Fund shareholder account that will be closed on the system as a result of the Reorganization. (c) To reflect the change in administrative services fees due to the Reorganization. (d) To reflect the change in plan administration services fees due to the Reorganization. (e) To reflect the change in other fees due to the Reorganization. (f) To adjust the expense reimbursement to reflect the net reduction in fees resulting from the Reorganization per the agreement by RiverSource Investments, LLC and its affiliates to waive certain fees and absorb certain expenses following the Reorganization. 24 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C, Class R2 and Class R5 shares of RiverSource Partners International Select Growth Fund as if the Reorganization were to have taken place on Oct. 31, 2008. The following table reflects the number of RiverSource Partners International Select Growth Fund shares assumed to be issued to the shareholders of the Seligman International Growth Fund.
RIVERSOURCE SELIGMAN PARTNERS INTERNATIONAL INTERNATIONAL TOTAL GROWTH FUND SELECT GROWTH FUND PRO FORMA SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING ---------------------------------------------------------------------------------------------------------------- Class A 3,983,839 40,703,983 44,687,822 ---------------------------------------------------------------------------------------------------------------- Class B 479,614 6,606,389 7,086,003 ---------------------------------------------------------------------------------------------------------------- Class C 2,400,605 717,874 3,118,479 ---------------------------------------------------------------------------------------------------------------- Class I N/A 32,753,046 32,753,046 ---------------------------------------------------------------------------------------------------------------- Class R2(1),(2) 91,664 N/A 91,664 ---------------------------------------------------------------------------------------------------------------- Class R4 N/A 116,504 116,504 ---------------------------------------------------------------------------------------------------------------- Class R5(1),(2) 1,980,907 N/A 1,980,907 ----------------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R and Class I shares of the Seligman International Growth Fund will be redesignated as Class R2 and Class R5 shares, respectively. (2) The inception date for the RiverSource Partners International Select Growth Fund Class R2 and Class R5 shares is expected to be in the third quarter of 2009. 25 COMBINED PORTFOLIO OF INVESTMENTS RiverSource Partners International Select Growth Fund OCT. 31, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (96.5%)(C) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED AUSTRALIA (4.0%) Australian Stock Exchange 30,000 -- 30,000 $ 602,083 $ -- $ 602,083 BHP Billiton 230,250 -- 230,250 4,421,058 -- 4,421,058 Billabong Intl 155,000 -- 155,000 1,238,434 -- 1,238,434 Centennial Coal 226,795 -- 226,795 533,044 -- 533,044 CSL 76,559 28,623 105,182 1,860,918 697,638 2,558,556 Leighton Holdings 43,763 -- 43,763 727,297 -- 727,297 Mount Gibson Iron 292,336 -- 292,336(b) 73,119 -- 73,119 OneSteel 214,024 -- 214,024 491,444 -- 491,444 Origin Energy 153,032 -- 153,032 1,604,046 -- 1,604,046 Perpetual 35,000 -- 35,000 814,601 -- 814,601 Rio Tinto 38,029 -- 38,029 1,966,312 -- 1,966,312 Sino Gold Mining 323,000 -- 323,000(b) 743,575 -- 743,575 Sonic Healthcare 97,607 -- 97,607 891,528 -- 891,528 ------------------------------------------------------- Total 15,967,459 697,638 16,665,097 ------------------------------------------------------- AUSTRIA (0.4%) OMV 20,288 -- 20,288 649,187 -- 649,187 Verbund Series A 23,257 -- 23,257 1,099,820 -- 1,099,820 ------------------------------------------------------- Total 1,749,007 -- 1,749,007 ------------------------------------------------------- BELGIUM (0.7%) Colruyt 4,203 -- 4,203 944,315 -- 944,315 Eurofins Scientific 8,000 -- 8,000 447,988 -- 447,988 Groupe Bruxelles Lambert 8,156 -- 8,156 598,950 -- 598,950 Hansen Transmis- sions Intl -- 209,064 209,064(b) -- 353,482 353,482 Mobistar 10,571 -- 10,571 701,244 -- 701,244 ------------------------------------------------------- Total 2,692,497 353,482 3,045,979 ------------------------------------------------------- BRAZIL (0.8%) Companhia Vale do Rio Doce ADR -- 20,300 20,300 -- 266,336 266,336 Localiza Rent A Car 117,300 -- 117,300 456,589 -- 456,589 Natura Cosmeticos 70,000 -- 70,000 590,361 -- 590,361 Petroleo Brasileiro ADR -- 10,700 10,700 -- 287,723 287,723 Porto Seguro 150,000 -- 150,000 747,220 -- 747,220 Suzano Papel e Celulose 196,000 -- 196,000 1,167,099 -- 1,167,099 ------------------------------------------------------- Total 2,961,269 554,059 3,515,328 ------------------------------------------------------- CAMBODIA (0.1%) NagaCorp 2,500,000 -- 2,500,000 436,171 -- 436,171 ------------------------------------------------------- CANADA (4.8%) Agrium 19,400 -- 19,400 743,349 -- 743,349 Alimentation Couche-Tard 58,100 -- 58,100 783,539 -- 783,539 Barrick Gold -- 10,100 10,100 -- 229,472 229,472 Brookfield Asset Management Cl A 71,600 -- 71,600 1,253,795 -- 1,253,795 Canadian Natural Resources -- 4,800 4,800 -- 242,210 242,210 Canadian Oil Sands Trust Unit 29,400 -- 29,400 789,075 -- 789,075 CCL Inds Cl B 31,000 -- 31,000 771,816 -- 771,816 CGI Group Cl A 102,218 -- 102,218(b) 816,082 -- 816,082 EnCana 67,600 -- 67,600 3,435,120 -- 3,435,120 Gildan Activewear 24,943 -- 24,943(b) 581,682 -- 581,682
26
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED Horizon North Logistics 114,400 -- 114,400(b) $ 75,004 $ -- $ 75,004 Ivanhoe Mines 39,000 -- 39,000(b) 101,954 -- 101,954 Potash Corp of Saskatchewan 20,400 12,800 33,200 1,737,034 1,091,328 2,828,362 Precision Drilling Trust Unit 36,300 -- 36,300 391,635 -- 391,635 Research in Motion -- 7,600 7,600(b) -- 383,268 383,268 Rogers Communica- tions Cl B -- 13,400 13,400 -- 389,004 389,004 ShawCor Cl A 77,300 -- 77,300 1,170,775 -- 1,170,775 Shoppers Drug Mart 39,400 -- 39,400 1,517,208 -- 1,517,208 Sino-Forest Cl A 91,200 -- 91,200(b) 853,758 -- 853,758 Suncor Energy 13,900 -- 13,900 333,960 -- 333,960 Talisman Energy -- 20,000 20,000 -- 197,627 197,627 Teck Cominco Cl B 53,400 -- 53,400 531,807 -- 531,807 Tesco 16,500 -- 16,500(b) 187,770 -- 187,770 Toronto- Dominion Bank 15,700 -- 15,700 741,644 -- 741,644 Uranium One 138,000 -- 138,000(b) 116,818 -- 116,818 UTS Energy 77,000 -- 77,000(b) 58,791 -- 58,791 Viterra 62,800 -- 62,800(b) 398,705 -- 398,705 Xtreme Coil Drilling 14,600 -- 14,600(b) 46,043 -- 46,043 ------------------------------------------------------- Total 17,437,364 2,532,909 19,970,273 ------------------------------------------------------- CHILE (0.4%) SQM ADR 73,000 -- 73,000 1,671,700 -- 1,671,700 ------------------------------------------------------- CHINA (1.1%) China Communica- tions Construction -- 166,000 166,000 -- 115,961 115,961 China Mass Media Intl Advertising ADR 65,200 -- 65,200(b) 283,620 -- 283,620 China Shipping Development Series H 803,000 -- 803,000 791,361 -- 791,361 Ctrip.com Intl ADR -- 12,300 12,300 -- 376,134 376,134 Jiangsu Expressway Series H 1,572,000 -- 1,572,000 1,099,606 -- 1,099,606 Mindray Medical Intl ADR 16,000 -- 16,000 344,960 -- 344,960 Parkson Retail Group -- 228,500 228,500 -- 209,722 209,722 Sinotrans Series H 2,100,000 -- 2,100,000 471,572 -- 471,572 Sohu.com -- 8,400 8,400(b) -- 461,496 461,496 TravelSky Technology Series H 762,900 -- 762,900 183,572 -- 183,572 VisionChina Media ADR 23,800 -- 23,800(b) 190,400 -- 190,400 ------------------------------------------------------- Total 3,365,091 1,163,313 4,528,404 ------------------------------------------------------- CZECH REPUBLIC (0.2%) Komercni Banka 4,400 -- 4,400 670,981 -- 670,981 ------------------------------------------------------- DENMARK (1.2%) Carlsberg Cl B -- 3,446 3,446 -- 136,434 136,434 Novo Nordisk Series B 51,000 -- 51,000 2,733,692 -- 2,733,692 Novozymes Series B 12,070 -- 12,070 852,072 -- 852,072 Vestas Wind Systems 26,025 9,828 35,853(b) 1,065,958 404,536 1,470,494 ------------------------------------------------------- Total 4,651,722 540,970 5,192,692 ------------------------------------------------------- FINLAND (1.5%) Cargotec Series B 24,000 -- 24,000 332,108 -- 332,108 Fortum 48,994 -- 48,994 1,203,653 -- 1,203,653 Jaakko Poyry Group 81,000 -- 81,000 1,074,895 -- 1,074,895 Nokia 152,209 32,538 184,747 2,330,743 496,303 2,827,046 Ramirent 90,000 -- 90,000 362,740 -- 362,740 Stockmann Series B 49,000 -- 49,000 660,157 -- 660,157 ------------------------------------------------------- Total 5,964,296 496,303 6,460,599 ------------------------------------------------------- FRANCE (5.3%) ALSTOM 31,243 -- 31,243 1,547,971 -- 1,547,971 APRIL Group 16,000 -- 16,000 580,073 -- 580,073
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COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED BNP Paribas -- 9,112 9,112 $ -- $ 661,455 $ 661,455 Carbone Lorraine 16,800 -- 16,800 499,447 -- 499,447 Eutelsat Communica- tions 31,521 -- 31,521 676,304 -- 676,304 France Telecom -- 31,430 31,430 -- 793,124 793,124 GDF Suez 99,746 -- 99,746 4,438,489 -- 4,438,489 Gemalto 25,040 -- 25,040(b) 701,305 -- 701,305 Hermes Intl 10,905 -- 10,905 1,406,993 -- 1,406,993 Hi-Media 50,000 -- 50,000(b) 127,113 -- 127,113 Iliad 11,000 -- 11,000 869,650 -- 869,650 Ingenico 23,377 -- 23,377 364,971 -- 364,971 Meetic 20,000 -- 20,000(b) 281,912 -- 281,912 Neopost 12,000 -- 12,000 1,004,314 -- 1,004,314 Norbert Dentressan- gle 12,500 -- 12,500 689,163 -- 689,163 Pierre & Vacances 11,000 -- 11,000 503,579 -- 503,579 PPR -- 8,227 8,227(b) -- 523,954 523,954 Rubis 13,200 -- 13,200 730,841 -- 730,841 Sanofi- Aventis -- 8,325 8,325 -- 523,995 523,995 Societe Generale -- 5,307 5,307 -- 291,394 291,394 SR Teleperform- ance 28,979 -- 28,979 625,105 -- 625,105 SUEZ 20 -- 20 867 -- 867 Total -- 6,874 6,874 -- 377,553 377,553 Ubisoft Entertain- ment 15,290 -- 15,290(b) 807,931 -- 807,931 Unibail- Rodamco 8,131 -- 8,131 1,219,095 -- 1,219,095 Vallourec 5,210 -- 5,210 582,579 -- 582,579 Vivendi 50,233 -- 50,233 1,312,582 -- 1,312,582 ------------------------------------------------------- Total 18,970,284 3,171,475 22,141,759 ------------------------------------------------------- GERMANY (5.6%) Allianz -- 2,456 2,456 -- 183,927 183,927 Bayer 26,618 -- 26,618 1,488,308 -- 1,488,308 CTS Eventim 38,900 -- 38,900 965,704 -- 965,704 Deutsche Beteiligungs 17,500 -- 17,500 232,702 -- 232,702 Deutsche Telekom -- 58,432 58,432 -- 869,732 869,732 E.ON 137,121 -- 137,121 5,245,880 -- 5,245,880 ElringKlin- ger 54,500 -- 54,500 444,214 -- 444,214 Fresenius Medical -- 13,242 13,242 -- 594,236 594,236 GEA Group 48,989 -- 48,989 705,725 -- 705,725 Hamburger Hafen und Logistik 9,000 -- 9,000 301,349 -- 301,349 Metro -- 3,687 3,687 -- 118,818 118,818 MPC Muenchmeyer Petersen Capital 3,000 -- 3,000 28,225 -- 28,225 Rational 8,200 -- 8,200 843,066 -- 843,066 Rhon- Klinikum 84,100 -- 84,100 1,808,085 -- 1,808,085 RWE 13,685 -- 13,685 1,137,611 -- 1,137,611 SAP 72,747 -- 72,747 2,566,811 -- 2,566,811 SGL Carbon 25,902 -- 25,902(b) 508,291 -- 508,291 Siemens 29,647 -- 29,647 1,780,304 -- 1,780,304 Takkt 40,000 -- 40,000 392,247 -- 392,247 Tognum 26,600 -- 26,600 296,574 -- 296,574 Vossloh 13,900 -- 13,900 1,058,633 -- 1,058,633 Wacker Chemie 6,226 -- 6,226 677,220 -- 677,220 Wincor Nixdorf 28,100 -- 28,100 1,220,124 -- 1,220,124 ZhongDe Waste Technology 12,100 -- 12,100 149,877 -- 149,877 ------------------------------------------------------- Total 21,850,950 1,766,713 23,617,663 -------------------------------------------------------
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COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED GREECE (0.8%) Alpha Bank 87,238 -- 87,238 $ 1,273,218 $ -- $ 1,273,218 Intralot- Integrated Lottery Systems & Services 251,000 -- 251,000 1,291,709 -- 1,291,709 OPAP 45,376 -- 45,376 990,420 -- 990,420 ------------------------------------------------------- Total 3,555,347 -- 3,555,347 ------------------------------------------------------- HONG KONG (2.4%) BOC Hong Kong Holdings 428,500 -- 428,500 490,631 -- 490,631 Cheung Kong Holdings 89,000 -- 89,000 854,585 -- 854,585 China Green Holdings 1,420,000 -- 1,420,000 1,102,535 -- 1,102,535 China Mobile -- 22,500 22,500 -- 197,419 197,419 Esprit Holdings -- 10,500 10,500 -- 58,946 58,946 FU JI Food & Catering Services Holdings 737,000 -- 737,000 390,163 -- 390,163 Global Digital Creations Holdings 1,894,600 -- 1,894,600(b) 21,758 -- 21,758 Hang Seng Bank 64,400 -- 64,400 803,597 -- 803,597 Hong Kong Aircraft Engineering 50,000 -- 50,000 394,136 -- 394,136 Hong Kong Exchanges and Clearing 140,000 -- 140,000 1,419,797 -- 1,419,797 Hopewell Highway Infrastruc- ture 1,100,000 -- 1,100,000 720,217 -- 720,217 Hutchison Whampoa 249,000 -- 249,000 1,345,642 -- 1,345,642 Lenovo Group 1,257,000 -- 1,257,000 381,138 -- 381,138 Lifestyle Intl Holdings 860,000 -- 860,000 574,081 -- 574,081 Noble Group 642,000 -- 642,000 467,559 -- 467,559 REXCAPITAL Financial Holdings 5,000,000 -- 5,000,000(b) 92,400 -- 92,400 TPV Technology 1,495,000 -- 1,495,000 296,835 -- 296,835 Wharf Holdings 172,000 -- 172,000 343,198 -- 343,198 Xinyu Hengdeli Holdings 1,600,000 -- 1,600,000 290,280 -- 290,280 ------------------------------------------------------- Total 9,988,552 256,365 10,244,917 ------------------------------------------------------- INDIA (1.0%) Asian Paints 48,446 -- 48,446 948,029 -- 948,029 Housing Development Finance 33,000 -- 33,000 1,197,876 -- 1,197,876 Jain Irrigation Systems 77,000 -- 77,000 480,755 -- 480,755 Mundra Port and Special Economic Zone 63,500 -- 63,500 468,449 -- 468,449 Shree Cement 8,350 -- 8,350 68,553 -- 68,553 Shriram Transport Finance 80,000 -- 80,000 355,023 -- 355,023 United Phosphorus 380,000 -- 380,000 837,318 -- 837,318 ------------------------------------------------------- Total 4,356,003 -- 4,356,003 ------------------------------------------------------- INDONESIA (0.1%) Perusahaan Gas Negara 3,500,000 -- 3,500,000 438,744 -- 438,744 ------------------------------------------------------- IRELAND (0.5%) Paddy Power 24,500 -- 24,500 417,623 -- 417,623 United Drug 400,000 -- 400,000 1,553,717 -- 1,553,717 ------------------------------------------------------- Total 1,971,340 -- 1,971,340 ------------------------------------------------------- ISRAEL (0.5%) Teva Pharmaceuti- cal Inds ADR -- 43,900 43,900 -- 1,882,432 1,882,432 ------------------------------------------------------- ITALY (1.0%) Amplifon 69,500 -- 69,500 108,379 -- 108,379 Cobra Automotive Technologies 30,000 -- 30,000(b) 80,488 -- 80,488 Compagnie Industriali Riunite 453,100 -- 453,100 486,566 -- 486,566 Enel 177,532 -- 177,532 1,187,314 -- 1,187,314 GranitiFian- dre 62,000 -- 62,000 295,298 -- 295,298 Lottomatica 34,182 -- 34,182 797,798 -- 797,798
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COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED SABAF 15,000 -- 15,000 $ 309,065 $ -- $ 309,065 Terna -- R- ete Elettrica Nationale 253,964 -- 253,964 818,778 -- 818,778 ------------------------------------------------------- Total 4,083,686 -- 4,083,686 ------------------------------------------------------- JAPAN (20.7%) AEON Delight 35,000 -- 35,000 862,450 -- 862,450 AEON Mall 54,000 -- 54,000 1,333,410 -- 1,333,410 Ain Pharmaciez 35,000 -- 35,000 670,836 -- 670,836 AS ONE 28,600 -- 28,600 569,247 -- 569,247 Asahi Breweries 80,900 -- 80,900 1,335,726 -- 1,335,726 Asics 95,100 -- 95,100 596,035 -- 596,035 Astellas Pharma 23,900 10,600 34,500 962,931 433,347 1,396,278 Bank of Kyoto 76,000 -- 76,000 799,648 -- 799,648 Benesse 18,700 -- 18,700 785,636 -- 785,636 Canon 33,400 -- 33,400 1,169,048 -- 1,169,048 Chuo Mitsui Trust Holdings 110,000 -- 110,000 434,114 -- 434,114 Cosel 69,900 -- 69,900 580,877 -- 580,877 CyberAgent 700 -- 700 625,113 -- 625,113 Daihatsu Motor 78,000 -- 78,000 577,668 -- 577,668 Daiichi Sankyo -- 10,300 10,300 -- 210,780 210,780 Daito Trust Construction 19,000 -- 19,000 801,739 -- 801,739 East Japan Railway 369 -- 369 2,626,539 -- 2,626,539 Eisai -- 10,200 10,200 -- 335,299 335,299 FamilyMart 22,900 -- 22,900 907,531 -- 907,531 Fast Retailing 17,163 -- 17,163 1,830,225 -- 1,830,225 FCC 60,000 -- 60,000 748,863 -- 748,863 Fukuoka REIT 120 -- 120 471,728 -- 471,728 Glory 35,000 -- 35,000 501,729 -- 501,729 Hamamatsu Photonics 25,000 -- 25,000 555,031 -- 555,031 Hisamitsu Pharmaceuti- cal 26,200 -- 26,200 1,092,308 -- 1,092,308 Hitachi 434,000 -- 434,000 2,038,222 -- 2,038,222 Hitachi Metals 68,000 -- 68,000 511,442 -- 511,442 Honda Motor 49,900 -- 49,900 1,241,129 -- 1,241,129 Hosiden 58,300 -- 58,300 612,429 -- 612,429 Ibiden 35,000 -- 35,000 654,910 -- 654,910 ITOCHU 189,000 -- 189,000 999,097 -- 999,097 Japan Pure Chemical 46 -- 46 103,495 -- 103,495 Japan Tobacco 621 168 789 2,203,721 596,540 2,800,261 Jupiter Telecommuni- cations 2,100 -- 2,100 1,407,356 -- 1,407,356 Kamigumi 130,000 -- 130,000 1,034,514 -- 1,034,514 Kansai Paint 370,000 -- 370,000 2,065,596 -- 2,065,596 Kansai Urban Banking 10,400 -- 10,400 12,079 -- 12,079 KDDI 247 -- 247 1,480,322 -- 1,480,322 Keyence 4,400 -- 4,400 843,413 -- 843,413 Kintetsu World Express 35,400 -- 35,400 513,934 -- 513,934 Konami 31,000 -- 31,000 560,973 -- 560,973 Kurita Water Inds 30,600 -- 30,600 698,367 -- 698,367 Lawson 20,900 -- 20,900 1,021,801 -- 1,021,801 Makita 26,000 -- 26,000 471,574 -- 471,574 Marubeni 319,000 -- 319,000 1,239,676 -- 1,239,676 Mitsubishi 129,300 -- 129,300 2,167,912 -- 2,167,912 Mitsubishi Electric 272,000 -- 272,000 1,686,687 -- 1,686,687 Mitsubishi UFJ Financial Group 426,000 -- 426,000 2,677,806 -- 2,677,806 Mitsui & Co 109,000 -- 109,000 1,056,451 -- 1,056,451 Mitsui Fudosan 121,000 16,000 137,000 2,111,225 275,464 2,386,689 Mitsui OSK Lines 184,000 -- 184,000 961,100 -- 961,100
30
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED Mitsui Sumitomo Insurance Group Holdings 22,500 -- 22,500 $ 625,413 $ -- $ 625,413 MIURA 27,300 -- 27,300 560,927 -- 560,927 Nakanishi 8,400 -- 8,400 602,146 -- 602,146 NGK Insulators 43,000 -- 43,000 446,751 -- 446,751 Nikon 73,000 -- 73,000 1,029,087 -- 1,029,087 Nintendo 8,900 1,200 10,100 2,860,443 378,477 3,238,920 Nippon Building Fund 90 -- 90 865,051 -- 865,051 Nippon Meat Packers 51,000 -- 51,000 699,714 -- 699,714 Nippon Residential Investment 208 -- 208 111,964 -- 111,964 Nippon Yusen Kabushiki Kaisha 179,000 -- 179,000 865,828 -- 865,828 NTT DoCoMo -- 235 235 -- 372,841 372,841 Olympus 27,000 -- 27,000 520,484 -- 520,484 ORIX JREIT 140 -- 140 641,964 -- 641,964 Osaka Securities Exchange 255 -- 255 838,156 -- 838,156 Panasonic 165,000 -- 165,000 2,657,857 -- 2,657,857 POINT 20,000 -- 20,000 982,553 -- 982,553 Rakuten 2,104 -- 2,104 1,043,324 -- 1,043,324 Ryohin Keikaku 13,000 -- 13,000 622,181 -- 622,181 Seven Bank 421 -- 421 1,212,919 -- 1,212,919 Shimano 23,700 -- 23,700 678,139 -- 678,139 Shin-Etsu Chemical 47,000 -- 47,000 2,499,005 -- 2,499,005 Sony 17,300 -- 17,300 410,131 -- 410,131 Square Enix Holdings 23,000 -- 23,000 579,615 -- 579,615 Suruga Bank 144,000 -- 144,000 1,355,921 -- 1,355,921 Sysmex 16,800 -- 16,800 522,045 -- 522,045 T&D Holdings 18,300 -- 18,300 699,279 -- 699,279 T. Hasegawa 42,500 -- 42,500 606,812 -- 606,812 Tamron 35,000 -- 35,000 376,418 -- 376,418 Tokio Marine Holdings 67,600 -- 67,600 2,085,765 -- 2,085,765 TOPCON 127,800 -- 127,800 719,522 -- 719,522 Uni-Charm -- 5,700 5,700 -- 406,750 406,750 Unicharm PetCare 31,300 -- 31,300 1,104,766 -- 1,104,766 Union Tool 25,600 -- 25,600 567,829 -- 567,829 Ushio 45,000 -- 45,000 608,096 -- 608,096 USS 11,000 -- 11,000 673,940 -- 673,940 Wacom 413 -- 413 364,760 -- 364,760 Yahoo! Japan -- 1,115 1,115 -- 365,023 365,023 Yokohama Rubber 126,000 -- 126,000 618,424 -- 618,424 Yusen Air & Sea Service 52,000 -- 52,000 558,488 -- 558,488 ZENRIN 26,000 -- 26,000 218,561 -- 218,561 ------------------------------------------------------- Total 83,647,941 3,374,521 87,022,462 ------------------------------------------------------- LUXEMBOURG (0.7%) ArcelorMit- tal 39,516 -- 39,516 1,025,534 -- 1,025,534 Millicom Intl Cellular -- 10,600 10,600 -- 424,000 424,000 SES FDR 82,000 -- 82,000 1,474,624 -- 1,474,624 ------------------------------------------------------- Total 2,500,158 424,000 2,924,158 ------------------------------------------------------- MEXICO (0.4%) Financiera Independen- cia 177,654 -- 177,654 122,404 -- 122,404 Grupo Aeropor- tuario del Sureste ADR 24,000 -- 24,000 773,760 -- 773,760 Urbi Desarrollos Urbanos 500,000 -- 500,000(b) 751,283 -- 751,283 ------------------------------------------------------- Total 1,647,447 -- 1,647,447 ------------------------------------------------------- NETHERLANDS (4.6%) Aalberts Inds 91,317 -- 91,317 833,948 -- 833,948 Arcadis 48,900 -- 48,900 578,517 -- 578,517
31
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED Fugro 58,686 -- 58,686 $ 2,096,360 $ -- $ 2,096,360 Imtech 94,000 -- 94,000 1,435,565 -- 1,435,565 Koninklijke (Royal) KPN 177,259 29,240 206,499 2,495,490 411,430 2,906,920 Koninklijke Ahold 159,087 -- 159,087 1,707,254 -- 1,707,254 Koninklijke DSM 17,547 -- 17,547 488,483 -- 488,483 Koninklijke Vopak 39,126 -- 39,126 1,268,153 -- 1,268,153 Qiagen 29,712 -- 29,712(b) 423,313 -- 423,313 Reed Elsevier 122,169 -- 122,169 1,632,340 -- 1,632,340 Royal Boskalis Westminster 18,419 -- 18,419 607,855 -- 607,855 Smit Intl 13,400 -- 13,400 903,800 -- 903,800 Ten Cate 74,320 -- 74,320 1,575,191 -- 1,575,191 Unilever 70,309 -- 70,309 1,693,811 -- 1,693,811 Unit 4 Agresso 64,150 -- 64,150 960,568 -- 960,568 Wavin 66,830 -- 66,830 233,133 -- 233,133 ------------------------------------------------------- Total 18,933,781 411,430 19,345,211 ------------------------------------------------------- NEW ZEALAND (0.1%) Sky City Entertain- ment Group 264,229 -- 264,229 509,677 -- 509,677 ------------------------------------------------------- NORWAY (0.7%) DNB NOR 100 -- 100 580 -- 580 Kongsberg Automotive 63,150 -- 63,150(b) 34,429 -- 34,429 StatoilHydro 84,200 -- 84,200 1,694,523 -- 1,694,523 Tandberg 34,300 -- 34,300 424,614 -- 424,614 Yara Intl 29,770 -- 29,770 622,312 -- 622,312 ------------------------------------------------------- Total 2,776,458 -- 2,776,458 ------------------------------------------------------- POLAND ( -- %) ING Bank Slaski 1,200 -- 1,200 172,178 -- 172,178 ------------------------------------------------------- PORTUGAL (0.2%) Jeronimo Martins 140,138 -- 140,138 714,902 -- 714,902 ------------------------------------------------------- RUSSIA (0.1%) RBC Information Systems ADR 10,450 -- 10,450 56,221 -- 56,221 Vimpelcom ADR -- 20,800 20,800(b) -- 301,600 301,600 ------------------------------------------------------- Total 56,221 301,600 357,821 ------------------------------------------------------- SINGAPORE (1.1%) CDL Hospitality Trusts 1,344,500 -- 1,344,500 613,571 -- 613,571 ComfortDel- Gro 850,000 -- 850,000 697,537 -- 697,537 Mapletree Logistics Trust 1,973,100 -- 1,973,100 560,574 -- 560,574 Mapletree Logistics Trust Series A 1,479,825 -- 1,479,825(e) 406,021 -- 406,021 Olam Intl 800,000 -- 800,000 704,547 -- 704,547 Singapore Exchange 450,000 -- 450,000 1,611,513 -- 1,611,513 ------------------------------------------------------- Total 4,593,763 -- 4,593,763 ------------------------------------------------------- SOUTH AFRICA (0.8%) Impala Platinum Holdings 66,000 -- 66,000 690,389 -- 690,389 Mr Price Group 310,000 -- 310,000 763,339 -- 763,339 Naspers Series N 64,000 -- 64,000 1,067,811 -- 1,067,811 Randgold Resources ADR 29,500 -- 29,500 914,795 -- 914,795 ------------------------------------------------------- Total 3,436,334 -- 3,436,334 ------------------------------------------------------- SOUTH KOREA (0.7%) MegaStudy 6,850 -- 6,850 770,653 -- 770,653 Sung Kwang Bend 41,000 -- 41,000 388,458 -- 388,458 Taewoong 11,372 -- 11,372 554,243 -- 554,243
32
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED Woongjin Coway 50,700 -- 50,700 $ 1,044,103 $ -- $ 1,044,103 ------------------------------------------------------- Total 2,757,457 -- 2,757,457 ------------------------------------------------------- SPAIN (2.0%) Grifols 34,914 -- 34,914 694,571 -- 694,571 Iberdrola 118,651 -- 118,651 858,415 -- 858,415 Mapfre 201,970 -- 201,970 642,548 -- 642,548 Red Electrica de Espana 17,800 -- 17,800 779,920 -- 779,920 Telefonica 293,252 -- 293,252 5,427,624 -- 5,427,624 ------------------------------------------------------- Total 8,403,078 -- 8,403,078 ------------------------------------------------------- SWEDEN (1.3%) Atlas Copco Series A 124,600 -- 124,600 1,045,633 -- 1,045,633 Hexagon Series B 172,710 -- 172,710 1,131,917 -- 1,131,917 HEXPOL 49,196 -- 49,196(b) 197,546 -- 197,546 Modern Times Group Series B 20,475 -- 20,475 439,598 -- 439,598 Nobia 104,170 -- 104,170 227,078 -- 227,078 Nordea Bank 52,309 -- 52,309 419,499 -- 419,499 Oriflame Cosmetics SDR 16,296 -- 16,296 509,397 -- 509,397 Securitas Systems Series B 469,000 -- 469,000 475,887 -- 475,887 Sweco Series B 139,000 -- 139,000 852,467 -- 852,467 Swedish Match -- 18,400 18,400(b) -- 253,657 253,657 ------------------------------------------------------- Total 5,299,022 253,657 5,552,679 ------------------------------------------------------- SWITZERLAND (10.3%) ABB 62,015 -- 62,015(b) 813,600 -- 813,600 Actelion 28,586 6,448 35,034(b) 1,509,942 340,919 1,850,861 Aryzta 44,100 -- 44,100(b) 1,573,258 -- 1,573,258 Burckhardt Compression Holding 4,350 -- 4,350 565,447 -- 565,447 Geberit 11,600 -- 11,600 1,205,020 -- 1,205,020 Givaudan 750 -- 750 510,995 -- 510,995 Julius Baer Holding -- 12,036 12,036 -- 473,788 473,788 Kuehne & Nagel Intl 24,500 -- 24,500 1,483,177 -- 1,483,177 Lonza Group 11,822 -- 11,822 981,014 -- 981,014 Nestle 241,728 38,226 279,954 9,398,860 1,490,029 10,888,889 Novartis 156,762 27,161 183,923 7,955,898 1,374,038 9,329,936 Roche Holding 29,421 11,977 41,398 4,498,679 1,833,269 6,331,948 Sika 1,200 -- 1,200 946,047 -- 946,047 Sonova Holding 18,810 -- 18,810 781,465 -- 781,465 Synthes 11,061 -- 11,061 1,427,153 -- 1,427,153 Temenos Group 29,567 -- 29,567(b) 370,260 -- 370,260 UBS -- 63,775 63,775 -- 1,088,206 1,088,206 Xstrata 93,209 -- 93,209 1,594,128 -- 1,594,128 Zurich Financial Services 5,706 -- 5,706 1,157,470 -- 1,157,470 ------------------------------------------------------- Total 36,772,413 6,600,249 43,372,662 ------------------------------------------------------- TAIWAN (0.6%) Everlight Electronics 282,975 -- 282,975 427,848 -- 427,848 Formosa Intl Hotels 81,800 -- 81,800 561,209 -- 561,209 GeoVision 60,000 -- 60,000 249,087 -- 249,087 President Chain Store 318,000 -- 318,000 738,636 -- 738,636 Wah Lee Industrial 341,755 -- 341,755 321,115 -- 321,115 ------------------------------------------------------- Total 2,297,895 -- 2,297,895 ------------------------------------------------------- UNITED KINGDOM (18.1%) 3i Group -- 49,584 49,584 -- 433,232 433,232 Aggreko 118,017 -- 118,017 825,761 -- 825,761 Anglo American 99,811 29,048 128,859 2,504,152 717,371 3,221,523
33
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED ARM Holdings -- 694,390 694,390 $ -- $ 1,081,961 $ 1,081,961 AstraZeneca -- 28,946 28,946 -- 1,230,642 1,230,642 Autonomy 72,059 67,433 139,492(b) 1,142,437 1,063,202 2,205,639 AVEVA Group 38,097 -- 38,097 485,616 -- 485,616 Babcock Intl Group 117,774 -- 117,774 736,856 -- 736,856 BAE Systems 345,074 -- 345,074 1,939,469 -- 1,939,469 Barclays -- 59,648 59,648(b) -- 175,666 175,666 BG Group 253,614 -- 253,614 3,728,782 -- 3,728,782 BHP Billiton 118,803 49,279 168,082 2,017,153 836,313 2,853,466 British American Tobacco 136,293 13,582 149,875 3,738,076 372,997 4,111,073 Cable & Wireless 530,986 -- 530,986 1,052,310 -- 1,052,310 Cadbury -- 45,342 45,342 -- 416,664 416,664 Capita Group 143,000 85,302 228,302 1,477,480 878,360 2,355,840 Chemring Group 23,376 -- 23,376 599,650 -- 599,650 Cobham 360,988 -- 360,988 1,097,003 -- 1,097,003 Compass Group 273,250 -- 273,250 1,270,518 -- 1,270,518 easyJet -- 289,687 289,687(b) -- 1,437,028 1,437,028 Enterprise Inns 243,374 -- 243,374 383,220 -- 383,220 FirstGroup 129,189 -- 129,189 852,453 -- 852,453 G4S 375,738 -- 375,738 1,137,891 -- 1,137,891 GAME Group 245,627 -- 245,627 515,195 -- 515,195 GlaxoSmithK- line 317,051 -- 317,051 6,094,410 -- 6,094,410 HMV Group 277,241 -- 277,241 444,041 -- 444,041 IG Group Holdings 130,897 -- 130,897 611,496 -- 611,496 Imperial Tobacco Group 104,119 -- 104,119 2,790,289 -- 2,790,289 Informa 128,200 -- 128,200 434,297 -- 434,297 Inmarsat 130,419 -- 130,419 889,114 -- 889,114 Intermediate Capital Group 37,500 -- 37,500 584,550 -- 584,550 Intertek Group 182,176 -- 182,176 2,157,327 -- 2,157,327 Intl Power 316,111 -- 316,111 1,130,783 -- 1,130,783 J Sainsbury -- 109,901 109,901 -- 502,666 502,666 John D Wood & Co 136,926 -- 136,926 529,195 -- 529,195 Keller Group 42,000 -- 42,000 353,238 -- 353,238 Michael Page Intl -- 114,256 114,256 -- 369,305 369,305 Next -- 34,722 34,722 -- 589,613 589,613 Northgate 110,000 -- 110,000 226,328 -- 226,328 Petrofac 83,944 -- 83,944 581,071 -- 581,071 Prudential 274,748 -- 274,748 1,380,024 -- 1,380,024 Reckitt Benckiser Group 71,434 30,132 101,566 3,021,364 1,266,486 4,287,850 Rio Tinto 42,455 14,894 57,349 1,982,980 694,587 2,677,567 Rotork 102,886 -- 102,886 1,232,752 -- 1,232,752 Royal Dutch Shell Cl A -- 24,326 24,326 -- 665,081 665,081 RPS Group 342,400 -- 342,400 814,976 -- 814,976 Serco Group 220,000 -- 220,000 1,311,864 -- 1,311,864 Smith & Nephew 110,000 -- 110,000 1,007,104 -- 1,007,104 Stagecoach Group 288,916 -- 288,916 867,409 -- 867,409 Standard Chartered 139,077 -- 139,077 2,298,317 -- 2,298,317 Tesco 244,681 102,872 347,553 1,340,510 562,318 1,902,828 Tullett Prebon 153,390 -- 153,390 587,789 -- 587,789 Tullow Oil 36,000 -- 36,000 305,704 -- 305,704 Unilever 97,311 -- 97,311 2,185,970 -- 2,185,970 Vodafone Group -- 80,515 80,515 -- 155,085 155,085 Wm Morrison Supermarkets 348,257 109,913 458,170 1,482,720 469,610 1,952,330 ------------------------------------------------------- Total 62,149,644 13,918,187 76,067,831 ------------------------------------------------------- UNITED STATES (1.7%) Atwood Oceanics 58,000 -- 58,000(b) 1,593,840 -- 1,593,840
34
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED BioMarin Pharmaceuti- cal 28,000 -- 28,000(b) $ 512,960 $ -- $ 512,960 Bristow Group 13,500 -- 13,500(b) 334,395 -- 334,395 Central European Distribution 38,000 -- 38,000(b) 1,094,020 -- 1,094,020 FMC Technologies 30,600 -- 30,600(b) 1,070,694 -- 1,070,694 iShares MSCI EAFE Index Fund 39,938 -- 39,938 1,782,033 -- 1,782,033 Oceaneering Intl 5,000 -- 5,000(b) 140,850 -- 140,850 Synthes -- 5,135 5,135 -- 663,009 663,009 ------------------------------------------------------- Total 6,528,792 663,009 7,191,801 ------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $564,309,82- 4) $365,979,624 $39,362,312 $405,341,936 ------------------------------------------------------------------------------------------------------------------------------ MONEY MARKET FUND (2.8%) SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND GROWTH FUND GROWTH FUND PRO FORMA COMBINED GROWTH FUND GROWTH FUND PRO FORMA COMBINED RiverSource Short-Term Cash Fund, 1.60% 11,780,597 -- 11,780,597(d) $ 11,780,597 $ -- $ 11,780,597 ------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $11,780,597) $ 11,780,597 $ -- $ 11,780,597 ------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $576,090,42- 1)(f) $377,760,221 $39,362,312 $417,122,533 ------------------------------------------------------------------------------------------------------------------------------
35 SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of total net assets at Oct. 31, 2008:
INDUSTRY VALUE VALUE VALUE RIVERSOURCE RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PERCENTAGE OF INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND NET ASSETS GROWTH FUND GROWTH FUND PRO FORMA COMBINED Aerospace & Defense 0.9% $ 3,636,122 $ -- $ 3,636,122 Air Freight & Logistics 0.5 2,233,157 -- 2,233,157 Airlines 0.3 -- 1,437,028 1,437,028 Auto Components 0.5 1,926,418 -- 1,926,418 Automobiles 0.4 1,818,797 -- 1,818,797 Beverages 0.6 2,429,746 136,434 2,566,180 Biotechnology 1.3 4,578,391 1,038,557 5,616,948 Building Products 0.4 1,888,776 -- 1,888,776 Capital Markets 1.0 2,247,867 1,995,226 4,243,093 Chemicals 3.9 15,309,467 1,091,328 16,400,795 Commercial Banks 3.4 13,363,132 1,128,515 14,491,647 Commercial Services & Supplies 1.5 6,240,689 -- 6,240,689 Communications Equipment 0.9 3,004,444 879,571 3,884,015 Computers & Peripherals 0.7 2,964,162 -- 2,964,162 Construction & Engineering 1.2 4,788,072 115,961 4,904,033 Construction Materials -- 68,553 -- 68,553 Consumer Finance 0.1 477,427 -- 477,427 Containers & Packaging 0.2 771,816 -- 771,816 Distributors 0.1 290,280 -- 290,280 Diversified Consumer Services 0.4 1,556,289 -- 1,556,289 Diversified Financial Services 1.8 7,464,028 -- 7,464,028 Diversified Telecommunication Services 3.1 10,734,188 2,375,886 13,110,074 Electric Utilities 2.7 11,193,780 -- 11,193,780 Electrical Equipment 1.9 7,607,501 404,536 8,012,037 Electronic Equipment, Instruments & Components 1.8 7,770,213 -- 7,770,213 Energy Equipment & Services 1.9 8,142,628 -- 8,142,628 Food & Staples Retailing 3.4 12,533,799 1,653,412 14,187,211 Food Products 4.7 18,157,619 1,490,029 19,647,648 Gas Utilities 0.4 1,169,585 416,664 1,586,249 Health Care Equipment & Supplies 1.4 5,205,357 663,009 5,868,366 Health Care Providers & Services 1.3 4,930,956 594,236 5,525,192 Hotels, Restaurants & Leisure 1.9 7,644,487 376,134 8,020,621 Household Durables 1.5 6,487,079 -- 6,487,079 Household Products 1.1 3,021,364 1,673,236 4,694,600 Independent Power Producers & Energy Traders 0.3 1,130,783 -- 1,130,783 Industrial Conglomerates 0.9 3,612,512 -- 3,612,512 Insurance 1.9 7,917,792 183,927 8,101,719 Internet & Catalog Retail 0.3 1,435,571 -- 1,435,571 Internet Software & Services 0.3 281,912 826,519 1,108,431 IT Services 0.2 999,654 -- 999,654 Leisure Equipment & Products 0.5 2,083,644 -- 2,083,644 Life Sciences Tools & Services 0.4 1,852,315 -- 1,852,315 Machinery 2.6 10,414,014 353,482 10,767,496 Marine 1.0 4,101,466 -- 4,101,466 Media 2.7 10,911,644 389,004 11,300,648 Metals & Mining 5.4 19,569,842 2,744,079 22,313,921 Multiline Retail 0.8 1,856,419 1,323,289 3,179,708 Multi-Utilities 1.3 5,576,967 -- 5,576,967 Office Electronics 0.5 2,173,362 -- 2,173,362 Oil, Gas & Consumable Fuels 3.6 13,249,050 1,770,194 15,019,244 Paper & Forest Products 0.5 2,020,857 -- 2,020,857 Personal Products 0.3 1,099,758 -- 1,099,758 Pharmaceuticals 7.8 24,826,226 7,823,802 32,650,028 Professional Services 1.6 5,334,807 1,247,665 6,582,472
36
INDUSTRY VALUE VALUE VALUE RIVERSOURCE RIVERSOURCE PARTNERS PARTNERS SELIGMAN INTERNATIONAL PERCENTAGE OF INTERNATIONAL SELECT INTERNATIONAL SELECT GROWTH FUND NET ASSETS GROWTH FUND GROWTH FUND PRO FORMA COMBINED Real Estate Investment Trusts (REITs) 1.2 $ 4,889,968 $ -- $ 4,889,968 Real Estate Management & Development 1.7 6,697,952 275,464 6,973,416 Road & Rail 1.4 5,726,855 -- 5,726,855 Semiconductors & Semiconductor Equipment 0.3 -- 1,081,961 1,081,961 Software 2.8 10,356,412 1,441,679 11,798,091 Specialty Retail 1.3 5,436,371 58,946 5,495,317 Textiles, Apparel & Luxury Goods 1.3 5,398,335 -- 5,398,335 Thrifts & Mortgage Finance 0.3 1,197,876 -- 1,197,876 Tobacco 2.4 8,732,086 1,223,194 9,955,280 Trading Companies & Distributors 1.5 6,293,435 -- 6,293,435 Transportation Infrastructure 1.7 6,963,984 -- 6,963,984 Wireless Telecommunication Services 0.8 2,181,566 1,149,345 3,330,911 Other(1) 2.8 11,780,597 -- 11,780,597 ------------------------------------------------------------------------------------------- Total $377,760,221 $39,362,312 $417,122,533 -------------------------------------------------------------------------------------------
(1) Cash & Cash Equivalents. 37 INVESTMENTS IN DERIVATIVES FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008 RiverSource Partners International Select Growth Fund
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION Nov. 3, 2008 474,700 775,375 $11,488 $ -- British Pound U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 422,254 344,627 -- (5,806) Canadian Dollar U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 1,348,178 1,741,044 23,331 -- European Monetary Unit U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 502,030 335,375 -- (3,308) Singapore Dollar U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 1,781,042 1,570,695 35,114 -- Swiss Franc U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 240,088 369,764 5,509 -- U.S. Dollar Australian Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 637,866 390,517 -- (9,446) U.S. Dollar British Pound ------------------------------------------------------------------------------------------ Nov. 3, 2008 83,940 102,848 1,414 -- U.S. Dollar Canadian Dollar ------------------------------------------------------------------------------------------ Nov. 3, 2008 13,378 37,111 71 -- U.S. Dollar Polish Zloty ------------------------------------------------------------------------------------------ Nov. 3, 2008 68,224 102,139 681 -- U.S. Dollar Singapore Dollar ------------------------------------------------------------------------------------------ Nov. 4, 2008 80,423 103,842 1,375 -- European Monetary Unit U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 4, 2008 56,034,950 577,510 8,526 -- Japanese Yen U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 4, 2008 12,936 1,026 19 -- Mexican Peso U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 4, 2008 630,413 383,230 -- (13,719) U.S. Dollar British Pound ------------------------------------------------------------------------------------------ Nov. 4, 2008 788,546 952,106 1,616 -- U.S. Dollar Canadian Dollar ------------------------------------------------------------------------------------------ Nov. 4, 2008 649,617 63,023,713 -- (9,669) U.S. Dollar Japanese Yen ------------------------------------------------------------------------------------------ Nov. 4, 2008 7,075 10,388 -- (67) U.S. Dollar Singapore Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 7,693 6,377 -- (7) Canadian Dollar U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 11,837 15,090 9 -- European Monetary Unit U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 4,791,733 48,563 -- (94) Japanese Yen U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 23,817 1,848 -- (6) Mexican Peso U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 361,456 533,869 -- (6,896) U.S. Dollar Australian Dollar ------------------------------------------------------------------------------------------ Nov. 5, 2008 216,067 134,215 -- (87) U.S. Dollar British Pound ------------------------------------------------------------------------------------------ Nov. 5, 2008 12,534 18,588 6 -- U.S. Dollar Singapore Dollar ------------------------------------------------------------------------------------------ Nov. 6, 2008 4,978,267 50,773 731 -- Japanese Yen U.S. Dollar ------------------------------------------------------------------------------------------ Nov. 6, 2008 285,028 433,630 2,989 -- U.S. Dollar Australian Dollar ------------------------------------------------------------------------------------------ Nov. 6, 2008 19,491 1,911,046 -- (281) U.S. Dollar Japanese Yen ------------------------------------------------------------------------------------------ Total $92,879 $(49,386) ------------------------------------------------------------------------------------------
38 Seligman International Growth Fund
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION Nov. 3, 2008 285,706 364,275 $ 129 $ -- European Monetary Unit U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 3, 2008 814,944 122,718 1,722 -- Norwegian Krone U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 3, 2008 408,669 353,430 1,038 -- Swiss Franc U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 3, 2008 410,796 251,043 -- (6,780) U.S. Dollar British Pound ----------------------------------------------------------------------------------------------- Nov. 3, 2008 146,556 178,804 1,792 -- U.S. Dollar Canadian Dollar ----------------------------------------------------------------------------------------------- Nov. 3, 2008 21,428 16,563 -- (318) U.S. Dollar European Monetary Unit ----------------------------------------------------------------------------------------------- Nov. 3, 2008 246,263 190,223 -- (3,814) U.S. Dollar European Monetary Unit ----------------------------------------------------------------------------------------------- Nov. 3, 2008 275,962 2,139,260 69 -- U.S. Dollar Hong Kong Dollar ----------------------------------------------------------------------------------------------- Nov. 3, 2008 50,554 57,181 -- (1,248) U.S. Dollar Swiss Franc ----------------------------------------------------------------------------------------------- Nov. 4, 2008 90,605 117,297 1,817 -- European Monetary Unit U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 4, 2008 382,889 232,558 -- (8,621) U.S. Dollar British Pound ----------------------------------------------------------------------------------------------- Nov. 4, 2008 135,523 162,758 -- (488) U.S. Dollar Canadian Dollar ----------------------------------------------------------------------------------------------- Nov. 4, 2008 123,256 709,686 -- (1,782) U.S. Dollar Danish Krone ----------------------------------------------------------------------------------------------- Nov. 4, 2008 67,063 52,598 -- (24) U.S. Dollar European Monetary Unit ----------------------------------------------------------------------------------------------- Nov. 4, 2008 177,164 17,150,315 -- (3,066) U.S. Dollar Japanese Yen ----------------------------------------------------------------------------------------------- Nov. 4, 2008 163,559 186,227 -- (2,977) U.S. Dollar Swiss Franc ----------------------------------------------------------------------------------------------- Nov. 5, 2008 102,169 130,143 -- (76) European Monetary Unit U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 5, 2008 90,812 115,777 32 -- European Monetary Unit U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 5, 2008 307,104 265,587 774 -- Swiss Franc U.S. Dollar ----------------------------------------------------------------------------------------------- Nov. 5, 2008 57,241 35,561 -- (10) U.S. Dollar British Pound ----------------------------------------------------------------------------------------------- Nov. 5, 2008 147,177 178,518 934 -- U.S. Dollar Canadian Dollar ----------------------------------------------------------------------------------------------- Nov. 5, 2008 303,224 29,900,636 305 -- U.S. Dollar Japanese Yen ----------------------------------------------------------------------------------------------- Nov. 6, 2008 2,979,628 30,595 348 -- Japanese Yen U.S. Dollar ----------------------------------------------------------------------------------------------- Total $ 8,960 $(29,204) ----------------------------------------------------------------------------------------------- PRO FORMA COMBINED TOTAL $101,839 $(78,590) ----------------------------------------------------------------------------------------------- NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
(A) Securities are valued by procedures described in Note 1 to the financial statements in the annual report. (B) Non-income producing. (C) Foreign security values are stated in U.S. dollars. (D) Affiliated Money Market Fund -- See Note 5 to the financial statements in the annual report. The rate shown is the seven-day current annualized yield at Oct. 31, 2008. (E) Security valued by management at fair value according to procedures approved, in good faith, by the Board. 39 (F) At Oct. 31, 2008, the cost of securities for federal income tax purposes and the aggregate gross unrealized appreciation and depreciation based on that cost was:
RIVERSOURCE PARTNERS RIVERSOURCE PARTNERS SELIGMAN INTERNATIONAL INTERNATIONAL INTERNATIONAL SELECT GROWTH FUND SELECT GROWTH FUND GROWTH FUND PRO FORMA COMBINED Cost of securities for federal income tax purposes: $ 537,108,889 $47,322,896 $ 584,431,785 Unrealized appreciation 14,274,295 535,060 14,809,355 Unrealized depreciation (173,622,963) (8,495,644) (182,118,607) --------------------------------------------------------------------------------------------------------------- Net unrealized depreciation $(159,348,668) $(7,960,584) $(167,309,252) ---------------------------------------------------------------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. 40 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) INTRODUCTION TO PROPOSED FUND REORGANIZATION Nov. 30, 2008 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements have been derived from financial statements prepared for the RiverSource Short Duration U.S. Government Fund and the Seligman U.S. Government Securities Fund as of Nov. 30, 2008. RiverSource Short Duration U.S. Government Fund invests primarily in debt securities issued or guaranteed as to principal and interest by the U.S. government, or its agencies or instrumentalities. Seligman U.S. Government Securities Fund invests primarily in U.S. government securities which are debt securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or government sponsored enterprises. Under the proposed Agreement and Plan of Reorganization, share classes of Seligman U.S. Government Securities Fund would be exchanged for share classes of RiverSource Short Duration U.S. Government Fund.
SELLING FUND BUYING FUND --------------------------------------------------------------------------------------------------------------- Seligman U.S. Government Securities Fund Class A RiverSource Short Duration U.S. Government Fund Class A --------------------------------------------------------------------------------------------------------------- Seligman U.S. Government Securities Fund Class B RiverSource Short Duration U.S. Government Fund Class B --------------------------------------------------------------------------------------------------------------- Seligman U.S. Government Securities Fund Class C RiverSource Short Duration U.S. Government Fund Class C --------------------------------------------------------------------------------------------------------------- Seligman U.S. Government Securities Fund Class R(1) RiverSource Short Duration U.S. Government Fund Class R2(2) ---------------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R shares of the Seligman U.S. Government Securities Fund will be redesignated as Class R2 shares. (2) The inception date for the RiverSource Short Duration U.S. Government Fund Class R2 shares is expected to be in the third quarter of 2009. Note: RiverSource Short Duration U.S. Government Fund also offers Class I, Class R4 and Class W shares. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Short Duration U.S. Government Fund, as if the transaction had occurred at the beginning of the fiscal year ending Nov. 30, 2008. 41 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION RIVERSOURCE SELIGMAN U.S. GOVERNMENT U.S. GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND FUND U.S. GOVERNMENT SECURITIES PRO FORMA PRO FORMA NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED ASSETS Investments in securities, at cost Unaffiliated issuers $ 856,828,651 $92,254,153 $ -- $ 949,082,804 Affiliated money market fund $ 23,204,156 $ -- $ -- $ 23,204,156 ---------------------------------------------------------------------------- Investments in securities, at value Unaffiliated issuers $ 821,536,813 $94,412,985 $ -- $ 915,949,798 Affiliated money market fund $ 23,204,156 $ -- $ -- $ 23,204,156 Cash -- 64,844 -- 64,844 Capital shares receivable 1,158,621 12,185 -- 1,170,806 Dividends and accrued interest receivable 3,717,190 497,874 -- 4,215,064 Receivable for investment securities sold 9,632,333 -- -- 9,632,333 Transfer agency fees receivable (Note 2) -- -- 39,986(b) 39,986 Receivable from RiverSource Investments, LLC (Note 2) -- -- 139,531(f) 139,531 Prepaid expenses -- 42,812 -- 42,812 Other assets -- 14,178 -- 14,178 ------------------------------------------------------------------------------------------------------------------------------ Total assets 859,249,113 95,044,878 179,517 954,473,508 ------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Forward sale commitments, at value (proceeds receivable $9,347,823 for RiverSource Short Duration U.S. Government Fund) 9,434,419 -- -- 9,434,419 Dividends payable to shareholders 211,503 57,967 -- 269,470 Capital shares payable 829,806 303,871 -- 1,133,677 Payable for reorganization costs (Note 2) -- -- 80,918(g) 80,918 Payable for investment securities purchased 39,811,910 13,056,559 -- 52,868,469 Variation margin payable 271,205 -- -- 271,205 Accrued investment management services fees (Note 2) 21,210 32,327 (3,286)(a) 50,251 Accrued distribution fees 151,076 32,583 -- 183,659 Accrued transfer agency fees (Note 2) 6,779 61,509 (68,288)(b) -- Accrued administrative services fees (Note 2) 3,009 -- 47,747(c) 50,756 Accrued plan administration services fees (Note 2) 901 -- 7,363(d) 8,264 Other accrued expenses (Note 2) 536,061 69,553 (166,217)(e) 439,397 ------------------------------------------------------------------------------------------------------------------------------ Total liabilities 51,277,879 13,614,369 (101,763) 64,790,485 ------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to outstanding capital stock $ 807,971,234 $81,430,509 $ 281,280 $ 889,683,023 ------------------------------------------------------------------------------------------------------------------------------ REPRESENTED BY Capital stock -- $.01 par value for RiverSource Short Duration U.S. Government Fund and $.001 par value for Seligman U.S. Government Securities Fund (Note 3) $ 1,776,823 $ 11,369 $ 168,218 $ 1,956,410 Additional paid-in capital (Notes 2 and 3) 1,040,002,565 86,549,235 (249,136)(g) 1,126,302,664 Excess of distributions over net investment income (Note 2) (405,936) (24,156) 362,198 (67,894) Accumulated net realized gain (loss) (196,133,845) (7,264,771) -- (203,398,616) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (37,268,373) 2,158,832 -- (35,109,541) ------------------------------------------------------------------------------------------------------------------------------ Total -- representing net assets applicable to outstanding capital stock $ 807,971,234 $81,430,509 $ 281,280 $ 889,683,023 ------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to outstanding shares: Class A $ 586,444,617 $47,195,472 $ 163,025 $ 633,803,114 Class B $ 129,748,319 $ 8,916,698 $ 30,800 $ 138,695,817 Class C $ 11,782,382 $21,042,387 $ 72,685 $ 32,897,454 Class I $ 75,499,402 N/A $ -- $ 75,499,402 Class R2 N/A $ 4,275,952 $ 14,770 $ 4,290,722 Class R4 $ 4,491,730 N/A $ -- $ 4,491,730 Class W $ 4,784 N/A $ -- $ 4,784 Shares outstanding (Note 3): Class A shares 128,981,199 6,593,371 -- 139,389,660 Class B shares 28,536,267 1,242,979 -- 30,502,750 Class C shares 2,591,394 2,935,262 -- 7,232,069 Class I shares 16,585,126 N/A -- 16,585,126 Class R2 shares N/A 597,126 -- 943,016 Class R4 shares 987,307 N/A -- 987,307 Class W shares 1,053 N/A -- 1,053 Net asset value per share of outstanding capital stock: Class A $ 4.55 $ 7.16 $ -- $ 4.55 Class B $ 4.55 $ 7.17 $ -- $ 4.55 Class C $ 4.55 $ 7.17 $ -- $ 4.55 Class I $ 4.55 N/A $ -- $ 4.55 Class R2 N/A $ 7.16 $ -- $ 4.55 Class R4 $ 4.55 N/A $ -- $ 4.55 Class W $ 4.54 N/A $ -- $ 4.54 ------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 42 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF OPERATIONS
RIVERSOURCE RIVERSOURCE RIVERSOURCE SELIGMAN SHORT DURATION SHORT DURATION SHORT DURATION U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES FUND PRO FORMA PRO FORMA YEAR ENDED NOV. 30, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED INVESTMENT INCOME Income: Interest $ 35,106,555 $3,122,790 $ -- $ 38,229,345 Income distributions from affiliated money market fund 255,080 -- -- 255,080 --------------------------------------------------------------------------------------------------------------------------- Total income 35,361,635 3,122,790 -- 38,484,425 --------------------------------------------------------------------------------------------------------------------------- Expenses: Investment management services fees (Note 2) 3,825,944 343,471 (3,286)(a) 4,166,129 Distribution fees Class A 1,372,442 101,543 -- 1,473,985 Class B 1,516,358 72,321 -- 1,588,679 Class C 98,304 169,925 -- 268,229 Class R2 -- 14,623 -- 14,623 Class W 12 -- -- 12 Transfer agency fees (Note 2) Class A 970,169 196,588 (48,046)(b) 1,118,711 Class B 284,318 34,161 (2,286)(b) 316,193 Class C 17,982 81,021 (45,373)(b) 53,630 Class R2 -- 14,042 (12,569)(b) 1,473 Class R4 2,263 -- -- 2,263 Class W 10 -- -- 10 Administrative services fees (Note 2) 542,966 -- 47,747(c) 590,713 Plan administration services fees (Note 2) Class R2 -- -- 7,363(d) 7,363 Class R4 11,316 -- -- 11,316 Compensation of board members (Note 2) 19,075 6,440 (4,796)(e) 20,719 Custodian fees (Note 2) 91,875 28,334 (20,415)(e) 99,794 Printing and postage (Note 2) 135,880 28,998 (17,286)(e) 147,592 Registration fees (Note 2) 95,354 88,736 (80,517)(e) 103,573 Professional fees (Note 2) 44,307 39,313 (35,494)(e) 48,126 Other (Note 2) 32,326 10,495 (7,709)(e) 35,112 --------------------------------------------------------------------------------------------------------------------------- Total expenses 9,060,901 1,230,011 (222,667) 10,068,245 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (1,071,144) -- (139,531)(f) (1,210,675) Earnings and bank fee credits on cash balances (28,530) -- -- (28,530) --------------------------------------------------------------------------------------------------------------------------- Total net expenses 7,961,227 1,230,011 (362,198) 8,829,040 --------------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 27,400,408 1,892,779 362,198 29,655,385 --------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions 2,946,255 1,078,111 -- 4,024,366 Futures contracts (9,675,202) -- -- (9,675,202) --------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (6,728,947) 1,078,111 -- (5,650,836) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (35,338,940) 901,867 -- (34,437,073) --------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (42,067,887) 1,979,978 -- (40,087,909) --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(14,667,479) $3,872,757 $ 362,198 $(10,432,524) ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements. 43 RIVERSOURCE SHORT DURATION U.S. GOVERNMENT FUND (BUYING FUND) SELIGMAN U.S. GOVERNMENT SECURITIES FUND (SELLING FUND) NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited as to Nov. 30, 2008) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Nov. 30, 2008. These statements have been derived from financial statements prepared for the RiverSource Short Duration U.S. Government Fund and the Seligman U.S. Government Securities Fund as of Nov. 30, 2008. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: RiverSource Short Duration U.S. Government Fund invests primarily in debt securities issued or guaranteed as to principal and interest by the U.S. government, or its agencies or instrumentalities. Seligman U.S. Government Securities Fund invests primarily in U.S. government securities which are debt securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or government sponsored enterprises. The pro forma statements give effect to the proposed transfer of the assets and liabilities of Seligman U.S. Government Securities Fund in exchange for Class A, Class B, Class C and Class R2 shares of RiverSource Short Duration U.S. Government Fund under U.S. generally accepted accounting principles. The pro forma statements reflect estimates for the combined RiverSource Short Duration U.S. Government Fund based on the increased asset level of the Reorganization and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the Funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Short Duration U.S. Government Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect the change in investment management services fee due to the Reorganization. (b) To reflect the change in transfer agent fees due to the Reorganization including adjusting for closed account fees for each Seligman U.S. Government Securities Fund shareholder account that will be closed on the system as a result of the Reorganization. (c) To reflect the change in administrative services fees due to the Reorganization. (d) To reflect the change in plan administration services fees due to the Reorganization. (e) To reflect the change in other fees due to the Reorganization. (f) To adjust the expense reimbursement to reflect the net reduction in fees resulting from the Reorganization per the agreement by RiverSource Investments, LLC and its affiliates to waive certain fees and absorb certain expenses following the Reorganization. (g) Includes the impact of estimated Reorganization costs of $80,918, none of which are recurring expenses. 44 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C and Class R2 shares of RiverSource Short Duration U.S. Government Fund as if the Reorganization were to have taken place on Nov. 30, 2008. The following table reflects the number of RiverSource Short Duration U.S. Government Fund shares assumed to be issued to the shareholders of the Seligman U.S. Government Securities Fund.
SELIGMAN RIVERSOURCE U.S. GOVERNMENT SHORT DURATION TOTAL SECURITIES FUND U.S. GOVERNMENT FUND PRO FORMA SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING ----------------------------------------------------------------------------------------------------------------- Class A 10,408,461 128,981,199 139,389,660 ----------------------------------------------------------------------------------------------------------------- Class B 1,966,483 28,536,267 30,502,750 ----------------------------------------------------------------------------------------------------------------- Class C 4,640,675 2,591,394 7,232,069 ----------------------------------------------------------------------------------------------------------------- Class I N/A 16,585,126 16,585,126 ----------------------------------------------------------------------------------------------------------------- Class R2(1),(2) 943,016 N/A 943,016 ----------------------------------------------------------------------------------------------------------------- Class R4 N/A 987,307 987,307 ----------------------------------------------------------------------------------------------------------------- Class W N/A 1,053 1,053 -----------------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R shares of the Seligman U.S. Government Securities Fund will be redesignated as Class R2 shares. (2) The inception date for the RiverSource Short Duration U.S. Government Fund Class R2 shares is expected to be in the third quarter of 2009. 45 COMBINED PORTFOLIO OF INVESTMENTS RiverSource Short Duration U.S. Government Fund NOV. 30, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
BONDS (83.7%) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED U.S. GOVERNMENT OBLIGATIONS & AGENCIES (28.1%) Federal Home Loan Bank 12/29/08 5.13% $24,390,000 $ -- $24,390,000 $ 24,441,614 $ -- $ 24,441,614 04/09/09 2.32 225,000 -- 225,000 226,138 -- 226,138 05/20/11 2.63 -- 2,565,000 2,565,000 -- 2,551,554 2,551,554 10/18/13 3.63 -- 2,000,000 2,000,000 -- 2,045,786 2,045,786 11/17/17 5.00 -- 500,000 500,000 -- 529,080 529,080 Federal Home Loan Mtge Corp 06/15/11 6.00 -- 500,000 500,000 -- 542,810 542,810 08/20/12 5.50 -- 2,610,000 2,610,000 -- 2,835,708 2,835,708 07/15/14 5.00 -- 900,000 900,000 -- 974,572 974,572 06/13/18 4.88 5,405,000 -- 5,405,000 5,736,449 -- 5,736,449 Federal Natl Mtge Assn 06/09/10 3.26 -- 580,000 580,000 -- 590,299 590,299 08/12/10 3.25 -- 870,000 870,000 -- 885,905 885,905 11/19/12 4.75 -- 730,000 730,000 -- 775,014 775,014 04/09/13 3.25 18,880,000 -- 18,880,000 19,000,908 -- 19,000,908 01/02/14 5.13 16,915,000 -- 16,915,000 17,386,759 -- 17,386,759 02/13/17 5.00 -- 2,500,000 2,500,000 -- 2,646,788 2,646,788 07/09/18 5.00 -- 500,000 500,000 -- 500,335 500,335 11/15/30 6.63 1,945,000 -- 1,945,000 2,438,911 -- 2,438,911 U.S. Treasury 08/15/09 3.50 -- 1,500,000 1,500,000 -- 1,528,127 1,528,127 10/22/09 1.27 -- 2,000,000 2,000,000 -- 1,983,244 1,983,244 04/30/10 2.13 -- 260,000 260,000 -- 265,484 265,484 06/30/10 2.88 5,730,000 -- 5,730,000 5,910,850 -- 5,910,850 10/31/10 1.50 57,750,000 -- 57,750,000 58,336,509 -- 58,336,509 12/15/10 4.38 10,550,000 -- 10,550,000(i) 11,295,094 -- 11,295,094 02/28/11 4.50 -- 175,000 175,000 -- 188,740 188,740 06/30/12 4.88 -- 735,000 735,000 -- 827,392 827,392 08/31/12 4.13 -- 2,830,000 2,830,000 -- 3,124,940 3,124,940 09/30/13 0.01 -- 7,425,000 7,425,000 -- 7,860,640 7,860,640 02/15/14 4.00 -- 405,000 405,000 -- 447,652 447,652 11/15/16 4.63 -- 1,000,000 1,000,000 -- 1,131,954 1,131,954 11/15/17 4.25 -- 3,315,000 3,315,000 -- 3,662,299 3,662,299 11/15/18 3.75 25,300,000 2,672,000 27,972,000 27,003,803 2,852,780 29,856,583 11/15/26 6.50 -- 2,400,000 2,400,000 -- 1,211,436 1,211,436 02/15/31 5.38 -- 375,000 375,000 -- 466,319 466,319 02/15/36 4.50 -- 585,000 585,000 -- 678,326 678,326 U.S. Treasury Inflation- Indexed Bond 01/15/14 2.00 17,769,221 367,074 18,136,295(j) 15,998,571 330,625 16,329,196 01/15/15 1.63 22,919,000 -- 22,919,000(j) 20,085,473 -- 20,085,473 01/15/16 2.00 -- 286,614 286,614(j) -- 255,333 255,333 07/15/18 1.38 -- 253,655 253,655(j) -- 227,239 227,239 01/15/28 1.75 -- 522,190 522,190(j) -- 430,644 430,644 ------------------------------------------------ Total 207,861,079 42,351,025 250,212,104 ------------------------------------------------ ASSET-BACKED (1.3%) Capital Auto Receivables Asset Trust Series 2006-SN1A Cl A4B 03/20/10 1.56 3,250,000 -- 3,250,000(d,h) 3,204,317 -- 3,204,317 Countrywide Asset- backed Ctfs Series 2007-7 Cl 2A2 10/25/37 1.56 2,600,000 -- 2,600,000(h) 2,036,939 -- 2,036,939 Residential Asset Securities Series 2007-KS3 Cl AI2 04/25/37 1.58 4,050,000 -- 4,050,000(h) 3,555,310 -- 3,555,310 Soundview Home Equity Loan Trust Series 2006-EQ1 Cl A2 10/25/36 1.51 3,900,000 -- 3,900,000(h) 3,177,283 -- 3,177,283 ------------------------------------------------ Total 11,973,849 -- 11,973,849 ------------------------------------------------
46
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED COMMERCIAL MORTGAGE-BACKED (1.1%)(F) Federal Home Loan Mtge Corp Multifamily Structured Pass- Through Ctfs Series K001 Cl A2 04/25/16 5.65 $ 5,879,459 $ -- $ 5,879,459 $ 5,718,829 $ -- $ 5,718,829 Federal Natl Mtge Assn #381990 10/01/09 7.11 4,059,446 -- 4,059,446 4,077,332 -- 4,077,332 ------------------------------------------------ Total 9,796,161 -- 9,796,161 ------------------------------------------------ MORTGAGE-BACKED (53.2%)(F,K) Adjustable Rate Mtge Trust Collateralized Mtge Obligation Series 2007-1 Cl 3A21 03/25/37 6.18 1,782,292 -- 1,782,292(g) 910,858 -- 910,858 American Home Mtge Assets Collateralized Mtge Obligation Series 2007-2 Cl A2A 03/25/47 1.56 3,232,332 -- 3,232,332(g) 707,095 -- 707,095 American Home Mtge Investment Trust Collateralized Mtge Obligation Series 2007-1 Cl GA1C 05/25/47 1.59 4,168,407 -- 4,168,407(g) 1,397,706 -- 1,397,706 Banc of America Alternative Loan Trust Collateralized Mtge Obligation Series 2006-9 Cl 1CB1 01/25/37 6.00 3,236,559 -- 3,236,559 1,565,559 -- 1,565,559 Barclays Capital LLC Trust Collateralized Mtge Obligation Series 2007-AA4 Cl 11A1 06/25/47 6.20 1,288,492 -- 1,288,492(g) 953,577 -- 953,577 Bear Stearns Adjustable Rate Mtge Trust Collateralized Mtge Obligation Series 2007-5 Cl 3A1 08/25/47 5.98 2,050,079 -- 2,050,079(g) 1,175,883 -- 1,175,883 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2005-6CB Cl 1A1 04/25/35 7.50 1,407,266 -- 1,407,266 1,167,355 -- 1,167,355 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2006-2CB Cl A11 03/25/36 6.00 5,506,983 -- 5,506,983 2,765,541 -- 2,765,541 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2006-OA11 Cl A3B1 09/25/46 1.58 3,491,021 -- 3,491,021(h) 2,083,813 -- 2,083,813 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2007-22 Cl 2A16 09/25/37 6.50 4,480,708 -- 4,480,708 2,006,519 -- 2,006,519 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2007-25 Cl 1A1 11/25/37 6.50 4,486,403 -- 4,486,403 2,143,659 -- 2,143,659 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2007-OA9 Cl A2 06/25/47 1.75 5,484,812 -- 5,484,812(h) 1,381,370 -- 1,381,370 Countrywide Alternative Loan Trust Collateralized Mtge Obligation Series 2007-OH3 Cl A3 09/25/47 1.90 3,706,134 -- 3,706,134(h) 865,782 -- 865,782
47
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Countrywide Home Loans Collateralized Mtge Obligation Series 2005-HYB8 Cl 4A1 12/20/35 5.56 $ 3,069,596 $ -- $ 3,069,596(g) $ 1,404,402 $ -- $ 1,404,402 Countrywide Home Loans Collateralized Mtge Obligation Series 2005-R2 Cl 2A1 06/25/35 7.00 4,093,993 -- 4,093,993(d) 3,357,259 -- 3,357,259 Federal Home Loan Mtge Corp 12/01/38 4.50 -- 3,000,000 3,000,000 -- 2,990,625 2,990,625 12/01/38 5.50 -- 6,050,000 6,050,000 -- 6,138,930 6,138,930 12/01/38 6.00 2,000,000(e) 1,000,000 3,000,000 2,043,124 1,021,719 3,064,843 12/01/38 6.50 12,000,000(e) -- 12,000,000 12,344,999 -- 12,344,999 Federal Home Loan Mtge Corp #1G0847 07/01/35 4.71 7,007,898 -- 7,007,898(g) 7,022,871 -- 7,022,871 Federal Home Loan Mtge Corp #1G2264 10/01/37 6.01 5,943,966 -- 5,943,966(g) 6,066,472 -- 6,066,472 Federal Home Loan Mtge Corp #1G2547 12/01/36 6.12 -- 1,547,921 1,547,921(g) -- 1,559,084 1,559,084 Federal Home Loan Mtge Corp #1G2598 01/01/37 6.10 2,234,343 -- 2,234,343(g) 2,288,004 -- 2,288,004 Federal Home Loan Mtge Corp #1J0614 09/01/37 5.70 3,110,668 -- 3,110,668(g) 3,145,227 -- 3,145,227 Federal Home Loan Mtge Corp #1Q0140 08/01/36 6.17 -- 792,969 792,969(g) -- 805,890 805,890 Federal Home Loan Mtge Corp #783049 03/01/35 4.85 5,637,612 -- 5,637,612(g) 5,596,536 -- 5,596,536 Federal Home Loan Mtge Corp #A18107 01/01/34 5.50 2,972,429 -- 2,972,429 3,020,698 -- 3,020,698 Federal Home Loan Mtge Corp #A75929 04/01/38 7.00 -- 401,580 401,580 -- 413,945 413,945 Federal Home Loan Mtge Corp #B10459 10/01/18 5.50 -- 1,206,621 1,206,621 -- 1,230,888 1,230,888 Federal Home Loan Mtge Corp #C00351 07/01/24 8.00 225,992 -- 225,992 239,170 -- 239,170 Federal Home Loan Mtge Corp #C00385 01/01/25 9.00 372,290 -- 372,290 409,359 -- 409,359 Federal Home Loan Mtge Corp #C80329 08/01/25 8.00 65,120 -- 65,120 69,022 -- 69,022 Federal Home Loan Mtge Corp #E00398 10/01/10 7.00 199,635 -- 199,635 204,515 -- 204,515 Federal Home Loan Mtge Corp #E81240 06/01/15 7.50 2,902,216 -- 2,902,216 3,046,587 -- 3,046,587 Federal Home Loan Mtge Corp #E90650 07/01/12 5.50 102,663 -- 102,663 105,330 -- 105,330 Federal Home Loan Mtge Corp #E92454 11/01/17 5.00 2,474,442 -- 2,474,442 2,521,832 -- 2,521,832 Federal Home Loan Mtge Corp #E96624 05/01/18 5.00 -- 1,401,787 1,401,787 -- 1,426,224 1,426,224
48
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Home Loan Mtge Corp #G00363 06/01/25 8.00 $ 291,984 $ -- $ 291,984 $ 309,477 $ -- $ 309,477 Federal Home Loan Mtge Corp #G00501 05/01/26 9.00 494,258 -- 494,258 543,982 -- 543,982 Federal Home Loan Mtge Corp #G10669 03/01/12 7.50 1,058,163 -- 1,058,163 1,107,991 -- 1,107,991 Federal Home Loan Mtge Corp #G11243 04/01/07 6.50 11,195,847 -- 11,195,847 11,585,737 -- 11,585,737 Federal Home Loan Mtge Corp #G12100 11/01/13 5.00 2,613,148 -- 2,613,148 2,645,386 -- 2,645,386 Federal Home Loan Mtge Corp #M30074 09/01/09 6.50 27,440 -- 27,440 27,780 -- 27,780 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Interest Only Series 11 Cl B 01/01/20 15.05 6,687 -- 6,687(b) 1,622 -- 1,622 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Interest Only Series 237 Cl I0 05/15/36 14.70 1,060,392 -- 1,060,392(b) 171,982 -- 171,982 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Interest Only Series 2471 Cl SI 03/15/32 44.63 1,268,415 -- 1,268,415(b) 148,654 -- 148,654 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Interest Only Series 2783 Cl MI 03/15/25 78.62 2,222,458 -- 2,222,458(b) 39,513 -- 39,513 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Series 2617 Cl HD 06/15/16 7.00 5,515,532 -- 5,515,532 5,781,864 -- 5,781,864 Federal Home Loan Mtge Corp Collateralized Mtge Obligation Series 3346 Cl FA 02/15/19 1.65 8,677,977 -- 8,677,977(h) 8,305,051 -- 8,305,051 Federal Natl Mtge Assn 12/01/38 5.00 2,500,000(e) -- 2,500,000 2,516,405 -- 2,516,405 12/01/38 5.50 8,000,000(e) -- 8,000,000 8,132,496 -- 8,132,496 12/01/38 6.00 10,000,000(e) -- 10,000,000 10,221,880 -- 10,221,880 12/01/38 6.50 -- 3,000,000 3,000,000 -- 3,083,907 3,083,907 Federal Natl Mtge Assn #125032 11/01/21 8.00 122,323 -- 122,323 129,456 -- 129,456 Federal Natl Mtge Assn #190129 11/01/23 6.00 890,053 -- 890,053 916,033 -- 916,033 Federal Natl Mtge Assn #190353 08/01/34 5.00 6,382,017 -- 6,382,017 6,435,011 -- 6,435,011 Federal Natl Mtge Assn #190785 05/01/09 7.50 32,237 -- 32,237 32,668 -- 32,668 Federal Natl Mtge Assn #190988 06/01/24 9.00 195,601 -- 195,601 211,378 -- 211,378 Federal Natl Mtge Assn #254384 06/01/17 7.00 279,842 -- 279,842(i) 294,129 -- 294,129 Federal Natl Mtge Assn #254454 08/01/17 7.00 496,026 -- 496,026 521,351 -- 521,351 Federal Natl Mtge Assn #254723 05/01/23 5.50 8,198,373 -- 8,198,373 8,367,873 -- 8,367,873
49
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Natl Mtge Assn #254748 04/01/13 5.50 $ 4,473,645 $ -- $ 4,473,645 $ 4,588,283 $ -- $ 4,588,283 Federal Natl Mtge Assn #254757 05/01/13 5.00 6,057,250 -- 6,057,250 6,110,765 -- 6,110,765 Federal Natl Mtge Assn #254774 05/01/13 5.50 1,389,294 -- 1,389,294 1,416,125 -- 1,416,125 Federal Natl Mtge Assn #255501 09/01/14 6.00 560,227 -- 560,227 586,506 -- 586,506 Federal Natl Mtge Assn #256901 09/01/37 6.50 -- 2,035,299 2,035,299 -- 2,068,332 2,068,332 Federal Natl Mtge Assn #303885 05/01/26 7.50 427,007 -- 427,007 451,048 -- 451,048 Federal Natl Mtge Assn #313007 07/01/11 7.50 129,461 -- 129,461 133,613 -- 133,613 Federal Natl Mtge Assn #336512 02/01/26 6.00 62,122 -- 62,122 64,005 -- 64,005 Federal Natl Mtge Assn #357485 02/01/34 5.50 12,314,086 -- 12,314,086 12,544,836 -- 12,544,836 Federal Natl Mtge Assn #407327 01/01/14 5.50 355,442 -- 355,442 364,978 -- 364,978 Federal Natl Mtge Assn #456374 12/01/13 5.50 604,883 -- 604,883 621,112 -- 621,112 Federal Natl Mtge Assn #508402 08/01/14 6.50 242,175 -- 242,175(i) 249,358 -- 249,358 Federal Natl Mtge Assn #545818 07/01/17 6.00 11,673,144 -- 11,673,144 11,978,221 -- 11,978,221 Federal Natl Mtge Assn #545864 08/01/17 5.50 9,747,354 -- 9,747,354 9,989,792 -- 9,989,792 Federal Natl Mtge Assn #545910 08/01/17 6.00 1,804,974 -- 1,804,974 1,852,049 -- 1,852,049 Federal Natl Mtge Assn #555063 11/01/17 5.50 6,915,094 -- 6,915,094 7,091,373 -- 7,091,373 Federal Natl Mtge Assn #555367 03/01/33 6.00 8,978,406 -- 8,978,406 9,205,572 -- 9,205,572 Federal Natl Mtge Assn #579485 04/01/31 6.50 2,151,518 -- 2,151,518(i) 2,235,226 -- 2,235,226 Federal Natl Mtge Assn #593829 12/01/28 7.00 1,463,747 -- 1,463,747 1,536,028 -- 1,536,028 Federal Natl Mtge Assn #601416 11/01/31 6.50 757,578 -- 757,578 787,062 -- 787,062 Federal Natl Mtge Assn #630993 09/01/31 7.50 2,104,990 -- 2,104,990 2,220,562 -- 2,220,562 Federal Natl Mtge Assn #648040 06/01/32 6.50 2,067,362 -- 2,067,362 2,138,773 -- 2,138,773 Federal Natl Mtge Assn #648349 06/01/17 6.00 6,186,610 -- 6,186,610 6,347,947 -- 6,347,947 Federal Natl Mtge Assn #651284 07/01/17 6.00 1,212,490 -- 1,212,490 1,244,295 -- 1,244,295 Federal Natl Mtge Assn #662866 11/01/17 6.00 1,062,928 -- 1,062,928 1,094,739 -- 1,094,739 Federal Natl Mtge Assn #665752 09/01/32 6.50 1,174,133 -- 1,174,133 1,214,691 -- 1,214,691 Federal Natl Mtge Assn #670782 11/01/12 5.00 237,174 -- 237,174 238,999 -- 238,999 Federal Natl Mtge Assn #670830 12/01/12 5.00 330,824 -- 330,824 338,122 -- 338,122 Federal Natl Mtge Assn #671415 01/01/10 5.00 351,675 -- 351,675 351,902 -- 351,902 Federal Natl Mtge Assn #678940 02/01/18 5.50 1,856,424 -- 1,856,424 1,904,564 -- 1,904,564 Federal Natl Mtge Assn #686227 02/01/18 5.50 2,528,653 -- 2,528,653 2,594,469 -- 2,594,469 Federal Natl Mtge Assn #696837 04/01/18 5.50 2,739,943 -- 2,739,943 2,810,300 -- 2,810,300
50
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Natl Mtge Assn #704610 06/01/33 5.50 $ 9,936,371 $ -- $ 9,936,371(i) $ 10,122,567 $ -- $ 10,122,567 Federal Natl Mtge Assn #712602 06/01/13 5.00 714,348 -- 714,348 721,090 -- 721,090 Federal Natl Mtge Assn #722325 07/01/33 4.96 4,476,063 -- 4,476,063(g) 4,500,854 -- 4,500,854 Federal Natl Mtge Assn #725232 03/01/34 5.00 9,441,311 -- 9,441,311(i) 9,525,608 -- 9,525,608 Federal Natl Mtge Assn #725425 04/01/34 5.50 8,731,157 -- 8,731,157 8,904,273 -- 8,904,273 Federal Natl Mtge Assn #725431 08/01/15 5.50 6,492,835 -- 6,492,835 6,667,040 -- 6,667,040 Federal Natl Mtge Assn #725773 09/01/34 5.50 7,400,391 -- 7,400,391 7,534,440 -- 7,534,440 Federal Natl Mtge Assn #730632 08/01/33 4.02 1,532,183 -- 1,532,183(g) 1,510,787 -- 1,510,787 Federal Natl Mtge Assn #735212 12/01/34 5.00 5,669,459 -- 5,669,459 5,716,536 -- 5,716,536 Federal Natl Mtge Assn #735578 06/01/35 5.00 4,331,665 -- 4,331,665 4,364,926 -- 4,364,926 Federal Natl Mtge Assn #739243 09/01/33 6.00 2,706,417 -- 2,706,417 2,782,363 -- 2,782,363 Federal Natl Mtge Assn #739331 09/01/33 6.00 1,409,724 -- 1,409,724 1,444,511 -- 1,444,511 Federal Natl Mtge Assn #743524 11/01/33 5.00 2,841,728 -- 2,841,728 2,867,101 -- 2,867,101 Federal Natl Mtge Assn #745275 02/01/36 5.00 995,350 -- 995,350 1,002,993 -- 1,002,993 Federal Natl Mtge Assn #745392 12/01/20 4.50 -- 994,790 994,790 -- 1,000,474 1,000,474 Federal Natl Mtge Assn #753508 11/01/33 5.00 2,866,414 -- 2,866,414 2,892,007 -- 2,892,007 Federal Natl Mtge Assn #791447 10/01/34 6.00 4,334,878 -- 4,334,878(i) 4,439,138 -- 4,439,138 Federal Natl Mtge Assn #797046 07/01/34 5.50 2,692,051 -- 2,692,051 2,740,815 -- 2,740,815 Federal Natl Mtge Assn #799769 11/01/34 5.05 3,566,443 -- 3,566,443(g) 3,569,581 -- 3,569,581 Federal Natl Mtge Assn #799843 11/01/34 4.84 -- 1,075,341 1,075,341(g) -- 1,084,286 1,084,286 Federal Natl Mtge Assn #801344 10/01/34 5.03 3,843,481 -- 3,843,481(g) 3,851,667 -- 3,851,667 Federal Natl Mtge Assn #815463 02/01/35 5.50 1,750,823 -- 1,750,823 1,782,537 -- 1,782,537 Federal Natl Mtge Assn #829597 08/01/35 4.74 -- 1,313,289 1,313,289(g) -- 1,307,055 1,307,055 Federal Natl Mtge Assn #832641 09/01/35 6.00 6,022,126 -- 6,022,126 6,161,321 -- 6,161,321 Federal Natl Mtge Assn #849082 01/01/36 5.82 2,559,620 -- 2,559,620(g) 2,583,889 -- 2,583,889 Federal Natl Mtge Assn #849170 01/01/36 5.95 3,017,448 -- 3,017,448(g) 3,052,241 -- 3,052,241 Federal Natl Mtge Assn #867549 02/01/36 5.50 -- 1,986,295 1,986,295 -- 2,021,965 2,021,965 Federal Natl Mtge Assn #878661 02/01/36 5.50 7,268,229 -- 7,268,229 7,348,861 -- 7,348,861 Federal Natl Mtge Assn #881886 04/01/36 5.36 -- 816,232 816,232(g) -- 824,062 824,062 Federal Natl Mtge Assn #883267 07/01/36 6.50 4,209,791 -- 4,209,791 4,349,120 -- 4,349,120 Federal Natl Mtge Assn #886764 08/01/36 5.60 -- 671,832 671,832(g) -- 686,628 686,628 Federal Natl Mtge Assn #887403 07/01/36 7.00 2,515,995 -- 2,515,995 2,635,569 -- 2,635,569
51
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Natl Mtge Assn #888989 06/01/37 6.05 $ 5,696,176 $ -- $ 5,696,176(g) $ 5,851,509 $ -- $ 5,851,509 Federal Natl Mtge Assn #895834 04/01/36 6.05 -- 1,312,595 1,312,595(g) -- 1,349,458 1,349,458 Federal Natl Mtge Assn #902818 11/01/36 5.91 2,014,549 -- 2,014,549(g) 2,044,223 -- 2,044,223 Federal Natl Mtge Assn #919341 05/01/37 6.50 3,310,688 -- 3,310,688 3,406,756 -- 3,406,756 Federal Natl Mtge Assn #928771 10/01/37 8.00 5,776,833 -- 5,776,833(i) 6,083,937 -- 6,083,937 Federal Natl Mtge Assn #946609 09/01/37 5.82 -- 984,920 984,920(g) -- 1,004,445 1,004,445 Federal Natl Mtge Assn #967656 12/01/37 6.50 -- 3,572,990 3,572,990 -- 3,677,227 3,677,227 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 163 Cl 2 07/25/22 34.02 493,783 -- 493,783(b) 72,472 -- 72,472 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2002-18 Cl SE 02/25/32 46.58 2,642,309 -- 2,642,309(b) 287,233 -- 287,233 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2003-26 Cl MI 03/25/23 13.70 1,529,182 -- 1,529,182(b) 209,004 -- 209,004 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2003-63 Cl IP 07/25/33 25.88 3,553,978 -- 3,553,978(b) 408,092 -- 408,092 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2003-71 Cl IM 12/25/31 9.86 1,835,688 -- 1,835,688(b) 225,112 -- 225,112 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2003-81 Cl LI 11/25/13 59.80 1,251,315 -- 1,251,315(b) 11,045 -- 11,045 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 36 Cl 2 08/01/18 15.66 3,987 -- 3,987(b) 876 -- 876 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 367 C l2 01/01/36 12.99 2,652,947 -- 2,652,947(b) 434,371 -- 434,371 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 379 Cl 2 05/01/37 13.46 5,139,714 -- 5,139,714(b) 814,725 -- 814,725 Federal Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 70 Cl 2 01/15/20 27.28 177,082 -- 177,082(b) 32,598 -- 32,598 Federal Natl Mtge Assn Collateralized Mtge Obligation Principal Only Series G-15 Cl A 06/25/21 2.49 23,502 -- 23,502(c) 21,765 -- 21,765
52
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2002-52 Cl FG 09/25/32 1.90 $ 7,459,317 $ -- $ 7,459,317(h) $ 7,323,500 $ -- $ 7,323,500 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2003-133 Cl GB 12/25/26 8.00 1,741,536 -- 1,741,536 1,859,467 -- 1,859,467 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2003-94 Cl QB 07/25/23 5.50 1,451,559 -- 1,451,559 1,450,382 -- 1,450,382 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2003-W11 Cl A1 06/25/33 6.29 107,620 -- 107,620(g) 105,377 -- 105,377 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2004-60 Cl PA 04/25/34 5.50 3,031,541 -- 3,031,541 3,097,939 -- 3,097,939 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2005-50 Cl AH 06/25/25 5.00 -- 2,000,000 2,000,000 -- 1,911,199 1,911,199 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2006-60 Cl JF 10/25/35 1.83 5,258,851 -- 5,258,851(h) 5,092,865 -- 5,092,865 Federal Natl Mtge Assn Collateralized Mtge Obligation Series 2006-90 Cl FE 09/25/36 1.85 6,697,825 -- 6,697,825(h) 6,554,519 -- 6,554,519 Govt Natl Mtge Assn 12/01/38 5.50 5,000,000 -- 5,000,000(e) 5,068,750 -- 5,068,750 Govt Natl Mtge Assn #615740 08/15/13 6.00 618,862 -- 618,862 642,152 -- 642,152 Govt Natl Mtge Assn #648339 10/15/35 5.50 -- 1,600,202 1,600,202 -- 1,632,128 1,632,128 Govt Natl Mtge Assn #781507 09/15/14 6.00 2,980,624 -- 2,980,624 3,070,300 -- 3,070,300 Govt Natl Mtge Assn Collateralized Mtge Obligation Interest Only Series 2003-62 Cl IC 03/20/29 76.25 970,053 -- 970,053(b) 13,505 -- 13,505 Govt Natl Mtge Assn Collateralized Mtge Obligation Series 2004-3 Cl JB 05/20/29 5.00 -- 457,035 457,035 -- 457,176 457,176 Govt Natl Mtge Assn Collateralized Mtge Obligation Series 2006-32 Cl A 01/16/30 5.08 8,548,708 -- 8,548,708 8,626,292 -- 8,626,292 Harborview Mtge Loan Trust Collateralized Mtge Obligation Series 2004-4 Cl 3A 06/19/34 3.97 390,964 -- 390,964(g) 176,121 -- 176,121 Lehman XS Trust Series 2006-16N Cl A1B 11/25/46 1.52 1,998,462 -- 1,998,462(h) 1,800,303 -- 1,800,303 Merrill Lynch Alternative Note Asset Collateralized Mtge Obligation Series 2007-OAR1 Cl A1 02/25/37 1.57 5,139,861 -- 5,139,861(h) 1,948,002 -- 1,948,002 Morgan Stanley Mtge Loan Trust Series 2006-13AX Cl A1 10/25/36 1.49 2,770,542 -- 2,770,542(h) 2,529,017 -- 2,529,017
53
BONDS (CONTINUED) COUPON PRINCIPAL PRINCIPAL PRINCIPAL ISSUER RATE AMOUNT AMOUNT AMOUNT VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Small Business Administration Series 2002-P10B Cl 1 08/01/12 5.20 $ -- $ 493,280 $ 493,280 $ -- $ 496,813 $ 496,813 Washington Mutual Mtge Pass- Through Ctfs Collateralized Mtge Obligation Series 2006-AR3 Cl A1A 02/25/46 3.48 1,800,546 -- 1,800,546(g) 758,151 -- 758,151 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2005-10 Cl A1 10/25/35 5.00 5,316,554 -- 5,316,554 4,719,754 -- 4,719,754 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2005-14 Cl 2A1 12/25/35 5.50 2,849,488 -- 2,849,488 2,019,909 -- 2,019,909 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2005-5 Cl 2A1 05/25/35 5.50 3,819,619 -- 3,819,619 3,500,922 -- 3,500,922 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2006-AR6 Cl 5A1 03/25/36 5.11 3,408,850 -- 3,408,850(g) 2,288,186 -- 2,288,186 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2007-11 Cl A68 08/25/37 6.00 4,573,963 -- 4,573,963 2,275,918 -- 2,275,918 Wells Fargo Mtge Backed Securities Trust Collateralized Mtge Obligation Series 2007-15 Cl A1 11/25/37 6.00 3,136,295 -- 3,136,295 1,956,141 -- 1,956,141 ------------------------------------------------ Total 434,616,183 38,192,460 472,808,643 ------------------------------------------------ TOTAL BONDS (Cost: $774,463,338) $664,247,272 $80,543,485 $744,790,757 ---------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS (3.9%)(R) SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED RiverSource Short- Term Cash Fund, 0.69% 23,204,156 -- 23,204,156(l) $23,204,156 $ -- $23,204,156 SSgA U.S. Treasury Money Market Fund -- 11,375,635 11,375,635 -- 11,375,635 $11,375,635 ------------------------------------------------ TOTAL MONEY MARKET FUNDS (Cost: $34,579,791) $23,204,156 $11,375,635 $34,579,791 -------------------------------------------------------------------------------------------------------------------------
54
SHORT-TERM SECURITIES (18.0%) EFFEC- TIVE AMOUNT PAYABLE AMOUNT PAYABLE AMOUNT PAYABLE ISSUER YIELD AT MATURITY AT MATURITY AT MATURITY VALUE(A) VALUE(A) VALUE(A) RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION U.S. U.S. RIVERSOURCE SELIGMAN GOVERNMENT RIVERSOURCE SELIGMAN GOVERNMENT SHORT DURATION U.S. GOVERNMENT FUND SHORT DURATION U.S. GOVERNMENT FUND U.S. GOVERNMENT SECURITIES PRO FORMA U.S. GOVERNMENT SECURITIES PRO FORMA FUND FUND COMBINED FUND FUND COMBINED U.S. GOVERNMENT AGENCIES Federal Home Loan Bank Disc Nts 12/01/08 0.10% $23,100,000 $ -- $23,100,000 $ 23,099,808 $ -- $ 23,099,808 12/04/08 0.22 45,000,000 -- 45,000,000 44,998,374 -- 44,998,374 12/05/08 0.35 16,000,000 -- 16,000,000 15,998,911 -- 15,998,911 12/09/08 0.35 21,300,000 -- 21,300,000 21,297,722 -- 21,297,722 12/12/08 0.18 12,000,000 -- 12,000,000 11,999,160 -- 11,999,160 12/15/08 0.20 24,900,000 -- 24,900,000 24,897,649 -- 24,897,649 12/23/08 0.20 15,000,000 -- 15,000,000 14,997,917 -- 14,997,917 03/25/09 2.91 -- 2,500,000 2,500,000 -- 2,493,865 2,493,865 ------------------------------------------------ TOTAL SHORT-TERM SECURITIES (Cost: $163,243,831) $157,289,541 $ 2,493,865 $159,783,406 ------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES (Cost: $972,286,960)(m) $844,740,969 $94,412,985 $939,153,954 ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT NOV. 30, 2008 RiverSource Short Duration U.S. Government Fund
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) U.S. Long Bond, 20-year 30 $ 3,824,531 March 2009 $ 70,963 U.S. Treasury Note, 2-year 696 150,901,500 April 2009 1,150,951 U.S. Treasury Note, 5-year (806) (94,069,017) April 2009 (1,151,720) U.S. Treasury Note, 10-year (585) (70,766,719) March 2009 (1,960,133) ---------------------------------------------------------------------------------------------------------------- Total $(1,889,939) ---------------------------------------------------------------------------------------------------------------- NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
(A) Securities are valued by using procedures described in Note 1 to the financial statements. (B) Interest only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. The interest rate disclosed represents yield based upon the estimated timing and amount of future cash flows at Nov. 30, 2008. (C) Principal only represents securities that entitle holders to receive only principal payments on the underlying mortgages. The yield to maturity of a principal only is sensitive to the rate of principal payments on the underlying mortgage assets. A slow (rapid) rate of principal repayments may have an adverse (positive) effect on yield to maturity. Interest rate disclosed represents yield based upon the estimated timing of future cash flows at Nov. 30, 2008. (D) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Nov. 30, 2008, the value of these securities amounted to $6,561,576 or 0.7% of net assets. (E) At Nov. 30, 2008, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $39,811,910. (F) Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and collateralized mortgage obligations. These securities may be issued or guaranteed by U.S. government agencies or instrumentalities, or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. Unless otherwise noted, the coupon rates presented are fixed rates. (G) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on Nov. 30, 2008. (H) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Nov. 30, 2008. (I) At Nov. 30, 2008, investments in securities included securities valued at $3,974,282 that were partially pledged as collateral to cover initial margin deposits on open interest rate futures contracts. (J) Inflation-indexed bonds are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. 55 (K) Represents comparable securities held to satisfy future delivery requirements of the following open forward sale commitments at Nov. 30, 2008:
PRINCIPAL PRINCIPAL SETTLEMENT PROCEEDS PROCEEDS SECURITY AMOUNT AMOUNT DATE RECEIVABLE RECEIVABLE RIVERSOURCE RIVERSOURCE SHORT DURATION SHORT DURATION RIVERSOURCE U.S. GOVERNMENT RIVERSOURCE U.S. GOVERNMENT SHORT DURATION SELIGMAN FUND SHORT DURATION SELIGMAN FUND U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA FUND FUND COMBINED FUND FUND COMBINED Federal Natl Mtge Assn 12/01/23 5.50% $9,275,000 $-- $9,275,000 12/16/08 $9,347,823 $-- $9,347,823 SECURITY VALUE VALUE RIVERSOURCE SHORT DURATION RIVERSOURCE U.S. GOVERNMENT SHORT DURATION SELIGMAN FUND U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA FUND FUND COMBINED Federal Natl Mtge Assn 12/01/23 5.50% $9,434,419 $-- $9,434,419
(L) Affiliated Money Market Fund -- See Note 6 to the financial statements in the annual report. The rate shown is the seven-day current annualized yield at Nov. 30, 2008. (M) At Nov. 30, 2008, the approximate cost of securities for federal income tax purposes and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
RIVERSOURCE SHORT DURATION RIVERSOURCE U.S. GOVERNMENT SHORT DURATION SELIGMAN FUND U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA FUND FUND COMBINED Cost of securities for federal income tax purposes: $880,033,000 $92,254,000 $972,287,000 Unrealized appreciation $ 10,781,000 $ 2,366,000 $ 13,147,000 Unrealized depreciation (46,073,000) (207,000) (46,280,000) ----------------------------------------------------------------------------------------------------------- Net unrealized appreciation/depreciation $(35,292,000) 2,159,000 $(33,133,000) -----------------------------------------------------------------------------------------------------------
56 THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) SELIGMAN EMERGING MARKETS FUND (SELLING FUND) INTRODUCTION TO PROPOSED FUND REORGANIZATION Oct. 31, 2008 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements have been derived from financial statements prepared for the Threadneedle Emerging Markets Fund and the Seligman Emerging Markets Fund as of Oct. 31, 2008. Threadneedle Emerging Markets Fund invests primarily in equity securities of emerging markets companies or in companies that earn 50% or more of their total revenues from goods or services produced in emerging market countries or from sales made in emerging market countries. Seligman Emerging Markets Fund invests primarily in equity securities of companies that conduct their principal business activities in emerging markets, are organized under the laws of, or maintain their principal place of business in emerging markets, or whose securities are traded principally on exchanges in emerging markets. Under the proposed Agreement and Plan of Reorganization, share classes of Seligman Emerging Markets Fund would be exchanged for share classes of Threadneedle Emerging Markets Fund.
SELLING FUND BUYING FUND --------------------------------------------------------------------------------------------------------- Seligman Emerging Markets Fund Class A Threadneedle Emerging Markets Fund Class A --------------------------------------------------------------------------------------------------------- Seligman Emerging Markets Fund Class B Threadneedle Emerging Markets Fund Class B --------------------------------------------------------------------------------------------------------- Seligman Emerging Markets Fund Class C Threadneedle Emerging Markets Fund Class C --------------------------------------------------------------------------------------------------------- Seligman Emerging Markets Fund Class R(1) Threadneedle Emerging Markets Fund Class R2(2) --------------------------------------------------------------------------------------------------------- Seligman Emerging Markets Fund Class I(1) Threadneedle Emerging Markets Fund Class R5 ---------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R and Class I shares of the Seligman Emerging Markets Fund will be redesignated as Class R2 and Class R5 shares, respectively. (2) The inception date for the Threadneedle Emerging Markets Fund Class R2 shares is expected to be in the third quarter of 2009. Note: Threadneedle Emerging Markets Fund also offers Class I and Class R4 shares. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivor, Threadneedle Emerging Markets Fund, as if the transaction had occurred at the beginning of the fiscal year ending Oct. 31, 2008. 57 THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) SELIGMAN EMERGING MARKETS FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
THREADNEEDLE THREADNEEDLE THREADNEEDLE SELIGMAN EMERGING EMERGING EMERGING EMERGING MARKETS FUND MARKETS FUND MARKETS MARKETS PRO FORMA PRO FORMA OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED ASSETS Investments in securities, at cost Unaffiliated issuers $ 424,358,342 $ 95,091,922 $ -- $ 519,450,264 Affiliated money market fund $ 13,521,361 $ -- $ -- $ 13,521,361 ------------------------------------------------------------------ Investments in securities, at value Unaffiliated issuers $ 270,514,080 $ 63,721,034 $ -- $ 334,235,114 Affiliated money market fund $ 13,521,361 $ -- $ -- $ 13,521,361 Cash 667,406 748,010 -- 1,415,416 Foreign currency holdings (identified cost $1,911,096 for Threadneedle Emerging Markets Fund and $47,117 for Seligman Emerging Markets Fund) 1,906,201 47,117 -- 1,953,318 Capital shares receivable 202,353 125,371 -- 327,724 Dividends and accrued interest receivable 435,788 125,347 -- 561,135 Receivable for investment securities sold 12,802,608 43,743 -- 12,846,351 Investment management services fees receivable (Note 2) -- -- 55,609(a) 55,609 Transfer agency fees receivable (Note 2) -- -- 235,755(b) 235,755 Unrealized appreciation on forward foreign currency contracts -- 1,157,113 -- 1,157,113 Prepaid expenses -- 75,329 -- 75,329 Other assets -- 7,603 -- 7,603 --------------------------------------------------------------------------------------------------------------------------- Total assets 300,049,797 66,050,667 291,364 366,391,828 --------------------------------------------------------------------------------------------------------------------------- LIABILITIES Capital shares payable 278,847 353,783 -- 632,630 Payable for investment securities purchased 17,212,931 -- -- 17,212,931 Unrealized depreciation on forward foreign currency contracts -- 397,517 -- 397,517 Payable to RiverSource Investments, LLC (Note 2) -- -- 230,433(f) 230,433 Accrued investment management services fees (Note 2) 8,332 81,475 (89,807)(a) -- Accrued distribution fees 2,524 27,957 -- 30,481 Accrued transfer agency fees (Note 2) 2,573 -- (2,573)(b) -- Accrued administrative services fees (Note 2) 607 -- 95,843(c) 96,450 Accrued plan administration services fees (Note 2) 5 -- 25,082(d) 25,087 Other accrued expenses (Note 2) 320,472 166,237 (439,842)(e) 46,867 --------------------------------------------------------------------------------------------------------------------------- Total liabilities 17,826,291 1,026,969 (180,864) 18,672,396 --------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 282,223,506 $ 65,023,698 $ 472,228 $ 347,719,432 --------------------------------------------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value for Threadneedle Emerging Markets Fund and $.001 par value for Seligman Emerging Markets Fund (Note 3) $ 576,740 $ 9,089 $ 127,194 $ 713,023 Additional paid-in capital (Note 3) 456,206,763 88,980,080 (127,194) 545,059,649 Undistributed (excess of distributions over) net investment income (Note 2) (5,170) (1,486) 472,228 465,572 Accumulated net realized gain (loss) (20,707,820) 6,647,955 -- (14,059,865) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (153,847,007) (30,611,940) -- (184,458,947) --------------------------------------------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 282,223,506 $ 65,023,698 $ 472,228 $ 347,719,432 --------------------------------------------------------------------------------------------------------------------------- Net assets applicable to outstanding shares: Class A $ 250,088,197 $ 33,557,713 $ 243,709 $ 283,889,619 Class B $ 28,179,486 $ 2,060,989 $ 14,968 $ 30,255,443 Class C $ 3,162,935 $ 17,208,595 $ 124,976 $ 20,496,506 Class I $ 7,972 N/A $ -- $ 7,972 Class R2 N/A $ 6,861,199 $ 49,829 $ 6,911,028 Class R4 $ 782,170 N/A $ -- $ 782,170 Class R5 $ 2,746 $ 5,335,202 $ 38,746 $ 5,376,694 Shares outstanding (Note 3): Class A shares 50,453,378 4,533,207 -- 57,268,181 Class B shares 6,354,512 317,272 -- 6,823,125 Class C shares 711,847 2,638,190 -- 4,615,804 Class I shares 1,558 N/A -- 1,558 Class R2 shares N/A 932,562 -- 1,393,352 Class R4 shares 152,215 N/A -- 152,215 Class R5 shares 535 668,107 -- 1,048,088 Net asset value per share of outstanding capital stock: Class A $ 4.96 $ 7.40 $ -- $ 4.96 Class B $ 4.43 $ 6.50 $ -- $ 4.43 Class C $ 4.44 $ 6.52 $ -- $ 4.44 Class I $ 5.12 N/A $ -- $ 5.12 Class R2 N/A $ 7.36 $ -- $ 4.96 Class R4 $ 5.14 N/A $ -- $ 5.14 Class R5 $ 5.13 $ 7.99 $ -- $ 5.13 ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements 58 THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) SELIGMAN EMERGING MARKETS FUND (SELLING FUND) PRO FORMA COMBINING STATEMENT OF OPERATIONS
THREADNEEDLE THREADNEEDLE THREADNEEDLE SELIGMAN EMERGING EMERGING EMERGING EMERGING MARKETS FUND MARKETS FUND MARKETS MARKETS PRO FORMA PRO FORMA YEAR ENDED OCT. 31, 2008 (UNAUDITED) FUND FUND ADJUSTMENTS COMBINED INVESTMENT INCOME Income: Dividends $ 17,185,342 $ 3,512,330 $ -- $ 20,697,672 Interest 64,517 15,571 -- 80,088 Income distributions from affiliated money market fund 412,142 -- -- 412,142 Less foreign taxes withheld (1,058,784) (164,834) -- (1,223,618) --------------------------------------------------------------------------------------------------------------------- Total income 16,603,217 3,363,067 -- 19,966,284 --------------------------------------------------------------------------------------------------------------------- Expenses: Investment management services fees (Note 2) 7,352,591 1,587,834 (145,416)(a) 8,795,009 Distribution fees Class A 1,283,814 165,246 -- 1,449,060 Class B 701,567 55,576 -- 757,143 Class C 62,513 349,606 -- 412,119 Class R2 -- 50,182 -- 50,182 Transfer agency fees (Note 2) Class A 972,852 348,849 (82,692)(b) 1,239,009 Class B 139,042 27,231 -- 166,273 Class C 12,334 182,647 (101,605)(b) 93,376 Class R2 -- 58,236 (53,220)(b) 5,016 Class R4 868 -- -- 868 Class R5 1 5,592 (811)(b) 4,782 Administrative services fees (Note 2) 498,019 -- 95,843(c) 593,862 Plan administration services fees (Note 2) Class R2 -- -- 25,082(d) 25,082 Class R4 4,342 -- -- 4,342 Compensation of board members (Note 2) 13,359 11,189 (8,508)(e) 16,040 Custodian fees (Note 2) 693,125 357,788 (218,706)(e) 832,207 Printing and postage (Note 2) 117,050 31,315 (7,828)(e) 140,537 Registration fees (Note 2) 86,716 74,595 (57,195)(e) 104,116 Professional fees (Note 2) 79,151 163,487 (147,605)(e) 95,033 Other (Note 2) 168,800 13,879 -- 182,679 --------------------------------------------------------------------------------------------------------------------- Total expenses 12,186,144 3,483,252 (702,661) 14,966,735 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (4,460) (225,973) 230,433(f) -- Earnings and bank fee credits on cash balances (14,844) -- -- (14,844) --------------------------------------------------------------------------------------------------------------------- Total net expenses 12,166,840 3,257,279 (472,228) 14,951,891 --------------------------------------------------------------------------------------------------------------------- Investment income (loss) -- net 4,436,377 105,788 472,228 5,014,393 --------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (18,203,439) 8,831,686 -- (9,371,753) Foreign currency transactions (1,454,385) 1,052,938 -- (401,447) --------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (19,657,824) 9,884,624 -- (9,773,200) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (421,981,869) (93,108,293) -- (515,090,162) --------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (441,639,693) (83,223,669) -- (524,863,362) --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(437,203,316) $(83,117,881) $ 472,228 $(519,848,969) --------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements 59 THREADNEEDLE EMERGING MARKETS FUND (BUYING FUND) SELIGMAN EMERGING MARKETS FUND (SELLING FUND) NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited as to Oct. 31, 2008) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two Funds at, and for, the 12-month period ended Oct. 31, 2008. These statements have been derived from financial statements prepared for the Threadneedle Emerging Markets Fund and the Seligman Emerging Markets Fund as of Oct. 31, 2008. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: Threadneedle Emerging Markets Fund invests primarily in equity securities of emerging markets companies or in companies that earn 50% or more of their total revenues from goods or services produced in emerging market countries or from sales made in emerging market countries. Seligman Emerging Markets Fund invests primarily in equity securities of companies that conduct their principal business activities in emerging markets, are organized under the laws of, or maintain their principal place of business in emerging markets, or whose securities are traded principally on exchanges in emerging markets. The pro forma statements give effect to the proposed transfer of the assets and liabilities of Seligman Emerging Markets Fund in exchange for Class A, Class B, Class C, Class R2 and Class R5 shares of Threadneedle Emerging Markets Fund under U.S. generally accepted accounting principles. The pro forma statements reflect estimates for the combined Threadneedle Emerging Markets Fund based on the increased asset level of the Reorganization and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the Funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, Threadneedle Emerging Markets Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect the change in investment management services fee due to the Reorganization. In addition, the Performance Incentive Adjustment (PIA) was calculated based on the combined average net assets of the two funds and the Threadneedle Emerging Markets Fund PIA rate as of Oct. 31, 2008. (b) To reflect the change in transfer agent fees due to the Reorganization including adjusting for closed account fees for each Seligman Emerging Markets Fund shareholder account that will be closed on the system as a result of the Reorganization. (c) To reflect the change in administrative services fees due to the Reorganization. (d) To reflect the change in plan administration services fees due to the Reorganization. (e) To reflect the change in other fees due to the Reorganization. (f) To adjust the expense reimbursement to reflect the net reduction in fees resulting from the Reorganization per the agreement by RiverSource Investments, LLC and its affiliates to waive certain fees and absorb certain expenses following the Reorganization. 60 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C, Class R2 and Class R5 shares of Threadneedle Emerging Markets Fund as if the Reorganization were to have taken place on Oct. 31, 2008. The following table reflects the number of Threadneedle Emerging Markets Fund shares assumed to be issued to the shareholders of the Seligman Emerging Markets Fund.
SELIGMAN THREADNEEDLE EMERGING EMERGING MARKETS FUND MARKETS FUND TOTAL PRO FORMA SHARES ISSUED SHARES OUTSTANDING SHARES OUTSTANDING ---------------------------------------------------------------------------------------------------------------- Class A 6,814,803 50,453,378 57,268,181 ---------------------------------------------------------------------------------------------------------------- Class B 468,613 6,354,512 6,823,125 ---------------------------------------------------------------------------------------------------------------- Class C 3,903,957 711,847 4,615,804 ---------------------------------------------------------------------------------------------------------------- Class I N/A 1,558 1,558 ---------------------------------------------------------------------------------------------------------------- Class R2(1),(2) 1,393,352 N/A 1,393,352 ---------------------------------------------------------------------------------------------------------------- Class R4 N/A 152,215 152,215 ---------------------------------------------------------------------------------------------------------------- Class R5(1) 1,047,553 535 1,048,088 ----------------------------------------------------------------------------------------------------------------
(1) Effective May 9, 2009, the Class R and Class I shares of the Seligman Emerging Markets Fund will be redesignated as Class R2 and Class R5 shares, respectively. (2) The inception date for the Threadneedle Emerging Markets Fund Class R2 shares is expected to be in the third quarter of 2009. 61 COMBINED PORTFOLIO OF INVESTMENTS Threadneedle Emerging Markets Fund OCT. 31, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (95.8%)(C) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED BERMUDA (0.8%) Credicorp 72,761 -- 72,761 $ 2,857,324 $ $-- $ 2,857,324 BRAZIL (12.9%) AmBev ADR 54,439 -- 54,439 2,313,658 -- 2,313,658 Amil Participacoes -- 72,200 72,200(b) -- 333,256 333,256 Banco Bradesco 255,100 -- 255,100 2,937,551 -- 2,937,551 Banco Itau Holding ADR -- 71,700 71,700 -- 793,002 793,002 BM&F Bovespa -- 223,300 223,300(b) -- 596,772 596,772 Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR -- 23,700 23,700 -- 709,341 709,341 Companhia Energetica de Minas Gerais ADR -- 63,800 63,800 -- 970,398 970,398 Companhia Siderurgica Nasional ADR -- 35,500 35,500 -- 482,800 482,800 Companhia Vale do Rio Doce ADR 211,011 124,216 335,227 2,768,464 1,629,714 4,398,178 MRV Engenharia e Participacoes 160,400 -- 160,400 833,218 -- 833,218 Multiplan Empreendimentos Imobiliarios 399,849 -- 399,849(b) 2,017,774 -- 2,017,774 OdontoPrev -- 25,800 25,800(b) -- 332,250 332,250 PDG Realty 269,800 -- 269,800 1,381,506 -- 1,381,506 Petroleo Brasileiro ADR 327,760 105,200 432,960 8,813,466 2,828,828 11,642,294 Redecard 955,100 -- 955,100 10,405,191 -- 10,405,191 UNIBANCO -- Uniao de Bancos Brasileiros GDR 52,661 -- 52,661 3,321,857 -- 3,321,857 Usinas Siderurgicas de Minas Gerais -- 85,925 85,925 -- 1,009,366 1,009,366 Weg -- 52,300 52,300 -- 296,926 296,926 ------------------------------------------- Total 34,792,685 9,982,653 44,775,338 ------------------------------------------- CANADA (0.6%) Yamana Gold 460,420 -- 460,420 2,131,745 -- 2,131,745 ------------------------------------------- CHILE (0.5%) Enersis ADR -- 67,400 67,400 -- 970,560 970,560 Sociedad Quimica y Minera de Chile ADR -- 35,700 35,700 -- 817,530 817,530 ------------------------------------------- Total -- 1,788,090 1,788,090 ------------------------------------------- CHINA (15.6%) Angang Steel Series H -- 594,000 594,000 -- 368,527 368,527 China Construction Bank Series H 9,620,000 -- 9,620,000 4,772,560 -- 4,772,560 China Life Insurance Series H 2,005,000 509,000 2,514,000 5,358,462 1,360,306 6,718,768 China Medical Tehnologies ADR 77,736 -- 77,736 1,894,426 -- 1,894,426 China Merchants Bank Series H 2,439,000 -- 2,439,000 3,736,882 -- 3,736,882 China Mobile ADR -- 17,400 17,400 -- 763,686 763,686 China Overseas Land & Investment -- 326,000 326,000 -- 363,121 363,121 China Resources Enterprise -- 480,000 480,000 -- 942,084 942,084 China Shenhua Energy Series H -- 518,000 518,000(b) -- 959,592 959,592 CNOOC ADR 71,752 20,700 92,452 5,861,421 1,690,983 7,552,404 First Pacific -- 784,000 784,000(b) -- 316,808 316,808 Golden Meditech -- 1,768,000 1,768,000 -- 253,408 253,408 Hong Kong Exchange and Clearing -- 78,400 78,400 -- 801,458 801,458 Hopson Development Holdings -- 710,000 710,000 -- 233,245 233,245 Industrial & Commercial Bank of China Series H 18,359,000 2,709,000 21,068,000 8,638,789 1,260,360 9,899,149 Li Ning 1,691,500 -- 1,691,500 2,093,436 -- 2,093,436 Minth Group 2,484,000 -- 2,484,000 868,102 -- 868,102 Ping An Insurance Group of China Series H 1,825,000 -- 1,825,000 7,805,478 -- 7,805,478
62
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED Shanghai Electric Group -- 3,370,000 3,370,000 $ -- $ 994,274 $ 994,274 Shangri-La Asia -- 858,000 858,000 -- 1,200,072 1,200,072 Simcere Pharmaceutical Group ADR -- 65,173 65,173(b) -- 366,924 366,924 Weiqiao Textile -- 530,500 530,500 -- 108,495 108,495 WSP Holdings ADR -- 131,400 131,400(b) -- 622,836 622,836 Wumart Stores -- 712,178 712,178 -- 579,738 579,738 ------------------------------------------- Total 41,029,556 13,185,917 54,215,473 ------------------------------------------- CZECH REPUBLIC (0.9%) CEZ 70,000 -- 70,000 3,033,756 -- 3,033,756 ------------------------------------------- EGYPT (0.3%) Orascom Construction Inds -- 23,657 23,657 -- 796,470 796,470 Talaat Moustafa Group -- 598,801 598,801(b) -- 386,706 386,706 ------------------------------------------- Total -- 1,183,176 1,183,176 ------------------------------------------- HONG KONG (6.1%) China Mobile 2,084,000 -- 2,084,000 18,347,176 -- 18,347,176 China Overseas Land & Investment 2,566,000 -- 2,566,000 2,897,869 -- 2,897,869 ------------------------------------------- Total 21,245,045 -- 21,245,045 ------------------------------------------- HUNGARY (0.1%) Richter Gedeon -- 3,543 3,543 -- 486,721 486,721 ------------------------------------------- INDIA (7.7%) Bajaj Holdings and Investment -- 38,655 38,655 -- 270,688 270,688 Bharat Heavy Electricals 91,662 38,576 130,238 2,435,150 1,045,815 3,480,965 Bharti Airtel 412,765 25,465 438,230(b) 5,573,659 347,974 5,921,633 Educomp Solutions -- 10,663 10,663 -- 495,118 495,118 Firstsource Solutions -- 650,211 650,211(b) -- 199,576 199,576 HDFC Bank ADR -- 2,400 2,400 -- 157,440 157,440 Housing Development Finance 87,154 -- 87,154 3,163,627 -- 3,163,627 Infosys Technologies 191,779 -- 191,779 5,574,974 -- 5,574,974 Lanco Infratech -- 108,795 108,795(b) -- 251,704 251,704 Nicholas Piramal India -- 160,497 160,497 -- 728,710 728,710 Piramal Life Sciences -- 54,885 54,885(b) -- 76,176 76,176 Punjab Natl Bank -- 11,114 11,114 -- 98,828 98,828 Reliance Inds 145,110 50,927 196,037 4,113,500 1,423,750 5,537,250 Tata Chemicals -- 217,516 217,516 -- 712,688 712,688 ------------------------------------------- Total 20,860,910 5,808,467 26,669,377 ------------------------------------------- INDONESIA (1.1%) Bank Rakyat Indonesia 8,962,000 -- 8,962,000 2,729,545 -- 2,729,545 Bumi Resources 7,288,500 -- 7,288,500(f) 1,136,986 -- 1,136,986 ------------------------------------------- Total 3,866,531 -- 3,866,531 ------------------------------------------- ISRAEL (6.4%) Bezek Israeli Telecommunication -- 429,592 429,592 -- 637,484 637,484 Check Point Software Technologies 297,210 -- 297,210(b) 6,009,586 -- 6,009,586 Israel Chemicals 491,565 46,862 538,427 4,979,313 466,575 5,445,888 Teva Pharmaceutical Inds ADR 190,786 48,300 239,086 8,180,903 2,071,104 10,252,007 ------------------------------------------- Total 19,169,802 3,175,163 22,344,965 ------------------------------------------- JORDAN (0.2%) Hikma Pharmaceuticals -- 122,439 122,439 -- 638,503 638,503 ------------------------------------------- MALAYSIA (1.5%) Digi.com -- 86,900 86,900 -- 452,061 452,061 IOI 2,647,300 -- 2,647,300 2,101,445 -- 2,101,445
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COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED KNM Group 9,350,150 -- 9,350,150 $ 1,587,707 $ -- $ 1,587,707 Kulim -- 329,400 329,400 -- 362,572 362,572 Resorts World -- 891,500 891,500 -- 627,023 627,023 ------------------------------------------- Total 3,689,152 1,441,656 5,130,808 ------------------------------------------- MEXICO (7.1%) America Movil ADR Series L 207,252 61,300 268,552 6,412,377 1,896,622 8,308,999 Fomento Economico Mexicano ADR -- 19,800 19,800 -- 500,742 500,742 Genomma Lab Internacional -- 232,200 232,200(b) -- 248,125 248,125 Grupo Financiero Banorte Series O 1,930,900 -- 1,930,900 3,543,198 -- 3,543,198 Grupo Televisa ADR 252,920 64,900 317,820 4,466,567 1,146,134 5,612,701 Impulsora del Dessarrollo y el Empleo an America Latina Series B-1 -- 347,900 347,900(b) -- 297,408 297,408 Wal-Mart de Mexico Series V 1,747,500 496,000 2,243,500 4,707,272 1,324,080 6,031,352 ------------------------------------------- Total 19,129,414 5,413,111 24,542,525 ------------------------------------------- NORWAY (0.1%) Copeinca 110,800 -- 110,800(b) 181,059 -- 181,059 ------------------------------------------- PAPUA NEW GUINEA (0.1%) New Britain Palm Oil -- 79,663 79,663 -- 252,759 252,759 ------------------------------------------- PERU (0.2%) Compania de Minas Buenaventura Cl B ADR -- 67,500 67,500 -- 853,200 853,200 ------------------------------------------- PHILIPPINES (0.2%) Philippine Long Distance Telephone ADR -- 13,000 13,000 -- 531,700 531,700 ------------------------------------------- QATAR (0.1%) Commercial Bank of Qatar GDR -- 102,600 102,600(b,e) -- 307,800 307,800 ------------------------------------------- RUSSIA (7.1%) Cherkizovo Group -- 26,343 26,343(b) -- 67,175 67,175 Eurasia Drilling GDR 243,662 -- 243,662(b,e,g) 1,339,747 -- 1,339,747 Gazprom ADR 617,321 10,081 627,402 12,577,916 200,309 12,778,225 Gazprom ADR -- 106,687 106,687(e) -- 2,152,943 2,152,943 MMC Norilsk Nickel ADR 201,865 -- 201,865 2,025,853 -- 2,025,853 Mobile Telesystems ADR -- 19,600 19,600 -- 767,340 767,340 Pharmstandard 72,811 -- 72,811(b) 1,830,430 -- 1,830,430 Sibirskiy Cement 24,589 -- 24,589 1,475,340 -- 1,475,340 Vimpel- Communications ADR 163,588 -- 163,588 2,372,026 -- 2,372,026 ------------------------------------------- Total 21,621,312 3,187,767 24,809,079 ------------------------------------------- SOUTH AFRICA (8.2%) ABSA Group 335,510 -- 335,510 3,517,898 -- 3,517,898 Adcock Ingram Holdings -- 142,128 142,128(b) -- 498,403 498,403 African Bank Investments -- 287,996 287,996 -- 795,072 795,072 Aspen Pharmacare -- 181,064 181,064(b) -- 635,741 635,741 Aveng 720,771 -- 720,771 3,571,281 -- 3,571,281 Gold Fields 485,399 -- 485,399 3,386,473 -- 3,386,473 Gold Fields ADR 218,148 -- 218,148 1,450,684 -- 1,450,684 Impala Platinum Holdings 258,879 77,515 336,394 2,707,989 813,547 3,521,536 MTN Group 350,937 94,813 445,750 3,949,297 1,069,973 5,019,270 Murray & Roberts Holdings 272,391 -- 272,391 1,848,111 -- 1,848,111 Sasol 109,036 -- 109,036 3,225,527 -- 3,225,527 Truworths Intl -- 339,884 339,884 -- 1,157,506 1,157,506 ------------------------------------------- Total 23,657,260 4,970,242 28,627,502 ------------------------------------------- SOUTH KOREA (7.9%) Hyundai Motor 68,408 -- 68,408 3,163,629 -- 3,163,629
64
COMMON STOCKS (CONTINUED) ISSUER SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED Infopia 65,450 -- 65,450 $ 488,514 $ -- $ 488,514 KT 34,150 -- 34,150 870,018 -- 870,018 LG Electronics 45,653 19,346 64,999 3,411,257 1,430,742 4,841,999 NHN 33,539 -- 33,539(b) 3,572,276 -- 3,572,276 Samsung Electronics 27,090 -- 27,090 11,430,540 -- 11,430,540 Yuhan 20,363 -- 20,363 2,964,512 -- 2,964,512 ------------------------------------------- Total 25,900,746 1,430,742 27,331,488 ------------------------------------------- SWITZERLAND (0.1%) Orascom Development Holding -- 9,309 9,309(b) -- 269,666 269,666 ------------------------------------------- TAIWAN (7.6%) Asustek Computer 2,037,062 -- 2,037,062 2,919,344 -- 2,919,344 Chunghwa Telecom 1,286,460 -- 1,286,460 2,129,621 -- 2,129,621 Chunghwa Telecom ADR -- 34,600 34,600 -- 569,516 569,516 First Financial Holding 4,196,764 -- 4,196,764 1,980,311 -- 1,980,311 Hon Hai Precision Industry 1,098,250 382,910 1,481,160 2,652,248 926,982 3,579,230 MediaTek -- 89,000 89,000 -- 794,255 794,255 President Chain Store -- 203,000 203,000 -- 476,343 476,343 Taiwan Mobile -- 576,000 576,000(b) -- 801,575 801,575 Taiwan Semiconductor Mfg ADR 1,119,988 843,000 1,962,988 9,251,101 1,247,355 10,498,456 Tripod Technology 1,008,155 -- 1,008,155 1,232,753 -- 1,232,753 U-Ming Marine Transport 635,000 -- 635,000 741,724 -- 741,724 Yuanta Financial Holding -- 1,761,000 1,761,000 -- 701,035 701,035 ------------------------------------------- Total 20,907,102 5,517,061 26,424,163 ------------------------------------------- THAILAND (1.1%) Bangkok Bank -- 310,700 310,700 -- 632,382 632,382 Kasikornbank 2,094,800 -- 2,094,800 3,066,297 -- 3,066,297 Land and House -- 1,502,300 1,502,300 -- 165,389 165,389 ------------------------------------------- Total 3,066,297 797,771 3,864,068 ------------------------------------------- TURKEY (1.3%) Akcansa Cimento -- 77,071 77,071 -- 128,337 128,337 Aksigorta -- 130,725 130,725 -- 268,434 268,434 Cimsa Cimento Sanayi ve Ticaret -- 81,322 81,322 -- 153,435 153,435 Haci Omer Sabanci Holding -- 141,547 141,547 -- 344,308 344,308 Koc Holding -- 182,184 182,184 -- 340,601 340,601 Turkiye Garanti Bankasi 2,008,865 -- 2,008,865(b) 3,374,384 -- 3,374,384 ------------------------------------------- Total 3,374,384 1,235,115 4,609,499 ------------------------------------------- TOTAL COMMON STOCKS (Cost: $518,063,882) $270,514,080 $62,457,280 $332,971,360 ----------------------------------------------------------------------------------------------------------- PREFERRED STOCKS (0.4%) SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED BRAZIL Companhia de Bedidas das Americas -- 22,300 22,300 $ -- $ 936,672 $ 936,672 Petroleo Brasileiro -- 30,400 30,400 -- 327,082 327,082 ------------------------------------------- -- 1,263,754 1,263,754 TOTAL PREFERRED STOCKS (Cost: $1,386,382) $ -- $ 1,263,754 $ 1,263,754 -----------------------------------------------------------------------------------------------------------
65
MONEY MARKET FUND (3.9%) SHARES SHARES SHARES VALUE(A) VALUE(A) VALUE(A) THREADNEEDLE THREADNEEDLE EMERGING EMERGING THREADNEEDLE SELIGMAN MARKETS FUND THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED MARKETS FUND MARKETS FUND COMBINED RIVERSOURCE SHORT- TERM CASH FUND, 1.60% 13,521,361 -- 13,521,361(d) $ 13,521,361 $ -- $ 13,521,361 TOTAL MONEY MARKET FUND (Cost: $13,521,361) $ 13,521,361 $ -- $ 13,521,361 ------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $532,971,625)(h) $284,035,441 $63,721,034 $347,756,475 -----------------------------------------------------------------------------------------------------------
66 SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of total net assets at Oct. 31, 2008:
INDUSTRY VALUE VALUE VALUE THREADNEEDLE EMERGING THREADNEEDLE SELIGMAN MARKETS FUND PERCENTAGE OF EMERGING EMERGING PRO FORMA NET ASSETS MARKETS FUND MARKETS FUND COMBINED Auto Components 0.2% $ 868,102 $ -- $ 868,102 Automobiles 0.9 3,163,629 -- 3,163,629 Beverages 1.1 2,313,658 1,437,414 3,751,072 Biotechnology -- -- 76,176 76,176 Chemicals 2.0 4,979,313 1,996,793 6,976,106 Commercial Banks 13.7 44,476,596 3,249,812 47,726,408 Computers & Peripherals 0.8 2,919,344 -- 2,919,344 Construction & Engineering 1.5 3,571,281 1,627,354 5,198,635 Distributors 0.3 -- 942,084 942,084 Diversified Consumer Services 0.1 -- 495,118 495,118 Diversified Financial Services 1.0 -- 3,509,333 3,509,333 Diversified Telecommunication Services 2.1 5,371,665 1,738,700 7,110,365 Electric Utilities 1.4 3,033,756 1,940,958 4,974,714 Electrical Equipment 1.3 2,435,150 2,040,089 4,475,239 Electronic Equipment, Instruments & Components 1.4 3,885,001 926,982 4,811,983 Energy Equipment & Services 1.7 2,927,454 2,976,088 5,903,542 Food & Staples Retailing 2.2 4,707,272 3,089,502 7,796,774 Food Products 1.0 2,282,504 999,314 3,281,818 Health Care Equipment & Supplies 0.9 2,382,940 585,658 2,968,598 Household Durables 2.0 5,625,981 1,430,742 7,056,723 Industrial Conglomerate 0.6 1,848,111 340,601 2,188,712 Insurance 4.4 13,163,940 1,961,996 15,125,936 Internet Software & Services 1.0 3,572,276 -- 3,572,276 IT Services 4.7 15,980,165 199,576 16,179,741 Leisure Equipment & Products 1.2 2,093,436 2,205,256 4,298,692 Machinery 0.1 -- 296,926 296,926 Marine 0.2 741,724 -- 741,724 Media 1.6 4,466,567 1,146,134 5,612,701 Metals & Mining 5.7 14,471,208 5,157,154 19,628,362 Multi-Utilities 0.4 1,475,340 -- 1,475,340 Oil, Gas & Consumable Fuels 12.4 35,728,816 7,230,235 42,959,051 Pharmaceuticals 5.4 12,975,845 5,674,231 18,650,076 Real Estate Management & Development 1.8 4,915,643 1,148,461 6,064,104 Semiconductors & Semiconductor Equipment 6.5 20,681,641 2,041,610 22,723,251 Software 1.7 6,009,586 -- 6,009,586 Specialty Retail 0.3 -- 1,157,506 1,157,506 Thrifts & Mortgage Finance 0.9 3,163,627 -- 3,163,627 Wireless Telecommunication Services 11.6 34,282,510 6,099,231 40,381,741 Other(1) 3.9 13,521,361 -- 13,521,361 ---------------------------------------------------------------------------- Total $284,035,442 $63,721,034 $347,756,476 ----------------------------------------------------------------------------
(1) Cash & Cash Equivalents. 67 INVESTMENTS IN DERIVATIVES FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCT. 31, 2008 Seligman Emerging Markets Fund
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION Nov. 3, 2008 21,594 13,990 $ 1 $ -- Turkish Lira U.S. Dollar --------------------------------------------------------------------------------------- Nov. 4, 2008 382,864 30,314 560 -- Mexican Peso U.S. Dollar --------------------------------------------------------------------------------------- Nov. 21, 2008 2,689,000 2,007,166 276,908 -- Turkish Lira U.S. Dollar --------------------------------------------------------------------------------------- Nov. 21, 2008 143,608 205,000 -- (11,699) U.S. Dollar Turkish Lira --------------------------------------------------------------------------------------- Nov. 21, 2008 1,075,623 1,502,000 -- (109,150) U.S. Dollar Turkish Lira --------------------------------------------------------------------------------------- Jan. 22, 2009 2,158,287,000 2,122,627 432,372 -- South Korean Won U.S. Dollar --------------------------------------------------------------------------------------- Jan. 22, 2009 1,035,398 1,312,885,000 -- (7,217) U.S. Dollar South Korean Won --------------------------------------------------------------------------------------- Jan. 22, 2009 539,048 549,560,000 -- (108,662) U.S. Dollar South Korean Won --------------------------------------------------------------------------------------- Jan. 22, 2009 291,183 295,842,000 -- (59,495) U.S. Dollar South Korean Won --------------------------------------------------------------------------------------- Feb. 19, 2009 94,682,000 502,185 45,664 -- Hungarian Forint U.S. Dollar --------------------------------------------------------------------------------------- Feb. 19, 2009 80,830 14,648,000 -- (10,203) U.S. Dollar Hungarian Forint --------------------------------------------------------------------------------------- Sept. 29, 2009 20,663,000 2,304,723 356,083 -- South African Rand U.S. Dollar --------------------------------------------------------------------------------------- Sept. 29, 2009 2,570,000 287,891 45,525 -- South African Rand U.S. Dollar --------------------------------------------------------------------------------------- Sept. 29, 2009 1,077,058 10,455,000 -- (91,091) U.S. Dollar South African Rand --------------------------------------------------------------------------------------- Total $1,157,113 $(397,517) --------------------------------------------------------------------------------------- NOTES TO COMBINED PORTFOLIO OF INVESTMENTS
(A) Securities are valued by procedures described in Note 1 to the financial statements in the annual report. (B) Non-income producing. (C) Foreign security values are stated in U.S. dollars. (D) Affiliated Money Market Fund -- See Note 5 to the financial statements in the annual report. The rate shown is the seven-day current annualized yield at Oct. 31, 2008. (E) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Oct. 31, 2008, the value of these securities amounted to $3,800,490 or 1.1% of net assets. (F) Security valued by management at fair value according to procedures approved, in good faith, by the Board. (G) Identifies issues considered to be illiquid as to their marketability. These securities may be valued at fair value according to procedures approved, in good faith, by the Fund's Board of Directors. Information concerning such security holdings at Oct. 31, 2008, is as follows:
ACQUISITION SECURITY DATES COST Eurasia Drilling GDR* 11-02-07 thru 04-15-08 $5,741,380
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (H) At Oct. 31, 2008, the cost of securities for federal income tax purposes and the aggregate gross unrealized appreciation and depreciation based on that cost was:
THREADNEEDLE EMERGING THREADNEEDLE SELIGMAN MARKETS FUND EMERGING EMERGING PRO FORMA MARKETS FUND MARKETS FUND COMBINED Cost of securities for federal income tax purposes: $ 449,749,120 $ 95,827,053 $ 545,576,173 Unrealized appreciation $ 2,377,852 $ 2,878,916 $ 5,256,768 Unrealized depreciation (168,091,531) (34,984,935) (203,076,466) -------------------------------------------------------------------------------------------------------------- Net unrealized depreciation $(165,713,679) $(32,106,019) $(197,819,698) --------------------------------------------------------------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. 68 PART C. OTHER INFORMATION Item 15. Indemnification The Articles of Incorporation of the registrant provide that the Fund shall indemnify any person who was or is a party or is threatened to be made a party, by reason of the fact that she or he is or was a director, officer, employee or agent of the Fund, or is or was serving at the request of the Fund as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, to any threatened, pending or completed action, suit or proceeding, wherever brought, and the Fund may purchase liability insurance and advance legal expenses, all to the fullest extent permitted by the laws of the State of Minnesota, as now existing or hereafter amended. The By-laws of the registrant provide that present or former directors or officers of the Fund made or threatened to be made a party to or involved (including as a witness) in an actual or threatened action, suit or proceeding shall be indemnified by the Fund to the full extent authorized by the Minnesota Business Corporation Act, all as more fully set forth in the By-laws filed as an exhibit to this registration statement. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Any indemnification hereunder shall not be exclusive of any other rights of indemnification to which the directors, officers, employees or agents might otherwise be entitled. No indemnification shall be made in violation of the Investment Company Act of 1940. Any indemnification hereunder shall not be exclusive of any other rights of indemnification to which the trustees, officers, employees or agents might otherwise be entitled. No indemnification shall be made in violation of the Investment Company Act of 1940. Item 16. Exhibits (1)(a) Articles of Incorporation, as amended Nov. 14, 1991, filed as Exhibit No. 1 to Post-Effective Amendment No. 17 to Registration Statement No. 2-86637, are incorporated by reference. (1)(b) Articles of Amendment, dated June 16, 1999, filed electronically as Exhibit (a)(2) to Registrant's Post-Effective Amendment No. 34 to Registration Statement No. 2-86637 filed on or about July 25, 2001 are incorporated by reference. (1)(c) Articles of Amendment to the Articles of Incorporation, dated Nov. 14, 2002, filed electronically as Exhibit (a)(3) to Registrant's Post-Effective Amendment No. 36 to Registration Statement No. 2-86637, are incorporated by reference. (1)(d) Articles of Amendment, dated April 21, 2006, filed electronically on or about July 25, 2006 as Exhibit (a)(4) to Registrant's Post-Effective Amendment No. 42 to Registration Statement No. 2-86637 are incorporated by reference. (2) By-laws, as amended April 13, 2006, filed electronically on or about July 28, 2008 as Exhibit (b) to Registrant's Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 are incorporated by reference. (3) Not applicable. (4) Form of Agreement and Plan of Reorganization is included herein as Exhibit A to Part A of this Registration Statement. (5) Not applicable. (6) Investment Management Services Agreement, dated May 1, 2006, between Registrant and RiverSource Investments, LLC filed electronically on or about July 25, 2006 as Exhibit (d) to Registrant's Post-Effective Amendment No. 42 to Registration Statement No. 2-86637 is incorporated by reference. (7)(a) Distribution Agreement, effective Aug. 1, 2006, amended and restated as of Sept. 11, 2007, between Registrant and RiverSource Distributors, Inc. filed electronically on or about Oct. 30, 2007 as Exhibit (e)(2) to RiverSource Diversified Income Series, Inc. Post-Effective Amendment No. 63 to Registration Statement No. 2-51586 is incorporated by reference. (7)(b) Distribution Agreement, effective Nov. 7, 2008, between Registrant and Seligman Advisors, Inc. filed electronically on or about Nov. 25, 2008 as Exhibit (e)(2) to RiverSource Investment Series, Inc. Post-Effective Amendment No. 121 to Registration Statement No. 2-11328 is incorporated by reference. (7)(c) Form of Service Agreement for RiverSource Distributors, Inc. and RiverSource Service Corporation filed electronically on or about Aug. 27, 2007 as Exhibit (e)(3) to RiverSource Sector Series, Inc. Post-Effective Amendment No. 39 to Registration Statement No. 33-20872 is incorporated by reference. (7)(d) Form of RiverSource Funds Dealer Agreement filed electronically on or about Aug. 27, 2007 as Exhibit (e)(4) to RiverSource Sector Series, Inc. Post-Effective Amendment No. 39 to Registration Statement No. 33-20872 is incorporated by reference. (8) Not applicable. (9) Form of Master Global Custody Agreement with JP Morgan Chase Bank, N.A. filed electronically on or about Dec. 23, 2008 as Exhibit (g) to RiverSource International Mangers, Inc. Post-Effective Amendment No. 18 to Registration Statement No. 333-64010 is incorporated by reference. (10)(a) Plan of Distribution and Agreement of Distribution, dated Aug. 1, 2006, amended and restated June 12, 2008, between Registrant and RiverSource Distributors, Inc. filed electronically on or about July 28, 2008 as Exhibit (m) to RiverSource High Yield Income Series, Inc. Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 is incorporated by reference. (10)(b) Plan of Distribution and Agreement of Distribution, effective Nov. 7, 2008, between Registrant and Seligman Advisors, Inc. filed electronically on or about Nov. 25, 2008 as Exhibit (m)(2) to RiverSource Investment Series, Inc. Post-Effective Amendment No. 121 to Registration Statement No. 2-11328 is incorporated by reference. (10)(c) Rule 18f - 3(d) Plan, amended and restated as of June 12, 2008, filed electronically on or about June 30, 2008 as Exhibit (n) to RiverSource Investment Series, Inc. Post-Effective Amendment No. 120 to Registration Statement No. 2-11328 is incorporated by reference. (11) Opinion and consent of counsel as to the legality of the securities being registered to be filed by Amendment. (12) Tax opinion to be filed by Amendment. (13)(a) Administrative Services Agreement, dated Oct. 1, 2005, amended and restated June 12, 2008, between Registrant and Ameriprise Financial, Inc. filed electronically on or about July 28, 2008 as Exhibit (h)(1) to RiverSource High Yield Income Series, Inc. Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 is incorporated by reference. (13)(b) Plan Administration Services Agreement, dated Dec. 1, 2006, amended and restated June 12, 2008, between Registrant and RiverSource Service Corporation filed electronically on or about July 28, 2008 as Exhibit (h)(3) to RiverSource High Yield Income Series, Inc. Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 is incorporated by reference. (13)(c) Transfer Agency Agreement, dated Oct. 1, 2005, amended and restated June 12, 2008, between Registrant and RiverSource Service Corporation filed electronically on or about July 28, 2008 as Exhibit (h)(2) to RiverSource High Yield Income Series, Inc. Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 is incorporated by reference. (13)(d) License Agreement, effective May 1, 2006, amended and restated as of Sept. 11, 2007, between Ameriprise Financial, Inc. and RiverSource Funds filed electronically on or about Oct. 30, 2007 as Exhibit (h)(7) to RiverSource Diversified Income Series, Inc. Post-Effective Amendment No. 63 to Registration Statement No. 2-51586 is incorporated by reference. (13)(e) Master Fee Cap/Fee Waiver Agreement, dated Oct. 1, 2005, amended and restated June 12, 2008, between RiverSource Investments, LLC, Ameriprise Financial, Inc., RiverSource Service Corporation, RiverSource Distributors, Inc. and the Registrant filed electronically on or about July 28, 2008 as Exhibit (h)(5) to RiverSource High Yield Income Series, Inc. Post-Effective Amendment No. 45 to Registration Statement No. 2-86637 is incorporated by reference. (14) Consent of Independent Registered Public Accounting Firm to be filed by Amendment. (15) Financial Statements: Not applicable. (16) Directors/Trustees Power of Attorney to sign this Registration Statement and its amendments, dated Jan. 8, 2009, is filed electronically herewith as Exhibit (16). (17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed electronically on or about Aug. 27, 2007 as Exhibit (p)(1) to RiverSource Sector Series, Inc. Post-Effective Amendment No. 39 to Registration Statement No. 33-20872 is incorporated by reference. (17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's principal underwriter, dated April 2008, filed electronically on or about April 25, 2008 as Exhibit (p)(2) to RiverSource Variable Series Trust Post-Effective Amendment No. 3 to Registration Statement No. 333-146374 is incorporated by reference. (17)(c) Code of Ethics adopted under Rule 17j-1 for Registrant's investment adviser, dated Nov. 15, 2008, filed electronically on or about Nov. 25, 2008 as Exhibit (p)(3) to RiverSource Investment Series, Inc. Post-Effective Amendment No. 121 to Registration Statement No. 2-11328 is incorporated by reference. (17)(d) Prospectus, dated May 1, 2008, for Seligman High-Yield Fund to be filed by Amendment. (17)(e) Prospectus, dated July 30, 2008, for RiverSource High Yield Bond Fund to be filed by Amendment. (17)(f) Statement of Additional Information, dated May 1, 2008, for Seligman High-Yield Fund to be filed by Amendment. (17)(g) Statement of Additional Information, dated April 1, 2009, for RiverSource High Yield Bond Fund to be filed by Amendment. (17)(h) Annual Report for the period ended Dec. 31, 2008 for Seligman High-Yield Fund to be filed by Amendment. (17)(i) Annual Report for the period ended May 31, 2008 for RiverSource High Yield Bond Fund to be filed by Amendment. (17)(j) Semiannual Report for the period ended Nov. 30, 2008 for RiverSource High Yield Bond Fund to be filed by Amendment. Item 17. Undertakings. (1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The Registrant undertakes to file by Post-Effective Amendment an Opinion of Counsel supporting the tax consequences of the proposed reorganization within a reasonable time after receipt of such opinion. SIGNATURES As required by the Securities Act of 1933, as amended, this Registration Statement has been signed on behalf of the Registrant, in the City of Minneapolis, and State of Minnesota on the 27th day of Feb., 2009. RIVERSOURCE HIGH YIELD INCOME SERIES, INC. By /s/ Patrick T. Bannigan ----------------------------------- Patrick T. Bannigan President By /s/ Jeffrey P. Fox ----------------------------------- Jeffrey P. Fox Treasurer As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 27th day of Feb., 2009.
Signature Capacity Signature Capacity --------- -------- --------- -------- /s/ Stephen R. Lewis, Jr.* Chair of the Board /s/ Jeffrey Laikind* Director ------------------------------- ---------------------------------- Stephen R. Lewis, Jr. Jeffrey Laikind /s/ Kathleen A. Blatz* Director /s/ John F. Maher* Director ------------------------------- ---------------------------------- Kathleen A. Blatz John F. Maher /s/ Arne H. Carlson* Director /s/ Catherine James Paglia* Director ------------------------------- ---------------------------------- Arne H. Carlson Catherine James Paglia /s/ Pamela G. Carlton* Director /s/ Leroy C. Richie* Director ------------------------------- ---------------------------------- Pamela G. Carlton Leroy C. Richie /s/ Patricia M. Flynn* Director /s/ Alison Taunton-Rigby* Director ------------------------------- ---------------------------------- Patricia M. Flynn Alison Taunton-Rigby /s/ Anne P. Jones* Director /s/ William F. Truscott* Director ------------------------------- ---------------------------------- Anne P. Jones William F. Truscott
---------- * Signed pursuant to Directors/Trustees Power of Attorney, dated Jan. 8, 2009, filed electronically herewith as Exhibit (16), by: /s/ Scott R. Plummer ------------------------------- Scott R. Plummer EXHIBIT INDEX (16) Directors/Trustees Power of Attorney to sign this Registration Statement and its amendments, dated Jan. 8, 2009.