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Key Information

Portfolio Managers
Charles Kadlec
John Schonberg

Seligman TargetHorizon ETF Portfolios

Seligman TargETFund Core returned 4.98%. The Fund’s benchmark, the Dow Jones U.S. Portfolio Target Today Index, returned 1.43% for the quarter.

Seligman TargETFund 2015 returned 5.43%. The Fund’s benchmark, the Dow Jones U.S. Portfolio Target 2015 Index, returned 2.69% for the quarter.

Seligman TargETFund 2025 returned 4.39%. The Fund’s benchmark, the Dow Jones U.S. Portfolio Target 2025 Index, returned 4.33% for the quarter.

Seligman TargETFund 2035 returned 4.06%. The Fund’s benchmark, the Dow Jones U.S. Portfolio Target 2035 Index, returned 5.70% for the quarter.

Seligman TargETFund 2045 returned 4.36%. The Fund’s benchmark, the Dow Jones U.S. Portfolio Target 2045 Index, returned 6.16% for the quarter.

The date in the Fund name refers to the approximate year an investor in the fund would plan to retire or to begin withdrawing portions or his or her investment for retirement or other investment goal. In each fund's target year, the Fund is combined with the TargETFund Core, and shareholders of the Fund automatically become shareholders of TargETFund Core. An investment in the Fund is not guaranteed at any time, and you could experience loss of principal before, at, or after, the target date. There is no guarantee that the Fund will provide adequate income at and through retirement.

The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. To obtain performance information current to the most recent month-end click here.

AVERAGE ANNUAL TOTAL RETURNS as of 12/31/09
Class A shares (with sales charge) and Annual Operating Expense Ratios

Return figures reflect any change in price per share, and assume the reinvestment of dividends and capital gain distributions, if any. Average annual total return figures for Class A shares are calculated without and with the effect of the maximum initial sales charge. The average annual total returns (with sales charges) for all periods presented for Class A shares reflect the maximum initial sales charge of 5.75% that went into effect January 7, 2008. Effective June 4, 2007, there is no initial sales charge on purchases of Class C shares. Average annual total return figures do not reflect the performance of Class C or R shares, which would differ due to different sales charges, fees and expenses.

(a) Through at least January 31, 2015, the Funds’ Manager has contractually agreed to waive its management fee and/or reimburse Fund 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 0.23% per annum of each Fund’s average daily net assets (excluding the assets in Class I shares, shares of which are not offered herein). This waiver/reimbursement arrangement also excludes Underlying ETF fees and expenses. The table does not reflect the expenses of Class C or R shares.

Environment

Particularly helpful for performance during the quarter were allocations to equity real estate investment trusts (REITs) and emerging market stocks, and to a slightly lesser extent, domestic large-, mid- and small-cap stocks. International large-company stocks and Treasury Inflation Protected Securities (TIPS) also made strong contributions, while international small-company stocks and investment-grade bonds made modest yet positive contributions. (TargETFunds 2015 and 2025 have allocations to all of these asset classes, while TargETFunds 2035 and 2045 have allocations to all except equity REITs and TIPS. TargETFund Core has allocations to international large-company stocks and equity REITs, but not to emerging market stocks or domestic and international small- company stocks.)

The Funds’ ability to benefit from exposure to these varied asset classes demonstrates the importance of their strategic investment process, which is designed to capture returns that markets are expected to produce over the longer holding periods associated with target-date funds. A key tenet of the strategic investment process is maintaining and systematically adjusting time-appropriate allocations to asset classes that historically have provided diversification and outperformance over these longer periods, even though these asset classes can fluctuate significantly over short time frames. Our strategy is to maintain the allocation regardless of how the overall market or individual sectors might be performing short-term.

As a result, each Fund avoided over-exposure to fixed income and was well-positioned to capture the significant gains that the equity asset classes delivered throughout the final three quarters of the year. Just as important, each of the Funds avoided the lure of chasing and overweighting the best-performing sectors. For example, the Funds maintained their strategic allocations to equity REITs in the first quarter, which penalized short-term results but as a consequence realized the full benefit of this asset classes’ exceptionally strong absolute and relative performance during the remainder of the year.

In addition to maintaining prudent, time-specific diversification, TargETFunds Core and 2015 added a risk-management overlay midway through the third quarter. The goal of the risk management overlay — which primarily is based on collecting premium income from selling monthly covered-call options — is to provide a risk/reward profile that seeks higher returns in down, flat, or gently rising equity markets in exchange for lower returns in strong up markets. As equity markets continued their strong rally through year-end, the risk overlay actually added value because high volatility produced premium income sufficient to offset the cost of closing out several of the option contracts that settled in the money. The four months of experience we’ve had in applying the risk overlay is consistent with our research that indicated it would be possible to reduce short-term volatility without significantly reducing the long-term growth potential of these funds and thereby provide an improved balance between growth of capital with preservation of capital for shareholders who are within 10 years of their financial goals.

Outlook

Each TargETFund solution is backed by a single research-based investment philosophy. This philosophy, which we call the Time Horizon investment process, is built on the pivotal research observation that time dramatically affects the relative risk of stocks, bonds and cash.

We update our research at least annually so that we can assess whether this observation holds true over an ever-increasing span of market history. With the 2009 update, which we expect to complete early in 2010, our analysis will incorporate six decades of market history. This expansive view of how holding periods affect the risk-reward relationships among asset classes reinforces our confidence that the Funds’ allocations — coupled with the risk management overlay we recently introduced for TargETFunds 2015 and Core — will be appropriate for the specific investment timeframes each of the Funds is designed to address.

The views expressed above reflect the views of RiverSource Investments, LLC as of the date referenced. These views may change as market or other conditions change. This commentary is provided for information purposes only and is not intended to provide investment advice or account for individual investor circumstances. Past performance does not guarantee future.

It is not possible to invest directly in an index or an average.

Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institutions, and involve investment risks including possible loss of principal and fluctuation in value.

Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security.

Each of the underlying ETFs in which the portfolio invests has its own investment risks, and those risks can affect the value of each portfolio’s shares and investments. Investments in real estate securities are subject to specific risks, such market risk, issuer risk, diversification risk, and sector/concentration risks. There are risks associated with fixed income investments, including credit risk, interest rate risk, and prepayment and extension risk. Non-investment grade securities have more volatile prices and carry more risk to principal and income than investment grade securities. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. Investments in small- and mid-capitalization companies involve greater risks and volatility than investments in larger, more established companies. See the Funds’ prospectus for more information on these and other risks that may be associated with the underlying ETFs.

Diversification does not assure a profit or protect against loss in a declining market. A typical investor would incur lower costs through an investment in Seligman TargETFunds (which includes professional portfolio management based on Seligman Time Horizon Matrix research) as compared to a direct investment (without professional portfolio management) in the same ETFs held by the Seligman TargETFunds. Such cost comparison takes into consideration transaction costs, sales charges, and expenses, as applicable.

An investment in a Fund involves risks, including the possible loss of principal. The rate of return will vary and the principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. There is no guarantee that a Fund’s investment goals/objectives will be met.

Risks of Asset Classes and ETFs: The following risks apply to some or all of the exchange-traded funds (“ETFs”) in which the Fund’s invests. An ETF may concentrate its investments in stocks of large-, medium- or small-capitalization companies. At times, one or more of these groups of stocks has experienced periods of volatility and negative performance. During such periods, the value of such stocks may decline and the performance of the ETF may be negatively affected. The products of technology companies may be subject to severe competition and rapid obsolescence, and technology stocks may be subject to greater price fluctuation, government regulation, and limited liquidity as compared to other investments. There are specific risks associated with global investing, such as currency fluctuations, foreign taxation, differences in financial reporting practices, and rapid changes in political and economic conditions. Investments in emerging market companies should be considered speculative. Investments in real estate securities may be subject to specific risks, such as risks of general and local economic conditions, and risks related to individual properties. To the extent that a Fund has a substantial percentage of its assets exposed to an industry through its investment in ETFs, the Fund’s performance may be negatively affected if that industry or sector falls out of favor. A portfolio with fewer holdings may be subject to greater volatility than a portfolio with a greater number of holdings. US Government and other fixed-income securities are subject to interest rate risk, credit risk, prepayment risk and market risk. Securities that are not guaranteed by the US Government may have increased credit risk, including, but not limited to, the risk of non-payment of principal or interest. High-yield securities are subject to higher volatility in yield and market value and a greater risk of loss of principal and interest than higher-rated, investment grade fixed-income securities.

Investments by the Funds in ETFs involve risk, including the risk of loss of principal. An investor in a Fund will indirectly bear the operating expenses of the ETFs in which it invests. Thus, the expenses borne by the investor will be higher than if he or she invested directly in the ETFs, and the returns may therefore be lower.

The Dow Jones Target Date Indices are unmanaged benchmarks that assume the reinvestment of all distributions. The Dow Jones Target Date Indices do not reflect any taxes, fees, sales charges, or expenses. The Dow Jones Target Date Indices were designed to measure balanced and multi-asset-class portfolios with risk profiles that become more conservative over time (the Dow Jones Target Today Index aims to hold a low-risk portfolio of securities). Each index within the Dow Jones Target Date Indices allocates among stock, bond, and cash sub-indices on a monthly basis to measure predefined relative risk levels. Dow Jones equity indices make up the stock component and Barclays Capital indices make up the bond and cash components. The asset classes are weighted within each Dow Jones Target Date Index to reflect a targeted level of risk. Over time, the weights are adjusted based on predetermined formulas to reduce the level of potential risk as the index’s maturity date approaches. As of March 1, 2009, the sub-index allocation of each index represented: Dow Jones Target Today Index: 26.2% equity, 69.9% fixed income, and 4.0% cash; Dow Jones Target 2015 Index: 36.4% equity, 59.7% fixed income, and 4.0% cash; Dow Jones Target 2025 Index: 61.9% equity, 34.2% fixed income, and 4.0% cash; Dow Jones Target 2035 Index: 83.2% equity, 12.9% fixed income, and 4.0% cash; and Dow Jones Target 2045 Index: 89.4% equity, 6.7% fixed income and 4.0% cash.