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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22328
Columbia Seligman Premium Technology Growth Fund, Inc.
(Exact name of registrant as specified in charter)
225 Franklin Street,
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip code)
Scott R. Plummer
5228 Ameriprise Financial Center
Minneapolis, MN 55474
(Name and address of agent for service)
Registrant’s telephone number, including area code: (800) 345-6611
Date of fiscal year end: December 31
Date of reporting period: December 31, 2016
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Table of Contents
Item 1. Reports to Stockholders.
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ANNUAL REPORT
December 31, 2016
COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||
Under the Fund’s managed distribution policy and subject to the approval of the Fund’s Board of Directors (the Board), the Fund expects to make quarterly cash distributions (in February, May, August and November) to holders of common stock. The Fund’s most recent distribution (February 28, 2017) amounted to $0.4625 per share, which is equal to a quarterly rate of 2.3125% (9.25% annualized) of the $20.00 offering price in the Fund’s initial public offering in November 2009. This distribution is equal to a quarterly rate of 2.3406% (9.36% annualized) of the Fund’s market price of $19.76 per share as of January 31, 2017. You should not draw any conclusions about the Fund’s investment performance from the amount of the distribution or from the terms of the Fund’s distribution policy. Historically, the Fund has distributed more than its income and net realized capital gains, which has resulted in Fund distributions substantially consisting of return of capital or other capital source. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’. As of the payment date of the most recent distribution, all Fund distributions paid in 2016 (as estimated by the Fund based on current information) are from the earnings and profits of the Fund and not a return of capital. This could change during the remainder of the year. The Fund’s Board may determine in the future that the Fund’s managed distribution policy and the amount or timing of the distributions should not be continued in light of changes in the Fund’s portfolio holdings, market or other conditions or factors, including that the distribution rate under such policy may not be dependent upon the amount of the Fund’s earned income or realized capital gains. The Board could also consider amending or terminating the current distribution policy because of potential adverse tax consequences associated with maintaining the policy. In certain situations, returns of capital could be taxable for federal income tax purposes, and all or a portion of the Fund’s capital loss carryforwards from prior years, if any, could effectively be forfeited. The Board may amend or terminate the Fund’s distribution policy at any time without prior notice to Fund stockholders; any such change or termination may have an adverse effect on the market price of the Fund’s shares.
See Notes to Financial Statements for additional information related to the Fund’s managed distribution policy.
Annual Report 2016
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
LETTER TO THE STOCKHOLDERS
Dear Stockholders,
We are pleased to present the annual stockholder report for Columbia Seligman Premium Technology Growth Fund (the Fund). The report includes the Fund’s investment results, a discussion with the Fund’s portfolio managers, the portfolio of investments and financial statements as of December 31, 2016.
The Fund’s common shares (Common Stock) returned 17.18% at market price and 15.29% at net asset value, for the 12 months ended December 31, 2016. The Fund outperformed its benchmark, the S&P North American Technology Sector Index, which returned 13.56% over the same period.
During 2016, the Fund paid four distributions, in accordance with its managed distribution policy, that aggregated to $1.85 per share of Common Stock of the Fund. In October 2010, the Fund received exemptive relief from the Securities and Exchange Commission that permits the Fund to make periodic distributions of long-term capital gains more often than once in any one taxable year. Unless you elected otherwise, distributions were paid in additional shares of the Fund.
On April 19, 2017, the Fund will hold its 7th Annual Meeting of Stockholders in Minneapolis, MN.
Information about the Fund, including daily pricing, current performance, Fund holdings, stockholder reports, distributions and other information can be found at investor.columbiathreadneedleus.com under the Closed-End Funds tab.
On behalf of the Board, I would like to thank you for your continued support of Columbia Seligman Premium Technology Growth Fund.
Best regards,
William A. Hawkins
Chairman of the Board
For more information, go online to investor.columbiathreadneedleus.com; or call American Stock Transfer & Trust Company, LLC, the Fund’s Stockholder Servicing Agent, at 866.666.1532. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 8 p.m. Eastern time.
Annual Report 2016
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
Annual Report 2016
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
Performance Summary
| ∎ | Columbia Seligman Premium Technology Growth Fund (the Fund) Common Stock returned 17.18% at market price and 15.29% at net asset value for the 12-month period ended December 31, 2016. |
| ∎ | The Fund outperformed its benchmark, the S&P North American Technology Sector Index, which returned 13.56% over the same period. |
| ∎ | A combination of favorable stock selection and industry allocations aided the Fund’s performance advantage relative to the benchmark. |
|
Average Annual Total Returns (%) (for period ended December 31, 2016) |
| |||||||||||||
| Inception | 1 Year | 5 Years | Life | |||||||||||
| Market Price |
11/24/09 | 17.18 | 16.05 | 10.34 | ||||||||||
| Net Asset Value |
11/30/09 | 15.29 | 12.80 | 10.25 | ||||||||||
| S&P North American Technology Sector Index |
13.56 | 17.41 | 14.69 | |||||||||||
Life total return for market price is based on the initial offering price on November 24, 2009, which was $20.00 per share.
Life total return for net asset value (NAV) is from the opening of business on November 30, 2009 and includes the 4.50% initial sales load. The NAV price per share of the Fund’s Common Stock at inception was $19.10.
Index inception return is calculated from 11/30/2009.
Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than the original cost. For current month-end performance information, please visit investor.columbiathreadneedleus.com.
Returns reflect changes in market price or net asset value, as applicable, and assume reinvestment of distributions. Returns do not reflect the deduction of taxes that investors may pay on distributions or the sale of shares.
The S&P North American Technology Sector Index is an unmanaged modified capitalization-weighted index based on a universe of technology-related stocks.
Indices are not available for investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
| Price Per Share |
||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||
| Market Price ($) |
18.74 | 18.60 | 16.58 | 18.00 | ||||||||||
| Net Asset Value ($) |
17.78 | 17.82 | 16.22 | 17.22 |
|
Distributions Paid Per Common Share |
||
| Payable Date |
Per Share Amount ($) | |
| February 23, 2016 |
0.4625 | |
| May 24, 2016 |
0.4625 | |
| August 23, 2016 |
0.4625 | |
| November 22, 2016 |
0.4625 |
The net asset value of the Fund’s shares may not always correspond to the market price of such shares. Common stock of many closed-end funds frequently trade at a discount from their net asset value. The Fund is subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment in the Fund.
| Annual Report 2016 | 3 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
MANAGER DISCUSSION OF FUND PERFORMANCE
| 4 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
MANAGER DISCUSSION OF FUND PERFORMANCE (continued)
| Annual Report 2016 | 5 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
FUND OBJECTIVES AND RULES-BASED OPTION STRATEGY
(Unaudited)
The Fund’s investment objectives are to seek growth of capital and current income. Under normal market conditions, the Fund’s investment program will consist primarily of (i) investing in a portfolio of equity securities of technology and technology-related companies that seeks to exceed the total return, before fees and expenses, of the S&P North American Technology Sector Index and (ii) writing call options on the NASDAQ 100 Index®, an unmanaged index that includes the largest and most active non-financial domestic and international companies listed on the Nasdaq Stock Market, or its exchange-traded fund equivalent (the NASDAQ 100) on a month-to-month basis, with an aggregate notional amount typically ranging from 0% to 90% of the underlying value of the Fund’s holdings of Common Stock. The Fund expects to generate current income from premiums received from writing call options on the NASDAQ 100. The Fund may also buy or write other call and put options on securities, indices, ETFs and market baskets of securities to generate additional income or return or to provide the portfolio with downside protection.
The Fund uses a rules-based call option writing strategy on the NASDAQ 100 Index®, an unmanaged index that includes the largest and most active nonfinancial domestic and international companies listed on the Nasdaq Stock Market, or its exchange-traded fund equivalent (NASDAQ 100) on a month-to-month basis with an aggregate notional amount ranging from 0% to 90% of the underlying value of the Fund’s holdings of common stock (the Rules-based Option Strategy). The Fund’s Rules-based Option Strategy with respect to writing call options is as follows:
| When the VXN Index(a) is: | Aggregate Notional Amount of Written Call Options as a Percentage of the Fund’s Holdings in Common Stocks | |
| 17 or less |
25% | |
| Greater than 17, but less than 18 |
Increase up to 50% | |
| At least 18, but less than 33 |
50% | |
| At least 33, but less than 34 |
Increase up to 90% | |
| At least 34, but less than 55 |
90% | |
| At 55 or greater |
0% to 90% |
| (a) | The VXN Index is a leading barometer of investor sentiment and market volatility relating to the NASDAQ 100 Index. |
In addition to the Rules-based Option Strategy, the Fund may write additional calls with aggregate notional amounts of up to 25% of the value of the Fund’s holdings in common stocks (to a maximum of 90% when aggregated with the call options written pursuant to the Rules-based Option Strategy) when call premiums are attractive relative to the risk of the price of the NASDAQ 100. The Fund may also close (or buy back) a written call option if the Investment Manager believes that a substantial amount of the premium (typically, 70% or more) to be received by the Fund has been captured before exercise, potentially reducing the call position to 0% of total equity until additional calls are written.
| 6 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
December 31, 2016
(Percentages represent value of investments compared to net assets)
The accompanying Notes to Financial Statements are an integral part of this statement.
| Annual Report 2016 | 7 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2016
Notes to Portfolio of Investments
| (a) | Non-income producing investment. |
| (b) | The rate shown is the seven-day current annualized yield at December 31, 2016. |
| (c) | As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended December 31, 2016 are as follows: |
| Issuer | Beginning Cost ($) |
Purchase Cost ($) |
Proceeds From Sales ($) |
Realized Gain (Loss) ($) |
Ending Cost ($) |
Dividends — Affiliated Issuers ($) |
Value ($) | |||||||||||||||||||||
| Columbia Short-Term Cash Fund |
7,598,373 | 107,260,563 | (108,413,322 | ) | 340 | 6,445,954 | 32,095 | 6,445,681 | ||||||||||||||||||||
Fair Value Measurements
The Fund categorizes its fair value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
| ∎ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date (including NAV for open-end mutual funds). Valuation adjustments are not applied to Level 1 investments. |
| ∎ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ∎ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Certain investments that have been measured at fair value using the net asset value (NAV) per share (or its equivalent) are not categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to reconcile the fair value hierarchy to the amounts presented in the Portfolio of Investments. The Columbia Short-Term Cash Fund seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. Columbia Short-Term Cash Fund prices its shares with a floating NAV and no longer seeks to maintain a stable NAV.
Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Directors (the Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
For investments categorized as Level 3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. This data is also used to corroborate, when available,
The accompanying Notes to Financial Statements are an integral part of this statement.
| 8 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2016
Fair Value Measurements (continued)
information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the Fund’s investments at December 31, 2016:
| Level 1 Quoted Prices in Active |
Level 2 Other Significant |
Level 3 Significant |
Total ($) | |||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
||||||||||||||||
| Consumer Discretionary |
2,052,485 | — | — | 2,052,485 | ||||||||||||
| Information Technology |
265,883,414 | — | — | 265,883,414 | ||||||||||||
| Telecommunication Services |
277,983 | — | — | 277,983 | ||||||||||||
| Total Common Stocks |
268,213,882 | — | — | 268,213,882 | ||||||||||||
| Investments measured at net asset value |
||||||||||||||||
| Money Market Funds |
— | — | — | 6,445,681 | ||||||||||||
| Total Investments |
268,213,882 | — | — | 274,659,563 | ||||||||||||
See the Portfolio of Investments for all investment classifications not indicated in the table.
There were no transfers of financial assets between levels during the period.
The accompanying Notes to Financial Statements are an integral part of this statement.
| Annual Report 2016 | 9 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2016
| Assets |
| |||
| Investments, at value |
||||
| Unaffiliated issuers (identified cost $218,666,997) |
$268,213,882 | |||
| Affiliated issuers (identified cost $6,445,954) |
6,445,681 | |||
|
|
||||
| Total investments (identified cost $225,112,951) |
274,659,563 | |||
| Receivable for: |
||||
| Investments sold |
274,071 | |||
| Dividends |
192,777 | |||
| Prepaid expenses |
32,842 | |||
|
|
||||
| Total assets |
275,159,253 | |||
|
|
||||
| Liabilities |
| |||
| Payable for: |
||||
| Investments purchased |
1,577,308 | |||
| Management services fees |
238,281 | |||
| Stockholder servicing and transfer agent fees |
980 | |||
| Compensation of board members |
57,269 | |||
| Stockholders’ meeting fees |
4,761 | |||
| Compensation of chief compliance officer |
60 | |||
| Other expenses |
54,985 | |||
|
|
||||
| Total liabilities |
1,933,644 | |||
|
|
||||
| Net assets applicable to outstanding Common Stock |
$273,225,609 | |||
|
|
||||
| Represented by |
| |||
| Paid-in capital |
$207,529,384 | |||
| Excess of distributions over net investment income |
(51,383 | ) | ||
| Accumulated net realized gain |
16,200,996 | |||
| Unrealized appreciation (depreciation) on: |
||||
| Investments — unaffiliated issuers |
49,546,885 | |||
| Investments — affiliated issuers |
(273 | ) | ||
|
|
||||
| Total — representing net assets applicable to outstanding Common Stock |
$273,225,609 | |||
|
|
||||
| Shares outstanding applicable to Common Stock |
15,369,130 | |||
|
|
||||
| Net asset value per share of outstanding Common Stock |
$17.78 | |||
|
|
||||
| Market price per share of Common Stock |
$18.74 | |||
|
|
||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| 10 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
Year Ended December 31, 2016
| Net investment income |
||||
| Income: |
||||
| Dividends — unaffiliated issuers |
$2,131,855 | |||
| Dividends — affiliated issuers |
32,095 | |||
|
|
||||
| Total income |
2,163,950 | |||
|
|
||||
| Expenses: |
||||
| Management services fees |
2,734,968 | |||
| Stockholder servicing and transfer agent fees |
15,087 | |||
| Compensation of board members |
26,230 | |||
| Stockholders’ meeting fees |
34,428 | |||
| Custodian fees |
10,145 | |||
| Printing and postage fees |
40,484 | |||
| Audit fees |
33,794 | |||
| Legal fees |
10,224 | |||
| Compensation of chief compliance officer |
60 | |||
| Other |
102,065 | |||
|
|
||||
| Total expenses |
3,007,485 | |||
|
|
||||
| Net investment loss |
(843,535 | ) | ||
|
|
||||
| Realized and unrealized gain (loss) — net |
||||
| Net realized gain (loss) on: |
||||
| Investments — unaffiliated issuers |
38,314,623 | |||
| Investments — affiliated issuers |
340 | |||
| Options contracts written |
(1,141,448 | ) | ||
|
|
||||
| Net realized gain |
37,173,515 | |||
| Net change in unrealized appreciation (depreciation) on: |
||||
| Investments — unaffiliated issuers |
19,440 | |||
| Investments — affiliated issuers |
(273 | ) | ||
| Options contracts written |
(348,454 | ) | ||
|
|
||||
| Net change in unrealized depreciation |
(329,287 | ) | ||
|
|
||||
| Net realized and unrealized gain |
36,844,228 | |||
|
|
||||
| Net increase in net assets resulting from operations |
$36,000,693 | |||
|
|
||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Annual Report 2016 | 11 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
STATEMENT OF CHANGES IN NET ASSETS
| Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
|||||||
| Operations |
||||||||
| Net investment loss |
$(843,535 | ) | $(647,388 | ) | ||||
| Net realized gain |
37,173,515 | 33,817,834 | ||||||
| Net change in unrealized depreciation |
(329,287 | ) | (10,922,533 | ) | ||||
|
|
||||||||
| Net increase in net assets resulting from operations |
36,000,693 | 22,247,913 | ||||||
|
|
||||||||
| Distributions to stockholders |
||||||||
| Net realized gains |
(28,417,154 | ) | (28,390,455 | ) | ||||
|
|
||||||||
| Total distributions to stockholders |
(28,417,154 | ) | (28,390,455 | ) | ||||
|
|
||||||||
| Increase in net assets from capital stock activity |
216,446 | 267,777 | ||||||
|
|
||||||||
| Total increase (decrease) in net assets |
7,799,985 | (5,874,765 | ) | |||||
| Net assets at beginning of year |
265,425,624 | 271,300,389 | ||||||
|
|
||||||||
| Net assets at end of year |
$273,225,609 | $265,425,624 | ||||||
|
|
||||||||
| Excess of distributions over net investment income |
$(51,383 | ) | $(40,708 | ) | ||||
|
|
||||||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| 12 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
STATEMENT OF CHANGES IN NET ASSETS (continued)
| Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
|||||||||||||||
| Shares | Dollars ($) | Shares | Dollars ($) | |||||||||||||
| Capital stock activity |
||||||||||||||||
| Distributions reinvested |
13,505 | 216,446 | 15,183 | 267,777 | ||||||||||||
|
|
||||||||||||||||
| Total net increase |
13,505 | 216,446 | 15,183 | 267,777 | ||||||||||||
|
|
||||||||||||||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Annual Report 2016 | 13 |
Table of Contents
| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
The Fund’s financial highlights are presented below. Per share operating performance data is designed to allow investors to trace the operating performance, on a per Common Stock share basis, from the beginning net asset value to the ending net asset value, so that investors can understand what effect the individual items have on their investment, assuming it was held throughout the period. Generally, the per share amounts are derived by converting the actual dollar amounts incurred for each item, as disclosed in the financial statements, to their equivalent per Common Stock share amounts, using average Common shares outstanding during the period.
Total return measures the Fund’s performance assuming that investors purchased Fund shares at market price or net asset value as of the beginning of the period, reinvested all their distributions, and then sold their shares at the closing market price or net asset value on the last day of the period. The computations do not reflect taxes or any sales commissions investors may incur on distributions or on the sale of Fund shares. Total returns and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund’s portfolio turnover rate may be higher.
| Year Ended December 31, | ||||||||||||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
| Per share data |
||||||||||||||||||||
| Net asset value, beginning of period |
$17.29 | $17.69 | $16.18 | $15.36 | $17.13 | |||||||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment loss |
(0.05 | ) | (0.04 | ) | (0.07 | ) | (0.07 | ) | (0.08 | ) | ||||||||||
| Net realized and unrealized gain |
2.39 | 1.49 | 3.43 | 2.74 | 0.16 | |||||||||||||||
| Total from investment operations |
2.34 | 1.45 | 3.36 | 2.67 | 0.08 | |||||||||||||||
| Less distributions to stockholders: |
||||||||||||||||||||
| Net realized gains |
(1.85 | ) | (1.85 | ) | (1.85 | ) | (0.42 | ) | — | |||||||||||
| Tax return of capital |
— | — | — | (1.43 | ) | (1.85 | ) | |||||||||||||
| Total distributions to Stockholders |
(1.85 | ) | (1.85 | ) | (1.85 | ) | (1.85 | ) | (1.85 | ) | ||||||||||
| Net asset value, end of period |
$17.78 | $17.29 | $17.69 | $16.18 | $15.36 | |||||||||||||||
| Market price, end of period |
$18.74 | $17.93 | $18.93 | $14.39 | $14.51 | |||||||||||||||
| Total return based upon net asset value |
15.29 | % | 8.40 | % | 22.32 | % | 19.02 | % | 0.36 | % | ||||||||||
| Total return based upon market price |
17.18 | % | 5.05 | % | 47.17 | % | 12.05 | % | 3.71 | % | ||||||||||
| Ratios to average net assets(a) |
||||||||||||||||||||
| Total gross expenses |
1.17 | % | 1.17 | % | 1.17 | % | 1.17 | % | 1.15 | % | ||||||||||
| Net investment loss |
(0.33 | %) | (0.24 | %) | (0.41 | %) | (0.46 | %) | (0.46 | %) | ||||||||||
| Supplemental data |
||||||||||||||||||||
| Net assets, end of period (in thousands) |
$273,226 | $265,426 | $271,300 | $247,700 | $234,613 | |||||||||||||||
| Portfolio turnover |
61 | % | 61 | % | 60 | % | 57 | % | 73 | % | ||||||||||
Notes to Financial Highlights
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
The accompanying Notes to Financial Statements are an integral part of this statement.
| 14 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
December 31, 2016
| Annual Report 2016 | 15 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| 16 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| Annual Report 2016 | 17 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| 18 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| Annual Report 2016 | 19 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| 20 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| Annual Report 2016 | 21 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| 22 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| Annual Report 2016 | 23 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| 24 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2016
| Annual Report 2016 | 25 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Columbia Seligman Premium Technology Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Seligman Premium Technology Growth Fund (the “Fund”) as of December 31, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where such confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Minneapolis, MN
February 21, 2017
| 26 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
FEDERAL INCOME TAX INFORMATION
(Unaudited)
The Fund hereby designates the following tax attributes for the fiscal year ended December 31, 2016.
Tax Designations
| Qualified Dividend Income |
28.20 | % | ||
| Dividends Received Deduction |
27.39 | % | ||
| Capital Gain Dividend |
$29,973,209 |
Qualified Dividend Income. For taxable, non-corporate stockholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends Received Deduction. The percentage of ordinary income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
Capital Gain Dividend. The Fund designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
| Annual Report 2016 | 27 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
Stockholders elect the Board that oversees the Fund’s operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Directors, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Directors may serve a term of three years, whereupon they may be re-elected to serve another term (the Fund’s Board has three classes, with one class expiring each year at the Fund’s regular stockholder’s meeting), or, for Directors not affiliated with the Investment Manager, generally through the end of the calendar year in which they reach either the mandatory retirement age established by the Board or the fifteenth anniversary of the first Board meeting they attended as a member of the Board.
| Independent Directors | ||||||||
| Name, |
Position Held With the Fund and Length of Service |
Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience |
Number of Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Director During the Past Five Years | ||||
| Kathleen Blatz 901 S. Marquette Ave. Minneapolis, MN 55402 1954 |
Director since November 2008 | Attorney, specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees | 126 | Trustee to other Columbia Funds since 2006; Trustee, BlueCross BlueShield of Minnesota (Chair of the Business Development Committee) since 2009; Chair of the Robina Foundation since August 2013 | ||||
| Pamela G. Carlton 901 S. Marquette Ave. Minneapolis, MN 55402 1954 |
Director since November 2008 | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 126 | Trustee to other Columbia Funds since 2007; Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996 | ||||
| 28 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
DIRECTORS AND OFFICERS (continued)
| Independent Directors (continued) | ||||||||
| Name, |
Position Held With the Fund and Length of Service |
Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience |
Number of Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Director During the Past Five Years | ||||
| William P. Carmichael 901 S. Marquette Ave. Minneapolis, MN 55402 1943 |
Director since January 2014 | Retired; Co-founder, The Succession Fund (provides exit strategies to owners of privately held companies), 1998-2007; Adjunct Professor of Finance, Kelley School of Business, Indiana University, 1993-2007; Senior Vice President, Sara Lee Corporation, 1991-1993; Senior Vice President and Chief Financial Officer, Beatrice Foods Company, 1984-1990; Vice President, Esmark, Inc., 1973-1984; Associate, Price Waterhouse, 1968-1972 | 126 | Trustee to other Columbia Funds since 2003; Director, The Finish Line (athletic shoes and apparel) since July 2003; Director, hhgregg since May, 2015; former Director, Cobra Electronics Corporation (electronic equipment manufacturer), 1994-August 2014; former Director, Spectrum Brands, Inc. (consumer products), 2002-2009; former Director, Simmons Company (bedding), 2004-2010; former Trustee, BofA Funds Series Trust (11 funds) 2003-2011; former Director, McMoRan Exploration Company (oil and gas exploration and development) 2010-2013; former Director, International Textile Corp., 2012-2016 | ||||
| Patricia M. Flynn 901 S. Marquette Ave. Minneapolis, MN 55402 1950 |
Director since November 2008 | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 126 | Trustee to other Columbia Funds since 2004; Trustee, MA Taxpayers Foundation since 1997; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 | ||||
| William A. Hawkins 901 S. Marquette Ave. Minneapolis, MN 55402 1942 |
Chair of the Board since November 2015; Director since March 2015 | Managing Director, Overton Partners (financial consulting), since August 2010; President and Chief Executive Officer, California General Bank, N.A., January 2008-August 2010; Operation Hope, COO, 2004-2007; IndyMac Bancorp, President, CBG, 1999-2003; American General Bank, President, 1997-1999; Griffin Financial Services, CEO, 1981-1997; The Griffin Funds, CEO, 1992-1998 | 126 | Trustee to other Columbia Funds since 2005; former Trustee, BofA Funds Series Trust (11 funds) 2005-2015 | ||||
| Annual Report 2016 | 29 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
DIRECTORS AND OFFICERS (continued)
| Independent Directors (continued) | ||||||||
| Name, |
Position Held With the Fund and Length of Service |
Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience |
Number of Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Director During the Past Five Years | ||||
| Catherine James Paglia 901 S. Marquette Ave. Minneapolis, MN 55402 1952 |
Director since November 2008 | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 126 | Trustee to other Columbia Funds since 2004; Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) | ||||
| Minor M. Shaw 901 S. Marquette Ave. Minneapolis, MN 55402 1947 |
Director since April 2016 | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 126 | Trustee to other Columbia Funds since 2003; Director, BlueCross BlueShield of South Carolina since April 2008; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Director, National Association of Corporate Directors, Carolinas Chapter, since 2013; Chair of Greenville — Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016 | ||||
| Alison Taunton-Rigby 901 S. Marquette Ave. Minneapolis, MN 55402 1944 |
Director since November 2008 | President, Chief Executive Officer and Director, RiboNovix, Inc., 2003-2010; CMT Inc., 2001-2003; Aquila Biopharmaceuticals Inc., 1996-2000; Cambridge Biotech Corporation, 1995-1996; Mitotix Inc., 1993-1994 | 126 | Trustee to other Columbia Funds since 2002; Director, Boston Children’s Hospital since 2002; Director, ICI Mutual Insurance Company, since 2011;Director, Blumont/IRD since 2016; Director, Mount Ida College since 2016; former Director, Abt Associates (government contractor), 2001-2016; former Director, Healthways, Inc. (health and well-being solutions), 2005-2016 | ||||
| 30 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
DIRECTORS AND OFFICERS (continued)
| Interested Director Affiliated with Investment Manager* | ||||||||
| Name, |
Position Held With the Fund and Length of Service |
Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience |
Number of Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Director During the Past Five Years | ||||
| William F. Truscott c/o Columbia Management Investment Advisers, LLC, 225 Franklin St. Boston, MA 02110 1960 |
Director and Senior Vice President since November 2008 | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010-September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006-August 2012. | 185 | Trustee to other Columbia Funds since 2001; Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; Former Director, Ameriprise Certificate Company, 2006-January 2013 | ||||
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
| Annual Report 2016 | 31 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
DIRECTORS AND OFFICERS (continued)
The Board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund, including principal occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
| Fund Officers | ||||
| Name, |
Position and Year First Appointed to Position for any Fund in the Columbia Funds Complex or a Predecessor Thereof |
Principal Occupation(s) During Past Five Years | ||
| Christopher O. Petersen 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel January 2010-December 2014); officer of Columbia Funds and affiliated funds since 2007. | ||
| Michael G. Clarke 225 Franklin Street Boston, MA 02110 Born 1969 |
Treasurer (2011), Chief Financial Officer (2009) and Chief Accounting Officer (2015) | Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC, since May 2010; senior officer of Columbia Funds and affiliated funds since 2002. | ||
| Paul B. Goucher 100 Park Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011), Chief Legal Officer (2015) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008-January 2017 and January 2013-January 2017, respectively, and Chief Counsel, January 2010-January 2013); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since May 2010. | ||
| Thomas P. McGuire 225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. | ||
| Colin Moore 225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013 (previously Director and Global Chief Investment Officer, 2010-2013). | ||
| Michael E. DeFao 225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. | ||
| Amy Johnson 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Vice President (2006) | Managing Director and Global Head of Operations, Columbia Management Investment Advisers, LLC since April 2016 (previously Managing Director and Chief Operating Officer, 2010-2016). | ||
| Lyn Kephart-Strong 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. | ||
| Ryan C. Larrenaga 225 Franklin Street Boston, MA 02110 Born 1970 |
Vice President and Secretary (2015) | Vice President and Group Counsel, Ameriprise Financial, Inc. since August 2011; officer of Columbia Funds and affiliated funds since 2005. | ||
| 32 | Annual Report 2016 |
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| COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND | ||||||
IMPORTANT INFORMATION ABOUT THIS REPORT
The Fund mails one stockholder report to each stockholder address. If you would like more than one report, please call shareholder services at 800.937.5449 and additional reports will be sent to you.
The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures that can be found by visiting investor.columbiathreadneedleus.com. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting investor.columbiathreadneedleus.com; or searching the website of the SEC at sec.gov.
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q, can also be obtained without charge, upon request, by calling 800.937.5449.
| Annual Report 2016 | 33 |
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Columbia Seligman Premium Technology Growth Fund
P.O. Box 8081
Boston, MA 02266-8081
You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. You can obtain the Fund’s most recent periodic reports and other regulatory filings by contacting your financial advisor or American Stock Transfer & Trust Company at 866.666.1532. These reports and other filings can also be found on the Securities and Exchange Commission’s EDGAR Database. You should read these reports and other filings carefully before investing.
Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. All rights reserved. Columbia Management Investment Distributors, Inc., 225 Franklin Street, Boston, MA 02110-2804
© 2017 Columbia Management Investment Advisers, LLC.
investor.columbiathreadneedleus.com
ANN221_12_G01_(02/17)
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Item 2. Code of Ethics.
| (a) | The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
| (b) | During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. |
| (c) | During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics described in 2(a) above that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
The registrant’s Board of Trustees has determined that Pamela G. Carlton, William A. Hawkins and Alison Taunton-Rigby, each of whom are members of the registrant’s Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Ms. Carlton, Mr. Hawkins and Ms. Taunton-Rigby are each independent trustees, as defined in paragraph (a)(2) of this item’s instructions.
Item 4. Principal Accountant Fees and Services.
Fee information below is disclosed for the one series of the registrant whose report to stockholders is included in this annual filing.
(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $27,900 | $25,800 |
Audit Fees include amounts related to the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $400 | $400 |
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Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported in Audit Fees above. In both fiscal years 2016 and 2015, Audit-Related Fees consist of agreed-upon procedures performed for semi-annual shareholder reports.
During the fiscal years ended December 31, 2016 and December 31, 2015, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(c) Tax Fees. Aggregate Tax Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $4,500 | $3,700 |
Tax Fees include amounts for the review of annual tax returns, the review of required shareholder distribution calculations and typically include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning.
During the fiscal years ended December 31, 2016 and December 31, 2015, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $0 | $0 |
All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.
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Aggregate All Other Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant during the fiscal years ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $110,000 | $110,000 |
In both fiscal years 2016 and 2015, All Other Fees primarily consist of fees billed for internal control examinations of the registrant’s transfer agent and investment advisor.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The registrant’s Audit Committee is required to pre-approve the engagement of the registrant’s independent auditors to provide audit and non-audit services to the registrant and non-audit services to its investment adviser (excluding any sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser (the “Adviser”) or any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund (a “Control Affiliate”) if the engagement relates directly to the operations and financial reporting of the registrant.
The Audit Committee has adopted a Policy for Engagement of Independent Auditors for Audit and Non-Audit Services (the “Policy”). The Policy sets forth the understanding of the Audit Committee regarding the engagement of the registrant’s independent accountants to provide (i) audit and permissible audit-related, tax and other services to the registrant (“Fund Services”); (ii) non-audit services to the registrant’s Adviser and any Control Affiliates, that relates directly to the operations and financial reporting of a Fund (“Fund-related Adviser Services”); and (iii) certain other audit and non-audit services to the registrant’s Adviser and its Control Affiliates. A service will require specific pre-approval by the Audit Committee if it is to be provided by the Fund’s independent auditor; provided, however, that pre-approval of non-audit services to the Fund, the Adviser or Control Affiliates may be waived if certain de minimis requirements set forth in the SEC’s rules are met.
Under the Policy, the Audit Committee may delegate pre-approval authority to any pre-designated member or members who are independent board members. The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regular meeting. The Audit Committee’s responsibilities with respect to the pre-approval of services performed by the independent auditor may not be delegated to management.
On an annual basis, at a regularly scheduled Audit Committee meeting, the Fund’s Treasurer or other Fund officer shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to specific pre-approval. This schedule will provide a description of each type of service that is subject to specific pre-approval, along with total projected fees for each service. The pre-approval will generally cover a one-year period. The Audit Committee will review and approve the types of services and the projected fees for the next one-year period and may
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add to, or subtract from, the list of pre-approved services from time to time, based on subsequent determinations. This specific approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform and the projected fees for each service.
The Fund’s Treasurer or other Fund officer shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services provided since the last such report was rendered, including a description of the services, by category, with forecasted fees for the annual reporting period, proposed changes requiring specific pre-approval and a description of services provided by the independent auditor, by category, with actual fees during the current reporting period.
*****
(e)(2) 100% of the services performed for items (b) through (d) above during 2016 and 2015 were pre-approved by the registrant’s Audit Committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal year ended December 31, 2016 and December 31, 2015 are approximately as follows:
| 2016 | 2015 | |
| $114,900 | $114,100 |
(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
| (a) | The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A). Pamela G. Carlton, William A. Hawkins, Alison Taunton-Rigby and Patricia M. Flynn are each independent trustees and collectively constitute the entire Audit Committee. |
| (b) | Not applicable. |
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Item 6. Investments
| (a) | The registrant’s “Schedule I – Investments in securities of unaffiliated issuers” (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. |
| (b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Proxy Voting Policies and Procedures
General. The Funds have delegated to the Investment Manager the responsibility to vote proxies relating to portfolio securities held by the Funds, including Funds managed by subadvisers.
The Investment Manager votes proxies relating to portfolio securities in accordance with a proxy voting policy and pre-determined proxy voting guidelines adopted by the Board. The Funds endeavor to vote all proxies of which they become aware prior to the vote deadline; provided, however, that in certain circumstances the Funds may refrain from voting securities. For instance, the Funds may refrain from voting foreign securities if the costs of voting outweigh the expected benefits of voting and typically will not vote securities if voting would impose trading restrictions.
Board Oversight and Retention of Proxy Voting Authority. The Board may, in its discretion, vote proxies for the Funds. For instance, the Board may determine to vote on matters that may present a material conflict of interest to the Investment Manager.
The Board reviews on an annual basis, or more frequently as determined appropriate, the Investment Manager’s administration of the proxy voting process and its adherence to the approved guidelines.
Voting Guidelines. The Investment Manager and Board will generally vote in accordance with pre-determined voting guidelines adopted by the Board. The voting guidelines indicate whether to vote for, against or abstain from particular proposals, or whether the matter should be considered on a case-by-case basis. A committee within the Investment Manager (the Proxy Voting Committee), which is composed of representatives of the Investment Manager’s equity investments, equity research, compliance, legal and operations functions, may determine to vote differently from the guidelines on particular proposals in the event it determines that doing so is in the clients’ best economic interests. The Board may also determine to vote differently from the guidelines on particular proposals in the event it determines that doing so is appropriate and in the Funds’ interests. The Investment Manager and the Board may also consider the voting recommendations of analysts, portfolio managers, subadvisers and information obtained from outside resources, including one or more third party research providers. When proposals are not covered by the voting guidelines or a voting determination must be made on a case-by-case basis, a portfolio manager, subadviser or analyst will make the voting determination based on his or her determination of the clients’ best economic interests. In addition, the Proxy Voting Committee or Board may determine proxy votes when proposals require special consideration.
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On an annual basis, or more frequently as determined necessary, the Board reviews recommendations to revise the existing guidelines or add new guidelines. Recommendations are based on, among other things, industry trends and the frequency that similar proposals appear on company ballots.
Addressing Conflicts of Interest. If the Investment Manager is subject to a potential material conflict of interest with respect to a proxy vote, the Board will vote the proxy by administering the guidelines or determining the vote on a case-by-case basis. If the Board determines that its members may be subject to a potential material conflict of interest with respect to a proxy vote, the member is asked to recuse himself or herself from the determination.
Voting Proxies of Affiliated Underlying Funds. Certain Funds may invest in shares of other Columbia Funds (referred to in this context as “underlying funds”) and may own substantial portions of these underlying funds. If such Funds are in a master-feeder structure, the feeder fund will either seek instructions from its shareholders with regard to the voting of proxies with respect to the master fund’s shares and vote such proxies in accordance with such instructions or vote the shares held by it in the same proportion as the vote of all other master fund shareholders. With respect to Funds that hold shares of underlying funds other than in a master-feeder structure, the proxy policy of the Funds is, in general, to ensure that direct public shareholders of underlying funds control the outcome of any shareholder vote. To help manage this potential conflict of interest, the policy of the Funds is to vote proxies of the underlying funds in the same proportion as the vote of the direct public shareholders; provided, however, that if there are no direct public shareholders of an underlying fund or if direct public shareholders represent only a minority interest in an underlying fund, the Fund may cast votes in accordance with instructions from the independent members of the Board.
Proxy Voting Agents. The Investment Manager has retained Institutional Shareholder Services Inc., a third party vendor, as its proxy voting administrator to implement the Funds’ proxy voting process and to provide recordkeeping and vote disclosure services. The Investment Manager has retained both Institutional Shareholder Services Inc. and Glass-Lewis & Co. to provide proxy research services.
Additional Information. Information regarding how the Columbia Funds (except certain Columbia Funds that do not invest in voting securities) voted proxies relating to portfolio securities during the most recent twelve month period ended June 30 will be available by August 31 of this year free of charge: (i) through the Columbia Funds’ website at www.columbiathreadneedle.com/us and/or (ii) on the SEC’s website at www.sec.gov. For a copy of the voting guidelines in effect on the date of this SAI, see Appendix B to this SAI.
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Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Portfolio Managers
| Portfolio Manager |
Title |
Role with the Corporation |
Managed the Corporation Since | |||
| Paul Wick |
Portfolio Manager | Lead Portfolio Manager | 2009 | |||
| Braj Agrawal |
Portfolio Manager | Co-Portfolio Manager | 2010 | |||
| Jeetil Patel |
Portfolio Manager | Technology Team Member | 2015 | |||
| Christopher Boova |
Portfolio Manager | Co-Portfolio Manager | 2016 |
Mr. Wick joined one of the Columbia Management legacy firms or acquired business lines in 1987. Mr. Wick is Team Leader and Portfolio Manager for Technology. Mr. Wick began his investment career in 1987 and earned a B.A. from Duke and an M.B.A. from Duke/Fuqua.
Mr. Agrawal joined the Investment Manager in 2010 as a Managing Trader responsible for derivatives. Mr. Agrawal has been a member of the investment community since 2001, and earned a B.A. in Economics from the University of Illinois at Urbana-Champaign and an M.B.A. from University of Minnesota’s Carlson School.
Mr. Patel joined the Investment Manager in 2012. Prior to joining the Investment Manager as a Portfolio Analyst, Mr. Patel was a managing director and senior internet analyst for Deutsche Bank Securities. Mr. Patel began his investment career in 1998 and earned a B.A. from University of California, Los Angeles.
Mr. Boova joined one of the Columbia Management legacy firms or acquired business lines in 2000. Mr. Boova began his investment career in 1995 and earned two B.S. degrees from Worcester Polytechnic Institute, an M.A. from Georgetown University and an M.B.A. from the Wharton School at the University of Pennsylvania.
Other Accounts Managed by the Portfolio Managers:
| Fund |
Portfolio Manager |
Other Accounts Managed | Performance Based Accounts |
Ownership of Fund Shares | ||||||
| Number and type of account |
Approximate Total Net Assets (excluding the fund) |
|||||||||
| For fiscal period ending December 31, 2016, unless otherwise noted | ||||||||||
| Columbia Seligman Premium Technology Growth |
Paul Wick | 4 RICs 2 PIVs 4 Other accounts |
$5.17 billion $672.14 million $19.16 million |
1 PIV ($603.15 M) |
None | |||||
| Braj Agrawal | 13 Other accounts | $0.52 million | None | None | ||||||
| Jeetil Patel | 4 RICs 6 Other accounts |
$5.17 billion $3.30 million |
None | None | ||||||
| Christopher Boova |
4 RICs 8 Other accounts |
$5.17 billion $5.23 million |
None | None | ||||||
Potential Conflicts of Interest:
Like other investment professionals with multiple clients, a Fund’s portfolio manager(s) may face certain potential conflicts of interest in connection with managing both the Fund and other accounts at the same time. The Investment Manager and the Funds have adopted compliance policies and procedures that attempt to address certain of the potential conflicts that portfolio managers face in this regard. Certain of these conflicts of interest are summarized below.
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The management of accounts with different advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (performance fee accounts), may raise potential conflicts of interest for a portfolio manager by creating an incentive to favor higher fee accounts.
Potential conflicts of interest also may arise when a portfolio manager has personal investments in other accounts that may create an incentive to favor those accounts. As a general matter and subject to the Investment Manager’s Code of Ethics and certain limited exceptions, the Investment Manager’s investment professionals do not have the opportunity to invest in client accounts, other than the funds.
A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those Funds and/or accounts. The effects of this potential conflict may be more pronounced where Funds and/or accounts managed by a particular portfolio manager have different investment strategies.
A portfolio manager may be able to select or influence the selection of the broker/dealers that are used to execute securities transactions for the Funds. A portfolio manager’s decision as to the selection of broker/dealers could produce disproportionate costs and benefits among the Funds and the other accounts the portfolio manager manages.
A potential conflict of interest may arise when a portfolio manager buys or sells the same securities for a Fund and other accounts. On occasions when a portfolio manager considers the purchase or sale of a security to be in the best interests of a Fund as well as other accounts, the Investment Manager’s trading desk may, to the extent consistent with applicable laws and regulations, aggregate the securities to be sold or bought in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to a Fund or another account if a portfolio manager favors one account over another in allocating the securities bought or sold. The Investment Manager and its Participating Affiliates (including Threadneedle) may coordinate their trading operations for certain types of securities and transactions pursuant to personnel-sharing agreements or similar intercompany arrangements. However, typically the Investment Manager does not coordinate trading activities with a Participating Affiliate with respect to accounts of that Participating Affiliate unless such Participating Affiliate is also providing trading services for accounts managed by the Investment Manager. Similarly, a Participating Affiliate typically does not coordinate trading activities with the Investment Manager with respect to accounts of the Investment Manager unless the Investment Manager is also providing trading services for accounts managed by such Participating Affiliate. As a result, it is possible that the Investment Manager and its Participating Affiliates may trade in the same instruments at the same time, in the same or opposite direction or in different sequence, which could negatively impact the prices paid by the Fund on such instruments. Additionally, in circumstances where trading services are being provided on a coordinated basis for the Investment Manager’s accounts (including the Funds) and the accounts of one or more Participating Affiliates in accordance with applicable law, it is possible that the allocation opportunities available to the Funds may be decreased, especially for less actively traded securities, or orders may take longer to execute, which may negatively impact Fund performance.
“Cross trades,” in which a portfolio manager sells a particular security held by a Fund to another account (potentially saving transaction costs for both accounts), could involve a potential conflict of interest if, for example, a portfolio manager is permitted to sell a security from one account to another account at a higher price than an independent third party would pay. The Investment Manager and the Funds have adopted compliance procedures that provide that any transactions between a Fund and another account managed by the Investment Manager are to be made at a current market price, consistent with applicable laws and regulations.
Another potential conflict of interest may arise based on the different investment objectives and strategies of a Fund and other accounts managed by its portfolio manager(s). Depending on another account’s objectives and other factors, a portfolio manager may give advice to and make decisions for a Fund that may differ from advice given, or the timing or nature of decisions made, with respect to another account. A portfolio manager’s investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a portfolio manager may buy or sell a particular security for certain accounts, and not for a Fund, even though it could have been bought or sold for the Fund at the same time. A portfolio manager also may buy a particular security for one or more accounts when one or more other accounts are selling the security (including short sales). There may be circumstances when a portfolio manager’s purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts, including the Funds.
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To the extent a Fund invests in underlying funds, a portfolio manager will be subject to additional potential conflicts of interest. Because of the structure of funds-of-funds, the potential conflicts of interest for the portfolio managers may be different than the potential conflicts of interest for portfolio managers who manage other Funds. The Investment Manager and its affiliates may receive higher compensation as a result of allocations to underlying funds with higher fees.
A Fund’s portfolio manager(s) also may have other potential conflicts of interest in managing the Fund, and the description above is not a complete description of every conflict that could exist in managing the Fund and other accounts. Many of the potential conflicts of interest to which the Investment Manager’s portfolio managers are subject are essentially the same or similar to the potential conflicts of interest related to the investment management activities of the Investment Manager and its affiliates.
Structure of Compensation:
Portfolio manager compensation is typically comprised of (i) a base salary and (ii) an annual cash bonus. The annual cash bonus, and in some instances the base salary, are paid from a team bonus pool that is based on fees and performance of the accounts managed by the portfolio management team, which might include mutual funds, wrap accounts, institutional portfolios and hedge funds.
The percentage of management fees on mutual funds and long-only institutional portfolios that fund the bonus pool is based on the short term (typically one-year) and long-term (typically three-year and five-year) performance of those accounts in relation to the relevant peer group universe.
A fixed percentage of management fees on hedge funds and separately managed accounts that follow a hedge fund mandate fund the bonus pool.
The percentage of performance fees on hedge funds and separately managed accounts that follow a hedge fund mandate that fund the bonus pool is based on the absolute level of each hedge fund’s current year investment return.
For all employees the benefit programs generally are the same, and are competitive within the financial services industry. Employees participate in a wide variety of plans, including options in Medical, Dental, Vision, Health Care and Dependent Spending Accounts, Life Insurance, Long Term Disability Insurance, 401(k), and a cash balance pension plan.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
The Fund has a share repurchase plan approved by the Fund’s Board of Directors, which authorizes repurchases of the Fund’s common stock in the open market at times when shares are trading at a discount from NAV and in an amount approximately sufficient to offset the growth in the number of common shares attributable to the reinvestment of the portion of its distributions to common stockholders attributable to distributions received from portfolio investments less Fund expenses. The Fund has not repurchased shares during the period.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.
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Item 11. Controls and Procedures.
| (a) | The registrant’s principal executive officer and principal financial officer, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that material information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. |
| (b) | There was no change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) None.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (registrant) | Columbia Seligman Premium Technology Growth Fund, Inc. |
| By (Signature and Title) | /s/ Christopher O. Petersen | |
| Christopher O. Petersen, President and Principal Executive Officer | ||
| Date | February 21, 2017 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title) | /s/ Christopher O. Petersen | |
| Christopher O. Petersen, President and Principal Executive Officer |
| Date | February 21, 2017 | |
| By (Signature and Title) | /s/ Michael G. Clarke | |
| Michael G. Clarke, Treasurer and Chief Financial Officer |
| Date | February 21, 2017 | |