UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-22328
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)
Christopher O. Petersen
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, Massachusetts 02110
Ryan C. Larrenaga, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
(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, 2019
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, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Annual Report
December 31, 2019
Columbia Seligman
Premium Technology Growth Fund
Beginning on January 1, 2021, as
permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual stockholder reports like this one will no longer be sent by mail, unless you
specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified
by mail and provided with a website address to access the report.
If you have already elected to
receive stockholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive stockholder reports and other communications from the Fund electronically
at any time by contacting your financial intermediary (such as a broker-dealer or bank).
You may elect to receive all future
reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your stockholder reports. If you
invest directly with the Fund, you can call 866.666.1532 to let the Fund know you wish to continue receiving paper copies of your stockholder reports. Your election to receive paper reports will apply to all Columbia
Funds held in your account if you invest through a financial intermediary or only to the Fund if you invest directly with the Fund.
FDIC Insured • No bank
guarantee • May lose value
Under Columbia Seligman Premium
Technology Growth Fund’s (the Fund) 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 (Common Stockholders). The Fund’s most recent distribution under its managed distribution policy (paid on February 25, 2020) amounted to $0.4625 per share,
which is equal to a quarterly rate of 1.9279% (7.71% annualized) of the Fund’s market price of $23.99 per share as of January 31, 2020. You should not draw any conclusions about the Fund’s investment
performance from the amount of the distributions or from the terms of the Fund’s managed distribution policy. Historically, the Fund has at times 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 Fund’s 2020 distribution, all Fund distributions paid in 2020 (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 managed 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 managed 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.
Columbia Seligman Premium Technology Growth Fund
| Annual Report 2019
Letter to the Stockholders
Dear Stockholders,
We are pleased to present the
annual stockholder report for Columbia Seligman Premium Technology Growth Fund, Inc. (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, 2019.
The Fund’s common shares
(Common Stock) returned 51.04%, based on net asset value, and 53.17%, based on market price, for the 12 months ended December 31, 2019. The Fund outperformed its benchmark, the S&P North American Technology Sector
Index, which returned 42.68% for the same time period.
During 2019, 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 addition, on January 22, 2019, the Fund paid a special 2018 fourth quarter
distribution, beyond its typical quarterly managed distribution policy, in the amount of $0.6521 per share of Common Stock to stockholders of record on December 17, 2018. The Fund has 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 December 12, 2019, the
Fund’s Board of Directors (the Board) unanimously appointed Brian J. Gallagher to the Fund’s Board. His service with the Board commenced on January 1, 2020, for a term expiring at the 2023 annual meeting
of stockholders. Mr. Gallagher currently serves on the board of trustees of certain of the mutual funds and exchange-traded funds (ETFs) within the Columbia Funds Complex and on the board of another closed-end fund
within the Columbia Funds Complex. Effective December 31, 2019, Mr. Edward J. Boudreau, Jr. retired from the Fund’s Board. We thank Mr. Boudreau for his service to the Fund.
Information about the Fund,
including daily pricing, current performance, Fund holdings, stockholder reports, distributions and other information can be found at columbiathreadneedleus.com/investor/ 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, Inc.
Regards,
Catherine James Paglia
Chair of the BoardFor more information, go online to columbiathreadneedleus.com/investor/; 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.
Columbia Seligman Premium Technology Growth Fund
| Annual Report 2019
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12
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30
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Columbia Seligman Premium
Technology Growth Fund (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.
Proxy voting policies and
procedures
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 columbiathreadneedleus.com/investor/. 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 columbiathreadneedleus.com/investor/; or
searching the website of the SEC at sec.gov.
Quarterly schedule of
investments
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-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT
filings are available on the SEC’s website at sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling
800.937.5449.
Additional Fund information
For more information, go online to
columbiathreadneedleus.com/investor/; 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.
Fund investment manager
Columbia Management Investment Advisers, LLC (the
Investment Manager)
225 Franklin Street
Boston, MA 02110
Fund transfer agent
American Stock Transfer & Trust Company,
LLC
6201 15th Avenue
Brooklyn, NY 11219
Columbia Seligman Premium Technology Growth
Fund | Annual Report 2019
Investment objective
Columbia
Seligman Premium Technology Growth Fund (the Fund) seeks growth of capital and current income.
Portfolio management
Paul Wick
Lead Portfolio Manager
Managed Fund since 2009
Braj Agrawal
Co-Portfolio Manager
Managed Fund since 2010
Christopher Boova
Co-Portfolio Manager
Managed Fund since 2016
Jeetil Patel
Technology Team Member
Managed Fund since 2015
Vimal Patel
Technology Team Member
Managed Fund since 2018
Shekhar Pramanick
Technology Team Member
Managed Fund since 2018
Morningstar style boxTM
The Morningstar Style Box is based on a fund’s portfolio holdings. For equity funds, the vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows
investment style (value, blend, or growth). Information shown is based on the most recent data provided by Morningstar.
© 2020 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
|
Average annual total returns (%) (for the period ended December 31, 2019)
|
|
|
|
Inception
|
1 Year
|
5 Years
|
10 Years
|
|
Market Price
|
11/24/09
|
53.17
|
16.76
|
13.49
|
|
Net Asset Value
|
11/30/09
|
51.04
|
18.23
|
13.48
|
|
S&P North American Technology Sector Index
|
|
42.68
|
20.34
|
17.55
|
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 sold, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting
columbiathreadneedleus.com/investor/.
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, 2019
|
September 30, 2019
|
June 30, 2019
|
March 31, 2019
|
|
Market Price ($)
|
23.55
|
21.10
|
20.47
|
20.08
|
|
Net Asset Value ($)
|
23.43
|
20.75
|
20.00
|
20.19
|
|
Distributions Paid Per Common Share
|
|
Payable Date
|
Per Share Amount ($)
|
|
January 22, 2019
|
0.6521(a)
|
|
February 26, 2019
|
0.4625
|
|
May 21, 2019
|
0.4625
|
|
August 20, 2019
|
0.4625
|
|
November 26, 2019
|
0.4625
|
(a) The Fund paid this special
2018 fourth quarter distribution beyond its typical quarterly managed distribution policy to stockholders of record on December 17, 2018.
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.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
3
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Fund at a Glance (continued)
|
Portfolio breakdown (%) (at December 31, 2019)
|
|
Common Stocks
|
98.8
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|
Money Market Funds
|
1.2
|
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Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
|
Equity sector breakdown (%) (at December 31, 2019)
|
|
Communication Services
|
11.4
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Financials
|
0.5
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Industrials
|
0.7
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Information Technology
|
87.4
|
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
|
Equity sub-industry breakdown (%) (at December 31, 2019)
|
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Information Technology
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|
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Application Software
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9.7
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Communications Equipment
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3.0
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Data Processing & Outsourced Services
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9.4
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Internet Services & Infrastructure
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1.0
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IT Consulting & Other Services
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0.6
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Semiconductor Equipment
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16.6
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Semiconductors
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23.6
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Systems Software
|
11.9
|
|
Technology Hardware, Storage & Peripherals
|
11.6
|
|
Total
|
87.4
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
|
4
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
For the 12-month period that ended
December 31, 2019, shares of the Fund returned 53.17% at market value and 51.04% at net asset value. The Fund solidly outperformed its benchmark, the S&P North American Technology Sector Index, which returned
42.68% for the same time period. A significant overweight in the semiconductor industry accounted for most of the Fund’s performance advantage over its benchmark. Stock selection coupled with an underweight in
internet and direct marketing stocks also aided relative results for the period.
Declining interest rates helped
drive financial markets to new highs
Optimism prevailed early in 2019,
buoyed by solid economic growth and a recovery from meaningful market losses in the fourth quarter of 2018. The labor markets added 184,000 jobs per month, on average. Unemployment fell to 3.5%, annualized. As the
year wore on, U.S. growth slowed from 3.1% in the first quarter to an estimated 2.1%, annualized, for the year overall, as manufacturing activity edged lower. European economies transitioned to a slower pace of
growth, struggling with rising interest rates, trade tensions and uncertainty surrounding the U.K.’s departure from the European Union (Brexit). At the same time, China’s economic conditions weakened and
emerging markets came under pressure, driven by trade and tariff concerns.
Despite these global uncertainties,
the U.S. stock market rose strongly in 2019, as the Fed reduced short-term interest rates three times during the second half of the year, then announced in its December meeting that it would hold the federal funds
target rate at 1.50%-1.75%, judging its current monetary policy appropriate to support economic expansion, a strong labor market and inflation approximating its 2.0% target. Central banks in major foreign economies
followed the Fed’s lead with stimulus efforts. Investors had a strong preference for growth over value stocks, and in some cases a very narrow subset of growth stocks. Nearly one-third of the domestic stock
market’s total return for the year came from the information technology sector, which rose approximately 50% as measured by the S&P 500 Index.
Contributors and detractors
Stock selection in semiconductors
aided relative returns, led by overweight positions in semiconductor capital equipment companies Lam Research Corp. and Teradyne, Inc. Lam is a major player in “etch fabrication” and
“deposition” equipment that creates chips. The company continued to benefit from the rise in labor-intensive chips of all kinds. Given the increased complexity of chips, demand for semiconductor testing,
which is Teradyne’s specialty, has grown. Teradyne has delivered strong earnings on the back of high margins, continued strong demand for collaborative robots and military and cellular testing. Like many other
companies in the sector, Teradyne has availed itself of improved access to offshore cash and repurchased shares over the course of the past year. Synaptics, Inc., a leading developer of human interface solutions, was
another strong contributor to performance for the period. The company recently announced a new, permanent CEO, whose background inspired investor confidence. Synaptics also appears to have locked up touch sensor
design wins in Apple’s 2020 lineup of smartphones, while the company’s current business continued to improve as its pivot to IOT (Internet of Things) devices has shown early signs of progress. Within
software, an overweight position in electronic design automation software maker Synopsis, Inc. aided relative results and produced strong gains for the Fund. The company announced earnings that beat expectations and
reaffirmed forward earnings guidance. Synopsis suggested that design activity and customer demand for electronic design automation tools remain robust, despite general industry weakness. The company also cited strong
results from its nascent Software Integrity business, which has demonstrated strong growth and solid profitability. Speech recognition software company Nuance Communications, Inc. also contributed to returns after
reporting consecutive quarters of better-than-expected results under its new CEO. The company also completed the sale of its Imaging division and appears on track in focusing on its core Healthcare and Enterprise
divisions and returning more cash to shareholders. Within hardware, Xerox Corp. contributed to Fund returns after announcing strong earnings that highlighted solid execution under the company’s new leadership,
which has focused on cost containment and increasing its share repurchase program.
Security selection in software
detracted from relative performance, notably an underweight in Microsoft Corp., as the company’s Azure cloud computing division continued to demonstrate rapid growth as corporations shift to the cloud. At year
end the company won a landmark Department of Defense contract in a head-to-head competition with Amazon. Microsoft also produced good results across its Server, Office and Window divisions. A position in LogMeIn,
Inc., a provider of remote access and collaborative software solutions, detracted from returns on investor concerns of increased competition, a dated product set and the increased expenses needed to reignite growth in
the Unified Communication as a Service (UCaaS)
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
space. By the end of the year, the company had
entered into an agreement to be acquired by a pair of private equity funds. Within IT Services, DXC Technology Co. struggled with balancing a fast-growing digital IT/ app-based services practice with legacy businesses
in outsourced data center management and business process optimization that are in decline. DXC shares dropped in 2019, making them among the portfolio’s worst performing investments. While the company trades at
a low valuation, it does have a meaningful amount of debt at a time when leverage has gone out of favor. The Fund enjoyed solid gains from Apple, Inc. and from exposure to Apple suppliers, including Synaptics, Qorvo,
Inc. and Broadcom, Inc., but it was underweight in Apple, which detracted from relative results as the smartphone market outperformed expectations, paced by a positive reception for Apple’s new iPhone 11
series.
Call options detracted from
results
Given the strong results for
technology stocks and relatively low volatility for both technology and technology-related stocks, the Fund’s call option writing strategy detracted from returns.
At period’s end
Equity markets had a banner year
in 2019, particularly technology stocks which recovered strongly from a sell-off at the end of 2018. As always, we continue to adhere to our disciplined investment process, which relies on deep fundamental analysis to
identify those companies that we believe have superior growth prospects, trade at attractive valuations and that have the potential to deliver solid investment returns over time.
The market prices of
technology-related stocks tend to exhibit a greater degree of market risk and price volatility than other types of investments. These stocks may fall in and out of favor with investors rapidly, which may cause sudden
selling and dramatically lower market prices. These stocks may also be affected adversely by changes in technology, consumer and business purchasing patterns, government regulation and/or obsolete products or
services. Technology-related companies are often smaller and less experienced and may be subject to greater risks than larger companies, such as limited product lines, markets and financial and managerial resources.
These risks may be heightened for technology companies in foreign markets. The Fund’s use of derivatives introduces risks possibly greater than the risks associated with investing directly in the investments
underlying the derivatives. A relatively small price movement in an underlying investment may result in a substantial gain or loss.
The views expressed in this report
reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and
results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update
such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf
of any particular Columbia fund. References to specific securities should not be construed as a recommendation or investment advice.
|
6
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
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%-90% of the underlying value of the Fund’s holdings of Common Stock (the Rules-based Option Strategy). 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’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 Stock (to a maximum of 90% when aggregated with the call options
written pursuant to the Rules-based Option Strategy) when Columbia Management Investment Advisers, LLC (the Investment Manager) believes 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.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
7
|
Portfolio of Investments
December 31, 2019
(Percentages represent value of
investments compared to net assets)
Investments in securities
|
Common Stocks 98.1%
|
|
Issuer
|
Shares
|
Value ($)
|
|
Communication Services 11.1%
|
|
Broadcasting 1.7%
|
|
Discovery, Inc., Class A(a)
|
192,200
|
6,292,628
|
|
Total Broadcasting
|
6,292,628
|
|
Cable & Satellite 0.3%
|
|
Comcast Corp., Class A
|
27,400
|
1,232,178
|
|
Total Cable & Satellite
|
1,232,178
|
|
Integrated Telecommunication Services 0.2%
|
|
Ooma, Inc.(a)
|
49,984
|
661,288
|
|
Total Integrated Telecommunication Services
|
661,288
|
|
Interactive Home Entertainment 2.0%
|
|
Activision Blizzard, Inc.
|
111,708
|
6,637,689
|
|
Sciplay Corp., Class A(a)
|
62,656
|
770,042
|
|
Total Interactive Home Entertainment
|
7,407,731
|
|
Interactive Media & Services 6.9%
|
|
Alphabet, Inc., Class A(a),(b)
|
10,375
|
13,896,171
|
|
Alphabet, Inc., Class C(a),(b)
|
8,474
|
11,329,908
|
|
Tencent Holdings Ltd., ADR
|
13,000
|
624,195
|
|
Total Interactive Media & Services
|
25,850,274
|
|
Total Communication Services
|
41,444,099
|
|
Financials 0.5%
|
|
Investment Banking & Brokerage 0.5%
|
|
XP, Inc., Class A(a)
|
50,000
|
1,926,000
|
|
Total Investment Banking & Brokerage
|
1,926,000
|
|
Total Financials
|
1,926,000
|
|
Industrials 0.7%
|
|
Heavy Electrical Equipment 0.5%
|
|
Bloom Energy Corp., Class A(a)
|
241,700
|
1,805,499
|
|
Total Heavy Electrical Equipment
|
1,805,499
|
|
Research & Consulting Services 0.2%
|
|
Nielsen Holdings PLC
|
32,000
|
649,600
|
|
Total Research & Consulting Services
|
649,600
|
|
Total Industrials
|
2,455,099
|
|
Information Technology 85.8%
|
|
Common Stocks (continued)
|
|
Issuer
|
Shares
|
Value ($)
|
|
Application Software 9.5%
|
|
Cerence, Inc.(a)
|
116,338
|
2,632,729
|
|
Cerence, Inc.(a)
|
24,664
|
558,146
|
|
Cornerstone OnDemand, Inc.(a)
|
31,221
|
1,827,990
|
|
Dropbox, Inc., Class A(a)
|
70,300
|
1,259,073
|
|
Nuance Communications, Inc.(a)
|
215,204
|
3,837,087
|
|
Salesforce.com, Inc.(a)
|
33,000
|
5,367,120
|
|
Splunk, Inc.(a)
|
11,558
|
1,731,042
|
|
Synopsys, Inc.(a),(b)
|
100,489
|
13,988,069
|
|
TeamViewer AG(a)
|
51,617
|
1,845,813
|
|
Verint Systems, Inc.(a)
|
44,200
|
2,446,912
|
|
Total Application Software
|
35,493,981
|
|
Communications Equipment 2.9%
|
|
Arista Networks, Inc.(a)
|
11,179
|
2,273,808
|
|
CommScope Holding Co., Inc.(a)
|
61,100
|
867,009
|
|
F5 Networks, Inc.(a)
|
16,000
|
2,234,400
|
|
Juniper Networks, Inc.
|
67,400
|
1,660,062
|
|
Plantronics, Inc.
|
93,100
|
2,545,354
|
|
Telefonaktiebolaget LM Ericsson, ADR
|
153,500
|
1,347,730
|
|
Total Communications Equipment
|
10,928,363
|
|
Data Processing & Outsourced Services 9.2%
|
|
Euronet Worldwide, Inc.(a)
|
9,525
|
1,500,759
|
|
Fidelity National Information Services, Inc.
|
44,200
|
6,147,778
|
|
Fiserv, Inc.(a)
|
38,400
|
4,440,192
|
|
Genpact Ltd.
|
72,500
|
3,057,325
|
|
Global Payments, Inc.
|
20,657
|
3,771,142
|
|
Pagseguro Digital Ltd., Class A(a)
|
87,358
|
2,984,149
|
|
Visa, Inc., Class A(b)
|
66,100
|
12,420,190
|
|
Total Data Processing & Outsourced Services
|
34,321,535
|
|
Internet Services & Infrastructure 1.0%
|
|
GoDaddy, Inc., Class A(a)
|
52,215
|
3,546,443
|
|
Total Internet Services & Infrastructure
|
3,546,443
|
|
IT Consulting & Other Services 0.6%
|
|
DXC Technology Co.
|
59,100
|
2,221,569
|
|
Total IT Consulting & Other Services
|
2,221,569
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
8
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Portfolio of Investments (continued)
December 31, 2019
|
Common Stocks (continued)
|
|
Issuer
|
Shares
|
Value ($)
|
|
Semiconductor Equipment 16.3%
|
|
Advanced Energy Industries, Inc.(a)
|
62,400
|
4,442,880
|
|
Applied Materials, Inc.(b)
|
202,900
|
12,385,016
|
|
Lam Research Corp.(b)
|
96,205
|
28,130,342
|
|
Teradyne, Inc.(b)
|
197,506
|
13,467,934
|
|
Xperi Corp.
|
117,083
|
2,166,036
|
|
Total Semiconductor Equipment
|
60,592,208
|
|
Semiconductors 23.2%
|
|
Broadcom, Inc.(b)
|
63,900
|
20,193,678
|
|
Infineon Technologies AG
|
233,300
|
5,271,264
|
|
Inphi Corp.(a)
|
46,405
|
3,434,898
|
|
Intel Corp.
|
33,400
|
1,998,990
|
|
Marvell Technology Group Ltd.(b)
|
458,192
|
12,169,580
|
|
Micron Technology, Inc.(a),(b)
|
247,504
|
13,310,765
|
|
NXP Semiconductors NV(b)
|
54,600
|
6,948,396
|
|
ON Semiconductor Corp.(a),(b)
|
434,818
|
10,600,863
|
|
Qorvo, Inc.(a)
|
24,142
|
2,806,025
|
|
Rambus, Inc.(a)
|
40,600
|
559,265
|
|
SMART Global Holdings, Inc.(a)
|
25,399
|
963,638
|
|
Synaptics, Inc.(a),(b)
|
122,681
|
8,068,729
|
|
Total Semiconductors
|
86,326,091
|
|
Systems Software 11.7%
|
|
ForeScout Technologies, Inc.(a)
|
34,000
|
1,115,200
|
|
Fortinet, Inc.(a),(b)
|
79,524
|
8,489,982
|
|
Microsoft Corp.
|
74,900
|
11,811,730
|
|
Oracle Corp.
|
104,100
|
5,515,218
|
|
Common Stocks (continued)
|
|
Issuer
|
Shares
|
Value ($)
|
|
Palo Alto Networks, Inc.(a),(b)
|
29,400
|
6,798,750
|
|
SailPoint Technologies Holding, Inc.(a)
|
66,019
|
1,558,049
|
|
Symantec Corp.
|
202,375
|
5,164,610
|
|
TiVo Corp.
|
356,900
|
3,026,512
|
|
Total Systems Software
|
43,480,051
|
|
Technology Hardware, Storage & Peripherals 11.4%
|
|
Apple, Inc.(b)
|
68,300
|
20,056,295
|
|
Dell Technologies, Inc.(a)
|
49,800
|
2,559,222
|
|
NetApp, Inc.(b)
|
148,700
|
9,256,575
|
|
Western Digital Corp.(b)
|
163,400
|
10,370,998
|
|
Total Technology Hardware, Storage & Peripherals
|
42,243,090
|
|
Total Information Technology
|
319,153,331
|
Total Common Stocks
(Cost: $216,812,401)
|
364,978,529
|
|
|
|
Money Market Funds 1.2%
|
|
|
Shares
|
Value ($)
|
|
Columbia Short-Term Cash Fund, 1.699%(c),(d)
|
4,613,600
|
4,613,138
|
Total Money Market Funds
(Cost: $4,613,138)
|
4,613,138
|
Total Investments in Securities
(Cost $221,425,539)
|
369,591,667
|
|
Other Assets & Liabilities, Net
|
|
2,471,126
|
|
Net Assets
|
$372,062,793
|
At December 31, 2019,
securities and/or cash totaling $200,207,547 were pledged as collateral.
Investments in
derivatives
|
Call option contracts written
|
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Premium
received ($)
|
Value ($)
|
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(132,800)
|
(50)
|
32.00
|
1/17/2020
|
(3,987)
|
(100)
|
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(162,016)
|
(61)
|
31.00
|
1/17/2020
|
(5,900)
|
(122)
|
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(1,245,664)
|
(469)
|
35.00
|
1/15/2021
|
(47,819)
|
(63,081)
|
|
NASDAQ-100 Index
|
Deutsche Bank
|
USD
|
(179,901,304)
|
(206)
|
8,900.00
|
1/17/2020
|
(618,901)
|
(647,870)
|
|
Western Digital Corp.
|
Deutsche Bank
|
USD
|
(2,545,147)
|
(401)
|
90.00
|
1/15/2021
|
(148,912)
|
(96,841)
|
|
Total
|
|
|
|
|
|
|
(825,519)
|
(808,014)
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
December 31, 2019
|
Put option contracts written
|
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Premium
received ($)
|
Value ($)
|
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(1,256,288)
|
(473)
|
15.00
|
01/17/2020
|
(50,669)
|
(710)
|
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(2,563,040)
|
(965)
|
17.00
|
01/15/2021
|
(132,165)
|
(69,962)
|
|
Western Digital Corp.
|
Deutsche Bank
|
USD
|
(2,551,494)
|
(402)
|
40.00
|
01/15/2021
|
(127,416)
|
(82,209)
|
|
Total
|
|
|
|
|
|
|
(310,250)
|
(152,881)
|
Notes to Portfolio of
Investments
|
(a)
|
Non-income producing investment.
|
|
(b)
|
This security or a portion of this security has been pledged as collateral in connection with derivative contracts.
|
|
(c)
|
The rate shown is the seven-day current annualized yield at December 31, 2019.
|
|
(d)
|
As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company
which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended December 31, 2019 are as follows:
|
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized gain
(loss) —
affiliated
issuers ($)
|
Net change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends —
affiliated
issuers ($)
|
Value —
affiliated
issuers
at end of
period ($)
|
|
Columbia Short-Term Cash Fund, 1.699%
|
|
|
9,299,869
|
102,338,361
|
(107,024,630)
|
4,613,600
|
534
|
—
|
141,208
|
4,613,138
|
Abbreviation Legend
|
ADR
|
American Depositary Receipt
|
Currency Legend
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. 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.
Foreign equity securities actively
traded in markets where there is a significant delay in the local close relative to the New York Stock Exchange are classified as Level 2. The values of these securities may include an adjustment to reflect the impact
of significant market movements following the close of local trading, as described in Note 2 to the financial statements – Security valuation.
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
10
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Portfolio of Investments (continued)
December 31, 2019
Fair value measurements (continued)
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.
The following table is a summary of
the inputs used to value the Fund’s investments at December 31, 2019:
|
|
Level 1 ($)
|
Level 2 ($)
|
Level 3 ($)
|
Total ($)
|
|
Investments in Securities
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
Communication Services
|
40,819,904
|
624,195
|
—
|
41,444,099
|
|
Financials
|
1,926,000
|
—
|
—
|
1,926,000
|
|
Industrials
|
2,455,099
|
—
|
—
|
2,455,099
|
|
Information Technology
|
312,036,254
|
7,117,077
|
—
|
319,153,331
|
|
Total Common Stocks
|
357,237,257
|
7,741,272
|
—
|
364,978,529
|
|
Money Market Funds
|
4,613,138
|
—
|
—
|
4,613,138
|
|
Total Investments in Securities
|
361,850,395
|
7,741,272
|
—
|
369,591,667
|
|
Investments in Derivatives
|
|
|
|
|
|
Liability
|
|
|
|
|
|
Options Contracts Written
|
(960,895)
|
—
|
—
|
(960,895)
|
|
Total
|
360,889,500
|
7,741,272
|
—
|
368,630,772
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to
the Level 2 input category are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical
assets. These assets include certain foreign securities for which a third party statistical pricing service may be employed for purposes of fair market valuation. The model utilized by such third party statistical
pricing service takes into account a security’s correlation to available market data including, but not limited to, intraday index, ADR, and exchange-traded fund movements.
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
11
|
Statement of Assets and Liabilities
December 31, 2019
|
Assets
|
|
|
Investments in securities, at value
|
|
|
Unaffiliated issuers (cost $216,812,401)
|
$364,978,529
|
|
Affiliated issuers (cost $4,613,138)
|
4,613,138
|
|
Cash collateral held at broker for:
|
|
|
Options contracts written
|
4,168,400
|
|
Receivable for:
|
|
|
Investments sold
|
9,615
|
|
Dividends
|
166,742
|
|
Prepaid expenses
|
33,240
|
|
Total assets
|
373,969,664
|
|
Liabilities
|
|
|
Option contracts written, at value (premiums received $1,135,769)
|
960,895
|
|
Payable for:
|
|
|
Investments purchased
|
788,435
|
|
Management services fees
|
10,765
|
|
Stockholder servicing and transfer agent fees
|
2,502
|
|
Compensation of board members
|
107,636
|
|
Compensation of chief compliance officer
|
71
|
|
Other expenses
|
36,567
|
|
Total liabilities
|
1,906,871
|
|
Net assets applicable to outstanding Common Stock
|
$372,062,793
|
|
Represented by
|
|
|
Paid in capital
|
217,509,554
|
|
Total distributable earnings (loss)
|
154,553,239
|
|
Total - representing net assets applicable to outstanding Common Stock
|
$372,062,793
|
|
Shares outstanding applicable to Common Stock
|
15,879,011
|
|
Net asset value per share of outstanding Common Stock
|
$23.43
|
|
Market price per share of Common Stock
|
$23.55
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
12
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Statement of Operations
Year Ended December 31, 2019
|
Net investment income
|
|
|
Income:
|
|
|
Dividends — unaffiliated issuers
|
$3,362,904
|
|
Dividends — affiliated issuers
|
141,208
|
|
Foreign taxes withheld
|
(10,648)
|
|
Total income
|
3,493,464
|
|
Expenses:
|
|
|
Management services fees
|
3,445,638
|
|
Stockholder servicing and transfer agent fees
|
18,059
|
|
Compensation of board members
|
57,918
|
|
Custodian fees
|
12,349
|
|
Printing and postage fees
|
35,687
|
|
Stockholders’ meeting fees
|
32,705
|
|
Audit fees
|
39,221
|
|
Legal fees
|
9,821
|
|
Compensation of chief compliance officer
|
67
|
|
Other
|
100,436
|
|
Total expenses
|
3,751,901
|
|
Net investment loss
|
(258,437)
|
|
Realized and unrealized gain (loss) — net
|
|
|
Net realized gain (loss) on:
|
|
|
Investments — unaffiliated issuers
|
36,482,806
|
|
Investments — affiliated issuers
|
534
|
|
Foreign currency translations
|
(3,299)
|
|
Options purchased
|
(63,250)
|
|
Options contracts written
|
(8,323,973)
|
|
Net realized gain
|
28,092,818
|
|
Net change in unrealized appreciation (depreciation) on:
|
|
|
Investments — unaffiliated issuers
|
102,152,843
|
|
Foreign currency translations
|
(6)
|
|
Options contracts written
|
1,907,951
|
|
Net change in unrealized appreciation (depreciation)
|
104,060,788
|
|
Net realized and unrealized gain
|
132,153,606
|
|
Net increase in net assets resulting from operations
|
$131,895,169
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
13
|
Statement of Changes in Net Assets
|
|
Year Ended
December 31, 2019
|
Year Ended
December 31, 2018
|
|
Operations
|
|
|
|
Net investment loss
|
$(258,437)
|
$(179,055)
|
|
Net realized gain
|
28,092,818
|
37,137,729
|
|
Net change in unrealized appreciation (depreciation)
|
104,060,788
|
(58,397,231)
|
|
Net increase (decrease) in net assets resulting from operations
|
131,895,169
|
(21,438,557)
|
|
Distributions to stockholders
|
|
|
|
Net investment income and net realized gains
|
(29,351,348)
|
(39,107,876)
|
|
Total distributions to stockholders
|
(29,351,348)
|
(39,107,876)
|
|
Increase in net assets from capital stock activity
|
4,204,361
|
5,389,156
|
|
Total increase (decrease) in net assets
|
106,748,182
|
(55,157,277)
|
|
Net assets at beginning of year
|
265,314,611
|
320,471,888
|
|
Net assets at end of year
|
$372,062,793
|
$265,314,611
|
|
|
Year Ended
|
Year Ended
|
|
|
December 31, 2019
|
December 31, 2018
|
|
|
Shares
|
Dollars ($)
|
Shares
|
Dollars ($)
|
|
Capital stock activity
|
|
Common Stock issued at market price in distributions
|
257,740
|
4,618,719
|
253,576
|
5,389,156
|
|
Common Stock purchased in the open market
|
(20,562)
|
(414,358)
|
—
|
—
|
|
Total net increase
|
237,178
|
4,204,361
|
253,576
|
5,389,156
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
14
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
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 Stock 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, a Fund’s portfolio turnover rate may be higher.
|
|
Year ended December 31,
|
|
2019
|
2018
|
2017
|
2016
|
2015
|
|
Per share data
|
|
|
|
|
|
|
Net asset value, beginning of period
|
$16.96
|
$20.83
|
$17.78
|
$17.29
|
$17.69
|
|
Income from investment operations:
|
|
|
|
|
|
|
Net investment loss
|
(0.02)
|
(0.01)
|
(0.06)
|
(0.05)
|
(0.04)
|
|
Net realized and unrealized gain (loss)
|
8.34
|
(1.36)
|
5.74
|
2.39
|
1.49
|
|
Total from investment operations
|
8.32
|
(1.37)
|
5.68
|
2.34
|
1.45
|
|
Less distributions to Stockholders from:
|
|
|
|
|
|
|
Net realized gains
|
(1.85)
|
(2.50)
|
(2.63)
|
(1.85)
|
(1.85)
|
|
Total distributions to Stockholders
|
(1.85)
|
(2.50)
|
(2.63)
|
(1.85)
|
(1.85)
|
|
Net asset value, end of period
|
$23.43
|
$16.96
|
$20.83
|
$17.78
|
$17.29
|
|
Market price, end of period
|
$23.55
|
$16.81
|
$22.25
|
$18.74
|
$17.93
|
|
Total return
|
|
|
|
|
|
|
Based upon net asset value
|
51.04%
|
(7.77%)
|
32.72%
|
15.29%
|
8.40%
|
|
Based upon market price
|
53.17%
|
(14.42%)
|
34.51%
|
17.18%
|
5.05%
|
|
Ratios to average net assets
|
|
|
|
|
|
|
Total gross expenses(a)
|
1.15%
|
1.15%
|
1.16%
|
1.17%
|
1.17%
|
|
Net investment loss
|
(0.08%)
|
(0.05%)
|
(0.28%)
|
(0.33%)
|
(0.24%)
|
|
Supplemental data
|
|
|
|
|
|
|
Net assets, end of period (in thousands)
|
$372,063
|
$265,315
|
$320,472
|
$273,226
|
$265,426
|
|
Portfolio turnover
|
43%
|
34%
|
47%
|
61%
|
61%
|
|
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.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
15
|
Notes to Financial Statements
December 31, 2019
Note 1. Organization
Columbia Seligman Premium
Technology Growth Fund (the Fund) is a non-diversified fund. The Fund is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a closed-end management investment company.
The Fund was incorporated under the
laws of the State of Maryland on September 3, 2009, and commenced investment operations on November 30, 2009. The Fund had no investment operations prior to November 30, 2009 other than those relating to
organizational matters and the sale to Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), of 5,250 shares of Common
Stock at a cost of $100,275 on October 14, 2009. As of December 31, 2009, the Fund issued 14,300,000 shares of Common Stock, including 13,100,000 shares of Common Stock in its initial public offering and 1,200,000
shares of Common Stock purchased by the Fund’s underwriters pursuant to an over-allotment option granted to the underwriters in connection with the initial public offering. On January 13, 2010, the Fund’s
underwriters purchased an additional 545,000 shares of Common Stock pursuant to the over-allotment option, resulting in a total of 14,845,000 shares of Common Stock issued by the Fund in its initial public offering,
including shares purchased by the underwriters pursuant to the over-allotment option. With the closing of this additional purchase of Common Stock, the Fund’s total raise-up in its initial public offering was an
aggregate of $296.9 million. The Fund has one billion authorized shares of Common Stock. The issued and outstanding Common Stock trades on the New York Stock Exchange under the symbol “STK”.
The Fund currently has outstanding
Common Stock. Each outstanding share of Common Stock entitles the holder thereof to one vote on all matters submitted to a vote of the Common Stockholders, including the election of directors. Because the Fund has no
other classes or series of stock outstanding, Common Stock possesses exclusive voting power. All of the Fund’s shares of Common Stock have equal dividend, liquidation, voting and other rights. The Fund’s
Common Stockholders have no preference, conversion, redemption, exchange, sinking fund, or appraisal rights and have no preemptive rights to subscribe for any of the Fund’s securities.
Although the Fund has no current
intention to do so, the Fund is authorized and reserves the flexibility to use leverage to increase its investments or for other management activities through the issuance of Preferred Stock and/or borrowings. The
costs of issuing Preferred Stock and/or a borrowing program would be borne by Common Stockholders and consequently would result in a reduction of net asset value of Common Stock.
Note 2. Summary of
significant accounting policies
Basis of preparation
The Fund is an investment company
that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of
significant accounting policies followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at
the close of business of the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for
which there were no sales during the day are valued at the mean of the latest quoted bid and ask prices on such exchanges or markets.
Foreign equity securities are
valued based on the closing price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean
of the latest quoted bid and ask prices on such exchanges or markets. Foreign currency exchange rates are determined at the scheduled closing time of the New York Stock Exchange. Many securities markets and exchanges
outside the U.S. close prior to the
|
16
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
close of the New York Stock Exchange; therefore,
the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign
securities will be fair valued pursuant to a policy adopted by the Board of Directors. Under the policy, the Fund may utilize a third-party pricing service to determine these fair values. The third-party pricing
service takes into account multiple factors, including, but not limited to, movements in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred
subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. The fair value of a
security is likely to be different from the quoted or published price, if available.
Investments in open-end investment
companies, including money market funds, are valued at their latest net asset value.
Option contracts are valued at the
mean of the latest quoted bid and ask prices on their primary exchanges. Option contracts, including over-the-counter option contracts, with no readily available market quotations are valued using mid-market
evaluations from independent third-party vendors.
Investments for which market
quotations are not readily available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by
and under the general supervision of the Board of Directors. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published
price for the security, if available.
The determination of fair value
often requires significant judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used
to determine fair value.
GAAP requires disclosure regarding
the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following
the Fund’s Portfolio of Investments.
Foreign currency transactions and
translations
The values of all assets and
liabilities denominated in foreign currencies are generally translated into U.S. dollars at exchange rates determined at the close of regular trading on the New York Stock Exchange. Net realized and unrealized gains
(losses) on foreign currency transactions and translations include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising
from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes,
the Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations
are included with the net realized and unrealized gains (losses) on investments in the Statement of Operations.
Derivative instruments
The Fund may invest in certain
derivative instruments, which are transactions whose values depend on or are derived from (in whole or in part) the value of one or more other assets, such as securities, currencies, commodities or indices. 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.
The Fund may also seek to provide
downside protection by purchasing puts on the NASDAQ 100 when premiums on these options are considered by the Investment Manager to be low and, therefore, attractive relative to the downside protection provided.
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. In this regard, options may
include writing “in-” or “out-of-the-money” put options or buying or selling options in connection with closing out positions prior to
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
17
|
Notes to Financial Statements (continued)
December 31, 2019
expiration of any options. However, the Fund does
not intend to write “naked” call options on individual stocks (i.e., selling a call option on an individual security not owned by the Fund) other than in connection with implementing the options strategies
with respect to the NASDAQ 100. The put and call options purchased, sold or written by the Fund may be exchange-listed or over-the-counter.
The notional amounts of derivative
instruments, if applicable, are not recorded in the financial statements. A derivative instrument may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market
rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract. Options written by the Fund do not typically give rise to counterparty credit risk, as
options written generally obligate the Fund and not the counterparty to perform. With exchange-traded purchased options, there is minimal counterparty credit risk to the Fund since the exchange’s clearinghouse,
as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the counterparty credit risk is limited to failure of
the clearinghouse. However, credit risk still exists in exchange traded option contracts with respect to any collateral that is held in a broker’s customer accounts. While brokers are required to segregate
customer collateral from their own assets, in the event that a broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of collateral held by the broker for all
its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across all the broker’s customers, potentially resulting in losses to the Fund.
In order to better define its
contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement)
or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives and foreign exchange contracts and
typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances,
offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master
Agreement typically permit a single net payment in the event of default (close-out netting) including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular
jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. Collateral (margin) requirements differ by type of derivative. Margin requirements are
established by the exchange for exchange traded options. Brokers can ask for margin in excess of the minimum in certain circumstances. To the extent amounts due to the Fund from its counterparties are not fully
collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense
paid by the Fund is shown on the Statement of Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor
their obligations and by monitoring the financial stability of those counterparties.
Investments in derivative
instruments may expose the Fund to certain additional risks, including those detailed below.
Options contracts
Options are contracts which entitle
the holder to purchase or sell securities or other identified assets at a specified price, or in the case of index option contracts, to receive or pay the difference between the index value and the strike price of the
index option contract. Option contracts can be either exchange-traded or over-the-counter. The Fund purchased and wrote option contracts to decrease the Fund’s exposure to equity market risk and to increase
return on investments. These instruments may be used for other purposes in future periods. Completion of transactions for option contracts traded in the over-the-counter market depends upon the performance of the
other party. Cash collateral may be collected or posted by the Fund to secure certain over-the-counter option contract trades. Cash collateral held or posted by the Fund for such option contract trades must be
returned to the broker or the Fund upon closure, exercise or expiration of the contract.
Options contracts purchased are
recorded as investments. When the Fund writes an options contract, the premium received is recorded as an asset and an amount equivalent to the premium is recorded as a liability in the Statement of Assets and
Liabilities and is subsequently adjusted to reflect the current fair value of the option written. Changes in the fair value of the written option are recorded as unrealized appreciation or depreciation until the
contract is exercised or has expired. The Fund
|
18
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
will realize a gain or loss when the option
contract is closed or expires. When option contracts are exercised, the proceeds on sales for a written call or purchased put option contract, or the purchase cost for a written put or purchased call option contract,
is adjusted by the amount of premium received or paid.
For over-the-counter options
purchased, the Fund bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the
contracts. Option contracts written by the Fund do not typically give rise to significant counterparty credit risk, as options written generally obligate the Fund and not the counterparty to perform. The risk in
writing a call option contract is that the Fund gives up the opportunity for profit if the market price of the security increases above the strike price and the option contract is exercised. The risk in writing a put
option contract is that the Fund may incur a loss if the market price of the security decreases below the strike price and the option contract is exercised. Exercise of a written option could result in the Fund
purchasing or selling a security or foreign currency when it otherwise would not, or at a price different from the current market value. In purchasing and writing options, the Fund bears the risk of an unfavorable
change in the value of the underlying instrument or the risk that the Fund may not be able to enter into a closing transaction due to an illiquid market.
Effects of derivative transactions in
the financial statements
The following tables are intended
to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the
Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules
following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.
The following table is a summary of
the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at December 31, 2019:
|
|
Liability derivatives
|
|
Risk exposure
category
|
Statement
of assets and liabilities
location
|
Fair value ($)
|
|
Equity risk
|
Options contracts written, at value
|
960,895
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended December 31, 2019:
|
Amount of realized gain (loss) on derivatives recognized in income
|
|
Risk exposure category
|
Options
contracts
written
($)
|
Options
contracts
purchased
($)
|
Total
($)
|
|
Equity risk
|
(8,323,973)
|
(63,250)
|
(8,387,223)
|
|
Change in unrealized appreciation (depreciation) on derivatives recognized in income
|
|
Risk exposure category
|
Options
contracts
written
($)
|
|
Equity risk
|
1,907,951
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended December 31, 2019:
|
Derivative instrument
|
Average
value ($)
|
|
Options contracts — purchased
|
3,018*
|
|
Options contracts — written
|
(535,264)**
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
19
|
Notes to Financial Statements (continued)
December 31, 2019
|
*
|
Based on the ending daily outstanding amounts for the year ended December 31, 2019.
|
|
**
|
Based on the ending quarterly outstanding amounts for the year ended December 31, 2019.
|
Offsetting of assets and
liabilities
The following table presents the
Fund’s gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of December 31, 2019:
|
|
Deutsche Bank ($)
|
|
Liabilities
|
|
|
Options contracts written
|
960,895
|
|
Total financial and derivative net assets
|
(960,895)
|
|
Total collateral received (pledged) (a)
|
(960,895)
|
|
Net amount (b)
|
-
|
|
(a)
|
In some instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
|
(b)
|
Represents the net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted
for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Corporate actions and dividend
income are generally recorded net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions
from holdings in equity securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts
(REITs), which report information as to the tax character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported.
Return of capital is recorded as a reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the
extent actual information has not yet been reported, estimates for return of capital are made by Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial). The Investment Manager’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a
proportionate change in return of capital to stockholders.
Awards from class action litigation
are recorded as a reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities on the payment date, the proceeds are recorded as
realized gains.
Federal income tax status
The Fund intends to qualify each
year as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its
tax year, and as such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other
amounts, if any, such that the Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign
taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules
and regulations that exist in the markets in which it invests.
|
20
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
Realized gains in certain countries
may be subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The
amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.
Dividends to stockholders
In November 2010, the Fund paid its
first dividend under the Fund’s managed distribution policy adopted by the Fund’s Board of Directors. Prior to the managed distribution policy, the Fund paid distributions pursuant to a level rate
distribution policy. Under its former distribution policy and consistent with the 1940 Act, the Fund could not distribute long-term capital gains, as defined in the Internal Revenue Code of 1986, more often than once
in any one taxable year. In October 2010, the Fund received exemptive relief from the Securities and Exchange Commission that permits the Fund to distribute long-term capital gains more often than once in any one
taxable year. After consideration by the Fund’s Board of Directors, the Fund adopted the managed distribution policy which allows the Fund to make periodic distributions of long-term capital gains. Under its
managed distribution policy, the Fund intends to make quarterly distributions to Common Stockholders at a rate that reflects the past and projected performance of the Fund. The Fund expects to receive all or some of
its current income and gains from the following sources: (i) dividends received by the Fund that are paid on the equity and equity-related securities in its portfolio; and (ii) capital gains (short-term and long-term)
from option premiums and the sale of portfolio securities. It is possible that the Fund’s distributions will at times exceed the earnings and profits of the Fund and therefore all or a portion of such
distributions may constitute a return of capital as described below. A return of capital is a return of a portion of an investor’s original investment. A return of capital is not taxable, but it reduces a
Stockholder’s tax basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the Stockholder of his or her shares. Distributions may vary, and the
Fund’s distribution rate will depend on a number of factors, including the net earnings on the Fund’s portfolio investments and the rate at which such net earnings change as a result of changes in the
timing of, and rates at which, the Fund receives income from the sources described above. The net investment income of the Fund consists of all income (other than net short-term and long-term capital gains) less all
expenses of the Fund.
The Board of Directors may change
the Fund’s distribution policy and the amount or timing of the distributions, based on a number of factors, including, but not limited to, as the Fund’s portfolio and market conditions change, the amount
of the Fund’s undistributed net investment income and net short- and long-term capital gains and historical and projected net investment income and net short- and long-term capital gains. Over time, the Fund
will distribute all of its net investment income and net short-term capital gains. In addition, at least annually, the Fund intends to distribute any net capital gain (which is the excess of net long-term capital gain
over net short-term capital loss) or, alternatively, to retain all or a portion of the year’s net capital gain and pay federal income tax on the retained gain.
In order to avoid federal excise
tax in 2018, the Fund declared a special fourth quarter distribution in the amount of $0.6521 per share of common stock to stockholders of record on December 17, 2018. The distribution was paid on January 22, 2019 and
is in addition to distributions made under the Fund’s typical quarterly managed distribution policy.
Dividends and other distributions
to stockholders are recorded on ex-dividend dates.
Guarantees and indemnifications
Under the Fund’s
organizational documents and, in some cases, by contract, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the
Fund’s contracts with its service providers contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made
against the Fund cannot be determined, and the Fund has no historical basis for predicting the likelihood of any such claims.
Recent accounting pronouncement
Accounting Standards Update 2018-13
Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial
Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods
beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
21
|
Notes to Financial Statements (continued)
December 31, 2019
permitted. After evaluation, management determined
to adopt the ASU effective for the period ended July 31, 2019 and all subsequent periods. To comply with the ASU, management implemented disclosure changes which include removal of the amount and reasons for transfers
between Level 1 and Level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the Level 3 valuation processes, as well as modifications to the
measurement uncertainty disclosure.
Note 3. Fees and other
transactions with affiliates
Management services fees
The Fund has entered into a
Management Agreement with Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the
Investment Manager provides the Fund with investment research and advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to 1.06% of the Fund’s
daily Managed Assets. "Managed Assets" means the net asset value of the Fund’s outstanding Common Stock plus the liquidation preference of any issued and outstanding Preferred Stock of the Fund and the principal
amount of any borrowings used for leverage.
Participating Affiliates
The Investment Manager and its
investment advisory affiliates (Participating Affiliates) around the world may coordinate in providing services to their clients. From time to time the Investment Manager (or any affiliated investment subadviser to
the Fund, as the case may be) may engage its Participating Affiliates to provide a variety of services such as investment research, investment monitoring, trading and discretionary investment management (including
portfolio management) to certain accounts managed by the Investment Manager, including the Fund. These Participating Affiliates provide services to the Investment Manager (or any affiliated investment subadviser to
the Fund as the case may be) either pursuant to subadvisory agreements, personnel-sharing agreements or similar inter-company arrangements and the Fund pays no additional fees and expenses as a result of any such
arrangements.
These Participating Affiliates,
like the Investment Manager, are direct or indirect subsidiaries of Ameriprise Financial and are registered, as appropriate, with respective regulators in their home jurisdictions and, where required, the Securities
and Exchange Commission and the Commodity Futures Trading Commission in the United States.
Pursuant to some of these
arrangements, certain employees of these Participating Affiliates may serve as "associated persons" of the Investment Manager and, in this capacity, subject to the oversight and supervision of the Investment Manager
and consistent with the investment objectives, policies and limitations may provide such services to the Fund on behalf of the Investment Manager.
Compensation of board members
Members of the Board of Directors
who are not officers or employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the
Deferred Plan), these members of the Board of Directors may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of
certain funds managed by the Investment Manager. The Fund’s liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All
amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance
Officer
The Board of Directors has
appointed a Chief Compliance Officer for the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is
allocated to the Fund, along with other allocations to affiliated registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
|
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
Note 4. Federal tax
information
The timing and character of
income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At December 31, 2019, these
differences were primarily due to differing treatment for deferral/reversal of wash sale losses, Directors’ deferred compensation, derivative investments, distribution reclassifications, net operating loss
reclassification, and foreign currency transactions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not
require reclassifications.
The following reclassifications
were made:
Excess of distributions
over net investment
income ($)
|
Accumulated
net realized
gain ($)
|
Paid in
capital ($)
|
|
1,131,629
|
(1,131,629)
|
—
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions
paid during the years indicated was as follows:
|
Year Ended December 31, 2019
|
Year Ended December 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
|
907,715
|
28,443,633
|
29,351,348
|
4,710,707
|
34,397,169
|
39,107,876
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At December 31, 2019, the
components of distributable earnings on a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital loss
carryforwards ($)
|
Net unrealized
appreciation ($)
|
|
384,817
|
6,302,873
|
—
|
147,966,080
|
At December 31, 2019, the cost of
all investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross unrealized
appreciation ($)
|
Gross unrealized
(depreciation) ($)
|
Net unrealized
appreciation ($)
|
|
220,664,692
|
152,736,488
|
(4,770,408)
|
147,966,080
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at
a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the
prior three fiscal years remain subject to examination by the Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and
proceeds from sales of securities, excluding short-term investments and derivatives, if any, aggregated to $135,626,780 and $177,796,453, respectively, for the year ended December 31, 2019. The amount of purchase and
sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
December 31, 2019
Note 6. Dividend
investment plan and stock repurchase program
The Fund, in connection with its
Dividend Investment Plan (the Plan), issues shares of its own Common Stock, as needed, to satisfy the Plan requirements. A total of 257,740 shares were issued to the Plan participants during the year ended December
31, 2019 for proceeds of $4,618,719, a weighted average discount of 3.44% from the net asset value of those shares.
Pursuant to the Plan, unless a
Common Stockholder elects otherwise, all cash dividends, capital gains distributions, and other distributions are automatically reinvested in additional Common Stock. If you hold your shares in street name or other
nominee (i.e., through a broker), you should contact them to determine their policy, as the broker firm’s policy with respect to Fund distributions may be to default to a cash payment. Common Stockholders who
elect not to participate in the Plan (including those whose intermediaries do not permit participation in the Plan by their customers) will receive all dividends and distributions payable in cash directly to the
Common Stockholder of record (or, if the shares of Common Stock are held in street or other nominee name, then to such nominee). Common Stockholders may elect not to participate in the Plan and to receive all
distributions of dividends and capital gains or other distributions in cash by sending written instructions to American Stock Transfer & Trust Company, LLC (AST), 59 Maiden Lane Plaza Level, New York, New York
10038. Participation in the Plan may be terminated or resumed at any time without penalty by written notice if received by AST, prior to the record date for the next distribution. Otherwise, such termination or
resumption will be effective with respect to any subsequently declared distribution.
Under the Plan, Common Stockholders
receive shares of Common Stock in lieu of cash distributions unless they have elected otherwise as described above. Common Stock will be issued in lieu of cash by the Fund from previously authorized but unissued
Common Stock. If the market price of a share on the ex-dividend date of such a distribution is at or above the Fund’s net asset value per share on such date, the number of shares to be issued by the Fund to each
Common Stockholder receiving shares in lieu of cash distributions will be determined by dividing the amount of the cash distribution to which such Common Stockholder would be entitled by the greater of the net asset
value per share on such date or 95% of the market price of a share on such date. If the market price of a share on such an ex-dividend date is below the net asset value per share, the number of shares to be issued to
such Common Stockholders will be determined by dividing such amount by the per share market price. The issuance of Common Stock at less than net asset value per share will dilute the net asset value of all Common
Stock outstanding at that time. Market price on any day means the closing price for the Common Stock at the close of regular trading on the New York Stock Exchange on such day or, if such day is not a day on which the
Common Stock trades, the closing price for the Common Stock at the close of regular trading on the immediately preceding day on which trading occurs.
For the year ended December 31,
2019, the Fund purchased 20,562 shares of its Common Stock in the open market at a cost of $414,358, which represented a weighted average premium of 0.11% from the net asset value of those acquired shares.
The Fund reserves the right to
amend or terminate the Plan as applied to any distribution paid subsequent to written notice of the change sent to participants in the Plan at least 90 days before the record date for such distribution. There are no
service or brokerage charges to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable to the Fund by the participants. The Fund reserves the right to
amend the Plan to provide for payment of brokerage fees by the Plan participants in the event the Plan is changed to provide for open market purchases of Common Stock on behalf of the Plan participants. All
correspondence concerning the Plan should be directed to AST.
Note 7. Affiliated money
market fund
The Fund invests in Columbia
Short-Term Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as
Dividends - affiliated issuers in the Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a
floating net asset value. In addition, the Board of Directors of the Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to
as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
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24
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
Note 8. Interfund
Lending
Pursuant to an exemptive order
granted by the Securities and Exchange Commission, the Fund entered into a master interfund lending agreement (the Interfund Program) with certain other funds advised by the Investment Manager or its affiliates (each
a Participating Fund). The Interfund Program allows each Participating Fund to lend money directly to and, other than closed-end funds (including the Fund) and money market funds, borrow money directly from other
Participating Funds for temporary purposes through the Interfund Program (each an Interfund Loan).
A Participating Fund may make
unsecured borrowings under the Interfund Program if its outstanding borrowings from all sources, including those outside of the Interfund Program, immediately after such unsecured borrowing under the Interfund Program
are equal to or less than 10% of its total assets, provided that if the borrowing Participating Fund has a secured loan outstanding from any other lender, including but not limited to another Participating Fund, the
borrowing Participating Fund’s borrowing under the Interfund Program will be secured on at least an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding loan
that requires collateral. A Participating Fund may not borrow through the Interfund Program or from any other source if its total outstanding borrowings immediately after a borrowing would be more than 33 1/3% of its
total assets or any lower threshold provided for by a Participating Fund’s fundamental or non-fundamental policy restriction.
No Participating Fund may lend to
another Participating Fund through the Interfund Program if the loan would cause the lending Participating Fund’s aggregate outstanding loans under the Interfund Program to exceed 15% of its current net assets
at the time of the loan. A Participating Fund’s Interfund Loans to any one Participating Fund may not exceed 5% of the lending Participating Fund’s net assets at the time of the loan. The duration of
Interfund Loans will be limited to the time required to receive payment for securities sold, but in no event more than seven days. Interfund Loans effected within seven days of each other will be treated as separate
loan transactions for purposes of this limitation. Each Interfund Loan may be called on one business day’s notice by a lending Participating Fund and may be repaid on any day by a borrowing Participating
Fund.
Loans under the Interfund Program
are subject to the risk that the borrowing Participating Fund could be unable to repay the loan when due, and a delay in repayment to the lending Participating Fund could result in a lost opportunity by the lending
Participating Fund to invest those loaned assets and additional lending costs. Because the Investment Manager provides investment management services to both borrowing and lending Participating Funds, the Investment
Manager may have a potential conflict of interest in determining that an Interfund Loan is comparable in credit quality to other high-quality money market instruments. The Participating Fund has adopted policies and
procedures that are designed to manage potential conflicts of interest, but the administration of the Interfund Program may be subject to such conflicts.
As noted above, the Fund may only
participate in the Interfund Program as a Lending Fund. The Fund did not lend money under the Interfund Program during the year ended December 31, 2019.
Note 9. Investments in
illiquid investments
The Fund may not acquire any
illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of Managed Assets in illiquid investments that are assets. For these purposes, an “illiquid investment”
means any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value
of the investment.
Note 10. Significant
risks
Active management risk
Due to its active management, the
Fund could underperform its benchmark index and/or other funds with similar investment objectives.
Foreign securities risk
Investments in or exposure to
foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. Foreign securities subject the Fund to the risks associated with investing in the particular
country of an issuer, including political, regulatory, economic, social, diplomatic and other conditions or events (including, for
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
December 31, 2019
example, military confrontations, war and
terrorism), occurring in the country or region, as well as risks associated with less developed custody and settlement practices. Foreign securities may be more volatile and less liquid than securities of U.S.
companies, and are subject to the risks associated with potential imposition of economic and other sanctions against a particular foreign country, its nationals or industries or businesses within the country. In
addition, foreign governments may impose withholding or other taxes on the Fund’s income, capital gains or proceeds from the disposition of foreign securities, which could reduce the Fund’s return on such
securities.
Securities issued by foreign
governments or companies in emerging market countries may have greater exposure to the risks of investing in foreign securities. Emerging market countries are more likely to experience instability resulting, for
example, from rapid changes or developments in social, political, economic or other conditions. Their economies are usually less mature and their securities markets are typically less developed with more limited
trading activity (i.e., lower trading volumes and less liquidity) than more developed countries. Emerging market securities tend to be more volatile than securities in more developed markets. Many emerging market
countries are heavily dependent on international trade and have fewer trading partners, which makes them more sensitive to world commodity prices and economic downturns in other countries, and some have a higher risk
of currency devaluations.
Information technology sector risk
The Fund invests a substantial
portion of its assets in technology and technology-related companies. The market prices of technology and technology-related stocks tend to exhibit a greater degree of market risk and price volatility than other types
of investments. These stocks may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. These stocks also may be affected adversely by changes in
technology, consumer and business purchasing patterns, government regulation and/or obsolete products or services. In addition, a rising interest rate environment tends to negatively affect technology and
technology-related companies. In such an environment, those companies with high market valuations may appear less attractive to investors, which may cause sharp decreases in the companies’ market prices.
Further, those technology or technology-related companies seeking to finance their expansion would have increased borrowing costs, which may negatively impact their earnings. As a result, these factors may negatively
affect the performance of the Fund. Finally, the Fund may be susceptible to factors affecting the technology and technology-related industries, and the Fund’s net asset value may fluctuate more than a fund that
invests in a wider range of industries. Technology and technology-related companies are often smaller and less experienced companies and may be subject to greater risks than larger companies, such as limited product
lines, markets and financial and managerial resources. These risks may be heightened for technology companies in foreign markets.
Issuer risk
An issuer in which the Fund invests
or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which may negatively affect the Fund’s performance. Underperformance of an issuer may be caused by poor
management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, natural disasters or other events,
conditions or factors.
Large-capitalization risk
Stocks of large-capitalization
companies have at times experienced periods of volatility and negative performance. During such periods, the value of the stocks may decline and the Fund’s performance may be negatively affected.
Leverage Risk
Leverage occurs when the Fund
increases its assets available for investment using derivatives, or similar instruments or techniques. Use of leverage can produce volatility and may exaggerate changes in the NAV of Fund shares and in the return on
the Fund’s portfolio, which may increase the risk of loss. If the Fund uses leverage, through the purchase of particular instruments such as derivatives, the Fund may experience capital losses. Leverage presents
the opportunity for increased net income and capital gains, but may also exaggerate the Fund’s volatility and risk of loss. There can be no guarantee that a leveraging strategy will be successful.
|
26
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
Market risk
The market values of securities or
other investments that the Fund holds may fall, sometimes rapidly or unpredictably, or fail to rise. An investment in the Fund could lose money over short or even long periods.
Non-diversification risk
A non-diversified fund is permitted
to invest a greater percentage of its total assets in fewer issuers than a diversified fund. This increases the risk that a change in the value of any one investment held by the Fund could affect the overall value of
the Fund more than it would affect that of a diversified fund holding a greater number of investments. Accordingly, the Fund’s value will likely be more volatile than the value of a more diversified fund.
Options risk
The Fund engages in transactions in
options on securities, indices, exchange traded funds and market baskets of securities on exchanges and in the OTC markets. In general, exchange-traded options have standardized exercise prices and expiration dates
and require the parties to post margin against their obligations, and the performance of the parties’ obligations in connection with such options is guaranteed by the exchange or a related clearing corporation.
OTC options have more flexible terms negotiated between the buyer and the seller, but generally do not require the parties to post margin and are subject to greater credit risk. OTC options also involve greater
liquidity risk.
In addition to writing call options
as described above, the Fund may purchase put options. By buying a put option, the Fund will pay a premium to acquire a right to sell the securities or instruments underlying the put at the exercise price of the
option. The Fund will lose money if the securities or instruments underlying the option do not decline in value below the exercise price of the option by an amount sufficient to offset the premium paid to acquire the
option. To the extent the Fund purchases put options in the OTC market, the Fund will be subject to the credit risk of the seller of the option. The Fund also may write put options on the types of securities or
instruments that may be held by the Fund, provided that such put options are secured by segregated, liquid instruments. The Fund will receive a premium for writing a put option, which increases the Fund’s
return. In exchange for the premium received, the Fund has the obligation to buy the securities or instruments underlying the option at an agreed-upon exercise price if the securities or instruments decrease below the
exercise price of the option.
The Fund will lose money if the
securities or instruments decrease in value so that the amount the Fund is obligated to pay the counterparty to the option to purchase the securities underlying the option upon exercise of the option exceeds the value
of those securities by an amount that is greater than the premium received by the Fund for writing the option.
The Fund may purchase call options
on any of the types of securities or instruments in which it may invest. In exchange for paying the option premium, a purchased call option gives the Fund the right to buy, and obligates the seller to sell, the
underlying security or instrument at the exercise price. The Fund will lose money if the securities or instruments underlying the option do not appreciate in value in an amount sufficient to offset the premium paid by
the Fund to acquire the option.
Small and mid-cap companies risk
The Fund may invest all or a
substantial portion of its Managed Assets in small- and mid-capitalization companies (small- and mid-cap companies). Investments in small- and mid-cap companies often involve greater risks than investments in larger
companies because small- and mid-cap companies tend to have less predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies.
Securities of small- and mid-cap companies may trade less frequently and in smaller volumes and may be less liquid and fluctuate more sharply in value than securities of larger companies. This means that the Fund
could have greater difficulty selling such securities at the time and price that the Fund would like. During periods of investor uncertainty, investor sentiment may favor large, well-known companies over smaller,
lesser-known companies which may adversely impact the value of the Fund’s investment in small- and mid-cap companies and the value of your investment in the Fund.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
December 31, 2019
Writing call options risk
A principal aspect of the
Fund’s investment strategy involves writing call options on the NASDAQ 100. This part of the Fund’s strategy subjects the Fund to certain additional risks. A decision as to whether, when and how to use
options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. The principal factors affecting the market
value of an option include supply and demand, interest rates, the current market price of the underlying index or security in relation to the exercise price of the option, the actual or perceived volatility of the
underlying index or security and the time remaining until the expiration date.
The Fund intends to write call
options on the NASDAQ 100; however, it does not intend to have a portfolio of securities that mirrors the securities in the NASDAQ 100. As a result, during a period when the Fund has outstanding call options written
on the NASDAQ 100, the NASDAQ 100 may appreciate to a greater extent than the securities in the Fund’s portfolio. If the call options are exercised in these circumstances, the Fund’s loss on the options
will be greater because it will be paying the option holder not only an amount effectively representing appreciation on securities in its own portfolio but also an amount representing the greater appreciation
experienced by the securities in the NASDAQ 100 that the Fund does not own. If, at a time these call options may be exercised, the securities underlying these options have market values above the exercise price, then
these call options will be exercised and the Fund will be obligated to deliver to the option holder either the securities underlying these options or to deliver the cash value of those securities, in exchange for
which the option holder will pay the Fund the exercise price. In either case, the Fund will incur losses to the extent the market value of the underlying securities exceed the sum of the premium the Fund received from
writing the call options and the exercise price of the call options, which loss may be very substantial.
To the extent all or part of the
Fund’s call options are covered, the Fund forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security underlying the call option above the sum of the
option premium received and the exercise price of the call, but has retained the risk of loss should the price of the underlying security decline below the exercise price minus the option premium received. The writer
of an exchange-listed option on a security has no control over when during the exercise period of the option (which may be a single day or multiple days) it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it would be obligated to deliver the underlying security at the exercise price. Thus, the writing of call options may require the Fund to sell portfolio
securities at inopportune times or for prices other than current market values and will limit the amount of appreciation the Fund can realize above the exercise price of an option.
The Fund may be required to sell
investments from its portfolio to effect cash settlement (or transfer ownership of a stock or other instrument to physically settle) on any written call options that are exercised. Such sales (or transfers) may occur
at inopportune times, and the Fund may incur transaction costs that increase the costs borne by Common Stockholders. The Fund may sell written call options over an exchange or in the OTC market. The options in the OTC
markets may not be as liquid as exchange-listed options. The Fund may be limited in the number of counterparties willing to take positions opposite the Fund or may find the terms of such counterparties to be less
favorable than the terms available for listed options. The Fund cannot guarantee that its options strategies will be effective. Moreover, OTC options may provide less favorable tax treatment than listed options.
The value of options may be
adversely affected if the market for such options becomes less liquid or smaller. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position, in the case of a call
option written, by buying the option back. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the Options Clearing Corporation (OCC) may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled to discontinue the trading of options (or a particular class or series of options) at some future
date. If trading were discontinued, the secondary market on that exchange (or in that class or series of options) would cease to exist. However, outstanding options on that exchange that had been issued by the OCC as
a result of trades on that exchange would
|
28
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
December 31, 2019
continue to be exercisable in accordance with
their terms. The Fund’s ability to terminate OTC options will be more limited than with exchange-traded options and may involve the risk that broker-dealers participating in such transactions will not fulfill
their obligations.
The hours of trading for options
may not conform to the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can
take place in the underlying markets that would not be reflected concurrently in the options markets. Call options are marked to market daily and their value will be affected by changes in the value of and dividend
rates of the underlying common stocks, changes in interest rates, changes in the actual or perceived volatility of the stock market and the underlying common stocks and the remaining time to the options’
expiration.
Additionally, the exercise price of
an option may be adjusted downward before the option’s expiration as a result of the occurrence of certain corporate events affecting the underlying equity security, such as extraordinary dividends, stock
splits, merger or other extraordinary distributions or events. A reduction in the exercise price of an option would reduce the Fund’s capital appreciation potential on the underlying security.
The Fund’s options
transactions will be subject to limitations established by each of the exchanges, boards of trade or other trading facilities on which such options are traded. These limitations govern the maximum number of options in
each class which may be written or purchased by a single investor or group of investors acting in concert, regardless of whether the options are written or purchased on the same or different exchanges, boards of trade
or other trading facilities or are held or written in one or more accounts or through one or more brokers. Thus, the number of options which the Fund may write or purchase may be affected by options written or
purchased by other investment advisory clients of the Investment Manager. An exchange, board of trade or other trading facility may order the liquidation of positions found to be in excess of these limits, and may
impose certain other sanctions.
Note 11. Subsequent
events
Management has evaluated the
events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 12. Information
regarding pending and settled legal proceedings
Ameriprise Financial and certain
of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in
connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject
of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with
the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to
Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that
these matters, or the adverse publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe
proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines,
penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
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29
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Report of Independent Registered Public
Accounting Firm
To the Board of Directors and
Stockholders of Columbia Seligman Premium Technology Growth Fund, Inc.
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Seligman Premium Technology Growth Fund, Inc. (the "Fund") as of December 31, 2019, the related statement of operations for the
year ended December 31, 2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the five
years in the period ended December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Fund as of December 31, 2019, 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 ended December 31, 2019 and the financial
highlights for each of the five years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these
financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies
were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 21, 2020
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30
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Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Federal Income Tax
Information
(Unaudited)
The Fund hereby designates the
following tax attributes for the fiscal year ended December 31, 2019.
Qualified
dividend
income
|
Dividends
received
deduction
|
Capital
gain
dividend
|
|
100.00%
|
100.00%
|
$29,731,629
|
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.
Directors and
Officers
Stockholders elect the Board that
oversees the Fund’s operations and 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 as of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. The Directors
may have served as a Trustee to other Funds in the Columbia Funds Complex prior to the date set forth in the Position Held with the Fund and Length of Service column. 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 may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent directors
Name, Address,
Year of Birth
|
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
|
George S. Batejan
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Director since January 2018
|
Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating
Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of
Colorado Business School, 2015-2018
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
31
|
Directors and Officers (continued)
Independent directors (continued)
Name, Address,
Year of Birth
|
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
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Director since October 2009
|
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; Member and Interim Chair, Minnesota Sports Facilities Authority, January-July 2017; Interim President and Chief Executive Officer,
BlueCross BlueShield of Minneota (health care insurance), February-July 2018
|
121
|
Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance
Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January-July 2017
|
Pamela G. Carlton
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Director since October 2009
|
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
|
121
|
Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, DR Bank
(Audit Committee) since 2017; Director, Evercore Inc. (Audit Committee, Nominating and Governance Committee) since 2019
|
Patricia M. Flynn
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Director since October 2009
|
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
|
121
|
Trustee, MA Taxpayers Foundation since 1997; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010; Board of
Directors, The MA Business Roundtable 2003-2019
|
Brian J. Gallagher
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Director since January 2020
|
Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977 - 2016
|
121
|
Trustee, Catholic Schools Foundation since 2004
|
Catherine James Paglia
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Director since October 2009; Chair of the Board since January 2020
|
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.
|
121
|
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)
|
|
32
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Directors and Officers (continued)
Independent directors (continued)
Name, Address,
Year of Birth
|
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
|
Anthony M. Santomero
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Director since April 2019
|
Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey &
Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Director,
Citigroup Inc. and Citibank, N.A., 2009-2019; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011
|
Minor M. Shaw
c/o Columbia Management
Investment Advisers LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Director since April 2016
|
President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business),
1998-2011
|
121
|
Director, BlueCross BlueShield of South Carolina since April 2008; Trustee, Hollingsworth Funds since 2016 (previously Board
Chair from 2016-2019); Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11
funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Interested Director Affiliated
with Investment Manager*
Name,
Address,
Year of Birth
|
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 October 2009
|
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.
|
192
|
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.
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
33
|
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 as of the printing of this report, 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,
address and
year of birth
|
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
|
Chief Financial Officer, Principal Financial Officer (2009), and Senior Vice President (2019)
|
Vice President, Head of North American Operations, and Co-Head of Global Operations, – Accounting and Tax, Columbia Management
Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 – May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously, Treasurer and
Chief Accounting Officer, January 2009 – January 2019 and December 2015 – January 2019, respectively).
|
Joseph Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer, Chief Accounting Officer (Principal Accounting Officer) (2019), and Principal Financial Officer (2020)
|
Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and
March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017).
|
Paul B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior Vice President (2011) 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); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015
(previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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; Chief Compliance Officer, Columbia Acorn/Wanger Funds since December 2015.
|
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.
|
Ryan C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 -
August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
Daniel J. Beckman
225 Franklin Street
Boston, MA 02110
Born 1962
|
Senior Vice President (2020)
|
Vice President – Head of North America Product, Columbia Management Investment Advisers, LLC (since April 2015); previously, Senior Vice
President of Investment Product Management, Fidelity Financial Advisor Solutions, a division of Fidelity Investments (January 2012 – March 2015).
|
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.
|
|
34
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
Directors and Officers (continued)
Fund officers (continued)
Name,
address and
year of birth
|
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
|
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.
|
Columbia Seligman Premium Technology Growth Fund | Annual Report 2019
|
35
|
[THIS PAGE INTENTIONALLY LEFT
BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Seligman Premium Technology Growth Fund
6201 15th Avenue
Brooklyn, NY 11219
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
© 2020 Columbia Management Investment
Advisers, LLC.
columbiathreadneedleus.com/investor/
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 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, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item.
(c)During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics 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 that relates to one or more of the items set forth in paragraph (b) of this Item.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Brian J. Gallagher, Pamela G. Carlton, Anthony M. Santomero, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Gallagher, Ms. Carlton, Mr. Santomero 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, 2019 and December 31,
2018 are approximately as follows:
20192018
$35,000 $30,000
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, 2019 and December 31, 2018 are approximately as follows:
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.
During the fiscal years ended December 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018 are approximately as follows:
20192018
$7,100 $6,800
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, 2019 and December 31, 2018, 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,
2019 and December 31, 2018 are approximately as follows:
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.
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, 2019 and December 31, 2018 are approximately as follows:
20192018
$110,000 $110,000
In both fiscal years 2019 and 2018, 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 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 2018 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, 2019 and December 31, 2018 are approximately as follows:
20192018
$117,100 $116,800
(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). Brian J. Gallagher, Pamela G. Carlton, Anthony Santomero are each independent trustees and collectively constitute the entire Audit Committee.
(b)Not applicable.
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. In deciding to delegate this responsibility to the Investment Manager, the Board reviewed the policies adopted by the Investment Manager. These included the procedures that the Investment Manager follows when a vote presents a conflict between the interests of the Funds and their shareholders and the Investment Manager and its affiliates.
The Investment Manager's policy is to vote all proxies for Fund securities in a manner considered by the Investment Manager to be in the best economic interests of its clients, including the Funds, without regard to any benefit or detriment to the Investment Manager, its employees or its affiliates. The best economic interests of clients is defined for this purpose as the interest of enhancing or protecting the value of client accounts, considered as a group rather than individually, as the Investment Manager determines in its discretion. The Investment Manager endeavors to vote all proxies of which it becomes aware prior to the vote deadline; provided, however, that in certain circumstances the Investment Manager may refrain from voting securities. For instance, the Investment Manager may refrain from voting foreign securities if it determines that the costs of voting outweigh the expected benefits of voting and typically will not vote securities if voting would impose trading restrictions.
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.
Oversight. The operation of the Investment Manager's proxy voting policy and procedures is overseen by a committee (the Proxy Voting Committee) composed of representatives of the Investment Manager's equity investments, equity research, responsible investment, compliance, legal and operations functions. The Proxy Voting Committee has the responsibility to review, at least annually, the Investment Manager's proxy voting policies to ensure consistency with internal policies, regulatory requirements, conflicts of interest and client disclosures. The Board reviews on an annual
basis, or more frequently as determined appropriate, the Investment Manager's administration of the proxy voting process.
Corporate Governance and Proxy Voting Principles (the Principles). The Investment Manager has adopted the Principles, which set out the Investment Manager's views on key issues and the broad principles shaping its approach, as well as the types of related voting action the Investment Manager may take. The Principles also provide indicative examples of key guidelines used in any given region, which illustrate the standards against which voting decisions are considered. The Investment Manager has developed voting stances that align with the Principles and will generally vote in accordance with such voting stances. The Proxy Voting Committee or investment professionals may determine to vote differently from the voting stances on particular proposals in the event it determines that doing so is in the clients' best economic interests. The Investment Manager 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 stances 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 may determine proxy votes when proposals require special consideration.
Addressing Conflicts of Interest. The Investment Manager seeks to address potential material conflicts of interest by voting in accordance with predetermined voting stances. In addition, if the Investment Manager determines that a material conflict of interest exists, the Investment Manager will invoke one or more of the following conflict management practices: (i) causing the proxies to be voted in accordance with the recommendations of an independent third party (which may be the Investment Manager's proxy voting administrator or research provider); (ii) causing the proxies to be delegated to an independent third party (which may be the Investment Manager's proxy voting administrator or research provider); and (iii) in infrequent cases, forwarding the proxies to an Independent Director authorized to vote the proxies for the Funds. A member of the Proxy Voting Committee is prohibited from voting on any proposal for which he or she has a conflict of interest by reason of a direct relationship with the issuer or other party affected by a given proposal. Persons making recommendations to the Proxy Voting Committee or its members are required to disclose to the committee any relationship with a party making a proposal or other matter known to the person that would create a potential conflict of interest.
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 holding Funds will typically vote proxies of the underlying funds in the same proportion as the vote of all other holders of the underlying fund's shares, unless the Board otherwise instructs.
Proxy Voting Agents. The Investment Manager has retained Institutional Shareholder Services Inc., a third-party vendor, as its proxy voting administrator to implement its proxy voting process and to provide recordkeeping and vote disclosure services. The Investment Manager has retained both Institutional Shareholder Services Inc. and Glass Lewis & Company, LLC 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 columbiathreadneedleus.com and/or (ii) on the SEC's website at www.sec.gov. For a copy of the Investment Manager's Principles in effect on the date of this SAI, see Appendix B to this SAI.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Portfolio Managers
|
|
|
|
Managed the
|
|
Portfolio Manager
|
Title
|
Role with the Corporation
|
Corporation Since
|
|
Paul Wick
|
Portfolio Manager
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Lead Portfolio Manager
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2009
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Braj Agrawal
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Portfolio Manager
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Co-Portfolio Manager
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2010
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Jeetil Patel
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Portfolio Manager
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Technology Team Member
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2015
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Christopher Boova
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Portfolio Manager
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Co-Portfolio Manager
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2018
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Vimal Patel
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Portfolio Manager
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Technology Team Member
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2019
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Shekhar Pramanick
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Portfolio Manager
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Technology Team Member
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2019
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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. Jeetil Patel joined the Investment Manager in 2012. 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.
Dr. Pramanick joined the Investment Manager in 2012. Dr. Pramanick began his investment career in 1993 and earned a B.S. from the National Institute of Technology, an M.S. from the University of Oregon and a Ph.D. from North Carolina State University.
Mr. Vimal Patel joined the Investment Manager in 2014. Mr. Patel began his investment career in 2001 and earned a B.S. from North Carolina State University, an M.S. from the University of Colorado, Boulder, and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles.
Other Accounts Managed by the Portfolio Managers:
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Other Accounts Managed
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Ownership
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Approximate
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Performance
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Fund
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Portfolio Manager
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Number and type of
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of Fund
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Total Net Assets
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Based Accounts
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account
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Shares
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(excluding the fund)
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For fiscal period ending December 31, 2019, unless otherwise noted
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Columbia Seligman Premium
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Paul Wick
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4
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RICs
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$8.51 billion
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2 PIVs
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None
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Technology Growth
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4
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PIVs
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$840.53 million
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($670.43 M)
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5
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Other accounts
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$351.77 million
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Braj Agrawal
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10 Other accounts
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$0.89 million
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None
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None
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Jeetil Patel
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4
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RICs
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$8.51 billion
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None
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None
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6
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Other accounts
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$3.27 million
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Christopher
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4
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RICs
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$8.51 billion
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None
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None
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Boova
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7
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Other accounts
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$6.32 million
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Vimal Patel
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4
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RICs
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$8.51 billion
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None
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None
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7
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Other accounts
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$3.71 million
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Shekhar
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4
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RICs
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$8.51 billion
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None
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None
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Pramanick(a)
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5
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Other accounts
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$6.31 million
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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.
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.
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 most instances the base salary, are paid from a team compensation 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 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.
The pool is also funded by a percentage of the management fees on long-only institutional separate accounts, that percentage being based on the source of the account in question, and by a fixed percentage of management fees on hedge funds and separately managed accounts that follow a hedge fund mandate.
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.
For the year ended December 31, 2019, the Fund purchased 20,562 shares of its Common Stock in the open market at a cost of $414,358 which represented a weighted average premium of 0.11% from the NAV of those acquired shares.
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.
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 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 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. 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.
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
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authorized.
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(registrant)
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Columbia Seligman Premium Technology Growth Fund, Inc
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By (Signature and Title)
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/s/ Christopher O. Petersen
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Christopher O. Petersen, President and Principal Executive Officer
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Date
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February 21, 2020
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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.
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By (Signature and Title)
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/s/ Christopher O. Petersen
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Christopher O. Petersen, President and Principal Executive Officer
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Date
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February 21, 2020
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By (Signature and Title)
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/s/ Michael G. Clarke
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Michael G. Clarke, Chief Financial Officer, Principal Financial Officer
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and Senior Vice President
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Date
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February 21, 2020
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By (Signature and Title)
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/s/ Joseph Beranek
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Joseph Beranek, Treasurer, Chief Accounting Officer and Principal
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Financial Officer
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Date
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February 21, 2020
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