Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number 811-22328

COLUMBIA SELIGMAN PREMIUM TECHNOLOGY GROWTH FUND, INC.

(Exact name of registrant as specified in charter)

 

50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474

(Address of principal executive offices) (Zip code)

Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474

(Name and address of agent for service)

Registrant’s telephone number, including area code: (612) 671-1947

Date of fiscal year end: December 31

Date of reporting period: June 30, 2012

 

 

 

---

Table of Contents

Item 1. Reports to Stockholders.

Semiannual Report

---

Table of Contents

Semiannual Report June 30, 2012

 

Columbia Seligman Premium Technology Growth Fund

 

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Under the Fund’s managed distribution policy and subject to the approval of the Fund’s Board of Directors (the Board), the Fund expects to make quarterly cash distributions (in November, February, May, and August) to Common Stockholders. The Fund’s most recent distribution (May 24, 2012) amounted to $0.4625 per share, which is equal to a quarterly rate of 2.3125% (9.25% annualized) of the $20.00 offering price in the Fund’s initial public offering in November 2009. You should not draw any conclusions about the Fund’s investment performance from the amount of the distribution or from the terms of the Fund’s distribution policy. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. 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’. The Fund’s Board may determine in the future that the Fund’s managed distribution policy and the amount or timing of the distributions should not be continued in light of changes in the Fund’s portfolio holdings, market or other conditions or factors, including that the distribution rate under such policy may not be dependent upon the amount of the Fund’s earned income or realized capital gains. The Board could also consider amending or terminating the current distribution policy because of potential adverse tax consequences associated with maintaining the policy. In certain situations, returns of capital could be taxable for federal income tax purposes, and all or a portion of the Fund’s capital loss carryforwards from prior years, if any, could effectively be forfeited. The Board may amend or terminate the Fund’s distribution policy at any time without prior notice to Fund stockholders; any such change or termination may have an adverse effect on the market price of the Fund’s shares.

See Notes to Financial Statements for additional information related to the Fund’s managed distribution policy.

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Letter to Stockholders

 

Dear Stockholders,

We are pleased to present the semiannual stockholder report for Columbia Seligman Premium Technology Growth Fund (the fund). The report includes the fund’s investment results, a portfolio of investments and financial statements as of June 30, 2012.

The fund’s Common Stock returned 3.55% based on net asset value, and 6.95% based on market price, for the six months ended June 30, 2012. The fund underperformed its benchmark, the S&P North American Technology Sector Index, which returned 11.17% during the same period.

In April 2012, Braj Agrawal joined Paul Wick and Ajay Diwan as a portfolio manager of the fund. John Schonberg no longer serves as a portfolio manager for the fund.

During the first half of 2012, the fund paid two distributions that aggregated $0.925 per share. In October 2010, the Fund received exemptive relief from the Securities and Exchange Commission that permits the fund to make periodic distributions of long-term capital gains more often than once in any one taxable year. Unless you elected otherwise, distributions were paid in additional shares of the fund.

On April 12, 2012, the fund held its 2nd Annual Meeting of Stockholders. During the meeting, Stockholders re-elected three Directors and ratified the selection of Ernst & Young LLP (Ernst & Young) as the fund’s independent registered public accounting firm for 2012. Subsequently, at its June Meeting, the fund’s Audit Committee recommended, and the fund’s Board of Directors approved, the appointment of PricewaterhouseCoopers LLP (PricewaterhouseCoopers) as independent auditor for the fund, as well as the other funds in the Columbia Family of Funds (collectively, the funds). PricewaterhouseCoopers’ engagement is effective at the completion of Ernst & Young’s audits of the financial statements of the funds with fiscal years ending July 31, 2012, which is expected to be completed in September 2012. Ernst & Young completed the audit of the fund’s financial statements for the fiscal year ended December 31, 2011 and issued its report on February 22, 2012.

Information about the fund, including daily pricing, current performance, fund holdings, stockholder reports, distributions and other information can be found at columbiamanagement.com under the Closed-End Funds tab.

On behalf of the Board, we would like to thank you for your support of Columbia Seligman Premium Technology Growth Fund.

Stephen R. Lewis

 

Chairman of the Board

 

 

For more information, go online to columbiamanagement.com; or call American Stock Transfer & Trust Company, LLC, the fund’s Stockholder Servicing Agent, at 800.937.5449. Customer Service Representatives are available to answer your questions Monday through Friday from 9 a.m. to 5 p.m. Eastern time.

 

Semiannual Report 2012

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Table of Contents

 

 

Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Performance Overview

 

Performance Summary

 

>

Columbia Seligman Premium Technology Growth Fund (the fund) Common Stock returned 3.55% based on net asset value, and 6.95% based on market price, for the six-month period ended June 30, 2012.

 

>

The fund’s benchmark, the S&P North American Technology Sector (NATS) Index, returned 11.17% for the same time period.

 

Average Annual Total Returns (%) (for period ended June 30, 2012)
		Inception		6 Months cumulative				1 Year				Life
Market Price		11/24/09			6.95				-6.93				0.82
Net Asset Value		11/30/09			3.55				-3.71				4.94
S&P North American Technology Sector Index					11.17				6.96				11.33

Life total return for market price is based on the initial offering price on November 24, 2009, which was $20.00 per share.

Life total return for net asset value (NAV) is from the opening of business on November 30, 2009 and includes the 4.50% initial sales load. The NAV price per share of the Fund's Common Stock at inception was $19.10.

Index inception return is calculated from 11/30/2009.

Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than the original cost. For current month-end performance information, please visit columbiamanagement.com.

Returns reflect changes in market price or net asset value, as applicable, and assume reinvestment of distributions. Returns do not reflect the deduction of taxes that investors may pay on distributions or the sale of shares.

The S&P NATS 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
			June 30, 2012				March 31, 2012				December 31, 2011
Market price ($)			15.90				18.90				15.66
Net asset value ($)			16.84				19.39				17.13

 

Distributions Paid Per Common Share
Payable date			Per share amount ($)
February 23, 2012			0.4625
May 24, 2012			0.4625

The net asset value of the fund’s shares may not always correspond to the market price of such shares. Common stock of many closed-end funds frequently trade at a discount from their net asset value. The fund is subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment in the fund.

 

Semiannual Report 2012			3

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Portfolio Overview

 

 

4		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Portfolio of Investments

June 30, 2012 (Unaudited)

(Percentages represent value of investments compared to net assets)

 

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

Semiannual Report 2012			5

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Portfolio of Investments (continued)

June 30, 2012 (Unaudited)

 

 

Money Market Funds 4.6%
		Shares				Value ($)
Columbia Short-Term Cash Fund, 0.152%(c)(d)(e)			11,937,057				11,937,057
Total Money Market Funds (Cost: $11,937,057)							11,937,057
Total Investments (Cost: $249,267,437)							259,547,620
Other Assets & Liabilities, Net							(2,799,549	)
Net Assets							256,748,071

 

Investment in Derivatives

 

Open Options Contracts Written at June 30, 2012
Issuer		Puts/Calls			Number of Contracts				Exercise Price ($)				Premium Received ($)				Expiration Date				Value ($)
Aruba Networks, Inc.		Put			51				20.00				8,806				July 2012				24,735
NASDAQ 100 Index		Call			255				2,600.00				1,190,526				July 2012				1,267,350
NASDAQ 100 Index		Call			225				2,625.00				861,472				July 2012				789,750
Oracle Corp.		Call			649				40.00				59,342				Jan. 2013				5,841
Oracle Corp.		Call			825				35.00				56,656				Jan. 2013				42,488
Oracle Corp.		Put			1,299				20.00				233,838				Jan. 2013				45,465
Oracle Corp.		Put			1,156				25.00				159,150				Jan. 2013				110,976
Parametric Technology Corp.		Put			356				20.00				24,391				July 2012				14,240
Total																					2,300,845

Notes to Portfolio of Investments

 

(a)	Non-income producing.

 

(b)	At June 30, 2012, securities valued at $4,377,780 were held to cover open call options written.

 

(c)	The rate shown is the seven-day current annualized yield at June 30, 2012.

 

(d)

As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of its 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 period ended June 30, 2012, are as follows:

 

 

(e)	At June 30, 2012, cash or short-term securities were designated to cover open put and/or call options written.

Abbreviation Legend

ADR		American Depositary Receipt

Fair Value Measurements

Generally accepted accounting principles (GAAP) require 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.

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 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.

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

6		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Portfolio of Investments (continued)

June 30, 2012 (Unaudited)

 

Fair Value Measurements (continued)

 

Fair value inputs are summarized in the three broad levels listed below:

 

>

Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date (including NAV for open-end mutual funds). Valuation adjustments are not applied to Level 1 investments.

 

>

Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).

 

>

Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).

Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.

Foreign equity securities actively traded in markets where there is a significant delay in the local close relative to the New York Stock Exchange (NYSE) 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.

Under the direction of the Fund’s Board of Directors (the Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for carrying out 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 readily available, including recommendation of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third- party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.

For investments categorized as Level 3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

Semiannual Report 2012			7

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Portfolio of Investments (continued)

June 30, 2012 (Unaudited)

 

Fair Value Measurements (continued)

 

The following table is a summary of the inputs used to value the Fund’s investments at June 30, 2012:

 

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 models utilized by the third party statistical pricing service take into account a security’s correlation to available market data including, but not limited to, intraday index, ADR, and ETF movements.

There were no transfers of financial assets between Levels 1 and 2 during the period.

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

8		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Statement of Assets and Liabilities

June 30, 2012 (Unaudited)

 

Assets
Investments, at value
Unaffiliated issuers (identified cost $237,330,380)			$247,610,563
Affiliated issuers (identified cost $11,937,057)			11,937,057
Total investments (identified cost $249,267,437)			259,547,620
Receivable for:
Investments sold			1,306,276
Dividends			64,921
Total assets			260,918,817
Liabilities
Option contracts written, at value (premiums received $2,594,181)			2,300,845
Payable for:
Investments purchased			1,545,354
Investment management fees			198,990
Administration fees			11,939
Compensation of board members			10,359
Stockholders’ meeting fees			19,245
Other expenses			84,014
Total liabilities			4,170,746
Net assets applicable to outstanding common stock			$256,748,071
Represented by
Paid-in capital			$244,800,183
Excess of distributions over net investment income			(864,296	)
Accumulated net realized gain			2,238,707
Unrealized appreciation (depreciation) on:
Investments			10,280,183
Foreign currency translations			(42	)
Options contracts written			293,336
Total — representing net assets applicable to outstanding common stock			$256,748,071
Shares outstanding applicable to common stock			15,250,711
Net asset value per share of outstanding common stock			$16.84
Market price per share of common stock			$15.90

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

Semiannual Report 2012			9

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Statement of Operations

Six months ended June 30, 2012 (Unaudited)

 

Net investment income
Income:
Dividends			734,100
Dividends from affiliates			10,280
Foreign taxes withheld			(2,669	)
Total income			741,711
Expenses:
Investment management fees			1,369,563
Stockholder account and registrar fees			6,554
Administration fees			82,172
Compensation of board members			15,107
Stockholders’ meeting fees			17,745
Custodian fees			7,208
Printing and postage fees			36,393
Professional fees			23,700
Other			43,916
Total expenses			1,602,358
Net investment loss			(860,647	)
Realized and unrealized gain (loss) — net
Net realized gain (loss) on:
Investments			15,053,607
Foreign currency translations			(5,905	)
Options contracts written			(11,170,247	)
Net realized gain			3,877,455
Net change in unrealized appreciation (depreciation) on:
Investments			6,300,741
Foreign currency translations			(42	)
Options contracts written			306,294
Net change in unrealized appreciation			6,606,993
Net realized and unrealized gain			10,484,448
Net increase in net assets resulting from operations			$9,623,801

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

10		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Statement of Changes in Net Assets

 

			Six Months Ended June 30, 2012 (Unaudited)				Year Ended December 31, 2011
Operations
Net investment loss			$(860,647	)			$(1,095,407	)
Net realized gain			3,877,455				8,597,470
Net change in unrealized appreciation (depreciation)			6,606,993				(29,734,483	)
Net increase (decrease) in net assets resulting from operations			9,623,801				(22,232,420	)
Distributions to stockholders:
Net realized gains			(875,084	)			(8,198,479	)
Tax return of capital			(13,216,424	)			(19,799,906	)
Total distributions to stockholders			(14,091,508	)			(27,998,385	)
Increase (decrease) in net assets from capital share transactions			393,573				2,992,813
Total decrease in net assets			(4,074,134	)			(47,237,992	)
Net assets at beginning of period			260,822,205				308,060,197
Net assets at end of period			$256,748,071				$260,822,205
Excess of distributions over net investment income			$(864,296	)			$(3,649	)

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

Semiannual Report 2012			11

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Statement of Changes in Net Assets (continued)

 

			Six Months Ended June 30, 2012 (Unaudited)								Year Ended December 31, 2011
			Shares				Dollars ($)				Shares				Dollars ($)
Capital stock activity
Distributions reinvested			22,401				393,573				161,639				2,992,813
Total net increase			22,401				393,573				161,639				2,992,813

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

12		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Financial Highlights

 

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 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 amounts, using average Common stock 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 in purchasing or selling Fund shares and taxes investors may incur on distributions or on the sale of Fund shares. Total returns are not annualized for periods of less than one year.

 

			Six Months  Ended June 30, 2012				Year Ended December 31,
			(Unaudited)				2011				2010				2009(a)
Per share data
Net asset value, beginning of period			$17.13				$20.45				$19.91				$19.10(b)
Income from investment operations
Net investment income (loss)			(0.06)				(0.07)				(0.11)				(0.02)
Net realized and unrealized gain (loss)			0.70				(1.40)				2.49				0.87
Increase from payments by affiliate			—				(0.00)(c)				0.01				—
Total from investment operations			0.64				(1.47)				2.39				0.85
Offering costs			—				—				(0.00)(c)				(0.04)
Less distributions to stockholders:
Net investment income			—				—				(1.13)				—
Net realized gains			(0.06)				(0.54)				—				—
Tax return of capital			(0.87)				(1.31)				(0.72)				—
Total distributions to stockholders			(0.93)				(1.85)				(1.85)				—
Net asset value, end of period			$16.84				$17.13				$20.45				$19.91
Market price, end of period			$15.90				$15.66				$19.13				$20.00
Total return based upon net asset value			3.55%				(7.37%)(d)				13.29%(d)				4.24%(e)
Total return based upon market price			6.95%				(9.48%)				5.50%				0.00%(f)
Ratios to average net assets(g)
Total expenses			1.17%(h)				1.10%				1.21%				1.22%(h)
Net investment income			(0.63%)(h)				(0.39%)				(0.60%)				(0.96%)(h)
Supplemental data
Net assets, end of period (in thousands)			$256,748				$260,822				$308,060				$284,875
Portfolio turnover			43%				71%				102%				8%

Notes to Financial Highlights

 

(a)	For the period from November 30, 2009 (commencement of operations) to December 31, 2009.

 

(b)	Net asset value, beginning of period, of $19.10 reflects a deduction of $0.90 per share sales change from the initial offering price of $20.00 per share.

 

(c)	Rounds to less than $0.01.

 

(d)	During the years ended December 31, 2011 and 2010, the Fund received a payment from an affiliate. Had the Fund not received this payment, the total return would have been lower by 0.01% and 0.03%, respectively.

 

(e)	Since inception total return for net asset value (NAV) is from the opening of business on November 30, 2009, and includes the 4.50% initial sales load. The NAV price per share of the Fund’s Common Stock at inception was $19.10.

 

(f)	Since inception total return for market price is based on the initial offering price on November 24, 2009, which was $20.00 per share.

 

(g)	In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios.

 

(h)	Annualized.

 

The accompanying Notes to Financial Statements are an integral part of this statement.

 

Semiannual Report 2012			13

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements

June 30, 2012 (Unaudited)

 

 

14		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

Semiannual Report 2012			15

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

16		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

Semiannual Report 2012			17

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

18		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

Semiannual Report 2012			19

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

20		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

Semiannual Report 2012			21

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

22		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Notes to Financial Statements (continued)

June 30, 2012 (Unaudited)

 

 

Semiannual Report 2012			23

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Supplemental Information

(Unaudited)

 

Change in Independent Registered Public Accounting Firm

At a meeting held on June 14, 2012, the Board, upon recommendation of the Audit Committee, approved the replacement of Ernst & Young LLP (Ernst & Young) as the independent registered public accounting firm for the Fund and certain other funds in the Columbia Family of Funds (collectively, the Funds) and appointed PricewaterhouseCoopers LLP (PwC). PwC’s engagement is effective at the completion of Ernst & Young’s audits of the financial statements of the Funds with fiscal years ending July 31, 2012, which are expected to be completed in September 2012. The Fund did not consult with PwC during the fiscal years ended December 31, 2011 and 2010 and through the June meeting.

Ernst & Young’s reports on the financial statements of the Fund as of and for the fiscal years ended December 31, 2011 and 2010 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During such fiscal periods and through the June meeting, there were no: (1) disagreements between the Fund and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Ernst & Young’s satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their reports, or (2) reportable events.

 

24		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Approval of Investment Management Services Agreement

 

Columbia Management Investment Advisers, LLC (Columbia Management or the investment manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to Columbia Seligman Premium Technology Growth Fund, Inc. (the Fund). Under an investment management services agreement (the IMS Agreement), Columbia Management provides investment advice and other services to the Fund and all funds distributed by Columbia Management Investment Distributors, Inc. (collectively, the Funds).

On an annual basis, the Fund’s Board of Directors (the Board), including the independent Board members (the Independent Directors), considers renewal of the IMS Agreement. Columbia Management prepared detailed reports for the Board and its Contracts Committee in March and April 2012, including reports based on analyses of data provided by an independent organization and a comprehensive response to each item of information requested by independent legal counsel to the Independent Directors (Independent Legal Counsel) in a letter to the investment manager, to assist the Board in making this determination. All of the materials presented in March and April were first supplied in draft form to designated representatives of the Independent Directors, i.e., Independent Legal Counsel, the Board’s Chair and the Chair of the Contracts Committee, and the final materials were revised to reflect comments provided by these Board representatives. In addition, throughout the year, the Board (or its committees) regularly meets with portfolio management teams and senior management personnel, and reviews information prepared by Columbia Management addressing the services Columbia Management provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of its Contracts Committee, Investment Review Committee and Compliance Committee in determining whether to continue the IMS Agreement.

The Board, at its April 10-12, 2012 in-person Board meeting (the April Meeting), considered the renewal of the IMS Agreement for an additional one-year term. At the April Meeting, Independent Legal Counsel reviewed with the Independent Directors various factors relevant to the Board’s consideration of advisory agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement.

Nature, Extent and Quality of Services Provided by Columbia Management

The Independent Directors analyzed various reports and presentations they had received detailing the services performed by Columbia Management, as well as its expertise, resources and capabilities. The Independent Directors specifically considered many developments during the past year concerning the services provided by Columbia Management, including, in particular, the continued investment in, and resources dedicated to, the Funds’ operations and the successful completion of various integration initiatives and the consolidation of dozens of Funds. The Independent Directors noted the information they received concerning Columbia Management’s ability to retain key portfolio management personnel. In that connection, the Independent Directors took into account their meetings with Columbia Management’s Chief Investment Officer (the CIO) and considered the CIO’s successful execution of additional risk and portfolio management oversight applied to the Funds. The Independent Directors also assessed Columbia Management’s significant investment in upgrading technology (such as an equity trading system) and considered management’s commitments to enhance existing resources in this area.

In connection with the Board’s evaluation of the overall package of services provided by Columbia Management, the Board also considered the quality of administrative services provided to the Fund by Columbia Management. In addition, the Board also reviewed the financial condition of Columbia Management (and its affiliates) and each entity’s ability to carry out its responsibilities under the IMS Agreement and the Fund’s other services agreements with Ameriprise affiliates. The Board also discussed the acceptability of the terms of the IMS Agreement (including the relatively broad scope of services required to be performed by Columbia Management). The Board concluded that the services being performed under the IMS Agreement were of a reasonably high quality.

Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Management and its affiliates were in a position to continue to provide a high quality and level of services to the Fund.

Investment Performance

For purposes of evaluating the nature, extent and quality of services provided under the IMS Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an independent organization showing, for various periods, the performance of the Fund, the performance of a benchmark index and the percentage ranking of the Fund among its comparison group. The Board observed that while the

 

Semiannual Report 2012			25

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

Approval of Investment Management Services Agreement (continued)

 

Fund underperformed its benchmark on a total NAV return basis, its short-term year-to-date performance was in the top quintile of its peer group. The Board also observed the Fund’s relatively high yield. The Board determined that the Fund’s investment performance reflected the interrelationship of market conditions with the particular investment strategies employed by the portfolio management team.

Comparative Fees, Costs of Services Provided and the Profits Realized By Columbia Management and its Affiliates from their Relationships with the Fund

The Board reviewed comparative fees and the costs of services provided under the IMS Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent organization) showing a comparison of the Fund’s expenses with median expenses paid by other closed-end funds, as well as a peer universe of open-end technology-focused funds. The Board also reviewed data showing the Fund’s contribution to Columbia Management’s profitability.

The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Fund family. The Board observed that although the Fund’s expense ratio was higher than the comparative peer group’s median expense ratios, the Fund, unlike many funds in the peer universe, employs a unique options-writing strategy designed to cushion its downside performance. Further, the Board reviewed the fees charged to comparable institutional or other accounts/vehicles managed by Columbia Management and discussed differences in how the products are managed and operated, noting no unreasonable differences in the levels of contractual fees. The Board was satisfied that the fee schedule applicable to the Fund reflected the consistent and rational pricing approach applied across the Fund family. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the extent and quality of services that the Fund receives.

The Board also considered the expected profitability of Columbia Management and its affiliates in connection with Columbia Management providing investment management services to the Fund. In this regard, the Board referred to a detailed profitability report, discussing the profitability to Columbia Management and Ameriprise Financial from managing and operating the Funds. In this regard, the Board observed that 2011 profitability, while slightly lower than 2010, was generally in line with the reported profitability of other asset management firms. The Board also considered the indirect economic benefits flowing to Columbia Management or its affiliates in connection with managing, operating and, as the case may be, distributing the Funds, such as the enhanced ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Funds should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.

Economies of Scale to be Realized

The Board noted that the management fee schedule does not contain breakpoints that reduce the fee rate on assets above specified levels. However, due to the Fund’s closed-end structure, the Board did not view the potential for realization of economies of scale as the Fund’s assets grow to be a material factor in its deliberations.

Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2012, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement.

 

26		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Results of Meeting of Stockholders

 

The 2^nd Annual Meeting of Stockholders of Columbia Seligman Premium Technology Growth Fund, Inc. (the Fund) was held on April 12, 2012. Stockholders voted in favor of each of the two proposals. The description of each proposal and number of shares voted are as follows:

Proposal 1

To elect three Directors to the Fund’s Board, each to hold office until the 2015 Annual Meeting of Stockholders and all until their successors are elected and qualify:

 

Director			For				Withheld
Kathleen Blatz			14,197,979				97,918
Pamela Carlton			14,189,208				106,689
Alison Taunton-Rigby			14,193,202				102,695

Proposal 2

To ratify the selection of Ernst & Young LLP as the Fund’s independent registered public accounting firm for 2012:

 

For			Against				Abstain
14,181,728			53,520				60,653

 

Semiannual Report 2012			27

---

Table of Contents

		Columbia Seligman Premium Technology Growth Fund

 

[THIS PAGE INTENTIONALLY LEFT BLANK]

 

28		Semiannual Report 2012

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

 

Important Information About This Report

 

Each fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800.937.5449 and additional reports will be sent to you.

The policy of the Board is to vote the proxies of the companies in which the fund holds investments consistent with the procedures that can be found by visiting columbiamanagement.com. Information regarding how the fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at sec.gov.

Each fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Each fund’s Form N-Q is available on the SEC’s website at sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330. Each fund’s complete schedule of portfolio holdings, as filed on Form N-Q, can also be obtained without charge, upon request, by calling 800.937.5449.

 

Semiannual Report 2012			29

---

Table of Contents

Columbia Seligman Premium Technology Growth Fund

P.O. Box 8081

Boston, MA 02266-8081

columbiamanagement.com

 

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 800.937.5449. These reports and other filings can also be found on the Securities and Exchanges Commission’s EDGAR Database. You should read these reports and other filings carefully before investing.

© 2012 Columbia Management Investment Advisers, LLC. All rights reserved.

 

SL-9949 E (08/12)

---

Table of Contents

Item 2.

Code of Ethics. Not applicable for semi-annual reports.

 

Item 3.

Audit Committee Financial Expert. Not applicable for semi-annual reports.

 

Item 4.

Principal Accountant Fees and Services. Not applicable for semi-annual reports.

 

Item 5.

Audit Committee of Listed Registrants. Not applicable.

 

Item 6.

Investments.

 

(a)	The registrant’s “Schedule 1 – 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. Not applicable.

 

Item 8.

Portfolio Managers of Closed-End Management Investment Companies. Not applicable.

 

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. The Fund has a share repurchase plan approved by the Fund’s Board of Directors. The Fund has not repurchased shares during the period.

 

Item 10.

Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedure 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 controls over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this

---

Table of Contents

report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12.

Exhibits.

(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not applicable for semi annual reports.

(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) Not applicable.

(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.

---

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(registrant)		Columbia Seligman Premium Technology Growth Fund, Inc.
By (Signature and Title)		/s/ J. Kevin Connaughton
		J. Kevin Connaughton, President and Principal Executive Officer
Date		August 21, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)		/s/ J. Kevin Connaughton
		J. Kevin Connaughton, President and Principal Executive Officer
Date		August 21, 2012
By (Signature and Title)		/s/ Michael G. Clarke
		Michael G. Clarke, Treasurer and Chief Financial Officer
Date		August 21, 2012