<PAGE>
File No. 2-10837
811-525
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. [_]
--
Post-Effective Amendment No. 72 [X]
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 20 [X]
--
- --------------------------------------------------------------------------------
SELIGMAN INCOME FUND, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
- --------------------------------------------------------------------------------
THOMAS G. ROSE, Treasurer, 100 Park Avenue, New York, New York 10017
(Name and address of agent for service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
[_] immediately upon filing pursuant [_] on (date) pursuant to paragraph
to paragraph (b) of rule 485 (a)(i) of rule 485
[X] on May 1, 1995 pursuant to [_] 75 days after filing pursuant to
paragraph (b) of rule 485 paragraph (a)(ii) of rule 485
[_] 60 days after filing pursuant to [_] on (date) pursuant to paragraph
paragraph (a)(i) of rule 485 (a)(ii) of rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on February
27, 1995.
<PAGE>
File No. 2-10837
811-525
SELIGMAN INCOME FUND, INC.
FORM N-1A CROSS REFERENCE SHEET
Post-Effective Amendment No. 72
Pursuant to Rule 481 (a)
------------------------
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
- ----------------------------- ----------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization and Capitalization
5. Management of the Fund Management Services
5a. Manager's Discussion of Fund Performance Management Services
6. Capital Stock and Other Securities Organization and Capitalization
7. Purchase of Securities Being Offered Alternative Distribution System; Purchase of Shares;
Administration, Shareholder Services and Distribution Plan
8. Redemption or Repurchase Telephone Transactions; Redemption of Shares; Exchange Privilege
9. Pending Legal Proceedings Not applicable
<CAPTION>
Item in Part B of Form N-1A Location in Statement of Additional Information
- --------------------------- -----------------------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information; Organization and Capitalization (Prospectus);
Appendix
13. Investment Objectives and Policies Investment Objectives, Policies And Risks; Investment Limitations
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Other Services Management and Expenses; Distribution Services
17. Brokerage Allocation Portfolio Transactions; Administration, Shareholder Services and
Distribution Plan
18. Capital Stock and Other Securities General Information; Organization and Capitalization (Prospectus)
19. Purchase, Redemption and Pricing Purchase And Redemption of Fund Shares;
of Securities being Offered Valuation
20. Tax Status Federal Income Taxes (Prospectus)
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
SELIGMAN INCOME FUND, INC.
100 Park Avenue
New York, NY 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States
For Retirement Plan Information: Toll-Free Telephone: (800) 445-1777
May 1, 1995
Seligman Income Fund, Inc. (the "Fund") is a mutual fund which invests to
produce high current income consistent with what is believed to be prudent
risk of capital and the possibility of improvement of income and capital value
over the longer term. Investment advisory and management services are provided
to the Fund by J. & W. Seligman & Co. Incorporated (the "Manager"); the Fund's
distributor is Seligman Financial Services, Inc., an affiliate of the Manager.
For a description of the Fund's investment objectives and policies, including
the risk factors associated with an investment in the Fund, see "Investment
Objectives, Policies and Risks." There can be no assurance that the Fund's in-
vestment objective will be achieved.
The Fund offers two classes of shares. Class A shares are sold subject to an
initial sales load of up to 4.75% and an annual service fee currently charged
at a rate of up to .25 of 1% of the average daily net asset value of the Class
A shares. Class D shares are sold without an initial sales load but are sub-
ject to a contingent deferred sales load ("CDSL") of 1% imposed on certain re-
demptions within one year of purchase, an annual distribution fee of up to .75
of 1% and an annual service fee of up to .25 of 1% of the average daily net
asset value of the Class D shares. See "Alternative Distribution System."
Shares of the Fund may be purchased through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund before investing. Please read it carefully before
you invest and keep it for future reference. Additional information about the
Fund, including a Statement of Additional information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request and without charge by calling or writing the Fund at
the telephone numbers or the address set forth above. The Statement of Addi-
tional Information is dated the same date as this Prospectus and is incorpo-
rated herein by reference in its entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary Of Fund Expenses...................... 2
Financial Highlights.......................... 3
Alternative Distribution System............... 4
Investment Objectives, Policies And
Risks........................................ 5
Management Services........................... 7
Purchase Of Shares............................ 10
Telephone Transactions........................ 14
Redemption Of Shares.......................... 15
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Administration, Shareholder Services And
Distribution Plan............................ 17
Exchange Privilege............................ 18
Further Information About Transactions In The
Fund......................................... 20
Dividends And Distributions................... 20
Federal Income Taxes.......................... 21
Shareholder Information....................... 22
Advertising The Fund's Performance............ 24
Organization And Capitalization............... 24
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
-------------- ---------------
(INITIAL SALES (DEFERRED SALES
LOAD LOAD
ALTERNATIVE) ALTERNATIVE)
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)................ 4.75% None
Sales Load on Reinvested Dividends............ None None
Deferred Sales Load (as a percentage of 1% during the
original first year;
purchase price or redemption proceeds, None thereafter
whichever is lower).......................... None
Redemption Fees............................... None None
Exchange Fee.................................. None None
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS D
ANNUAL FUND OPERATING EXPENSES FOR 1994 ------- -------
<S> <C> <C>
(as a percentage of average net assets)
Management Fee................................................ .49% .49%
12b-1 Fees.................................................... .22% 1.00%*
Other Expenses................................................ .31% .33%
---- -----
Total Fund Operating Expenses................................. 1.02% 1.82%
==== =====
</TABLE>
The purpose of this table is to assist investors in understanding the vari-
ous costs and expenses which shareholders of the Fund may bear directly or in-
directly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The contingent deferred sales load on Class D shares is a one-
time charge paid only if shares are redeemed within one year of purchase. For
more information concerning reduction in sales loads and for a more complete
description of the various costs and expenses, see "Purchase Of Shares," "Re-
demption Of Shares" and "Management Services" herein. The Fund's Administra-
tion, Shareholder Services and Distribution Plan, to which the caption "12b-1
Fees" relates, is discussed under "Administration, Shareholder Services and
Distribution Plan" herein.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period.............................Class A $57 $78 $101 $166
Class D $28+ $57 $ 99 $214
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5% AN-
NUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1%. Pursuant to the Rules of the National Association of Securi-
ties Dealers, Inc., the aggregate deferred sales loads and annual distribu-
tion fees on Class D shares of the Fund may not exceed 6.25% of total gross
sales, subject to certain exclusions. The 6.25% limitation is imposed on the
Fund rather than on a per shareholder basis. Therefore, a long-term Class D
shareholder of the Fund may pay more in total sales loads (including distri-
bution fees) than the economic equivalent of 6.25% of such shareholder's in-
vestment in the shares.
+ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be $18.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights for the periods presented below have been
audited by Deloitte & Touche LLP, independent auditors. This information,
which is derived from the financial and accounting records of the Fund, should
be read in conjunction with the 1994 financial statements and notes contained
in the 1994 Annual Report, which may be obtained by calling or writing the
Fund at the telephone numbers or address provided on the cover page of this
Prospectus.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from the Fund's begin-
ning net asset value to its ending net asset value so that investors may un-
derstand what effect the individual items have on their investment, assuming
it was held throughout the period. Generally, the per share amounts are de-
rived by converting the actual dollar amounts incurred for each item, as dis-
closed in the financial statements, to their equivalent per share amount.
The total return based on net asset value measures the Fund's performance
assuming investors purchased Fund shares at net asset value as of the begin-
ning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value per share on the last
day of the period. Total return computations do not reflect any sales loads
investors may incur in purchasing or selling shares of the Fund. The total re-
turns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------------------------
19940 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period......... $14.58 $13.69 $12.45 $10.38 $12.44 $12.04 $11.80 $13.44 $13.21 $11.51
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income......... .76 .75 .92 .96 1.02 1.06 1.00 1.00 1.07 1.16
Net realized and
unrealized
investment gain
(loss)......... (1.57) 1.40 1.21 2.08 (2.02) .71 .23 (1.50) 1.10 1.81
Net realized and
unrealized gain
on foreign
currency....... .03 -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Increase
(decrease) from
investment
operations..... (.78) 2.15 2.13 3.04 (1.00) 1.77 1.23 (.50) 2.17 2.97
Dividends paid.. (.75) (.75) (.89) (.97) (1.06) (1.03) (.99) (1.01) (1.09) (1.16)
Distributions
from net gain
realized**..... -- (.51) -- -- -- (.34) -- (.13) (.85) (.11)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease) in
net asset
value.......... (1.53) .89 1.24 2.07 (2.06) .40 .24 (1.64) .23 1.70
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value,
end of period.. $13.05 $14.58 $13.69 $12.45 $10.38 $12.44 $12.04 $11.80 $13.44 $13.21
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN
BASED ON NET
ASSET VALUE.... (5.43)% 15.98% 17.54% 30.12% (8.30)% 15.11% 10.53% (4.00)% 17.10% 27.09%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to
average net
assets......... 1.02% 1.03% .84% .85% .76% .75% .80% .79% .73% .77%
Net investment
income to
average net
assets......... 5.51% 5.29% 6.88% 8.24% 8.79% 8.35% 7.99% 7.77% 7.75% 9.47%
Portfolio
turnover....... 66.62% 60.62% 70.43% 66.77% 53.27% 83.33% 74.23% 79.58% 72.48% 83.77%
Net assets, end
of period
(000's
omitted)....... $286,355 $321,040 $213,007 $153,511 $127,825 $159,155 $160,403 $165,809 $162,910 $105,029
<CAPTION>
CLASS D
----------------------
YEAR 5/3/93*
ENDED TO
12/31/940 12/31/93
---------- -----------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period......... $14.55 $14.42
---------- -----------
Net investment
income......... .65 .45
Net realized and
unrealized
investment gain
(loss)......... (1.57) .69
Net realized and
unrealized gain
on foreign
currency....... .03 --
---------- -----------
Increase
(decrease) from
investment
operations..... (.89) 1.14
Dividends paid.. (.65) (.50)
Distributions
from net gain
realized**..... -- (.51)
---------- -----------
Net increase
(decrease) in
net asset
value.......... (1.54) .13
---------- -----------
Net asset value,
end of period.. $13.01 $14.55
========== ===========
TOTAL RETURN
BASED ON NET
ASSET VALUE.... (6.20)% 8.02%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to
average net
assets......... 1.82% 1.84%+
Net investment
income to
average net
assets......... 4.74% 4.42%+
Portfolio
turnover....... 66.62% 60.62%++
Net assets, end
of period
(000's
omitted)....... $67,946 $49,941
</TABLE>
- -------
* Commencement of operations of Class D shares.
** Includes excess of taxable gain distribution over realized corporate gain
charged to paid-in capital of $.06 in 1987 and $.02 in 1985.
+ Annualized.
++ For the year ended December 31, 1993.
0 Per share amounts for the year ended December 31, 1994, are calculated
based on average shares outstanding.
The data provided above reflects historical information and therefore through
April 10, 1991 has not been adjusted to reflect the effect of the increased
management fee which was approved by shareholders on April 10, 1991 and
through December 31, 1992, has not been adjusted to reflect the effect of the
Administration, Shareholder Services and Distribution Plan which was approved
on November 23, 1992 and effective January 1, 1993.
3
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
The Fund offers two classes of shares. Class A shares are sold to investors
who have concluded that they would prefer to pay an initial sales load and
have the benefit of lower continuing charges. Class D shares are sold to in-
vestors choosing to pay no initial sales load, a higher distribution fee and,
with respect to redemptions within one year of purchase, a CDSL. The Alterna-
tive Distribution System allows investors to choose the method of purchasing
shares that is most beneficial in light of the amount of the purchase, the
length of time the shares are expected to be held and other relevant circum-
stances. Investors should determine whether under their particular circum-
stances it is more advantageous to incur an initial sales load and be subject
to lower ongoing charges, as discussed below, or to have the entire initial
purchase price invested in the Fund with the investment thereafter being sub-
ject to higher ongoing charges and, for a one-year period, a CDSL.
Investors who qualify for reduced sales loads, as described under "Purchase
Of Shares" below, might choose to purchase Class A shares because Class A
shares would be subject to lower ongoing fees. The amount invested in the
Fund, however, is reduced by the initial sales loads deducted at the time of
purchase.
Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also choose to
purchase Class A shares because over time the accumulated continuing distribu-
tion fee of Class D shares may exceed the initial sales load and lower distri-
bution fee of Class A shares. This consideration must be weighed against the
fact that the amount invested in the Fund will be reduced by the initial sales
load deducted at the time of purchase. Furthermore, the distribution fees will
be offset to the extent any return is realized on the additional funds ini-
tially invested under the Class D alternative.
Alternatively, some investors might choose to have all of their funds in-
vested initially in Class D shares, although remaining subject to a higher
continuing distribution fee and, for a one-year period, a CDSL as described
below. For example, an investor who does not qualify for reduced sales loads
would have to hold Class A shares for more than 6.33 years for the Class D
distribution fee to exceed the initial sales load plus the distribution fee on
Class A shares. This example does not take into account the time value of mon-
ey, which further reduces the impact of the Class D shares' 1% distribution
fee, other expenses charged to each class, fluctuations in net asset value or
the effect of the return on the investment over this period of time.
The two classes of shares represent interests in the same portfolio of in-
vestments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class ex-
penses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the Investment Company Act of 1940,
as amended (the "1940 Act"), or Maryland law. The net income attributable to
each class and dividends payable on the shares of each class will be reduced
by the amount of distribution fee and other expenses of each class. Class D
shares bear higher distribution fees which will cause the Class D shares to
pay lower dividends than the Class A shares. The two classes also have sepa-
rate exchange privileges.
The Directors of the Fund believe that no conflict of interest currently ex-
ists between the Class A and Class D shares. On an ongoing basis, the Direc-
tors, in the exercise of their fiduciary duties under the 1940 Act and Mary-
land law, will seek to ensure that no such conflict arises. For this purpose,
the Directors will monitor the Fund for the existence of any material conflict
among the classes and will take such action as is reasonably necessary to
eliminate any such conflicts that may develop.
DIFFERENCES BETWEEN CLASSES. The primary distinctions between Class A and
Class D shares are their sales load structures and ongoing expenses as
4
<PAGE>
set forth below. Each Class has advantages and disadvantages for different in-
vestors, and investors should choose the class that best suits their circum-
stances and their objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE OTHER
SALES LOAD DAILY NET ASSETS) INFORMATION
----------- ------------------ -----------
<S> <C> <C> <C>
CLASS A Maximum Service fee Initial
initial of .25% sales load
sales load waived or
of 4.75% of reduced for
the public certain
offering purchases.
price.
CLASS D None Service fee CDSL of 1%
of .25%; on
Distribution redemptions
fee of .75%. within one
year of
purchase
</TABLE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is an open-end diversified management investment company, as de-
fined in the 1940 Act, or mutual fund, incorporated in Maryland in 1947. The
Fund has two investment objectives. Primarily, it seeks to provide sharehold-
ers with high current income consistent with what is believed to be a prudent
risk of capital. Secondarily, it seeks to provide the possibility of improve-
ment in income and capital value over the longer term. There can be no assur-
ance that the Fund's investment objectives will be attained.
Assets are invested in securities carefully selected in light of investment
objectives and diversified to limit risk. The distribution of investments be-
tween different types of securities is governed by a fundamental policy, which
can be changed only by vote of the shareholders, that at least 25% of the mar-
ket value of gross assets must at all times be in cash, bonds and/or preferred
stocks. Under an investment policy established by the Board of Directors,
which can be changed by it, at least 80% of assets will be invested in income-
producing securities.
Subject to that limitation, assets may be invested in many different types
of securities, including money market instruments, fixed-income securities,
such as bonds, debentures and preferred stocks, senior securities convertible
into common stocks, and common stocks.
Convertible bonds are convertible at a stated exchange rate or price into
common stock. Before conversion, convertible securities are similar to noncon-
vertible debt securities in that they provide a steady stream of income with
generally higher yields than in issuer's equity securities. The market value
of all debt securities, including convertible securities, tends to decline as
interest rates increase and to increase as interest rates decline. In general,
convertible securities may provide lower interest or dividend yields than non-
convertible debt securities of similar quality, but they may also allow in-
vestors to benefit from increases in the market price of the underlying common
stock. When the market price of the underlying common stock increases, the
price of the convertible security tends to reflect the increase. When the mar-
ket price of the underlying common stock declines, the convertible security
tends to trade on the basis of yield, and may not depreciate to the same ex-
tent as the underlying common stock. In an issuer's capital structure, con-
vertible securities are senior to common stocks. They are therefore of higher
quality and involve less risk than the issuer's common stock but the extent to
which risk is reduced depends largely on the extent to which the convertible
security sells above its value as a fixed income security. In selecting con-
vertible securities for the Fund's portfolio, the Manager evaluates such fac-
tors as economic and business conditions involving the issuer, future earnings
growth potential of the issuer, potential for price appreciation of the under-
lying equity, the value of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits and capability
of management. In evaluating a convertible security, the Manager gives empha-
sis to the attractiveness of the underlying common stock and the capital ap-
preciation opportunities that the convertible bonds present. Convertible secu-
rities can be callable or redeemable at the issuer's discretion, in which case
the Manager would be forced to seek alternative investments. The
5
<PAGE>
Fund may invest in debt securities convertible into equity securities rated as
low as CC by Standard & Poor's Corporation ("S&P") or Ca by Moody's Investors
Service, Inc. ("Moody's"). Securities rated below investment grade often have
speculative characteristics and may be subject to greater market fluctuations
and risk of loss of income and principal than higher rated securities. A de-
scription of credit ratings and risks associated with lower rated debt securi-
ties is set forth in Appendix B to this prospectus. The Manager does not rely
on the ratings of these securities in making investment decisions but performs
its own analysis, based on the factors described above, in light of the Fund's
investment objectives.
The Fund does not expect to invest more than 5% of its assets in nonconvert-
ible bonds, notes and debentures ("bonds") rated below BBB by S&P or Baa by
Moody's ("investment grade"). Although bonds rated in the fourth credit rating
category (BBB or Baa) are commonly referred to as investment grade, they may
have speculative characteristics. Appendix B of this prospectus contains a de-
scription of credit ratings and the risks associated with lower rated debt se-
curities, which tend to be more speculative and riskier than higher rated debt
securities.
The following table sets forth the weighted average ratings of the Fund's
portfolio invested in debt securities for the year ended December 31, 1994.
When securities receive different ratings from S&P and Moody's, the table re-
flects the higher rating.
<TABLE>
<S> <C>
AAA/Aaa....................... --
AA/Aa......................... 2.2%
A/A........................... 7.2%
BBB/Baa....................... 17.8%
BB/Ba......................... 6.1%
B/B........................... 7.5%
CCC/Caa....................... --
CC/Ca......................... --
Non-rated..................... 6.8%
</TABLE>
The Fund may invest for either the long or short term in its efforts to at-
tain its objectives, and changes in investments may be made whenever consid-
ered advisable by the Manager. Portfolio turnover may vary with such changes.
Short-term investing may result in higher portfolio turnover and the payment
of higher brokerage commissions.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities to bro-
kers or dealers, banks or other institutional borrowers of securities. The
borrower must maintain with the Fund cash or equivalent collateral equal to at
least 100% of the market value of the securities loaned. During the time port-
folio securities are on loan, the borrower pays the Fund an amount equivalent
to any dividends or interest paid on the securities and the Fund may invest
the cash collateral and earn additional income or may receive an agreed upon
amount of interest income from the borrower.
RESTRICTED SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities (i.e., securities not
readily marketable without registration under the Securities Act of 1933 (the
"1933 Act") and other securities that are not readily marketable. The Fund may
purchase restricted securities that can be offered and sold to "qualified in-
stitutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Directors may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities.
Should the Board of Directors make this determination, it will carefully moni-
tor the security (focusing on such factors, among others, as trading activity
and availability of information) to determine that the Rule 144A security con-
tinues to be liquid. It is not possible to predict with assurance exactly how
the market for restricted securities offered and sold under Rule 144A will
develop. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing Rule 144A securities.
6
<PAGE>
FOREIGN SECURITIES. The Fund may invest in commercial paper and certificates
of deposit issued by foreign banks and may invest in other securities of for-
eign issuers directly or through American Depository Receipts ("ADRs"), Euro-
pean Depository Receipts ("EDRs") or Global Depository Receipts ("GDRs") (col-
lectively, "Depository Receipts"). Foreign investments may be affected favor-
ably or unfavorably by changes in currency rates and exchange control regula-
tions. There may be less information available about a foreign company than
about a U.S. company and foreign companies may not be subject to reporting
standards and requirements comparable to those applicable to U.S. companies.
Foreign securities may not be as liquid as U.S. securities. Securities of for-
eign companies may involve greater market risk than securities of U.S. compa-
nies, and foreign brokerage commissions and custody fees are generally higher
than those in the United States. Investments in foreign securities may also be
subject to local economic or political risks, political instability and possi-
ble nationalization of issuers. Depository Receipts are instruments generally
issued by domestic banks or trust companies that represent the deposits of a
security of a foreign issuer. ADRs may be publicly traded on exchanges or
over-the-counter in the United States and are quoted and settled in dollars at
a price that generally reflects the dollar equivalent of the home country
share price. EDRs and GDRs are typically traded in Europe and in both Europe
and the United States, respectively. Depository Receipts may be issued under
sponsored or unsponsored programs. In sponsored programs, the issuer has made
arrangements to have its securities traded in the form of a Depository Re-
ceipt. In unsponsored programs, the issuers may not be directly involved in
the creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored Depository Receipt programs are generally similar,
the issuers of securities represented by unsponsored Depository Receipts, are
not obligated to disclose material information in the United States, and
therefore, the import of such information may not be reflected in the market
value of such receipts. The Fund may invest up to 10% of its total assets in
foreign securities that it holds directly, but this 10% limit does not apply
to foreign securities held through Depository Receipts which are traded in the
United States or to commercial paper and certificates of deposit issued by
foreign banks.
Except as noted above, the foregoing investment policies are not fundamental
and the Board of Directors of the Fund may change such policies without the
vote of a majority of its outstanding voting securities. As a matter of poli-
cy, the Board would not change the Fund's investment objectives of seeking to
produce high current income consistent with prudent risk of capital and the
possibility of improvement in income and capital value over the longer term
without such a vote.
A more detailed description of the Fund's investment policies, including a
list of those restrictions on the Fund's investment activities which cannot be
changed without such a vote, appears in the Statement of Additional Informa-
tion. Under the 1940 Act, a "vote of a majority of the outstanding voting se-
curities" of the Fund means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares present at a shareholder's meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy.
MANAGEMENT SERVICES
THE MANAGER. The Board of Directors provides board supervision over the af-
fairs of the Fund. Pursuant to a Management Agreement approved by the Board
and the shareholders of the Fund, the Manager manages the investments of the
Fund and administers the business and other affairs of the Fund. The address
of the Manager is 100 Park Avenue, New York, NY 10017.
The Manager also serves as a manager of sixteen other investment companies
which, together with the Fund, comprise the "Seligman Group." These companies
are: Seligman Capital Fund, Inc., Selig
7
<PAGE>
man Cash Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund, Inc., Se-
ligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc., Selig-
man High Income Fund Series, Seligman New Jersey Tax-Exempt Fund, Inc., Selig-
man Pennsylvania Tax-Exempt Fund Series, Seligman Portfolios, Inc., Seligman
Quality Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series Trust and Tri-Conti-
nental Corporation. The aggregate assets of the Seligman Group are approxi-
mately $7.3 billion. The Manager also provides investment management or advice
to institutional accounts having an aggregate value of more than $3.3 billion.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a
majority of the outstanding voting securities of the Manager.
The Manager also provides senior management for Seligman Data Corp., a whol-
ly-owned subsidiary of the Fund, and certain other investment companies in the
Seligman Group, which performs, at cost, certain recordkeeping functions for
the Fund, maintains the records of shareholder accounts and furnishes dividend
paying, redemption and related services.
The Manager is entitled to receive a management fee, calculated daily and
payable monthly, based on a percentage of the daily net assets of the Fund. In
1994, the management fee paid by the Fund was equal to an annual rate of .49%
of the average daily net assets of the Fund. The method for determining the
management fee is set forth in Appendix A. The Fund pays all of its expenses
other than those assumed by the Manager.
Total expenses of the Fund's Class A and Class D shares, respectively, for
the year ended December 31, 1994 amounted to 1.02% and 1.82%, respectively, of
the average daily net assets of each class.
THE SUBADVISER. On May 19, 1994, shareholders of the Fund approved a
Subadvisory Agreement between the Manager and Seligman Henderson Co. (the
"Subadviser") that provides that the Subadviser shall act as Subadviser to the
Fund with respect to a portion of the Fund's Assets as designated by the Man-
ager, which shall include all or a portion of the Fund's foreign investments
("Qualifying Assets"). The Fund has a non-fundamental policy under which it
may invest up to 10% of its total assets in foreign securities that are held
directly. The 10% limit does not apply to foreign securities held through De-
pository Receipts which are traded in the United States or to commercial paper
and certificates of deposit issued by foreign banks. The Subadviser serves the
Fund pursuant to a Subadvisory Agreement with the Manager (the "Subadvisory
Agreement"), dated June 1, 1994. The Subadvisory Agreement provides that the
Subadviser provides investment management services with respect to the Quali-
fying Assets, including investment research, advice and supervision, deter-
mines which securities will be purchased or sold, makes purchases and sales on
behalf of the Fund and determines how voting and other rights with respect to
securities held by the Fund shall be exercised, subject in each case to the
control of the Board of Directors and in accordance with the Fund's investment
objectives, policies and principles. For this service, the Subadviser receives
a fee from the Manager, calculated pursuant to the method set forth in Appen-
dix A. For the period June 1, 1994 through December 31, 1994 the Subadviser
received a fee of $102,618.
The Subadviser was founded in 1991 as a joint venture between the Manager
and Henderson International, Inc., a controlled affiliate of Henderson Admin-
istration Group plc. The Subadviser, headquartered in New York, was created to
provide international and global investment advice to institutional and indi-
vidual investors and investment companies in the United States. The Subadviser
currently serves as subadviser to Seligman Capital Fund, Inc., Seligman Common
Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier
8
<PAGE>
Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series,
Inc., the Global Portfolio and Global Smaller Companies Portfolio of Seligman
Portfolios, Inc., Tri-Continental Corporation, the International Equity Fund
of The Compass Capital Group, and the Seligman Henderson International Small
Capital Portfolio and Seligman Henderson International Equity Portfolio of the
American Skandia Trust. The address of the Subadviser is 100 Park Avenue, New
York, NY 10017.
PORTFOLIO MANAGERS. Charles C. Smith, Jr. is a Managing Director of the Man-
ager and has been a Vice President and Portfolio Manager of the Fund since De-
cember 1991. He is also a Vice President and Portfolio Manager of Seligman
Common Stock Fund, Inc., the Seligman Common Stock Portfolio and Seligman In-
come Portfolio of Seligman Portfolios, Inc., and Tri-Continental Corporation.
Mr. Smith joined the Manager in 1985 as Vice President, Investment Officer. He
was promoted to Senior Vice President, Senior Investment Officer in 1992 and
to Managing Director in January 1994.
Stacey G. Navin, Vice President of the Manager, served as Co-Portfolio Man-
ager of the Fund and of Seligman Common Stock Fund since December 1991. Ms.
Navin joined the Manager in 1986 as a research analyst and assumed portfolio
management responsibilities in 1988.
The Subadviser's International Policy Group has overall responsibility for
directing and overseeing all aspects of foreign investment activity for the
Corporation and provides international investment policy, including country
weightings, asset allocations and industry sector guidelines, as appropriate.
Mr. Iain C. Clark, a Managing Director and Chief Investment Officer of the
Subadviser, is responsible for the day-to-day foreign investment activity of
the Corporation. Mr. Clark, who joined the Subadviser in 1992, has been a Di-
rector of Henderson Administration Group plc and Henderson International, Ltd.
and Secretary, Treasurer and Vice President of Henderson International, Inc.
since 1985.
The Manager's discussion of the Fund's performance as well as a line graph
illustrating comparative performance information between the Fund, the Stan-
dard & Poor's 500 Composite Stock Price Index, Lehman Brothers Aggregate Bond
Index and the Lipper Income Fund Average is included in the Fund's 1994 Annual
Report to Shareholders. Copies of the 1994 Annual Report may be obtained,
without charge, by calling or writing the Fund at the telephone numbers or ad-
dress listed on the front page of this Prospectus.
PORTFOLIO TRANSACTIONS. The Management Agreement and Subadvisory Agreement
recognize that in the purchase and sale of portfolio securities, the Manager
and Subadviser will seek the most favorable price and execution, and, consis-
tent with that policy, may give consideration to the research, statistical and
other services furnished by brokers or dealers to the Manager and Subadviser.
The use of brokers who provide investment and market research and securities
and economic analysis may result in higher brokerage charges than the use of
brokers selected on the basis of the most favorable brokerage commission
rates, and research and analysis received may be useful to the Manager and
Subadviser in connection with its services to other clients as well as to the
Fund. In the over-the-counter markets, orders are placed with responsible pri-
mary market makers unless a more favorable execution or price is believed to
be obtainable.
Consistent with the rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution available
and such other policies as the Directors may determine, the Manager and
Subadviser may consider sales of shares of the Fund and, if permitted by ap-
plicable laws, may consider sales of shares of the other funds in the Seligman
Group as a factor in the selection of brokers or dealers to execute portfolio
transactions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" which may result in the payment by the Fund of dealer
9
<PAGE>
spreads or underwriting commissions and other transactions costs on the sale
of securities as well as on the reinvestment of the proceeds in other securi-
ties. Although it is the policy of the Fund to hold securities for investment,
changes will be made from time to time when the Manager and Subadviser believe
such changes in the securities held by the Fund will strengthen the Fund's
portfolio. The portfolio turnover of the Fund is not expected to exceed 100%.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the Fund's shares. Its address is 100 Park Ave-
nue, New York, New York 10017.
The Fund issues two classes of shares: Class A shares are sold to investors
choosing the initial sales load alternative; and Class D shares are sold to
investors choosing no initial sales load, a higher distribution fee and a CDSL
on redemptions within one year of purchase. See "Alternative Distribution Sys-
tem" above.
Shares of the Fund may be purchased through any authorized investment deal-
er. All orders will be executed at the net asset value per share next computed
after receipt of the purchase order plus, in the case of Class A shares, a
sales load which, except for shares purchased under one of the reduced sales
load plans, will vary with the size of the purchase as shown in the schedule
under "Class A Shares--Initial Sales Load" below.
THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE FUND IS $1,000 (EXCEPT FOR
AN ACCOUNT BEING ESTABLISHED PURSUANT TO THE INVEST-A-CHECK (R) SERVICE); SUB-
SEQUENT INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (EXCEPT FOR INVEST-
MENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS). THE FUND RESERVES THE RIGHT
TO RETURN INVESTMENTS WHICH DO NOT MEET THESE MINIMUMS.
Orders received by an authorized dealer before the close of business on the
New York Stock Exchange ("NYSE") (4:00 p.m. Eastern time) and accepted by SFSI
before the close of business (5:00 p.m. Eastern time) on the same day will be
executed at the Funds' net asset value determined as of the close of the NYSE
on that day plus, in the case of Class A shares, the applicable sales load.
Orders accepted by dealers after the close of the NYSE, or received by SFSI
after the close of business, will be executed at the Fund's net asset value as
next determined plus, in the case of Class A shares, the applicable sales
load. The authorized dealer through which a shareholder purchases shares is
responsible for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire pay-
ment, dealer orders must first be placed through SFSI's order desk and as-
signed a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C Seligman Income Fund,
Inc. (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE CONFIR-
MATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Fund makes no charge for this
service, the transmitting bank may impose a wire service fee.
Existing shareholders may purchase additional shares at any time through any
authorized dealer or by sending a check payable to the "Seligman Group of Mu-
tual Funds" directly to P.O. BOX 3936, NEW YORK, NY 10008-3936. Checks for in-
vestment must be in U.S. dollars drawn on a domestic bank. The check should
include the shareholder's name, address, account number, name of Fund and
class of shares. IF A SHAREHOLDER DOES NOT INDICATE THE REQUIRED INFORMATION,
SELIGMAN DATA CORP. WILL SEEK FURTHER CLARIFICATION AND MAY BE FORCED TO RE-
TURN THE CHECK TO THE SHAREHOLDER. IF ONLY THE CLASS DESIGNATION IS MISSING,
THE INVESTMENT WILL AUTO
10
<PAGE>
MATICALLY BE MADE IN CLASS A SHARES. Orders sent directly to Seligman Data
Corp. will be executed at the Fund's net asset value next determined after the
order is accepted plus, in the case of Class A shares, the applicable sales
load.
Seligman Data Corp. will charge a $10.00 service fee for checks returned to
it marked "unpaid." This charge may be deducted from the account that re-
quested the purchase. For the protection of the Fund and its shareholders, no
redemption proceeds will be remitted to a shareholder with respect to shares
purchased by check (unless certified) until Seligman Data Corp. receives no-
tice that the check has cleared which may be up to 15 days from the credit of
the shares to the shareholder's account.
VALUATION. The net asset value of the Fund's shares is determined each day,
Monday through Friday, as of the close of trading on the NYSE (usually 4:00
p.m. Eastern time) on each day that the NYSE is open for business. Net asset
value is calculated separately for each class. Securities traded on a U.S. or
foreign exchange or over-the-counter market are valued at the last sales price
on the primary exchange or market on which they are traded. United Kingdom se-
curities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securi-
ties. Any securities for which recent market quotations are not readily avail-
able are valued at fair value determined in accordance with procedures ap-
proved by the Board of Directors. Short-term holdings maturing in 60 days or
less are generally valued at amortized cost if their original maturity was 60
days or less. Short-term holdings with more than 60 days remaining to maturity
will be valued at current market value until the 61st day prior to maturity,
and will then be valued on an amortized cost basis based on the value as of
such date unless the Board determines that amortized cost value does not rep-
resent fair market value.
Although the legal rights of Class A and Class D shares are substantially
identical, the different expenses borne by each class will result in different
net asset values and dividends. The net asset value of Class D shares will
generally be lower than the net asset value of Class A shares as a result of
the larger distribution fee charged to Class D shares. In addition, net asset
value per share of the two classes will be affected to the extent any other
class expense differs among classes.
CLASS A SHARES--INITIAL SALES LOAD. Class A shares are subject to an initial
sales load which varies with the size of the purchase as shown in the schedule
below, and an annual service fee of up to .25% of the average daily net asset
value of Class A shares. See "Administration, Shareholder Services and Distri-
bution Plan" below.
CLASS A SHARES--SALES LOAD SCHEDULE
<TABLE>
<CAPTION>
SALES LOAD AS A REGULAR
PERCENTAGE OF DEALER
------------------- DISCOUNT
NET
AMOUNT AS A
INVESTED % OF
OFFERING (NET ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE) PRICE
------------------ -------- ---------- --------
<S> <C> <C> <C>
Less than--$ 50,000 .75% 4.99% 4.25%
$ 50,000-- 99,999 4.00 4.17 3.50
100,000-- 249,999 3.50 3.63 3.00
250,000-- 499,999 2.50 2.56 2.25
500,000-- 999,999 2.00 2.04 1.75
1,000,000--3,999,999 1.00 1.01 .90
4,000,000-- or more* 0 0 0
</TABLE>
-------
* Dealers may receive a fee of .15% on sales of $4,000,000
or more.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class A
shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their
own account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
11
<PAGE>
. VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the Fund alone, or in any combination of shares of the other funds
in the Seligman Group that are sold with a sales load reaches levels indicated
in the above sales load schedule.
. THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the other mutual funds in the Seligman Group
sold with a sales load with the total net asset value of shares of those funds
already owned that were sold with a sales load and the total net asset value
of shares of Seligman Cash Management Fund that were acquired by the investor
through an exchange of shares of another mutual fund in the Seligman Group on
which there was a sales load to determine reduced sales loads in accordance
with the above sales load schedule. An investor or a dealer purchasing shares
on behalf of an investor must indicate that the investor has existing accounts
when making investments or opening new accounts.
. A LETTER OF INTENT allows an investor to purchase Class A shares over a
13-month period at reduced sales loads, based upon the total amount the in-
vestor intends to purchase, plus the total net asset value of shares of the
other mutual funds in the Seligman Group already owned that were sold with a
sales load and the total net asset value of shares of Seligman Cash Management
Fund that were acquired through an exchange of shares of another mutual fund
in the Seligman Group on which there was a sales load. An investor or a dealer
purchasing shares on behalf of an investor must indicate that the investor has
existing accounts when making investments or opening new accounts.
For more information concerning terms of Letters of Intent, see "Terms and
Conditions" on page 27.
SPECIAL PROGRAMS. The Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees (and their
spouses and minor children) of the Fund, the other investment companies in the
Seligman Group, the Manager and other companies affiliated with the Manager.
Such sales also may be made to employee benefit and thrift plans for such per-
sons and to any investment advisory, custodial, trust or other fiduciary ac-
count managed or advised by the Manager or any affiliate.
Class A shares also may be issued without a sales load in connection with
the acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is
the issuer of periodic payment plan certificates, the net proceeds of which
are invested in Fund shares, to separate accounts established and maintained
by an insurance company which are exempt from registration under Section
3(c)(11) of the 1940 Act; to registered representatives and employees (and
their spouses and minor children) of any dealer that has a sales agreement
with SFSI; to shareholders of mutual funds with investment objectives and pol-
icies similar to the Fund who purchase shares with redemption proceeds of such
funds; to financial institution trust departments; to registered investment
advisers exercising discretionary investment authority with respect to the
purchase of Fund shares; to accounts of financial institutions or
broker/dealers that charge account management fees, provided the Manager or
one of its affiliates has entered into an agreement with respect to such ac-
count; pursuant to sponsored arrangements with organizations which make recom-
mendations to or permit group solicitations of, its employees, members or par-
ticipants in connection with the purchase of shares of the Fund; and to "eli-
gible employee benefit plans" of employers who have at least 2,000 U.S. em-
ployees to whom such plan is made available and, regardless of the number of
employees, if such plan is established and maintained by any dealer that has a
sales agreement with SFSI. "Eligible employee benefit plans" means any plan or
arrangement, whether or not tax qualified, which provides for the purchase of
Fund shares. Sales of shares to such plans must be made in connection with a
payroll deduction system of
12
<PAGE>
plan funding or other system acceptable to Seligman Data Corp.
CLASS D SHARES. Class D shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75 of 1% and an annual service fee of up to .25 of
1%, of the average daily net asset value of the Class D shares. SFSI will make
a 1% payment to dealers in respect of purchases of Class D shares.
A CDSL will be imposed on any redemption of Class D shares which were pur-
chased during the preceding twelve months; however, no such charge will be im-
posed on shares acquired through the investment of dividends or distributions
from any Class D shares within the Seligman Group. The amount of any CDSL will
be paid to and retained by SFSI.
To minimize the application of CDSL to a redemption, shares acquired pursu-
ant to the investment of dividends and distributions will be redeemed first;
followed by shares purchased at least one year prior to the redemption. Shares
held for the longest period of time within the applicable one year period will
then be redeemed. Additionally, for those shares determined to be subject to
the CDSL, the application of the 1% CDSL will be made to the current net asset
value or original purchase price, whichever is less.
For example, assume an investor purchased 100 shares in January at a price
of $10.00 per share. During the first year, 5 additional shares were acquired
through investment of dividends and distributions. In January of the following
year, an additional 50 shares are purchased at a price of $12.00 per share. In
March of that year, the investor chooses to redeem $1,500.00 from the account
which now holds 155 shares with a total value of $1,898.75 ($12.25 per share).
The CDSL for this transaction would be calculated as follows:
<TABLE>
<S> <C>
Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
---------
Dividend/Distribution shares
(5 @ $12.25) $ 61.25
Shares held more than 1 year
(100 @ $12.25) 1,225.00
Shares held less than 1 year subject to
CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares
@ $12.00 = $209.39 X 1% = $2.09) (2.09)
---------
Net proceeds of redemption $1,497.91
=========
</TABLE>
For Federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the re-
demption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401(a) of the Code when such redemptions are necessary
to make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii) dis-
tributions from a custodial account under Code section 403(b)(7) or an indi-
vidual retirement account ("IRA") due to death, disability, or attainment of
age 59 1/2, and (iii) a tax-free return of an excess contribution to an IRA;
(c) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund; (d) in whole or in part, in connection with shares sold
to any state, county, or city or any instrumentality, department, authority,
or agency thereof, which is prohibited by applicable investment laws from pay-
ing a sales load or commission in connection with the purchases of shares of
any registered investment management
13
<PAGE>
company; (e) pursuant to an automatic cash withdrawal service; (f) in connec-
tion with the redemption of Class D shares of the Fund if it is combined with
another mutual fund in the Seligman Group, or another similar reorganization
transaction; and (g) in connection with the Fund's right to redeem or liqui-
date an account that holds below a certain minimum number or dollar amount of
shares (currently $500).
If, with respect to a redemption of any Class D shares sold by a dealer, the
CDSL is waived because the redemption qualifies for a waiver as set forth
above, the dealer shall remit to SFSI promptly upon notice, an amount equal to
the 1% payment or a portion of the 1% payment paid on such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the mutual funds in the Seligman Group. SFSI may from time to time
pay a bonus or other incentive to dealers that sell shares of the Seligman Mu-
tual Funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or
may sell a significant amount of shares of the Fund and/or certain other funds
managed by the Manager during a specified period of time. Such bonus or other
incentive may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representa-
tives and members of their families to places within or outside the United
States. The cost to SFSI of such promotional activities and payments shall be
consistent with the rules of the National Association of Securities Dealers,
Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder whose account has either an individual or joint tenancy regis-
tration may elect to effect the following transactions via telephone by com-
pleting the Telephone Service Election portion of the Account Application or a
separate Telephone Service Election Form: (i) redemption of Fund shares, (ii)
exchange of Fund shares for shares of another Seligman Mutual Fund, (iii)
change of a dividend and/or capital gain distribution option, and (iv) change
of address. IRA accounts may only elect to effect exchanges or address
changes. By completing the appropriate section of the Account Application or
separate Election Form, all Seligman Mutual Funds with the same account number
(i.e. registered in exactly the same names, including any new fund in which
the shareholder invests in the future, will automatically have telephone serv-
ices. All telephone transactions are effected through Seligman Data Corp. at
(800) 221-2450.
For accounts registered as joint tenancies, each joint tenant, by electing
telephone transaction services, authorizes each of the other tenants to effect
telephone transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder may expe-
rience difficulty in contacting Seligman Data Corp. to request a redemption or
exchange of Fund shares. In these circumstances, the shareholder should con-
sider using other redemption or exchange procedures. (See "Redemption Of
Shares" below). Use of these other redemption or exchange procedures will re-
sult in the redemption request being processed at a later time than if tele-
phone transactions had been used, and the Fund's net asset value may fluctuate
during such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to con-
firm that instructions communicated by telephone are genuine. These will in-
clude: recording all telephone calls requesting account activity, requiring
that the caller provide certain requested personal and/or account information
at the time of the call for the purpose of establishing the caller's identity,
and sending a written confirmation of redemptions, exchanges or address
changes to the
14
<PAGE>
address of record each time activity is initiated by telephone. As long as the
Fund and Seligman Data Corp. follow instructions communicated by telephone
that were reasonably believed to be genuine at the time of their receipt, nei-
ther they nor any of their affiliates will be liable for any loss to the
shareholder caused by an unauthorized transaction. Shareholders are, of
course, under no obligation to apply for telephone transaction services. In
any instance where the Fund or Seligman Data Corp. is not reasonably satisfied
that instructions received by telephone are genuine, the requested transaction
will not be executed, and neither they nor any of their affiliates will be li-
able for any losses which may occur due to a delay in implementing the trans-
action. If the Fund or Seligman Data Corp. does not follow the procedures de-
scribed above, the Fund or Seligman Data Corp. may be liable for any losses
due to unauthorized or fraudulent instructions. Telephone services must be ef-
fected through a representative of Seligman Data Corp., i.e., requests may not
be communicated via Seligman Data Corp.'s automated telephone answering sys-
tem. Telephone transaction services may be terminated by a shareholder at any
time by sending a written request to Seligman Data Corp. Written acknowledg-
ment of termination of telephone transaction services will be sent to the
shareholder.
REDEMPTION OF SHARES
REGULAR REDEMPTION PROCEDURES. A shareholder may redeem shares held in book
credit form without charge (except a CDSL, if applicable) at any time by SEND-
ING A WRITTEN REQUEST to Seligman Data Corp., 100 Park Avenue, New York, New
York 10017. The redemption request must be signed by all persons in whose name
the shares are registered. A shareholder may redeem shares that are not in
book credit form by surrendering certificates in proper form to the same ad-
dress. Certificates should be sent by registered mail. Share certificates must
be endorsed for transfer or accompanied by an endorsed stock power signed by
all share owners exactly as their name(s) appear(s) on the account registra-
tion. The shareholder's letter of instruction or endorsed stock power should
specify the account number, class of shares (A or D) and the number of shares
or dollar amount to be redeemed. The Fund cannot accept conditional redemption
requests. If the redemption proceeds are (i) $50,000 or more, (ii) to be paid
to someone other than the shareholder of record (regardless of the amount) or
(iii) to be mailed to other than the address of record (regardless of the
amount), the signature(s) of the shareholder(s) must be guaranteed by an eli-
gible financial institution including, but not limited to, the following:
banks, trust companies, credit unions, securities brokers and dealers, savings
and loan associations and participants in the Securities Transfer Association
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the
New York Stock Exchange Medallion Signature Program (MSP). The Fund reserves
the right to reject a signature guarantee where it is believed that the Fund
will be placed at risk by accepting such guarantee. A signature guarantee is
also necessary in order to change the account registration. Notarization by a
notary public is not an acceptable signature guarantee. ADDITIONAL DOCUMENTA-
TION MAY ALSO BE REQUIRED BY SELIGMAN DATA CORP. IN THE EVENT OF A REDEMPTION
BY CORPORATIONS, EXECUTORS, ADMINISTRATORS, TRUSTEES, CUSTODIANS OR RETIREMENT
PLANS. FOR FURTHER INFORMATION WITH RESPECT TO NECESSARY REDEMPTION REQUIRE-
MENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES DEPARTMENT OF SELIGMAN DATA
CORP. FOR ASSISTANCE.
In the case of Class A shares and in the case of Class D shares redeemed af-
ter one year, a shareholder will receive the net asset value per share next
determined after receipt of a request in good order. If Class D shares are re-
deemed within one year of purchase, a shareholder will receive the net asset
value per share next determined after receipt of a request in good order, less
a CDSL of 1% as described under "Purchase Of Shares--Class D Shares" above.
A shareholder also may "sell" shares to the Fund through an investment
dealer and, in that way, be
15
<PAGE>
certain, providing the order is timely, of receiving the net asset value es-
tablished at the end of the day on which the dealer is given the repurchase
order. The Fund makes no charge for this transaction, but the dealer may
charge a service fee. "Sell" or repurchase orders received from an authorized
dealer before the close of the NYSE and received by SFSI, the repurchase
agent, before the close of business on the same day will be executed at the
net asset value per share determined as of the close of the NYSE on that day.
Repurchase orders received from authorized dealers after the close of the NYSE
or not received by SFSI prior to the close of business, will be executed at
the net asset value determined as of the close of the NYSE on the next trading
day. Shares held in a "street name" account with a broker/dealer may be sold
to the Fund only through a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may be
made in an amount of up to $50,000 per day, per account. One telephone redemp-
tion request per day is permitted. Telephone redemption requests must be re-
ceived by Seligman Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00
p.m. Eastern time, on any business day and will be processed as of the close
of business on that day. Redemption requests by telephone will not be accepted
within 30 days following an address change. Keogh Plans, IRAs or other retire-
ment plans are not eligible for telephone redemptions. The Fund reserves the
right to suspend or terminate its telephone redemption service at any time
without notice.
For more information about telephone redemptions, including the procedure
for electing such service and the circumstances under which shareholders may
bear the risk of loss for a fraudulent transaction, see "Telephone Transac-
tions" above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
of Class A shares who owns or purchases shares in the Fund worth $25,000 or
more to request Seligman Data Corp. to provide redemption checks to be drawn
on the shareholder's account in amounts of $500 or more. The shareholder may
elect to use this Service on the Account Application or by later written re-
quest to Seligman Data Corp. Shares for which certificates have been issued
will not be available for redemption under this Service. Use of this Service
is subject to Mellon Bank, N.A. rules and regulations covering checking
accounts.
There is no charge for use of checks. When honoring a check that was proc-
essed for payment, Mellon Bank, N.A. will cause the Fund to redeem exactly
enough full and fractional shares from an account to cover the amount of the
check. If shares are owned jointly, redemption checks must be signed by all
persons, unless otherwise elected on the Account Application, in which case a
single signature will be acceptable.
In view of daily fluctuations in share value, the shareholder should be cer-
tain that the amount of shares in the account is sufficient to cover the
amount of checks written. If insufficient shares are in the account, the check
will be returned, marked "insufficient funds." SELIGMAN DATA CORP. WILL CHARGE
A $10.00 PROCESSING FEE FOR ANY CHECK REDEMPTION DRAFT RETURNED MARKED "UN-
PAID." THIS CHARGE MAY BE DEBITED FROM THE ACCOUNT THE CHECK WAS DRAWN
AGAINST.
Check Redemption books cannot be reordered unless the shareholder's account
has a value of $25,000 or more and the Fund has a certified Taxpayer Identifi-
cation Number on file.
Cancelled checks will be returned to a shareholder under separate cover the
month after they clear. The Check Redemption Service may be terminated at any
time by the Fund or Mellon Bank, N.A. See "Terms and Conditions" on page for
further information. The Check Redemption Service is not available to holders
of Class D shares.
FOR THE PROTECTION OF THE FUND AND ITS SHAREHOLDERS, NO PROCEEDS WILL BE RE-
MITTED TO A SHARE
16
<PAGE>
HOLDER WITH RESPECT TO SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) UNTIL SE-
LIGMAN DATA CORP. RECEIVES NOTICE THAT THE CHECK HAS CLEARED FOR PAYMENT,
WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF SHARES TO THE SHAREHOLDER'S AC-
COUNT.
GENERAL. Whether shares are redeemed or repurchased, a check for the pro-
ceeds will be sent to the address of record within seven calendar days after
acceptance of the redemption or repurchase order and will be made payable to
all of the registered owners on the account. The Fund will not permit redemp-
tions of shares with respect to shares purchased by check (unless certified)
until Seligman Data Corp. receives notice that the check has cleared, which
may be up to 15 days from the credit of the shares to the shareholder's ac-
count. The proceeds of a redemption or repurchase may be more or less than the
shareholder's cost.
The Fund reserves the right to redeem shares owned by a shareholder whose
investment in the Fund has a value of less than a minimum amount specified by
the Fund's Board of Directors, which is presently $500. Shareholders are sent
a notice before the redemption is processed stating that the value of their
investment in the Fund is less than the specified minimum and that they have
sixty days to make an additional investment.
REINSTATEMENT PRIVILEGE. If a shareholder redeems Class A shares and then
decides not to redeem them, or to shift the investment to one of the other mu-
tual funds in the Seligman Group, the shareholder may, within 120 calendar
days of the date of redemption, use all or any part of the proceeds of the re-
demption to reinstate, free of sales load, all or any part of the investment
in shares of the Fund or in shares of any of the other mutual funds in the Se-
ligman Group. If a shareholder redeems Class D shares and the redemption was
subject to a CDSL, the shareholder may reinstate the investment in shares of
the same class of the Fund or of any of the other mutual funds in the Seligman
Group within 120 calendar days of the date of redemption and receive a credit
for the CDSL paid. Such investment will be reinstated at the net asset value
per share established as of the close of the NYSE on the day the request is
received. Seligman Data Corp. must be informed that the purchase represents a
reinstated investment. REINSTATED SHARES MUST BE REGISTERED EXACTLY AND BE OF
THE SAME CLASS AS THE SHARES PREVIOUSLY REDEEMED.
Generally, exercise of the Reinstatement Privilege does not alter the fed-
eral income tax status of any capital gain realized on a sale of Fund shares,
but to the extent that any shares are sold at a loss and the proceeds are re-
invested in shares of the same Fund, some or all of the loss will not be al-
lowed as a deduction, depending upon the percentage of the proceeds reinvest-
ed.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
Under the Fund's Administration, Shareholder Services and Distribution Plan
(the "Plan"), the Fund may pay to SFSI an administration, shareholder services
and distribution fee in respect of the Fund's Class A and Class D shares. Pay-
ments under the Plan may include, but are not limited to: (i) compensation to
securities dealers and other organizations ("Service Organizations") for pro-
viding distribution assistance with respect to assets invested in the Fund,
(ii) compensation to Service Organizations for providing administration, ac-
counting and other shareholder services with respect to Fund shareholders, and
(iii) otherwise promoting the sale of shares of the Fund, including paying for
the preparation of advertising and sales literature and the printing and dis-
tribution of such promotional materials and prospectuses to prospective in-
vestors and defraying SFSI's costs incurred in connection with its marketing
efforts with respect to shares of the Fund. The Manager, in its sole discre-
tion, may also make similar payments to SFSI from its own resources, which may
include the management fee that the Manager receives from the Fund.
17
<PAGE>
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in re-
spect of Class A shares will be used primarily to compensate Service Organiza-
tions which enter into agreements with SFSI. Such Service Organizations will
receive from SFSI a continuing fee of up to .25% on an annual basis, payable
quarterly, of the average daily net assets of Class A shares attributable to
the particular Service Organization for providing personal service and/or the
maintenance of shareholder accounts. The fee payable from time to time is,
within such limit, determined by the Directors of the Fund.
The Plan, as it relates to Class A shares, was approved by shareholders on
November 23, 1992 and became effective on January 1, 1993. The Plan is re-
viewed by the Directors annually. The total amount paid for the year ended De-
cember 31, 1994 in respect of the Fund's Class A shares pursuant to the Plan
was equal to .22% of the Class A shares' average daily net assets.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class D shares at an annual rate of up to 1% of the average daily net asset
value of the Class D shares. Proceeds from the Class D distribution fee are
used primarily to compensate Service Organizations for administration, share-
holder services and distribution assistance (including a continuing fee of up
to .25% on an annual basis of the average daily net asset value of Class D
shares attributable to particular Service Organizations for providing personal
service and/or the maintenance of shareholder accounts) and will initially be
used by SFSI to defray the expense of the 1% payment made by it to Service Or-
ganizations at the time of the sale of Class D shares. The amounts expended by
SFSI in any one year upon the initial purchase of Class D shares may exceed
the amounts received by it from Plan payments retained. Expenses of adminis-
tration, shareholder services and distribution of Class D shares in one fiscal
year of the Fund may be paid from Class D Plan fees received from the Fund in
any other fiscal year.
The Plan, as it relates to Class D shares, was approved by the Directors on
March 18, 1993 and became effective May 1, 1993. The Plan is reviewed by the
Directors annually. The total amount paid for the year ended December 31, 1994
by the Fund's Class D shares pursuant to the Plan was 1% per annum of the av-
erage daily net assets of Class D shares.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI shall act as broker/dealer of record for most
shareholder accounts that do not have a designated broker/dealer of record in-
cluding all such shareholder accounts established after April 1, 1995 and will
receive compensation for providing personal service and account maintenance to
its accounts of record.
EXCHANGE PRIVILEGE
A shareholder of the Fund may, without charge, exchange at net asset value
any or all of an investment in the Fund for shares of any of the other mutual
funds in the Seligman Group. Exchanges may be made by mail, or by telephone,
if telephone services are elected by the shareholder.
Class A and Class D shares may be exchanged only for Class A and Class D
shares, respectively, of another mutual fund in the Seligman Group on the ba-
sis of relative net asset value.
If Class D shares that are subject to a CDSL are exchanged for Class D
shares of another fund, for purposes of assessing the CDSL payable upon dispo-
sition of the exchanged Class D shares the one year holding period shall be
reduced by the holding period of the original Class D shares.
The mutual funds in the Seligman Group available under the Exchange Privi-
lege are:
. SELIGMAN CAPITAL FUND, INC: seeks aggressive capital appreciation. Current
income is not an objective.
18
<PAGE>
. SELIGMAN CASH MANAGEMENT FUND, INC: invests in high quality money market
instruments. Shares are sold at net asset value.
. SELIGMAN COMMON STOCK FUND, INC: seeks favorable current income and long-
term growth of both income and capital value without exposing capital to undue
risk.
. SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC: invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective. The Fund will be closing to new in-
vestors on June 30, 1995.
. SELIGMAN FRONTIER FUND, INC: seeks to produce growth in capital value; in-
come may be considered, but will only be incidental to the fund's investment
objective.
. SELIGMAN GROWTH FUND, INC: seeks longer-term growth in capital value and
an increase in future income.
. SELIGMAN HENDERSON GLOBAL FUND SERIES, INC: consists of the Seligman Hen-
derson International Fund, the Seligman Henderson Global Smaller Companies
Fund and the Seligman Henderson Global Technology Fund, which seek long-term
capital appreciation primarily by investing either in companies globally or
internationally.
. SELIGMAN HIGH INCOME FUND SERIES: seeks high current income by investing
in debt securities. The Fund consists of the U.S. Government Securities Series
and the High-Yield Bond Series.
. SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC: invests in investment grade New
Jersey tax-exempt securities.
. SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES: invests in investment grade
Pennsylvania tax-exempt securities.
. SELIGMAN TAX-EXEMPT FUND SERIES, INC: consists of several State Series and
a National Series. The National Tax-Exempt Series seeks to provide maximum in-
come exempt from Federal income taxes; individual state series, each seeking
to maximize income exempt from Federal income taxes and from personal income
taxes in designated states, are available for Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon
and South Carolina.
. SELIGMAN TAX-EXEMPT SERIES TRUST: includes a California Tax-Exempt Quality
Series, a California Tax-Exempt High-Yield Series, a Florida Tax-Exempt Series
and a North Carolina Tax-Exempt Series, each of which invests in tax-exempt
securities of its designated state.
All permitted exchanges will be based on the then current net asset values
of the respective funds. Telephone requests for exchanges must be received be-
tween 8:30 a.m. and 4:00 p.m. Eastern time, on any business day, by Seligman
Data Corp. at (800) 221-2450, and will be processed as of the close of busi-
ness on that day. The registration of an account into which an exchange is
made must be identical to the registration of the account from which shares
are exchanged. When establishing a new account by an exchange of shares, the
shares being exchanged must have a value of at least the minimum initial in-
vestment required by the mutual fund into which the exchange is being made.
The method of receiving distributions, unless otherwise indicated, will be
carried over to the new Fund account. Account services, such as Invest-A-
Check(R) Service, Directed Dividends, Automatic Cash Withdrawal Service and
Check Writing Privilege will not be carried over to the new Fund account un-
less specifically requested and permitted by the new Fund. Exchange orders may
be placed to effect an exchange of a specific number of shares, an exchange of
shares equal to a specific dollar amount or an exchange of all shares held.
Shares for which certificates have been issued may not be exchanged via tele-
phone and may be exchanged only upon receipt of a written exchange request to-
gether with certificates representing shares to be exchanged in form for
transfer.
19
<PAGE>
Telephone exchanges are only available to shareholders whose accounts are
registered individually, as joint tenancies or IRAs. The Exchange Privilege
via mail is generally applicable to investments in an IRA and other retirement
plans, although some restrictions may apply and may be applicable to other mu-
tual funds in the Seligman Group that may be organized by the Manager in the
future. The terms of the exchange offer described herein may be modified at
any time; and not all of the mutual funds in the Seligman Group are available
to residents of all states. Before making any exchange, a shareholder should
contact an authorized investment dealer or Seligman Data Corp. to obtain pro-
spectuses of any of the mutual funds in the Seligman Group.
A broker/dealer of record will be able to effect exchanges on behalf of a
shareholder only if the broker/dealer has entered into a Telephone Exchange
Agreement with SFSI wherein the broker/dealer must agree to indemnify SFSI and
the mutual funds in the Seligman Group from any loss or liability incurred as
a result of the acceptance of telephone exchange orders.
Written confirmation of all exchanges will be forwarded to the shareholder
to whom the exchanged shares are registered and a duplicate confirmation will
be sent to the dealer of record listed on the account. SFSI reserves the right
to reject a telephone exchange request. The Fund reserves the right to reject
any telephone requests for transactions with a share value exceeding $250,000.
Any rejected telephone exchange order may be processed by mail. For more in-
formation about telephone exchanges, including the procedure for electing such
service and the circumstances under which shareholders may bear the risk of
loss for a fraudulent transaction, see "Telephone Transactions" above.
Exchanges of shares are sales and may result in a gain or loss for Federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE FUND
Because excessive trading (including short-term, "market timing" trading)
can hurt the Fund's performance, the Fund may refuse any exchange (1) from any
shareholder account from which there have been two exchanges in the preceding
three month period, or (2) where the exchanged shares equal in value the
lesser of $1,000,000 or 1% of the Fund's net assets. The Fund may also refuse
any exchange or purchase order from any shareholder account if the shareholder
or the shareholder's broker/dealer has been advised that previous patterns of
purchases and redemptions or exchanges have been considered excessive. Ac-
counts under common ownership or control, including those with the same tax-
payer ID number and those administered so as to redeem or purchase shares
based upon certain predetermined market indicators, will be considered one ac-
count for this purpose. Additionally, the Fund reserves the right to refuse
any order for the purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
The Fund's net investment income is paid to shareholders in dividends quar-
terly, usually in March, June, September and December. Payments vary in amount
depending on income received from portfolio securities and the costs of opera-
tions. In determining amounts of capital gains to be distributed, any capital
loss carryforwards from prior years will offset capital gains. For Federal in-
come tax purposes, the Fund has a capital loss carryforward as of December 31,
1994, of $569,873 which expires in 2002. Accordingly, the Fund may not dis-
tribute capital gains (short-term or long-term) to shareholders until net
gains have been realized in excess of the capital loss carryforward.
Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares;
(3) to receive both dividends and gain distributions in cash. In the case of
prototype retirement plans, dividends and gain distributions are reinvested in
additional shares. Unless another election is made, dividends and capital gain
distributions will be credited to shareholder accounts in additional shares.
Shares acquired through a dividend or gain distribution and credited to a
shareholder's account are not subject to an initial sales load or a CDSL. Div-
idends and gain
20
<PAGE>
distributions paid in shares are invested at the net asset value on the ex-
dividend date. Shareholders may elect to change their dividend and gain dis-
tribution options by writing Seligman Data Corp. at the address listed below.
If the shareholder has elected telephone services, changes may also be tele-
phoned to Seligman Data Corp. between 8:00 a.m. and 5:30 p.m. Eastern time, by
either the shareholder or the broker/dealer of record on the account. For in-
formation about electing telephone services see "Telephone Transactions."
These elections must be received by Seligman Data Corp. before the record date
for the dividend or distribution in order to be effective for such dividend or
distribution; otherwise payment will be made in accordance with the current
option on the shareholder's account.
The per share dividends from net investment income on Class D shares will be
lower than the per share dividends on Class A shares as a result of the higher
distribution fee applicable with respect to Class D shares. Per share divi-
dends of the two classes may also differ as a result of differing class ex-
penses. Distributions of net capital gains, if any, will be paid in the same
amount for Class A and Class D shares. See "Purchase of Shares--Valuation."
Shareholders exchanging shares of a mutual fund for shares of another mutual
fund in the Seligman Group will continue to receive dividend and gains as
elected prior to such exchange unless otherwise specified. In the event that a
shareholder redeems all shares in an account between the record date and the
payable date the value of dividends or gain distributions declared will be
paid in cash regardless of the existing election.
FEDERAL INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended. For each year so quali-
fied, the Fund will not be subject to Federal income taxes on its net invest-
ment income and capital gains, if any, realized during any taxable year, which
it distributes to its shareholders, provided that at least 90% of its net in-
vestment income and net short-term capital gains are distributed to sharehold-
ers each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether re-
ceived in cash or reinvested in additional shares; and, to the extent desig-
nated as derived from the Fund's dividend income that would be eligible for
the dividends received deduction if the Fund were not a regulated investment
company, they are eligible, subject to certain restrictions, for the 70% divi-
dends received deduction for corporations.
Distributions of net capital gain, i.e., the excess of net long-term capital
gains over any net short-term losses, are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long shares have been held by the shareholders; such distributions are not el-
igible for the dividends received deduction allowed to corporate shareholders.
Any gain or loss realized upon a sale or redemption of shares in the Fund by
a shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any
loss realized will be treated as long-term capital loss to the extent that it
offsets the long-term capital gain distribution. In addition, no loss will be
allowed on the sale or other disposition of shares of the Fund if, within a
period beginning 30 days before the date of such sale or disposition and end-
ing 30 days after such date, the holder acquires (such as through dividend re-
investment) securities that are substantially identical to the shares of the
Fund.
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permit-
ted to
21
<PAGE>
include in the tax basis attributable to such shares the sales load incurred
in acquiring such shares to the extent of any subsequent reduction of the
sales load by reason of the Exchange or Reinstatement Privilege offered by the
Fund. Any sales load not taken into account in determining the tax basis of
shares sold or exchanged within 90 days after acquisition will be added to the
shareholder's tax basis in the shares acquired pursuant to the Exchange or Re-
instatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of
any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to share-
holders in the calendar year in which it was earned. Furthermore, dividends
declared in October, November or December payable to shareholders of record on
a specified date in such a month and paid in the following January will be
treated as having been paid by the fund and received by each shareholder in
December. Under this rule, therefore, shareholders may be taxed in one year on
dividends or distributions actually received in January of the following year.
Shareholders are urged to consult their tax advisers concerning the effect
of Federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND CERTI-
FIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLD-
ING IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED
BY THE INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH
ACCOUNT FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED.
IN THE EVENT THAT SUCH A FINE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF
UP TO $50 THAT MAY BE DEBITED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET
AGAINST ANY UNDISTRIBUTED DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. THE FUND
ALSO RESERVES THE RIGHT TO CLOSE ANY ACCOUNT WHICH DOES NOT HAVE A CERTIFIED
TAXPAYER IDENTIFICATION NUMBER.
SHAREHOLDER INFORMATION
Shareholders will be sent reports quarterly regarding the Fund. General in-
formation about the Fund may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co. Incorpo-
rated, 100 Park Avenue, New York, New York 10017 or by telephoning the Corpo-
rate Communications/Investor Relations Department toll-free by dialing (800)
221-7844 from all continental United States, except New York or (212) 850-1864
in New York State and the Greater New York City area. Information about share-
holder accounts may be requested by writing Shareholder Services, Seligman
Data Corp. at the same address or by toll-free telephone by dialing (800) 221-
2450 from all continental United States. Seligman Data Corp. may be telephoned
Monday through Friday (except holidays), between the hours of 8:30 a.m. and
5:30 p.m. Eastern time, and calls will be answered by service representatives.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BAL-
ANCE, MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT
STATEMENTS, FORM 1099-DIVS AND CHECKBOOKS CAN BE ORDERED. TO INSURE PROMPT DE-
LIVERY OF DISTRIBUTION CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION SELIG-
MAN DATA CORP. SHOULD BE NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS
CHANGE. ADDRESS CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHARE-
HOLDER HAS ELECTED TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE
SERVICES, SEE "TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial transac-
tions in their Account.
22
<PAGE>
Other investor services are available. These include:
. INVEST-A-CHECK (R) SERVICE enables a shareholder to authorize checks to be
drawn on a regular checking account at regular monthly intervals in fixed
amounts of $100 or more, or regular quarterly intervals in fixed amounts of
$250 or more, to purchase Class A shares. (See "Terms and Conditions" on page
27.)
. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder to exchange
a specified amount, at regular monthly intervals in fixed amounts of $100 or
more, or regular quarterly intervals in fixed amounts of $250 or more, from
Class A shares of the Fund into Class A shares of any other Seligman Mutual
Fund(s) registered in the same name. The shareholder's account must have a
value of at least $5,000 at the initiation of the service. Exchanges will be
made at the public offering price.
. DIVIDENDS FROM OTHER INVESTMENTS permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Fund. (Dividend checks must meet or exceed the required minimum
purchase amount and include the shareholder's name, the name of the Fund and
the class of shares in which the investment is to be made and the sharehold-
er's Fund account number.)
. AUTOMATIC CD TRANSFER SERVICE permits a shareholder to instruct a bank to
invest the proceeds of a maturing bank certificate of deposit ("CD") in shares
of any designated Seligman Mutual Fund. Shareholders who wish to use this
service should contact Seligman Data Corp. or a broker to obtain the necessary
documentation. Banks may charge a penalty on CD assets withdrawn prior to ma-
turity. Accordingly, it will not normally be advisable to liquidate a CD be-
fore its maturity.
. PAYMENTS AT REGULAR INTERVALS can be made to a shareholder who owns or
purchases Class A shares worth $5,000 or more held as book credits under the
Automatic Cash Withdrawal Service. Holders of Class D shares may elect to use
this service with respect to shares that have been held for at least one year.
(See "Terms and Conditions" on page 27.)
. DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person
or to direct the payment of such dividends to another mutual fund in the Se-
ligman Group for purchase at net asset value. Dividends on Class A and Class D
shares may only be directed to shares of the same class of another mutual fund
in the Seligman Group.
. OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be debited from a shareholder's account, if requested.
. COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for prior years back to 1970 are available for a fee of $10.00 per
year, per account, with a maximum charge of $150 per account. Statement re-
quests should be forwarded, along with a check to Seligman Data Corp.
TAX-DEFERRED RETIREMENT PLANS. Shares of the Fund may be purchased for all
types of tax-deferred retirement plans. SFSI makes available plans, plan forms
and custody agreements for:
--Individual Retirement Accounts (IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
--Pension and Profit Sharing Plans for sole proprietorships, corporations
and partnerships.
These types of plans may be established only upon receipt of a written ap-
plication form.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue,
23
<PAGE>
New York, New York 10017. You may telephone toll-free by dialing (800) 445-
1777 from all continental United States or you may receive information through
an authorized dealer.
ADVERTISING THE FUND'S PERFORMANCE
From time to time the Fund advertises its "total return" and "average annual
total return," each of which are calculated separately for Class A and Class D
shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. The "total return" shows what an investment in
shares of Class A and Class D of the Fund would have earned over a specified
period of time (for example, one, five and ten-year periods or since incep-
tion) assuming the payment of the maximum sales load, if any, when the invest-
ment was made and that all distributions and dividends paid by the Fund were
reinvested on the reinvestment dates during the period. The "average annual
total return" is the annual rate required for the initial payment to grow to
the amount which would be received at the end of the specified period (one,
five and ten-year periods or since inception of the Fund); i.e., the average
annual compound rate of return. The total return and average annual total re-
turn of Class A shares quoted from time to time through December 31, 1992 have
not been adjusted to reflect the deduction of the administration, shareholder
services and distribution fee and through April 10, 1991 also have not been
adjusted to reflect the increase in the management fee approved by sharehold-
ers on April 10, 1991, which fees if reflected would reduce the performance
quoted. Total return and average annual total return may also be presented
without the effect of the initial sales load or CDSL, as applicable.
From time to time, reference may be made in advertising or promotional mate-
rial to performance information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ("Lipper"), an indepen- dent reporting service
which monitors the performance of mutual funds. In calculating the total re-
turn of the Fund's Class A and Class D shares, the Lipper analysis assumes in-
vestment of all dividends and distributions paid but does not take into ac-
count applicable sales loads. The Fund may also refer in advertisements or in
other promotional material to articles, comments, listings and columns in the
financial press pertaining to the Fund's performance. Examples of such finan-
cial and other press publications include Barron's, Business Week,
CDA/Weisenberger Mutual Funds Investment Report, Christian Science Monitor,
Financial Planning, Financial Times, Financial World, Forbes, Fortune, Indi-
vidual Investor, Investment Advisor, Investors Business Daily, Kiplinger's,
Los Angeles Times, MONEY Magazine, Morningstar, Inc., Pensions and Invest-
ments, Smart Money, The New York Times, USA Today, U.S. News and World Report,
The Wall Street Journal, Washington Post, Worth Magazine and Your Money.
ORGANIZATION AND CAPITALIZATION
The Fund is an open-end diversified management investment company incorpo-
rated under the laws of the state of Maryland in 1947. The Fund is authorized
to issue 100,000,000 shares of common stock, each with a par value of $1.00,
divided into two classes. Each share of the Fund's Class A and Class D common
stock is equal as to earnings, assets and voting privileges, except that each
class bears its own separate distribution and certain other class expenses and
has exclusive voting rights with respect to any matter to which a separate
vote of any class is required by the 1940 Act or Maryland law. The Fund has
received an order from the Securities and Exchange Commission permitting the
issuance and sale of multiple classes of common stock. In accordance with the
Articles of Incorporation, the Board of Directors may authorize the creation
of additional classes of common stock with such characteristics as are permit-
ted by the order received from the Securities and Exchange Commission. The
1940 Act requires that where more than one class exists, each class must be
preferred over all other classes in respect of assets specifically allocated
to such class. Shares have non-cumulative voting rights, do not have preemp-
tive or subscription rights and are transferable.
24
<PAGE>
APPENDIX A
MANAGEMENT FEE
As compensation for the services performed and the facilities and personnel
provided by the Manager, the Fund pays to the Manager promptly after the end
of each month a fee, calculated on each day during such month, equal to the
Applicable Percentage of the daily net assets of the Fund at the close of
business on the previous business day. The term "Applicable Percentage" means
the amount (expressed as a percentage and rounded to the nearest one millionth
of one percent) obtained by dividing (i) the Fee Amount by (ii) the Fee Base.
The term "Fee Amount" means the sum of an annual basis of:
.50 of 1% of the first $4 billion of Fee Base,
.48 of 1% of the next $2 billion of Fee Base,
.46 of 1% of the next $2 billion of Fee Base, and
.44 of 1% of Fee Base in excess of $8 billion.
The term "Fee Base" as of any day means the sum of the net assets at the
close of business on the previous day of each of the investment companies reg-
istered under the 1940 Act for which the Manager or any affiliated company act
as investment adviser or manager (including the Fund).
SUBADVISORY FEE
As compensation for the services performed and the facilities and personnel
provided by the Subadviser, the Manager pays to the Subadviser each month a
fee, equal to the Applicable Percentage of the average monthly Net Qualifying
Assets of the Fund. For this purpose, the term "Net Qualifying Assets" means
the assets designated by the Manager for which the Subadviser provides
investment management services less any related liabilities as designated by
the Manager.
Average monthly Net Qualifying Assets shall be determined, for any month, by
taking the average of the value of the Net Qualifying Assets as of the (i)
opening of business on the first day of such month and (ii) close of business
on the last day of such month.
APPENDIX B
MOODY'S INVESTORS SERVICE
BONDS AND NOTES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk. Interest payments are protected
by a large or exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be visu-
alized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than Aaa bonds because margins of pro-
tection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving secu-
rity to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa: Bonds and notes which are rated Baa are considered as medium grade ob-
ligations, i.e., they are neither highly protected nor poorly secured. Inter-
est payments and principal security appear adequate for the
25
<PAGE>
present, but certain protective elements may be characteristically lacking or
may be unreliable over any great length of time. Such bonds or notes lack out-
standing investment characteristics and in fact may have speculative charac-
teristics as well.
Ba: Bonds and notes which are rated Ba are judged to have speculative ele-
ments; their future cannot be considered as well-assured. Often the protection
of interest and principal payments may be very moderate and therefore not well
safeguarded during both good and bad times over the future. Uncertainty of po-
sition characterizes bonds and notes in this class.
B: Bonds and notes which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of main-
tenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds and notes which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds and notes which are rated Ca represent obligations which are spec-
ulative in high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds and notes which are rated C are the lowest rated class of bonds or
notes, and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
STANDARD & POOR'S CORPORATION
BONDS
AAA: Debt issues rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very high degree of safety and a very strong
capacity to pay interest and repay principal and differ from the higher rated
issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a
strong degree of safety and capacity to pay interest and repay principal al-
though they are somewhat more susceptible in the long term to the adverse ef-
fects of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB: Debt issues rated BBB are regarded as having a satisfactory degree of
safety and capacity to pay interest and repay principal. Whereas they normally
exhibit adequate protection parameters, adverse economic conditions or chang-
ing circumstances are more likely to lead to a weakened capacity to pay inter-
est and repay principal for bonds in this category than for bonds in higher
rated categories.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and CC the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse condi-
tions.
C: The rating C is reserved for income bonds on which no interest is being
paid.
D: Debt issues rated D are in default, and payment of interest and/or repay-
ment of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
26
<PAGE>
TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the third
decimal place, as can be purchased at the net asset value plus a sales load,
if applicable, at the close of business on the day payment is received. If a
check in payment of a purchase of Fund shares is dishonored for any reason,
Seligman Data Corp. will cancel the purchase and may redeem additional shares,
if any, held in a shareholder's account in an amount sufficient to reimburse
the Fund for any loss it may have incurred and charge a $10.00 return check
fee. Shareholders will receive dividends from investment income and any dis-
tributions from gain realized on investments in shares or in cash, according
to the option elected. Dividend and gain options may be changed by notifying
Seligman Data Corp. in writing. These option changes must be received by Se-
ligman Data Corp. on or before the record date for the dividend or distribu-
tion in order to be effective for that dividend or distribution. Stock certif-
icates will not be issued unless requested. Replacement stock certificates
will be subject to a surety fee.
INVEST-A-CHECK(R) SERVICE
The Invest-A-Check(R) Service is available to all shareholders. The applica-
tion is subject to acceptance by the shareholder's bank and Seligman Data
Corp. Checks in the amount specified will be drawn automatically on the share-
holder's bank on the fifth day of each month (or on the prior business day if
the fifth day of the month falls on a weekend or holiday) in which an invest-
ment is scheduled and invested at the public offering price at the close of
business on the same date. After the initial investment, the value of shares
held in a shareholder's account must equal not less than two regularly sched-
uled investments. If a check is not honored by the shareholder's bank, or if
the value of shares held falls below the required minimum, the Service will be
suspended. In the event that a check is returned marked "unpaid," Seligman
Data Corp. will cancel the purchase, redeem shares held in the shareholder's
account for an amount sufficient to reimburse the Fund for any loss it may
have incurred as a result, and charge a $10.00 return check fee. This fee may
be debited to the shareholder's account. The Service will be reinstated upon
written request indicating that the cause of interruption has been corrected.
The Service may be terminated by the shareholder or Seligman Data Corp. at any
time by written notice. The shareholder agrees to hold the Fund and its agents
free from all liability which may result from acts done in good faith and pur-
suant to these terms. Instructions for establishing Invest-A-Check(R) Service
are given on the Account Application. In the event a shareholder exchanges all
of the shares from one mutual fund in the Seligman Group to another, a share-
holder must reapply for the Invest-A-Check(R) Service in the Seligman Fund
into which the exchange was made. In the event of a partial exchange, the In-
vest-A-Check(R) Service will be continued, subject to the above conditions, in
the Seligman Fund from which the exchange was made. If a shareholder uses the
Invest-A-Check(R) Service to make an IRA investment, the purchase will be
credited as a current year contribution. If a shareholder uses the Invest-A-
Check(R) Service to make an investment in a pension or profit sharing plan,
the purchase will be credited as a current year employer contribution.
AUTOMATIC CASH WITHDRAWAL SERVICE
Automatic Cash Withdrawal Service is available to Class A shareholders and
to Class D shareholders with respect to Class D shares held for one year or
more. A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment. Redemptions will be made
at the asset value at the close of business on the specific day designated by
the shareholder of each month (or on the prior business day if the day speci-
fied falls on a weekend or holiday). A shareholder may change the amount of
scheduled payments, or may suspend payments by written notice to Seligman Data
Corp. at least ten days prior to the effective date of such a change or sus-
pension. The Service may be terminated by the shareholder or Seligman Data
Corp. at any time by written notice. It will be terminated upon proper notifi-
cation of the death or legal incapacity of the shareholder. This Service is
considered terminated in the event a withdrawal of shares, other than to make
scheduled withdrawal payments, reduces the value of shares remaining on de-
posit to less than $5,000. Continued payments in excess of dividend income in-
vested will reduce and ultimately exhaust capital. Withdrawals, concurrent
with purchases of shares of this or any other investment company, will be dis-
advantageous because of the payment of duplicative sales loads, if applicable.
For this reason, additional purchases of Fund shares are discouraged when the
Withdrawal Service is in effect.
LETTER OF INTENT--CLASS A SHARES ONLY
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to the shareholder or credited to their account
upon completion of the specified minimum purchase within the thirteen-month
period, all shares held in escrow will be deposited to the shareholder's ac-
count or delivered to the shareholder. A shareholder may include the total as-
set value of shares of the mutual funds in the Seligman Group on which a sales
load was paid owned as of the date of a Letter of Intent toward the completion
of the Letter. If the total amount invested within the thirteen-month period
does not equal or exceed the specified minimum purchase, the shareholder will
be requested to pay the difference between the amount of the sales load paid
and the amount of the sales load applicable to the total purchase made. If,
within 20 days following the mailing of a written request, a shareholder has
not paid this additional sales load to Seligman Financial Services, sufficient
escrowed shares will be redeemed for payment of the additional sales load.
Shares remaining in escrow after this payment will be released to the Account.
The intended purchase amount may be increased at any time during the thirteen-
month period by filing a revised Agreement for the same period, provided that
a Dealer furnishes evidence that an amount representing the reduction in sales
load under the new Agreement, which becomes applicable on purchases already
made under the original Agreement, will be refunded to the shareholder and
that the required additional escrowed shares are being furnished by the share-
holder.
Shares of Seligman Cash Management Fund which have been acquired by an ex-
change of shares of another mutual fund in the Seligman Group on which there
is a sales load may be taken into account in completing a Letter of Intent, or
for Right of Accumulation. However, shares of this Fund which have been pur-
chased directly may not be used for purposes of determining reduced sales
loads on additional purchases of the other mutual funds in the Seligman Group.
CHECK REDEMPTION SERVICE--CLASS A SHARES ONLY
If shares are held in joint names, all shareholders must sign the Check Re-
demption section of the Account Application. All checks will require all sig-
natures unless a lesser number is indicated in the Check Redemption section.
Accounts in the names of corporations, trusts, partnerships, etc. must list
all authorized signatories.
In all cases, each signator guarantees the genuineness of the other signa-
ture(s). Checks may not be drawn for less than $500.
The shareholder authorizes Mellon Bank, N.A. to honor the checks drawn by
the shareholder on the account of Seligman Income Fund, Inc.--Class A Shares
and to effect a redemption of sufficient shares in the shareholder's account
to cover payment of the check.
Mellon Bank, N.A. shall be liable only for its own negligence, Seligman In-
come Fund, Inc. will not be liable for any loss, expense or cost arising out
of check redemptions. Seligman Income Fund, Inc. reserves the right to change,
modify or terminate this service at any time upon notification mailed to the
address of record of the shareholder(s). Seligman Data Corp. will charge a
$10.00 service fee for any check redemption draft returned marked "unpaid."
This charge may be debited from the shareholder's account. NO PROCEEDS WILL BE
REMITTED TO A SHAREHOLDER WITH RESPECT TO SHARES PURCHASED BY CHECK (UNLESS
CERTIFIED) UNTIL SELIGMAN DATA CORP. RECEIVES NOTICE THAT THE CHECK HAS
CLEARED FOR PAYMENT WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THE SHARES
TO THE SHAREHOLDER'S ACCOUNT.
Rev. 5/95
27
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<CAPTION>
THE SELIGMAN GROUP OF FUNDS
ACCOUNT APPLICATION
Please make your investment check payable to the
"Seligman Group of Funds" and mail it
with this completed Application to:
Seligman Data Corp. TO OPEN A SELIGMAN IRA, SEP OR PENSION/
100 Park Avenue/2nd Floor PROFIT SHARING PLAN, A SEPARATE ADOPTION
New York, NY 10017 AGREEMENT IS REQUIRED. PLEASE CALL
(800) 221-2450 RETIREMENT PLAN SERVICES FOR MORE
INFORMATION AT (800) 445-1777.
<S> <C> <C> <C>
1. ACCOUNT REGISTRATION
TYPE OF ||INDIVIDUAL ||MULTIPLE OWNERS ||GIFT/TRANSFER TO MINOR ||OTHER (Corporations, Trusts, Organizations,
Partnerships, etc.)
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5 Multiple Owners
will be registered as Joint Tenants with Right of Survivorship.
The first name and Social Security or Taxpayer ID Number on line 1, 4, or 5
below will be used for IRS reporting. NAME (Minors cannot be legal owners)
PLEASE PRINT OR TYPE
1._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
2._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
3._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
4.______________________________, as custodian for ____________________ under the _______________
Custodian (one only) Minor (one only) State
Uniform Gift/Transfer to Minors Act_______________________________until age____________________ _________________
Minor's Social Security Number (Not more than 21) Minor's Birthdate
5._______________________________________________________________________ _____________________
Name of Corporation or Other Entity. If a Trust, also complete below. Taxpayer ID Number
TYPE OF TRUST ACCOUNT: ||Trust ||Guardianship ||Conservatorship ||Estate ||Other
Trustee/Fiduciary Name__________________________________ Trust Date__________________________
Trust Name ______________________________,for the benefit of (FBO)_______________________________
2. MAILING ADDRESS
ADDRESS TELEPHONE
___________________________________________ (_______)__________________(_______)_________________
Street Address or P.O. Box Daytime Evening
___________________________________________ U.S. CITIZEN? ||Yes ||No _________________________
City State Zip If no, indicate country
3. INVESTMENT SELECTION
Please indicate the dollar amount(s) you would like to invest in the space
provided below. Minimum initial investment is $1,000 per Fund except for
accounts established pursuant to the Invest-A-Check(R) Service (see section
6-I. of this application). IF MORE THAN ONE FUND IS SELECTED, ACCOUNTS MUST
HAVE IDENTICAL REGISTRATIONS AND CLASS OF SHARES (except for Seligman Cash
Management Fund). PLEASE CHOOSE ONE: || Class A Shares || Class D Shares
MAKE CHECK PAYABLE TO: SELIGMAN GROUP OF FUNDS
$_____________ TOTAL AMOUNT,
INVESTED AS FOLLOWS:
$_____________ *Seligman Communications $_____________ Seligman Common Stock Fund
and Information Fund $_____________ Seligman Income Fund
$_____________ Seligman Henderson $_____________ Seligman High-Yield Bond Fund
Global Technology Fund $_____________ Seligman U.S. Government Securities Fund
$_____________ Seligman Frontier Fund $_____________ Seligman National Tax-Exempt Fund
$_____________ Seligman Henderson Global $_____________ Seligman Tax-Exempt Fund (choose one):
Smaller Companies Fund CA-Qlty.|| FL|| MD|| MN|| NY|| OR||
$_____________ Seligman Capital Fund CA-Hy. || GA|| MA|| MO|| NC|| PA||
$_____________ Seligman Growth Fund CO || LA|| MI|| NJ|| OH|| SC||
$_____________ Seligman Henderson
International Fund $_____________ Seligman Cash Management Fund (Class A only)
*Closed indefinitely to new investors after June 30, 1995; please contact
your financial advisor for information on current availability. NO
REDEMPTION PROCEEDS WILL BE REMITTED TO A SHAREHOLDER WITH RESPECT TO
SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) UNTIL SELIGMAN DATA CORP.
RECEIVES NOTICE THAT THE CHECK HAS CLEARED, WHICH MAY BE UP TO 15 DAYS FROM
THE CREDIT OF THE SHARES TO THE SHAREHOLDER'S ACCOUNT.
4. SIGNATURE AND CERTIFICATION
Under penalties of perjury I certify that the number shown on this form is
my correct Taxpayer Identification Number (Social Security Number) and that
I am not subject to backup withholding either because I have not been
notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or the Internal Revenue Service has
notified me that I am no longer subject to backup withholding. I certify to
my legal capacity to purchase or redeem shares of each Fund for my own
Account, or for the Account of the organization named below. I have
received and read the current Prospectus of each Fund in which I am
investing and appoint Seligman Data Corp. as my agent to act in accordance
with my instructions herein.
A. ________________________________________________________________________
Date Signature of Investor
B. ________________________________________________________________________
Date Signature of Co-Investor, if any
5. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
________________________________________ _____________________________
Firm Name Representative's Nam
________________________________________ _____________________________
Branch Office Address Representative's ID Number
________________________________________ (______)_____________________
City State Zip Representative's Telephone Number
________________________________________
Branch Number
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6. ACCOUNT OPTIONS AND SERVICES
________________________________________________________________________________
A. DIVIDENDS AND GAIN DISTRIBUTION OPTIONS
I choose the following options for each Fund listed: OPTION
------
1 2 3
Option 1. Dividends in shares, gain distributions in shares. || || || FUND NAME
Option 2. Dividends in cash, gain distributions in shares. || || || FUND NAME
Option 3. Dividends in cash, gain distributions in cash. || || || FUND NAME
__________________________________________________________________________________________
NOTE: IF NO ELECTION IS MADE, OPTION 1. WILL AUTOMATICALLY BE PUT INTO EFFECT.
All dividend and/or gain distributions taken in shares will be invested at net asset value.
__________________________________________________________________________________________
________________________________________________________________________________
B. DIVIDEND DIRECTION OPTION
If you wish to have your dividend payments made to another
party or Seligman Fund, please complete the following. I
hereby authorize and request that my dividend payments from
the following Fund(s)
__________________ __________________ __________________ be made payable to:
Fund Name Fund Name Fund Name
Name______________________ Seligman Fund__________________
Address___________________ (If opening a new account, a minimum of $1,000 is required.)
City______________________ Account Number_________________
State, Zip________________ (For an existing account.)
________________________________________________________________________________
C. LETTER OF INTENT SERVICE (CLASS A ONLY)
I intend to purchase, although I am not obligated to do so,
additional shares of Seligman _________________________
Fund within a 13-month period which, together with the
total asset value of shares owned, will aggregate at least:
||$50,000 ||$100,000 ||$250,000 ||$500,000 ||$1,000,000
||$4,000,000
I AGREE TO THE ESCROW PROVISION LISTED UNDER "TERMS AND CONDITIONS"
IN THE BACK OF EACH PROSPECTUS.
________________________________________________________________________________
D. RIGHT OF ACCUMULATION (CLASS A ONLY)
Please identify any additional Seligman Fund accounts
eligible for the Right of Accumulation or to be used toward
completion of a Letter of Intent, and check applicable box:
|| I am a trustee for the following accounts, which are
held by the same trust, estate, or under the terms of a
pension, profit sharing or other employee benefit trust
qualified under section 401 of the Internal Revenue Code.
|| In calculating my holdings for Right of Accumulation or
Letter of Intent purposes, I am including the following
additional accounts which are registered in my name, in my
spouse's name, or in the name(s) of my child(ren) under
the age of 21.
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
________________________________________________________________________________
E. AUTOMATIC CASH WITHDRAWAL SERVICE
(CLASS A, OR CLASS D ONLY AFTER CLASS D SHARES ARE HELD FOR ONE YEAR)
Please send a check for $ withdrawn from Seligman
________________________ Fund, beginning on the day of 19,
and thereafter on the day specified of every:
||Month ||3rd Month ||6th Month ||12th Month
Make payments to: Name___________________________________
Address________________________________
City___________State________Zip________
Shares having a current value at offering price of $5,000
or more must be held in the account at initiation of
Service, and all shares must be in "book credit" form.
________________________________________________________________________________
F. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE
I authorize Seligman Data Corp. to withdraw $ _____________
(minimum: $100 monthly or $250 quarterly) from my Seligman
Cash Management Fund Class A account || Monthly or
|| Quarterly to purchase Class A shares of Seligman
________________________________ Fund, beginning on the
_____ day of __________ 19 ____. Shares in the Seligman
Cash Management Fund Class A account must have a current
value of $5,000 at the initiation of Service and all shares
must be in "book credit" form.
________________________________________________________________________________
G. EXPEDITED REDEMPTION SERVICE, FOR SELIGMAN CASH MGMT. FUND ONLY
I hereby authorize Seligman Data Corp. to honor telephone
or written instructions received from me without a
signature and believed by Seligman Data Corp. to be genuine
for redemption. Proceeds will be wired ONLY to the
commercial bank listed below for credit to my account, or
to my address of record. If Expedited Redemption Service is
elected, no certificates for shares will be issued. I also
understand and agree to the risks and procedures outlined
for all telephone transactions set forth in section 6-H. of
this Application.
Investment by ||Check ______________________________________________________________________
||Wire Name of Commercial Bank (Savings Bank May Not Be Used)
_________________________ ______________________ ______________________
Bank Account Name Bank Account No. Bank Routing No.
_______________________________________________________________________________________
Address of Bank City State Zip Code
X________________________________ X____________________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
______________________________________________________________________________________________________________________
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H. TELEPHONE SERVICE ELECTION
AVAILABLE FOR INDIVIDUAL OR JOINT TENANT ACCOUNTS ONLY
By completing this section, I understand that I may place
the following requests by telephone:
o Redemptions up to $50,000 o Exchanges
o Address Changes o Dividend and/or Capital
Gain Distribution Option
changes
AUTHORIZATION
I understand that the telephone services are optional and
that by signing below I authorize the Funds, all other
Seligman Funds with the same account number and
registration which I currently own or in which I invest in
the future, and Seligman Data Corp. ("SDC"), to act upon
instructions received by telephone from me or any other
person in accordance with the provisions regarding
telephone services as set forth in the current prospectus
of each such Fund, as amended from time to time. I
understand that redemptions of uncertificated shares of up
to $50,000 will be sent only to my account address of
record, and only if such address has not changed within the
30 days preceding such request. Any telephone instructions
given in respect of this account and any account into which
exchanges are made are hereby ratified and I agree that
neither the Fund(s) nor SDC will be liable for any loss,
cost or expense for acting upon such telephone instructions
reasonably believed to be genuine and in accordance with
the procedures described in each prospectus, as amended
from time to time. Such procedures include recording of
telephone instructions, requesting personal and/or account
information to verify a caller's identity and sending
written confirmations of transactions. As a result of this
policy, I may bear the risk of any loss due to unauthorized
or fraudulent telephone instructions; provided, however,
that if the Fund(s) or SDC fail to employ such procedures,
the Fund(s) and/or SDC may be liable. TO ELECT TELEPHONE
SERVICES, PLEASE SIGN YOUR NAME(S) AS IT APPEARS ON THE
FIRST PAGE OF THIS ACCOUNT APPLICATION.
X________________________________ X____________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
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I. INVEST-A-CHECK(R) SERVICE
To start your Invest-A-Check(R) Service, fill out the "Bank
Authorization to Honor Pre-Authorized Checks" below, and
forward it with an unsigned bank check from your regular
checking account (marked "void", if you wish). Please
arrange with my bank to draw pre-authorized checks and
invest the following dollar amounts (minimum: $100 monthly
or $250 quarterly) in the designated Seligman Fund(s) as
indicated:
_______________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
I understand that my checks will be drawn on the fifth day
of the month, or prior business day, for the period
designated. I have completed the "Bank Authorization to
Honor Pre-Authorized Checks" below and have read and agree
to the Terms and Conditions applicable to the
Invest-A-Check(R) Service as set forth in each Prospectus
and as set forth below in the Bank Authorization.
X__________________________________________________________________
Signature of Investor (Please also sign Bank Authorization below.)
X__________________________________________________________________
Signature of Co-Investor, if any
________________________________________________________________________________________
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
________________________________________________________________________________________
To:_____________________________________________________________________________________
(Name of Bank)
________________________________________________________________________________________
Address of Bank or Branch (Street, City, State and Zip)
Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, N.Y. 10017, to the order of the Fund(s) designated
below:
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
and charge them to my regular checking account. Your authority to do so shall
continue until you receive written notice from me revoking it. You may
terminate your participation in this arrangement at any time by written notice
to me. I agree that your rights with respect to each pre-authorized check
shall be the same as if it were a check drawn and signed by me. I further
agree that should any such check be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
___________________________________ _________________________________________________
Checking Account Number Name(s) of Depositor(s) -- Please Print
X__________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank
X__________________________________________________
________________________________________________________________________________________
Address (Street) (City) (State, Zip)
________________________________________________________________________________________
To the Bank Designated above:
Your depositor(s) named in the above form has instructed us to establish the
Invest-A-Check(R) Service for his convenience. Under the terms of the Service,
your depositor(s) has pre-authorized checks to be drawn against his account in
a specific amount at regular intervals to the order of the designated Fund(s).
Checks presented to you will be magnetic-ink coded and will otherwise conform
to specifications of the American Bankers Association. A letter of
indemnification addressed to you and signed by Seligman Financial Services,
Inc., general distributor of the Seligman Mutual Funds, appears below. If
there is anything we can do to help you in giving your depositor(s) this
additional Service which he has requested, please let us know.
SELIGMAN DATA CORP.
INDEMNIFICATION AGREEMENT
To the Bank designated above:
SELIGMAN FINANCIAL SERVICES, INC., distributor of the shares of the Seligman
Mutual Funds, hereby agrees:
(1) To indemnify and hold you harmless against any loss, damage, claim or
suit, and any costs or expenses reasonably incurred in connection therewith,
either (a) arising as a consequence of your actions in connection with the
execution and issuance of any check or draft, whether or not genuine,
purporting to be executed by Seligman Data Corp. and received by you in the
regular course of business for the purpose of payment, or (b) resulting from
the dishonor of any such check or draft, with or without cause and
intentionally or inadvertently, even though such dishonor results in
suspension or termination of the Invest-A-Check(R) Service pursuant to which
such checks or drafts are drawn. (2) To refund to you any amount erroneously
paid by you on any such check or draft, provided claim for any such payment is
made within 12 months after the date of payment.
SELIGMAN FINANCIAL SERVICES, INC.
/S/Stephen J. Hodgdon
President
________________________________________________________________________________
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<PAGE>
J. CHECK REDEMPTION SERVICE (CLASS A ONLY)
Available to shareholders who own or purchase shares having
a value of at least $25,000 invested in any of the
following: Seligman High-Yield Bond Fund, Seligman Income
Fund, Seligman U.S. Government Securities Fund, and any
Seligman Tax-Exempt Fund, or $2,000 invested in Seligman
Cash Management Fund. IF YOU WISH TO USE THIS SERVICE, YOU
MUST COMPLETE SECTION 4 AND THE SIGNATURE CARD BELOW.
SHAREHOLDERS ELECTING THIS SERVICE ARE SUBJECT TO THE
CONDITIONS OF THE TERMS AND CONDITIONS IN THE BACK OF EACH
PROSPECTUS.
CHECK WRITING SIGNATURE CARD Authorized Signature(s)
___________________________________________ 1.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 2.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 3.______________________________
Name of Fund for Check Redemption Service
__________________________________________ 4.______________________________
Account Number (If known)
__________________________________________ 5.______________________________
Account Registration (Please Print)
|| Check here if only one signature is required on checks.
|| Check here if a combination of signatures is required and specify the
number:___________________.
ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC., MUST
INDICATE THE LEGAL TITLES OF ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS
ELECTING THIS SERVICE ARE SUBJECT TO THE TERMS AND CONDITIONS LISTED IN THE
PROSPECTUS.
<PAGE>
MANAGED BY
[J&W SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
JWS23 5/95
<PAGE>
SELIGMAN
INCOME
FUND, INC.
- ----------------------------------------
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
EQCS1
- ----------------------------------------
PROSPECTUS
- ----------------------------------------
SELIGMAN
INCOME
FUND, INC.
- ----------------------------------------
MAY 1, 1995
[LOGO OF J&WS APPEARS HERE]
- ----------------------------------------
An Income Fund
In its 49th year
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
SELIGMAN INCOME FUND, INC.
100 Park Avenue
New York, New York 10017
New York City Telephone (212) 850-1864
Toll Free Telephone (800) 221-2450 all continental United States
For Retirement Plan Information - Toll-Free Telephone (800) 445-1777
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Income Fund,
Inc., (the "Fund") dated May 1, 1995. It should be read in conjunction with the
Prospectus, which may be obtained by writing or calling the Fund at the above
address or telephone numbers. This Statement of Additional Information,
although not in itself a Prospectus, is incorporated by reference into the
Prospectus in its entirety.
The Fund offers two classes of shares. Class A shares may be
purchased at net asset value plus a sales load of up to 4.75%. Class D shares
may be purchased at net asset value and are subject to a contingent deferred
sales load ("CDSL") of 1% if redeemed within one year.
Each Class A and Class D share represents an identical legal interest
in the investment portfolio of the Fund and has the same rights except for
certain class expenses and except that Class D shares bear a higher distribution
fee that generally will cause the Class D shares to have a higher expense ratio
and pay lower dividends than Class A shares. Each Class has exclusive voting
rights with respect to its distribution plan. Although holders of Class A and
Class D shares have identical legal rights, the different expenses borne by each
Class will result in different net asset values and dividends. The two classes
also have different exchange privileges.
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<CAPTION>
TABLE OF CONTENTS
Page Page
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Investment Objectives, Policies Purchase And Redemption Of Fund Shares.... 11
And Risks............................... 2 Distribution Services..................... 14
Investment Limitations.................... 4 Valuation................................. 14
Directors And Officers.................... 5 Performance............................... 15
Management And Expenses................... 8 General Information....................... 16
Administration, Shareholder Services And Financial Statements...................... 16
Distribution Plan....................... 10 Appendix A................................ 17
Portfolio Transactions.................... 10 Appendix B................................ 19
</TABLE>
EQIN1A
-1-
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
As stated in the Prospectus, the Fund seeks primarily to provide high current
income consistent with what is believed to be prudent risk of capital.
Secondarily, it also seeks to provide the possibility of improvement in income
and capital value over the longer term.
Lending of Portfolio Securities. As stated in the Prospectus, the Fund may lend
- -------------------------------
portfolio securities to certain institutional borrowers of securities and may
invest the cash collateral and obtain additional income or receive an agreed
upon amount of interest from the borrower. Loans are subject to termination at
the option of the Fund or the borrower. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. The Fund does not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
Rights and Warrants. The Fund may not invest in rights and warrants if, at the
- --------------------
time of acquisition, the investment in rights and warrants would exceed 5% of
the Fund's net assets, valued at the lower of cost or market. In addition, no
more than 2% of net assets may be invested in warrants not listed on the New
York or American Stock Exchanges. For purposes of this restriction, rights and
warrants acquired by the Fund in units or attached to securities may be deemed
to have been purchased without cost.
Foreign Currency Transactions. A forward foreign currency exchange contract is
- -----------------------------
an agreement to purchase or sell a specific currency at a future date and at a
price set at the time the contract is entered into. The Fund will generally
enter into forward foreign currency exchange contracts to fix the US dollar
value of a security it has agreed to buy or sell for the period between the date
the trade was entered into and the date the security is delivered and paid for,
or, to hedge the US dollar value of securities it owns.
The Fund may enter into a forward contract to sell or buy the amount of a
foreign currency it believes may experience a substantial movement against the
US dollar. In this case the contract would approximate the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. Under
normal circumstances, the portfolio manager will limit forward currency
contracts to not greater than 75% of the Fund's portfolio position in any one
country as of the date the contract is entered into. This limitation will be
measured at the point the hedging transaction is entered into by the Fund.
Under extraordinary circumstances, the Subadviser may enter into forward
currency contracts in excess of 75% of the Fund's portfolio position in any one
country as of the date the contract is entered into. The precise matching of
the forward contract amounts and the value of securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market involvement in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Under certain circumstances, the Fund may commit
up to the entire value of its assets which are denominated in foreign currencies
to the consummation of these contracts. The Subadviser will consider the effect
a substantial commitment of its assets to forward contracts would have on the
investment program of the Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, the Fund will also not enter
into such forward contracts or maintain a net exposure to such contracts where
the consummation of the contracts would oblige the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency. The Fund, in order to avoid excess
transactions and transaction costs, may nonetheless maintain a net exposure to
forward contracts in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency provided the excess amount is
"covered" by cash or liquid, high-grade debt securities, denominated in any
currency, at least equal at all times to the amount of such excess. Under
normal circumstances, consideration of the prospect for currency parties will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Subadviser believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
At the maturity of a forward contract, the Fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
-2-
<PAGE>
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. However, the Fund may use liquid, high-grade
debt securities, denominated in any currency, to cover the amount by which the
value of a forward contract exceeds the value of the securities to which it
relates.
If the Fund retains the portfolio security and engages in offsetting
transactions, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will be
limited to the transactions described above. Of course, the Fund is not
required to enter into forward contracts with regard to its foreign currency-
denominated securities and will not do so unless deemed appropriate by the
Subadviser. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange
at a future date. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of a hedged currency, at the same
time, they tend to limit any potential gain which might result from an increase
in the value of that currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries which entitle
the Fund to a reduced rate of such taxes or exemption from taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amounts of the Fund's assets to be invested within various countries is not
known.
Repurchase Agreements. The Fund may enter into repurchase agreements with
- ---------------------
commercial banks and with broker/dealers to invest cash for the short-term. A
repurchase agreement is an agreement under which the Fund acquires a money
market instrument, generally a U.S. Government obligation, subject to resale at
an agreed upon price and date. Such resale price reflects an agreed upon
interest rate effective for the period of time the instrument is held by the
Fund and is unrelated to the interest rate on the instrument. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating the
securities underlying the agreement, decline in value of the underlying
securities and loss of interest. Repurchase agreements usually are for short
periods, such as one week or less, but may be for longer periods. However, as a
matter of fundamental policy, the Fund will not enter into repurchase agreements
of more than one week's duration if more than 10% of its net assets would be so
invested. The Fund to date has not entered into any repurchase agreements and
has no present intention of doing so in the future.
Except as described under "Investment Limitations" below, the foregoing
investment policies are not fundamental and the Board of Directors of the Fund
may change such policies without the vote of a majority of its outstanding
voting securities (as defined on page 4).
Portfolio Turnover. The Fund's portfolio turnover rate is calculated by
- ------------------
dividing the lesser of purchases or sales of portfolio securities for the fiscal
year by the monthly average value of the portfolio securities owned during the
fiscal year. Securities with remaining maturities of one year or less at the
date of acquisition are excluded from the calculation.
The Fund's portfolio turnover rates were 66.62% in 1994 and 60.62% in 1993.
-3-
<PAGE>
INVESTMENT LIMITATIONS
Under the Fund's fundamental policies, which cannot be changed except by vote
of a majority of its outstanding voting securities, the Fund may not:
. Borrow money, except for temporary purposes in an amount not to exceed 5% of
the value of its total assets;
. Mortgage or pledge any of its assets, except to secure permitted borrowings
up to 5% of the value of its total assets and except to enter into escrow
arrangements in connection with the sales of permitted call options. The
Fund has no present intention of investing in these types of securities, and
will not do so without the prior approval of the Fund's Board of Directors;
. Purchase securities (other than closing call options) except for investment,
buy on "margin," or sell "short";
. Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been in
operation at least three continuous years shall be excluded from this
calculation;
. Invest more than 5% of its total assets (taken at market) in securities of
any one issuer, other than the U.S. Government, its agencies or
instrumentalities, buy more than 10% of the outstanding voting securities or
more than 10% of all the securities of any issuer, or invest to control or
manage any company;
. Invest more than 25% of total assets at market value in any one industry;
. Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
. Purchase or hold any real estate, including limited partnership interests in
real property, except the Fund may invest in securities secured by real
estate or interests therein or issued by persons (other than real estate
investment trusts) which deal in real estate or interests therein;
. Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more than
0.5% of the securities of that other company own in the aggregate more than
5% of such securities;
. Deal with its directors or officers, or firms they are associated with, in
the purchase or sale of securities of other issuers, except as broker;
. Purchase or sell commodities and commodity contracts;
. Underwrite the securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security;
. Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, the entry
into repurchase agreements or deposits with banks may be considered loans;
or
. Write or purchase put, call, straddle or spread options except that the Fund
may sell covered call options listed on a national securities exchange or
quoted on NASDAQ and purchase closing call options so listed or quoted. The
Fund has no present intention of investing in these types of securities, and
will not do so without the prior approval of the Fund's Board of Directors.
Although not fundamental policies subject to shareholder vote, as long as the
Fund's shares are registered in certain states, it may not mortgage, pledge or
hypothecate its assets to the extent that the value of such encumbered assets
exceeds 10% of the per share offering price of shares of the Fund, it may not
invest in interests in oil, gas, mineral leases or other mineral exploration or
development programs and it must limit to 5% of its gross assets at market value
its combined investments in securities of companies in operation for less than
three years.
-4-
<PAGE>
Under the Investment Company Act of 1940 (the "1940 Act"), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or
(2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below.
Each Director who is an "interested person" of the Fund, as defined in the 1940
Act, is indicated by an asterisk. Unless otherwise indicated, their addresses
are 100 Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive
(56) Officer and Chairman of the Executive Committee
Managing Director, Chairman and President, J. & W.
Seligman & Co. Incorporated, investment managers
and advisors; and Seligman Advisors, Inc.,
advisors; Chairman and Chief Executive Officer, the
Seligman Group of Investment Companies; Chairman,
Seligman Financial Services, Inc., distributor;
Seligman Holdings, Inc., holding company; Seligman
Services, Inc., broker/dealer; and Carbo Ceramics
Inc., ceramic proppants for oil and gas industry;
Director or Trustee, Seligman Data Corp. (formerly
Union Data Service Center, Inc.), shareholder
service agent; Daniel Industries, Inc.,
manufacturer of oil and gas metering equipment;
Kerr-McGee Corporation, diversified energy company;
and Sarah Lawrence College; and a Member of the
Board of Governors of the Investment Company
Institute; formerly, Chairman, Seligman Securities,
Inc., broker/dealer; and J. & W. Seligman Trust
Company, trust company.
RONALD T. SCHROEDER* Director, President and Member of the Executive
(47) Committee
Director, Managing Director and Chief Investment
Officer, J. & W. Seligman & Co. Incorporated,
investment managers and advisors; Managing Director
and Chief Investment Officer, Seligman Advisors,
Inc., advisors; Director or Trustee and President
and Chief Investment Officer, Tri-Continental
Corporation, closed-end investment company and the
open-end investment companies in the Seligman Group
of Investment Companies; Director and President,
Seligman Holdings, Inc., holding company; Director,
Seligman Financial Services, Inc., distributor;
Seligman Data Corp., shareholder service agent;
Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc., closed-end investment
companies; Seligman Henderson Co., advisors; and
Seligman Services, Inc., broker/dealer; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
FRED E. BROWN* Director
(81)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, Tri-Continental Corporation,
closed-end investment company; and the open-end
investment companies in the Seligman Group of
Investment Companies; Director, Seligman Financial
Services, Inc., distributor; Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies;
Seligman Services Inc., broker/dealer; Trustee,
Trudeau Institute, nonprofit bio-medical research
organization; Lake Placid Center for the Arts,
cultural organization; Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
-5-
<PAGE>
ALICE S. ILCHMAN Director
(59)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; NYNEX (formerly, New York Telephone
Company), telephone company; The Rockefeller
Foundation, charitable foundation; and The
Committee for Economic Development; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, International Research
and Exchange Board, intellectual exchanges.
Sarah Lawrence College, Bronxville, NY 10708
JOHN E. MEROW* Director
(65)
Partner, Sullivan & Cromwell, law firm; Director or
Trustee, the Commonwealth Aluminum Corporation; the
Seligman Group of Investment Companies; the
Municipal Art Society of New York; the U. S.
Council for International Business and the U. S.-
New Zealand Council; Chairman, American Australian
Association; the Municipal Art Society of New York;
Member of the American Law Institute and Council on
Foreign Relations; and Member of the Board of
Governors of the Foreign Policy Association and New
York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(52)
Attorney; Director or Trustee, the Seligman Group
of Investment Companies; National Association of
Independent Schools (Washington, D.C.), education;
Chairman of the Board of Trustees of St. George's
School (Newport, RI).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
DOUGLAS R. NICHOLS, JR. Director
(75)
Management Consultant; Director or Trustee, the
Seligman Group of Investment Companies; formerly,
Trustee, Drew University.
790 Andrews Avenue, Delray Beach, FL 33483
JAMES C. PITNEY Director
(68)
Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of
Investment Companies; Public Service Enterprise
Group, public utility.
Park Avenue at Morris County, P.O. Box 1945,
Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(67)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn Union
Gas Company; The Committee for Economic
Development; Dow Jones & Co., Inc.; Public
Broadcasting Service; formerly, Co-Chairman of the
Policy Council of the Tax Foundation; Director and
Vice Chairman, Mobil Corporation; Director, Tesoro
Petroleum Companies, Inc.; and Director and
President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY 10017
HERMAN J. SCHMIDT Director
(78)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; H. J. Heinz Company; HON Industries,
Inc.; and MAPCO, Inc; formerly, Director, MetLife
Series Fund, Inc. and MetLife Portfolios, Inc.; and
Ryder System, Inc.
15 Oakley Lane, Greenwich, CT 06830
-6-
<PAGE>
ROBERT L. SHAFER Director
(62)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies; and USLIFE Corporation, life
insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(60)
Executive Vice President, Chief Operating Officer
and Director, Sammons Enterprises, Inc.; Director
or Trustee, Red Man Pipe and Supply Company, piping
and other materials; the Seligman Group of
Investment Companies; Director, C-SPAN.
300 Crescent Court, Suite 700, Dallas, TX 75201
BRIAN T. ZINO* Director and Member of the Executive Committee
(42)
Managing Director (formerly, Chief Administrative
and Financial Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, the Seligman Group of
Investment Companies; Chairman, Seligman Data
Corp., shareholder service agent; Director,
Seligman Financial Services, Inc., distributor;
Seligman Services, Inc., broker/dealer; Senior Vice
President, Seligman Henderson Co., advisors;
formerly, Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisors; and Director, Seligman
Securities, Inc., broker/dealer; and J. & W.
Seligman Trust Company, trust company.
STACEY G. NAVIN Co-Portfolio Manager
(30)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment managers
and advisors; Co-Portfolio Manager, two other open-
end investment companies in the Seligman Group of
Investment Companies.
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(38)
Managing Director (formerly, Senior Vice President
and Senior Investment Officer), J. & W. Seligman &
Co. Incorporated, investment managers and advisors;
Vice President and Portfolio Manager, two other
open-end investment companies in the Seligman Group
of Investment Companies and Tri-Continental
Corporation, closed-end investment company.
LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and advisors;
Seligman Financial Services, Inc., distributor; and
Seligman Advisors, Inc., advisors; Vice President,
the Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Audit Manager at Price Waterhouse,
independent accountants.
FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of Investment
Companies; J. & W. Seligman & Co., Incorporated,
investment managers and advisers; Seligman
Financial Services, Inc., distributor; Seligman
Henderson Co., advisers; Seligman Services, Inc.,
broker/dealers; Seligman Data Corp.; Vice
President, Law and Regulation, J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
formerly, attorney, Seward & Kissel.
-7-
<PAGE>
THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc.
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
------------------
Pension or
Retirement
Benefits
Accrued as Total
Aggregate part of Compensation
Compensation Fund from Fund and
Position With Registrant from Fund (1) Expenses Fund Complex (2)
- ------------------------ ------------- ---------- ----------------
<S> <C> <C> <C>
William C. Morris, Director N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
Alice S. Ilchman, Director $3,317.29 N/A $67,000.00
John E. Merow, Director 3,281.58(d) N/A 66,000.00(d)
Betsy S. Michel, Director 3,281.58 N/A 66,000.00
Douglas R. Nichols, Jr., Director 3,281.58 N/A 66,000.00
James C. Pitney, Director 3,317.29 N/A 67,000.00
James Q. Riordan, Director 3,281.58 N/A 66,000.00
Herman J. Schmidt, Director 3,281.58 N/A 66,000.00
Robert L. Shafer, Director 3,281.58 N/A 66,000.00
James N. Whitson, Director 3,281.58(d) N/A 66,000.00(d)
Brian T. Zino, Director N/A N/A N/A
- ----------------------
</TABLE>
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1994.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred. As of December 31, 1994, the total amounts of deferred
compensation (including interest) payable to Messrs. Merow, Pitney and Whitson
were $38,120, $37,060 and $5,195, respectively. Mr. Pitney no longer defers
current compensation.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. Under this arrangement, interest is accrued on
the deferred balances. The annual cost of such interest is included in the
directors' fees and expenses, and the accumulated balance thereof is included in
"Liabilities" in the Fund's financial statements.
Directors and officers of the Fund are also directors or trustees and officers
of some or all of the other investment companies in the Seligman Group.
Directors and officers of the Fund as a group owned directly or indirectly
18,900 shares or less than 1% of the Fund's Class A Capital Stock at March 31,
1995. As of that date, no Directors or officers owned shares of the Fund's
Class D Capital Stock.
MANAGEMENT AND EXPENSES
As indicated in the Prospectus, under the Management Agreement, dated December
29, 1988, as amended April 10, 1991, subject to the control of the Board of
Directors, the Manager manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with the
Fund's investment objectives and policies, and administers its business and
other affairs. The Manager provides the Fund with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. The Manager pays all of the compensation of
directors of the Fund who are employees or consultants of the Manager and of the
officers and employees of the Fund. The Manager also provides senior management
for Seligman Data Corp., the Fund's shareholder service agent.
-8-
<PAGE>
The Fund pays the Manager a management fee for its services, calculated daily
and payable monthly, based on a percentage of the daily net assets of the Fund.
The method for determining this percentage is set forth in Appendix A to the
Prospectus. The management fee amounted to $1,846,289 in 1994, $1,419,768 in
1993 and $897,182 in 1992 which was equivalent to an annual rate of .49% of the
Fund's average net assets in 1994, .49% in 1993 and .49% in 1992.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees including fees and expenses for qualifying the Fund
and its shares under Federal and state securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by (or serving as a Director of) the Manager
or its affiliates, insurance premiums and extraordinary expenses such as
litigation expenses. The Manager has undertaken to one state securities
administrators, so long as required, to reimburse the Fund for each year in the
amount by which total expenses, including the management fee, but excluding
interest, taxes, brokerage commissions, distribution fees and extraordinary
expenses, exceed 2 1/2% of the first $30,000,000 of average net assets, 2% of
the next $70,000,000 of average net assets, and 1 1/2% thereafter. Such
reimbursement, if any, will be made monthly.
On December 29, 1988, a majority of the outstanding voting securities of the
Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.
The Management Agreement was approved by the Board of Directors on September
30, 1988 and by the shareholders at a Special Meeting held on December 16, 1988.
The Management Agreement will continue in effect until December 31 of each year
if (1) such continuance is approved in the manner required by the 1940 Act (by a
vote of a majority of the Board of Directors or of the outstanding voting
securities of the Fund and by a vote of a majority of the Directors who are not
parties to the Management Agreement or interested persons of any such party) and
(2) if the Manager shall not have notified the Fund at least 60 days prior to
December 31 of any year that it does not desire such continuance. The
Management Agreement may be terminated by the Fund, without penalty, on 60 days'
written notice to the Manager and will terminate automatically in the event of
its assignment. The Fund has agreed to change its name upon termination of the
Management Agreement if continued use of the name would cause confusion in the
context of the Manager's business.
The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. See Appendix B for further history of the
Manager.
Under the Subadvisory Agreement, dated June 1, 1994, the Subadviser supervises
and directs a portion of the Fund's investment in foreign securities and
Depository Receipts consistent with the Fund's investment objectives, policies
and principles. For these services, the Subadviser is paid a fee as described
in the Appendix to the Fund's Prospectus. The Subadvisory Agreement was
approved by the Board of Directors at a meeting held on January 20, 1994 and by
the shareholders of the Fund on May 19, 1994. The Subadvisory Agreement will
continue in effect until December 31, 1995, and from year to year thereafter if
such continuance is approved in the manner required by the 1940 Act (by a vote
of a majority of the Board of Directors or of the outstanding voting securities
of the Fund and by a vote of a majority of the Directors who are not parties to
the Subadvisory Agreement or interested persons of any such party) and (2) if
the Subadviser shall not have notified the Manager in writing at least 60 days
prior to December 31 of any year that it does not desire such continuance. The
Subadvisory Agreement may be terminated at any time by the Fund, on 60 days
written notice to the Subadviser. The Subadvisory Agreement will terminate
automatically in the event of its assignment or upon the termination of the
Management Agreement.
For the period June 1, 1994 through December 31, 1994, the Subadviser received
a fee of $102,618.
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. Henderson Administration Group plc, headquartered in
London, is one of the largest independent money managers in Europe. The Firm
currently manages approximately $18.5 billion in assets and is recognized as a
specialist in global equity investing.
-9-
<PAGE>
Officers, directors and employees of the Manager are permitted to engage in
personal securities transactions, subject to the Manager's Code of Ethics (the
"Code"). The Code proscribes certain practices with regard to personal
securities transactions and personal dealings, provides a framework for the
reporting and monitoring of personal securities transactions by the Manager's
Director of Compliance, and sets forth a procedure of identifying, for
disciplinary action, those individuals who violate the Code. The Code prohibits
each of the officers, directors and employees (including all portfolio managers)
of the Manager from purchasing or selling any security that the officer,
director or employee knows or believes (i) was recommended by the Manager for
purchase or sale by any client, including the Fund, within the preceding two
weeks, (ii) has been reviewed by the Manager for possible purchase or sale
within the preceding two weeks, (iii) is being purchased or sold by any client,
(iv) is being considered by a research analyst, (v) is being acquired in a
private placement, unless prior approval has been obtained from the Manager's
Director of Compliance, or (vi) is being acquired during an initial or secondary
public offering. The Code also imposes a strict standard of confidentiality and
requires portfolio managers to disclose any interest they may have in the
securities or issuers that they recommend for purchase by any client.
The Code also prohibits (i) each portfolio manager or member of an investment
team from purchasing or selling any security within seven calendar days of the
purchase or sale of the security by a client's account (including investment
company accounts) for which the portfolio manager or investment team manages and
(ii) each employee from engaging in short-term trading (a purchase and sale or
vice-versa within 60 days). Any profit realized pursuant to either of these
prohibitions must be disgorged.
Officers, directors and employees are required, except under very limited
circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may
not be purchased due to a possible conflict with clients. All officers,
directors and employees are also required to disclose all securities
beneficially owned by them on December 31 of each year.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
As indicated in the Prospectus, the Fund has adopted an Administration,
Shareholder Services and Distribution Plan for each Class (the "Plan") in
accordance with Section 12(b) of the Act and Rule 12b-1 thereunder.
The Plan was approved on July 16, 1992 by the Board of Directors of the Fund,
including a majority of the Directors who are not "interested persons" (as
defined in the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the "Qualified
Directors") and was approved by shareholders of the Fund at a Special Meeting of
Shareholders held on November 23, 1992. The Plan became effective in respect of
the Class A shares on January 1, 1993. The Plan was approved in respect of the
Class D shares on March 18, 1993 by the Board of Directors of the Fund,
including a majority of the Qualified Directors, and became effective with
respect to the Class D shares on May 1, 1993. The Plan will continue in effect
through December 31 of each year so long as such continuance is approved by a
majority vote of both the Directors and the Qualified Directors of the Fund,
cast in person at a meeting called for the purpose of voting on such approval.
The Plan may not be amended to increase materially the amounts payable to
Service Organizations with respect to a Class without the approval of a majority
of the outstanding voting securities of the Class and no material amendment to
the Plan may be made except by a majority of both the Directors and Qualified
Directors.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Directors who are not "interested
persons" of the Fund be made by such disinterested Directors.
PORTFOLIO TRANSACTIONS
The Management and Subadvisory Agreements recognize that in the purchase and
sale of portfolio securities the Manager and Subadviser will seek the most
favorable price and execution, and, consistent with that policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Manager and Subadviser for their use, as well as to
the general attitude toward and support of investment companies demonstrated by
such brokers or dealers. Such services include supplemental investment
research, analysis and reports concerning issuers, industries and
-10-
<PAGE>
securities deemed by the Manager and Subadviser to be beneficial to the Fund.
In addition, the Manager and Subadviser are authorized to place orders with
brokers who provide supplemental investment and market research and statistical
and economic analysis although the use of such brokers may result in a higher
brokerage charge to the Fund than the use of brokers selected solely on the
basis of seeking the most favorable price and execution and although such
research and analysis may be useful to the Manager and Subadviser in connection
with its services to clients other than the Fund.
In over-the-counter markets, the Fund deals with primary market makers unless a
more favorable execution or price is believed to be obtainable. The Fund may
buy securities from or sell securities to dealers acting as principal, except
dealers with which its directors and/or officers are affiliated.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager and Subadviser desire to buy or sell
the same security at the same time the securities purchased or sold are
allocated by the Manager and Subadviser in a manner believed to be equitable to
each. There may be possible advantages or disadvantages of such transactions
with respect to price or the size of positions readily obtainable or
saleable.
Brokerage commissions for the last three years are set forth in the following
table:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Total Brokerage Commissions Paid (1) $144,134 $85,695 $144,177
Brokerage Commissions Paid
to Seligman Securities, Inc. (2) --- 5,006 52,829
Brokerage Commissions Paid to Others for
Execution and Research and Statistical Services 144,134 80,689 91,348
</TABLE>
Notes:
(1) Not including any spreads on principal transactions on a net basis.
(2) Brokerage commissions paid to Seligman Securities, Inc. were 5.8% and
36.6%, of total brokerage commissions paid for 1993 and 1992, respectively.
The aggregate dollar amount of the Fund's transactions for which Seligman
Securities, Inc. acted as broker was 7.8% of the total dollar amount of all
commission transactions in 1993 and 43.4% in 1992. The Board of Directors
adopted procedures effective January 1, 1984, pursuant to which Seligman
Securities, Inc. was available to the Fund as broker for approximately one-
half of agency transactions in listed securities at commission rates
believed in accordance with applicable regulations to be fair and
reasonable. As of March 31, 1993, Seligman Securities, Inc. ceased
functioning as a broker for the Fund and its other clients.
PURCHASE AND REDEMPTION OF FUND SHARES
The Fund issues two classes of shares: Class A shares may be purchased at a
price equal to the next determined net asset value per share, plus a sales load.
Class D shares may be purchased at a price equal to the next determined net
asset value without an initial sales load, but a CDSL may be charged on
redemptions within one year of purchase. See "Alternative Distribution System,"
"Purchase Of Shares," and "Redemption Of Shares" in the Prospectus.
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value/*/. Using the Fund's net asset value at
December 31, 1994, the maximum offering price of the Fund's shares is as
follows:
-11-
<PAGE>
<TABLE>
<CAPTION>
Class A
<S> <C>
Net asset value per Class A share.................................. $13.05
Maximum sales load (4.75% of offering price)....................... .65
-----
Offering price to public........................................... $13.70
=====
<CAPTION>
Class D
<S> <C>
Net asset value and offering price to public per Class D share/*/.. $13.01
=====
</TABLE>
___________
/*/ Class D shares are subject to a CDSL of 1% on redemptions within one year
of purchase. See "Redemption Of Shares" in the Prospectus.
CLASS A SHARES - REDUCED SALES LOADS
Reductions Available. Shares of any Seligman Fund sold with a sales load in a
- --------------------
continuous offering will be eligible for the following reductions:
Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other Funds in
the Seligman Group which are sold with a sales load, reaches levels indicated in
the sales load schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of Seligman Capital Fund,
Seligman Common Stock Fund, Seligman Communications and Information Fund,
Seligman Frontier Fund, Seligman Growth Fund, Seligman Henderson Global Fund
Series, Seligman High Income Fund Series, Seligman New Jersey Tax-Exempt Fund,
Seligman Pennsylvania Tax-Exempt Fund Series, Seligman Tax-Exempt Fund Series,
or Seligman Tax-Exempt Series Trust sold with a sales load with the total net
asset value of shares of those Mutual Funds already owned that were sold with a
sales load and the total net asset value of shares of Seligman Cash Management
Fund which were acquired through an exchange of shares of another Mutual Fund in
the Seligman Group on which there was a sales load at the time of purchase to
determine reduced sales loads in accordance with the schedule in the Prospectus.
The value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Mutual Fund in the
Seligman Group on which there was a sales load at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Financial Services, Inc. is notified by an investor or a dealer of the amount
owned at the time the purchase is made and is furnished sufficient information
to permit confirmation.
A Letter of Intent allows an investor to purchase Class A shares over a 13-
month period at reduced sales loads in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states an investor intends to purchase plus the total net asset value of
shares sold with a sales load of Seligman Capital Fund, Seligman Common Stock
Fund, Seligman Communications and Information Fund, Seligman Frontier Fund,
Seligman Growth Fund, Seligman Henderson Global Fund Series, Seligman High
Income Fund Series, Seligman New Jersey Tax-Exempt Fund, Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Tax-Exempt Fund Series, or Seligman Tax-Exempt
Series Trust already owned and the total net asset value of shares of Seligman
Cash Management Fund which were acquired through an exchange of shares of
another Mutual Fund in the Seligman Group on which there was a sales load at the
time of purchase. Reduced sales loads also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent. For more information concerning the terms of the letter of intent,
see "Terms and Conditions - Letter of Intent - Class A Shares Only" accompanying
the account application in the Prospectus.
Persons Entitled To Reductions. Reductions in sales loads apply to purchases of
- ------------------------------
Class A shares by a "single person," including an individual; members of a
family unit comprising husband, wife and minor children; or a trustee or other
fiduciary purchasing for a single fiduciary account. Employee benefit plans
qualified under Section 401 of the Internal Revenue Code, organizations tax
exempt under Section 501 (c)(3) or (13), and non-qualified employee benefit
plans that satisfy uniform criteria are considered "single persons" for this
purpose. The uniform criteria are as follows:
-12-
<PAGE>
1. Employees must authorize the employer, if requested by the Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event,
the dropped participant would lose the discount on share purchases to which the
plan might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The term "eligible employee benefit plan"
- -------------------------------
means any plan or arrangement, whether or not tax qualified, which provides for
the purchase of Fund shares. The term "participant account plan" means any
"eligible employee benefit plan" where (i) the Fund shares are purchased through
payroll deductions or otherwise by a fiduciary or other person for the account
of participants who are employees (or their spouses) of an employer and (ii) a
separate Open Account is maintained in the name of such fiduciary or other
person for the account of each participant in the plan (such as a payroll
deduction IRA program).
The table of sales loads in the Prospectus applies to sales to "eligible
employee benefit plans," except that the Fund may sell shares at net asset value
to "eligible employee benefit plans," of employers who have at least 2,000 U.S.
employees to whom such plan is made available or, regardless of the number of
employees, if such plan is established or maintained by any dealer which has a
sales agreement with Seligman Financial Services, Inc. Such sales must be made
in connection with a payroll deduction system of plan funding or other systems
acceptable to Seligman Data Corp., the Fund's shareholder service agent. Such
sales are believed to require limited sales effort and sales-related expenses
and therefore are made at net asset value. Contributions or account information
for plan participation also should be transmitted to Seligman Data Corp. by
methods which it accepts. Additional information about "eligible employee
benefit plans" is available from investment dealers or Seligman Financial
Services, Inc.
Payment in Securities. In addition to cash, the Fund may accept securities in
- ---------------------
payment for Fund shares sold at the applicable public offering price (net asset
value plus any applicable sales load) although the Fund does not presently
intend to accept securities in payment for Fund shares. Generally, the Fund
will only consider accepting securities (l) to increase its holdings in a
portfolio security, or (2) if the Manager determines that the offered securities
are a suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales loads, and may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will not accept restricted securities in
payment for shares. The Fund will value accepted securities in the manner
provided for valuing portfolio securities of the Fund. Any securities accepted
by the Fund in payment for Fund shares will have an active and substantial
market and have a value which is readily ascertainable (See "Valuation"). In
accordance with Texas securities regulations, should the Fund accept securities
in payment for shares, such transactions would be limited to a bond fide
reorganization, statutory merger, or to other acquisitions of portfolio
securities (except for municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) which meet the investment
objectives and policies of the investment company; are acquired for investment
and not for resale; are liquid securities which are not restricted as to
transfer either by law or liquidity of market; and have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange or
NASDAQ.
Further Types of Reductions. Class A shares may be issued without a sales load
- ---------------------------
in connection with the acquisition of cash and securities owned by other
investment companies and personal holding companies, to financial institution
trust departments, to registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares, or pursuant to
sponsored arrangements with organizations which make recommendations to, or
permit group solicitation of, its employees, members or participants in
connection with the purchase of shares of the Fund, to separate accounts
established and maintained by an insurance company which are exempt from
registration under Section 3(c)(11) of the Investment Company Act of 1940, to
registered representatives (and their spouses and minor children) and employees
of any dealer that has a sales agreement with SFSI, to shareholders of mutual
funds with investment objectives and policies similar to the Fund's who purchase
shares with redemption proceeds of such funds and to certain unit investment
trusts as described in the Prospectus.
-13-
<PAGE>
Class A shares may be sold at net asset value to these persons since such sales
required less sales effort and lower sales related expenses as compared with
sales to the general public.
More About Redemptions. The procedures for redemption of Fund shares under
- ----------------------
ordinary circumstances are set forth in the Prospectus. In unusual
circumstances payment may be postponed, if the orderly liquidation of portfolio
securities is prevented by the closing of, or restricted trading on the New York
Stock Exchange during periods of emergency, or such other periods as ordered by
the Securities and Exchange Commission. Payment may be made in securities,
subject to the review of some state securities commissions. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities into cash.
DISTRIBUTION SERVICES
The Fund and Seligman Financial Services, Inc. ("SFSI") are parties to a
Distributing Agreement dated January 1, 1993. SFSI, an affiliate of the
Manager, acts as general distributor of the shares of the Fund and of the other
mutual funds in the Seligman Group. As general distributor of the Fund's
Capital Stock, SFSI allows concessions to all dealers, as indicated in the
Prospectus. Pursuant to agreements with the Fund, certain dealers may also
provide sub-accounting and other services for a fee. SFSI receives the balance
of sales loads and any CDSLs paid by investors. The balance of sales loads and
any CDSLs paid by investors and received by SFSI in respect of Class A shares
amounted to $156,975, after allowance of $1,211,633 as concession to dealers;
$389,753 in 1993, after allowance of $3,450,153 as concessions to dealers; and
$207,174 in 1992, after allowance of $2,023,583 as concessions to dealers. For
the year ended December 31, 1994, SFSI retained CDSL charges from Class D shares
amounting to $48,151; and $16,931 for the period May 3, 1993 through December
31, 1993.
Class A shares may be sold at net asset value to present and retired directors,
trustees, officers, and employees (and their spouses and minor children) of the
Fund, the other investment companies in the Seligman Group, the Manager and
other companies affiliated with the Manager. Such sales also may be made to
employee benefit and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by the
Manager or any affiliate. These sales may be made for investment purposes only,
and shares may be resold only to the Fund.
VALUATION
Net asset value per Fund share is determined as of the close ob trading on the
New York Stock Exchange, (usually 4:00 p.m. Eastern time), each dat that the New
York Stock Exchange is open. The New York Stock Exchange is currently closed on
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value of Class D
shares will generally be lower than the net asset value of Class A shares as a
result of the larger distribution fee with respect to Class D shares.
The net asset value per share is determined separately for each class of
shares. Portfolio securities, including open short positions and options
written, are valued at the last sale price on the securities exchange or
securities market on which such securities primarily are traded. Securities
traded on a foreign exchange or over-the-counter market are valued at the last
sales price on the primary exchange or market on which they are traded. United
Kingdom securities and securities for which there are no recent sales
transactions are valued based on quotations provided primary market makers in
such securities. Any securities for which recent market quotations are not
readily available, including restricted securities, are valued at fair value as
determined in accordance with procedures approved by the Board of Directors.
Short-term obligations with less than sixty days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than sixty
days remaining to maturity will be valued at current market value until the
sixtieth day prior to maturity, and will then be valued on an amortized cost
basis based on the value on such date unless the Board determines that this
amortized cost value does not represent fair market value. Expenses and fees,
including the investment management fee, are accrued daily and taken into
account for the purpose of determining the net asset value of Fund shares.
Premiums received on the sale of call options will be included in the net asset
value, and the current market value of the options sold by the Fund will be
subtracted from net asset value.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE. Occasionally, events affecting the
value of such securities and such exchange rates may occur between the times at
which they are determined and the close of the
-14-
<PAGE>
NYSE, which will not be reflected in the computation of net asset value. If
during such periods events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined in accordance with procedures approved by the Board of Directors.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
PERFORMANCE
The Fund's average annual total returns of Class A shares for the one-year,
five-year and ten-year periods ended December 31, 1994 were (9.94)%, 7.94% and
10.30%, respectively. These amounts were computed by assuming a hypothetical
initial payment of $1,000, subtracting the maximum sales load of $47.50 (4.75%
of public offering price) and assuming that all of the dividends and
distributions by the Fund over the relevant time period were reinvested. It was
then assumed that at the end of these periods, the entire amount was redeemed.
The average annual total return was then calculated by calculating the annual
rate required for the initial payment to grow to the amount which would have
been received upon redemption (i.e., the average annual compound rate of
return). The average annual total returns for Class D shares of the Fund for the
one-year period and since inception through December 31, 1994 were (7.09)% and
0.79%, respectively. This amount was computed assuming a hypothetical initial
payment of $1,000 and that all of the dividends and distributions paid by the
Fund's Class D shares were reinvested over the relevant time period. For the
one-year period ended Decmeber 31, 1994, it was then assumed that at the end of
the period, the entire amount was redeemed, subtracting the applicable 1%
CDSL.
Table A below illustrates the total return (income and capital) on Class A
shares of the Fund with dividends invested and gain distributions taken in
shares. It shows that a $1,000 investment in Class A shares, assuming payment
of the 4.75% sales load, made on January 1, 1985 had a value of $2,664 on
December 31, 1994, resulting in an aggregate total return of 166.42%. Table B
illustrates the total return (income and capital) on Class D shares of the Fund
with dividends invested and gain distributions, if any, taken in shares. It
shows that a $1,000 investment in Class D shares made on May 3, 1993
(commencement of offering of Class D shares) had a value of $1,013 on December
31, 1994 resulting in an aggregate total return of 1.32%. The results shown
should not be considered a representation of the dividend income or gain or loss
in capital value which may be realized from an investment made in a class of
shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
Value of
Year Ended Value of Initial Value of Gain Dividends Total
12/31 (1) Investment (2) Distribution Invested Total Value(2) Return (3)
- ------------ ---------------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1985 $ 1,094 $ 10 $ 107 $ 1,211
1986 1,113 93 213 1,419
1987 977 96 288 1,361
1988 997 98 410 1,505
1989 1,029 146 555 1,730
1990 859 122 607 1,588
1991 1,031 147 889 2,067
1992 1,133 161 1,135 2,429
1993 1,207 266 1,344 2,817
1994 1,080 238 1,346 2,664 166.42%
<CAPTION>
TABLE B - CLASS D SHARES
Value of
Year Ended Value of Initial Value of Gain Dividends Total
12/31 (1) Investment (2) Distribution Invested Total Value(2) Return (3)
- ------------ ---------------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1993 $ 1,009 $ 36 $ 35 $ 1,080
1994 902 32 79 1,013 1.32%
</TABLE>
-15-
<PAGE>
(1) For the ten years ended December 31, 1994; and from commencement of
offering of Class D shares on May 3, 1993.
(2) The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value" reflects the effect of the CDSL, if applicable, assumes
investment of all dividends and capital gain distributions and reflects
changes in the net asset value.
(3) "Total Return" for each class of shares of the Fund is calculated by
assuming a hypothetical initial investment of $1,000 at the beginning of
the period specified, subtracting the maximum sales load for Class A
shares; determining total value of all dividends and distributions that
would have been paid during the period on such shares assuming that each
dividend or distribution was invested in additional shares at net asset
value; calculating the total value of the investment at the end of the
period; subtracting the CDSL on Class D shares, if applicable; and finally,
by dividing the difference between the amount of the hypothetical initial
investment at the beginning of the period and its total value at the end of
the period by the amount of the hypothetical initial investment.
No adjustments have been made for any income taxes payable by investors on
dividends invested or gain distributions taken in shares.
The total return and average annual total return of the Class A shares quoted
from time to time through December 31, 1992 does not reflect the deduction of
the administration, shareholder services and distribution fee, effective January
1, 1993; and through April 10, 1991 also does not reflect the management fee
approved by shareholders on April 10, 1991, which fees if reflected would reduce
the performance quoted.
The Fund may also include aggregate total return over a specified period in
advertisements or in information furnished to present or prospective
shareholders.
GENERAL INFORMATION
Capital Stock. The Board of Directors is authorized to classify or reclassify
- --------------
and issue any unissued Capital Stock of the Fund into any number of other
classes without further action by shareholders. The Investment Company Act of
1940 requires that where more than one class exists, each class must be
preferred over all other classes in respect of assets specifically allocated to
such class.
Custodian. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
- ----------
City, Missouri 64105 serves as custodian of the Fund. It also maintains, under
the general supervision of the Manager, the accounting records and determines
the net asset value for the Fund.
Auditors. Deloitte & Touche LLP Independent auditors, have been selected as
- ---------
auditors of the Fund. Their address is Two World Financial Center, New York,
New York 10281.
FINANCIAL STATEMENTS
The Annual Report to Shareholders for the year ended December 31, 1994 is
incorporated by reference into this Statement of Additional Information. The
Annual Report contains a schedule of the investments as of December 31, 1994,
as well as certain other financial information as of that date. The Annual
Report will be furnished, without charge, to investors who request copies of the
Fund's Statement of Additional Information.
-16-
<PAGE>
APPENDIX A
Moody's Investors Service
Bonds and Notes
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally know as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A posses many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa: Bonds and notes which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds or notes lack outstanding
investment characteristics and in fact may have speculative characteristics as
well.
Ba: Bonds and notes which are rated Ba are judged to have speculative element;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds and notes in this class.
B: Bonds and notes which are rated B generally lack characteristics of
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds and notes which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds and notes which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds and notes which are rated C are the lowest rated class of bonds or
notes, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard & Poor's Corporation
Bonds
AAA: Debt rate AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA have a very high degree of safety and very strong capacity
to pay interest and repay principal and differs from the highest rated issues
only in small degree.
A: Debt rated A are regarded as upper medium grade. They have a strong degree
of safety and capacity to pay interest and repay principal although it is
somewhat more susceptible in the long term to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Bonds rated BBB are regarded as having a satisfactory degree of safety
and capacity to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and interest for bonds in this category than for bonds in the A category.
-17-
<PAGE>
BB, B, CCC, CC: Bonds rated BB, B, CCC, and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and C the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
C: The rating C is reserved for income bonds on which no interest is being
paid.
D: Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
-18-
<PAGE>
APPENDIX B
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War - Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, Seligman played a major role in the
geographical expansion and industrial development of the United States.
Seligman:
.... Prior to 1900
. Helps finance America's fledgling railroads through underwriting.
. Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
. Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
. Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
. Is appointed U.S. Navy fiscal agent by President Grant.
. Plays a significant role in raising capital for America's industrial and urban
development.
...1900-1910
. Helps Congress finance the building of the Panama Canal.
...1910s
. Participates in raising billions for Great Britain, France and Italy, helping
finance World War I.
...1920s
. Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
. Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
. Assumes management of Broad Street Investing Co. Inc., its first mutual fund,
today known as Seligman Common Stock Fund.
. Establishes Investment Advisory Service.
...1940s
. Helps shape the Investment Company Act of 1940.
. Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the investment
banking industry.
. Assumes management of National Investors Corporation, today Seligman Growth
Fund.
. Establishes Whitehall Fund, Inc., today Seligman Income Fund.
-19-
<PAGE>
...1950-1989
. Develops new open-end investment companies. Today, manages 44 mutual fund
portfolios with combined assets of $7.3 billion.
. Helps pioneer state-specific, tax-exempt municipal bond funds, today managing
a national and 18 state-specific tax-exempt funds.
. Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
. Establishes Seligman Portfolios, Inc., an investment vehicle offered through
variable annuity products.
...1990s
. Introduces Seligman Select Municipal Fund and Seligman Quality Municipal Fund,
two closed-end funds that invest in high-quality municipal bonds.
. In 1991 establishes a joint venture with Henderson Administration Group plc,
of London, known as Seligman Henderson Co., to offer global investment
products.
. Introduces Seligman Frontier Fund, Inc., a small capitalization mutual fund.
. Launches Seligman Henderson Global Fund Series, Inc., which today offers three
separate series: Seligman Henderson International Fund, Seligman Henderson
Global Smaller Companies Fund and Seligman Henderson Global Technology
Fund.
-20-
<PAGE>
================================================================================
Seligman
Income
Fund, Inc.
- --------------------------------------------------------------------------------
An Income Fund
- --------------------------------------------------------------------------------
48th Annual Report
1994
================================================================================
[LOGO APPEARS HERE]
<PAGE>
================================================================================
Seligman Income Fund
- --------------------------------------------------------------------------------
A mutual fund that seeks to provide shareholders with high current income
consistent with prudent risk of capital, and with the possibility of improvement
in income and capital value over the longer term. The Fund invests in a changing
blend of fixed-income securities and common stocks.
<TABLE>
<CAPTION>
Highlights of 1994
- --------------------------------------------------------------------------------
December 31, 1993 December 31, 1994
---------------------- ----------------------
Class A Class D Class A Class D
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands).. $286,355 $67,946 $321,040 $49,941
- --------------------------------------------------------------------------------
Net Asset Value per Share.. $ 13.05 $ 13.01 $ 14.58 $ 14.55
- --------------------------------------------------------------------------------
Dividends Paid per Share... $ 0.75 $ 0.65 $ 0.75 $ 0.50
With December 1993 Gain
Distribution Taken in
Shares........ 0.78 0.67 -- --
Distribution of Realized
Gain per Share........... -- -- 0.51 0.51
- --------------------------------------------------------------------------------
Total Expenses per Dollar
of Average Net Assets..... $ 0.0102 $0.0182 $ 0.0103 $0.0184+
- --------------------------------------------------------------------------------
</TABLE>
+ Annualized.
1
<PAGE>
================================================================================
To the Shareholders
- --------------------------------------------------------------------------------
We are pleased to report Seligman Income Fund's long-term investment results,
portfolio holdings, and audited financial statements at December 31, 1994.
For your Fund's Class A shares, net asset value per share was $13.05 at
December 31, compared to $13.49 at September 30, and $14.58 a year ago. For your
Fund's Class D shares, net asset value per share was $13.01 at December 31,
compared to $13.46 at September 30, and $14.55 a year ago.
On December 20, your Fund paid a fourth quarter dividend to shareholders of
record December 13. Class A shareholders were paid $0.19 per share, bringing the
total dividends for the year to $0.75 per share. Class D shareholders were paid
$0.17 per share, bringing the total dividends for the year to $0.65 per share.
For your Fund's Class A shares, total return was -1.85% for the three months
and -5.43% for the 12 months ended December 31. For your Fund's Class D shares,
total return was -2.08% and -6.20%, respectively, for the same periods. This
compares to the Standard & Poor's 500 Composite Stock Price Index's total return
of -0.02% for the three months and 1.32% for the 12 months ended December 31.
(Total return reflects change in net asset value and assumes any distributions
paid within the period are reinvested in additional shares. Class A returns do
not, however, reflect the effect of the maximum initial sales charge of 4.75%,
and Class D returns do not reflect the effect of the 1% contingent deferred
sales load.)
While your Fund's performance was less favorable in 1994, its longer-term
performance remains strong. Please refer to page 3 for a discussion with your
Portfolio Managers about your Fund's performance in 1994, followed by the chart
and table that analyze longer-term performance.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74. The equity market remained hostage to the
bond market and demonstrated lackluster performance for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains robust despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
For more information about Seligman Income Fund, or your investment in its
shares, please write or call the toll-free telephone numbers listed on page 19.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/Ronald T. Schroeder
Ronald T. Schroeder
President
February 3, 1995
2
<PAGE>
================================================================================
Annual Performance Overview
- --------------------------------------------------------------------------------
The following are biographies of your Portfolio Managers, a discussion with them
regarding Seligman Income Fund, and a comparison chart of your Fund's
performance against the Standard & Poor's 500 Composite Stock Price Index, the
Lehman Brothers Aggregate Bond Index, and the Lipper Income Fund Average.
Your Portfolio Managers
[PHOTOGRAPHS OF PORTFOLIO MANAGERS APPEARS HERE]
Charles C. Smith, Jr. is a Managing Director of J. & W. Seligman & Co.
Incorporated and Portfolio Manager of Seligman Common Stock Fund and Seligman
Income Fund. Mr. Smith joined Seligman in 1985 as Vice President, Investment
Officer. He was promoted to Senior Vice President, Senior Investment Officer in
August 1992, and to Managing Director in January 1994. Stacey G. Navin, Vice
President of J. & W. Seligman & Co. Incorporated, serves as Co-Portfolio Manager
of Seligman Common Stock Fund and Seligman Income Fund. She spent 1994 with
Seligman Henderson Co. in London and will continue to do so to specifically
focus on the international investments in the portfolio. Mr. Smith is supported
by a group of investment professionals dedicated to the income and growth
investment discipline, and to the objectives of Seligman Income Fund.
Iain C. Clark, Chief Investment Officer of Seligman Henderson Co., is
responsible for the investment activities of Seligman Income Fund's Subadviser,
Seligman Henderson Co. Mr. Clark is also head of International Investments for,
and a Director of, Henderson Administration Group plc, an investment manager in
London, England. He has been with Henderson since 1985.
Economic Factors Affecting Seligman Income Fund
"The rise in short-term interest rates and investors' concerns over the
possibility of an increase in the future rate of inflation had a tremendous
effect on both the equity and bond markets in the U.S. Higher U.S. interest
rates also negatively affected most stock markets around the world. However, at
the same time, the U.S. Dollar weakened against many main currencies,
particularly in Europe and Japan, thus mitigating some of the stock markets'
falls. Overall though, these conditions made 1994 a challenging year for
investors."
Your Manager's Investment Strategy
"Our strategy in 1994 was to lessen the impact of rising interest rates on the
portfolio. We began the year with a relatively large cash position and a reduced
exposure to convertible securities. Throughout the year we avoided domestic
electric utilities and focused instead on other issues with stronger
fundamentals and attractive yields. In hindsight though, cash proved to be the
only true safe haven for yield-oriented investors.
"In the international portion of the portfolio we significantly increased the
diversification, both by country and by the number of holdings. In the third
quarter, the largest portion of the investments were in Mexico and Hong Kong.
Later in the year, however, the weightings were significantly reduced and
investments were made in Continental Europe and in a broader range of countries
in the Pacific."
(continued)
3
<PAGE>
================================================================================
Annual Performance Overview (continued)
- --------------------------------------------------------------------------------
Individual Sector Performance
"Stock selection was the key to performance in 1994 and should remain important
in 1995. Within the difficult market conditions, few sectors saw strong stock
price appreciation in 1994, except for select technology and cyclical issues.
The interest-sensitive nature of the Income Fund was the main reason for its
lackluster performance, as 1994 was a year in which interest rates were
dramatically increased.
"Internationally, there was no particular `sector theme,' as the investments
covered a broad range of issues. The Fund was able to take advantage of a number
of attractively priced new issues such as Tele Danmark and Land & General
Berhad, both of which present opportunities for strong long-term investments."
Looking Ahead
"With the majority of the interest rate increases behind us, we expect 1995 to
be a better year for interest-sensitive assets, which should benefit Seligman
Income Fund. Within the international portion of the portfolio, we may increase
the Fund's low weighting in Japan as the economic activity picks up following
the Kobe earthquake. Overall, we believe that economic growth should continue to
improve, with inflation rising only slightly, which should provide a positive
backdrop for equity markets around the world. In 1995 we remain committed to
identifying companies that represent good value and have strong potential for
future earnings growth, a strategy that has served us well over the years."
4
<PAGE>
================================================================================
Ten-Year Performance Comparison Chart and Table December 31, 1994
- --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman Income
Fund Class A shares, with and without the maximum initial sales charge of 4.75%,
for the 10-year period ended December 31, 1994, to a $10,000 hypothetical
investment made in the Standard & Poor's 500 Composite Stock Price Index (S&P
500), the Lehman Brothers Aggregate Bond Index (Lehman Index), and the Lipper
Income Fund Average (Lipper Income) for the same period. The performance of
Seligman Income Fund Class D shares is not shown in this chart, but is included
in the table below. It is important to keep in mind that the indices exclude the
effects of any fees or sales charges, and the Lipper Income excludes the effects
of any sales charges.
[THE FOLLOWING DATA IS PRESENTED AS A GRAPH IN THE PRINTED REPORT]
<TABLE>
<CAPTION>
Seligman Seligman
Income Fund with Income Fund w/o S&P Stock Lehman Brothers Lipper
Date sales charge sales charge Index Aggregate Index Income
<S> <C> <C> <C> <C> <C>
12/31/84 9528 10000 10000 10000 10000
3/31/85 9904 10395 10918 10223 10482
6/30/85 10998 11543 11715 11096 11469
9/30/85 10797 11331 11238 11333 11201
12/31/85 12109 12709 13164 12212 12398
3/31/86 13331 13992 15013 13161 13625
6/30/86 13708 14387 15894 13317 14033
9/30/86 13710 14389 14790 13633 13871
12/31/86 14180 14883 15615 14076 14382
3/31/87 14652 15378 18945 14308 15436
6/30/87 14264 14971 19890 14052 15425
9/30/87 14001 14694 21203 13669 15527
12/31/87 13614 14288 16424 14463 14397
3/31/88 14383 15095 17358 15006 15212
6/30/88 14841 15576 18508 15184 15636
9/30/88 14961 15702 18567 15486 15871
12/31/88 15047 15792 19133 15603 16063
3/31/89 15562 16332 20487 15781 16589
6/30/89 16609 17432 22291 17039 17507
9/30/89 16933 17772 24675 17232 18181
12/31/89 17320 18178 25177 17873 18368
3/31/90 17181 18032 24416 17730 18063
6/30/90 17280 18136 25945 18377 18605
9/30/90 15420 16184 22396 18535 17580
12/31/90 15882 16668 24393 19473 18354
3/31/91 17626 18499 27923 20018 19972
6/30/91 18171 19071 27862 20342 20318
9/30/91 19767 20746 29351 21498 21620
12/31/91 20666 21690 31793 22588 22775
3/31/92 21728 22804 30993 22298 23003
6/30/92 22575 23693 31584 23197 23674
9/30/92 23607 24777 32579 24194 24503
12/31/92 24291 25494 34212 24260 24991
3/31/93 25871 27152 35701 25262 26185
6/30/93 26520 27834 35870 25931 26766
9/30/93 27452 28811 36794 26608 27596
12/31/93 28172 29567 37645 26624 27903
3/31/94 27044 28384 36229 25860 27012
6/30/94 26609 27927 36384 25593 26926
9/30/94 27145 28489 38162 25750 27502
12/31/94 26642 27961 38334 25847 27104
- --------------------------------------------------------------------------------
</TABLE>
The table below shows the average annual total returns for the one-year,
five-year, and 10-year periods through December 31, 1994, for the Seligman
Income Fund Class A shares, with and without the maximum initial sales charge of
4.75%, the S&P 500, the Lehman Index, and the Lipper Income. Also included in
the table are the average annual total returns for the one-year and
since-inception periods through December 31, 1994, for the Seligman Income Fund
Class D shares, with and without the effect of the 1% contingent deferred sales
load ("CDSL") imposed on shares redeemed within one year of purchase, the S&P
500, the Lehman Index, and the Lipper Income.
<TABLE>
<CAPTION>
Average Annual Total Returns
One Five Ten
Year Years Years
------- ------ ------
<S> <C> <C> <C>
Seligman Income Fund
Class A with sales charge (9.94)% 7.94% 10.30%
Class A without sales charge (5.43) 8.99 10.83
S&P 500 1.32 8.70 14.34
Lehman Index (2.92) 7.66 9.96
Lipper Income (2.86) 8.09 10.48
</TABLE>
<TABLE>
<CAPTION>
Since
One Inception
Year 5/3/93
------ ---------
<S> <C> <C>
Seligman Income Fund
Class D with CDSL (7.09)% N/A
Class D without CDSL (6.20) 0.79%
S&P 500 1.32 5.59
Lehman Index (2.92) 0.96
Lipper Income (2.86) 1.71
- -----------------------------------------------------------
</TABLE>
No adjustment was made to performance for periods prior to January 1, 1993, the
commencement date for the annual Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% of average daily net assets of Class A
shares.
THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS.
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The
investment return and principal value of an investment will fluctuate so that
shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
5
<PAGE>
================================================================================
Seligman Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Composition of Net Assets
Percent of total
December 31
-----------------------
1994 1993
- ---------------------------------------------------------
<S> <C> <C>
U.S. Government and Government
Agency Securities............. 12.6 16.5
- ---------------------------------------------------------
Foreign Government Securities... 0.6 0.8
- ---------------------------------------------------------
Corporate Bonds................. 23.6 16.9
Convertible Bonds............... 27.4 26.1
Convertible Preferred Stocks.... 16.8 15.8
Asset-backed Securities......... 1.4 --
- ---------------------------------------------------------
Total Corporate Fixed Income.... 69.2 58.8
- ---------------------------------------------------------
Common Stocks................... 16.0 18.2
- ---------------------------------------------------------
Net Cash and Short-Term
Holdings...................... 1.6 5.7
- ---------------------------------------------------------
Total........................... 100.0 100.0
- ---------------------------------------------------------
</TABLE>
Federal Tax Information for 1994
Dividends For Taxable Accounts
A year-end statement of account showing activity for 1994 has been mailed
to each shareholder. Under "Tax Information for Calendar Year" it shows the
proceeds of any redemptions paid to the shareholder during the year and reported
to the Internal Revenue Service as required by federal regulations (Form
1099-B). In addition, a separate Form 1099-DIV showing the amounts of dividends
and the distribution from gain on investments paid during the year has been
mailed to each shareholder. For federal tax information regarding your 1994
dividend distributions, please refer to the "Important Tax Information" notice
that accompanied your Form 1099-DIV.
Diversification of Net Assets by Industry
<TABLE>
<CAPTION>
Percent of Total
December 31
-----------------------
1994 1993
- -----------------------------------------------------------
<S> <C> <C>
Automotive........................ 2.7 4.3
Banking and Finance............... 10.5 9.7
Biotechnology..................... -- 0.5
Building and Construction......... 1.2 0.6
Chemicals......................... 1.1 0.4
Computers and Business Services... 1.7 3.5
Consumer Goods and Services....... 2.8 --
Diversified....................... 0.8 1.3
Drugs and Health Care............. 1.7 2.7
Electric Utilities................ 4.0 8.4
Electronics....................... -- 2.3
Energy............................ 8.6 6.0
Environmental Services............ 1.6 1.0
Finance and Insurance............. 9.6 2.2
Food.............................. 0.7 1.2
Leasing........................... 0.8 --
Leisure/Entertainment............. -- 1.4
Machinery......................... 0.7 --
Manufacturing..................... 0.2 --
Minerals.......................... 0.7 0.7
Office Equipment and Services..... 0.6 1.4
Packaging and Paper............... 0.7 --
Publishing........................ 1.0 1.1
Restaurants....................... -- 0.8
Retailing......................... 5.1 3.7
Spirits, Wines, and Ciders........ 0.3 --
Steel............................. 1.8 1.0
Technology........................ 5.8 2.7
Textiles.......................... -- 0.9
Tobacco........................... -- 0.8
Transportation.................... 8.3 7.1
Utilities/Telecommunications...... 8.6 7.0
Miscellaneous..................... 3.6 4.3
- -----------------------------------------------------------
Total Corporate Fixed Income and
Common Stocks................... 85.2 77.0
- -----------------------------------------------------------
U.S. Government and Government
Agency Securities............... 12.6 16.5
- -----------------------------------------------------------
Foreign Government Securities..... 0.6 0.8
- -----------------------------------------------------------
Net Cash and Short-Term Holdings.. 1.6 5.7
- -----------------------------------------------------------
Total............................. 100.0 100.0
- -----------------------------------------------------------
</TABLE>
6
<PAGE>
================================================================================
Seligman Income Fund
- --------------------------------------------------------------------------------
Major Portfolio Holdings
at December 31, 1994
<TABLE>
<CAPTION>
Security Value
- -------- -----------
<S> <C>
U.S. Treasury Notes 7 7/8%, 11/15/2004...................... $10,031,250
Carlton Communications 7 1/2%, 8/14/2007.................... 5,451,781
Federal Home Loan Mortgage Co. 10%, 6/15/2020 REMIC 1614-K.. 5,198,596
U.S. Treasury Notes 8 1/2%, 5/15/1997....................... 5,075,000
GMAC Floating Rate Notes, 7/19/1996......................... 5,000,000
Ford Credit Grantor Trust 7.30%, due 10/15/1999............. 4,826,444
Federal National Mortgage Association 7%, 7/25/2007
G-92-40L.................................................. 4,478,500
General Motors 9 1/8%, 7/15/2001 ........................... 4,084,496
Ryder System 7.87%, 11/24/1997 ............................. 3,952,440
First Security Bank 6.88%, 10/4/1996 ....................... 3,931,812
</TABLE>
<TABLE>
<CAPTION>
Largest Portfolio Changes*
During Past Three Months
Principal Amount or Shares
------------------------------
Holdings
Additions Increase 12/31/94
- ----------------------------------------------------------------
<S> <C> <C>
U.S. Government Securities
U.S. Treasury Notes 7 7/8%,
11/15/2004..................... $10,000,000 $10,000,000
Corporate Bonds
First Security Bank 6.88%,
10/4/1996...................... 4,000,000 4,000,000
Midland Bank 8 5/8%,
12/15/2004..................... 3,000,000 3,000,000
Ryder System 7.87%,
11/24/1997..................... 4,000,000 4,000,000
Santa Fe Pacific 8 5/8%,
11/1/2004...................... 3,000,000 3,000,000
United Companies Financial
9.35%, 11/1/1999............... 3,000,000 3,000,000
Asset-backed Securities
Ford Credit Grantor Trust
7.30%, due 10/15/1999.......... 4,862,475 4,862,475
Convertible Bonds
Apache 6%, 1/15/2002............ 3,000,000 3,000,000
Convertible Preferred Stocks
Cooper Industries $1.60......... 120,000shs. 120,000shs.
Unisys $3.75.................... 40,000 40,000
</TABLE>
<TABLE>
<CAPTION>
Holdings
Reductions Decrease 12/31/94
- ----------------------------------------------------------------
<S> <C> <C>
U.S. Government and Government
Agency Securities
U.S. Treasury Notes 8 1/2%,
5/15/1997...................... $ 5,000,000 $ 5,000,000
U.S. Treasury Notes 7 1/4%,
11/15/1996..................... 5,000,000 --
Federal Home Loan Mortgage
Co. 7%, 5/15/2005
REMIC 1257-F................... 5,000,000 --
Federal National Mortgage
Association
6 3/4%, 8/25/1999
1992-158-DB.................... 5,000,000 --
Corporate Bonds
Ford Motor Credit 9 1/4%,
6/15/1998...................... 3,000,000 --
HSBC Financial 7.40%,
4/15/2003...................... 3,000,000 --
Ryder System 6.92%, 3/29/1997... 3,000,000 --
Time Warner Entertainment
7 1/4%, 9/1/2008............... 4,000,000 --
Convertible Bonds
IBM France 5 3/4%, 1/1/1998..... 15,975,000+ --
Convertible Preferred Stock
Great Western Financial 8 3/4%.. 50,000 shs. --
</TABLE>
* Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
+ Principal amount reported in French francs.
7
<PAGE>
================================================================================
Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ------------
<S> <C> <C>
U.S. Government and
Government Agency
Securities--12.6%
U.S. Treasury Notes:
7 7/8%, 11/15/2004................... $10,000,000 $10,031,250
8 1/2%, 5/15/1997.................... 5,000,000 5,075,000
Mortgage-backed Securities:**
Federal Home Loan Mortgage Co. 10%,
6/15/2020 REMIC 1614-K............... 5,041,014 5,198,596
Federal National Mortgage
Association Obligations:
7%, 7/25/2007 G-92-40-L.............. 5,000,000 4,478,500
7 1/2%, 6/25/2017 1991-8-E........... 3,000,000 2,939,640
Government National Mortgage
Association Obligations:
8 1/2%, with various maturities
from 10/15/2021 to 8/15/2024....... 4,948,350 4,864,847
10%, with various maturities
from 1/15/2018 to 8/15/2021........ 11,435,795 12,039,755
----------- -----------
Total U.S. Government and Government
Agency Securities
(Cost $46,770,525)................... 44,627,588
-----------
Foreign Government Securities--0.6%
(Cost $2,981,040)
Argentina Global Bonds
8 3/8%, 12/20/2003................... 3,000,000 2,145,000
----------- -----------
Corporate Bonds--23.6%
Automotive--1.9%
Chrysler Financial 6 1/2%,
6/15/1998............................ 3,000,000 2,819,745
General Motors 9 1/8%,
7/15/2001............................ 4,000,000 4,084,496
----------- -----------
6,904,241
-----------
Banking and Finance--8.8%
Banco Nacional de Comercio
Exterior 7 1/4%, 2/2/2004*........... 3,000,000 2,133,795
Citicorp 9 1/2%, 2/1/2002.............. 3,000,000 3,156,543
First Security Bank 6.88%,
10/4/1996............................ 4,000,000 3,931,812
First U.S.A. Bank 5 3/4%, 1/15/1999.... 4,000,000 3,617,408
GMAC Floating Rate Notes,
7/19/1996............................ 5,000,000 5,000,000
Great Western Financial 8.60%,
2/1/2002............................. 3,000,000 2,982,297
Midland Bank 8 5/8%, 12/15/2004........ 3,000,000 2,979,060
National Westminster 9 3/8%,
11/15/2003........................... 2,190,000 2,298,847
NationsBank 9 1/8%, 10/15/2001......... 2,000,000 2,057,948
United Companies Financial
9.35%, 11/1/1999..................... 3,000,000 2,983,311
----------- -----------
31,141,021
-----------
Building and Construction--0.8%
Cemex 6 1/4%, 10/25/1995*.............. 3,000,000 2,971,470
----------- -----------
Chemicals--0.2%
Dow Corning 9 3/8%, 2/1/2008........... 1,000,000 757,687
----------- -----------
Computers and Business Services--0.6%
Comdisco 9 3/4%, 1/15/1997............. 2,000,000 2,048,716
----------- -----------
Electric Utilities--0.8%
Texas Utilities 5 7/8%,
4/1/1998............................. 3,000,000 2,788,149
----------- -----------
Energy--1.8%
Coastal 10 1/4%, 10/15/2004............ 3,000,000 3,225,000
McDermott 9 3/8%, 3/15/2002............ 3,000,000 3,053,724
----------- -----------
6,278,724
-----------
Insurance--1.1%
AEGON N.V. 8%, 8/15/2006............... 4,000,000 3,825,000
----------- -----------
Leasing--0.8%
Hertz 7%, 4/15/2001.................... 3,000,000 2,776,914
----------- -----------
Publishing--1.0%
News America Holdings 8 1/4%,
8/10/2018............................ 4,000,000 3,541,668
----------- -----------
Retailing--1.0%
Sears, Roebuck 9 3/8%, 11/1/2011....... 3,500,000 3,697,834
----------- -----------
Steel--1.1%
USX 9 1/8%, 1/15/2013.................. 4,000,000 3,874,056
----------- -----------
Transportation--3.4%
Delta Air Lines 10 3/8%, 2/1/2011...... 3,000,000 2,989,152
Ryder System 7.87%,
11/24/1997........................... 4,000,000 3,952,440
Santa Fe Pacific 8 5/8%, 11/1/2004..... 3,000,000 3,018,576
Transportacion Maritima Mexicana
9 1/4%, 5/15/2003.................... 2,850,000 2,016,375
----------- -----------
11,976,543
-----------
Miscellaneous--0.3%
Service Corp. International
8 3/8%, 12/15/1995................... 1,000,000 990,310
----------- -----------
Total Corporate Bonds
(Cost $89,773,758)................... 83,572,333
-----------
Asset-backed Securities**--1.4%
(Cost $4,858,297)
Finance--1.4%
Ford Credit Grantor Trust
7.30%, due 10/15/1999................ 4,862,475 4,826,444
----------- -----------
Convertible Bonds--27.4%
Automotive--0.8%
Arvin Industries 7 1/2%, 9/30/2014..... 3,000,000 2,951,250
----------- -----------
Consumer Goods and Services--1.8%
Unifi 6%, 3/15/2002.................... 4,000,000 3,895,000
Wendy's International 7%,
4/1/2006............................. 2,000,000 2,510,000
----------- -----------
6,405,000
-----------
</TABLE>
8
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -----------
<S> <C> <C>
Diversified--0.8%
Land & General Berhad
4 1/2%, 7/26/2004.................... $ 1,000,000 $ 1,142,500
MascoTech 4 1/2%, 12/15/2003........... 2,750,000 1,849,375
------------- -----------
2,991,875
-----------
Drugs and Health Care--1.0%
Ciba-Geigy 6 1/4%, 3/15/2016*.......... 2,000,000 1,690,000
Greenery Rehabilitation Group
8 3/4%, 4/1/2015..................... 2,000,000 1,800,000
------------- -----------
3,490,000
-----------
Energy--3.3%
Apache 6%, 1/15/2002................... 3,000,000 3,071,250
E. E. Finance 8 3/4%, 6/27/2006........ 1,000,000+ 1,547,394
Kelley Oil & Gas 8 1/2%,
4/1/2000............................. 1,250,000 1,035,938
Santa Fe Pipelines 10.418%,
8/15/2010............................ 2,500,000 2,962,500
Western Co. of North America
7 1/4%, 1/15/2015.................... 3,000,000 3,150,000
------------- -----------
11,767,082
-----------
Environmental Services--1.6%
Browning-Ferris 6 1/4%, 8/15/2012...... 2,500,000 2,290,624
OHM 8%, 10/1/2006...................... 3,000,000 2,392,500
U.S.A. Waste Services 8 1/2%,
10/15/2002........................... 1,000,000 1,003,750
------------- -----------
5,686,874
-----------
Finance and Insurance--3.3%
AXA 6%, 1/1/2001....................... 2,184,500++ 479,919
Bank of Boston 7 3/4%, 6/15/2011....... 2,000,000 2,240,000
Leucadia National 5 1/4%, 2/1/2003..... 3,000,000 2,775,000
Liberty Life International
6 1/2%, 9/30/2004.................... 750,000 770,625
SCOR U.S. 5 1/4%, 4/1/2000*............ 3,000,000 2,550,000
Trenwick Group 6%, 12/15/1999.......... 3,000,000 2,985,000
------------- -----------
11,800,544
-----------
Retailing--2.2%
CML Group 5 1/2%, 1/15/2003............ 2,000,000 1,440,000
Federated Department Stores
0%/6%, 2/15/2004..................... 2,000,000 1,932,500
Price 6 3/4%, 3/1/2001................. 3,000,000 2,700,000
Proffitts 4 3/4%, 11/1/2003............ 2,000,000 1,550,000
------------- -----------
7,622,500
-----------
Technology--5.0%
Bay Networks
5 1/4%, 5/15/2003*................... 3,000,000 2,272,500
Conner Peripheral 6 1/2%,
3/1/2002............................ 3,000,000 2,096,250
Cray Research 6 1/8%, 2/1/2011......... 1,500,000 990,000
Data General 7 3/4%, 6/1/2001.......... 2,000,000 1,740,000
EMC 4 1/4%, 1/1/2001................... 1,500,000 1,816,875
Evans & Sutherland Computer
6%, 3/1/2012......................... 2,000,000 1,490,000
Kulicke & Soffa Industries
8%, 3/1/2008......................... 3,000,000 3,240,000
Quantum 6 3/8%, 4/1/2002............... 2,500,000 2,418,750
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
or Shares
-------------
<S> <C> <C>
Seagate Technology
6 3/4%, 5/1/2012..................... $ 2,000,000 1,652,500
------------- -----------
17,716,875
-----------
Telecommunications--3.4%
Alcatel Alsthom 6 1/2%, 1/1/2000....... 7,599,680++ 1,368,017
Carlton Communications 7 1/2%,
8/14/2007............................ 2,600,000 5,451,781
Century Telephone 6%,
2/1/2007*............................ 2,000,000 2,365,000
Network Equipment 7 1/4%,
5/15/2014............................ 3,000,000 2,726,250
------------- -----------
11,911,048
-----------
Transportation--2.5%
Airborne Freight 6 3/4%, 8/15/2001..... 1,750,000 1,601,250
British Airways 9 3/4%, 6/15/2005...... 700,000+ 1,761,412
Builders Transport 8%, 8/15/2005....... 3,000,000 2,587,500
Interpool 5 1/4%, 12/15/2018........... 2,000,000 1,530,000
Nippon Yusen 2%, 9/29/2000............. 115,000,000# 1,444,869
------------- -----------
8,925,031
-----------
Miscellaneous--1.7%
Bell Sports 4 1/4%, 11/15/2000......... 2,500,000 1,609,375
General Signal 5 3/4%, 6/1/2002........ 2,300,000 2,288,500
TriMas 5%, 8/1/2003.................... 2,000,000 1,980,000
------------- -----------
5,877,875
-----------
Total Convertible Bonds
(Cost $97,292,324)................... 97,145,954
-----------
Convertible Preferred Stocks--16.8%
Computers and Business Services--1.1%
Ceridian 5 1/2%........................ 60,000shs. 3,780,000
------------- -----------
Drugs and Health Care--0.7%
Beverly Enterprises $2.75.............. 40,000 2,360,000
------------- -----------
Energy--1.0%
Unocal $3.50*.......................... 50,000 2,506,250
WRT Energy 9%.......................... 40,000 975,000
------------- -----------
3,481,250
-----------
Finance and Insurance--3.8%
Ahmanson (HF)(Series D) 6%............. 50,000 2,012,500
Alexander & Alexander (Series A)
$3.625*.............................. 65,000 2,600,000
California Federal Bank 7 3/4%......... 38,000 760,000
Chemical Banking 10%................... 30,000 2,066,250
Citicorp $5.375*....................... 30,000 3,438,750
National City $4.00.................... 40,000 2,500,000
------------- -----------
13,377,500
-----------
Food--0.7%
ConAgra (Series E)$1.6875 75,000 2,456,250
------------- -----------
Machinery--0.7%
Cooper Industries $1.60................ 120,000 2,460,000
------------- -----------
Minerals--0.7%
Freeport-McMoRan 4 3/8%*............... 50,000 2,387,500
------------- -----------
Office Equipment and Services--0.6%
Alco Standard 4 3/4%................... 30,000 2,175,000
------------- -----------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Portfolio of Investments (continued) December 31, 1994
- --------------------------------------------------------------------
Shares Value
--------- -----------
<S> <C> <C>
Packaging and Paper--0.6%
Federal Paper Board $2.875............ 40,000 $ 2,140,000
--------- -----------
Retailing--1.5%
Sears, Roebuck $3.75.................. 50,000 2,781,250
TJX Companies $3.125.................. 30,000 1,162,500
Venture Stores $3.25.................. 40,000 1,300,000
--------- -----------
5,243,750
-----------
Steel--0.7%
U.S. Steel $3.25...................... 60,000 2,685,000
--------- -----------
Technology--0.8%
General Motors (Series E) 6 1/2%...... 30,000 1,721,250
Unisys $3.75.......................... 40,000 1,270,000
--------- -----------
2,991,250
-----------
Transportation--2.4%
Consolidated Freightways $1.54........ 140,000 3,132,500
GATX $3.875........................... 50,000 2,700,000
Sea Containers 8%..................... 70,000 2,843,750
--------- -----------
8,676,250
-----------
Utilities/Telecommunications--0.7%
Mobile Telecommunications
Technology $2.25*................... 50,000 1,400,000
Nacional Financiera 11 1/4%........... 30,000 1,245,000
--------- -----------
2,645,000
-----------
Miscellaneous--0.8%
Corning 6%............................ 60,000 2,805,000
--------- -----------
Total Convertible Preferred Stocks
(Cost $60,034,574).................. 59,663,750
-----------
Common Stocks--16.0%
Banking and Finance--1.7%
Banco de Santander.................... 52,732 2,019,831
Internationale Nederlanden Bank....... 30,750 1,454,153
National Australia Bank (ADRs)........ 60,000 2,430,000
--------- -----------
5,903,984
-----------
Building and Construction--0.4%
Hopewell Holdings..................... 1,500,000 1,240,631
--------- -----------
Chemicals--0.9%
Bayer AG.............................. 5,700 1,321,046
Dow Chemical.......................... 30,000 2,017,500
--------- -----------
3,338,546
-----------
Consumer Goods and Services--1.0%
B.A.T Industries PLC.................. 200,000 1,350,595
Christian Dior-- ABSA................. 7,570 592,891
Christian Dior (Warrants)(0).......... 7,570 63,828
Semi-Tech (Global).................... 1,000,000 1,686,482
--------- -----------
3,693,796
-----------
Electric Utilities--3.2%
Central Costanera (ADRs)*............. 14,000 374,500
CINergy............................... 102,300 2,391,263
Detroit Edison........................ 100,000 2,612,500
Empresa Nacional de
Electricidad (ADRs)................. 25,000 1,006,250
PacifiCorp............................ 150,000 2,718,750
Unicom................................ 100,000 2,400,000
--------- -----------
11,503,263
-----------
Energy--2.5%
Atlantic Richfield.................... 20,000 2,035,000
BP Prudhoe Bay Royalty Trust.......... 80,000 1,360,000
European Vinyls(0).................... 17,100 758,357
Huaneng Power International
(ADRs)(0)........................... 35,000 516,250
Shell Transport and Trading
(ADRs).............................. 50,000 3,268,750
Total SA (Class B).................... 15,000 871,838
--------- -----------
8,810,195
-----------
Manufacturing--0.2%
Pacific Dunlop........................ 275,000 731,019
--------- -----------
Packaging and Paper--0.1%
Pechiney International................ 15,000 449,691
--------- -----------
Retailing--0.4%
K Mart................................ 100,000 1,300,000
--------- -----------
Spirits, Wines, and Ciders--0.3%
Allied Domecq......................... 140,000 1,183,140
--------- -----------
Utilities/Telecommunications--4.5%
Bell Atlantic......................... 40,000 1,990,000
British Telecommunications
(ADRs).............................. 30,000 1,792,500
GTE................................... 100,000 3,037,500
Hong Kong Electric.................... 800,000 2,186,611
NYNEX................................. 50,000 1,837,500
Tele Danmark (ADSs)................... 50,000 1,275,000
Telecom Italia........................ 439,000 875,834
Telefonica de Espana.................. 85,000 1,004,522
U.S. West............................. 50,000 1,781,250
--------- -----------
15,780,717
-----------
Miscellaneous--0.8%
Ogden................................. 150,000 2,812,500
--------- -----------
Total Common Stocks
(Cost $59,735,087)................... 56,747,482
-----------
Short-Term Holdings--1.2%
(Cost $4,095,000).................... 4,095,000
-----------
Total Investments--99.6%
(Cost $365,540,605).................. 352,823,551
Other Assets
Less Liabilities--0.4%............... 1,477,783
-----------
Net Assets--100.0%.................... $354,301,334
===========
</TABLE>
- ----------
* Rule 144A Security.
** Investments in mortgage-backed and asset-backed securities are subject to
principal paydowns. As a result of prepayments from refinancing or
satisfaction of the underlying instruments, the average life may be less
than the original maturity. This in turn may impact the ultimate yield
realized from these instruments.
+ Principal amount reported in British pounds.
++ Principal amount reported in French francs.
# Principal amount reported in Japanese yen.
(0) Non-income producing security.
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Statement of Assets and Liabilities December 31, 1994
- --------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value:
Bonds and stocks (cost $311,694,040)............................ $301,955,963
U.S. Government and Government Agency securities
(cost $46,770,525).............................................. 44,627,588
Foreign Government securities (cost $2,981,040)................. 2,145,000
Short-term holdings (cost $4,095,000)........................... 4,095,000
------------
$352,823,551
Cash.............................................................. 1,356,931
Receivable for interest and dividends............................. 4,729,880
Receivable for Capital Stock sold................................. 653,006
Investment in, and expenses prepaid to, shareholder service agent. 154,857
Receivable for securities sold.................................... 101,572
Other............................................................. 33,779
------------
Total Assets...................................................... 359,853,576
------------
Liabilities:
Payable for securities purchased.................................. 3,000,000
Payable for Capital Stock repurchased............................. 2,066,170
Accrued expenses, taxes, and other................................ 486,072
------------
Total Liabilities................................................. 5,552,242
------------
Net Assets........................................................ $354,301,334
============
Composition of Net Assets:
Capital Stock, at par ($1 par value; 100,000,000 shares
authorized; 27,166,342 shares outstanding): Class A.............. $ 21,943,501
Class D......................................................... 5,222,841
Additional paid-in capital........................................ 339,487,009
Undistributed net investment income............................... 253,655
Undistributed net realized gain................................... 108,409
Net unrealized depreciation of investments........................ (13,162,689)
Net unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies.................... 448,608
------------
Net Assets........................................................ $354,301,334
============
Net Asset Value per share:
Class A ($286,355,334 / 21,943,501 shares)........................ $13.05
======
Class D ($67,946,000 / 5,222,841 shares).......................... $13.01
======
</TABLE>
- -----------------
See notes to financial statements.
11
<PAGE>
================================================================================
Statement of Operations For the Year Ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income:
Interest ......................................................... $ 17,536,232
Dividends (net of foreign taxes withheld of $97,109).............. 7,050,783
------------
Total investment income........................................... $ 24,587,015
Expenses:
Management fee.................................................... 1,846,289
Distribution and service fees..................................... 1,326,355
Shareholder account services...................................... 719,631
Registration...................................................... 106,379
Custody and related services...................................... 90,455
Shareholder reports and communications............................ 78,984
Auditing and legal fees........................................... 67,151
Shareholders' meeting............................................. 52,877
Directors' fees and expenses...................................... 38,049
Miscellaneous..................................................... 35,827
------------
Total expenses.................................................... 4,361,997
------------
Net investment income ............................................ 20,225,018
Net realized and unrealized gain (loss) on investments and
foreign currency transactions:
Net realized loss on investments.................................. (617,238)
Net realized gain from foreign currency transactions.............. 463,795
Net change in unrealized appreciation of investments.............. (42,180,630)
Net change in unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies................ 442,628
------------
Net loss on investments .......................................... (41,891,445)
------------
Decrease in net assets from operations ........................... $(21,666,427)
============
</TABLE>
- -----------------
See notes to financial statements.
12
<PAGE>
================================================================================
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------
1994 1993
------------ ------------
Operations:
<S> <C> <C>
Net investment income..................................................... $ 20,225,018 $ 15,156,696
Net realized gain on investments.......................................... (617,238) 12,478,602
Net realized gain from foreign currency transactions...................... 463,795 --
Net change in unrealized appreciation of investments...................... (42,180,630) 13,459,494
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies............................ 442,628 --
------------ ------------
Increase (decrease) in net assets from operations......................... (21,666,427) 41,094,792
------------ ------------
Distributions to shareholders:
Net investment income:
Class A.................................................................. (16,840,179) (14,292,268)
Class D.................................................................. (3,211,726) (907,326)
Net realized gain on investments:
Class A.................................................................. -- (10,754,450)
Class D.................................................................. -- (1,586,425)
------------ ------------
Decrease in net assets from distributions................................. (20,051,905) (27,540,469)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Shares
------------------------------------------------------
Year Ended December 31
------------------------------------------------------
1994 1993
------------------------ ---------------------------
<S> <C> <C> <C> <C>
Capital share transactions:*
Net proceeds from sale of shares:
Class A.................................................................. 2,841,412 6,635,338 39,717,860 96,376,060
Class D.................................................................. 2,558,453 3,411,206 35,792,197 50,296,419
Investment of dividends:
Class A.................................................................. 839,174 652,988 11,361,860 9,503,764
Class D.................................................................. 187,366 48,890 2,524,974 715,009
Exchanged from associated Funds:
Class A.................................................................. 448,817 569,325 6,195,966 8,279,792
Class D.................................................................. 55,945 15,011 745,079 225,075
Shares issued in payment of gain distributions:
Class A.................................................................. -- 601,817 -- 8,774,520
Class D.................................................................. -- 95,145 -- 1,384,373
---------- ----------- ------------ ------------
Total..................................................................... 6,931,167 12,029,720 96,337,936 175,555,012
---------- ----------- ------------ ------------
Cost of shares repurchased:
Class A.................................................................. (2,914,276) (1,502,649) (39,968,347) (21,940,661)
Class D.................................................................. (722,706) (128,932) (9,798,891) (1,927,301)
Exchanged into associated Funds:
Class A.................................................................. (1,290,311) (497,671) (17,596,183) (7,137,064)
Class D.................................................................. (288,794) (8,743) (3,935,880) (130,231)
---------- ----------- ------------ ------------
Total..................................................................... (5,216,087) (2,137,995) (71,299,301) (31,135,257)
---------- ----------- ------------ ------------
Increase in net assets
from capital share transactions.......................................... 1,715,080 9,891,725 25,038,635 144,419,755
========== =========== ============ ============
Increase (decrease) in net assets......................................... (16,679,697) 157,974,078
Net Assets:
Beginning of year......................................................... 370,981,031 213,006,953
----------- ------------
End of year (including undistributed net investment income of $253,655 and
dividends in excess of net investment income of $74,881)................. $354,301,334 $370,981,031
============ ============
</TABLE>
- -----------------
* The Fund began offering Class D shares on May 3, 1993.
See notes to financial statements.
13
<PAGE>
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Effective May 3, 1993, Seligman Income Fund, Inc. (the "Fund") began offering
two classes of shares. All shares existing prior to May 3, 1993, have been
classified as Class A shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class D shares are sold without an initial sales charge but are subject
to a higher distribution fee and a contingent deferred sales load ("CDSL") of 1%
imposed on certain redemptions made within one year of purchase. The two classes
of shares represent interests in the same portfolio of investments, have the
same rights and are generally identical in all respects except that each class
bears its separate distribution and certain class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in U.S. and other Government securities, bonds and stocks are
valued at current market values or, in their absence, at fair value
determined in accordance with procedures approved by the Board of Directors.
Securities traded on national exchanges are valued at last sales prices or,
in their absence and in the case of over-the-counter securities, a mean of
bid and asked prices. Short-term holdings maturing in 60 days or less are
valued at amortized cost.
b. The books and records of the Fund are maintained in U.S. dollars. The market
value of investment securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollars at the closing daily
rate of exchange as reported by a pricing service. Purchases and sales of
investment securities, income, and expenses are translated into U.S. dollars
at the rate of exchange prevailing on the respective dates of such
transactions.
The Fund separates that portion of the results of operations resulting
from changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of securities held in the portfolio. Similarly,
the Fund separates the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of portfolio
securities sold during the period.
c. There is no provision for federal income or excise tax. The Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
d. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Dividends receivable and payable are recorded on ex-dividend dates.
Interest income is recorded on an accrual basis.
e. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of the value of the shares outstanding of each
class. Class-specific expenses, which include distribution and service fees
and any other items that can be specifically attributed to a particular
class, are charged directly to such class.
f. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gain may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by: differences in the timing of the recognition of
certain components of income, expense, or capital gain and the
recharacterization of foreign exchange gains or losses to either ordinary
income or realized capital gain for federal income tax purposes. Where such
differences are permanent in nature, they are reclassified in the components
of net assets based on their ultimate characterization for federal income tax
purposes. Any such reclassification will have no effect on net assets,
results of operations, or net asset value per share of the Fund.
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1994, amounted to $277,660,328 and
$229,105,469, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $364,862,323, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effect of foreign currency
transactions, amounted to $13,651,437 and $25,690,209, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager receives a fee, calculated daily and payable
monthly, equal to a per annum percentage of the Fund's daily net assets. The
management fee is calculated on a sliding scale of 0.50% to 0.44%, based on
average daily net assets of all the investment companies managed by the Manager.
The management fee for the year ended December 31, 1994, was equivalent to an
annual rate of 0.49% of the average daily net assets of the Fund. Effective June
1, 1994, Seligman Henderson Co. (the "Subadviser"), a 50% owned affiliate of the
Manager, is entitled to a portion of the Manager's fee for acting as subadviser
for certain of the international investments of the Fund.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of Fund shares and an affiliate of the Manager, received
commissions of $156,975 from sales of Class A shares, after concessions of
$1,211,633 paid to dealers.
Effective January 1, 1993, the Fund adopted an Administration, Shareholder
Services and Distribution Plan (the "Plan") with respect to Class A shares under
which service organizations can enter into agreements with the Distributor and
receive a continuing fee of up to 0.25% on an annual basis, payable quarterly,
of the average daily net assets of the Class A shares attributable to the
particular service organizations for providing personal services and/or the
maintenance of shareholder accounts. The Distributor charges such fees to the
Fund pursuant to the Plan. For the year ended December 31, 1994, fees paid
aggregated $672,700, or 0.22% per annum of the average daily net assets of Class
A shares.
Effective May 3, 1993, the Fund adopted a Plan with respect to Class D
shares under which service organizations can enter into agreements with the
Distributor and receive a continuing fee for providing personal services and/or
the maintenance of shareholder accounts of up to 0.25% on an annual basis of the
average daily net assets of the Class D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Fund to the Distributor pursuant to the Plan. For the year ended December
31, 1994, fees paid amounted to $653,655, or 1% per annum of the average daily
net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain redemptions
occurring within one year of purchase. For the year ended December 31, 1994,
such charges amounted to $48,151.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $719,631 for shareholder account services.
The Fund's investment in Seligman Data Corp. is recorded at a cost of $3,553.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Subadviser, the Distributor, and/or Seligman Data Corp.
Fees of $15,500 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
15
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1994, of
$80,375 is included in other liabilities. Deferred fees and the related accrued
interest are not deductible for federal income tax purposes until such amounts
are paid.
5. Class-specific expenses charged to Class A and Class D during the year ended
December 31, 1994, which are included in the corresponding captions of the
Statement of Operations, were as follows:
<TABLE>
<CAPTION>
Class A Class D
-------- --------
<S> <C> <C>
Distribution and service fees.. $672,700 $653,655
Registration................... 48,146 20,772
Shareholders' meeting.......... 17,133 1,859
Shareholder reports and
communications.............. 13,006 2,037
</TABLE>
6. At December 31, 1994, the Fund had a capital loss carryforward of $569,873,
which is available for offset against future taxable net gains through 2002.
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net capital gains have been realized in excess of the available capital
loss carryforward.
16
<PAGE>
================================================================================
Financial Highlights
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they 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 share amount.
The total return based on net asset value measures the Fund's performance
assuming investors purchased Fund shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share on the last day of
the period. The total return computations do not reflect any sales charges
investors may incur in purchasing or selling shares of the Fund. The total
returns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
Class A Class D
---------------------------------------------------- ----------------------
Year Ended December 31 Year 5/3/93*
---------------------------------------------------- Ended to
1994(0) 1993 1992 1991 1990 12/31/94(0) 12/31/93
-------- ------- -------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..... $ 14.58 $ 13.69 $ 12.45 $ 10.38 $ 12.44 $ 14.55 $ 14.42
-------- -------- -------- -------- -------- ------- -------
Net investment income.................... .76 .75 .92 .96 1.02 .65 .45
Net realized and unrealized investment
gain (loss)............................. (1.57) 1.40 1.21 2.08 (2.02) (1.57) .69
Net realized and unrealized gain on
foreign currency transactions........... .03 -- -- -- -- .03 --
-------- -------- -------- -------- -------- ------- -------
Increase (decrease) from investment
operations.............................. (.78) 2.15 2.13 3.04 (1.00) (.89) 1.14
Dividends paid........................... (.75) (.75) (.89) (.97) (1.06) (.65) (.50)
Distributions from net gain realized..... -- (.51) -- -- -- -- (.51)
-------- -------- -------- -------- -------- ------- -------
Net increase (decrease) in net asset
value................................... (1.53) .89 1.24 2.07 (2.06) (1.54) .13
-------- -------- -------- -------- -------- ------- -------
Net asset value, end of period........... $ 13.05 $ 14.58 $ 13.69 $ 12.45 $ 10.38 $ 13.01 $ 14.55
======== ======== ======== ======== ======== ======= =======
Total return based on net asset value.... (5.43)% 15.98% 17.54% 30.12% (8.30)% (6.20)% 8.02%
Ratios/Supplemental Data:
Expenses to average net assets........... 1.02% 1.03% .84% .85% .76% 1.82% 1.84%+
Net investment income to average net
assets.................................. 5.51% 5.29% 6.88% 8.24% 8.79% 4.74% 4.42%+
Portfolio turnover....................... 66.62% 60.62% 70.43% 66.77% 53.27% 66.62% 60.62%++
Net assets, end of period
(000's omitted)......................... $286,355 $321,040 $213,007 $153,511 $127,825 $67,946 $49,941
</TABLE>
- --------------------
* Commencement of offering of Class D shares.
(0) Per share amounts for the year ended December 31, 1994, are calculated based
on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1993.
See notes to financial statements.
17
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Income Fund, Inc. as of December 31,
1994, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the Fund's custodians and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Income
Fund, Inc. as of December 31, 1994, the results of its operations, the changes
in its net assets and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
----------------------
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1995
18
<PAGE>
================================================================================
Board of Directors
- --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3, 4
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel 2, 4
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2, 4
Management Consultant
James C. Pitney 3, 4
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3, 4
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2, 4
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3, 4
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2, 4
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated
- -------------------
Member: 1 Executive Committee; 2 Audit Committee; 3 Director Nominating
Committee; 4 Board Operations Committee
- --------------------------------------------------------------------------------
Executive Officers
William C. Morris
Chairman
Ronald T. Schroeder
President
David Watts
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
Subadviser
Seligman Henderson Co.
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
19
<PAGE>
Seligman Financial Services, Inc.
an affiliate of
[LOGO APPEARS HERE]
J. & W. Seligman & Co.
Incorporated
Established 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Income Fund, Inc., which contains information about the sales charges,
management fee, and other costs. Please read the prospectus carefully before
investing or sending money.
EQIN2 12/94
<PAGE>
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements and Schedule:
Part A Financial Highlights for Class A shares for the ten years ended
December 31, 1994; Financial Highlights for Class D shares for the
period from May 3, 1993 (commencement of offering) to December 31,
1994.
Part B Required Financial Statements are included in the Fund's Annual Report
to Shareholders, dated December 31, 1994, which are incorporated by
reference in the Statement of Additional Information. These Financial
Statements are: Portfolio of Investments as of December 31, 1994;
Statement of Assets and Liabilities as of December 31, 1994; Statement
of Operations for the year ended December 31, 1994; Statement of
Changes in Net Assets for the years ended December 31, 1994 and 1993;
Notes to Financial Statements; Financial Highlights for the five years
ended December 31, 1994 for the Fund's Class A shares and for the
period May 3, 1993 (commencement of offering) through December 31,
1994 for the Fund's Class D shares; Report of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed except Exhibits
marked with an asterisk (*) are incorporated herein.
(1) Articles of Amendment and Articles Supplementary to Articles of
Incorporation of Registrant.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(2) By-laws of the Corporation.
(Incorporated by reference to Post-Effective Amendment No. 54 filed on
February 27, 1981.)
(4) Specimen certificate of Class D Capital Stock.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(5) Amended Management Agreement between Registrant and J. & W. Seligman &
Co. Incorporated.*
(5a) Form of Subadvisory Agreement between the Manager and Seligman Henderson
Co.*
(6) Copy of Amended Distributing Agreement between Registrant and Seligman
Financial Services, Inc.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(6a) Copy of Amended Sales Agreement between Registrant and Seligman Financial
Services, Inc.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(7) Amendments to the Amended Retirement Income Plan of J. & W. Seligman &
Co. Incorporated and Trust.
(Incorporated by reference to Post-Effective Amendment No. 71 filed on
April 29, 1994.)
(7a) Amendments to the Amended Employees' Thrift Plan of Union Data Service
Center, Inc. and Trust.
(Incorporated by reference to Post-Effective Amendment No. 71 filed on
April 29, 1994.)
(8) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company.
(Incorporated by reference to Post-Effective Amendment No. 68 filed on
May 1, 1991.)
(10) Opinion and Consent of Counsel.
(Incorporated by Reference to Seligman Capital Fund, Inc., File No. 2-
33566, Post-Effective Amendment No. 47 filed on March 31,1994.)
(11) Report and Consent of Independent Auditors.*
(13) Purchase Agreement for Initial Capital between Registrant's Class D
shares and J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(14) Copy of Amended Individual Retirement Account Trust and Related
Documents.
(Incorporated by reference to Post-Effective Amendment No. 69 filed on
April 30, 1992.)
<PAGE>
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits (continued)
- ------- ---------------------------------
(14a) Copy of Amended Comprehensive Retirement Plans for Money Purchase
and/or Prototype Profit Sharing Plan.
(Incorporated by reference Seligman Tax-Exempt Fund Series, Inc., File
No. 2-86008, to Post-Effective Amendment No. 24 filed on November 30,
1992.)
(14b) Copy of Amended Basic Business Retirement Plans for Money Purchase
and/or Profit Sharing Plans.
(Incorporated by reference to Seligman Tax-Exempt Fund Series, Inc.,
File No. 2-86008, Post-Effective Amendment No. 24 filed on November 30,
1992.)
(14c) Copy of Amended 403(b)(7) Custodial Account Plan.
(Incorporated by reference to Seligman New Jersey Tax-Exempt Fund,
Inc., File No. 33-13401, Pre-Effective Amendment No. 1 filed on January
11, 1988.)
(14d) Copy of Amended Simplified Employee Pension Plan (SEP).
(Incorporated by reference to Post-Effective Amendment No. 69 filed on
April 30, 1992.)
(14e) Copy of the Amended J. & W. Seligman & Co. Incorporated (SARSEP) Salary
Reduction and Other Elective Simplified Employee Pension-Individual
Retirement Accounts Contribution Agreement (Under Section 408(k) of the
Internal Revenue Code).
(Incorporated by reference to Post-Effective Amendment No. 69 filed on
April 30, 1992.)
(15) Copy of Amended Administration, Shareholder Services and Distribution
Plan and form of Agreement of Registrant.
(Incorporated by reference to Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(16) Schedule for Computation of each Performance Quotation Provided in
Registration Statement to Item 22.
(Incorporated by reference to Post-Effective Amendment No. 66 filed on
April 30, 1990.)
Item 25. Persons Controlled by or Under Common Control with Registrant -
- ------- -------------------------------------------------------------
Seligman Data Corp. ("SDC"), a New York corporation, is owned by the
Registrant and certain associated investment companies. The
Registrant's investment in SDC is recorded at a cost of $3,553.
Item 26. Number of Holders of Securities - As of March 31, 1995, there were
- ------- -------------------------------
12,113 record holders of Registrant's Class A Capital Stock and 3,474
record holders of Registrant's Class D Capital Stock.
Item 27. Indemnification - Incorporated by reference to Registrant's Post-
- ------- ---------------
Effective Amendment #68 (File No. 2-10837) as filed with the Commission
on 5/1/91.
Item 28. Business and Other Connections of Investment Adviser - The Manager
- ------- ----------------------------------------------------
also serves as investment manager to sixteen associated investment
companies. They are Seligman Capital Fund, Inc., Seligman Cash
Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series,
Seligman Portfolios, Inc., Seligman Quality Municipal Fund, Inc.,
Seligman Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series
Trust, Seligman Select Municipal Fund, Inc. and Tri-Continental
Corporation.
The Subadviser also serves as subadviser to seven other associated
investment companies. They are Seligman Capital Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., the Global and Global Smaller Companies Portfolios of
Seligman Portfolios, Inc. and Tri-Continental Corporation.
The Manager and Subadviser have investment advisory service divisions
which provide investment management or advice to private clients. The
list required by this Item 28 of officers and directors of the Manager
and the Subadviser, respectively, together with information as to any
other business, profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV,
filed by the Manager and the Subadviser, respectively, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-5798 and SEC File No.
801-4067 both of which were filed on March 30, 1994).
<PAGE>
PART C. OTHER INFORMATION
- ------- -----------------
Item 29. Principal Underwriters
- ------- ----------------------
(a) The names of each investment company (other than the Registrant) for which
each principal underwriter currently distributing securities of the
Registrant also acts as a principal underwriter, depositor or investment
adviser follow:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Portfolios, Inc.
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust
(b) Name of each director, officer or partner of each principal underwriter
named in the answer to Item 21:
Seligman Financial Services, Inc.
---------------------------------
As of April 1, 1995
-------------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- --------------------------- ------------------------ ----------------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board
and Chief Executive
Officer
Ronald T. Schroeder* Director President and Director
Fred E. Brown* Director Director
Michael J. Del Priore* Director None
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
David Watts* Director None
Brian T. Zino* Director Director
Stephen J. Hodgdon* President None
Mark R. Gordon Senior Vice President, None
Director of Marketing
Gerald I. Cetrulo, III Senior Vice President None
140 West Parkway of Sales and Regional
Pompton Plains, NJ 07444 Sales Manager
Brad Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Jonathan G. Evans Regional Vice President None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Susan Gutterud Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
Bradley F. Hanson Senior Vice President None
9707 Xylon Court of Sales and Regional
Bloomington, MN 55438 Sales Manager
Bradley W. Larson Senior Vice President None
367 Bryan Drive of Sales and Regional
Danville, CA 94526 Sales Manager
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
- ------- -----------------
Seligman Financial Services, Inc.
---------------------------------
As of April 1, 1995
-------------------
<TABLE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- --------------------------- ------------------------- ---------------------
<S> <C> <C>
Randy D. Lierman Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
Judith L. Lyon Regional Vice President None
163 Haynes Bridge Rd,
Ste. 205
Alpharetta, GA 30201
David Meyncke Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
Herb W. Morgan Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
Melinda Nawn Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
Robert H. Ruhm Regional Vice President None
167 Derby Street
Melrose, MA 02176
Diane Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
Lynda M. Soleim* Regional Vice President None
14074 Rue St.
Raphael Street
Del Mar, CA 92014
Bruce Tuckey Regional Vice President None
23477 Haggerty Road
Building No. 7
Novi, MI 48375
D. Ian Valentine Senior Vice President of None
307 Braehead Drive Sales and Regional Sales
Fredericksburg, VA 22401 Manager
Andrew Veasey Regional Vice President None
40 Goshawk Court
Voorhees, NJ 08043
Todd Volkman Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
Kelli A. Dumser Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
James R. Besher Regional Vice President None
1400 Margaux Lane
Town & Country, MO 63017
Lawrence P. Vogel* Senior Vice President - Vice President
Finance
Helen Simon* Vice President None
Marsha E. Jacoby* Vice President, National None
Accounts Manager
Vito Graziano* Assistant Secretary Assistant Secretary
William W. Johnson* Vice President, Order None
Desk
Frank P. Marino* Assistant Vice
President, Mutual
Fund Product Manager None
Aurelia Lacsamana* Treasurer None
Frank J. Nasta, Esq.* Secretary Secretary
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
- ------- -----------------
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, NY, NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
- ---------- --------------------------------
Custodian: Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105 and
Seligman Income Fund, Inc.
100 Park Avenue
New York, NY 10017
Item 31. Management Services - Seligman Data Corp. ("SDC") the
- -------- -------------------
Registrant's shareholder service agent, has an agreement with The
Shareholder Service Group ("TSSG") pursuant to which TSSG provides a
data processing system for certain shareholder accounting and
recordkeeping functions performed by SDC, which commenced in July
1990. For the fiscal years ended December 31, 1994, 1993 and 1992
the approximate cost of these services were:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Class A Shares $61,201 $60,200 $52,800
Class D Shares $15,018 $ 1,600 N/A
</TABLE>
Item 32. Undertakings - The Registrant undertakes, (1) to furnish a copy of
- -------- ------------
the Registrant's latest annual report, upon request and without
charge, to every person to whom a prospectus is delivered and (2) if
requested to do so by the holders of at least ten percent of its
outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the removal of a director or directors and to
assist in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 72 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 28th day of April, 1995.
SELIGMAN INCOME FUND, INC.
By: /s/ William C. Morris
---------------------
William C. Morris, Chairman*
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 72 has been signed below by the following persons in the
capacities indicated on April 28, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ William C. Morris Chairman of the Board
- ----------------------------------- (Principal executive
William C. Morris* officer) and Director
/s/ Ronald T. Schroeder Director and President
- -----------------------------------
Ronald T. Schroeder*
/s/ Thomas G. Rose Treasurer
- -----------------------------------
Thomas G. Rose
</TABLE>
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
Douglas R. Nichols, Jr., Director ) -----------------
James C. Pitney, Director ) * Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Herman J. Schmidt, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Brian T. Zino, Director )
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 365,541
<INVESTMENTS-AT-VALUE> 352,824
<RECEIVABLES> 5,635
<ASSETS-OTHER> 1,394
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 359,853
<PAYABLE-FOR-SECURITIES> 3,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,552
<TOTAL-LIABILITIES> 5,552
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 366,653
<SHARES-COMMON-STOCK> 21,944<F1>
<SHARES-COMMON-PRIOR> 22,019<F1>
<ACCUMULATED-NII-CURRENT> 254
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (12,714)
<NET-ASSETS> 286,355<F1>
<DIVIDEND-INCOME> 5,823<F1>
<INTEREST-INCOME> 14,481<F1>
<OTHER-INCOME> 345<F1>
<EXPENSES-NET> 3,173<F1>
<NET-INVESTMENT-INCOME> 17,548<F1>
<REALIZED-GAINS-CURRENT> (570)
<APPREC-INCREASE-CURRENT> (41,738)
<NET-CHANGE-FROM-OPS> (21,666)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,840<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,290<F1>
<NUMBER-OF-SHARES-REDEEMED> 4,204<F1>
<SHARES-REINVESTED> 839<F1>
<NET-CHANGE-IN-ASSETS> (16,680)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 423
<OVERDISTRIB-NII-PRIOR> 75
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,526<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,173<F1>
<AVERAGE-NET-ASSETS> 311,090<F1>
<PER-SHARE-NAV-BEGIN> 14.58<F1>
<PER-SHARE-NII> .76<F1>
<PER-SHARE-GAIN-APPREC> (1.54)<F1>
<PER-SHARE-DIVIDEND> .75<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 13.05<F1>
<EXPENSE-RATIO> 1.02<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 365,541
<INVESTMENTS-AT-VALUE> 352,824
<RECEIVABLES> 5,635
<ASSETS-OTHER> 1,394
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 359,853
<PAYABLE-FOR-SECURITIES> 3,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,552
<TOTAL-LIABILITIES> 2,552
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 366,653
<SHARES-COMMON-STOCK> 5,223<F1>
<SHARES-COMMON-PRIOR> 3,433<F1>
<ACCUMULATED-NII-CURRENT> 254
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (12,714)
<NET-ASSETS> 67,946<F1>
<DIVIDEND-INCOME> 1,228<F1>
<INTEREST-INCOME> 3,055<F1>
<OTHER-INCOME> 72<F1>
<EXPENSES-NET> 1,189<F1>
<NET-INVESTMENT-INCOME> 3,166<F1>
<REALIZED-GAINS-CURRENT> (570)
<APPREC-INCREASE-CURRENT> (41,738)
<NET-CHANGE-FROM-OPS> (21,666)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,212<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,614<F1>
<NUMBER-OF-SHARES-REDEEMED> 1,011<F1>
<SHARES-REINVESTED> 187<F1>
<NET-CHANGE-IN-ASSETS> (16,680)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 423
<OVERDISTRIB-NII-PRIOR> 75
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 320<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,189<F1>
<AVERAGE-NET-ASSETS> 65,365<F1>
<PER-SHARE-NAV-BEGIN> 14.55<F1>
<PER-SHARE-NII> .65<F1>
<PER-SHARE-GAIN-APPREC> (1.54)<F1>
<PER-SHARE-DIVIDEND> .65<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 13.01<F1>
<EXPENSE-RATIO> 1.82<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<PAGE>
-1-
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, and amended April 10,
1991, between SELIGMAN INCOME FUND, INC., a Maryland corporation (the
"Corporation"), and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation
(the "Manager").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
I. Duties of the Manager. The Manager shall manage the affairs of the
Corporation including, but not limited to, continuously providing the
Corporation with investment management, including investment research,
advice and supervision, determining which securities shall be purchased or
sold by the Corporation, making purchases and sales of securities on
behalf of the Corporation and determining how voting and other rights with
respect to securities of the Corporation shall be exercised, subject in
each case to the control of the Board of Directors of the Corporation and
in accordance with the objectives, policies and principles set forth in
the Registration Statement and Prospectus of the Corporation and the
requirements of the Investment Company Act of 1940 (the "Act") and other
applicable law. In performing such duties, the Manager shall provide such
office space, such bookkeeping, accounting, internal legal, clerical,
secretarial and administrative services (exclusive of, and in addition to,
any such services provided by any others retained by the Corporation) and
such executive and other personnel as shall be necessary for the
operations of the Corporation. The Manager shall also, if requested by
and subject to the control of the Board of Directors of Union Data Service
Center, Inc. ("Data"), manage the affairs of Data and provide Data with
such office management, personnel, reproduction, employee cafeteria and
internal legal services and such senior executive officers (other than
vice presidents) as may be necessary for the operation of Data, and with a
treasurer, a corporate secretary and a principal operating officer.
I. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 and shall pay any salaries,
fees and expenses of the directors of the Corporation who are employees of
the Manager or its affiliates. The Manager shall not be required to pay
any other expenses of the Corporation, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, cost of stock certificates and any other
expenses (including clerical expenses) of issue, sale, repurchase or
redemption of shares, expenses of registering and qualifying shares for
sale, expenses of printing and distributing reports, notices and proxy
materials to shareholders, expenses of corporate data processing and
related services, shareholder recordkeeping and shareholder account
service, expenses of printing and filing reports and other documents filed
with governmental agencies, expenses of printing and distributing
prospectuses, expenses of annual and special shareholders' meetings, fees
and
<PAGE>
-2-
disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the
Corporation who are not employees of the Manager or its affiliates,
membership dues in the Investment Company Institute, insurance premiums
and extraordinary expenses such as litigation expenses.
I. Compensation.
I. As compensation for the services performed and the facilities and
personnel provided by the Manager pursuant to Section 1, the
Corporation will pay to the Manager promptly after the end of each
month a fee, calculated on each day during such month, equal to the
Applicable Percentage of the daily net assets of the Corporation at
the close of business on the previous business day.
I. As used herein.
I. The term "Applicable Percentage" means the amount (expressed as
a percentage and rounded to the nearest one millionth of one
percent) obtained by dividing (i) the Fee Amount by (ii) the Fee
Base.
I. The term "Fee Amount" means the sum of the following:
.50 of 1% on an annual basis of the first $4,000,000,000 of Fee Base,
.48 of 1% on an annual basis of the next $2,000,000,000 of Fee Base,
.46 of 1% on an annual basis of the next $2,000,000,000 of Fee Base, and
.44 of 1% on an annual basis of Fee Base in excess of $8,000,000,000.
I. The term "Fee Base" as of any day means the sum of the net
assets at the close of business on the previous day of each of
the investment companies registered under the Act for which the
Manager or any affiliated company acts as investment adviser or
manager (including the Corporation).
I. If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
I. Purchase and Sale of Securities. The Manager shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with
respect to brokerage as set forth in the Registration Statement and
Prospectus of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Corporation
with investment management and supervision it is recognized that the
Manager will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and
other services furnished by brokers or dealers to the Manager for its use,
to the general attitude of brokers or dealers toward
<PAGE>
-3-
investment companies and their support of them, and to such other
considerations as the Board of Directors of the Corporation may direct or
authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the
Corporation that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Corporation than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Corporation with such brokers,
subject to review by the Corporation's Board of Directors from time to time with
respect to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to the Manager in connection
with its services to other clients as well as to the Corporation.
The placing of purchase and sale orders may be carried out by the Manager
or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Corporation, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation from
approving the payment by the Corporation of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
I. Term of Agreement. This Agreement shall continue in full force and effect
until December 29, 1992 and from year to year thereafter if such
continuance is approved in the manner required by the Act and if the
Manager shall not have notified the Corporation in writing at least 60
days prior to such December 29 or prior to December 29 of any year
thereafter that it does not desire such continuance. This Agreement may
be terminated at any time, without payment of penalty by the Corporation,
on 60 days' written notice to the Manager by vote of the Board of
Directors of the Corporation or by vote of a majority of the outstanding
voting securities of the Corporation (as defined by the Act). This
Agreement shall automatically terminate in the event of its assignment (as
defined by the Act).
I. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations.
<PAGE>
-4-
IN WITNESS WHEREOF, the Corporation and the Manager have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
SELIGMAN INCOME FUND, INC.
By
----------------------------------
Ronald T. Schroeder
J. & W. SELIGMAN & CO. INCORPORATED
By
------------------------------------
Brian T. Zino
<PAGE>
SUBADVISORY AGREEMENT
Seligman Income Fund, Inc.
SUBADVISORY AGREEMENT, dated as of May 19, 1994 between J. & W. SELIGMAN & CO.
INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN HENDERSON CO.,
a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated December 29,
1988, as amended April 10, 1991 (the "Management Agreement") with Seligman
Income Fund, Inc. (the "Fund"), an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), pursuant to which the Manager will render investment management
services to the Fund, and to administer the business and other affairs of the
Fund; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Fund, and the Subadviser is willing to render such
investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the Fund with
investment management services with respect to assets of the Fund if, and to the
extent, designated by the Manager (such designated assets, "Qualifying Assets").
Such services shall include investment research, advice and supervision,
determining which securities shall be purchased or sold by the Fund, making
purchases and sales of securities on behalf of the Fund and determining how
voting and other rights with respect to securities of the Fund shall be
exercised, subject in each case to the control of the Board of Directors of the
Fund and in accordance with the objectives, policies and principles set forth in
the Registration Statement and Prospectus(es) of the Fund and the requirements
of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be liable to the
Fund for any error of judgment or mistake of law or for any loss arising out of
any investment or for any act or omission in the management of the Fund and the
performance of its duties under this Agreement except for willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
3. Compensation
(a) As compensation for the services performed and the facilities and
personnel provided by the Subadviser pursuant to Section 1, the Manager
will pay to the Subadviser each month a fee, equal to the Applicable
Percentage of the average monthly Net Qualifying Assets of the Fund.
<PAGE>
(b) As used herein:
(1) The term "Applicable Percentage" means the amount (expressed as a
percentage and rounded to the nearest one millionth of one
percent) obtained by dividing (i) the Fee Amount by (ii) the Fee
Base.
(2) The term "Fee Amount" means the sum of the following:
.50 of 1% on an annual basis of the first $4,000,000,000 of Fee
Base,
.48 of 1% on an annual basis of the next $2,000,000,000 of Fee
Base,
.46 of 1% on an annual basis of the next $2,000,000,000 of Fee
Base,
.44 of 1% on an annual basis of Fee Base in excess of
$8,000,000,000.
(3) The term "Fee Base" as of any day means the sum of the net assets
at the close of business on the previous day of each of the
investment companies registered under the 1940 Act for which the
Manager or any affiliated company acts as investment adviser or
manager (including the Fund).
(4) The term "Net Qualifying Assets" means the Qualifying Assets less
related liabilities as designated by the Manager.
(c) Average monthly Net Qualifying Assets shall be determined, for any
month, by taking the average of the value of the Net Qualifying Assets
as of the (i) opening of business on the first day of such month and
(ii) close of business on the last day of such month.
(d) If the Subadviser shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers as the Subadviser shall deem appropriate in order to carry out the
policy with respect to allocation of portfolio transactions as set forth in the
Registration Statement and Prospectus(es) of the Fund or as the Board of
Directors of the Fund may direct from time to time. In providing the Fund with
investment management and supervision, it is recognized that the Subadviser will
seek the most favorable price and execution, and, consistent with such policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the Subadviser for its use, to the general attitude of
brokers or dealers toward investment companies and their support of them, and to
such other considerations as the Board of Directors of the Fund may direct or
authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the Fund
that the Subadviser have access to supplemental investment and market research
and security and economic analysis provided by brokers who execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
execution. Therefore, the Subadviser is authorized to place orders for the
purchase and sale of securities of the Fund with such brokers, subject to review
by the Fund's Board of Directors from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Subadviser in connection with its services
to other clients as well as the Fund.
<PAGE>
If, in connection with purchases and sales of securities for the Fund, the
Subadviser may, without material risk, arrange to receive a soliciting dealer's
fee or other underwriter's or dealer's discount or commission, the Subadviser
shall, unless otherwise directed by the Board of Directors of the Fund, obtain
such fee, discount or commission and the amount thereof shall be applied to
reduce the compensation to be received by the Subadviser pursuant to Section 3
hereof.
Nothing herein shall prohibit the Board of Directors of the Fund from approving
the payment by the Fund of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
5. Term of Agreement. This Agreement shall continue in full force and effect
until December 31, 1995, and from year to year thereafter if such continuance is
approved in the manner required by the 1940 Act, and if the Subadviser shall
not have notified the Manager in writing at least 60 days prior to such date or
prior to December 31 of any year thereafter that it does not desire such
continuance. This Agreement may be terminated at any time, without payment of
penalty by the Fund, on 60 days' written notice to the Subadviser by vote of the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Fund (as defined by the 1940 Act). This Agreement will
automatically terminate in the event of its assignment (as defined by the 1940
Act) or upon the termination of the Management Agreement.
6. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the Fund is obtained in accordance with the
requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
J. & W. SELIGMAN & CO. INCORPORATED
By____________________________________________
Brian T. Zino
SELIGMAN HENDERSON CO.
By____________________________________________
David Stein
<PAGE>
Consent of Independent Auditors
Seligman Income Fund, Inc.:
We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 72 to Registration Statement
No. 2-10837 of our report dated February 3, 1995, appearing in the Annual Report
to shareholders for the year ended December 31, 1994, and to the reference to us
under the caption "Financial Highlights" in the Prospectus, which is a part of
such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 28, 1995
