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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. 73 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 19 [X]
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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
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THOMAS G. ROSE, Treasurer, 100 Park Avenue, New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate box):
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[ ] immediately upon filing pursuant to paragraph [ ] on (date) pursuant to paragraph (a)(i) of rule 485
(b) of rule 485 filing pursuant to paragraph (b)
of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii)
of rule 485
[X] on April 22, 1996 pursuant to paragraph (b) of
rule 485 [ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
[ ] 60 days after filing pursuant to paragraph (a)
(i) 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.
</TABLE>
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 20, 1996.
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SELIGMAN INCOME FUND, INC.
FORM N-1A CROSS REFERENCE SHEET
Post-Effective Amendment No. 73
Pursuant to Rule 481 (a)
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<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
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<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
Item in Part B of Form N-1A Location in Statement of Additional Information
- --------------------------- -----------------------------------------------
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 Objective, 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
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SELIGMAN INCOME FUND, INC.
April 22, 1996
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') and, to the extent
requested by the Manager in respect of foreign assets, Seligman Henderson Co.
(the 'Subadviser'). 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 investment objectives will be achieved.
The Fund offers three 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 the average daily net asset value of the Class A
shares. Class B shares are sold without an initial sales load but are subject to
a contingent deferred sales load ('CDSL'), if applicable, of 5% on redemptions
in the first year after purchase of such shares, declining to 1% in the sixth
year and 0% thereafter, an annual distribution fee of up to .75% and an annual
service fee of up to .25% of the average daily net asset value of the Class B
shares. Class B shares will automatically convert to Class A shares on the last
day of the month that precedes the eighth anniversary of their date of purchase.
Class D shares are sold without an initial sales load but are subject to a CDSL
of 1% imposed on certain redemptions within one year of purchase, an annual
distribution fee of up to .75% and an annual service fee of up to .25% of the
average daily net asset value of the Class D shares. Any CDSL payable upon
redemption of Class B or Class D shares will be assessed on the lesser of the
current net asset value or the original purchase price of the shares redeemed.
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 Additional
Information is dated the same date as this Prospectus and is incorporated 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
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PAGE
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Summary Of Fund Expenses............................. 2
Financial Highlights................................. 3
Alternative Distribution System...................... 4
Investment Objectives, Policies And Risks............ 6
Management Services.................................. 8
Purchase Of Shares................................... 11
Telephone Transactions............................... 16
Redemption Of Shares................................. 17
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PAGE
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Administration, Shareholder Services And Distribution
Plan............................................... 20
Exchange Privilege................................... 21
Further Information About Transactions In The Fund... 23
Dividends And Distributions.......................... 23
Federal Income Taxes................................. 24
Shareholder Information.............................. 25
Advertising The Fund's Performance................... 26
Organization And Capitalization...................... 27
</TABLE>
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SUMMARY OF FUND EXPENSES
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<CAPTION>
CLASS A CLASS B CLASS D
----------------- ----------------- -----------------
(INITIAL SALES (DEFERRED SALES (DEFERRED SALES
SHAREHOLDER TRANSACTION EXPENSES LOAD ALTERNATIVE) LOAD ALTERNATIVE) LOAD ALTERNATIVE)
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)............................................ 4.75% None None
Sales Load on Reinvested Dividends........................... None None None
Deferred Sales Load (as a percentage of original purchase
price or redemption proceeds, whichever is lower).......... None 5% in 1st year 1% in 1st year
4% in 2nd year None thereafter
3% in 3rd and
4th years
2% in 5th year
1% in 6th year
None thereafter
Redemption Fees.............................................. None None None
Exchange Fee................................................. None None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES FOR 1995 CLASS A CLASS B* CLASS D
----------------- ----------------- -----------------
<S> <C> <C> <C>
(as a percentage of average net assets)
Management Fee............................................... .60% .60% .60%
12b-1 Fees................................................... .23% 1.00%** 1.00%**
Other Expenses............................................... .29% .29% .29%
------- ------- -------
Total Fund Operating Expenses................................ 1.12% 1.89% 1.89%
------- ------- -------
------- ------- -------
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of the Fund may bear directly or
indirectly. 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 loads on Class B and Class D shares
are one-time charges paid only if shares are redeemed within six years or one
year of purchase, respectively. The management fees for Class A and Class D
shares have been restated to reflect the increase in the management fee rate
payable by the Fund, which was approved by shareholders on December 12, 1995 and
became effective January 1, 1996. The 'Other Expenses' disclosed for Class D
shares have been restated to reflect the expense allocation methodology
currently being used by the Fund. For more information concerning reductions in
sales loads and for a more complete description of the various costs and
expenses, see 'Purchase Of Shares,' 'Redemption Of Shares' and 'Management
Services' herein. The Fund's Administration, Shareholder Services and
Distribution Plan, to which the caption '12b-1 Fees' relates, is discussed under
'Administration, Shareholder Services and Distribution Plan' herein.
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<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<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 $ 58 $81 $ 106 $177
Class B`D' $ 69 $89 $ 122 $201
Class D $ 29`D'`D' $59 $ 102 $221
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5%
ANNUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
- ------------
* Expenses for Class B shares are estimated because no shares of that Class
were outstanding in the year ended December 31, 1995.
** Includes an annual distribution fee of up to .75% and an annual service fee
of up to .25%. Pursuant to the Rules of the National Association of
Securities Dealers, Inc., the aggregate deferred sales loads and annual
distribution fees on Class B and Class D shares of the Fund may not exceed
6.25% of total gross sales, subject to certain exclusions. The maximum sales
charge rule is applied separately to each class. The 6.25% limitation is
imposed on the Fund rather than on a per shareholder basis. Therefore, a
long-term Class B or Class D shareholder of the Fund may pay more in total
sales loads (including distribution fees) than the economic equivalent of
6.25% of such shareholder's investment in such shares.
`D' Assuming a (1) 5% annual return and (2) no redemption at the end of the
period, the expenses on a $1,000 investment would be $19 for 1 year, $59
for 3 years and $102 for 5 years. The expenses shown for the ten-year
period reflect the conversion of Class B shares to Class A shares after 8
years.
`D'`D' Assuming (1) 5% annual return and (2) no redemption at the end of one
year, the expenses on a $1,000 investment would be $19.
2
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FINANCIAL HIGHLIGHTS
The Fund's financial highlights for the Fund's Class A and Class D shares
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 1995
financial statements and notes contained in the Fund's 1995 Annual Report, which
is incorporated by reference in the Fund's Statement of Additional Information,
copies of which may be obtained free of charge by calling or writing the Fund at
the telephone numbers or address provided on the cover page of this Prospectus.
Financial highlights are not presented for the Class B shares because no shares
of that class were outstanding during the periods set forth 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 its ending net asset value so that they may 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, 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 returns for periods
of less than one year are not annualized.
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<CAPTION>
CLASS A
--------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------------------------------------
1995[f] 1994[f] 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $13.05 $14.58 $13.69 $12.45 $10.38 $12.44 $12.04 $11.80 $13.44 $13.21
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment income........... .76 .76 .75 .92 .96 1.02 1.06 1.00 1.00 1.07
Net realized and unrealized
investment gain (loss)......... 1.89 (1.57) 1.40 1.21 2.08 (2.02) .71 .23 (1.50) 1.10
Net realized and unrealized gain
(loss) on foreign currency
transactions................... (.01) .03 -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Increase (decrease) from
investment operations.......... 2.64 (.78) 2.15 2.13 3.04 (1.00) 1.77 1.23 (.50) 2.17
Dividends paid.................. (.78) (.75) (.75) (.89) (.97) (1.06) (1.03) (.99) (1.01) (1.09)
Distributions from net gain
realized....................... (.28) -- (.51) -- -- -- (.34) -- (.13)** (.85)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value.................... 1.58 (1.53) .89 1.24 2.07 (2.06) .40 .24 (1.64) .23
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period......................... $14.63 $13.05 $14.58 $13.69 $12.45 $10.38 $12.44 $12.04 $11.80 $13.44
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL RETURN BASED ON NET ASSET
VALUE.......................... 20.60% (5.43)% 15.98% 17.54% 30.12% (8.30)% 15.11% 10.53% (4.00)% 17.10%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net
assets......................... 1.00% 1.02% 1.03% .84% .85% .76% .75% .80% .79% .73%
Net investment income to average
net assets..................... 5.38% 5.51% 5.29% 6.88% 8.24% 8.79% 8.35% 7.99% 7.77% 7.75%
Portfolio turnover.............. 111.78% 66.62% 60.62% 70.43% 66.77% 53.27% 83.33% 74.23% 79.58% 72.48%
Net assets, end of period (000's
omitted)....................... $318,307 $286,355 $321,040 $213,007 $153,511 $127,825 $159,155 $160,403 $165,809 $162,910
<CAPTION>
CLASS D
------------------------------
YEAR ENDED
DECEMBER 31
----------------- 5/3/93*
1995[f] 1994[f] TO 12/31/93
-------- ------- -----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $13.01 $14.55 $14.42
-------- ------- -----------
Net investment income........... .65 .65 .45
Net realized and unrealized
investment gain (loss)......... 1.88 (1.57) .69
Net realized and unrealized gain
(loss) on foreign currency
transactions................... (.01) .03 --
-------- ------- -----------
Increase (decrease) from
investment operations.......... 2.52 (.89) 1.14
Dividends paid.................. (.65) (.65) (.50)
Distributions from net gain
realized....................... (.28) -- (.51)
-------- ------- -----------
Net increase (decrease) in net
asset value.................... 1.59 (1.54) .13
-------- ------- -----------
Net asset value, end of
period......................... $14.60 $13.01 $14.55
-------- ------- -----------
-------- ------- -----------
TOTAL RETURN BASED ON NET ASSET
VALUE.......................... 19.66% (6.20)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net
assets......................... 1.79% 1.82% 1.84%`D'
Net investment income to average
net assets..................... 4.58% 4.74% 4.42%`D'
Portfolio turnover.............. 111.78% 66.62% 60.62%`D'`D'
Net assets, end of period (000's
omitted)....................... $86,701 $67,946 $49,941
</TABLE>
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[f] Per share amounts for the years ended December 31, 1995 and 1994 are
calculated based on average shares outstanding.
* Commencement of operations of Class D shares.
** Includes excess of taxable gain distribution over realized corporate gain
charged to paid-in capital of $.06.
`D' Annualized.
`D'`D' For the year ended December 31, 1993.
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; 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 became effective January 1, 1993; and through December 31,
1995, has not been adjusted to reflect the effect of the increase in the
management fee rate payable by the Fund which was approved by shareholders on
December 12, 1995 and became effective on January 1, 1996.
3
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ALTERNATIVE DISTRIBUTION SYSTEM
The Fund offers three 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 fees. Class B shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and a
CDSL with respect to redemptions within six years of purchase and who desire
shares to convert automatically to Class A shares after eight years. Class D
shares are sold to investors choosing to pay no initial sales load, a higher
distribution fee and, with respect to redemptions within one year of purchase, a
CDSL. The Alternative 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 circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur an initial sales load
and be subject to lower ongoing fees, as discussed below, or to have the entire
initial purchase price invested in the Fund with the investment thereafter being
subject to higher ongoing fees and either a CDSL for a six-year period with
automatic conversion to Class A shares after eight years or a CDSL for a
one-year period with no automatic conversion to Class A shares.
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
distribution fees of Class B and Class D shares may exceed the initial sales
load and lower distribution 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 on Class A shares deducted at the time of purchase.
Furthermore, the distribution fees on Class B and Class D shares will be offset
to the extent any return is realized on the additional funds initially invested
therein that would have been equal to the amount of the initial sales load on
Class A shares. In addition, Class B shares will be converted automatically to
Class A shares after a period of approximately eight years, and thereafter
investors will be subject to lower ongoing fees. Shares purchased through
reinvestment of dividends and distributions on Class B shares also will
converted automatically to Class A shares along with the underlying shares on
which they were earned.
Alternatively, some investors might choose to have all of their funds
invested initially in Class B or Class D shares, although remaining subject to a
higher continuing distribution fee and for a six-year or 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 B or 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 money, which further reduces the impact of the Class B and 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.
Investors should bear in mind that total asset based sales charges (i.e.,
higher continuing distribution fee plus the CDSL) on Class B shares that are
redeemed may exceed the total asset based sales charges that would be payable on
a purchase of the same amount of Class A or Class D shares, particularly if the
Class B shares are redeemed shortly after purchase or if the investor qualifies
for a reduced sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales loads with respect to Class A shares is the same as those of the deferred
4
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<PAGE>
sales loads and higher distribution fees with respect to Class B and Class D
shares in that the sales loads and distribution fees applicable to each class
provide for the financing of the distribution of the shares of the Fund.
Class B and Class D shares are subject to the same ongoing distribution
fees but Class D shares are subject to a CDSL for a shorter period of time (one
year as opposed to six years) than Class B shares. However, unlike Class D
shares, Class B shares automatically convert to Class A shares after eight
years, which are subject to lower ongoing distribution fees.
The three 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, potentially, 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 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 and other expenses of each class.
Class B and Class D shares bear higher distribution fees which will cause the
Class B and Class D shares to pay lower dividends than the Class A shares. The
three classes also have separate exchange privileges.
The Directors of the Fund believe that no conflict of interest currently
exists between the Class A, Class B and Class D shares. On an ongoing basis, the
Directors, in the exercise of their fiduciary duties under the 1940 Act and
Maryland 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 differences between Class A, Class
B and Class D shares are their sales load structures and ongoing expenses as set
forth below. The primary differences between Class B and Class D shares are that
Class D shares are subject to a shorter CDSL period but Class B shares
automatically convert to Class A shares after eight years, resulting in a
reduction in ongoing fees. Investors in Class B shares should take into account
whether they intend to redeem their shares within the CDSL period and, if not,
whether they intend to remain invested until the end of the conversion period
and thereby take advantage of the reduction in ongoing fees resulting from the
conversion to Class A shares. Other investors, however, may elect to purchase
Class D shares if they determine that it is advantageous to have all their
assets invested initially and they are uncertain as to the length of time they
intend to hold their assets in the Fund or another mutual fund in the Seligman
Group for which the exchange privilege is available. Although Class D
shareholders are subject to a shorter CDSL period at a lower rate, they forgo
the Class B automatic conversion feature, making their investment subject to a
higher distribution fee for an indefinite period of time. Each Class has
advantages and disadvantages for different investors, and investors should
choose the class that best suits their circumstances 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 initial Service fee of .25% Initial sales load
sales load of waived or reduced
4.75% of the for certain
public offering purchases.
price.
CLASS B None Service fee of CDSL of:
.25%; Distribution 5% in 1st year
fee of .75% until 4% in 2nd year
conversion.* 3% in 3rd and
4th years
2% in 5th year
1% in 6th year
0% after 6th year.
CLASS D None Service fee of CDSL of 1% on
.25%; Distribution redemptions within
fee of .75%. one year of
purchase.
</TABLE>
* Conversion occurs at the end of the month which precedes the 8th anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to
the Class B shares acquired in the exchange will apply, and the holding period
of the shares exchanged will be tacked onto the holding period of the shares
acquired.
5
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<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is an open-end diversified management investment company, as
defined in the 1940 Act, or mutual fund, incorporated in Maryland in 1947. The
Fund has two investment objectives. Primarily, it seeks to provide shareholders
with high current income consistent with what is believed to be a prudent risk
of capital. Secondarily, it seeks to provide the possibility of improvement in
income and capital value over the longer term. There can be no assurance 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
between 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 market
value of gross assets must at all times be in cash, bonds and/or preferred
stocks. Under an investment policy established by the Fund's Board of Directors,
which can be changed by the Board, 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
nonconvertible debt securities in that they provide a steady stream of income
with generally higher yields than an 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 nonconvertible debt securities of similar quality, but they may also allow
investors 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 market 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 extent as the
underlying common stock. In an issuer's capital structure, convertible
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 convertible securities
for the Fund's portfolio, the Manager evaluates such factors as economic and
business conditions involving the issuer, future earnings growth potential of
the issuer, potential for price appreciation of the underlying 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 emphasis to the
attractiveness of the underlying common stock and the capital appreciation
opportunities that the convertible security presents. Convertible securities can
be callable or redeemable at the issuer's discretion, in which case the Manager
would be forced to seek alternative investments. The 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 description of credit ratings and
risks associated with lower rated debt securities, which tend to be more
speculative and riskier than higher rated debt securities, is set forth in the
Appendix to this prospectus. The Manager does not rely on the ratings of these
securities in making investment decisions but performs its own
6
<PAGE>
<PAGE>
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
nonconvertible 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.
The following table sets forth the weighted average ratings of the Fund's
portfolio invested in debt securities for the year ended December 31, 1995. When
securities receive different ratings from S&P and Moody's, the table reflects
the higher rating.
<TABLE>
<S> <C>
AAA/Aaa...................................... 1.0%
AA/Aa........................................ 3.7%
A/A.......................................... 9.2%
BBB/Baa...................................... 21.2%
BB/Ba........................................ 5.2%
B/B.......................................... 6.8%
CCC/Caa...................................... --
CC/Ca........................................ --
Non-rated.................................... 5.0%
</TABLE>
The Fund may invest for either the long or short term in its efforts to
attain its objectives, and changes in investments may be made whenever
considered 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.
BORROWING. The Fund may borrow money for temporary or emergency purposes in
an amount not to exceed 15% of the value of its total assets. The Fund may
pledge its assets only to the extent necessary to effect permitted borrowings on
a secured basis.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
brokers 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
portfolio 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.
ILLIQUID 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
institutional buyers' under Rule 144A of the 1933 Act, and the Manager, acting
pursuant to procedures approved by 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 this determination be made,
the Manager, acting pursuant to such procedures, will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
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, if and to the extent that qualified institutional
buyers become for a time uninterested in purchasing Rule 144A securities.
FOREIGN SECURITIES. The Fund may invest in commercial paper and
certificates of deposit issued by foreign banks and may invest in other
securities of foreign issuers directly or through American Depositary Receipts
('ADRs'), European Depositary Receipts ('EDRs') or Global Depositary Receipts
('GDRs') (collectively, 'Depositary Receipts'). Foreign investments may be
affected favorably or unfavorably by changes in currency rates and exchange
control regulations. There may be less information available about a foreign
company than about a U.S.
7
<PAGE>
<PAGE>
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 foreign
companies may involve greater market risk than securities of U.S. companies, 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 possible
nationalization of issuers. Depositary 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. Depositary 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 Depositary Receipt. 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 Depositary Receipt programs are generally similar, the issuers of
securities represented by unsponsored Depositary 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 Depositary Receipts which are traded in the United States or to
commercial paper and certificates of deposit issued by foreign banks.
GENERAL. Except as noted above, the foregoing investment policies are not
fundamental and the Fund's Board of Directors may change such policies without
the vote of a majority of the Fund's outstanding voting securities. As a matter
of policy, 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 Information.
Under 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
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
affairs 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., 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
8
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<PAGE>
Select Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust and Tri-Continental Corporation. The aggregate assets of
the Seligman Group were approximately $11.9 billion at February 29, 1996. The
Manager also provides investment management or advice to institutional accounts
having an aggregate value at February 29, 1996 of approximately $3.9 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
wholly-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. The management fee, which became effective on January 1, 1996,
is equal to an annual rate of .60% of the Fund's average daily net assets on the
first $1 billion of net assets, .55% of the Fund's average daily net assets on
the next $1 billion of net assets and .50% of the Fund's average daily net
assets in excess of $2 billion. In 1995, the management fee paid by the Fund was
equal to an annual rate of .48% of the average daily net assets of the Fund.
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, 1995 amounted to 1.00% and 1.79%, respectively, of the
average daily net assets of each class. No Class B shares were outstanding
during this period.
THE SUBADVISER. The Subadviser provides management investment services to
the Fund with respect to all or a portion of the Fund's foreign investments, as
designated by the Manager ('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 Depositary 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. Pursuant to the
Subadvisory Agreement, the Subadviser, with respect to the Qualifying Assets,
provides investment management services, including investment research, advice
and supervision, determines 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, payable monthly. The subadvisory fee
rate, which is applied to the average monthly net Qualifying Assets of the Fund
(i.e., the Qualifying Assets less any liabilities as designated by the Manager),
is the same as the overall rate paid to the Manager by the Fund. For the year
ended December 31, 1995 the Subadviser received a fee of $175,819.
The Subadviser was founded in 1991 as a joint venture between the Manager
and Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. The Subadviser, headquartered in New York, was created
to provide international and global investment advice to institutional and
individual 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 Fund, Inc., Seligman Growth Fund, Inc., Seligman
Henderson Global Fund Series, Inc., the Seligman
9
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<PAGE>
Henderson Global Portfolio and Seligman Henderson Global Smaller Companies
Portfolio of Seligman Portfolios, Inc. and Tri-Continental Corporation. The
address of the Subadviser is 100 Park Avenue, New York, NY 10017.
PORTFOLIO MANAGERS. Charles C. Smith, Jr., a Managing Director of the
Manager, has been Vice President and Portfolio Manager of the Fund since
December 1991. He is also Vice President and Portfolio Manager of Seligman
Common Stock Fund, Inc., and Tri-Continental Corporation and a Vice President of
Seligman Portfolios, Inc. ('SPI') and Portfolio Manager of SPI's Seligman Common
Stock Portfolio and Seligman Income Portfolio. 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, has served as Co-Portfolio
Manager of the Fund and of Seligman Common Stock Fund, Inc. since December 1991.
Ms. Navin joined the Manager in 1986 as a research analyst and assumed portfolio
management responsibilities in 1988.
The Subadviser's Global Policy Group has overall responsibility for
directing and overseeing all aspects of foreign investment activity for the Fund
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
Fund. Mr. Clark, who joined the Subadviser in 1992, has been a Director of
Henderson Administration Group plc 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 Standard
& Poor's 500 Composite Stock Price Index, the Lehman Brothers Aggregate Bond
Index and the Lipper Income Funds Average is included in the Fund's 1995 Annual
Report to Shareholders. Copies of the 1995 Annual Report may be obtained,
without charge, by calling or writing the Fund at the telephone numbers or
address listed on the cover page of this Prospectus.
PORTFOLIO TRANSACTIONS. The Management Agreement and Subadvisory Agreement
each 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. 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
primary 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
applicable laws, may consider sales of shares of the other mutual 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
spreads or underwriting commissions and other transactions costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
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
10
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<PAGE>
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
Avenue, New York, NY 10017.
The Fund issues three classes of shares: Class A shares are sold to
investors choosing the initial sales load alternative; Class B shares are sold
to investors choosing to pay no initial sales load, a higher distribution fee
and a CDSL with respect to redemptions within six years of purchase and who
desire their shares to convert automatically to Class A shares after eight
years; 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 System' above.
Shares of the Fund may be purchased through any authorized investment
dealer. 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; SUBSEQUENT
INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (EXCEPT FOR INVESTMENT OF
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS). THE FUND RESERVES THE RIGHT TO RETURN
INVESTMENTS WHICH DO NOT MEET THESE MINIMUMS. EXCEPTIONS TO THESE MINIMUMS ARE
AVAILABLE FOR ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE INVEST-A-CHECK'r'
SERVICE OR THE SELIGMAN TIME HORIZON MATRIX'SM'.
No purchase order may be placed for Class B Shares for an amount of
$250,000 or more; or for Class D shares for an amount of $4,000,000 or more.
Orders received by an authorized dealer before the close of business on the
New York Stock Exchange ('NYSE') (normally, 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
payment, dealer orders must first be placed through SFSI's order desk and
assigned 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, B or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION 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.
Current shareholders may purchase additional shares at any time through any
authorized dealer or by sending a check payable to the 'Seligman Group of Funds'
directly to P.O. BOX 3936, NEW YORK, NY 10008-3936. Checks for investment must
be in U.S. dollars drawn on a domestic bank. The check should be accompanied by
an investment slip (provided at the bottom of shareholder account statements)
and include the shareholder's name, address, account
11
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number, name of Fund and class of shares (A, B or D). If a shareholder does not
provide the required information, Seligman Data Corp. will seek further
clarification and may be forced to return the check to the shareholder. 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 as uncollectable. This charge may be deducted from the shareholder's account.
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 notice 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 (normally, 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
securities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securities.
Any securities for which recent market quotations are not readily available are
valued at fair value determined in accordance with procedures approved by the
Fund's 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 represent fair
market value.
Although the legal rights of Class A, Class B 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 B and
Class D shares will generally be lower than the net asset value of Class A
shares as a result of the higher distribution fees charged to Class B and Class
D shares. In addition, net asset value per share of the three classes will be
affected to the extent any other expenses differ 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
Distribution Plan' below.
<TABLE>
<CAPTION>
CLASS A SHARES -- SALES LOAD SCHEDULE
SALES LOAD AS A
PERCENTAGE OF REGULAR
--------------------- DEALER
NET AMOUNT DISCOUNT
INVESTED AS A % OF
AMOUNT OF OFFERING (NET ASSET OFFERING
PURCHASE PRICE VALUE) PRICE
- ----------------------- -------- ---------- ---------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 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
- ------------
* Dealers may receive a fee of .15% on sales of $4,000,000
or more.
</TABLE>
SFSI shall pay broker/dealers, from its own resources, an additional fee in
respect of certain investments in Class A shares of the Seligman Mutual Funds by
an 'eligible employee benefit plan' (as defined below under 'Special Programs')
which are attributable to the particular broker/dealer. The shares eligible for
the fee are those on which an
12
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initial front-end sales load was not paid because either (i) the participating
eligible employee benefit plan has at least $1 million invested in the Seligman
Mutual Funds or (ii) the participating employer has at least 50 eligible
employees to whom such plan is made available. The fee, which is paid monthly,
is a percentage of the average daily net asset value of eligible shares based on
the length of time the shares have been invested in a Seligman Mutual Fund, as
follows: for shares held up to 1 year, .50% per annum; for shares held more than
1 year up to 2 years, .25% per annum; for shares held from 2 years up to 5
years, .10% per annum; and nothing thereafter.
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.
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 Seligman
Mutual Funds that are sold with a front-end 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 shares of the Seligman Mutual Funds sold with a front-end sales load
with the total net asset value of shares of those Seligman Mutual Funds already
owned that were sold with a front-end 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 Seligman Mutual Fund on which there was
a front-end 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 investor
intends to purchase, plus the total net asset value of shares of the other
Seligman Mutual Funds already owned that were sold with a front-end 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 Seligman Mutual Fund on
which there was a front-end 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 30.
SPECIAL PROGRAMS. The Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers and employees and their
spouses (and family members of the foregoing) of the Fund, the other investment
companies in the Seligman Group, the Manager and other companies affiliated with
the Manager. Family members are defined to include lineal descendants and lineal
ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. 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.
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
13
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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 policies 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 account; pursuant to sponsored arrangements with organizations
which make recommendations to or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the Fund;
and to 'eligible employee benefit plans' (i) which have at least $1 million
invested in the Seligman Group of Mutual Funds or (ii) of employers who have at
least 50 eligible employees 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 plan'
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 plan funding or other system
acceptable to Seligman Data Corp.
Section 403(b) plans sponsored by public educational institutions are not
eligible for net asset value purchases based on the aggregate investment made by
the plan or number of eligible employees. Participants in such plans are
eligible for reduced sales loans based solely on their individual investments.
CLASS B SHARES. Class B shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSL
- --------------------------------------------------- ----
<S> <C>
less than 1 year................................... 5%
1 year or more but less than 2 years............... 4%
2 years or more but less than 3 years.............. 3%
3 years or more but less than 4 years.............. 3%
4 years or more but less than 5 years.............. 2%
5 years or more but less than 6 years.............. 1%
6 years or more.................................... 0%
</TABLE>
Class B shares are also subject to an annual distribution fee of up to .75%
and an annual service fee of up to .25% of the average daily net asset value of
the Class B shares. SFSI will make a 4% payment to dealers in respect of
purchases of Class B shares. Approximately eight years after purchase, Class B
shares will convert automatically to Class A shares of the Fund, which are
subject to an annual service fee of up to .25% but no distribution fee. Shares
purchased through reinvestment of dividends and distributions on Class B shares
also will convert automatically to Class A shares along with the underlying
shares on which they were earned. Conversion occurs at the end of the month
which precedes the eighth anniversary of the purchase date. If Class B shares of
the Fund are exchanged for Class B shares of another Seligman Mutual Fund, the
conversion period applicable to the Class B shares acquired in the exchange will
apply, and the holding period of the shares exchanged will be tacked onto the
holding period of the shares acquired. Class B shareholders of the Fund
exercising the exchange privilege will continue to be subject to the Fund's CDSL
schedule if such schedule is higher or longer than the CDSL schedule relating to
the new Class B shares. In addition, Class B shares of the Fund acquired by
exchange will be subject to the Fund's CDSL schedule if such schedule is higher
or longer than the CDSL schedule relating to the Class B shares of the Seligman
Mutual Fund from which the exchange has been made.
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% and an annual
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service fee of up to .25%, 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. Unlike Class B shares, Class D shares do not automatically convert to
Class A shares after eight years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on any redemption of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares); however, no CDSL
will be imposed on shares acquired through the investment of dividends or
distributions from any Class B or Class D shares of mutual funds within the
Seligman Group. The amount of any CDSL will initially be used by SFSI to defray
the expense of the payment of 4% (in the case of Class B shares) or 1% (in the
case of Class D shares) made by it to Service Organizations (as defined under
'Administration, Shareholder Services and Distribution Plan') at the time of
sale.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and distributions (which are not subject
to a CDSL) will be redeemed first; followed by shares purchased at least six
years prior to redemption (in the case of Class B shares) or one year prior to
redemption (in the case of Class D shares). Shares held for the longest period
of time within the applicable period will then be redeemed. Additionally, for
those shares determined to be subject to a CDSL, the application of the CDSL
will be made to the current net asset value or original purchase price,
whichever is less.
For example, assume an investor purchased 100 Class D shares in January at
a price of $10.00 per share. During the first year, 5 additional Class D shares
were acquired through investment of dividends and distributions. In January of
the following year, an additional 50 Class D shares were 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 Class D 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
redemption 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)
distributions from a custodial account under section 403(b)(7) of the Code or an
individual 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 paying a
sales load or commission in connection with the purchases of shares of any
registered investment management company; (e)
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pursuant to an automatic cash withdrawal service; and (f) in connection with the
redemption of Class B or Class D shares of the Fund if the Fund is combined with
another mutual fund in the Seligman Group, or another similar reorganization
transaction.
If, with respect to a redemption of any Class B or 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 payment or a portion of the payment made by SFSI at the time of
sale of 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 Mutual
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 mutual
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
representatives 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 with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, will have the ability to effect the following
transactions via telephone: (i) redemption of Fund shares, (ii) exchange of Fund
shares for shares of the same class of another Seligman Mutual Fund, (iii)
change of a dividend and/or capital gain distribution option, and (iv) change of
address. All telephone transactions are effected through Seligman Data Corp. at
(800) 221-2450.
For investors who purchase shares by completing and submitting an Account
Application (except those accounts registered as trusts (unless the trustee and
sole beneficiary are the same person), corporations or group retirement plans):
Unless an election is made otherwise on the Account Application, a shareholder
and the shareholder's broker/ dealer of record, as designated on the Account
Application, will automatically receive telephone services.
For investors who purchase shares through a broker/dealer: Telephone
services for a shareholder and the shareholder's representative may be elected
by completing a supplemental election application available from the
broker/dealer of record.
For accounts registered as IRAs: Telephone services will include only
exchanges or address changes.
For accounts registered as trusts (unless the trustee and sole beneficiary
are the same person), corporations or group retirement plans: Telephone
redemptions are not permitted. Additionally, group retirement plans are not
permitted to change a dividend or gain distribution option.
All Seligman Mutual Fund accounts with the same account number (i.e.,
registered exactly the same) as an existing account, including any new Seligman
Mutual Fund in which the shareholder invests in the future, will automatically
include telephone services if the existing account has telephone services.
Telephone services may also be elected at any time on a supplemental election
application.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or
16
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<PAGE>
requesting telephone services, authorizes each of the other owners to effect
telephone transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of Fund shares via telephone. In
these circumstances, the shareholder or the shareholder's representative should
consider using other redemption or exchange procedures. (See 'Redemption Of
Shares' below). Use of these other redemption or exchange procedures will result
in the request being processed at a later time than if a telephone transaction
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
confirm that instructions communicated by telephone are genuine. These will
include: 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 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,
neither they nor any of their affiliates will be liable for any loss to the
shareholder caused by an unauthorized transaction. 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 liable for any
losses which may occur due to a delay in implementing the transaction. If the
Fund or Seligman Data Corp. does not follow the procedures described above, the
Fund or Seligman Data Corp. may be liable for any losses due to unauthorized or
fraudulent instructions. Telephone transactions must be effected through a
representative of Seligman Data Corp., i.e., requests may not be communicated
via Seligman Data Corp.'s automated telephone answering system. Shareholders, of
course, may refuse or cancel telephone services. Telephone services may be
terminated by a shareholder at any time by sending a written request to Seligman
Data Corp. TELEPHONE SERVICES MAY NOT BE ESTABLISHED BY A SHAREHOLDER'S
BROKER/DEALER WITHOUT THE WRITTEN AUTHORIZATION OF THE SHAREHOLDER. Written
acknowledgment of termination of telephone services will be sent to the
shareholder at the address of record.
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 sending
a written request to Seligman Data Corp., 100 Park Avenue, New York, NY 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 address. 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 registration. The
shareholder's letter of instruction or endorsed stock power should specify the
Fund name, account number, class of shares (A, B 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 eligible financial
institution including, but not limited to, the following: banks, trust
companies, credit unions, securities brokers and dealers, savings and loan
associations and partici-
17
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<PAGE>
pants 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 DOCUMENTATION 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 REDEMPTION REQUIREMENTS, 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 B shares redeemed
after six years and Class D shares redeemed after one year, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order. If Class B shares are redeemed within six years of purchase, a
shareholder will receive the net asset value per share next determined after
receipt of a request in good order, less the applicable CDSL as described under
'Purchase Of Shares -- Class B Shares' above. If Class D shares are redeemed
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 certain, providing the order is timely, of receiving
the net asset value established at the end of the day on which the dealer is
given the repurchase order (less any applicable CDSL). 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, less any applicable CDSL. 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, less any
applicable CDSL. 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, once per day, in an amount of up to $50,000 per account. Telephone
redemption requests received by Seligman Data Corp. at (800) 221-2450 between
8:30 a.m. and 4:00 p.m. Eastern time, on any business day 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 retirement 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 and the circumstances
under which shareholders may bear the risk of loss for a fraudulent transaction,
see 'Telephone Transactions' above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
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 request to
Seligman Data Corp. Shares for which certificates have been issued will not be
available for redemption under this service. Holders of Class B shares may use
this service, although check redemptions of Class B shares will be subject to a
CDSL. Holders of Class D shares may use this service with respect to Class D
18
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<PAGE>
shares held for at least one year. Use of this service is subject to Boston Safe
Deposit and Trust Co. rules and regulations covering checking accounts.
There is no charge for use of checks. When honoring a check that was
processed for payment, Boston Safe Deposit and Trust Co. 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
certain 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 AS UNCOLLECTABLE.
THIS CHARGE MAY BE DEDUCTED 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
Identification 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 Boston Safe Deposit and Trust Co. See 'Terms and Conditions'
on page 30.
GENERAL. With respect to shares redeemed, a check for the proceeds will be
sent to the address of record within seven calendar days after acceptance of the
redemption order and will be made payable to all of the registered owners on the
account. With respect to shares repurchased by the Fund, a check for the
proceeds will be sent to the investment dealer within seven calendar days after
acceptance of the repurchase order and will be made payable to the investment
dealer. The Fund will not permit redemptions 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 account. 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 would be
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 to reinvest them, or to shift the investment to one of the other
Seligman Mutual Funds, the shareholder may, within 120 calendar days of the date
of redemption, use all or any part of the proceeds of the redemption 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 Seligman Mutual Funds. If a
shareholder redeems Class B or 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 Seligman Mutual Funds 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
federal 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
reinvested in shares of
19
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the same Fund, some or all of the loss will not be allowed as a deduction,
depending upon the percentage of the proceeds reinvested.
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, Class B and Class D
shares. Payments under the Plan may include, but are not limited to: (i)
compensation to securities dealers and other organizations ('Service
Organizations') for providing distribution assistance with respect to assets
invested in the Fund, (ii) compensation to Service Organizations for providing
administration, accounting 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 distribution of such promotional materials and prospectuses to
prospective investors and defraying SFSI's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. The Manager, in its sole
discretion, may also make similar payments to SFSI from its own resources, which
may include the management fee that the Manager receives from the Fund.
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
respect of Class A shares will be used primarily to compensate Service
Organizations 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 reviewed
by the Directors annually. The total amount paid for the year ended December 31,
1995 in respect of the Fund's Class A shares pursuant to the Plan was equal to
.23% of the Class A shares' average daily net assets.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the respective
average daily net asset value of the Class B and Class D shares. Proceeds from
the Class B and Class D distribution fees are used primarily to compensate
Service Organizations for administration, shareholder 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 B and 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 payment of 4% (in the case of Class B shares) or 1%
(in the case of Class D shares) made by it to Service Organizations at the time
of the sale. The amounts expended by SFSI in any one year upon the initial
purchase of Class B and Class D shares may exceed the amounts received by it
from Plan payments retained. Expenses of administration, shareholder services
and distribution of Class B and Class D shares in one fiscal year of the Fund
may be paid from Class B and Class D Plan fees, respectively, received from the
Fund in any other fiscal year.
The Plan, as it relates to Class B shares, was approved by the Directors of
the Fund on March 21, 1996. The Plan, as it relates to Class D shares, was
approved by the Directors of the Fund 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, 1995 by the
20
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Fund's Class D shares pursuant to the Plan was 1% per annum of the average daily
net assets of Class D shares.
Seligman Services, Inc. ('SSI'), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as broker/dealer of record for most shareholder
accounts that do not have a designated broker/dealer of record including all
such shareholder accounts established after April 1, 1995 and receives
compensation for providing personal service and account maintenance to such
accounts of record.
EXCHANGE PRIVILEGE
A shareholder of the Fund may, without charge, exchange at net asset value
any part 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 the shareholder has telephone services.
Class A, Class B and Class D shares may be exchanged only for Class A,
Class B and Class D shares, respectively, of another mutual fund in the Seligman
Group on the basis of relative net asset value.
If Class B or Class D shares that are subject to a CDSL are exchanged for
Class B or Class D shares of another Seligman Mutual Fund, for purposes of
assessing the CDSL payable upon disposition of the exchanged Class B or Class D
shares, the applicable holding period shall be reduced by the holding period of
the original Class B or Class D shares.
Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSL schedule if such schedule is higher or
longer than the CDSL schedule relating to the new Class B shares. In addition,
Class B shares of the Fund acquired by exchange will be subject to the Fund's
CDSL schedule if such schedule is higher or longer than the CDSL schedule
relating to the Class B shares of the fund from which the exchange has been
made.
The Seligman Mutual Funds available under the Exchange Privilege are:
SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation. Current
income is not an objective.
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.
SELIGMAN FRONTIER FUND, INC. seeks to produce growth in capital value;
income 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
Henderson International Fund, the Seligman Henderson Global Growth Opportunities
Fund, the Seligman Henderson Global Smaller Companies Fund and the Seligman
Henderson Global Technology Fund, which seek long-term capital appreciation
primarily by investing in companies either 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
(which does not currently offer Class B shares) and the High-Yield Bond Series.
SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC. invests in investment grade New
Jersey tax-exempt securities. (Does not currently offer Class B shares.)
21
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SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES invests in investment grade
Pennsylvania tax-exempt securities. (Does not currently offer Class B shares.)
SELIGMAN TAX-EXEMPT FUND SERIES, INC. consists of several State Series and
a National Series. The National Tax-Exempt Series seeks to provide maximum
income 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. (Does not currently offer Class B shares.)
SELIGMAN TAX-EXEMPT SERIES TRUST includes the California Tax-Exempt
Quality Series, the California Tax-Exempt High-Yield Series, the Florida Tax-
Exempt Series and the North Carolina Tax-Exempt Series, each of which invests in
tax-exempt securities of its designated state. (Does not currently offer Class B
shares.)
All permitted exchanges will be based on the net asset values of the
respective funds determined at the close of the NYSE on that day. Telephone
requests for exchanges received between 8:30 a.m. and 4:00 p.m. Eastern time, on
any business day, by Seligman Data Corp. at (800) 221-2450, will be processed as
of the close of business 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 investment 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, as will telephone services. 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 unless 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 telephone and may be exchanged only upon receipt of a written
exchange request together with certificates representing shares to be exchanged
in proper form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. 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 prospectuses of any of the
Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges
on behalf of a shareholder only if the shareholder has telephone services or if
the broker/dealer has entered into a Telephone Exchange Agreement with SFSI
wherein the broker/dealer must agree to indemnify SFSI and the Seligman Mutual
Funds 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 any telephone exchange request. Any rejected telephone exchange order may
be processed by mail. For more information about telephone exchange privileges,
which, unless objected to, are assigned to most shareholders automatically, and
the circumstances under which shareholders may bear the risk of loss for a
fraudulent transaction, see 'Telephone Transactions' above.
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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. Accounts
under common ownership or control, including those with the same taxpayer ID
number and those administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be considered one account 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
quarterly, usually in March, June, September and December. Payments vary in
amount depending on income received from portfolio securities and the costs of
operations. The Fund distributes substantially all of any taxable net long-term
and short-term gain realized on investments to shareholders at least annually;
such distributions will generally be taxable to shareholders in the year in
which they are declared by the Fund if paid before February 1 of the following
year.
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. Cash
dividends and gain distributions are paid by check. If the payment option you
prefer is not listed, contact Seligman Data Corp. at (800) 221-2450 to request
information on other available options. 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. Dividends and gain
distributions paid in shares are invested on the payable date using the net
asset value of the ex-dividend date. Shareholders may elect to change their
dividend and gain distribution options by writing Seligman Data Corp. at the
address listed below. If the shareholder has elected telephone services, changes
may also be telephoned to Seligman Data Corp. between 8:30 a.m. and 6:00 p.m.
Eastern time, by either the shareholder or the broker/dealer of record on the
account. 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.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a result
of the higher distribution fees applicable with respect to Class B and Class D
shares. Per share dividends of the three classes may also differ as a result of
differing class expenses. Distributions of net capital gains, if any, will be
paid in the same amount for Class A, Class B and Class D shares. See 'Purchase
of Shares -- Valuation.'
Shareholders exchanging shares of one 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.
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FEDERAL INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Code. For each year so qualified, the Fund will not be subject to
Federal income taxes on its net investment 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 investment income and net short-term
capital gains are distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether
received in cash or reinvested in additional shares; and, to the extent
designated 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%
dividends 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
eligible 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 ending 30 days
after such date, the holder acquires (such as through dividend reinvestment)
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
permitted to 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
Reinstatement 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
shareholders 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
CERTIFIES 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 REPORTA-
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BLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING 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
DEDUCTED 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
information about the Fund may be requested by writing the Corporate
Communications/Investor Relations Department,
J. & W. Seligman & Co. Incorporated, 100 Park Avenue, New York, NY 10017 or by
telephoning the Corporate Communications/Investor Relations Department toll-free
at (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
shareholder 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 6:00 p.m. Eastern time, and calls will be answered by a service
representative.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BALANCE,
MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT STATEMENTS,
FORM 1099-DIVS AND CHECKBOOKS CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF
DISTRIBUTION CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION SELIGMAN DATA
CORP. SHOULD BE NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS
CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS
TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
'TELEPHONE TRANSACTIONS' ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial
transactions in their Account. Other investor services are available. These
include:
INVEST-A-CHECK'r' SERVICE enables a shareholder to authorize additional
purchases of shares automatically by electronic funds transfer from a checking
or savings acccount, if the bank that maintains the account is a member of the
Automated Clearing House ('ACH'), or by preauthorized checks to be drawn on the
shareholder's checking account at regular monthly intervals in fixed amounts of
$100 or more per fund, or regular quarterly intervals in fixed amounts of $250
or more per fund, to purchase shares. Accounts may be established concurrently
with the Invest-A-Check'r' Service only if accompanied by a $100 minimum in
conjunction with the monthly investment option or a $250 minimum in conjunction
with the quarterly investment option. (See 'Terms and Conditions' on page 30.)
AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of Seligman
Cash Management Fund to exchange a specified amount, at regular monthly
intervals in fixed amounts of $100 or more per fund, or regular quarterly
intervals in fixed amounts of $250 or more per fund, from shares of any class of
the Cash Management Fund into shares of the same class of any other Seligman
Mutual Fund registered in the same name. The shareholder's Cash Management Fund
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
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amount and include the shareholder's name, account number, the name of the Fund
and the class of shares in which the investment is to be made.)
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
maturity. Accordingly, it will not normally be advisable to liquidate a CD
before its maturity.
AUTOMATIC CASH WITHDRAWAL SERVICE permits payments at regular intervals to
be made to a shareholder who owns or purchases shares worth $5,000 or more held
as book credits. Holders of Class B shares may elect to use this service
immediately, although certain withdrawals may be subject to a CDSL. Please
contact Seligman Data Corp. at (800) 221-2450 for more information. 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 30.)
DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person
or to direct the payment of such dividends to another Seligman Mutual Fund for
purchase at net asset value. Dividends on Class A, Class B and Class D shares
may only be directed to shares of the same class of another Seligman Mutual
Fund.
OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be deducted 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 requests
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
application form.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also 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, Class
B 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, Class B 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 inception) assuming the payment of the maximum sales load, if
any, when the investment was made (or CDSL upon redemption, if applicable) 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
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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 return 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 shareholders on April 10,
1991, which fees if reflected would reduce the performance quoted. The total
return and average total return for both Class A and Class D shares for periods
prior to January 1, 1996 do not reflect the increase in the management fee
payable by the Fund effective on such date, which 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
material to performance information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ('Lipper'), an independent reporting service
which monitors the performance of mutual funds. In calculating the total return
of the Fund's Class A, Class B and Class D shares, the Lipper analysis assumes
investment of all dividends and distributions paid but does not take into
account 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 financial
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, Individual Investor,
Investment Advisor, Investors Business Daily, Kiplinger's, Los Angeles Times,
MONEY Magazine, Morningstar, Inc., Pensions and Investments, 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
incorporated under the laws of the state of Maryland in 1947. The Fund is
authorized to issue 500,000,000 shares of common stock, each with a par value of
$1.00, divided into three classes. Each share of the Fund's Class A, Class B and
Class D common stock is equal as to earnings, assets and voting privileges,
except that each class bears its own separate distribution and, potentially,
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 adopted a plan (the ('Multiclass Plan') pursuant to
Rule 18f-3 under the 1940 Act 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 permitted by the Multiclass Plan and Rule
18f-3. 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
preemptive or subscription rights and are transferable.
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APPENDIX
MOODY'S INVESTORS SERVICE, INC.
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
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 known as
high-grade bonds. They are rated lower than Aaa bonds because margins of
protection 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 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 characteristically lacking or may be
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
elements; 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 position 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
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 ('S&P')
BONDS
AAA: Debt issues rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
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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
although they are 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: 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 changing
circumstances are more likely to lead to a weakened capacity to pay interest 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 conditions.
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
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.
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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 distributions
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. These option changes must be received by Seligman Data Corp. before the
record date for the dividend or distribution in order to be effective for that
dividend or distribution. Stock certificates 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
application is subject to acceptance by the shareholder's bank and Seligman Data
Corp. The electronic funds transfer ('ACH debit') or preauthorized check in the
amount specified will be drawn automatically on the shareholder's bank on the
fifth day (unless otherwise specified) of each month (or on the prior business
day if such day of the month falls on a weekend or holiday) in which an
investment 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 scheduled
investments. If an ACH debit or preauthorized check is not honored by the
shareholder's bank, or if the value of shares held falls below the required
minimum, the Invest-A-Check'r' Service may be suspended. In the event that a
check or ACH debit is returned uncollectable, 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 deducted from the
shareholder's account. The Invest-A-Check'r' Service may be reinstated upon
written request indicating that the cause of interruption has been corrected.
The Invest-A-Check'r' Service 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 pursuant 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, the Invest-A-Check'r' Service will be terminated in the
Seligman Mutual Fund that was closed as a result of the exchange of all shares
and the shareholder must reapply for the Invest-A-Check'r' Service in the
Seligman Mutual Fund into which the exchange was made. In the event of a partial
exchange, the Invest-A-Check'r' Service will be continued, subject to the above
conditions, in the Seligman Fund from which the exchange was made. Accounts
established in conjunction with the Invest-A-Check'r' Service must be
accompanied by a minimum initial investment of at least $100 in connection with
the monthly investment option or $250 in connection with the quarterly
investment option. 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, to
Class B 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 specified falls on a weekend or holiday), less, in the
case of Class B Shares, any applicable CDSL. 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
suspension. The Service may be terminated by the shareholder or Seligman Data
Corp. at any time by written notice. It will be terminated upon proper
notification 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 deposit
to less than $5,000. Continued payments in excess of dividend income invested
will reduce and ultimately exhaust capital. Withdrawals, concurrent with
purchases of shares of this or any other investment company, will be
disadvantageous 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 account
or delivered to the shareholder. A shareholder may include toward completion of
a Letter of Intent the total asset value of shares of the the Seligman Mutual
Funds on which a front-end sales load was paid as of the date 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, Inc., 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 Fund and that the required additional escrowed shares
will be purchased by the shareholder.
Shares of Seligman Cash Management Fund which have been acquired by an
exchange of shares of the Seligman Mutual Fund on which there is a front-end
sales load may be taken into account in completing a Letter of Intent, or for
Right of Accumulation. However, shares of Seligman Cash Management Fund which
have been purchased 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
The Check Redemption Service is available to Class A shareholders, to Class B
shareholders and to Class D shareholders with respect to Class D shares held for
one year or more.
If shares are held in joint names, all shareholders must sign the Check
Redemption section of the Account Application. All checks will require all
signatures 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
signature(s). Checks may not be drawn for less than $500.
The shareholder authorizes Boston Safe Deposit and Trust Co. to honor the
checks drawn by the shareholder on the account of Seligman Income Fund, Inc. and
to effect a redemption of sufficient shares in the shareholder's account to
cover payment of the check and, in the case of Class B shares, any applicable
CDSL.
Boston Safe Deposit and Trust Co. shall be liable only for its own
negligence, Seligman Income 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.
4/96
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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
EQIN1 4/96
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P R O S P E C T U S
SELIGMAN
INCOME
FUND, INC.
APRIL 22, 1996
[LOGO]
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AN INCOME FUND
IN ITS 50TH YEAR
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 22, 1996
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 April 22, 1996. 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 three classes of shares. Class A shares may be purchased
at net asset value plus a sales load of up to 4.75%. Class B shares may be
purchased at net asset value and are subject to a contingent deferred sales load
("CDSL"), if applicable, in the following amount (as a percentage of the current
net asset value or the original purchase price, whichever is less, if redemption
occurs within the indicated number of years of purchase of such shares: 5% (less
than 1 year), 4% (1 but less than 2 years), 3% (2 but less than 4 years), 2% (4
but less than 5 years), 1% (5 but less than 6 years) and 0% (6 or more years).
Class B shares automatically convert to Class A shares after approximately eight
years resulting in lower ongoing fees. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned. Class
D shares may be purchased at net asset value and are subject to a CDSL of 1% if
redeemed within one year of purchase.
Each Class A, Class B 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 B and Class D shares bear a
higher distribution fee that generally will cause the Class B and 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, Class B 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 three classes also have different exchange
privileges.
TABLE OF CONTENTS
<TABLE>
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Page
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Investment Objectives, Policies And Risks 2
Investment Limitations................. 4
Directors And Officers................. 5
Management And Expenses................ 9
Administration, Shareholder Services And
Distribution Plan.................... 11
Portfolio Transactions................. 11
Purchase And Redemption Of Fund Shares. 12
Page
Distribution Services.................. 15
Valuation.............................. 15
Performance............................ 16
General Information.................... 17
Financial Statements................... 17
Appendix A............................. 18
Appendix B............................. 20
</TABLE>
EQIN1A
1
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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. The following information regarding the
Fund's investment policies supplements the information in the Prospectus.
LENDING OF PORTFOLIO SECURITIES. 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 invest in common stock rights and warrants
believed by the Manager to provide capital appreciation opportunities. Common
stock rights and warrants received as part of a unit or attached to securities
purchased (i.e., not separately purchased) are not included in the Fund's
investment restrictions regarding such securities.
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 U.S. 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 U.S. 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
U.S. 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.
2
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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.
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).
3
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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 111.78% in 1995 and 66.62% in
1994.
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 or emergency purposes in an amount not
to exceed 15% of the value of its total assets;
Mortgage or pledge any of its assets, except to the extent necessary to
effect permitted borrowings on a secured basis 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 (including 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
4
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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.
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.
<TABLE>
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WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive Officer and Chairman of
(57) the Executive Committee
Managing Director, Chairman and President, J. & W.
Seligman & Co. Incorporated, investment managers and
advisers; and Seligman Advisers, Inc., advisers;
Chairman and Chief Executive Officer, the Seligman
Group of Investment Companies; Chairman, Seligman
Financial Services, Inc., broker/dealer; 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., shareholder service
agent; 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.
BRIAN T. ZINO* Director, President and Member of the Executive Committee
(43)
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment managers and
advisers; and Seligman Advisers, Inc., advisers;
Director or Trustee, the Seligman Group of
Investment Companies; President, the Seligman Group
of Investment Companies, except Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.; Chairman, Seligman Data Corp.,
shareholder service agent; Director, Seligman
Financial Services, Inc., broker/dealer; Seligman
Services, Inc., broker/dealer; and Senior Vice
President, Seligman Henderson Co., advisers;
formerly, Director and Secretary, Chuo Trust - JWS
Advisers, Inc., advisers; and Director, Seligman
Securities, Inc., broker/dealer; and J. & W.
Seligman Trust Company, trust company.
FRED E. BROWN* Director
(82)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisers, Inc., advisers; Director or
Trustee, the Seligman Group of Investment Companies;
Seligman Financial Services, Inc., broker/dealer;
Seligman Services, Inc., broker/dealer; Trudeau
Institute, nonprofit biomedical research
organization; Lake Placid Center for the Arts,
cultural organization; and Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
</TABLE>
5
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<TABLE>
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JOHN R. GALVIN Director
(66)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group
of Investment Companies; Chairman of the American
Council on Germany; a Governor of the Center for
Creative Leadership; Director of USLIFE, insurance;
National Committee on U.S.-China Relations, National
Defense University; Raytheon Co., electronics; and
the Institute for Defense. Formerly, Ambassador,
U.S. State Department; Distinguished Policy Analyst
at Ohio State University and Olin Distinguished
Professor of National Security Studies at the United
States Military Academy. From June, 1987 to June,
1992, he was the Supreme Allied Commander, Europe
and the Commander-in-Chief, United States European
Command. Tufts University, Packard Avenue, Medford,
MA 02155
ALICE S. ILCHMAN Director
(60)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment Companies;
Chairman, The Rockefeller Foundation, charitable
foundation; and Director, NYNEX, telephone company;
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
FRANK A. McPHERSON Director
(62)
Chairman of the Board and Chief Executive Officer,
Kerr-McGee Corporation, energy and chemicals;
Director or Trustee, the Seligman Group of
Investment Companies; Director, Kimberly-Clark
Corporation, consumer products, Bank of Oklahoma
Holding Company, American Petroleum Institute,
Oklahoma City Chamber of Commerce, Baptist Medical
Center, Oklahoma Chapter of the Nature Conservancy,
Oklahoma Medical Research Foundation and United Way
Advisory Board; Chairman, Oklahoma City Public
Schools Foundation; and Member of the Business
Roundtable and National Petroleum Council. 123
Robert S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW* Director
(66)
Chairman and Senior Partner, Sullivan & Cromwell,
law firm; Director or Trustee, the Seligman Group of
Investment Companies; The Municipal Art Society of
New York; Commonwealth Aluminum Corporation; the U.
S. Council for International Business; and the U.
S.-New Zealand Council; Chairman, American
Australian Association; 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
(53)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies; Chairman of the Board of
Trustees of St. George's School (Newport, RI). St.
Bernard's Road, P.O. Box 449, Gladstone, NJ 07934
</TABLE>
6
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<TABLE>
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JAMES C. PITNEY Director
(69)
Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of
Investment Companies; and Public Service Enterprise
Group, public utility. Park Avenue at Morris County,
P.O. Box 1945, Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(68)
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.; and 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
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief Investment
Officer, Institutional, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisers, Inc., advisers; Director or
Trustee, the Seligman Group of Investment Companies;
Director, Seligman Holdings, Inc., holding company;
Seligman Financial Services, Inc., broker/dealer;
Seligman Henderson Co., advisers; and Seligman
Services, Inc., broker/dealer; formerly, President,
the Seligman Group of Investment Companies, except
Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.; and Director, Seligman
Data Corp., shareholder servcie agent, J. & W.
Seligman Trust Company, trust company; and Seligman
Securities, Inc., broker/dealer.
ROBERT L. SHAFER Director
(63)
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
(61)
Executive Vice President, Chief Operating Officer
and Director, Sammons Enterprises, Inc.; Director or
Trustee, the Seligman Group of Investment Companies;
Red Man Pipe and Supply Company, piping and other
materials; and C-SPAN. 300 Crescent Court, Suite
700, Dallas, TX 75201
STACEY G. NAVIN Co-Portfolio Manager
(31)
Vice President, Investment Officer, J. & W. Seligman
& Co. Incorporated, investment managers and
advisers; 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
(39)
Managing Director (formerly, Senior Vice President
and Senior Investment Officer), J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
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.
</TABLE>
7
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<TABLE>
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LAWRENCE P. VOGEL Vice President
(39)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., broker/dealer;
and Seligman Advisers, Inc., advisers; 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., advisers;
formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; and Vice President,
Finance, J. & W. Seligman Trust Company, trust
company.
FRANK J. NASTA Secretary
(31)
Senior Vice President, Law and Regulation, and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisors; and
Seligman Advisers, Inc., advisers; Corporate
Secretary, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer Seligman Henderson Co., advisors;
Seligman Services, Inc., broker/dealer; and Seligman
Data Corp., shareholder service agent; formerly,
Secretary, J. & W. Seligman Trust Company; and
attorney, Seward and Kissel, law firm.
THOMAS G. ROSE Treasurer
(38)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisers, Inc. and the American Investors
Family of Funds.
</TABLE>
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 Total
Aggregate Benefits Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
------------------------ ------------- ------------------ ----------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President 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
John R. Galvin, Director $2,052.53 N/A $41,252.75
Alice S. Ilchman, Director 3,364.68 N/A 68,000.00
Frank A. McPherson, Director 2,054.53 N/A 41,252.75
John E. Merow, Director 3,293.26(d) N/A 66,000.00(d)
Betsy S. Michel, Director 3,543.26 N/A 67,000.00
Douglas R. Nichols, Jr., Director* 1,238.73 N/A 24,747.25
</TABLE>
8
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<TABLE>
<CAPTION>
Pension or
Retirement Total
Aggregate Benefits Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
------------------------ ------------- ------------------ ----------------
<S> <C> <C> <C>
James C. Pitney, Director 3,364.68 N/A 68,000.00(d)
James Q. Riordan, Director 3,650.40 N/A 70,000.00
Herman J. Schmidt, Director * 1,238.73 N/A 24,747.25
Robert L. Shafer, Director 3,650.39 N/A 70,00.00
James N. Whitson, Director 3,578.98 N/A 68,000.00(d)
</TABLE>
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(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1995.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(d) Deferred. As of December 31, 1995, the total amounts of deferred
compensation (including interest) payable to Messrs. Merow, Pitney and Whitson
were $43,645, $39,163 and $9,144, 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 less than 1% of the Fund's
Class A Capital Stock at March 29, 1996. As of that date, no Directors or
officers owned shares of the Fund's Class D Capital Stock.
As of March 29, 1996, 2,087,051 Class A shares of the Fund or 9.7% of
the Fund's Class A capital stock and 7.6% of the Fund's capital stock, then
outstanding; and 1,715,468 Class D shares or 28.9% of the Fund's Class D capital
stock and 6.3% of the Fund's capital stock then outstanding; were registered in
the name of Merrill Lynch Pierce Fenner & Smith, P.O. Box 45286, Jacksonville,
FL 32232-5286.
MANAGEMENT AND EXPENSES
Under the Management Agreement, dated December 29, 1988, as amended
April 10, 1991, and January 1, 1996, subject to the control of the Board of
Directors, J.&W. Seligman & Co. Incorporated (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.
The Fund pays the Manager a management fee for its services, calculated
daily and payable monthly. Effective January 1, 1996, the management fee is
equal to .60% of the Fund's average daily net assets on the first $1 billion of
net assets, .55% of the Fund's average daily net assets on the next $1 billion
of net assets and .50% of the Fund's average daily net assets in excess of $2
billlion. The management fee amounted to $1,836,072 in 1995, $1,846,289 in 1994
and $1,419,768 in 1993, which was equivalent to an annual rate of .48% of the
Fund's average net assets in 1995, .49% in 1994 and .49% in 1993.
The Fund pays all its expenses other than those assumed by the Manager, or
the Subadviser, including brokerage commissions, administration, shareholder
services and distribution fees, fees and expenses of independent attorneys and
9
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<PAGE>
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.
The Management Agreement was initially approved by the Board of
Directors on September 30, 1988 and by the shareholders at a Special Meeting
held on December 16, 1988. The amendments to the Management Agreement, to
increase the fee rate payable to the Manager by the Fund, were approved by the
Board of Directors on January 17, 1991 and by the shareholders at a special
meeting held on April 10, 1991. The amendments to the Management Agreement
effective January 1, 1996 to increase the fee rate payable to the Manager by the
Fund were approved by the Board of Directors on September 21, 1995 and by the
shareholders at a special meeting on December 12, 1995. 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. 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. . See Appendix B for further history of the Manager.
Under the Subadvisory Agreement, dated June 1, 1994, as amended Janaury
1, 1996, Seligman Henderson Co.(the "Subadviser") supervises and directs a
portion of the Fund's investment in foreign securities and Depositary Receipts,
as designated by the Manager, consistent with the Fund's investment objectives,
policies and principles. For these services, the Subadviser is paid a fee, by
the Manager, as described in 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 amendments to the
Subadvisory Agreement effective January 1, 1996 to increase the subadvisory fee
rate payable by the Manager to the Subadvisor were approved by the Board of
Directors on September 21, 1995 and by the shareholders at a special meeting on
December 12, 1995. Subadvisory Agreement will continue in effect until December
31of each year, 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, and for the year
ended December 31, 1995, the Subadviser was paid a fee by the Manager of
$175,819.
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 $19 billion in assets and is recognized as a
specialist in global equity investing.
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Officers, directors and employees of the Manager are permitted to engage
in personal securities transactions, subject to the Manager's Code of Ethics
(the "Ethics Code"). The Ethics 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 Ethics Code. The Ethics
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 Ethics 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 Ethics 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
The Fund has adopted an Administration, Shareholder Services and
Distribution Plan for each Class (the "Plan") in accordance with Section 12(b)
of the 1940 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 1940 Act) of the Fund 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 B shares on March 21, 1996 by the Board of
Directors of the Fund, including a majority of the Qualified Directors, and
became effective in respect of the Class B shares on April 22, 1996. 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 in respect of 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 annually 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. If the
amount payable in respect opf Class A shares under the Plan is proposed to be
increased materially, the fund will either (i) permit holders of Class B shares
to vote as a separate class on the proposed increase or (ii) establish a new
class of shares subject to the same payment under the Plan as existing Class A
shares, in which case the Class B shares will thereafter convert into the new
class instead of into Class A shares. 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
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services include supplemental investment research, analysis and reports
concerning issuers, industries and 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,
1995 1994 1993
<S> <C> <C> <C>
Total Brokerage Commissions Paid (1) $173,123 $ 144,134 $ 85,695
Brokerage Commissions Paid
to Seligman Securities, Inc. (2) --- --- 5,006
Brokerage Commissions Paid to Others for
Execution and Research and Statistical Services 73,123 144,134 80,689
</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% of total
brokerage commissions paid for 1993. 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. 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 three 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 B 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 6 years of purchase. 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.
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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
B and Class D shares are sold at net asset value*. Using the Fund's net asset
value at December 31, 1995, the maximum offering price of the Fund's shares is
as follows:
<TABLE>
<CAPTION>
CLASS A
<S> <C>
Net asset value per Class A share.......................... $ 14.63
------
Maximum sales load (4.75% of offering price)............... 0.73
------
Offering price to public................................... $ 15.36
=======
CLASS B AND CLASS D
Net asset value and offering price per share*.............. $ 14.60
=======
</TABLE>
- -----------
* Class B shares are subject to a CDSL declining from 5% in the first year
after purchase to 0% after six years. 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 FRONT-END SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Fund sold with a front-end 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 front-end 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 the other Mutual Funds in
the Seligman Group which are sold with a front-end sales load with the total net
asset value of shares of those mutual funds already owned that were sold with a
front-end 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 front-end 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 front-end 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. ("SFSI") 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 front-end sales load of the other mutual funds in the
Seligman Group 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" in the back
of 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, of 1986, as amended,
organizations tax exempt under Section 501 (c)(3) or (13), and non-qualified
employee
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benefit plans that satisfy uniform criteria are considered "single persons" for
this purpose. The uniform criteria are as follows:
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 table of sales loads in the Prospectus
applies to sales to "eligible employee benefit plans," (as defined in the
Prospectus) except that the Fund may sell shares at net asset value to "eligible
employee benefit plans," (i) which have at least $1 million invested in the
Seligman Group of Mutual Funds or (ii) of employers who have at least 50
eligible 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 SFSI. 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 SFSI.
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
("NYSE") 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 1940 Act, 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.
Class A shares may be issued without a sales load to present and retired
directors, trustees, officers, employees and their spouses (and family members
of the foregoing) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Family
members are defined to include lineal descendants and
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lineal ancestors, siblings ( and their spouses and children) and any company or
organization controlled by any of the foregoing. Such sales may also be made to
employee benefit plans 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 to the Fund.
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, or the right of redemption postoned for more than
seven days, if the orderly liquidation of portfolio securities is prevented by
the closing of, or restricted trading on the NYSE 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
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. The Fund
and SFSI are parties to a Distributing Agreement dated January 1, 1993. As
general distributor of the Fund's Capital Stock, SFSI allows commissions 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 $105,433 in 1995, after allowance of
$804,096 as commissions to dealers; $156,975 in 1994, after allowance of
$1,211,633 as commissions to dealers; and $389,753 in 1993, after allowance of
$3,450,153 as commissions to dealers. No Class B shares were outstanding
throughout the 3 year period ended December 31, 1995 and as a result no CDSL
charges from Class B shares were retained by SFSI. For the years ended December
31, 1995 and 1994, SFSI retained CDSL charges from Class D shares amounting to
$18,340; and $48,151, respectively. For the period May 3, 1993 through December
31, 1993 SFSI retained CDSL charges form Class D shares amounting to $16,931.
VALUATION
Net asset value per share of each class of the Fund is determined as of
the close of trading on the NYSE (normally, 4:00 p.m. Eastern time), on each day
that the NYSE is open. The NYSE is currently closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund will also determine net asset value
for each class on each day in which there is a sufficient degree of trading in
the Fund's portfolio securities that the net asset value of Fund shares might be
materially affected. Net asset value per share for a class is computed by
dividing such class' share of the value of the net assets of the Fund (i.e., the
value of its assets less liabilities) by the total number of outstanding shares
of such class. All expenses of the Fund, including the Manager's fee, are
accrued daily and taken into account for the purpose of determining net asset
value. The net asset value of Class B and 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 such 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.
Other securities not listed on an exchange or securities market, or securities
in which there were no transactions, are valued at the average of the most
recent bid and asked price except in the case of open short positions where the
asked price is available. 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
15
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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 U.S. 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 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 U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. 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 average annual total returns for the Fund's Class A shares for the
one-year, five-year and ten-year periods ended December 31, 1995 were 14.88%,
14.01% and 9.71%, respectively. These returns were computed by subtracting the
maximum sales load of 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 the Fund's Class
D shares for the one-year period and since inception through December 31, 1995
were 18.66% and 7.50%, respectively. These returns were computed assuming that
all of the dividends and distributions paid by the Fund's Class D shares were
reinvested over the relevant time period. It was then assumed that at the end of
each period, the entire amount was redeemed, subtracting the 1% CDSL, if
applicable. Performance information is not provided for Class B shares because
no class B shares were outstanding prior to April 22, 1996.
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, 1986 had a value of $2,527 on December
31, 1995, resulting in an aggregate total return of 152.72%. 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 $1,212 on December 31, 1995 resulting
in an aggregate total return of 21.24%. 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>
1986 $ 969 $ 65 $ 81 $ 1,115
1987 851 68 152 1,071
1988 868 70 246 1,184
1989 897 107 358 1,362
1990 748 90 411 1,249
1991 898 108 620 1,626
1992 987 119 805 1,911
1993 1,051 200 965 2,216
1994 941 179 976 2,096
1995 1,055 247 1,225 2,527 152.72%
- --------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS D SHARES
Value of
Year/Period Value of Initial Value of Gain Dividends Total
Ended12/31 (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
1995 1,012 59 141 1,212 21.24%
- -------------------------------------------------------------------------------------------
</TABLE>
(1) For the ten years ended December 31, 1995; 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; through April 10, 1991 also does not reflect the
management fee approved by shareholders on April 10, 1991; and through December
31, 1995 does not reflect the increase in the management fee approved by
shareholders on December 12, 1995 and effective on Janaury 1, 1996, 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 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.
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, 1995
is incorporated by reference into this Statement of Additional Information. The
Annual Report contains a schedule of the investments as of December 31, 1995, 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.
17
<PAGE>
<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 ("S&P")
BONDS
AAA: Debt rate AAA has the highest rating assigned by S&P. 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
18
<PAGE>
<PAGE>
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.
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.
19
<PAGE>
<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, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
.... Prior to 1900
Helps finance America's fledgling railroads through underwritings.
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.
Becomes a leader 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 to 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, Inc.
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, Inc.
Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
20
<PAGE>
<PAGE>
...1950-1989
Develops new open-end investment companies. Today, manages more than
40 mutual fund portfolios.
Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt funds.
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
and international investment products.
Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
Launches Seligman Henderson Global Fund Series, Inc., which today
offers four separate series: Seligman Henderson International Fund,
Seligman Henderson Global Smaller Companies Fund, Seligman Henderson
Global Technology Fund and Seligman Henderson Global Growth
Opportunities Fund.
21
<PAGE>
<PAGE>
49TH ANNUAL REPORT
SELIGMAN
INCOME
FUND, INC.
DECEMBER 31, 1995
[logo]
AN INCOME FUND
ESTABLISHED IN 1947
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[logo]
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 12/95
<PAGE>
<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.
HIGHLIGHTS OF 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------- -----------------------
CLASS A CLASS D CLASS A CLASS D
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands)............................ $318,307 $86,701 $286,355 $67,946
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share............................ $14.63 $14.60 $13.05 $13.01
- ----------------------------------------------------------------------------------------------------------------------
Dividends Paid per Share............................. $ 0.78 $ 0.65 $ 0.75 $ 0.65
Distribution of Realized Gain per Share.............. 0.276 0.276 -- --
- ----------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of
Average Net Assets................................. $0.0100 $0.0179 $0.0102 $0.0182
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<PAGE>
================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Your Fund performed favorably during the past year. Long-term performance
results and an interview with your Portfolio Manager begin on page 3.
On December 27, your Fund paid a $0.20 per share dividend to Class A
shareholders of record December 21, and a $0.165 dividend to Class D
shareholders. For both Class A and D shares, net realized gain per share from
investment transactions for the 12 months totaled $0.37. Net unrealized gain per
share totaled $0.99 at December 31. A realized gain distribution of $0.276 was
paid on December 27 to shareholders of record December 21.
Turning towards the US financial markets, it can be unanimously concluded
that 1995 was a banner year. After a pessimistic start, many factors including
low inflation, falling interest rates, and strong corporate earnings paved the
way for a memorable year.
Both equity and bond market indices tell the best story. The Standard &
Poor's 500 Composite Stock Price Index and the Ibbotson Long-Term Government
Bond Index were up 30% or more for the year. It is interesting to note that
these leading market indices have only once, since the end of World War II,
risen more than 1995's powerful advance.
The financial markets, however, did teeter towards the end of the year due
to the Federal budget stalemate between the White House and Congress, which
brought on fears of higher inflation and interest rates. Nevertheless, the
deadlock in Washington did not deter the Federal Reserve Board from lowering
short-term interest rates on December 19--a move that quickly rejuvenated the
financial markets.
Looking forward, the slowing economy, the budget negotiations, and the 1996
Presidential election are a few of the factors that may create somewhat more
volatile markets in the year ahead. We remain optimistic about your Fund's
performance and will continue to search for, and invest in, those companies that
can sustain earnings growth in a challenging and competitive global business
environment--a strategy we believe is key to investment performance.
A Special Meeting of Shareholders was held on December 12, at which several
proposals were voted on. The results of the Special Meeting appear on page 21.
We thank you for your continued investment in Seligman Income Fund, and
look forward to serving your investment needs in 1996 and the years ahead.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
February 2, 1996
2
<PAGE>
<PAGE>
================================================================================
ANNUAL PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following are biographies of your Portfolio Managers, a discussion with them
regarding Seligman Income Fund, and a comparison chart and table 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
CHARLES C. SMITH, JR. is a Managing Director of J. & W.
Seligman & Co. Incorporated and has been Portfolio Manager of
Seligman Income Fund since December 1991. Mr. Smith is also
Portfolio Manager of Seligman Common Stock Fund and
Tri-Continental Corporation. In addition, Mr. Smith is Vice
President of Seligman Portfolios, Inc. and Portfolio Manager
of its Common Stock and Income portfolios. Mr. Smith joined
Seligman in 1985 as Vice President, Investment Officer. He was
[Photo] 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, has been Co-Portfolio Manager of Seligman Income
Fund and Seligman Common Stock Fund since December 1991. Ms.
Navin joined Seligman in 1986 as a research analyst and
assumed portfolio management responsibilities in 1988. Mr.
Smith and Ms. Navin are 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.
YOUR MANAGERS' INVESTMENT STRATEGY
"LATE IN 1994, WE EXTENDED MATURITIES IN THE FIXED-INCOME PORTION OF YOUR FUND,
BASED ON OUR EXPECTATION FOR DECLINING INTEREST RATES IN 1995. AT THE SAME TIME,
WE FOCUSED ON INCREASING OUR COMMITMENTS TO CONVERTIBLE SECURITIES WITH LOWER
PREMIUMS THAT HAVE A STRONGER CORRELATION TO THEIR UNDERLYING COMMON STOCK.
LASTLY, WE MODESTLY INCREASED OUR EXPOSURE TO UTILITY ISSUES, WHICH HAVE
HISTORICALLY DONE WELL IN DECLINING INTEREST RATE ENVIRONMENTS.
"AS PART OF YOUR FUND'S INVESTMENT POLICY, IT MAY INVEST UP TO 10% OF ASSETS IN
INTERNATIONAL EQUITIES. BY INVESTING INTERNATIONALLY, SELIGMAN INCOME FUND HAS
THE ABILITY TO PARTICIPATE IN NON-U.S. MARKETS, THUS SEEKING TO ACHIEVE GREATER
PORTFOLIO DIVERSIFICATION WITH LESS OVERALL RISK. HOWEVER, IN PERIODS WHEN
INTERNATIONAL MARKETS LAG THE U.S. MARKETS, SUCH AS 1995, INTERNATIONAL EXPOSURE
CAN DAMPEN OVERALL INVESTMENT RESULTS."
ECONOMIC FACTORS AFFECTING SELIGMAN INCOME FUND
"THE DRAMATIC DECLINE IN INTEREST RATES IN 1995 HAD A VERY POSITIVE IMPACT ON
YOUR FUND. INVESTORS' EXPECTATIONS FOR STABLE ECONOMIC GROWTH COUPLED WITH
MODEST INFLATION GREATLY BENEFITED INCOME-SENSITIVE INVESTMENTS SUCH AS BONDS,
CONVERTIBLE SECURITIES, AND HIGHER YIELDING EQUITIES - TRADITIONAL INVESTMENTS
FOR YOUR FUND."
3
<PAGE>
<PAGE>
================================================================================
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
INDIVIDUAL SECTOR PERFORMANCE
"MANY CONVERTIBLE SECURITIES ARE ISSUED BY COMPANIES WITH SMALLER
CAPITALIZATIONS, WHICH ENJOYED GOOD PERFORMANCE IN 1995. THE FINANCIAL,
TECHNOLOGY, AND UTILITY INDUSTRIES--THREE OF THE LARGER SECTORS IN THE
CONVERTIBLE AND EQUITY PORTIONS OF YOUR PORTFOLIO--DID PARTICULARLY WELL.
SPECIFICALLY, THE CONVERTIBLE SECURITIES OF CITICORP, H.F. AHMANSON, AND
CERIDIAN, AS WELL AS THE COMMON STOCKS OF NYNEX AND GTE, CONTRIBUTED TO YOUR
FUND'S PERFORMANCE IN 1995. ADDITIONALLY, THE BONDS HELD IN YOUR PORTFOLIO NOT
ONL CONTRIBUTED HIGH CURRENT INCOME, BUT SOLID CAPITAL APPRECIATION."
OUTLOOK FOR THE YEAR AHEAD
"ISSUE SELECTION WILL BE EXTREMELY IMPORTANT FOR YOUR FUND'S PERFORMANCE IN
1996. WE WILL PAY PARTICULAR ATTENTION TO IDENTIFYING VALUE, IN BOTH THE STOCK
AND BOND MARKETS. FURTHER, INTERNATIONAL INVESTMENTS SHOULD BE A POSITIVE FACTOR
AS THE YEAR PROGRESSES IF FOREIGN MONETARY AUTHORITIES LOWER INTEREST RATES
ABROAD."
4
<PAGE>
<PAGE>
================================================================================
PERFORMANCE COMPARISON CHART AND TABLE December 31, 1995
- --------------------------------------------------------------------------------
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, 1995, 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 Funds 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.
[TABLE BELOW LISTS PLOT POINTS FOR LINE GRAPH INCLUDED WITH PRINTED REPORT]
<TABLE>
<CAPTION>
Income Fund Income Fund S&P Stock Lehman Brothers
Date with sales charge w/o sales charge Index Aggregate Index Lipper Income
- ---- ----------------- ---------------- --------------- --------------- -------------
<C> <C> <C> <C> <C> <C>
12/31/85 9524.16 10000 10000 10000 10000
3/31/86 10485.38 11009.25 11410.50 10777 11005
6/30/86 10781.48 11320.15 12083.03 10905.25 11309.84
9/30/86 10783.58 11322.36 11240.12 11163.7 11266.86
12/31/86 11153.21 11710.46 11866.53 11526.52 11675.85
3/31/87 11524.28 12100.07 14400.28 11716.71 12503.67
6/30/87 11219.29 11779.83 15123.17 11506.98 12426.14
9/30/87 11012.17 11562.35 16120.85 11192.84 12470.88
12/31/87 10707.33 11242.28 12489.63 11843.14 11680.22
3/31/88 11312.48 11877.67 13200.78 12288.44 12273.58
6/30/88 11672.53 12255.72 14079.96 12433.45 12579.19
9/30/88 11767.51 12355.45 14127.69 12680.87 12780.46
12/31/88 11834.81 12426.11 14563.81 12777.25 12921.04
3/31/89 12239.65 12851.17 15596.38 12922.91 13352.61
6/30/89 13063.49 13716.18 16973.08 13952.87 14066.97
9/30/89 13318.17 13983.58 18790.72 14110.53 14619.8
12/31/89 13622.6 14303.23 19178.56 14635.44 14812.78
3/31/90 13513.09 14188.25 18601.67 14518.36 14583.19
6/30/90 13591.39 14270.46 19771.90 15048.28 14991.51
9/30/90 12128.22 12734.19 17054.65 15177.7 14228.45
12/31/90 12491.48 13115.61 18583.43 15945.69 14830.31
3/31/91 13863.37 14556.05 21282.86 16390.57 16092.37
6/30/91 14292.12 15006.22 21234.12 16659.38 16393.3
9/30/91 15547.31 16324.12 22369.72 17605.63 17498.2
12/31/91 16254.31 17066.44 24245.20 18498.24 18465.86
3/31/92 17089.18 17943.02 23632.77 18261.46 18650.51
6/30/92 17755.49 18642.62 23082.26 18999.22 19230.55
9/30/92 18567.74 19495.46 24841.58 19816.19 19911.31
12/31/92 19105.23 20059.81 26092.60 19869.69 20279.67
3/31/93 20347.86 21364.52 27232.06 20690.31 21328.12
6/30/93 20858.94 21901.14 27364.68 21238.6 21808.01
9/30/93 21591.36 22670.16 28072.06 21792.93 22521.13
12/31/93 22157.63 23264.74 28722.49 21806.01 22737.33
3/31/94 21270.96 22333.76 27633.33 21180.17 22062.03
6/30/94 20928.89 21974.6 27749.67 20962.02 21953.93
9/30/94 21350.06 22416.82 29106.35 21089.89 22377.64
12/31/94 20954.4 22001.39 29101.69 21170.03 22071.07
3/31/95 22081.35 22962.37 31935.32 22237 23287.18
6/30/95 23612.06 24878.47 34983.87 23591.23 24656.47
9/30/95 24653.15 25884.96 37764.04 24053.62 25788.2
12/31/95 25271.34 26534.02 40037.43 25078.3 26946.09
</TABLE>
The table below shows the average annual total returns for the one-, five-, and
10-year periods through December 31, 1995, 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, 1995, 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.
AVERAGE ANNUAL TOTAL RETURNS
ONE FIVE 10
YEAR YEARS YEARS
------ ------ ------
Seligman Income Fund
Class A with sales charge 14.88% 14.01% 9.71%
Class A without sales charge 20.60 15.13 10.25
S&P 500 37.58 16.59 14.86
Lehman Index 18.46 9.48 9.63
Lipper Income 22.10 12.69 10.42
SINCE
ONE INCEPTION
YEAR 5/3/93
--------- ---------
Seligman Income Fund
Class D with CDSL 18.66% n/a
Class D without CDSL 19.66 7.50%
S&P 500 37.58 16.62*
Lehman Index 18.46 7.19*
Lipper Income 21.66 9.04*
* From 4/30/93.
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>
<PAGE>
================================================================================
SELIGMAN INCOME FUND
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION FOR 1995 DIVIDEND AND GAIN DISTRIBUTIONS FOR TAXABLE
ACCOUNTS
The quarterly dividends paid to both Class A and Class D shareholders in 1995
are taxable as ordinary income for federal tax purposes. It makes no difference
whether you received them in cash or in shares. Under the Internal Revenue Code,
17% of the dividend paid to both Class A and Class D shareholders has been
designated as qualifying for the dividend received deduction available to
corporate shareholders. In order to claim the dividend received deduction for
this distribution, corporate shareholders must have held the Fund's shares for
at least 46 days.
A distribution of $0.276 per share, consisting of $0.067 from net long-term
and $0.209 from net short-term gain realized on investments in 1995, was paid on
December 27, 1995, to both Class A and D shareholders. The distribution from net
long-term gain is designated as a "capital gain dividend" for federal income tax
purposes and is taxable to shareholders in 1995 as a long-term gain from the
sale of capital assets, no matter how long your shares may have been owned or
whether the distribution was paid in additional shares or cash. However, if
shares on which a capital gain distribution was received are subsequently sold,
and such shares were held for six months or less from the date of purchase, any
loss would be treated as long-term to the extent it offsets the long-term gain
distribution. Net short-term gain is taxable as ordinary income whether paid to
you in cash or shares.
If the gain distribution was paid in shares, the per share cost basis for
federal income tax purposes was $14.52 for Class A and $14.49 for Class D.
A year-end statement of account showing activity for 1995 and a combined
Form 1099-DIV/B have been mailed to each shareholder. The Form 1099-B shows the
proceeds of any redemptions paid to shareholders during the year and reported to
the Internal Revenue Service as required by federal regulations. Form 1099-DIV
shows the amount of the dividends and the distribution from gain on investments
paid during the year.
6
<PAGE>
<PAGE>
================================================================================
SELIGMAN INCOME FUND
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
PERCENT OF TOTAL
DECEMBER 31
----------------
1995 1994
- ---------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT
AGENCY SECURITIES .................. 10.6 12.6
- ---------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES ........ -- 0.6
- ---------------------------------------------------------
Corporate Bonds........................ 35.5 23.6
Convertible Bonds...................... 19.5 27.4
Convertible Preferred Stocks........... 14.4 16.8
Asset-backed Securities................ -- 1.4
- ---------------------------------------------------------
Total Corporate Fixed Income ......... 69.4 69.2
- ---------------------------------------------------------
Common Stocks ........................ 15.4 16.0
- ---------------------------------------------------------
Net Cash and Short-Term
Holdings ........................... 4.6 1.6
- ---------------------------------------------------------
Total ................................ 100.0 100.0
- ---------------------------------------------------------
DIVERSIFICATION OF NET ASSETS BY INDUSTRY
PERCENT OF TOTAL
DECEMBER 31
---------------
1995 1994
- --------------------------------------------------------
Automotive............................. 2.3 2.7
Banking and Finance.................... 18.4 10.5
Broadcasting........................... 1.2 --
Building and Construction.............. -- 1.2
Chemicals.............................. 3.9 1.1
Commercial Services.................... 1.0 --
Computer and Business Services......... 0.9 1.7
Consumer Goods and Services............ 3.2 2.8
Diversified............................ 0.8 0.8
Drugs and Health Care.................. 0.9 1.7
Electric Utilities..................... 5.4 4.0
Energy ................................ 10.1 8.6
Environmental Services................. 0.6 1.6
Finance and Insurance.................. -- 9.6
Food................................... 1.6 0.7
Insurance.............................. 8.2 --
Leasing................................ -- 0.8
Machinery.............................. 0.9 0.7
Manufacturing.......................... -- 0.2
Minerals............................... -- 0.7
Office Equipment and Services.......... -- 0.6
Packaging and Paper.................... 0.9 0.7
Publishing............................. 1.4 1.0
Retailing.............................. 3.4 5.1
Spirits, Wines, and Ciders............. -- 0.3
Steel.................................. 0.8 1.8
Technology............................. 4.0 5.8
Transportation......................... 3.9 8.3
Utilities/Telecommunications........... 6.2 8.6
Miscellaneous.......................... 4.8 3.6
- --------------------------------------------------------
TOTAL CORPORATE FIXED INCOME AND
COMMON STOCKS........................ 84.8 85.2
- --------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT
AGENCY SECURITIES.................... 10.6 12.6
- --------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES.......... -- 0.6
- --------------------------------------------------------
NET CASH AND SHORT-TERM
HOLDINGS............................. 4.6 1.6
- --------------------------------------------------------
TOTAL.................................. 100.0 100.0
- --------------------------------------------------------
7
<PAGE>
<PAGE>
================================================================================
SELIGMAN INCOME FUND
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO HOLDINGS
AT DECEMBER 31, 1995
SECURITY VALUE
- ----------- ---------
U.S. Treasury Bonds
121/2%, 8/15/2014....................... $16,171,870
U.S. Treasury Notes
91/4%, 2/15/2016........................ 6,878,125
Carlton Communications
71/2%, 8/14/2007........................ 5,729,620
AEGON N.V. 8%,
8/15/2006............................... 5,643,200
Midland Bank 7.65%,
5/1/2025................................ 5,540,010
News America Holdings
81/4%, 8/10/2018........................ 5,468,895
Capital One Bank 81/8%,
3/1/2000................................ 5,384,495
Whitman 75/8%, 6/15/2015.................. 5,315,985
First Union 6.55%, 10/15/2035............. 5,174,480
St. Paul Companies 6.74%,
7/18/2005............................... 5,174,275
LARGEST PORTFOLIO CHANGES*
DURING PAST THREE MONTHS
PRINCIPAL AMOUNT
------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/95
- ----------- ----------- -----------
U.S. GOVERNMENT AND GOVERN-
MENT AGENCY SECURITIES
U.S. Treasury Bonds 121/2%,
8/15/2014 .............................. $10,000,000 $10,000,000
CORPORATE BONDS
Alco Capital 5.97%, 12/1/1998 ............ 5,000,000 5,000,000
Chase Manhattan Grantor Trust,
5.90%, 11/15/2001 ...................... 4,834,517 4,834,517
Finova Capital 6.54%,
11/15/2002 ............................. 5,000,000 5,000,000
Ford Credit Grantor Trust 5.90%,
10/15/2000 ............................. 4,863,483 4,863,483
Geon 67/8%, 12/15/2005 ................... 5,000,000 5,000,000
Tosco 7%, 7/15/2000 ...................... 5,000,000 5,000,000
USAA Capital 5.73%,
11/17/1997 ............................. 5,000,000 5,000,000
Viacom 63/4%, 1/15/2003 .................. 5,000,000 5,000,000
Woolworth 7%, 10/15/2002 ................. 5,000,000 5,000,000
HOLDINGS
REDUCTIONS DECREASE 12/31/95
- ---------- ----------- ----------
U.S. GOVERNMENT AND GOVERN-
MENT AGENCY SECURITIES
U.S. Treasury Bonds 12%,
8/15/2013 .............................. $10,000,000 --
U.S. Treasury Notes 73/8%,
5/15/1996 .............................. 3,000,000 --
CORPORATE BONDS
Alco Capital 61/4%, 6/24/1998 ............ 5,000,000 --
Beneficial 6.59%, 7/18/2002 ............. 5,000,000 --
Cemex 61/4%, 10/25/1995 .................. 3,000,000 --
Dresdner Bank 71/4%, 9/15/2015 ........... 5,000,000 --
James River 6.70%, 11/15/2003 ............ 4,000,000 --
McDonnell Douglas 6.39%,
5/15/1997 .............................. 5,000,000 --
ASSET-BACKED SECURITIES
Ford Credit Auto Lease Trust
6.35%, 10/15/1998 ...................... 5,000,000 --
Toyota Auto Receivable Grantor
Trust 5.85%, 1/15/1999 ................. 5,000,000 --
* Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
8
<PAGE>
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. GOVERNMENT AND GOVERNMENT
AGENCY SECURITIES 10.6%
U.S. Treasury Bonds
12 1/2%, 8/15/2014 .............................. $10,000,000 $ 16,171,870
U.S. Treasury Notes
9 1/4%, 2/15/2016 ............................... 5,000,000 6,878,125
MORTGAGE-BACKED SECURITIES:++
Government National Mortgage
Association Obligations:
7 1/2%, with various maturities from
1/15/2023 to 12/15/2024 ......................... 9,293,226 9,566,215
10%, with various maturities from
1/15/2018 to 8/15/2021 .......................... 9,353,255 10,282,735
------------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY SECURITIES
(Cost $40,423,180) ............................. 42,898,945
------------
CORPORATE BONDS 35.5%
AUTOMOTIVE 2.3%
Ford Credit Grantor Trust,
5.90%, 10/15/2000 ............................... 4,863,483 4,883,229
General Motors
9 1/8%, 7/15/2001 ............................... 4,000,000 4,574,528
------------
9,457,757
------------
BANKING AND FINANCE 14.7%
Alco Capital 5.97%, 12/1/1998 ..................... 5,000,000 5,040,950
CAF 7 3/8%, 7/21/2000 ............................. 5,000,000 5,126,250
Capital One Bank 8 1/8%, 3/1/2000 ................. 5,000,000 5,384,495
Chase Manhattan Grantor Trust
5.90%, 11/15/2001 ............................... 4,834,517 4,854,146
Finova Capital 6.54%, 11/15/2002 .................. 5,000,000 5,101,765
First Union 6.55%, 10/15/2035 ..................... 5,000,000 5,174,480
First USA Bank 5 3/4%, 1/15/1999 .................. 4,000,000 3,982,596
Golden West Financial
6.70%, 7/1/2002 ................................. 4,000,000 4,118,764
Midland Bank 7.65%, 5/1/2025 ...................... 5,000,000 5,540,010
Travelers Group
6 1/4%, 12/1/2005 ............................... 3,000,000 2,995,410
United Companies Financial
7%, 7/15/1998 ................................... 2,000,000 2,038,438
United Companies Financial
9.35%, 11/1/1999 ................................ 3,000,000 3,228,342
USAA Capital+
5.73%, 11/17/1997 ............................... 5,000,000 5,029,700
USF&G 7%, 5/15/1998 ............................... 2,000,000 2,047,110
------------
59,662,456
------------
BROADCASTING 1.2%
Viacom 6 3/4%, 1/15/2003 .......................... $5,000,000 $ 5,044,250
------------
CHEMICALS 3.4%
Geon 6 7/8%, 12/15/2005 .......................... 5,000,000 5,017,900
Lyondell Petrochemical
9 1/8%, 3/15/2002 ............................... 4,000,000 4,559,672
Praxair 6.85%, 6/15/2005 .......................... 4,000,000 4,157,576
------------
13,735,148
------------
COMMERCIAL SERVICES 1.0%
Service Corp. 6 3/8%, 10/1/2000 ................... 4,000,000 4,075,700
------------
ELECTRIC UTILITIES 1.0%
New Jersey Central Power & Light
6 1/8%, 8/1/1996 ............................... 1,000,000 999,896
Texas Utilities 5P. %, 4/1/1998 ................... 3,000,000 3,009,912
------------
4,009,808
------------
ENERGY 3.2%
Enron 7 1/8%, 5/15/2007 ........................... 3,000,000 3,187,989
Oryx Energy 10%, 4/1/2001 ......................... 4,000,000 4,508,420
Tosco 7%, 7/15/2000 ............................... 5,000,000 5,092,570
------------
12,788,979
------------
INSURANCE 2.7%
AEGON N.V. 8%, 8/15/2006 .......................... 5,000,000 5,643,200
St. Paul Companies
6.74%, 7/18/2005 ............................... 5,000,000 5,174,275
------------
10,817,475
------------
PUBLISHING 1.4%
News America Holdings
8 1/4%, 8/10/2018 ............................... 5,000,000 5,468,895
------------
RETAILING 1.3%
Woolworth 7%, 10/15/2002 ......................... 5,000,000 5,119,670
------------
TECHNOLOGY 0.5%
Tektronix 7 5/8%, 8/15/2002 ....................... 2,000,000 2,115,366
------------
MISCELLANEOUS 2.8%
CSR America 6 7/8%, 7/21/2005 ..................... 3,000,000 3,121,827
Trinova 7.95%, 5/1/1997 .......................... 3,000,000 3,087,039
Whitman 7 5/8%, 6/15/2015 ........................ 5,000,000 5,315,985
------------
11,524,851
------------
TOTAL CORPORATE BONDS
(Cost $138,768,312) ............................. 143,820,355
------------
9
<PAGE>
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------ -----
CONVERTIBLE BONDS 19.5%
CONSUMER GOODS AND SERVICES 2.3%
Bell Sports 4 1/4%, 11/15/2000 .................... $2,500,000 $ 1,750,000
Unifi 6%, 3/15/2002 ................................ 4,000,000 4,030,000
Wendy's International
7%, 4/1/2006 ..................................... 2,000,000 3,437,500
------------
9,217,500
------------
DIVERSIFIED 0.8%
Land and General Berhad
4 1/2%, 7/26/2004 ................................ 1,000,000 1,132,500
MascoTech 4 1/2%, 12/15/2003 ....................... 2,750,000 2,151,875
------------
3,284,375
------------
DRUGS AND HEALTH CARE 0.9%
Ciba-Geigy 6 1/4%, 3/15/2016+ ...................... 2,000,000 2,030,000
Greenery Rehabilitation Group
8 3/4%, 4/1/2015 ................................. 2,000,000 1,790,000
------------
3,820,000
------------
ENERGY 2.2%
Apache 6%, 1/15/2002+ .............................. 3,000,000 3,412,500
E. E. Finance 8 1/2%, 6/27/2006 .................... 1,000,000 1,543,120
Kelley Oil & Gas
8 1/2%, 4/1/2000 ................................. 1,250,000 698,438
Santa Fe Pipelines
11.162%, 8/15/2010 ............................... 2,500,000 3,168,750
------------
8,822,808
------------
ENVIRONMENTAL SERVICES 0.6%
OHM 8%, 10/1/2006 .................................. 3,000,000 2,625,000
------------
INSURANCE 2.0%
AXA 6%, 1/1/2001 ................................... 2,184,500++ 584,915
Leucadia National
5 1/4%, 2/1/2003 ................................. 3,000,000 3,097,500
Liberty Life International
6 1/2%, 9/30/2004 ................................ 750,000 986,250
Trenwick Group
6%, 12/15/1999 ................................... 3,000,000 3,540,000
------------
8,208,665
------------
MACHINERY 0.9%
Cooper Industries
7.05%, 1/1/2015 .................................. $2,724,000 $ 2,819,340
Teco Electric and Machinery ........................ 1,000,000 783,750
------------
3,603,090
------------
RETAILING 1.5%
CML Group 5 1/2%, 1/15/2003 ........................ 2,000,000 1,450,000
Price Co. 6 3/4%, 3/1/200 1 ........................ 3,000,000 3,048,750
Proffitts 4 3/4%, 11/1/2003 ........................ 2,000,000 1,727,500
------------
6,226,250
------------
TECHNOLOGY 2.9%
Bay Networks
5 1/4%, 5/15/2003+ ............................... 2,000,000 2,147,500
Conner Peripherals
6 1/2%, 3/1/2002 ................................. 3,000,000 3,075,000
Cray Research 6 1/8%, 2/1/2011 ..................... 1,500,000 1,205,625
Data General 7 3/4%, 6/1/2001 ...................... 2,000,000 1,980,000
EMC 4 1/4%, 1/1/2001 ............................... 1,500,000 1,492,500
Evans & Sutherland Computer
6%, 3/1/2012 ..................................... 2,000,000 1,730,000
------------
11,630,625
------------
TELECOMMUNICATIONS 2.3%
Carlton Communications
7 1/2%, 8/14/2007 ................................ 2,600,000 5,729,620
LDDS Communications
5%, 8/15/2003 .................................... 2,000,000 2,110,000
Network Equipment
7 1/4%, 5/15/2014 ............................... 1,470,000 1,534,313
------------
9,373,933
------------
TRANSPORTATION 2.0%
Airborne Freight
6 3/4%, 8/15/2001 ............................... 1,750,000 1,758,750
British Airways
9 3/4%, 6/15/2005 ............................... 700,000o 2,110,869
Builders Transport
8%, 8/15/2005 ................................... 3,000,000 2,726,250
Nippon Yusen 2%, 9/29/2000 ........................ 115,000,000** 1,311,111
------------
7,906,980
------------
10
<PAGE>
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------ -----
MISCELLANEOUS 1.1%
General Signal 5 3/4%, 6/1/2002 .................. $2,300,000 $ 2,415,000
TriMas 5%, 8/1/2003 ............................... 2,000,000 1,960,000
------------
4,375,000
------------
TOTAL CONVERTIBLE BONDS
(Cost $72,435,924) .............................. 79,094,226
------------
CONVERTIBLE PREFERRED
STOCKS 14.4%
BANKING AND FINANCE 1.5%
Citicorp $5.375 ................................... 15,000 shs. 2,746,875
National City $4.00 ............................... 40,000 3,150,000
------------
5,896,875
------------
COMPUTER AND BUSINESS SERVICES 0.9%
Ceridian 5 1/2% .................................... 40,000 3,700,000
------------
ENERGY 2.4%
Snyder Oil (Class A) 6% ............................ 150,000 2,962,500
Unocal $3.50+ ...................................... 50,000 2,681,250
Williams Cos. $3.50+ ............................... 50,000 3,800,000
WRT Energy 9% ...................................... 40,000 182,500
------------
9,626,250
------------
FOOD 0.8%
RJR Nabisco Holdings ............................... 500,000 3,187,500
------------
INSURANCE 3.2%
Ahmanson (HF) (Series D) 6% ........................ 50,000 2,956,250
Alexander & Alexander
(Series A) $3.625+ ............................... 65,000 3,241,875
American General (Series A) $3.00 .................. 50,000 2,618,750
St. Paul Capital 6% ................................ 75,000 4,218,750
------------
13,035,625
------------
PAPER 0.9%
International Paper 5(TM)%+ ........................ 80,000 3,630,000
------------
RETAILING 0.4%
TJX Companies $3.125 ............................... 30,000 1,342,500
Venture Stores $3.25 ............................... 40,000 400,000
------------
1,742,500
------------
STEEL 0.7%
U.S. Steel $3.25 ................................... 60,000 2,857,500
------------
TECHNOLOGY 0.6%
General Motors (Series E) 6 1/2% ................... 30,000 $ 2,197,500
------------
TRANSPORTATION 1.9%
GATX $3.875 ........................................ 50,000 2,875,000
Interpool 5 3/4% ................................... 20,000 1,870,000
Sea Containers $4.00 ............................... 70,000 3,062,500
------------
7,807,500
------------
UTILITIES/TELECOMMUNICATIONS 0.4%
Mobile Telecommunication
Technologies $2.25+ ............................. 50,000 1,587,500
------------
MISCELLANEOUS 0.7%
Corning (Delaware) 6% .............................. 60,000 3,022,500
------------
TOTAL CONVERTIBLE PREFERRED
STOCKS (Cost $53,682,725) ....................... 58,291,250
------------
COMMON STOCKS 15.4%
BANKING AND FINANCE 2.2%
Banco de Santander ................................. 52,732 2,638,658
Grupo Financiera Banamex
Accival (Class B ................................ 443,000 738,238
Internationale Nederlanden Bank .................... 31,518 2,101,200
National Australia Bank (ADRs) ..................... 60,000 2,715,000
Societe Generale ................................... 6,164 760,057
------------
8,953,153
------------
CHEMICALS 0.5%
Bayer AG ........................................... 5,700 1,511,006
European Vinyls .................................... 24,700 640,541
------------
2,151,547
------------
CONSUMER GOODS AND SERVICES 0.9%
Allied Domecq ...................................... 140,000 1,140,610
B.A.T. Industries .................................. 200,000 1,761,350
Christian Dior--ABSA ............................... 7,570 814,625
------------
3,716,585
------------
ELECTRIC UTILITIES 4.4%
Central Costanera (ADRs)+ .......................... 14,000 427,000
CINergy ............................................ 102,300 3,132,938
Empresa Nacionale de
Electricidad (ADRs) ............................. 25,000 1,431,250
Entergy ............................................ 100,000 2,925,000
FPL Group .......................................... 100,000 4,637,500
11
<PAGE>
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------ -----
ELECTRIC UTILITIES (continued)
Hong Kong Electric ................................. 800,000 $ 2,622,696
Huaneng Power International (ADRs)* ................ 35,000 503,125
SCE ................................................ 120,000 2,130,000
------------
17,809,509
------------
ENERGY 2.3%
Atlantic Richfield ................................. 20,000 2,215,000
BP Prudhoe Bay Royalty Trust ....................... 80,000 1,160,000
British Gas Petroleum (ADRs) ....................... 25,000 975,000
Shell Transport and Trading (ADRs) ................. 50,000 4,068,750
Total SA (Class B) ................................ 15,000 1,010,394
------------
9,429,144
------------
FOOD 0.8%
ConAgra ............................................ 76,329 3,148,571
------------
INSURANCE 0.3%
GCR Holdings ....................................... 57,000 1,275,375
------------
RETAILING 0.2%
Kmart .............................................. 100,000 725,000
------------
STEEL 0.1%
Pohang Iron & Steel (ADRs) ......................... 15,000 328,125
------------
UTILITIES/TELECOMMUNICATIONS 3.5%
Alcatel Alsthom .................................... 15,000 1,290,737
British Telecommunications (ADRs) .................. 30,000 1,638,750
GTE ................................................ 100,000 4,400,000
NYNEX .............................................. 50,000 2,700,000
Tele Danmark (ADSs) ................................ 50,000 1,381,250
Telecom Italia-Di Risp ............................. 439,000 536,864
Telecom Italia Mobile .............................. 439,000 461,669
U.S. West .......................................... 50,000 1,787,500
------------
14,196,770
------------
MISCELLANEOUS 0.2%
Pacific Dunlop ..................................... 275,000 $ 643,407
------------
OTHER .............................................. 121,585
------------
TOTAL COMMON STOCKS
(Cost $53,933,794) ............................... 62,498,771
------------
SHORT-TERM HOLDINGS 2.9%
(Cost $11,700,000) ............................... 11,700,000
------------
TOTAL INVESTMENTS 98.3%
(Cost $370,943,935) .............................. 398,303,547
OTHER ASSETS LESS
LIABILITIES 1.7% .............................. 6,704,056
------------
NET ASSETS 100.0% ................................ $405,007,603
============
- ---------------------
+Rule 144A security.
++Investments in mortgage-backed securities are subject to principal paydowns.
As a result of prepayments from refinancing or satisfaction of the underlying
mortgage instruments, the average life may be less than the original
maturity. This in turn may impact the ultimate yield realized from these
instruments.
oPrincipal amount reported in British pounds.
#Principal amount reported in French francs.
**Principal amount reported in Japanese yen.
*Non-income producing security.
See notes to financial statements.
12
<PAGE>
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Bonds and stocks (cost $318,820,755) ........................... $343,704,602
U.S. Government and Government Agency
securities (cost $40,423,180) ............................... 42,898,945
Short-term holdings (cost $11,700,000) ......................... 11,700,000 $398,303,547
------------
Cash ............................................................. 3,011,193
Receivable for interest and dividends ............................ 4,910,863
Receivable for Capital Stock sold ................................ 603,945
Investment in, and expenses prepaid to, shareholder service agent 36,708
Other ............................................................ 75,601
------------
Total Assets ..................................................... 406,941,857
------------
LIABILITIES:
Payable for Capital Stock repurchased ............................ 1,230,236
Accrued expenses, taxes, and other ............................... 704,018
------------
Total Liabilities ................................................ 1,934,254
------------
NET ASSETS ....................................................... $405,007,603
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 100,000,000 shares authorized;
27,691,916 shares outstanding):
Class A .......................................................... $ 21,753,370
Class D .......................................................... 5,938,546
Additional paid-in capital ......................................... 346,812,910
Undistributed net investment income ................................ 131,568
Undistributed net realized gain .................................... 3,012,187
Net unrealized appreciation of investments ......................... 27,227,039
Net unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies ............................... 131,983
------------
Net Assets ......................................................... $405,007,603
============
NET ASSET VALUE PER SHARE:
Class A ($318,306,477 / 21,753,370 shares) ......................... $14.63
======
Class D ($86,701,126 / 5,938,546 shares) ........................... $14.60
======
</TABLE>
- -----------------
See notes to financial statements.
13
<PAGE>
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest .......................................................... $17,870,239
Dividends ......................................................... 6,536,929
-----------
Total investment income (net of foreign taxes withheld of $101,989) $24,407,168
EXPENSES:
Management fee .................................................... 1,836,072
Distribution and service fees ..................................... 1,478,906
Shareholder account services ...................................... 650,436
Custody and related services ...................................... 120,000
Shareholder reports and communications ............................ 98,766
Auditing and legal fees ........................................... 79,816
Registration ...................................................... 78,105
Directors' fees and expenses ...................................... 39,219
Shareholders' meeting ............................................. 18,013
Miscellaneous ..................................................... 42,254
-----------
Total expenses .................................................... 4,441,587
-----------
Net investment income ............................................. 19,965,581
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments .................................. 10,209,134
Net realized gain from foreign currency transactions .............. 124,087
Net change in unrealized depreciation of investments .............. 40,389,728
Net change in unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies .............. (316,625)
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ......... 50,406,324
------------
INCREASE IN NET ASSETS FROM OPERATIONS ............................ $ 70,371,905
============
</TABLE>
- -----------------
See notes to financial statements.
14
<PAGE>
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1995 1994
------------ ------------
OPERATIONS:
<S> <C> <C>
Net investment income ........................................................ $ 19,965,581 $ 20,225,018
Net realized gain (loss) on investments ...................................... 10,209,134 (617,238)
Net realized gain from foreign currency transactions ......................... 124,087 463,795
Net change in unrealized appreciation (depreciation) of investments .......... 40,389,728 (42,180,630)
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies ......................................... (316,625) 442,628
------------ ------------
Increase (decrease) in net assets from operations ............................ 70,371,905 (21,666,427)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A .................................................................... (16,607,821) (16,840,179)
Class D .................................................................... (3,554,476) (3,211,726)
Net realized gain on investments:
Class A .................................................................... (5,854,791) --
Class D .................................................................... (1,589,987) --
------------ ------------
Decrease in net assets from distributions .................................... (27,607,075) (20,051,905)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------
YEAR ENDED DECEMBER 31
-----------------------------
CAPITAL SHARE TRANSACTIONS: 1995 1994
------------ --------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A ..................................... 2,037,105 2,841,412 29,059,201 39,717,860
Class D ..................................... 1,319,539 2,558,453 18,613,132 35,792,197
Investment of dividends:
Class A ..................................... 769,996 839,174 10,950,044 11,361,860
Class D ..................................... 193,425 187,366 2,746,592 2,524,974
Exchanged from associated Funds:
Class A ..................................... 2,629,077 448,817 38,414,916 6,195,966
Class D ..................................... 785,959 55,945 11,323,047 745,079
Shares issued in payment of gain distributions:
Class A ..................................... 340,918 -- 4,950,128 --
Class D ..................................... 104,206 -- 1,509,952 --
---------- ---------- ------------- -----------
Total ......................................... 8,180,225 6,931,167 117,567,012 96,337,936
---------- ---------- ------------- -----------
Cost of shares repurchased:
Class A ..................................... (3,019,135) (2,914,276) (42,874,377) (39,968,347)
Class D ..................................... (921,962) (722,706) (13,046,572) (9,798,891)
Exchanged into associated Funds:
Class A ..................................... (2,948,092) (1,290,311) (42,763,690) (17,596,183)
Class D ..................................... (765,462) (288,794) (10,940,934) (3,935,880)
---------- ---------- ------------- -----------
Total ......................................... (7,654,651) (5,216,087) (109,625,573) (71,299,301)
---------- ---------- ------------- -----------
Increase in net assets from capital
share transactions ......................... 525,574 1,715,080 7,941,439 25,038,635
========== ========== ------------- -----------
Increase (decrease) in net assets ............. 50,706,269 (16,679,697)
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS:
<S> <C> <C>
Beginning of year ............................................................ 354,301,334 370,981,031
------------ ------------
End of year (including undistributed net investment income of $131,568 and
$253,655, respectively) ................................................... $405,007,603 $354,301,334
============ ============
</TABLE>
- -----------------
See notes to financial statements.
15
<PAGE>
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Income Fund, Inc. (the "Fund") offers two classes of shares. All
shares existing prior to May 3, 1993, were 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 distribution fee of up to 0.75% and
a service fee of up to 0.25% on an annual basis, 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. 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 value of the shares of each class.
Class-specific expenses, which include distribution and service fees and
any other items that are 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 reclassifications will have no effect
on net assets, results of operations, or net asset value per share of the
Fund.
16
<PAGE>
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1995, amounted to $411,914,153 and
$424,421,417, respectively.
At December 31, 1995, the cost of investments for federal income tax
purposes was $370,222,289, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effects of foreign currency
translations, amounted to $38,235,115 and $10,153,857, respectively.
4. At December 31, 1995, the Fund owned short-term investments which matured in
less than 7 days.
5. 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, 1995, was equivalent to an
annual rate of 0.48% of the average daily net assets of the Fund. 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.
Effective January 1, 1996, the management fee rate is 0.60% of the first $1
billion of the Fund's average daily net assets, 0.55% of the next $1 billion of
average daily net assets and 0.50% of average daily net assets, thereafter.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of Fund shares and an affiliate of the Manager, received
concessions of $105,433 from sales of Class A shares, after commissions of
$804,096 paid to dealers.
The Fund has 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, 1995, fees paid aggregated $704,025,
or 0.23% per annum of the average daily net assets of Class A shares.
The Fund has 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, 1995,
fees paid amounted to $774,881, 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, 1995, such charges amounted to $18,340.
Effective April 1, 1995, Seligman Services, Inc., an affiliate of the
Manager, became eligible to receive commissions from certain sales of shares of
the Fund, as well as distribution and service fees pursuant to the Plan. For the
period ended December 31, 1995, Seligman Services, Inc. received commissions of
$7,101 from sales of shares of the Fund. Seligman Services, Inc. also received
distribution and service fees of $39,985, pursuant to the Plan.
17
<PAGE>
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $650,436 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, Seligman Services, Inc., and/or
Seligman Data Corp.
Fees of $24,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
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, 1995 of
$91,952 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. 6. Class-specific expenses charged to Class A and Class D during the
year ended December 31, 1995, which are included in the corresponding captions
of the Statement of Operations, were as follows:
CLASS A CLASS D
------- -------
Distribution and service fees.... $704,025 $774,881
Registration..................... 16,342 20,040
Shareholder reports and
communications................ 11,021 495
18
<PAGE>
<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 amounts.
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
YEAR ENDED DECEMBER 31 DECEMBER 31 5/3/93*
------------------------------------------------ --------------- TO
1995o 1994o 1993 1992 1991 1995o 1994o 12/31/93
-------- -------- -------- -------- -------- -------- -------- --------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.................... $ 13.05 $ 14.58 $ 13.69 $ 12.45 $ 10.38 $ 13.01 $ 14.55 $ 14.42
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income....... .76 .76 .75 .92 .96 .65 .65 .45
Net realized and unrealized
investment gain (loss)... 1.89 (1.57) 1.40 1.21 2.08 1.88 (1.57) .69
Net realized and unrealized
gain (loss) on foreign currency
transactions............. (.01) .03 -- -- -- (.01) .03 --
-------- -------- -------- -------- -------- -------- -------- --------
Increase (decrease) from
investment operations.... 2.64 (.78) 2.15 2.13 3.04 2.52 (.89) 1.14
Dividends paid.............. (.78) (.75) (.75) (.89) (.97) (.65) (.65) (.50)
Distributions from net gain
realized................. (.28) -- (.51) -- -- (.28) -- (.51)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
net asset value.......... 1.58 (1.53) .89 1.24 2.07 1.59 (1.54) .13
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.63 $ 13.05 $ 14.58 $ 13.69 $ 12.45 $ 14.60 $ 13.01 $ 14.55
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN BASED
ON NET ASSET VALUE 20.60% (5.43)% 15.98% 17.54% 30.12% 19.66% (6.20)% 8.02%
Ratios/Supplemental Data:
Expenses to average net assets 1.00% 1.02% 1.03% .84% .85% 1.79% 1.82% 1.84%+
Net investment income to
average net assets....... 5.38% 5.51% 5.29% 6.88% 8.24% 4.58% 4.74% 4.42%+
Portfolio turnover.......... 111.78% 66.62% 60.62% 70.43% 66.77% 111.78% 66.62% 60.62%++
Net assets, end of period
(000's omitted)...... $318,307 $286,355 $321,040 $213,007 $153,511 $86,701 $67,946 $49,941
</TABLE>
- -------------------
*Commencement of offering of Class D shares.
oPer share amounts for the years ended December 31, 1995 and 1994, are
calculated based on average shares outstanding.
+Annualized.
++For the year ended December 31, 1993.
See notes to financial statements.
19
<PAGE>
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN INCOME FUND, INC.:
We have audited the accompanying statements of assets and liabilities, including
the portfolio of investments, of Seligman Income Fund, Inc. as of December 31,
1995, 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, 1995 by correspondence with
the Fund's custodian. 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, 1995, 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.
DELOITTE & TOUCHE LLP
New York, New York
February 2, 1996
20
<PAGE>
<PAGE>
================================================================================
PROXY RESULTS
- --------------------------------------------------------------------------------
Seligman Income Fund Shareholders voted on the following proposals at the
Special Meeting of Shareholders held on December 12, 1995, in New York, New
York. Each Director was elected, and all other proposals were approved. The
description of each proposal and number of shares voted are as follows:
FOR AGAINST NON-VOTE
--- ------- --------
Election of Directors:
Fred E. Brown 15,946,062 426,117 10,890,954
John R. Galvin 15,930,574 438,971 10,890,963
Alice S. Ilchman 15,960,658 416,494 10,890,949
Frank A. McPherson 15,954,192 420,203 10,890,961
John E. Merow 15,940,479 437,335 10,890,959
Betsy S. Michel 15,966,339 415,836 10,890,947
William C. Morris 15,975,444 408,871 10,890,948
James C. Pitney 15,971,929 407,638 10,890,948
James Q. Riordan 15,950,875 417,741 10,890,960
Ronald T. Schroeder 15,976,763 406,380 10,890,947
Robert L. Shafer 15,973,044 406,696 10,890,948
James N. Whitson 15,974,281 406,702 10,890,948
Brian T. Zino 15,972,907 409,516 10,890,947
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
<S> <C> <C> <C> <C>
Ratification of Deloitte & Touche LLP as
independent auditors: 15,599,126 189,322 597,178 10,890,945
Approval of amendment to the Management
Agreement to increase management fee
payable by the Fund: 11,639,399 3,530,814 1,215,413 10,890,945
Approval of amendment to the Subadvisory
Agreement to increase the subadvisory fee payable
by J. & W. Seligman & Co. Incorporated: 11,689,152 3,385,959 1,310,512 10,890,948
Approval of amendment of Fund's fundamental
investment policy to increase the amount that may
be borrowed to 15% of the market value of the
Fund's total assets: 13,451,956 1,891,397 1,042,218 10,890,999
Approval of amendment of Fund's fundamental
investment policy to permit mortgaging or
pledging of its assets: 12,995,409 2,163,549 1,226,660 10,890,953
Approval of amendment of Fund's fundamental
investment policy with respect to investments in
real estate investment trusts: 13,820,605 1,496,126 1,068,895 10,890,945
</TABLE>
21
<PAGE>
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3, 4
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
CHAIRMAN AND CEO, Kerr-McGee Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
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, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
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
RONALD T. SCHROEDER 1
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
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
- ------------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
22
<PAGE>
<PAGE>
================================================================================
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
CHARLES C. SMITH, JR.
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
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
23
<PAGE>
<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, 1995; Financial Highlights for Class D shares for the
period from May 3, 1993 (commencement of offering) to December 31,
1995.
Part B Required Financial Statements are included in the Fund's Annual
Report to Shareholders, dated December 31, 1995, which are
incorporated by reference in the Statement of Additional Information.
These Financial Statements are: Portfolio of Investments as of
December 31, 1995; Statement of Assets and Liabilities as of December
31, 1995; Statement of Operations for the year ended December 31,
1995; Statements of Changes in Net Assets for the years ended December
31, 1995 and 1994; Notes to Financial Statements; Financial Highlights
for the five years ended December 31, 1995 for the Fund's Class A
shares and for the period May 3, 1993 (commencement of offering)
through December 31, 1995 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.
(1a) 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.)
(1b) Articles Supplementary to Articles of Incorporation of Registrant dated
February 8, 1996.*
(1c) Articles Supplementary to Articles of Incorporation of Registrant dated
April 10, 1996.*
(2) By-laws of the Corporation. (Incorporated by reference to Post-Effective
Amendment No. 54 filed on February 27, 1981.)
(4a) Specimen certificate of Class B Capital Stock. (Incorporated by reference
to Form SE filed on April 16, 1996).
(4b) 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.*
(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.*
(13a)Purchase Agreement for Initial Capital between Registrant's Class B shares
and J. & W. Seligman & Co. Incorporated.*
(13b)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.)
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits (continued)
(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.)
(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.*
(16) Schedule of Computation of Performance Data provided in Registration
Statement in response to Item 22. (Incorporated by reference to
Post-Effective Amendment No. 66 filed on April 30, 1990.)
(17) Financial Data Schedule meeting the requirements of Rule 483 under the
Securities Act of 1933.*
(18) Copy of Multiclass Plan entered into by Registrant pursuant to Rule 18f-3
under the Investment Company Act of 1940.*
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
<TABLE>
<CAPTION>
(1) (2)
Number of Record
Title of Class Holder as of March 29, 1996
<S> <C>
Class A Common Stock 12,015
Class B Common Stock 0
Class D Common Stock 4,171
</TABLE>
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.
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
The Subadviser also serves as subadviser to eight other associated investment
companies. They are Seligman Capital 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., 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 December 5, 1995.)
Item 29. Principal Underwriters
(a) The names of each investment company (other than the Registrant) for which
Registrant's 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 Registrant's principal
underwriter named in the answer to Item 21:
Seligman Financial Services, Inc.
As of March 29, 1996
<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
Brian T. Zino* Director Director and President
Ronald T. Schroeder* Director Director
Fred E. Brown* Director Director
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President None
Lawrence P. Vogel* Senior Vice President, Vice President
Finance
Mark R. Gordon* Senior Vice President, None
Director or Marketing
Gerald I. Cetrulo, III Senior Vice President None
140 West Parkway of Sales,
Pompton Plains, NJ 07444 Regional Sales Manager
Bradley F. Hanson Senior Vice President None
9707 Xylon Court of Sales, Regional
Bloomington, MN 55438 Sales Manager
</TABLE>
<PAGE>
<PAGE>
PART C. OTHER INFORMATION (continued)
Seligman Financial Services, Inc.
As of March 29, 1996
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Bradley W. Larson Senior Vice President None
367 Bryan Drive of Sales, Regional Sales
Danville, CA 94526 Manager
D. Ian Valentine Senior Vice President of Sales, None
307 Braehead Drive Regional Sales Manager
Fredericksburg, VA 22401
Helen Simon* Vice President, Sales None
Administration Manager
Marsha E. Jacoby* Vice President, National None
Accounts Manager
William W. Johnson* Vice President, Order Desk None
James R. Besher Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
Brad Davis Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
Andrew Draluck Regional Vice President None
4215 N. Civic Center
Blvd #273
Scottsdale, AZ 85251
Jonathan Evans Regional Vice Pesident None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Carla Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077
Susan Gutterud Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
Mark Lien Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
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 Road,
Ste 205
Alpharetta, CA 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
</TABLE>
<PAGE>
<PAGE>
PART C. OTHER INFORMATION (continued)
Seligman Financial Services, Inc.
As of March 29, 1996
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
Bruce Tuckey Regional Vice President None
41644 Chathman Drive
Novi, MI 48375
Andrew Veasey Regional Vice President None
14 Woodside
Rumson, NJ 07760
Todd Volkman Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
Kelli A. Wirth-Dumser Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
Frank P. Marino* Assistant Vice President,
Mutual Fund Product Manager None
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
(1) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105 and
(2) Seligman Data Corp.
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 First Data Investor
Services Group ("FDISG") pursuant to which FDISG 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, 1995, 1994 and 1993 the approximate cost of these services
were:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Class A Shares $ 63,300 $ 61,201 $60,200
Class D Shares $ 15,300 $ 15,018 $ 1,600
</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>
<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. 73 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 19th day of April, 1996.
SELIGMAN INCOME FUND, INC.
By: /s/ William C. Morris
_____________________________________
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Post-Effective Amendment No. 73 has been
signed below by the following persons in the capacities indicated on April
19, 1996.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ William C. Morris Chairman of the Board (Principal executive
______________________________ officer) and Director
William C. Morris*
/s/ Brian T. Zino Director and President
______________________________
Brian T. Zino
/s/ Thomas G. Rose Treasurer
______________________________
Thomas G. Rose
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) ___________________________________
James Q. Riordan, Director ) * Brian T. Zino, Attorney-in-fact.
Ronald T. Schroeder, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
</TABLE>
STATEMENT OF DIFFERENCES
The dagger shall be expressed as 'D'
The registered copyright symbol shall be expressed as 'r'
The Greek letter phi shall be expressed as [f]
The service mark shall be expressed as 'SM'
<PAGE>
<PAGE>
SELIGMAN INCOME FUND, INC.
ARTICLES SUPPLEMENTARY
Seligman Income Fund, Inc., a Maryland Corporation having its principal
office in Baltimore City, Maryland and registered as an open-end investment
company under the Investment Company Act of 1940 (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The total number of shares of capital stock of all classes which
the Corporation has authority to issue is hereby increased to 500,000,000 shares
of capital stock (par value $1.00 per share), amounting to an aggregate par
value of $500,000,000.
SECOND: The Board of Directors of the Corporation on September 21, 1995,
duly adopted and approved a resolution in accordance with Section 2-105(c) of
Maryland Corporations and Associations Code, in which was set forth the
foregoing increase in capital stock of the Corporation.
THIRD: (a) The total number of shares of capital stock of all classes
which the Corporation was heretofore authorized to issue was 100,000,000 shares
of capital stock (par value $1.00), amounting to an aggregate par value of
$100,000,000.
(b) The total number of shares of Common Stock is increased by this
amendment to 500,000,000 shares of the par value of $1.00 each and of the
aggregate par value of $500,000,000.
(c) The Corporation currently has only one class of Common Stock
outstanding.
IN WITNESS WHEREOF, SELIGMAN INCOME FUND, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
witnessed by its Secretary, and each of said officers of the Corporation has
also acknowledged these Articles Supplementary to be the corporate act of the
Corporation and has stated under penalties of perjury that to the best of his
knowledge, information and belief that the matters and facts set forth with
respect to approval are true in all material respects, all on February 8, 1996.
SELIGMAN INCOME FUND, INC.
By /s/ Brian T. Zino
_______________________________________
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
________________________________
Frank J. Nasta
Secretary
<PAGE>
<PAGE>
SELIGMAN INCOME FUND, INC.
ARTICLES SUPPLEMENTARY
Seligman Income Fund, Inc., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation") and registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The total number of shares of capital stock of all classes
which the Corporation has authority to issue is 500,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock. The number
of authorized shares of Class A Common Stock and of Class D Common Stock each
consisted of the sum of x and y, where x equalled the issued and outstanding
shares of such class and y equalled one-half of the authorized but unissued
shares of Common Stock of all classes; provided that at all times the aggregate
authorized, issued and outstanding shares of Class A and Class D Common Stock
shall not exceed the authorized number of shares of Common Stock; and, in the
event application of the formula above would have resulted, at any time, in
fractional shares, the applicable number of authorized shares of each class was
to have been rounded down to the nearest whole number of shares of such class.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of capital stock, the Board of Directors
has reclassified the unissued shares of Class A Common Stock and Class D Common
Stock into the following classes and has provided for the issuance of shares of
such classes. The terms of the Common Stock as set by the Board of Directors are
as follows:
(a) The Common Stock of the Corporation shall have three classes
of shares, which shall be designated Class A Common Stock, Class B
Common Stock and Class D Common Stock. The number of authorized shares
of Class A Common Stock, of Class B Common Stock and of Class D Common
Stock shall each consist of the sum of x and y, where x equals the
issued and outstanding shares of such class and y equals one-third of
the authorized but unissued shares of Common Stock of all classes;
provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class B and Class D Common Stock shall
not exceed the authorized number of shares of Common Stock (i.e.,
500,000,000 shares of Common Stock until changed by further action of
the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in
the event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each
class shall be rounded down to the nearest whole number of shares of
such class. Any class of Common Stock shall be referred to herein
individually as a "Class" and collectively, together with any further
class or classes from time to time established, as the "Classes".
(b) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter
of the Corporation to the contrary:
(1) Class A shares may be subject to such front-end sales
loads as may be established by the Board of Directors from time
to time in accordance with the Investment Company Act and
applicable rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD").
(2) Class B shares may be subject to such contingent
deferred sales charges as may be established from time to time by
the Board of Directors in accordance with the Investment Company
Act and applicable rules and regulations of the NASD. Subject to
subsection (5) below, each Class B share shall convert
automatically into Class A shares on the last business day of the
month that precedes the eighth anniversary of the date of
issuance of such Class B share; such conversion shall be effected
on the basis of the relative net asset values of Class B shares
and Class A shares as determined by the Corporation on the date
of conversion.
1
<PAGE>
<PAGE>
(3) Class D shares may be subject to such contingent
deferred sales charges as may be established from time to time by
the Board of Directors in accordance with the Investment Company
Act and applicable rules and regulations of the NASD.
(4) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other arrangement,
however designated, which may differ between the Classes) shall
be borne by that Class and shall be appropriately reflected (in
the manner determined by the Board of Directors) in the net asset
value, dividends, distribution and liquidation rights of the
shares of that Class.
(5) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provisions of any exemptive order applicable
to the Corporation, and as may be determined by the Board of
Directors and disclosed in the then current prospectus of the
Corporation, shares of a particular Class may be automatically
converted into shares of another Class; provided, however, that
such conversion shall be subject to the continuing availability
of an opinion of counsel to the effect that such conversion does
not constitute a taxable event under Federal income tax law. The
Board of Directors, in its sole discretion, may suspend any
conversion rights if such opinion is no longer available.
(6) As to any matter with respect to which a separate vote
of any Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to
in subsection (4) above), such requirement as to a separate vote
by the Class shall apply in lieu of single Class voting, and, if
permitted by the Investment Company Act or any rules, regulations
or orders thereunder and the Maryland General Corporation Law,
the Classes shall vote together as a single Class on any such
matter that shall have the same effect on each such Class. As to
any matter that does not affect the interest of a particular
Class, only the holders of shares of the affected Class shall be
entitled to vote.
THIRD: These Articles Supplementary do not change the total
number of authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN INCOME FUND, INC. has caused these
Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on
April 10, 1996.
SELIGMAN INCOME FUND, INC.
By: /s/ Brian T. Zino
_____________________
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
___________________________
Frank J. Nasta
Secretary
2
<PAGE>
<PAGE>
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, and amended April
10, 1991, and January 1, 1996 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:
1. 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 Seligman Data Corp. ("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.
2. 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 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.
3. Compensation.
(a) 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, on the basis of the Corporation's net assets at the
close of business on the previous day, at an annual rate of .60% of the
Corporation's average daily net assets on the first $1,000,000,000 of net
assets, .55% of the Corporation's average daily net assets on the next
$1,000,000,000 and .50% of the Corporation's average
<PAGE>
<PAGE>
daily net assets in excess of $2,000,000,000.
(b) If the Manager shall serve hereunder for less than the whole of any month
the fee hereunder shall be prorated.
4. 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 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.
5. Term of Agreement. This Agreement shall continue in full force and effect
until December 31, 1996 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 31 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 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).
2
<PAGE>
<PAGE>
6. 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 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.
/s/ Brian T. Zino
By ________________________________
Brian T. Zino
J. & W. SELIGMAN & CO. INCORPORATED
/s/ William C. Morris
By _________________________________
William C. Morris
3
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SUBADVISORY AGREEMENT
Seligman Income Fund, Inc.
SUBADVISORY AGREEMENT, dated as of May 19, 1994 and amended January 1, 1996
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 and January 1, 1996 (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.
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(b) As used herein:
1) The term "Applicable Percentage" means the percentage fee rate
that the Manager receives from the Fund pursuant to the
Management Agreement,which equals .60% of the Fund's average
daily net assets on the first $1,000,000,000 of net assets, .55%
of the Fund's average daily net assets on the next $1,000,000,000
and .50% of the Fund's average daily net assets in excess of
$2,000,000,000.
(2) 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. 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.
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5. Term of Agreement. This Agreement shall continue in full force and effect
until December 31, 1996, 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
/s/ Brian T. Zino
By____________________________________________
Brian T. Zino
SELIGMAN HENDERSON CO.
/s/ David F. Stein
By____________________________________________
David F. Stein
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ADDENDUM
TO
Sales Agreement
covering shares of capital stock
or shares of beneficial interest of
the Seligman Mutual Funds
between
SELIGMAN FINANCIAL SERVICES, INC.
and
DEALER
Dear Dealer:
Your Sales Agreement with Seligman Financial Services, Inc. ("SFSI") is
hereby amended to include the following provisions in connection with the
offering by certain of the Seligman Mutual Funds of Class B shares as described
in each applicable prospectus:
1. Dealer agrees to comply with the attached "Policies and Procedures" with
respect to sales of Seligman Mutual Funds offering three classes of shares.
2. SFSI shall be entitled to a contingent deferred sales load ("CDSL") on
redemptions within six years of purchase on any Class B shares sold and
within one year of purchase on any Class D shares sold. With respect to
omnibus accounts in which Class B shares or Class D shares are held at
Seligman Data Corp. ("SDC") in Dealer's name, Dealer agrees that by the
tenth day of each month it will furnish to SDC a report of each redemption
in the preceding month to which a CDSL was applicable, accompanied by a
check payable to SFSI in payment of the CDSL due.
3. If, with respect to a redemption of any Class B shares or Class D shares
sold by Dealer, the CDSL is waived because the redemption qualifies for a
waiver set forth in the Fund's prospectus, Dealer shall promptly remit to
SFSI an amount equal to the payment made by SFSI to Dealer at the time of
sale with respect to such Class B shares or Class D Shares.
4. The Dealer will comply in all respects with Notice to Members 95-80 of the
National Association of Securities Dealers, Inc. regarding members
obligations and responsibilities regarding mutual fund sales practices.
The sale of any Class A,Class B or Class D shares of a Seligman Mutual Fund
will constitute Dealer's acceptance of and agreement with the terms set forth
herein.
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Exhibit C
POLICIES AND PROCEDURES
In connection with the offering by the Funds of three classes of shares,
one subject to a front-end sales load and a service fee ("Class A Shares"), one
subject to a service fee, a distribution fee, no front-end sales load and a
contingent deferred sales load on redemptions within six years of purchase
("Class B Shares") and one subject to a service fee, a distribution fee, no
front-end sales load and a contingent deferred sales load on redemptions within
one year of purchase ("Class D Shares"), it is important for an investor to
choose the method of purchasing shares which best suits his or her particular
circumstances. To assist investors in these decisions, Seligman Financial
Services has instituted the following policies with respect to orders for
Shares:
1. No purchase order may be placed for Class B Shares or Class D Shares
for amounts of $4,000,000 or more.
2. Any purchase order for less than $4,000,000 may be for either Class A,
Class B or Class D Shares in light of the relevant facts and
circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his
Shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent, Volume Discount,
or Right of Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of higher ongoing distribution fee. On the other hand, an
investor whose order would not qualify for such a discount may wish to have all
of his or her funds invested in Class B or Class D Shares. An investor who
expects to hold his or her shares for longer than eight years might prefer Class
B Shares over Class D Shares because of the conversion feature; once the Class B
Shares have converted to Class A Shares, the ongoing distribution fees will be
reduced. Class D Shares may remain a more attractive choice for shorter-term
investors because of the contingent deferred sales load on such shares is only
1%, and it does not apply if the investor owns his or her shares for at least
one year. If an investor anticipates that he or she will redeem his or her Class
B Shares or Class D Shares while still subject to a contingent deferred sales
charge, the investor may, depending on the amount of the purchase, pay an amount
greater than the sales load and service fee attributable to Class A Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Financial Services at (212) 850-1217.
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SALES AGREEMENT
covering shares of capital stock
and/or shares of beneficial interest of
THE SELIGMAN MUTUAL FUNDS
Seligman Capital 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 Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust
between
SELIGMAN FINANCIAL SERVICES, INC.
and
----------------------------------------------------------------------------
Dealer
The Dealer named above and Seligman Financial Services, Inc., exclusive agent
for distribution of shares of capital stock of Seligman Capital 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 Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., and Seligman Tax-Exempt Fund Series, Inc., and
shares of beneficial interest of Seligman High Income Fund Series, Seligman
Pennsylvania Tax-Exempt Fund, and Seligman Tax-Exempt Series Trust, agree to the
terms and conditions set forth in this agreement.
Dealer Signature Seligman Financial Services, Inc. Acceptance
________________________________ ____________________________________
Principal Officer Stephen J. Hodgdon, President
SELIGMAN FINANCIAL SERVICES, INC.
________________________________ 100 Park Avenue
Address New York, New York 10017
________________________________ ____________________________________
Employer Identification No. Date
REV 1/95
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The Dealer and Seligman Financial Services, Inc. ("Seligman Financial
Services"), as exclusive agent for distribution of Class A and Class D Shares
(as described in the "Policies and Procedures," as set forth below) of the
Capital Stock and/or Class A and Class D Shares of beneficial interest
(collectively, the "Shares") of Seligman Capital 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 Income Fund, Inc.,
Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt
Fund, Seligman Tax-Exempt Fund Series, Inc. and Seligman Tax-Exempt Series Trust
and or any other mutual fund for which Seligman Financial Services is exclusive
agent for distribution (herein called the Funds), agree as follows:
1. The Dealer agrees to comply with the attached "Policies and Procedures"
with respect to sales of Seligman Mutual Funds offering two classes of
shares, as set forth below.
2. An order for Shares of one or more of the Funds, placed by the Dealer with
Seligman Financial Services, will be confirmed at the public offering price
as described in each Fund's current prospectus. Unless otherwise agreed
when an order is placed, the Dealer shall remit the purchase price to the
Fund, or Funds, with issuing instruction, within the period of time
prescribed by existing regulations. No wire orders under $1,000 may be
placed for initial purchases.
3. Shares of the Funds shall be offered for sale and sold by the Dealer only
at the applicable public offering price currently in effect, determined in
the manner prescribed in each Fund's prospectus. Seligman Financial
Services will make a reasonable effort to notify the Dealer of any
redetermination or suspension of the current public offering price, but
Seligman Financial Services shall be under no liability for failure to do
so.
4. On each purchase of Shares by the Dealer, the Dealer shall be entitled,
based on the Class of Shares purchased and except as provided in each
Fund's current prospectus, to a concession determined as a percentage of
the price to the investor as set forth in each Fund's current prospectus.
On each purchase of Class A Shares, Seligman Financial Services reserves
the right to receive a minimum concession of $.75 per transaction. No
concessions will be paid to the Dealer for the investment of dividends in
additional shares.
5. Except for sales to and purchases from the Dealer's retail customers, all
of which shall be made at the applicable current public offering price or
the current price bid by Seligman Financial Services on behalf of the Fund,
the Dealer agrees to buy Shares only through Seligman Financial Services
and not from any other sources and to sell shares only to Seligman
Financial Services, the Fund or its redemption agent and not to any other
purchasers.
6. By signing this Agreement, both Seligman Financial Services and the Dealer
warrant that they are members of the National Association of Securities
Dealers, Inc., and agree that termination of such membership at any time
shall terminate this Agreement forthwith regardless of the provisions of
paragraph 10 hereof. Each party further agrees to comply with all rules and
regulations of such Association and specifically to observe the following
provisions:
(a) Neither Seligman Financial Services nor the Dealer shall withhold
placing customers' orders for Shares so as to profit itself as a result of
such withholding.
(b) Seligman Financial Services shall not purchase Shares from any of
the Funds except for the purpose of covering purchase orders already
received, and the Dealer shall not purchase Shares of any of the Funds
through Seligman Financial Services other than for investment, except for
the purpose of covering purchase orders already received.
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(c) Seligman Financial Services shall not accept a conditional order
for Shares on any basis other than at a specified definite price. The
Dealer shall not, as principal, purchase Shares of any of the Funds from a
recordholder at a price lower than the bid price, if any, then quoted by or
for the Fund, but the Dealer shall not be prevented from selling Shares for
the account of a record owner to Seligman Financial Services, the Fund or
its redemption agent at the bid price currently quoted by or for such Fund,
and charging the investor a fair commission for handling the transaction.
(d) If Class A Shares are repurchased by a Fund or by Seligman
Financial Services as its agent, or are tendered for redemption within
seven business days after confirmation by Seligman Financial Services of
the original purchase order of the Dealer for such Shares, (i) the Dealer
shall forthwith refund to Seligman Financial Services the full concession
allowed to the Dealer on the original sales and (ii) Seligman Financial
Services shall forthwith pay to the Fund Seligman Financial Services' share
of the "sales load" on the original sale by Seligman Financial Services,
and shall also pay to the Fund the refund which Seligman Financial Services
received under (i) above. The Dealer shall be notified by Seligman
Financial Services of such repurchase or redemption within ten days of the
date that such redemption or repurchase is placed with Seligman Financial
Services, the Fund or its authorized agent. Termination or cancellation of
this Agreement shall not relieve the Dealer or Seligman Financial Services
from the requirements of this clause (d).
7.(a)Seligman Financial Services shall be entitled to a contingent deferred
sales load ("CDSL") on redemptions within one year of purchase on any Class
D Shares sold. With respect to omnibus accounts in which Class D Shares are
held at Seligman Data Corp. ("SDC") in the Dealer's name, the Dealer agrees
that by the tenth day of each month it will furnish to SDC a report of each
redemption in the preceding month to which a CDSL was applicable,
accompanied by a check payable to Seligman Financial Services in payment of
the CDSL due.
(b) If, with respect to a redemption of any Class D Shares sold by the Dealer,
the CDSL is waived because the redemption qualifies for a waiver set forth
in the Fund's prospectus, the Dealer shall promptly remit to Seligman
Financial Services an amount equal to the payment made by Seligman
Financial Services to the Dealer at the time of sale with respect to such
Class D Shares.
8. In all transactions between Seligman Financial Services and the Dealer
under this Agreement, the Dealer will act as principal in purchasing from
or selling to Seligman Financial Services. The dealer is not for any
purposes employed or retained as or authorized to act as broker, agent or
employee of any Fund or of Seligman Financial Services and the Dealer is
not authorized in any manner to act for any Fund or Seligman Financial
Services or to make any representations on behalf of Seligman Financial
Services. In purchasing and selling Shares of any Fund under this
Agreement, the Dealer shall be entitled to rely only upon matters stated in
the current offering prospectus of the applicable Fund and upon such
written representations, if any, as may be made by Seligman Financial
Services to the Dealer over the signature of Seligman Financial Services.
9. Seligman Financial Services will furnish to the Dealer, without charge,
reasonable quantities of the current offering prospectus of each Fund and
sales material issued from time to time by Seligman Financial Services.
10. Either Party to this Agreement may cancel this Agreement by written notice
to the other party. Such cancellation shall be effective at the close of
business on the 5th day following the date on which such notice was given.
Seligman Financial Services may modify this Agreement at any time by
written notice to the Dealer. Such notice shall be deemed to have been
given on the date upon which it was either delivered personally to the
other party or any officer or member thereof, or was mailed postage-paid,
or delivered to a telegraph office for transmission to the other party at
his or its address as shown herein.
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11. This Agreement shall be construed in accordance with the laws of the State
of New York and shall be binding upon both parties hereto when signed by
Seligman Financial Services and by the Dealer in the spaces provided on the
cover of this Agreement. This Agreement shall not be applicable to Shares
of a Fund in a state in which such Fund Shares are not qualified for sale.
POLICIES AND PROCEDURES
In connection with the offering by the Funds of three classes of shares, one
subject to a front-end sales load and a service fee ("Class A Shares"), one
subject to a service fee, a distribution fee, no front-end sales load and a
contingent deferred sales load on redemptions within six years of purchase
("Class B Shares") and one subject to a service fee, a distribution fee, no
front-end sales load and a contingent deferred sales load on redemptions within
one year of purchase ("Class D Shares"), it is important for an investor to
choose the method of purchasing shares which best suits his or her particular
circumstances. To assist investors in these decisions, Seligman Financial
Services has instituted the following policies with respect to orders for
Shares:
1. No purchase order may be placed for Class B Shares or Class D
Shares for amounts of $4,000,000 or more.
2. Any purchase order for less than $4,000,000 may be for either Class
A, Class B or Class D Shares in light of the relevant facts and
circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his
Shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent, Volume
Discount, or Right of Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of higher ongoing distribution fee. On the other hand, an
investor whose order would not qualify for such a discount may wish to have all
of his or her funds invested in Class B or Class D Shares. An investor who
expects to hold his or her shares for longer than eight years might prefer Class
B Shares over Class D Shares because of the conversion feature; once the Class B
Shares have converted to Class A Shares, the ongoing distribution fees will be
reduced. Class D Shares may remain a more attractive choice for shorter-term
investors because of the contingent deferred sales load on such shares is only
1%, and it does not apply if the investor owns his or her shares for at least
one year. If an investor anticipates that he or she will redeem his or her Class
B Shares or Class D Shares while still subject to a contingent deferred sales
charge, the investor may, depending on the amount of the purchase, pay an amount
greater than the sales load and service fee attributable to Class A Shares.
Appropriate supervisory personnel within your organization must ensure that
all employees receiving investor inquiries about the purchase of Shares of a
Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J. Hodgdon,
President, Seligman Financial Services at (212) 850-1217.
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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. 73 to Registration Statement
No. 2-10837 of our report dated February 2, 1996, appearing in the Annual Report
to shareholders for the year ended December 31, 1995, 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 17, 1996
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INVESTMENT LETTER
SELIGMAN INCOME FUND, INC.
Seligman Income Fund, Inc. (the "Fund"), an open-end diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class B
share (the "Share") of Capital Stock (par value $1.00) of the Fund at a
prive equivalent to the net asset value of one share of the Fund as of
the close of business on April 18, 1996. The Fund hereby acknowledges
receipt from Purchaser of funds in such amount in full payment for the
Share.
2. Purchaser represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of the
Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 17th day
of April, 1996 ("Purchase Date").
SELIGMAN INCOME FUND, INC.
By: /s/ Lawrence P. Vogel
_________________________________
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By: /s/ Lawrence P. Vogel
_________________________________
Name: Lawrence P. Vogel
Title: Senior Vice President
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ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Income Fund, Inc. (the "Fund") will pay fees to
Seligman Financial Services, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class D and Class D shares of the Fund. As a result,
the Fund is adopting this Administration, Shareholder Services and Distribution
Plan (the "Plan") pursuant to Section 12(b) of the Investment Company Act of
1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B and Class D) and a distribution fee of .75% on an annual
basis, payable monthly, of the average daily net assets of the Fund attributable
to the Class B Shares and a distribution fee of up to .75% on an annual basis,
payable monthly, of the average daily net assets of the Fund attributable to
Class D shares. Such fees will be used in their entirety by the Distributor to
make payments for administration, shareholder services and distribution
assistance, including, but not limited to (i) compensation to securities dealers
and other organizations (each, a "Service Organization" and collectively, the
"Service Organizations"), for providing distribution assistance with respect to
assets invested in the Fund, (ii) compensation to Service Organizations for
providing administration, accounting 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 distribution of such promotional materials and prospectuses
to prospective investors and defraying the Distributor's costs incurred in
connection with its marketing efforts with respect to shares of the Fund. To the
extent a Service Organization provides administration, accounting and other
shareholder services, payment for which is not required to be made pursuant to a
plan meeting the requirements of Rule 12b-1, a portion of the fee paid by the
Fund shall be deemed to include compensation for such services. The fees
received from the Fund hereunder in respect of the Class A shares may not be
used to pay any interest expense, carrying charges or other financing costs, and
fees received hereunder may not be used to pay any allocation of overhead of the
Distributor. The fees of any particular class of the Fund may not be used to
subsidize the sale of shares of any other class. The fees payable to Service
Organizations from time to time shall, within such limits, be determined by the
Directors of the Fund.
SECTION 3. J. & W. Seligman & Co. Incorporated, the Fund's investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Fund and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Fund's Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
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SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors, or by vote
of a majority of the outstanding voting securities of such class. If this Plan
is terminated in respect of a class, no amounts (other than amounts accrued but
not yet paid) would be owed by the Fund to the Distributor with respect to such
class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Fund
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
2
<PAGE>
<PAGE>
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Fund who are not "interested persons" of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan.
3
<PAGE>
<PAGE>
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT, dated as of
, 19 between Seligman Financial Services, Inc. ("Seligman
Financial Services") and (the "Service Organization").
The Parties hereto enter into a Administration, Shareholder Services and
Distribution Agree- ment ("Service Agreement") with respect to the shares of
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 Income
Fund, Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust (the "Funds"), and any other future mutual funds that
may become members of the Seligman Group of Investment Companies which adopt an
Administration, Shareholder Services and Distribution Plan, pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "Act"), and in
consideration of the mutual agreements herein made, agree as follows:
The Service Organization shall make such use of or provide such
information and services as may be necessary or appropriate (i) to provide
shareholder services to shareholders of the Funds and (ii) to assist Seligman
Financial Services in any distribution of shares of the Funds, including,
without limitation, making use of the Service Organization's name, client lists,
and publications, for the solicitation of sales of shares of the Funds to
Service Organization clients, and such other assistance as Seligman Financial
Services reasonably requests, to the extent permitted by applicable statute,
rule or regulation.
1. Except with respect to the Class D shares of a Fund for the first year
following the sale thereof, Seligman Financial Services shall pay to the
Service Organization a service fee (as defined in the National Association
of Securities Dealers, Inc. Rules of Fair Practice) not to exceed .25 of 1%
per annum of the average daily net assets of each class of shares of each
Fund attributable to the clients of the Service Organization.
2. With respect to the first year following the sale of Class D shares of a
Fund, Seligman Financial Services shall pay to the Service Organization at
or promptly after the time of sale a service fee (as defined in the
National Association of Securities Dealers, Inc. Rules of Fair Practice)
not to exceed .25 of 1% of the net asset value of the Class D shares sold
by the Service Organization. Such service fee shall be paid to the Service
Organization solely for personal services and/or the maintenance of
shareholder accounts to be provided by the Service Organization to the
purchaser of such Class D Shares over the course of the first year
following the sale.
3. Any service fee paid hereunder shall be paid solely for personal services
and/or the maintenance of shareholder accounts. For greater certainty, no
part of a service fee shall be paid for subtransfer agency services,
subaccounting services, or administrative services.
<PAGE>
<PAGE>
4. In addition to payment of the service fee, from time to time Seligman
Financial Services may make payments to the Service Organization in
addition to those contemplated above for providing distribution assistance
with respect to assets invested in each Fund by its clients.
5. Neither the Service Organization nor any of its employees or agents are
authorized to make any representation concerning the Funds or the Funds'
shares except those contained in the then current Prospectus, copies of
which will be supplied by Seligman Financial Services. The Service
Organization shall have no authority to act as agent for Seligman Financial
Services or the Funds.
6. In consideration of the services provided pursuant to paragraphs 1, 2
and/or 4 above, the Service Organization shall be entitled to receive fees
as are set forth in Exhibit A hereto as may be amended from time to time by
Seligman Financial Services. Seligman Financial Services has no obligation
to make any such payments and the Service Organization agrees to waive
payment of its fee until Seligman Financial Services is in receipt of the
fee from the Fund(s). The payment of fees has been authorized pursuant to
an Administration, Shareholder Services and Distribution Plans (the
"Plans") approved by the Directors/Trustees and the shareholders of the
Funds pursuant to the requirements of the Act and such authorizations may
be withdrawn at any time.
7. It is understood that the Funds reserve the right, at their discretion and
without notice, to suspend or withdraw the sale of shares of the Funds.
This Agreement shall not be construed to authorize the Service Organization
to perform any act that Seligman Financial Services would not be permitted
to perform under the respective Distributing Agreements between each of the
Funds and Seligman Financial Services.
8. Subject to the proviso in Section 6 of the Plans, this Agreement shall
continue until December 31 of the year in which any Plan has first been
approved by shareholders and through December 31 of each year thereafter
provided such continuance is specifically approved at least annually by a
vote of a majority of (i) the Fund's Directors/Trustees and (ii) the
Qualified Directors/Trustees cast in person at a meeting called for the
purpose of voting on such approval and provided further that the Service
Organization shall not have notified Seligman Financial Services in writing
at least 60 days prior to the anniversary date of the previous continuance
that it does not desire such continuance. This Agreement may be terminated
at any time without payment of any penalty with respect to any of the Funds
by vote of a majority of the Qualified Directors/Trustees, or by vote of a
majority of the outstanding voting securities of the particular Fund or
class or series of a Fund, on 60 days' written notice to the Service
Organization and Seligman Financial Services. Notwithstanding anything
contained herein, in the event that any of the Plans shall be terminated or
any of the Plans or any part thereof shall be found invalid or ordered
terminated by any regulatory or judicial authority, or the Service
Organization shall fail to perform the services contemplated by this
Agreement, such determination to be made in good faith by Seligman
Financial Services, this Agreement may be terminated with respect to such
Plan effective upon receipt of written notice thereof by the Service
Organization. This Agreement will also terminate automatically in the event
of its assignment.
<PAGE>
<PAGE>
9. All communications to Seligman Financial Services shall be sent to it at
its offices, 100 Park Avenue, New York, New York 10017.
Any notice to the Service Organization shall be duly given if mailed or
telegraphed to it at the address shown below.
10. As used in this Agreement, the terms "assignment", "interested person" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings specified in the Act and in the rules and regulations
thereunder and the term "Qualified Directors/Trustees" shall mean the
Directors/Trustees of a Fund who are not interested persons of the Fund and
have no direct or indirect financial interest in its Plan or in any
agreements related to the Plan.
11. 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, any of the parties to do anything in violation of any
applicable laws or regulations.
IN WITNESS WHEREOF, Seligman Financial Services and the Service Organization
have caused this Agreement to be executed by their duly authorized offices as of
the date first above written.
SELIGMAN FINANCIAL SERVICES, INC.
By__________________________________
Stephen J. Hodgdon, President
SERVICE ORGANIZATION
___________________________________
By__________________________________
Address_____________________________
____________________________________
1/95
<PAGE>
<PAGE>
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT
EXHIBIT A
The payment schedule for Service Organizations is set forth immediately below:
<TABLE>
<CAPTION>
Average Daily Fees as a Percentage
Net Assets of Each Fund's/Series'
Attributable to Net Assets Attributable
Fund Name Service Organizations to Service Organizations*
Class A Shares Class A Shares/ Class D
Class B Shares+ Shares**
<S> <C> <C> <C>
Seligman Capital Fund, Inc. $100,000 or more .25% 1.00%
Seligman Cash Management Fund, Inc: $100,000 or more -0-/.25% 1.00%
Seligman Common Stock Fund, Inc. $100,000 or more .25% 1.00%
Seligman Communications and Information Fund, Inc. $100,000 or more .25% 1.00%
Seligman Frontier Fund, Inc. $100,000 or more .25% 1.00%
Seligman Growth Fund, Inc. $100,000 or more .25% 1.00%
Seligman Henderson Global Fund Series, Inc:
Seligman Henderson Emerging Markets Growth Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Smaller Companies Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Growth Opportunities Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Technology Fund $100,000 or more .25% 1.00%
Seligman Henderson International Fund $100,000 or more .25% 1.00%
Seligman High Income Fund Series:
U.S. Government Securities Portfolio $100,000 or more .25% 1.00%
High-Yield Bond Portfolio $100,000 or more .25% 1.00%
Seligman Income Fund, Inc. $100,000 or more .25% 1.00%
Seligman New Jersey Tax-Exempt Fund, Inc. $100,000 or more .25% 1.00%
Seligman Pennsylvania Tax-Exempt Fund Series $100,000 or more .25% 1.00%
Seligman Tax-Exempt Fund Series, Inc:
National Series $100,000 or more .10% 1.00%
Colorado Series $100,000 or more .10% 1.00%
Georgia Series $100,000 or more .10% 1.00%
Louisiana Series $100,000 or more .10% 1.00%
Maryland Series $100,000 or more .10% 1.00%
Massachusetts Series $100,000 or more .10% 1.00%
Michigan Series $100,000 or more .10% 1.00%
Minnesota Series $100,000 or more .10% 1.00%
Missouri Series $100,000 or more .10% 1.00%
New York Series $100,000 or more .10% 1.00%
Ohio Series $100,000 or more .10% 1.00%
Oregon Series $100,000 or more .10% 1.00%
South Carolina Series $100,000 or more .10% 1.00%
Seligman Tax-Exempt Series Trust:
California Tax-Exempt Quality Series $100,000 or more .10% 1.00%
California Tax-Exempt High-Yield Series $100,000 or more .10% 1.00%
Florida Tax-Exempt Series $100,000 or more .25% 1.00%
North Carolina Tax-Exempt Series $100,000 or more .25% 1.00%
</TABLE>
March 21, 1996
* Included in each of the percentages above is the service fee (as defined in
the National Association of Securities Dealers, Inc. Rules of Fair
Practice) with respect to each class of shares referred to in paragraph 1
of this Agreement. Except as provided in Footnote ** below, Seligman
Financial Services shall pay the fees provided for above to the Service
Organization quarterly.
** At or promptly after the time of sale of any Class D Shares, a Service
Organization shall be paid 1.00% of the net asset value of the Class D
Shares sold by it. The difference between .75% and the amount paid is
comprised of the service fee referred to in paragraph 1 of this Agreement
for services to be provided to Class D shareholders over the course of the
one year period immediately following the sale.
+ Class B Shares are not available for the U.S. Government Securities
Portfolio of Seligman High Income Fund Series, Selligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series or any
Series of Seligman Tax-Exempt Fund Series, Inc. or Seligman Tax-Exempt
Series Trust.
<PAGE>
<PAGE>
SELIGMAN GROUP OF MUTUAL FUNDS
Plan for Multiple Classes of Shares (three classes)
THIS PLAN, as it may be amended from time to time, sets forth the
separate arrangement and expense allocation of each class of shares (a "Class")
of each registered open-end management investment company, or series thereof, in
the Seligman Group of Mutual Funds that offers multiple classes of shares (each,
a "Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. General
A. Any Fund may issue more than one Class of voting stock, provided that
each Class:
i. Shall have a different arrangement for shareholder services or
the distribution of securities or both, and shall pay all of the
expenses of that arrangement;
ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount by that Class, or if the Class
receives services of a different kind or to a different degree
than other Classes of the same Fund ("Class Level Expenses");
iii. May pay a different advisory fee to the extent that any
difference in amount paid is the result of the application of the
same performance fee provisions in the advisory contract of the
Fund to the different investment performance of each Class;
iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;
1
<PAGE>
<PAGE>
v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the
interests of any other Class; and
vi. Shall have in all other respects the same rights and obligations
as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph B., no
types or categories of expenses shall be designated Class Level
Expenses.
ii. The Directors recognize that certain expenses arising in certain
sorts of unusual situations are properly attributable solely to
one Class and therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for example: (i) the
costs of preparing a proxy statement for, and holding, a special
meeting of shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting of Directors
to consider such a matter; (iii) the costs of preparing a special
report relating exclusively to shareholders of one Class; and
(iv) the costs of litigation affecting one Class exclusively. J.
& W. Seligman & Co. Incorporated (the "Manager") shall be
responsible for identifying expenses that are potential Special
Expenses.
iii. Subject to clause iv. below, any Special Expense identified by
the Manager shall be treated as a Class Level Expense.
iv. Any Special Expense identified by the Manager that is material to
the Class in respect of which it is incurred shall be submitted
by the Manager to the Directors of the relevant Fund on a case by
case basis with a recommendation by the Manager as to whether it
should be treated as a Class Level Expense. If approved by the
Directors, such Special Expense shall be treated as a Class Level
Expense of the affected class.
C. i. Realized and unrealized capital gains and losses of a Fund
shall be allocated to each class of that Fund on the basis of the
aggregate net asset value of all outstanding shares ("Record
Shares") of the Class in relation to the aggregate net asset
value of Record Shares of the Fund.
2
<PAGE>
<PAGE>
ii. Income and expenses of a Fund not charged directly to a
particular Class shall be allocated to each Class of that Fund on
the following basis:
a. For periodic dividend funds, on the basis of the aggregate
net asset value of Record Shares of each Class in relation
to the aggregate net asset value of Record Shares of the
Fund.
b. For daily dividend funds, on the basis of the aggregate net
asset value of Settled Shares of each Class in relation to
the aggregate net asset value of Settled Shares of the Fund.
"Settled Shares" means Record Shares minus the number of
shares of that Class or Fund that have been issued but for
which payment has not cleared and plus the number of shares
of that Class or Fund which have been redeemed but for which
payment has not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsi- bilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of its
several Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The
Manager and Seligman Financial Services, Inc. (the "Distributor") will
be responsible for reporting any potential or existing conflicts to
the Directors. If a conflict arises, the Manager and the Distributor
will be responsible at their own expense for remedying such conflict
by appropriate steps up to and including separating the classes in
conflict by establishing a new registered management company to
operate one of the classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the Act
(the "Rule 12b-1 Plan") provides that the Directors will receive
quarterly and annual statements complying with paragraph (b)(3)(ii) of
Rule 12b-1, as it may be amended from time to time. To the extent that
the Rule 12b-1 Plan in respect of a specific Class is a reimbursement
plan, then only distribution expenditures properly attributable to the
sale of shares of that Class will be used in the statements to support
the Rule 12b-1 fee charged to shareholders of such Class. In such
cases expenditures not related to the sale of a specific Class will
not be presented to the Directors to support Rule 12b-1 fees charged
to shareholders of such Class. The statements, including the
allocations upon which they are based, will be subject to the review
of the Disinterested Directors.
3
<PAGE>
<PAGE>
F. Dividends paid by a Fund with respect to each Class, to the extent any
dividends are paid, will be calculated in the same manner, at the same
time and on the same day and will be in the same amount, except that
fee payments made under the Rule 12b-1 Plan relating to the Classes
will be borne exclusively by each Class and except that any Class
Level Expenses shall be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of any
irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Fund and is classified as a Class
Level Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing such
allocation, are hereby instructed to report thereon to the Audit
Committee of the relevant Fund and to the Manager. The Manager will be
responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.
2. Specific Arrangements for Each Class
The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class B shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus relating to each Fund, as the same may
from time to time be amended or supplemented (for each Fund, the "Relevant
Prospectus"), provided that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) Class A Shares
i. Class A shares are subject to an initial sales load which varies with
the size of the purchase, to a maximum of 4.75% of the public offering
price. Reduced sales loads shall apply in certain circumstances. Class
A shares of Seligman Cash Management Fund, Inc. shall not be subject
to an initial sales load.
4
<PAGE>
<PAGE>
ii. Class A shares shall be subject to a Rule 12b-1 service fee of up to
0.25% of average daily net assets.
iii. Special Expenses attributable to the Class A shares, except those
determined by the Directors not to be Class Level Expenses of the
Class A shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A shares. No other
expenses shall be treated as Class Level Expenses of the Class A
shares.
iv. The Class A shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
(b) Class B Shares
i. Class B shares are sold without an initial sales load but are subject
to a contingent deferred sales load ("CDSL") in certain cases. The
CDSL in respect of any Class B share, if applicable, will be in the
following amount (as a percentage of the current net asset value or
the original purchase price, whichever is less) if the redemption
occurs within the indicated number of years of issuance of such share:
<TABLE>
<CAPTION>
Years since issuance CDSL
<S> <C>
less than one 5%
one but less than two 4%
two but less than four 3%
four but less than five 2%
five but less than six 1%
six or more 0%
</TABLE>
ii. Class B shares shall be subject to a Rule 12b-1 fee of up to 1.00% of
average daily net assets, consisting of an asset-based distribution
fee of up to 0.75% and a service fee of up to 0.25%.
iii. Each Class B share shall automatically convert to a Class A share on
the last day of the month which precedes the eighth anniversary of its
date of issue occurs.
iv. Special Expenses attributable to the Class B shares, except those
determined by the Directors not to be Class Level Expenses of the
Class B shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class B shares. No other
expenses shall be treated as Class Level Expenses of the Class B
shares.
5
<PAGE>
<PAGE>
v. The Class B shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
(c) Class D Shares
i. Class D shares are sold without an initial sales load but are
subject to a CDSL of 1% of the lesser of the current net asset
value or the original purchase price in certain cases if the
shares are redeemed within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee of up to
1.00% of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class D shares, except those
determined by the Directors not to be Class Level Expenses of the
Class D shares in accordance with paragraph 1.B.iv., shall be
Class Level Expenses and attributed solely to the Class D shares.
No other expenses shall be treated as Class Level Expenses of the
Class D shares.
iv. The Class D shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant
Prospectus.
6
<PAGE>
<PAGE>
Schedule I
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman High-Yield Bond Fund
7
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 370944
<INVESTMENTS-AT-VALUE> 398304
<RECEIVABLES> 5515
<ASSETS-OTHER> 3123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 406942
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1934
<TOTAL-LIABILITIES> 1934
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 375505
<SHARES-COMMON-STOCK> 21753<F1>
<SHARES-COMMON-PRIOR> 21944<F1>
<ACCUMULATED-NII-CURRENT> 132
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3012
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27359
<NET-ASSETS> 318307<F1>
<DIVIDEND-INCOME> 5215<F1>
<INTEREST-INCOME> 14272<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3056)<F1>
<NET-INVESTMENT-INCOME> 16431<F1>
<REALIZED-GAINS-CURRENT> 10305
<APPREC-INCREASE-CURRENT> 40073
<NET-CHANGE-FROM-OPS> 70372
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16608)<F1>
<DISTRIBUTIONS-OF-GAINS> (5855)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4666<F1>
<NUMBER-OF-SHARES-REDEEMED> (5967)<F1>
<SHARES-REINVESTED> 1110<F1>
<NET-CHANGE-IN-ASSETS> 50706
<ACCUMULATED-NII-PRIOR> 254
<ACCUMULATED-GAINS-PRIOR> 108
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1464<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3056<F1>
<AVERAGE-NET-ASSETS> 305163<F1>
<PER-SHARE-NAV-BEGIN> 13.05<F1>
<PER-SHARE-NII> .76<F1>
<PER-SHARE-GAIN-APPREC> 1.88<F1>
<PER-SHARE-DIVIDEND> (.78)<F1>
<PER-SHARE-DISTRIBUTIONS> (.28)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 14.63<F1>
<EXPENSE-RATIO> 1.00<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN INCOME FUND - CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 370944
<INVESTMENTS-AT-VALUE> 398304
<RECEIVABLES> 5515
<ASSETS-OTHER> 3123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 406942
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1934
<TOTAL-LIABILITIES> 1934
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 375505
<SHARES-COMMON-STOCK> 5338<F1>
<SHARES-COMMON-PRIOR> 5223<F1>
<ACCUMULATED-NII-CURRENT> 132
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3012
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27359
<NET-ASSETS> 86701<F1>
<DIVIDEND-INCOME> 1322<F1>
<INTEREST-INCOME> 3627<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (1386)<F1>
<NET-INVESTMENT-INCOME> 3563<F1>
<REALIZED-GAINS-CURRENT> 10305
<APPREC-INCREASE-CURRENT> 40073
<NET-CHANGE-FROM-OPS> 70372
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3554)<F1>
<DISTRIBUTIONS-OF-GAINS> (1590)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2106<F1>
<NUMBER-OF-SHARES-REDEEMED> (1687)<F1>
<SHARES-REINVESTED> 298<F1>
<NET-CHANGE-IN-ASSETS> 50706
<ACCUMULATED-NII-PRIOR> 254
<ACCUMULATED-GAINS-PRIOR> 108
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 372<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1386<F1>
<AVERAGE-NET-ASSETS> 77488<F1>
<PER-SHARE-NAV-BEGIN> 13.01<F1>
<PER-SHARE-NII> .65<F1>
<PER-SHARE-GAIN-APPREC> 1.87<F1>
<PER-SHARE-DIVIDEND> (.65)<F1>
<PER-SHARE-DISTRIBUTIONS> (.28)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 14.60<F1>
<EXPENSE-RATIO> 1.79<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
<PAGE>
