File No. 2-10837
811-525
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 75 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [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):
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on March 27,
1998.
<PAGE>
File No. 2-10837
811-525
SELIGMAN INCOME FUND, INC.
FORM N-1A CROSS REFERENCE SHEET
Post-Effective Amendment No. 75
Pursuant to Rule 481 (a)
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
- --------------------------- ----------------------
<S> <C> <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
</TABLE>
SELIGMAN
-------------
Income
Fund, Inc.
PROSPECTUS
MAY 1, 1998
-----
An
Income Fund
In Its
52nd Year
[logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
Summary of Fund Expenses 2
Financial Highlights 3
Alternative Distribution System 5
Investment Objectives, Policies and Risks 7
Management Services 10
Purchase of Shares 12
Telephone Transactions 18
Redemption of Shares 19
Administration, Shareholder Services
and Distribution Plan 22
Exchange Privilege 23
Further Information about
Transactions in the Fund 25
Dividends and Capital Gain Distributions 25
Federal Income Taxes 26
Shareholder Information 28
Advertising the Fund's Performance 30
Organization and Capitalization 30
TIMES CHANGE ... VALUES ENDURE
<PAGE>
SELIGMAN INCOME FUND, INC.
100 Park Avenue o New York, NY 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450
For Retirement Plan Information--Toll-Free Telephone: (800) 445-1777
May 1, 1998
Seligman Income Fund, Inc. (the "Fund") is a mutual fund which invests to
produce high current income consistent with what is believed to be prudent risk
of capital and the possibility of improvement of income and capital value over
the longer term. Investment advisory and management services are provided to the
Fund by J. & W. Seligman & Co. Incorporated (the "Manager"). The Fund's
distributor is Seligman Financial Services, Inc., an affiliate of the Manager.
For a description of the Fund's investment objectives and policies, including
the risk factors associated with an investment in the Fund, see "Investment
Objectives, Policies and Risks." There can be no assurance that the Fund's
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 A shares purchased in an amount of $1,000,000 or more are sold
without an initial sales load but are subject to a contingent deferred sales
load ("CDSL") of 1% on redemptions within eighteen months of purchase. Class B
shares are sold without an initial sales load but are subject to a CDSL 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 .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 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.
No CDSL will be imposed on shares acquired through the reinvestment of dividends
or gain distributions received from any class of shares. See "Alternative
Distribution System." Shares of the Fund may be purchased through any authorized
investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund before investing. Please read it carefully before you
invest and keep it for future reference. Additional information about the Fund,
including a Statement of Additional information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request and without charge by calling or writing the Fund at the
telephone numbers or the address set forth above. The Statement of 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.
---------------
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
---------- ---------- ----------
(Initial Sales (Deferred Sales (Deferred Sales
Load Alternative) Load Alternative) Load Alternative)
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
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
except 1% in 4% in 2nd year None thereafter
first 18 months 3% in 3rd and
if initial sales 4th years
load was waived 2% in 5th year
in full due to size 1% in 6th year
of purchase None thereafter
Redemption Fees................................................... None None None
Exchange Fees..................................................... None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES FOR 1997 CLASS A CLASS B CLASS D
(as a percentage of average net assets) ---------- ---------- ----------
<S> <C> <C> <C>
Management Fees................................................... .60% .60% .60%
12b-1 Fees........................................................ .24% 1.00%* 1.00%*
Other Expenses.................................................... .30% .30% .30%
----- ----- -----
Total Fund Operating Expenses..................................... 1.14% 1.90% 1.90%
===== ===== =====
</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 initial sales loads are available in
certain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however, such shares are subject to a CDSL,
a one-time charge, only if the shares are redeemed within eighteen months of
purchase. The CDSLs 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.
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.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------ ------- --------
<S> <C> <C> <C> <C>
An investor 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 $59 $82 $107 $180
Class B+ 69 90 123 202
Class D 29 60 103 222
An investor would pay the following expenses on the same
investment, assuming no redemption............................ Class A $59 $82 $107 $180
Class B+ 19 60 103 202
Class D 19 60 103 222
</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.
- ----------
*Includes an annual distribution fee of .75% and an annual service fee of
.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.
+The expenses shown for the ten-year period reflect the conversion of Class B
shares to Class A shares after 8 years.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights for the Fund's Class A, Class B 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 1997
financial statements and notes contained in the Fund's 1997 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.
"Per share operating performance" data is designed to allow investors to
trace the operating performance, on a per share basis, from the beginning net
asset value to the ending net asset value so that they can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by
converting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amount.
"Total return based on net asset value" measures a Class'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.
"Average commission rate paid" represents the average commissions paid by
the Fund to purchase or sell securities. It is determined by dividing the total
commission dollars paid by the number of shares purchased and sold during the
period for which commissions were paid.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1997o 1996o 1995o 1994o 1993 1992 1991 1990 1989 1988
--------- ------- ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of year ...................... $ 14.97 $ 14.63 $ 13.05 $ 14.58 $ 13.69 $ 12.45 $ 10.38 $ 12.44 $ 12.04 $ 11.80
--------- ------- ------- ------- ------- ------- ------- ------- ------- --------
Net investment income ........ .71 .74 .76 .76 .75 .92 .96 1.2 1.06 1.00
Net realized and unrealized
investment gain (loss) ..... 1.41 .38 1.89 (1.57) 1.40 1.21 2.08 (2.02) .71 .23
Net realized and unrealized
gain (loss) from foreign
currency transactions ....... (.10) .04 (.01) .03 -- -- -- -- -- --
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Increase (decrease) from
investment operations ....... 2.02 1.16 2.64 (.78) 2.15 2.13 3.04 (1.00) 1.77 1.23
Dividends paid ............... (.74) (.73) (.78) (.75) (.75) (.89) (.97) (1.06) (1.03) (.99)
Distributions from net gain
realized .................... (1.44) (.09) (.28) -- (.51) -- -- -- (.34) --
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in net
asset value ................. (.16) .34 1.58 (1.53) .89 1.24 2.07 (2.06) .40 .24
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year . $ 14.81 $ 14.97 $ 14.63 $ 13.05 $ 14.58 $ 13.69 $ 12.45 $ 10.38 $ 12.44 $ 12.04
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN BASED ON
NET ASSET VALUE: ............ 14.06% 8.22% 20.60% (5.43)% 15.98% 17.54% 30.12% (8.30)% 15.11% 10.53%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net
assets ...................... 1.14% 1.14% 1.00% 1.02% 1.03% .84% .85% .76% .75% .80%
Net investment income to
average net assets ........... 4.66% 5.11% 5.38% 5.51% 5.29% 6.88% 8.24% 8.79% 8.35% 7.99%
Portfolio turnover ........... 138.90% 125.92% 111.78% 66.62% 60.62% 70.43% 66.77% 53.27% 83.33% 74.23%
Average commission rate paid . $.0170 $.0361
Net assets, end of year
(000s omitted) ............... $270,688 $296,291 $318,307 $286,355 $321,040 $213,007 $153,511 $127,825 $159,155 $160,403
</TABLE>
- --------
oPer share amounts for the years ended December 31, 1997, 1996, 1995 and
1994, are calculated based on average shares outstanding.
The data provided above reflects historical information and therefore has
not been adjusted to reflect (i) through April 10, 1991, the effect of the
increased management fee which was approved by shareholders on April 10, 1991;
(ii) through December 31, 1992, the effect of the Administration, Shareholder
Services and Distribution Plan which was approved by shareholders on November
23, 1992 and became effective January 1, 1993; and (iii) through December 31,
1995, 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
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS D
----------------- --------------------------------------------------
YEAR 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO --------------------------------------- TO
12/31/97o 12/31/96o 1997o 1996o 1995o 1994o 12/31/93
-------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $ 14.95 $ 14.43 $ 14.95 $ 14.60 $ 13.01 $ 14.55 $ 14.42
------- ------- ------- ------- ------- ------- -------
Net investment income ............................. .59 .43 .59 .63 .65 .65 .45
Net realized and unrealized
investment gain (loss) .......................... 1.41 .59 1.40 .38 1.88 (1.57) .69
Net realized and unrealized gain (loss)
from foreign currency transactions .............. (.10) .05 (.10) .04 (.01) .03 --
------- ------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations .... 1.90 1.07 1.89 1.05 2.52 (.89) 1.14
Dividends paid .................................... (.62) (.46) (.62) (.61) (.65) (.65) (.50)
Distributions from net gain realized .............. (1.44) (.09) (1.44) (.09) (.28) -- (.51)
------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value ........ (.16) .52 (.17) .35 1.59 (1.54) .13
------- ------- ------- ------- ------- --------- -------
Net asset value, end of period .................... $ 14.79 $ 14.95 $ 14.78 $ 14.95 $ 14.60 $ 13.01 $ 14.55
======= ======= ======= ======= ======= ======= ========
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 13.24% 7.58% 13.17% 7.43% 19.66% (6.20)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.90% 1.89%+ 1.90% 1.90% 1.79% 1.82% 1.84%+
Net investment income to average net assets ....... 3.90% 4.36%+ 3.90% 4.37% 4.58% 4.74% 4.42%+
Portfolio turnover ................................ 138.90% 125.92%++ 138.90% 125.92% 111.78% 66.62% 60.62%+++
Average commisson rate paid ....................... $.0170 $.0361++ $.0170 $.0361
Net assets, end of period (000s omitted) .......... $8,607 $2,961 $76,194 $81,957 $86,701 $67,946 $49,941
</TABLE>
- -------
* Commencement of offering of shares.
o Per share amounts for the periods ended December 31, 1997, 1996, 1995, and
1994, are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
The data provided above reflects historical information and therefore
through December 31, 1995, has not been adjusted to reflect the effect of the
increase in the management fee rate rate payable by the Fund, which was approved
by shareholders on December 12, 1995 and became effective on January 1, 1996.
4
<PAGE>
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 expect to maintain their investment for an extended period of
time might 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.
Investors who qualify for reduced initial sales loads, as described under
"Purchase of Shares" below, might also choose to purchase Class A shares because
the sales load deducted at the time of purchase would be less or waived in full.
However, investors should consider the effect of the 1% CDSL imposed on shares
on which the initial sales load was waived in full because the amount of Class A
shares purchased was $1,000,000 or more. 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
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.
5
<PAGE>
Investors should understand that the purpose and function of the initial
sales loads (and deferred sales load, when applicable) with respect to Class A
shares is the same as those of the deferred 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 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 and a lower CDSL rate 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.
6
<PAGE>
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
---------- ------------------- -----------------
CLASS A Maximum initial Service fee of .25% Initial sales load
sales load waived or reduced
of 4.75% of the for certain purchases.
public offering CDSL of 1% on
price. redemptions within
18 months of purchase
on shares on which
sales load was waived
in full due to the
size of the purchase.
CLASS B None Service fee of .25%; CDSL of:
Distribution fee of 5% in 1st year
.75% until conversion 4% in 2nd year
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
fee of up to .75%. within one year of
purchase.
* 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.
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
7
<PAGE>
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 Rating Service ("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 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, 1997. When
securities receive different ratings from S&P and Moody's, the table reflects
the higher rating.
AAA/Aaa........................................... 17.4%
AA/Aa............................................. 1.1%
A/A............................................... 3.1%
BBB/Baa........................................... 23.3%
BB/Ba............................................. 7.5%
B/B............................................... 2.5%
CCC/Caa........................................... --
CC/Ca............................................. --
Non-rated......................................... 1.9%
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 OF 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. 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
8
<PAGE>
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 Rule 144A securities will
further evolve. 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. 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 are typically traded in Europe. GDRs are typically
traded in both Europe and the United States. 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
9
<PAGE>
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
YEAR 2000 RISKS. The Fund is dependent upon service providers and their
computer systems for its day-to-day operations, and many of the Fund's service
providers in turn depend upon computer systems of other persons. Many computer
systems currently cannot properly recognize or process date sensitive
information relating to the year 2000 and beyond. The Manager, Seligman
Financial Services, Inc., and the Fund's custodian have been evaluating the
impact the year 2000 issue may have on their computer systems. They expect that
any modifications to their computer systems necessary to address the year 2000
issue will be made and tested in a timely manner. They are also working with
vendors and other persons whose systems are linked to theirs to obtain
satisfactory assurances regarding the year 2000 issue. Seligman Data Corp.,
which provides certain corporate and shareholder account services to the Fund at
cost, has informed the Fund that it does not expect that the cost to the Fund of
its services will increase materially as a result of the modifications to its
computer systems necessary to prepare for the year 2000. The costs of systems
remediation by persons other than Seligman Data Corp. will not be borne directly
by the Fund. There can be no assurance that the remedial actions taken by the
Fund's service providers will be sufficient or timely. Inadequate remediation
could have an adverse effect on the Fund's operations, including pricing and
securities trading and settlement, and the provision of shareholder services.
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 seventeen 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
Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New
Jersey Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series,
Seligman Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman
Select Municipal Fund, Inc., Seligman Value Fund Series, Inc. and
Tri-Continental Corporation. The aggregate assets of the Seligman Group were
approximately $20.2 billion at March 31, 1998. The Manager also provides
investment management or advice to institutional accounts having an aggregate
value at March 31, 1998 of approximately $7.4 billion.
Mr. William C. Morris is Chairman 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 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 1997,
the management fee paid by the Fund
10
<PAGE>
was equal to an annual rate of .60% 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, Class B and Class D shares, for the year
ended December 31, 1997 amounted to 1.14%, 1.90% and 1.90%, respectively, of the
average daily net assets of such class.
Prior to March 30, 1998, the Manager was party to a Subadvisory Agreement
with Seligman Henderson Co. pursuant to which Seligman Henderson Co. agreed to
provide investment advisory services to the Fund in respect of foreign assets to
the extent requested by the Manager. On March 30, 1998, the Subadvisory
Agreement terminated in accordance with its terms. The Manager has no present
plans to enter into similar subadvisory arrangements in respect of the Fund.
PORTFOLIO MANAGEMENT. 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.
Rodney Collins, Vice President, Investment Officer of the Manager, has
served as Co-Portfolio Manager of the Fund since October 1996. Mr. Collins also
serves as Co-Portfolio Manager of Seligman Income Portfolio of Seligman
Portfolios, Inc. Mr. Collins joined the Manager in 1992 as an investment
associate.
The Managers' 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 1997 Annual
Report to Shareholders. Copies of the 1997 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 recognizes that in the
purchase and sale of portfolio securities, the Manager 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. 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 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
may consider sales of shares of the Fund and, if permitted by applicable laws,
may consider sales of shares of the other Seligman Mutual Funds 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.
High portfolio turnover involves correspondingly greater transactions costs and
a possible increase in short-term capital gains and losses. Although it is the
policy of the Fund to hold securities for investment, changes will be made from
time to time when the Manager believes such changes
11
<PAGE>
in the securities held by the Fund will strengthen the Fund's portfolio. The
portfolio turnover of the Fund may 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
determined 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 FUND ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE
INVEST-A-CHECK(R) SERVICE. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE
SELIGMAN TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR
INFORMATION ABOUT THIS PROGRAM, CONTACT YOUR FINANCIAL ADVISOR.
The minimum amount for initial investment in the Fund is $500 for investors
who purchase shares of the Fund through Merrill Lynch's MFA or MFA Select
Programs. There is no minimum investment required for investors who purchase
shares of the Fund through wrap fee programs.
Purchase orders placed for Class B shares must be for an amount LESS THAN
$250,000.
Orders received by an authorized dealer by the close of regular trading 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 regular trading on the NYSE on that day plus, in the case of Class A
shares, any 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, any 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 of a Fund at any time
through any authorized dealer or by sending a check, payable to the "Seligman
Group of Funds," in a postage-paid return envelope or
12
<PAGE>
directly to P.O. BOX 9766, PROVIDENCE, RI 02940-9766. 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 number, name of Fund and
class of shares (A, B or D). Checks sent directly to Seligman Data Corp. and
received in good order will be invested at the Fund's net asset value determined
as of the close of regular trading on the NYSE on that day plus, in the case of
Class A shares, any applicable sales load.
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. IF ONLY THE CLASS DESIGNATION IS MISSING, THE INVESTMENT WILL
AUTOMATICALLY BE MADE IN CLASS A SHARES FOR NEW ACCOUNTS OR IN THE SHAREHOLDER'S
EXISTING CLASS FOR ADDITIONAL PURCHASES. Credit card convenience checks and
third party checks (i.e., checks made payable to someone other than the
"Seligman Group of Funds") may not be used to open a new fund account or
purchase additional shares of the Fund.
Seligman Data Corp. may 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.
Current shareholders may also purchase additional shares by having funds
electronically transferred directly from an employer, the Internal Revenue
Service or other government agency, or any institution capable of transmitting
payments through the Automated Clearing House ("ACH") network. Purchases may be
one-time transactions, or, for those institutions that offer direct deposit
programs, may be made on a systematic basis. To utilize this service, the
following bank information must be provided to the paying institution:
Mellon Bank, N.A.
ABA #043000261
A/C No. 600FFFNNNNNNNNNN
"600" IDENTIFIES THE SELIGMAN GROUP OF FUNDS, "FFF" IS THE FUND CODE
REPRESENTING THE FUND AND CLASS OF SHARES IN WHICH THE PURCHASE SHOULD BE MADE
(this code is available on the back of all shareholder account statements), AND
"NNNNNNNNNN" INDICATES THE SHAREHOLDER'S TEN-DIGIT ACCOUNT NUMBER. In addition,
the shareholder must indicate that this is a checking account at Mellon Bank.
For IRA and group retirement accounts, all electronic purchases will be
designated as current year contributions. For more information about this
service, please contact Seligman Data Corp.
VALUATION. The net asset value of the Fund's shares is determined each day,
Monday through Friday, as of the close of regular 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.
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. 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.
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<PAGE>
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.
- --------------------------------------------------------------------------------
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
---------- ------- ---------- -------
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- or more* 0 0 0
- --------
*Shares acquired at net asset value pursuant to the above schedule will be
subject to a CDSL of 1% if redeemed within 18 months of purchase. See
"Purchase of Shares--Contingent Deferred Sales Load."
- --------------------------------------------------------------------------------
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if
redeemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows: 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "Single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a fee on assets
of certain investments in Class A shares of the Seligman Mutual Funds
participating in an "eligible employee benefit plan" (as defined below under
"Special Programs") that are attributable to the particular broker/dealer. The
shares eligible for the fee are those on which an initial sales load was not
paid because either the participating eligible employee benefit plan has at
least (i) $500,000 invested in the Seligman Mutual Funds or (ii) 50 eligible
employees to whom such plan is made available. Class A shares representing only
an initial purchase of Seligman Cash Management Fund are not eligible for the
fee. Such shares will become eligible for the fee once they are exchanged for
shares of another Seligman Mutual Fund. The payment is based on cumulative sales
for each Plan during a single calendar year or portion thereof. The payment
schedule, for each calendar year, is as follows: 1.00% of sales up to but not
including $2 million; .80% of sales from $2 million up to but not including $3
million; .50% of sales from $3 million up to but not including $5 million; and
.25% of sales from $5 million and above.
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.
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant to a Volume Discount, Right of Accumulation or Letter
of Intent are subject to a CDSL of 1% on redemptions within eighteen months of
purchase.
14
<PAGE>
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the Seligman Mutual
Funds that are sold with an initial 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 any Seligman Mutual Fund sold with an initial sales load
with the total net asset value of shares already owned that were sold with an
initial sales load, including 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 an initial 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 initial 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 an initial 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 an initial 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."
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 an initial sales load in
connection with the acquisition of cash and securities owned by other investment
companies; to any registered unit investment trust which is the issuer of
periodic payment plan certificates, the net proceeds of which are invested in
Fund shares, to separate accounts established and maintained by an insurance
company which are exempt from registration under Section 3(c)(11) of the 1940
Act; to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with SFSI; to 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; to other investment companies in the Seligman Group in
connection with a deferred fee arrangement for outside directors; and to
"eligible employee benefit plans" which have at least (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. "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
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<PAGE>
by the plan or number of eligible employees. Employee benefit plans eligible for
net asset value sales, as described above, will be subject to a CDSL of 1% for
terminations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination. Sales pursuant to a 401(k) or other
retirement alliance program the sponsor of which has an agreement with SFSI
pursuant to which shares are made available at net asset value are not subject
to a CDSL.
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.
YEARS SINCE PURCHASE CDSL
- -------------------- ----
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%
Class B shares are also subject to an annual distribution fee of .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, 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 1% CDSL if the shares are redeemed within one year, 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. 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 redemptions 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). 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. Pursuant to an agreement with FEP
Capital, L.P. ("FEP") to fund payments in respect of Class B shares, SFSI has
agreed to assign any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on redemptions of Class A shares
purchased during the preceding eighteen months if such shares were acquired at
net asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee benefit plans eligible for net asset sales
as described
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above under "Special Programs" may be subject to a CDSL of 1% for terminations
at the plan level only, on redemptions of shares purchased within eighteen
months prior to plan termination.
The 1% CDSL normally imposed on redemptions of certain Class A shares
(i.e., those purchased during the preceding eighteen months at net asset value
pursuant to the sales load schedule provided under "Class A Shares--Initial
Sales Load") will be waived on shares that were purchased through Morgan Stanley
Dean Witter & Co. ("Morgan Stanley") by certain Chilean institutional investors
(i.e., pension plans, insurance companies and mutual funds). Upon redemption of
such shares within an eighteen month period, Morgan Stanley will reimburse SFSI
a pro rata portion of the fee it received from SFSI at the time of sale of such
shares.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and capital gain distributions (which
are not subject to a CDSL) will be redeemed first; followed by shares held for a
period of time longer than the applicable CDSL period. Shares held for the
longest period of time within the applicable CDSL 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. No CDSL will be imposed on shares acquired
through the investment of dividends or capital gain distributions from any Class
A, Class B or Class D shares of Seligman Mutual Funds.
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:
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
=========
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 (as defined in section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code")) of a
shareholder or beneficial owner; (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 (an "IRA") due
to death, disability, minimum distribution requirements after attainment of age
701/2, or, for accounts established prior to January 1, 1998, attainment of age
591/2, 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
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<PAGE>
connection with the purchase of shares of any registered investment management
company; (e) in whole or in part, in connection with systematic withdrawals; (f)
in connection with participation in the Merrill Lynch Small Market 401(k)
Program; and (g) in connection with the redemption of shares of the Fund if the
Fund is combined with another Seligman Mutual Fund, or another similar
reorganization transaction.
If, with respect to a redemption of any Class A, 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 Seligman Mutual Funds. 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, has the ability to effect the following
transactions via telephone: (i) redemption of Fund shares with proceeds sent to
the address of record (up to $50,000 per day per fund account), (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. In addition, a shareholder who has current bank information on file
with Seligman Data Corp. may redeem shares via telephone and have the proceeds
transferred electronically from the shareholder's fund account to the
shareholder's predesignated bank account. See "Redemption of Shares." 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: 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. A
shareholder must provide bank information on the Account Application or a
supplemental election form in order to have redemptions via telephone sent to
the shareholder's bank account.
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 form available from the broker/dealer of
record.
FOR ACCOUNTS REGISTERED AS IRAS: Telephone services will include only
exchanges or address changes.
FOR 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. Group retirement plans that may allow plan
participants to place telephone exchanges directly with the Fund must first
provide a letter
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<PAGE>
of authorization signed by the plan's custodian or trustee, and provide a
telephone services election form signed by each plan participant.
All Seligman Mutual Fund accounts with the same account number (i.e.,
registered exactly the same) as an existing account, including any new 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 telephone services
election form.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or 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 may 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 the addition of telephone services to an existing account or
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 ("uncertificated") form without charge, (except a CDSL, if applicable at
any time by sending a written request to Seligman Data Corp., P.O. Box 9759,
Providence, RI 02940-9759; or if the request is being sent by overnight delivery
service to 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 without charge, except a CDSL, if
applicable, by surrendering certificates in proper form to the same address.
Certificates should be sent certified or registered mail. Return receipt is
advisable; however, this may increase mailing time. 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
19
<PAGE>
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 (i.e., requests to sell shares at a
specific price or on a future date).
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 participants in the Securities Transfer Association Medallion
Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the New York
Stock Exchange Medallion Signature Program (MSP). The Fund reserves the right to
reject a signature guarantee where it is believed that the Fund will be placed
at risk by accepting such guarantee. A signature guarantee is also necessary in
order to change the account registration. Notarization by a notary public is not
an acceptable signature guarantee. A signature guarantee is not required if
redemption proceeds are transferred electronically to the shareholder's
pre-designated bank account.
ADDITIONAL DOCUMENTATION MAY ALSO BE REQUIRED BY SELIGMAN DATA CORP. IN THE
EVENT OF A REDEMPTION BY A CORPORATION, EXECUTOR, ADMINISTRATOR, TRUSTEE,
CUSTODIAN OR RETIREMENT PLAN. 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, (except for shares purchased without an
initial sales load due to the size of the purchase), 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 A shares which were purchased
without an initial sales load because the purchase amount was $1,000,000 or more
are redeemed within eighteen months 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 A
Shares--InitiaL Sales Load" above. 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 regular
trading on the NYSE (normally, 4:00 p.m. Eastern time) 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 regular trading
on the NYSE on that day, less any applicable CDSL. Repurchase orders received
from authorized dealers after the close of regular trading on 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 regular trading on 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.
20
<PAGE>
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares
payable to the address of record may be made, once per day, in an amount of up
to $50,000 per fund account. Proceeds will be sent to the address of record. A
shareholder whose bank is a member of the ACH network and who has current bank
information on file with Seligman Data Corp. may have redemption proceeds
transferred electronically to the shareholder's predesignated bank account.
Telephone redemption requests received by Seligman Data Corp. at (800) 221-2450
by the close of regular trading on the NYSE (normally, 4:00 p.m. Eastern time)
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.
IRAs, group retirement plans, corporations and trusts for which the name of the
current trustee does not appear on the account registration 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
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."
GENERAL. With respect to shares redeemed, a check for the proceeds, less
any applicable CDSL, 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. Redemptions via telephone to the shareholder's
bank account will be transferred electronically within five business days.
Payment of redemption proceeds will be delayed on redemptions of shares
purchased by check (unless certified) until Seligman Data Corp. receives notice
that the check has
21
<PAGE>
cleared, which may be up to 15 days from the credit of the shares to the
shareholder's account. No interest is earned on the redemption proceeds during
this time. 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 an initial sales load, all or any part of the investment in
Class A shares of the Fund or any of the other Seligman Mutual Funds. If a
shareholder redeems shares and the redemption was subject to a CDSL, the
shareholder may reinstate all or any part of 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 applicable
CDSL paid. Such investment will be reinstated at the net asset value per share
established as of the close of regular trading on 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; AND THE FUND'S
MINIMUM INITIAL INVESTMENT AMOUNT MUST BE MET AT THE TIME OF REINSTATEMENT.
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 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.
22
<PAGE>
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,
1997 in respect of the Fund's Class A shares pursuant to the Plan was equal to
.24% 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 distribution fees are used to pay Service Organizations a continuing
fee of up to .25% on an annual basis of the average net asset value of Class B
shares attributable to particular Service Organizations for providing personal
service and/or the maintenance of shareholder accounts and will also be used by
SFSI to defray the expense of the payment of 4% made by it to Service
Organizations at the time of the sale of Class B shares. In that connection,
SFSI has assigned FEP its interest in the fees payable to it in respect of the
Class B shares, other than the portion payable to Service Organizations on a
continuing basis. Proceeds from 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 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 1% 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 and became effective April 22, 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 fiscal period ended December 31, 1997 by
the Fund's Class B and Class D shares pursuant to the Plan was 1% per annum of
the average daily net assets of Class B and 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
Seligman Mutual Funds. 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 Seligman Mutual Fund on the
basis of relative net asset value.
If shares that are subject to a CDSL are exchanged for shares of another
Seligman Mutual Fund, for purposes of assessing the CDSL payable upon
disposition of the exchanged shares, the applicable holding period shall be
reduced by the period for which the original shares were held.
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
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CDSL schedule relating to the Class B shares of the fund from which such shares
were exchanged.
The Seligman Mutual Funds available under the Exchange Privilege are:
O SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation.
Current income is not an objective.
O SELIGMAN CASH MANAGEMENT FUND, INC. invests in high quality money market
instruments. Shares are sold at net asset value.
O 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.
O 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.
O 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.
O SELIGMAN GROWTH FUND, INC. seeks longer-term growth in capital value and
an increase in future income.
O SELIGMAN HENDERSON GLOBAL FUND SERIES, INC. consists of the Seligman
Henderson International Fund, the Seligman Henderson Emerging Markets Growth
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.
O SELIGMAN HIGH INCOME FUND SERIES consists of the Seligman U.S. Government
Securities Series and the Seligman High-Yield Bond Series each of which seeks
high current income by investing in debt securities.
O SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series and
a National Series. The National Municipal Series seeks to provide maximum income
exempt from regular federal income taxes; individual state series, each seeking
to maximize income exempt from regular 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.)
O SELIGMAN MUNICIPAL SERIES TRUST includes the Seligman California
Municipal Quality Series, the Seligman California Municipal High-Yield Series,
the Seligman Florida Municipal Series and the Seligman North Carolina Municipal
Series, each of which invests in municipal securities of its designated state.
(Does not currently offer Class B shares.)
O SELIGMAN NEW JERSEY MUNICIPAL FUND, INC. invests in investment grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
O SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
O SELIGMAN VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund, each of which seeks long-term
capital appreciation by investing in equity securities of value companies
primarily located in the U.S.
All permitted exchanges will be based on the net asset values of the
respective funds determined at the close of regular trading on the NYSE on that
day. Telephone requests for exchanges received by the close of regular trading
on the NYSE (normally, 4:00 p.m. Eastern time) by Seligman Data Corp. at (800)
221-2450, will be processed as of the close of business on that day. Requests
received after the close of regular trading on the NYSE will be processed at the
net asset values per share calculated the following business 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
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FUND ACCOUNT, AS WILL TELEPHONE SERVICES. ACCOUNT SERVICES, SUCH AS
INVEST-A-CHECK(R) SERVICE, DIRECTED DIVIDENDS, SYSTEMATIC WITHDRAWAL PLAN 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
Seligman Mutual Funds 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 the shareholder has telephone services or 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.
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 CAPITAL GAIN 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.
Dividends and capital gain 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
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<PAGE>
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 and sent to the address of record or, if elected by a
shareholder who has current bank information on file with Seligman Data Corp.,
electronically deposited into the shareholder's predesignated bank account. Such
deposits will normally be credited to the shareholder's bank account in 3 to 4
business days after the payable date of the dividend or gain distribution.
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. For information about telephone services, see
"Telephone Transactions." These elections must be received by Seligman Data
Corp. before the record date for the dividend or gain distribution in order to
be effective for such dividend or gain distribution. For information on how to
have dividend or gain distributions electronically deposited into a
shareholder's bank account, contact Seligman Data Corp.
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
Seligman Mutual Fund 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. A transfer or exchange of all
shares (closing an account), between the record date and the payable date, will
result in the value of dividends and gain distributions being paid to the new
fund account in accordance with the option on the closed account, unless
Seligman Data Corp. is instructed otherwise.
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 shareholders, whether received
in cash or reinvested in additional shares. 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 a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate
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<PAGE>
shareholders. Shareholders receiving distributions in the form of additional
shares issued by the Fund will be treated for federal income tax purposes as
having received a distribution in an amount equal to the fair market value on
the date of distribution of the shares received. Individual shareholders will be
subject to federal income tax on distributions of net capital gains at a maximum
rate of 28% if designated as derived from the Fund's capital gains from property
held for more than one year and at a maximum rate of 20% if designated as
derived from the Fund's capital gains from property held for more than eighteen
months.
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. Individual shareholders
will be subject to federal income tax on net capital gain at a maximum rate of
28% in respect of shares held for more than one year and at a maximum rate of
20% in respect of shares held for more than eighteen months. Net capital gain of
a corporate shareholder is taxed at the same rate as ordinary income. 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 gain distributions actually received in January of the following year.
Shareholders are urged to consult their tax advisors 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 REPORTABLE 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.
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SHAREHOLDER INFORMATION
Shareholders will be sent reports semi-annually 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, or (212) 850-1864 in the New York
City area. Information about shareholder accounts may be requested by writing
Shareholder Services, Seligman Data Corp. at the same address or by calling
toll-free (800) 221-2450 from all continental United States, or (212) 682-7600
outside the 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
AND FORM 1099-DIV 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 account, if the bank that maintains the account is a member of the
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 check for at leasT $100 in
conjunction with the monthly investment option or a check for at least $250 in
conjunction with the quarterly investment option. For investments in the
Seligman Time Horizon MatrixSM Asset Allocation Program, the minimum amount is
$500 at regular monthly intervals or $1,000 at regular quarterly intervals. By
utilizing the Invest-A-Check(R) Service tO establish an account, you are
agreeing to continue the service until the Fund's minimum investment amount is
met. If you elect to cancel the Service prior to meeting the minimum, your
account may be subject to closure. (See "Terms and Conditions.")
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. For exchanges into the Seligman Time
Horizon MatrixSM Asset Allocation Program, the minimum amount is $500 at regular
monthly intervals or $1,000 at regular quarterly intervals. 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 permit a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Fund or another Seligman Mutual Fund. (Dividend checks must
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.) If the dividends are to
be invested in a new fund account, the first investment must meet the required
minimum purchase amount for such fund.
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<PAGE>
A shareholder may also direct that dividends payable on shares of other
companies be transferred electronically to purchase shares of any Seligman
Mutual Fund, if the other company provides this service. See "Purchase of
Shares" or contact Seligman Data Corp. for more information.
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.
SYSTEMATIC WITHDRAWAL PLAN permits payments in fixed amounts of $50 or more
at regular intervals to be made to a shareholder who owns or purchases shares
worth $5,000 or more held as book credits. Payments will be sent by check to the
address designated by the shareholder or, if elected by a shareholder who has
current bank information on file with Seligman Data Corp., electronically
deposited into the shareholder's predesignated bank account. Such deposits will
normally be credited to the shareholder's bank account in 2 to 3 business days
after the shares are redeemed from the shareholder's fund account. Holders of
Class A shares purchased at net asset value because the purchase amount was
$1,000,000 or more should bear in mind that withdrawals will be subject to a 1%
CDSL if made within eighteen months of purchase of such shares. Holders of Class
B and Class D shares may elect to use this plan immediately, although certain
withdrawals may be subject to a CDSL. (See "Terms and Conditions.")
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 will 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 PLANS. Shares of the Fund may be purchased for:
-- Individual Retirement Accounts (IRAs), including Traditional IRAs, Roth
IRAs and Education IRAs;
-- Savings Incentive Match Plans for Employees (SIMPLE 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
-- Money Purchase 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. The Fund may register an IRA investment for which an account
application has not been received as an ordinary taxable account.
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.
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<PAGE>
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 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 Services, 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 RATING SERVICE ("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.
31
<PAGE>
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.
32
<PAGE>
TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the
third decimal place, as can be purchased at the net asset value plus a sales
load, if applicable, at the close of business on the day payment is received. If
a check in payment of a purchase of shares is dishonored for any reason,
Seligman Data Corp. will cancel the purchase and may redeem additional shares,
if any, held in the 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 such
dividend or distribution. Stock certificates will not be issued unless
requested. Replacement stock certificates and certain waiver of probate
procedures 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 close of business on the same date.
By utilizing the Invest-A-Check(R) Service tO establish an account, you are
agreeing to continue the service until the Fund's minimum investment amount is
met. If you elect to cancel the service prior to meeting the minimum, your
account may be subject to closure. 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 will 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 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 check for at least $100 in connection with the monthly
investment option or a check for at least $250 in connection with the quarterly
investment option. If a shareholder uses the Invest-A-Check(R) Service to make
an IRA or group retirement plan investment, the purchase will be credited as a
current year contribution.
SYSTEMATIC WITHDRAWAL PLAN
A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment and any applicable CDSL.
Redemptions will be made at the asset value at the close of business on the
specific day of each month designated by the shareholder (or on the prior
business day if the day specified falls on a weekend or holiday), less, in the
case of Class B or Class D Shares, any applicable CDSL. Systematic withdrawals
of Class A shares which were purchased at net asset value because the purchase
amount was $1,000,000 or more will be subject to a CDSL if made within 18 months
of purchase of such shares. Under this plan, a Class B or Class D shareholder
who reinvests both dividends and distributions in additional shares may withdraw
up to 12%, or 10%, respectively, of the value of the shareholder's fund account
(at the time of election) per annum, without the imposition of a CDSL. A minimum
payment amount of $50 per cycle is needed to establish this plan. The
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 plan 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 plan 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 Plan 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 into 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 Seligman
Mutual Funds on which an initial 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 an initial
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 Seligman Mutual Funds.
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.
5/98
33
<PAGE>
SELIGMAN
INCOME FUND, INC.
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQINI 5/98
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
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
For Retirement Plan Information - Toll-Free Telephone (800) 445-1777
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Income Fund,
Inc., (the "Fund") dated May 1, 1998. 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 A shares
purchased in an amount of $1,000,000 or more are sold without an initial sales
load but are subject to a contingent deferred sales load ("CDSL") of 1% (of
current net asset value or original purchase price, whichever is less) if such
shares are redeemed within eighteen months of purchase. Class B shares may be
purchased at net asset value and are subject to a 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 gain 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
higher ongoing fees that generally will cause the Class B and Class D shares to
have higher expense ratios 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
Page
Investment Objectives, Policies and Risks....... 2
Investment Limitations.......................... 4
Directors and Officers.......................... 5
Management and Expenses......................... 9
Administration, Shareholder Services and
Distribution Plan............................. 10
Portfolio Transactions.......................... 11
Purchase and Redemption of Fund Shares.......... 11
Distribution Services........................... 14
Valuation....................................... 14
Performance..................................... 15
General Information............................. 17
Financial Statements............................ 17
Appendix A...................................... 18
Appendix B...................................... 20
EQIN1A
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<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
As stated in the Prospectus, the Fund seeks primarily to provide high current
income consistent with what is believed to be prudent risk of capital.
Secondarily, it also seeks to provide the possibility of improvement in income
and capital value over the longer term. 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 Manager 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 Manager 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 Manager 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.
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<PAGE>
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 Manager. 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 indicated above or 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 5).
-3-
<PAGE>
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. High portfolio turnover involves correspondingly greater transactions
costs and a possible increase in short-term capital gains or losses. 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 for the years
ended December 31, 1997 and 1996 were 138.90% and 125.92%, respectively.
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:
o Borrow money, except for temporary or emergency purposes in an amount not to
exceed 15% of the value of its total assets;
o 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 selling call options, and will not do
so without the prior approval of the Fund's Board of Directors;
o Purchase securities (other than closing call options) except for investment,
buy on "margin," or sell "short";
o 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;
o 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;
o Invest more than 25% of total assets at market value in any one industry;
o Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;*
o 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;
o 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;
o 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;
o Purchase or sell commodities and commodity contracts;
o 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;
- ----------
* The Fund has applied for and received an exemptive order from the Securities
and Exchange Commission that would permit it to purchase shares of other
investment companies advised by the Manager for the limited purpose of hedging
its obligations in connection with the deferred fee arrangement for outside
directors referred to under "Directors and Officers" below.
-4-
<PAGE>
o 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
o Write or purchase put, call, straddle or spread options except that the Fund
may sell covered call options listed on a national securities exchange or
quoted on NASDAQ and purchase closing call options so listed or quoted. The
Fund has no present intention of entering into these types of transactions,
and will not do so without the prior approval of the Fund's Board of
Directors.
Under the Investment Company Act of 1940 (the "1940 Act"), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or
(2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive Officer
(60) and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated, investment
managers and advisers; Chairman and Chief Executive
Officer, the Seligman Group of Investment Companies;
Chairman, Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc., broker/dealer;
and Carbo Ceramics Inc., ceramic proppants for oil and
gas industry; Director, 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, President, J. & W. Seligman & Co. Incorporated;
Chairman, Seligman Advisors, Inc., advisers; Seligman
Holdings, Inc., holding company; Seligman Securities,
Inc., broker/dealer; and J. & W. Seligman Trust Company,
trust company; and Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
BRIAN T. ZINO* Director, President and Member of the Executive Committee
(45) Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; President
(with the exception of Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.) and
Director or Trustee, the Seligman Group of Investment
Companies; Chairman, Seligman Data Corp., shareholder
service agent; and Director, Seligman Financial Services,
Inc., broker/dealer; Seligman Services, Inc.,
broker/dealer; and Seligman Henderson Co., advisers;
formerly, Director, Seligman Advisors, Inc., advisers;
Seligman Securities, Inc., broker/dealer; and J. & W.
Seligman Trust Company, trust company.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(57) Director and Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated; Director of Seligman
Henderson Co. and Trustee Emeritus of Colby College;
formerly, Director, Investment Research at Neuberger &
Berman from May 1993 to September 1996 and Executive Vice
President of McGlinn Capital from July 1987 to May 1993.
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<PAGE>
JOHN R. GALVIN Director
(68) Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman, American Council on
Germany; a Governor of the Center for Creative
Leadership; National Committee on U.S.-China Relations,
National Defense University; and the Institute for
Defense; Raytheon Co., electronics; formerly, Director,
USLIFE Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
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
(63) President, Sarah Lawrence College; Director or Trustee,
the Seligman Group of Investment Companies; and the
Committee for Economic Development; Chairman, The
Rockefeller Foundation, charitable foundation; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, NYNEX, telephone company; and
International Research and Exchange Board, intellectual
exchanges. Sarah Lawrence College, Bronxville, NY 10708
FRANK A. McPHERSON Director
(65) Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; Kimberly-Clark
Corporation, consumer products; Bank of Oklahoma Holding
Company; Baptist Medical Center; Oklahoma Chapter of the
Nature Conservancy; Oklahoma Medical Research Foundation;
and National Boys and Girls Clubs of America; and Member
of the Business Roundtable and National Petroleum
Council; formerly, Chairman of the Board and Chief
Executive Officer, Kerr-McGee Corporation, diversified
energy company; Chairman, Oklahoma City Public Schools
Foundation; and Director, Federal Reserve System's Kansas
City Reserve Bank; and the Oklahoma City Chamber of
Commerce. 123 Robert S. Kerr Avenue, Oklahoma City, OK
73102
JOHN E. MEROW Director
(68) Retired Chairman and Senior Partner, Sullivan & Cromwell,
law firm; Director or Trustee, the Seligman Group of
Investment Companies; Commonwealth Industries, Inc.,
manufacturer of aluminum sheet products; the Foreign
Policy Association; Municipal Art Society of New York;
the U.S. Council for International Business; and The New
York and Presbyterian Hospital; Chairman, American
Australian Association; and The New York and Presbyterian
Hospital Care Network, Inc.; Vice-Chairman, the U.S.-New
Zealand Council; Member of the American Law Institute and
Council on Foreign Relations. 125 Broad Street, New York,
NY 10004
BETSY S. MICHEL Director
(55) Attorney; Director or Trustee, the Seligman Group of
Investment Companies; Trustee, The Geraldine R. Dodge
Foundation, charitable foundation; and Chairman of the
Board of Trustees of St. George's School (Newport, RI);
formerly, Director, National Association of Independent
Schools (Washington, DC). St. Bernard's Road, P.O. Box
449, Gladstone, NJ 07934
-6-
<PAGE>
JAMES C. PITNEY Director
(71) Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of Investment
Companies; and Director, Public Broadcasting Service
(PBS); formerly, Director, Public Service Enterprise
Group, public utility. Park Avenue at Morris County, P.O.
Box 1945, Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(70) Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; The Houston
Exploration Company; The Brooklyn Museum; The Brooklyn
Union Gas Company; the Committee for Economic
Development; and Public Broadcasting Service (PBS);
formerly, Co-Chairman of the Policy Council of the Tax
Foundation; Director and Vice Chairman, Mobil
Corporation; Director, Tesoro Petroleum Companies, Inc.;
Dow Jones & Co., Inc.; and Director and President,
Bekaert Corporation. 675 Third Avenue, Suite 3004, New
York, NY 10017
ROBERT L. SHAFER Director
(65) Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; formerly, Vice
President, Pfizer Inc., pharmaceuticals; and Director,
USLIFE Corporation, life insurance. 235 East 42nd Street,
New York, NY 10017
JAMES N. WHITSON Director
(63) Director, Sammons Enterprises, Inc.; Director or Trustee,
the Seligman Group of Investment Companies; C-SPAN; and
CommScope, Inc., manufacturer of coaxial cables;
formerly, Executive Vice President and Chief Operating
Officer, Sammons Enterprises, Inc.; and Red Man Pipe and
Supply Company, piping and other materials. 5949 Sherry
Lane, Suite 1900, Dallas, TX 75225
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(41) 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.
LAWRENCE P. VOGEL Vice President
(41) Senior Vice President, Finance, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; Seligman
Financial Services, Inc., broker/dealer; and Seligman
Data Corp., shareholder service agent; Vice President,
the Seligman Group of Investment Companies; and Seligman
Services, Inc., broker/dealer; and Treasurer, Seligman
Henderson Co., advisers; formerly, Senior Vice President,
Seligman Advisors, Inc., advisers; and Treasurer,
Seligman Holdings, Inc., holding company.
-7-
<PAGE>
FRANK J. NASTA Secretary
(33) Senior Vice President, Law and Regulation and Corporate
Secretary, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Secretary, the Seligman
Group of Investment Companies; Seligman Financial
Services, Inc., broker/dealer; Seligman Henderson Co.,
advisers; Seligman Services, Inc., broker/dealer; and
Seligman Data Corp., shareholder service agent; formerly,
Senior Vice President, Law and Regulation and Corporate
Secretary, Seligman Advisors, Inc., advisers; and an
attorney at Seward and Kissel, law firm.
THOMAS G. ROSE Treasurer
(40) Treasurer, the Seligman Group of Investment Companies;
and Seligman Data Corp., shareholder service agent.
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
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Fund from Fund (1) Fund Expenses Fund Complex (1)(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
Richard R. Schmaltz, Director N/A N/A N/A
Fred E. Brown, Director Emeritus** N/A N/A N/A
John R. Galvin, Director $1,683.01 N/A $69,000.00
Alice S. Ilchman, Director 1,615.38 N/A 65,000.00
Frank A. McPherson, Director 1,651.09 N/A 66,000.00
John E. Merow, Director 1,615.38 N/A 65,000.00
Betsy S. Michel, Director 1,683.01 N/A 69,000.00
James C. Pitney, Director 1,604.74 N/A 64,000.00
James Q. Riordan, Director 1,661.73 N/A 67,000.00
Robert L. Shafer, Director 1,661.73 N/A 67,000.00
James N. Whitson, Director 1,672.37(d) N/A 68,000.00(d)
</TABLE>
- ----------------------
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1997. Effective January 16, 1998, the per meeting fee for
Directors was increased by $1,000, which is allocated among all Funds in the
Fund Complex.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired as Director and designated Director Emeritus on March 20, 1997.
(d) Deferred.
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. As of December 31, 1997, the
total amount of deferred compensation (including interest) payable in respect of
the Fund to Mr. Whitson was $14,822. Messrs. Merow and Pitney no longer defer
current compensation; however, they have accrued
-8-
<PAGE>
deferred compensation in the amounts of $51,281 and $43,330, respectively, as of
December 31, 1997. The Fund has applied for and received exemptive relief that
would permit a director who has elected deferral of his or her fees to choose a
rate of return equal to either (i) the interest rate on short-term Treasury
bills, or (ii) the rate of return on the shares of any of the investment
companies advised by the Manager, as designated by the director. The Fund may,
but is not obligated to, purchase shares of such investment companies to hedge
its obligations in connection with this deferral arrangement.
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 31, 1998. As of that date, no Directors or
officers owned shares of the Fund's Class D Capital Stock.
As of March 31, 1998, 1,466,685 Class A shares of the Fund or 8.21% of the
Fund's Class A capital stock and 6.16% of the Fund's capital stock, then
outstanding; and 1,320,575 Class D shares or 25.40% of the Fund's Class D
capital stock and 5.55% 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. 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 billion. The management fee
amounted to $2,192,400 in 1997, $2,342,764 in 1996, and $1,836,072 in 1995,
which was equivalent to annual rates of .60%, .60% and .48%, respectively, of
the Fund's average net assets in 1997, 1996 and 1995. The Manager paid fees to
Seligman Henderson Co., pursuant to a subadvisory contract no longer in effect,
of $271,414, $248,704 and $175,819 for the years ended December 31, 1997, 1996
and 1995, respectively.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees including fees and expenses for qualifying the Fund
and its shares under Federal and state securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by (or serving as a Director of) the Manager
or its affiliates, insurance premiums and extraordinary expenses such as
litigation expenses.
The 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, effective April 10, 1991,
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 held 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
-9-
<PAGE>
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.
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 Compliance Officer, 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
Compliance Officer, 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 of 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.
-10-
<PAGE>
For the year ended December 31, 1997, Seligman Financial Services, Inc.
("SFSI"), an affiliate of the Manager, received payments of $674,872 under the
Plan in respect of Class A shares, or 0.24% per annum of the average daily net
assets of Class A shares. This amount was used primarily to pay Service
Organizations on a continuing basis for providing personal services and/or
maintenance of shareholder accounts. For the year ended December 31, 1997, fees
incurred by the Fund in respect of Class B shares amounted to $54,805, or 1.00%
per annum of the average daily net assets of Class B shares. Of this amount,
0.725% per annum was paid directly to FEP Capital, L.P. ("FEP") to compensate it
for having funded, at the time of sale (i) the 4% commission paid to selling
brokers and (ii) a payment of 0.25% of sales to SFSI; 0.025% per annum was paid
to SFSI; and the remaining 0.25% per annum was paid to SFSI which, in turn, made
an equal payment to Service Organizations for providing personal services and/or
maintenance of shareholder accounts. For the year ended December 31, 1997, fees
incurred in respect of Class D shares amounted to $781,422, or 1.00% per annum
of the average daily net assets of Class D shares. This amount was paid to SFSI
and, in the first twelve months after a sale, reimbursed it primarily for the 1%
payment made to dealers at the time of sale and for certain other direct
distribution costs. After the first twelve months, fees paid to SFSI are used to
pay a continuing fee to Service Organizations.
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 Agreement recognizes that in the purchase and sale of
portfolio securities the Manager 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 for its use, as well as to the general attitude toward and support of
investment companies demonstrated by such brokers or dealers. Such services
include supplemental investment research, analysis and reports concerning
issuers, industries and securities deemed by the Manager to be beneficial to the
Fund. In addition, the Manager is 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 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 desire to buy or sell the same
security at the same time the securities purchased or sold are allocated by the
Manager 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.
Total brokerage commissions paid to others for the execution, research and
statistical services for the years ended December 31, 1997, 1996 and 1995 were
$298,513, $86,967 and $173,123, respectively.
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 A shares purchased at net asset value without an initial sales load
due to the size of the purchase are subject to a CDSL of 1% if such shares are
redeemed within eighteen months of purchase. 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.
-11-
<PAGE>
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, 1997, the maximum offering price of the Fund's shares is
as follows:
CLASS A
Net asset value per Class A share.......................... $ 14.81
Maximum sales load (4.75% of offering price).................. 0.74
-------
Offering price to public..................................... $ 15.55
=======
CLASS B
Net asset value and offering price per share*........... $ 14.79
=======
CLASS D
Net asset value and offering price per share**......... $ 14.78
=======
- -----------
* 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 INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Fund sold with an initial 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 Seligman
Mutual Funds which are sold with an initial 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 any Seligman Mutual Funds sold with
an initial sales load with the total net asset value of shares already owned
that were sold with an initial sales load, including 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 an initial sales load, 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 Seligman Mutual
Fund on which there was an initial sales load at the time of purchase will be
taken into account in orders placed through a dealer, however, only if SFSI is
notified by an investor or a dealer of the amount owned by the investor 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 initial sales loads in accordance with the sales load
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 an initial sales load of the other Seligman
Mutual Funds 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 Seligman Mutual Fund on which there was a sales load at the time of
purchase. Reduced initial 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.
-12-
<PAGE>
Class A shares purchased without an initial sales load in accordance with
the sales load schedule in the Fund's prospectus, or pursuant to a Volume
Discount, Right of Accumulation or Letter of Intent are subject to a CDSL of 1%
on redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial 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 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" which have at least (i) $500,000 invested in the
Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such plan
is made available. 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.")
FURTHER TYPES OF REDUCTIONS. Class A shares also may be issued without an
initial sales load in connection with the acquisition of cash and securities
owned by other investment companies and personal holding companies; to any
registered unit investment trust which is the issuer of periodic payment plan
certificates, the net proceeds of which are invested in fund shares; to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act; to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI; to 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 accounts; 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;
to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors; and to "eligible employee
benefit plans" which have at least (i) $500,000 invested in the Seligman Mutual
Funds or (ii) 50 eligible employees to whom such plan is made available.
"Eligible employee benefit plan" means
-14-
<PAGE>
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.
The Fund may sell Class A shares at net asset value to present and retired
directors, trustees, officers, 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. 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 postponed 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 acts as general distributor of the shares of the Fund and of the other
Seligman Mutual Funds. 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 $36,070 in 1997,
after allowances of $276,369 as commissions to dealers; $65,484 in 1996, after
allowance of $503,183 as commissions to dealers; and $105,433 in 1995, after
allowance of $804,096 as commissions to dealers. For the years ended December
31, 1997, 1996, and 1995, SFSI retained CDSL charges from Class D shares and on
certain redemptions of Class A shares occurring within eighteen months of
purchase amounting to $11,752, $23,156, and $18,340, respectively.
SFSI has assigned its rights to collect any CDSL imposed on redemptions of
Class B shares to FEP Capital, L.P. ("FEP"). SFSI has also assigned its rights
to the distribution fees with respect of Class B shares received by it pursuant
to the Plans (other than the portion of such fees used to make ongoing
shareholder servicing payments to Service Organizations as described in the
Prospectus) to FEP, which provides funding to SFSI to enable it to pay
commissions to dealers at the time of the sale of the related Class B shares. In
connection with the assignment of its rights to collect any CDSL and the
distribution fees with respect to Class B shares, SFSI receives payments from
FEP based on the value of Class B shares sold. The aggregate amounts of such
payments from FEP and the Class B distribution fees retained by SFSI for the
year ended December 31, 1997 and the period ended 1996 were $14,432 and $7,616,
respectively.
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager, became eligible to receive commissions from certain sales of Fund
shares, as well as distribution and service fees pursuant to the Plan. For the
years ended December 31, 1997 and 1996 and the period April 1, 1995 through
December 31, 1995, SSI received commissions of $8,141, $10,898 and $7,101,
respectively, from sales of Fund shares. SSI also received distribution and
service fees of $51,665, $57,842 and $39,985, respectively, pursuant to the
Plan.
VALUATION
Net asset value per share of each class of the Fund is determined as of the
close of regular 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,
Martin Luther King, Jr. 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
-14-
<PAGE>
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 management fee, are accrued daily and taken into account for the
purpose of determining the net asset value of Fund shares. Premiums received on
the sale of call options will be included in the net asset value, and the
current market value of the options sold by the Fund will be subtracted from net
asset value.
Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of regular trading on 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 regular trading on 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 regular trading on 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, 1997 were 8.61%,
9.24% and 10.74%, 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 gain 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 determined
by calculating the annual rate required for the initial investment 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 B shares for the one-year period and the period April 22, 1996 (inception)
through December 31, 1997 were 8.30% and 10.18%, respectively. This return was
computed assuming that all of the dividends and gain distributions paid by the
Fund's Class B shares, if any, were reinvested over the relevant time period. It
was then assumed that at the end of the period the entire amount was redeemed,
subtracting the applicable CDSL (5% for the one-year period and 4% for the
period since inception). The average annual total returns for the Fund's Class D
shares for the one-year period and since inception through December 31, 1997
were 12.18% and 8.67%, respectively. These returns were computed assuming that
all of the dividends and gain 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.
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%
-15-
<PAGE>
sales load, made on January 1, 1988 had a value of $2,775 on December 31, 1997,
resulting in an aggregate total return of 177.45%. Table B illustrates the total
return (income and capital) on Class B shares of the Fund with dividends
invested and gain distributions, if any, taken in shares. It shows that a $1,000
investment in Class B shares made on April 22, 1996 (commencement of offering of
Class B shares) had a value of $1,178 on December 31, 1997, resulting in an
aggregate total return of 17.83%. Table C 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 $1,474 on December 31, 1997, resulting in an aggregate total
return of 47.40%. 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 A - CLASS A SHARES
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF INITIAL VALUE OF GAIN DIVIDENDS TOTAL
ENDED1 INVESTMENT 2 DISTRIBUTION INVESTED TOTAL VALUE 2 RETURN 1, 3
- ------ ------------ ------------ -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
12/31/88 $ 972 $ -- $ 81 $1,053
12/31/89 1,004 32 176 1,212
12/31/90 838 26 247 1,111
12/31/91 1,005 32 409 1,446
12/31/92 1,104 35 560 1,699
12/31/93 1,177 103 691 1,971
12/31/94 1,054 92 718 1,864
12/31/95 1,181 145 922 2,248
12/31/96 1,209 162 1,062 2,433
12/31/97 1,195 406 1,174 2,775 177.45%
</TABLE>
TABLE B - CLASS B SHARES
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF INITIAL VALUE OF GAIN DIVIDENDS TOTAL
ENDED1 INVESTMENT 2 DISTRIBUTION INVESTED TOTAL VALUE 2 RETURN 1, 3
- ------ ------------ ------------ -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
12/31/96 $1,036 $ 6 $ 34 $1,076
12/31/97 985 114 79 1,178 17.83%
</TABLE>
TABLE C - CLASS D SHARES
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF INITIAL VALUE OF GAIN DIVIDENDS TOTAL
ENDED1 INVESTMENT 2 DISTRIBUTION INVESTED TOTAL VALUE 2 RETURN 1, 3
- ------ ------------ ------------ -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
12/31/93 $1,009 $ 36 $ 35 $1,080
12/31/94 902 32 79 1,013
12/31/95 1,012 59 141 1,212
12/31/96 1,037 68 198 1,303
12/31/97 1,025 198 251 1,474 47.40%
</TABLE>
1 For the ten years ended December 31, 1997; from commencement of offering of
Class B shares on April 22, 1996; 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, and CDSL, if applicable, 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.
-16-
<PAGE>
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 capital gain distributions that would have
been paid during the period on such shares assuming that each dividend or
capital gain 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 B or 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 through December 31, 1992, do not reflect the deduction of the
administration, shareholder services and distribution fee, effective January 1,
1993; through April 10, 1991, do not reflect the management fee approved by
shareholders on April 10, 1991; and for Class A and Class D shares, through
December 31, 1995, do not reflect the increase in the management fee approved by
shareholders on December 12, 1995 and effective on January 1, 1996, which fees,
if reflected, would reduce the performances 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
It is the intention of the Fund not to hold Annual Meetings of Shareholders.
The Directors may call Special Meetings of Shareholders for action by
shareholder vote as may be required by the 1940 Act or the Articles of
Incorporation.
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, 801 Pennsylvania, 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, 1997
contains a schedule of the investments as of December 31, 1997, as well as
certain other financial information as of that date. The financial statements
and notes included in the Annual Report, and the Independent Auditor's Report
thereon, are incorporated herein by reference. The Annual Report will be
furnished without charge to investors who request copies of this Statement of
Additional Information.
<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 RATING SERVICE ("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.
-18-
<PAGE>
BBB: Bonds rated BBB are regarded as having a satisfactory degree of safety
and capacity to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and interest for bonds in this category than for bonds in the A category.
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>
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
o Helps finance America's fledgling railroads through underwritings.
o 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.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy, helping
to finance World War I.
...1920s
o 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.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $3 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual fund,
today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
-20-
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o 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.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a national
and 18 state-specific municipal funds.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered through
variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two closed-end funds that invest in high-quality municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global and international investment
products.
o Introduces to the public Seligman Frontier Fund, Inc., a small capitalization
mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers five
separate series: Seligman Henderson International Fund, Seligman Henderson
Global Smaller Companies Fund, Seligman Henderson Global Technology Fund,
Seligman Henderson Global Growth Opportunities Fund and Seligman Henderson
Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
-21-
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
December 31, 1997
PRINCIPAL
AMOUNT VALUE
--------- -----
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES 17.9%
US Treasury Bonds
6 5/8%, 2/15/2027 $ 5,000,000 $ 5,428,130
US Treasury Notes
6 5/8%, 5/15/2007 17,000,000 18,004,071
MORTGAGE-BACKED
SECURITIES:++
Government National
Mortgage Association
Obligations: 7 1/2%, with
various maturities from
1/15/2023 to 12/15/2027 39,149,679 40,165,504
-----------
TOTAL US GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES
(Cost $61,512,378) 63,597,705
-----------
CORPORATE BONDS 31.3%
BANKING AND FINANCE 9.1%
Associates Corp. of North
America 6 1/2%, 8/15/2002 3,500,000 3,536,190
Capital One Bank
8 1/8%, 3/1/2000 5,000,000 5,179,530
Corp Andina de Fomento
7 1/4%, 3/1/2007+ 5,000,000 5,099,680
Franchise Finance
7%, 11/30/2000 5,000,000 5,079,925
Homeside Lending
6.86%, 7/2/2001 5,000,000 5,087,365
The Money Store
8 3/8%, 4/15/2004 3,000,000 3,128,910
United Companies Financial
9.35%, 11/1/1999 2,000,000 2,101,246
United Companies Financial
8 3/8%, 7/1/2005 3,000,000 3,165,780
-----------
32,378,626
-----------
BUSINESS SERVICES 1.3%
First Data 6 3/8%, 12/15/2007 4,800,000 4,782,974
-----------
CHEMICALS 1.9%
Geon 6 7/8%, 2/15/2005 1,800,000 1,818,288
Millennium America
7%, 11/15/2006 5,000,000 5,112,565
-----------
6,930,853
-----------
ELECTRIC AND GAS
UTILITIES 1.4%
Empresa Electrica Guacolda
(Chile) 7.95%, 4/30/2003+ 5,000,000 5,124,800
-----------
PRIN. AMT.
OR SHARES VALUE
---------- -----
ENERGY 4.0%
Barrett Resources
7.55%, 2/1/2007 $ 3,300,000 $ 3,428,218
Oryx Energy
8 1/8%, 10/15/2005 5,000,000 5,382,205
Petroleum Geo-Services
7 1/2%, 3/31/2007 5,000,000 5,335,190
-----------
14,145,613
-----------
FUNERAL SERVICES 1.4%
Loewen Group International
7 1/2%, 4/15/2001 5,000,000 5,153,540
-----------
HOTELS/MOTELS 0.6%
Felcor Suites
7 3/8%, 10/1/2004+ 2,000,000 2,017,042
-----------
MACHINERY 1.5%
Anixter 8%, 9/15/2003 5,000,000 5,256,975
-----------
MEDIA 3.2%
News America Holdings
7.43%, 10/1/2026 5,000,000 5,332,970
Time Warner
9 1/8%, 1/15/2013 5,000,000 5,984,230
-----------
11,317,200
-----------
PAPER AND PACKAGING 1.0%
Owens-Illinois
7.85%, 5/15/2004 3,500,000 3,679,386
-----------
RETAILING 2.9%
Staples 7 1/8%, 8/15/2007 5,000,000 5,116,300
Woolworth 7%, 6/1/2000 5,000,000 5,069,285
-----------
10,185,585
-----------
TECHNOLOGY 1.2%
Solectron 7 3/8%, 3/1/2006 4,000,000 4,144,492
-----------
UTILITIES/
TELECOMMUNICATIONS 1.8%
Tele-Communications
9.80%, 2/1/2012 5,000,000 6,309,705
-----------
TOTAL CORPORATE BONDS
(Cost $108,059,915) 111,426,791
-----------
CONVERTIBLE
PREFERRED STOCKS 7.5%
AUTOMOTIVE
AND RELATED 1.4%
Federal Mogul 7%+ 96,000shs. 4,848,000
-----------
BANKING AND
FINANCE 1.6%
Salomon Smith Barney
Holdings 7 5/8% 137,500 5,534,375
-----------
- ----------
See footnotes on page 10.
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
December 31, 1997
PRIN. AMT.
OR SHARES VALUE
---------- -----
DRUGS AND
HEALTH CARE 1.0%
McKesson 5%+ 46,000shs. $ 3,519,000
----------
ENERGY 0.4%
Lomak Petroleum 5 3/4%+ 33,500 1,582,875
----------
ENVIRONMENTAL
SERVICES 1.0%
Browning-Ferris Industries 7 1/4% 100,000 3,400,000
----------
INSURANCE 1.5%
St. Paul Capital 6% 75,000 5,400,000
----------
OFFICE EQUIPMENT 0.6%
IKON Office Solutions $5.04 32,500 2,201,875
----------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $22,531,360) 26,486,125
----------
CONVERTIBLE BONDS 3.8%
DIVERSIFIED 0.6%
MascoTech 4 1/2%, 12/15/2003 2,500,000 2,187,500
----------
DRUGS AND
HEALTH CARE 0.6%
Ciba-Geigy 6 1/4%, 3/15/2016 2,000,000 2,200,000
----------
ELECTRONICS 0.5%
Park Electrochemical
5 1/2%, 3/1/2006 2,000,000 1,890,000
----------
ENERGY 1.2%
Santa Fe Pipelines
11.162%, 8/15/2010 2,500,000 4,237,500
----------
INSURANCE 0.3%
LibLife International (UK)
6 1/2%, 9/30/2004 750,000 879,381
----------
TECHNOLOGY 0.6%
Xilinx 5 1/4%, 11/1/2002+ 2,000,000 1,947,500
----------
TOTAL CONVERTIBLE BONDS
(Cost $11,076,250) 13,341,881
----------
COMMON STOCKS 36.1%
AEROSPACE AND
DEFENSE 0.6%
General Dynamics 26,900shs. 2,325,169
----------
AUTOMOTIVE AND
RELATED 0.5%
Chrysler 50,000 1,759,375
----------
SHARES VALUE
------ -----
BANKING AND FINANCE 5.9%
Ahmanson (H.F.) 37,000 $ 2,476,687
Banco Bilbao Vizcaya (Spain) 46,200 1,494,969
Bank of Ireland (Ireland) 190,000 2,927,969
Bank of New York 30,600 1,769,063
BankAmerica 12,700 927,100
Citicorp 11,600 1,466,675
First Union 25,000 1,281,250
ING Groep (Netherlands) 82,666 3,483,679
National Australia Bank
(ADRs) (Australia) 60,000 4,237,500
Societe Generale (France) 6,360 866,816
-------------
20,931,708
-------------
CHEMICALS 1.3%
Bayer (Germany) 57,000 2,115,572
duPont (E.I.) de Nemours 17,600 1,057,100
Goodrich (B.F.) 33,000 1,367,438
-------------
4,540,110
-------------
CONSUMER GOODS
AND SERVICES 5.5%
Allied Domecq (UK) 140,000 1,271,809
Anheuser-Busch 20,000 880,000
B.A.T. Industries (UK) 200,000 1,831,735
General Mills 34,400 2,463,900
PepsiCo 80,300 2,925,931
RJR Nabisco Holdings 64,000 2,400,000
Russell 50,100 1,330,781
Sara Lee 59,200 3,333,700
The Stanley Works 28,900 1,363,719
Xerox 23,000 1,697,687
-------------
19,499,262
-------------
DIVERSIFIED 0.6%
Alexander & Baldwin 29,600 813,075
Tenneco 36,000 1,422,000
-------------
2,235,075
-------------
DRUGS AND
HEALTH CARE 2.5%
American Home Products 15,600 1,193,400
Baxter International 42,200 2,128,462
Bristol-Myers Squibb 29,200 2,763,050
Schering-Plough 46,500 2,888,813
-------------
8,973,725
-------------
ELECTRIC AND GAS
UTILITIES 4.3%
Companhia Energetica de
Minas Gerais (ADRs)
"CEMIG" (Brazil) 22,700 1,021,500
Duke Energy 36,000 1,993,500
Electricidade de Portugal
(ADRs) (Portugal) 48,200 1,867,750
- ----------
See footnotes on page 10.
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
December 31, 1997
SHARES VALUE
------ -----
ELECTRIC AND GAS
UTILITIES (CONTINUED)
Endesa (ADRs) (Spain) 100,000 $ 1,818,750
FPL Group 34,500 2,041,969
Unicom 64,400 1,980,300
VEBA (Germany) 30,000 2,043,426
Williams Companies 83,000 2,355,125
-------------
15,122,320
-------------
ELECTRONICS 0.9%
AMP 30,400 1,276,800
Thomas & Betts 38,400 1,814,400
-------------
3,091,200
-------------
ENERGY 3.5%
Amoco 18,200 1,549,275
Atlantic Richfield 19,900 1,594,488
Exxon 26,300 1,609,231
Royal Dutch Petroleum
(Netherlands) 32,000 1,734,000
Snyder Oil 91,022 1,661,151
Total (Class B) (France) 15,396 1,676,121
Unocal 71,100 2,759,569
-------------
12,583,835
-------------
FOOD 0.5%
ConAgra 50,000 1,640,625
-------------
INSURANCE 2.6%
American General 30,000 1,621,875
AXA-UAP (France) 9,736 753,603
Irish Life (Ireland) 430,000 2,450,297
Lincoln National 20,700 1,617,188
Marsh & McLennan 20,200 1,506,163
St. Paul Companies 17,600 1,444,300
-------------
9,393,426
-------------
MACHINERY 0.6%
GATX 32,700 2,372,794
-------------
METALS 0.3%
Allegheny Teledyne 41,500 1,073,813
-------------
PAPER AND PACKAGING 1.2%
Bemis 47,000 2,070,937
Mead 25,000 700,000
Union Camp 15,300 821,419
Weyerhaeuser 15,300 750,656
-------------
4,343,012
-------------
RETAILING 1.6%
May Department Stores 25,900 1,364,606
Penney (J.C.) 31,300 1,887,781
Tesco (UK) 287,400 2,326,023
-------------
5,578,410
-------------
SHARES OR
PRIN. AMT. VALUE
---------- -----
TOBACCO 0.8%
Philip Morris 60,300 shs.$ 2,732,344
-------------
TRANSPORTATION 0.2%
Norfolk Southern 25,200 776,475
-------------
UTILITIES/
TELECOMMUNICATIONS 2.5%
Alcatel Alsthom (France) 15,000 1,907,255
Bell Atlantic 21,500 1,956,500
GTE 35,300 1,844,425
SBC Communications 27,200 1,992,400
Telecom Italia-SpA* (Italy) 255,225 1,125,324
-------------
8,825,904
-------------
MISCELLANEOUS 0.2%
Pacific Dunlop (Australia) 275,000 582,278
-------------
TOTAL COMMON STOCKS
(Cost $105,246,248) 128,380,860
-------------
ASSET-BACKED
SECURITIES++ 2.8%
BANKING AND FINANCE 2.8%
The Money Store Home Equity
Trust 1997-D
6.555%, 12/15/2038 $ 5,000,000 4,993,750
United Companies Financial
1997-C 6.88%, 9/15/2022 5,000,000 5,045,315
-------------
TOTAL ASSET-BACKED
SECURITIES
(Cost $9,999,247) 10,039,065
-------------
SHORT-TERM HOLDINGS 0.9%
(Cost $3,200,000) 3,200,000
-------------
TOTAL INVESTMENTS 100.3%
(Cost $321,625,398) 356,472,427
OTHER ASSETS
LESS LIABILITIES (0.3)% (983,553)
-------------
NET ASSETS 100.0% $ 355,488,874
=============
- ----------
+Rule 144A security.
++Investments in mortgage-backed and asset-backed securities are subject to
principal paydowns. As a result of prepayments from refinancing or
satisfaction of the underlying instruments, the average life may be less than
the original maturity. This in turn may impact the ultimate yield realized
from these instruments. See Notes to Financial Statements.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
ASSETS:
Investments, at value:
<S> <C> <C>
Bonds and stocks (cost $256,913,020) ...................... $ 289,674,722
US Government and Government agency securities
(cost $61,512,378) ........................................ 63,597,705
Short-term holdings (cost $3,200,000) ..................... 3,200,000 $ 356,472,427
-------------
Cash 828,150
Receivable for interest and dividends ...................................... 3,163,999
Receivable for securities sold ............................................. 920,112
Receivable for Capital Stock sold .......................................... 181,327
Investment in, and expenses prepaid to, shareholder service agent .......... 67,289
Other 21,711
-------------
Total Assets ............................................................... 361,655,015
-------------
LIABILITIES:
Payable for securities purchased ........................................... 5,026,559
Payable for Capital Stock repurchased ...................................... 498,571
Accrued expenses, taxes, and other ......................................... 641,011
-------------
Total Liabilities ..........................................................
6,166,141
-------------
Net Assets ................................................................. $ 355,488,874
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized;
24,008,910 shares outstanding):
Class A .................................................................. $ 18,271,389
Class B .................................................................. 582,119
Class D .................................................................. 5,155,402
Additional paid-in capital ................................................. 294,084,005
Undistributed net investment income ........................................ 406,565
Undistributed net realized gain ............................................ 2,144,594
Net unrealized appreciation of investments ................................. 35,749,685
Net unrealized depreciation on translation of assets
and liabilities denominated in foreign currencies .......................... (904,885)
-------------
Net Assets ................................................................. $ 355,488,874
=============
NET ASSET VALUE PER SHARE:
Class A ($270,688,127 / 18,271,389 shares) ................................. $ 14.81
=============
Class B ($8,606,825 / 582,119 shares) ...................................... $ 14.79
=============
Class D ($76,193,922 / 5,155,402 shares) ................................... $ 14.78
=============
- ----------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
INVESTMENT INCOME:
<S> <C> <C>
Interest ............................................................. $14,957,685
Dividends ............................................................ 6,243,369
-----------
Total Investment Income (net of foreign taxes withheld of $165,317) .............................. $21,201,054
EXPENSES:
Management fee ....................................................... 2,192,400
Distribution and service fees ........................................ 1,511,099
Shareholder account services ......................................... 630,508
Shareholder reports and communications ............................... 137,715
Custody and related services ......................................... 131,075
Registration ......................................................... 84,360
Auditing and legal fees .............................................. 69,191
Directors' fees and expenses ......................................... 26,097
Miscellaneous ........................................................ 27,364
-----------
Total Expenses ................................................................................... 4,809,809
-----------
Net Investment Income ............................................................................ 16,391,245
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ..................................... 28,464,970
Net realized loss from foreign currency transactions ................. (330,664)
Net change in unrealized appreciation of investments ................. 4,951,521
Net change in unrealized appreciation on translation of
assets and liabilities denominated in foreign currencies ............. (2,024,316)
-----------
Net Gain on Investments and Foreign Currency Transactions ........................................ 31,061,511
-----------
Increase in Net Assets from Operations ........................................................... $47,452,756
===========
- ----------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
------------ ------------
OPERATIONS:
<S> <C> <C>
Net investment income .......................................................... $ 16,391,245 $ 19,322,087
Net realized gain on investments ............................................... 28,464,970 5,841,486
Net realized gain (loss) from foreign currency transactions .................... (330,664) 7,433
Net change in unrealized appreciation of investments ........................... 4,951,521 3,571,125
Net change in unrealized appreciation/depreciation on translation of
assets and liabilities denominated in foreign currencies ....................... (2,024,316) 987,448
------------ ------------
Increase in Net Assets from Operations ......................................... 47,452,756 29,729,579
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ..................................................................... (13,456,408) (14,995,963)
Class B ..................................................................... (246,429) (55,035)
Class D ..................................................................... (3,132,293) (3,480,362)
Net realized gain on investments:
Class A ..................................................................... (25,021,509) (1,799,539)
Class B ..................................................................... (633,473) (3,653)
Class D (6,970,215) (494,274)
------------ ------------
Decrease in Net Assets from Distributions (49,460,327) (20,828,826)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996
--------- -----------
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
<S> <C> <C> <C> <C>
Class A .............................. 650,380 1,396,344 9,972,700 20,428,865
Class B .............................. 343,682 207,814 5,230,021 3,024,908
Class D .............................. 404,112 894,700 6,155,758 13,071,905
Investment of dividends:
Class A .............................. 606,682 702,268 9,216,525 10,180,313
Class B .............................. 11,758 2,581 178,238 37,557
Class D .............................. 167,968 193,834 2,546,388 2,804,770
Exchanged from associated Funds:
Class A .............................. 330,769 4,447,183 5,064,541 64,919,755
Class B .............................. 79,482 11,499 1,207,365 170,381
Class D .............................. 418,908 590,551 6,386,380 8,537,551
Shares issued in payment of
gain distributions:
Class A .............................. 1,378,265 102,587 20,340,211 1,470,077
Class B .............................. 34,906 222 512,347 3,179
Class D .............................. 423,625 30,841 6,229,511 441,057
--------- ---------- ----------- -----------
Total ................................... 4,850,537 8,580,424 73,039,985 125,090,318
--------- ---------- ----------- -----------
Cost of shares repurchased:
Class A .............................. (3,510,451) (3,856,199) (53,806,277) (56,302,959)
Class B .............................. (46,830) (6,522) (709,661) (96,604)
Class D .............................. (1,022,412) (1,261,567) (15,638,553) (18,398,148)
Exchanged into associated Funds:
Class A .............................. (971,157) (4,758,652) (14,983,726) (69,546,031)
Class B .............................. (39,006) (17,467) (600,589) (258,956)
Class D .............................. (720,259) (903,445) (11,014,316) (13,186,394)
--------- ---------- ----------- -----------
Total ................................... (6,310,115) (10,803,852) (96,753,122) (157,789,092)
--------- ---------- ----------- -----------
Decrease in Net Assets from Capital
Share Transactions ...................... (1,459,578) (2,223,428) (23,713,137) (32,698,774)
========= ========== ----------- -----------
Decrease in Net Assets ......................................................... (25,720,708) (23,798,021)
NET ASSETS:
Beginning of year .............................................................. 381,209,582 405,007,603
----------- -----------
End of Year (including undistributed net investment income of
$406,565 and $888,857, respectively) ........................................... $355,488,874 $381,209,582
=========== ===========
- ----------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
</TABLE>
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Income Fund, Inc. (the "Fund") offers
three classes of shares. All shares existing prior to May 3, 1993, the
commencement of Class D shares, were classified as Class A shares. The Fund
began offering Class B shares on April 22, 1996. 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 A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within 18 months of purchase.
Class B shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, a service fee of up to 0.25% on an annual basis, and
a CDSL, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. 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 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 CDSL, if
applicable, of 1% imposed on redemptions made within one year of purchase. 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 certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- Investments in US Government and Government agency
securities, bonds, and stocks are valued at current market values or, in
their absence, at fair values 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, at the mean of bid and asked prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
b. FOREIGN CURRENCY TRANSACTIONS -- The books and records of the Fund are
maintained in US dollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated into
US dollars at the daily rate of exchange as reported by a pricing service.
Purchases and sales of investment securities, income, and expenses are
translated into US 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. FEDERAL TAXES -- There is no provision for federal income 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. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- 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, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the dividend.
Interest income is recorded on an accrual basis.
e. MULTIPLE CLASS ALLOCATIONS -- 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 shares of each class.
Class-specific expenses, which include distribution and service fees and any
other items that are specifically attributable to a particular class, are
charged directly to such class. For the year ended December 31, 1997,
distribution and service fees were the only class-specific expenses.
f. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains 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 realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1997, amounted to $353,327,757 and $428,946,263,
respectively; purchases and sales of US Government obligations were $133,479,106
and $113,370,057, respectively.
At December 31, 1997, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio
securities, including
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
the effects of foreign currency translations, amounted to $37,813,748 and
$2,966,719, respectively.
4. SHORT-TERM INVESTMENTS -- At December 31, 1997, the Fund owned short-term
investments which matured in less than seven days.
5. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides or arranges for the necessary personnel and facilities. Seligman
Henderson Co. (the "Subadviser"), an entity owned 50% each by the Manager and
Henderson plc, supervises and directs all or a portion of the Fund's foreign
investments. For this service, the Subadviser receives a fee from the Manager,
payable monthly. 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 or by Henderson plc. The Manager
receives a fee, calculated daily and payable monthly, equal to 0.60% per annum
of the first $1 billion of the Fund's average daily net assets, 0.55% per annum
of the next $1 billion of the Fund's average daily net assets and 0.50% per
annum of the Fund's average daily net assets in excess of $2 billion. The
management fee reflected in the Statement of Operations represents 0.60% per
annum of the Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $36,070 from sales of Class A shares, after commissions of
$276,369 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, 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,
1997, fees incurred aggregated $674,872, or 0.24% per annum of the average daily
net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, 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 B and Class D shares for which the organizations are
responsible; and, for Class D shares only, 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.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provides funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended December 31, 1997, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $54,805 and $781,422, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the year ended
December 31, 1997, such charges amounted to $11,752.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor, for the
year ended December 31, 1997, amounted to $14,432.
Seligman Services, Inc., an affiliate of the Manager, is 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 year ended December 31, 1997,
Seligman Services, Inc. received commissions of $8,141 from the sales of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $51,665, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $630,508 for shareholder account
services. The Fund's investment in Seligman Data Corp. is recorded at 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.
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, 1997, of
$109,433 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.
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, 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.
"Total return based on net asset value" measures each Class's performance
assuming that 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 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. Total returns for periods
of less than one year are not annualized.
"Average commission rate paid" represents the average commission paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for periods
beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1997o 1996o 1995o 1994o 1993
--------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ..................... $ 14.97 $ 14.63 $ 13.05 $ 14.58 $ 13.69
--------- --------- -------- -------- ---------
Net investment income .................................. .71 .74 .76 .76 .75
Net realized and unrealized investment gain (loss) ..... 1.41 .38 1.89 (1.57) 1.40
Net realized and unrealized gain (loss)
from foreign currency transactions ..................... (.10) .04 (.01) .03 --
--------- --------- -------- -------- ---------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ............................................. 2.02 1.16 2.64 (.78) 2.15
Dividends paid ......................................... (.74) (.73) (.78) (.75) (.75)
Distributions from net gain realized ................... (1.44) (.09) (.28) -- (.51)
--------- --------- -------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSET VALUE ............. (.16) .34 1.58 (1.53) .89
--------- --------- -------- -------- ---------
NET ASSET VALUE, END OF YEAR ........................... $ 14.81 $ 14.97 $ 14.63 $ 13.05 $ 14.58
========= ========= ======== ======== =========
TOTAL RETURN BASED ON NET ASSET VALUE: 14.06% 8.22% 20.60% (5.43)% 15.98%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ......................... 1.14% 1.14% 1.00% 1.02% 1.03%
Net investment income to average net assets ............ 4.66% 5.11% 5.38% 5.51% 5.29%
Portfolio turnover ..................................... 138.90% 125.92% 111.78% 66.62% 60.62%
Average commission rate paid ........................... $ .0170 $ .0361
NET ASSETS, END OF YEAR (000S OMITTED) ................. $ 270,688 $ 296,291 $ 318,307 $ 286,355 $ 321,040
- -------------
See footnotes on page 17.
</TABLE>
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS D
----------------------- --------------------------------------------
YEAR 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO TO
12/31/97o 12/31/96o 1997o 1996o 1995o 1994o 12/31/93
--------- --------- ------- ------- ------- ------- --------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ................ $ 14.95 $14.43 $ 14.95 $ 14.60 $ 13.01 $ 14.55 $ 14.42
------- ------- ------- ------- ----- ------- --------
Net investment income ............................. .59 .43 .59 .63 .65 .65 .45
Net realized and unrealized investment gain (loss) 1.41 .59 1.40 .38 1.88 (1.57) .69
Net realized and unrealized gain (loss)
from foreign currency transactions ................ (.10) .05 (.10) .04 (.01) .03 --
------- ------- ------- ------- ----- ------- --------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ........................................ 1.90 1.07 1.89 1.05 2.52 (.89) 1.14
Dividends paid .................................... (.62) (.46) (.62) (.61) (.65) (.65) (.50)
Distributions from net gain realized .............. (1.44) (.09) (1.44) (.09) (.28) -- (.51)
------- ------- ------- ------- ------- ------- --------
NET INCREASE (DECREASE) IN NET ASSET VALUE ........ (.16) .52 (.17) .35 1.59 (1.54) .13
------- ------- ------- ------- ------- ------ --------
NET ASSET VALUE, END OF YEAR ...................... $ 14.79 $ 14.95 $ 14.78 $ 14.95 $ 14.60 $ 13.01 $ 14.55
======= ======= ======= ======= ======= ======= ========
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 13.24% 7.58% 13.17% 7.43% 19.66% (6.20)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.90% 1.89%+ 1.90% 1.90% 1.79% 1.82% 1.84%+
Net investment income to average net assets ....... 3.90% 4.36%+ 3.90% 4.37% 4.58% 4.74% 4.42%+
Portfolio turnover ................................ 138.90% 125.92%++ 138.90% 125.92% 111.78% 66.62% 60.62%+++
Average commission rate paid ...................... $ .0170 $ .0361++ $ .0170 $ .0361
NET ASSETS, END OF YEAR (000S OMITTED) ............ $ 8,607 $ 2,961 $76,194 $81,957 $86,701 $67,946 $ 49,941
</TABLE>
- ------------
* Commencement of offering of shares.
o Per share amounts for the years ended December 31, 1997, 1996, 1995, and
1994, are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN INCOME FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Income Fund, Inc. as of December 31,
1997, 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, 1997, by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Income
Fund, Inc. as of December 31, 1997, 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
January 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
File No. 2-10837
811-525
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, 1997; Financial Highlights for Class B shares of the
Fund for the period from April 22, 1996 (commencement of offering)
to December 31, 1997; Financial Highlights for Class D shares for
the period from May 3, 1993 (commencement of offering) to December
31, 1997.
Part B Required Financial Statements, which are included in the Fund's
Annual Report to Shareholders dated December 31, 1997, are
incorporated by reference in the Statement of Additional
Information. These Financial Statements are: Portfolio of
Investments as of December 31, 1997; Statement of Assets and
Liabilities as of December 31, 1997; Statement of Operations for the
year ended December 31, 1997; Statements of Changes in Net Assets
for the years ended December 31, 1997 and 1996; Notes to Financial
Statements; Financial Highlights for the five years ended December
31, 1997 for the Fund's Class A shares; for the period April 22,
1996 (commencement of offering) to December 31, 1997 for the Fund's
Class B shares; and for the period May 3, 1993 (commencement of
offering) through December 31, 1997 for the Fund's Class D shares;
Report of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed except Exhibits
marked with an asterisk (*) are incorporated herein.
(1) Articles of Amendment and Articles Supplementary to Articles of
Incorporation of Registrant. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 74, filed April 29, 1997.)
(2) By-laws of the Corporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 74, filed April 29, 1997.)
(3) Not applicable.
(4) Specimen certificate of Class B Capital Stock. (Incorporated by
reference to Form SE filed on April 16, 1996).
(4a) 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. (Incorporated by reference to Post-Effective Amendment
No. 73 filed on April 19, 1996.)
(6) Copy of Amended Distributing Agreement between Registrant and Seligman
Financial Services, Inc. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 74, filed April 29, 1997.)
(6a) Copy of Amended Sales Agreement between Registrant and Seligman
Financial Services, Inc. (Incorporated by reference to Post-Effective
Amendment No. 73 filed on April 19, 1996.)
(6b) Form of Sales Agreement between Seligman Financial Services, Inc. and
Dean Witter Reynolds, Inc. (Incorporated by reference to Exhibit 6b of
Registration Statement No. 2-33566, Post-Effective Amendment No. 53,
filed on April 28, 1997.)
(6c) Form of Sales Agreement between Seligman Financial Services, Inc. and
Dean Witter Reynolds, Inc. with respect to certain Chilean institutional
investors. (Incorporated by reference to Exhibit 6c of Registration
Statement No. 2-33566, Post-Effective Amendment No. 53, filed on April
28, 1997.)
(6d) Form of Dealer Agreement between Seligman Financial Services, Inc. and
Smith Barney Inc. (Incorporated by reference to Exhibit 6d of
Registration Statement No. 2-33566, Post-Effective Amendment No. 53,
filed on April 28, 1997.)
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (continued)
(7) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Exhibit 7 of Registration Statement No.
2-92487, Post-Effective Amendment No. 21, filed on January 29, 1997.)
(7a) Deferred Compensation Plan for Directors of Seligman Income Fund.*
(8) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 74, filed April 29, 1997.)
(9) Not applicable.
(10) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 74, filed April 29, 1997.)
(11) Report and Consent of Independent Auditors.*
(12) Not applicable.
(13) Purchase Agreement for Initial Capital between Registrant's Class B
shares and J. & W. Seligman & Co. Incorporated. (Incorporated by
reference to Post-Effective Amendment No. 73 filed on April 19, 1996.)
(13a) Purchase Agreement for Initial Capital between Registrant's Class D
shares and J. & W. Seligman & Co. Incorporated. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 74, filed April
29, 1997.)
(14) The Seligman Roth/Traditional IRA Information Kit. (Incorporated by
reference to Exhibit q(1) of Registration Statement No. 333-50295, Form
N-2, filed on April 16, 1998.)
(14a) The Seligman Simple IRA Plan Set-Up Kit. (Incorporated by reference to
Exhibit 14 of Registration Statement No. 333-20621, Pre-Effective
Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement. (Incorporated by reference to
Exhibit 14 of Registration Statement No. 333-20621, Pre-Effective
Amendment No. 2, filed on April 17, 1997.)
(14c) Qualified Plan and Trust Basic Plan Document. (Incorporated by reference
to Exhibit q(4) to Registration No. 333-50295, Form N-2, filed on April
16, 1998.)
(14d) Flexible Standardized 401(k) Profit Sharing Plan Adoption Agreement.
(Incorporated by reference to Exhibit q(4) to Registration No.
333-50295, Form N-2, filed on April 16, 1998.)
(14e) Flexible Nonstandardized Safe Harbor 401(k) Profit Sharing Plan Adoption
Agreement. (Incorporated by reference to Exhibit q(4) to Registration
No. 333-50295, Form N-2, filed on April 16, 1998.)
(14f) Simplified Employee Pension Plan. (Incorporated by reference to Exhibit
14(f) to Registration No. 2-10835, Post-Effective Amendment No. 76,
filed on April 29, 1998.)
(14g) Educational IRA. (Incorporated by reference to Exhibit 14(f) to
Registration No. 2-10835, Post-Effective Amendment No. 76, filed on
April 29, 1998.)
(15) Form of Administration, Shareholder Services and Distribution Plan of
Registrant. (Incorporated by reference to Post-Effective Amendment No.
73 filed on April 19, 1996.)
(15a) Form of Administration, Shareholder Services and Distribution Agreement
between Seligman Financial Services, Inc. and Dealers. (Incorporated by
reference to Post-Effective Amendment No. 73 filed on April 19, 1996.)
(16) Schedule of Computation of Performance Data provided in Registration
Statement in response to Item 22. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 74, filed April 29, 1997.)
(17) Financial Data Schedules 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. (Incorporated by
reference to Post-Effective Amendment No. 73 filed on April 19, 1996.)
Other Exhibits: Power of Attorney*
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
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
(1) (2)
Number of Record
Title of Class Holder as of March 31, 1998
-------------- ---------------------------
Class A Common Stock 10,051
Class B Common Stock 438
Class D Common Stock 3,465
ITEM 27. INDEMNIFICATION
Reference is made to the provisions of Articles Twelfth and
Thirteenth of Registrant's Amended and Restated Articles of
Incorporation filed as Exhibit 24(b)(1) and Article IV of
Registrant's Amended and Restated By-laws filed as Exhibit 24(b)(2)
to Registrant's Post-Effective Amendment No. 74 to the Registration
Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment Adviser - The Manager
also serves as investment manager to seventeen 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 Municipal
Fund Series, Inc., Seligman Municipal Series Trust, Seligman New
Jersey Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund
Series, Seligman Portfolios, Inc., Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., Seligman Value Fund
Series, Inc. and Tri-Continental Corporation.
The Manager has an investment advisory service division which
provides investment management or advice to private clients. The list
required by this Item 28 of officers and directors of the Manager,
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,
pursuant to the Investment Advisers Act of 1940 (SEC File No.
801-15798), which was filed on March 31, 1998.
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal
underwriter, depositor or investment adviser are as follows:
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 Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in the answer to Item 21:
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <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 None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, National None
Sales Manager
GERALD I. CETRULO, III Senior Vice President of Sales, None
140 West Parkway Regional Sales Manager
Pompton Plains, NJ 07444
JONATHAN G. EVANS Senior Vice President of Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
BRADLEY W. LARSON Senior Vice President of Sales, None
367 Bryan Drive Regional Sales Manager
Alamo, CA 94526
BRUCE TUCKEY Senior Vice President of Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW VEASEY Senior Vice President of Sales None
14 Woodside Drive
Rumson, NJ 07760
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
MICHELLE L. MCCANN Vice President, Manager, Retirement None
Plans Marketing
SCOTT H. NOVAK Vice President, Insurance Products None
Manager
MICHAEL R. SANDERS Vice President, Product Manager None
CHARLES L. VON BREITENBACH, II* Vice President, Product Manager None
Managed Money Services
ROBERT T. HAUSLER* Vice President, Global Mutual Funds, None
Product Management
MARSHA E. JACOBY* Vice President, Offshore Funds None
WILLIAM W. JOHNSON* Vice President, Order Desk None
TRACY A. SALOMON* Vice President, Retirement None
Marketing Manager
HELEN SIMON* Vice President, Sales None
Administration Manager
J. BRERETON YOUNG* Vice President, Mutual Funds None
Product Manager
PETER J. CAMPAGNA Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
MASON S. FLINN Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
BRADFORD C. DAVIS Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
ANDREW DRALUCK Regional Vice President None
4032 E. Williams Drive
Phoenix, AZ 85024
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
DAVID GARDNER Regional Vice President None
2403 Cayenne Drive
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine Drive
Houston, TX 77077
T. WAYNE KNOWLES Regional Vice President None
104 Morninghills Court
Cary, NC 27511
JUDITH L. LYON Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
DAVID MEYNCKE Regional Vice President None
4957 Cross Point Drive
Oldsmar, FL 34677
TIM O'CONNELL Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
THOMAS PARNELL Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
DAVE PETZKE Regional Vice President None
4016 Saint Lucia Street
Boulder, CO 80301
NICHOLAS ROBERTS Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
STEVE WILSON Regional Vice President None
83 Kaydeross Park
Saratoga Springs, NY 12866
KELLI A. WIRTH-DUMSER Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28215
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
JEFFREY S. DEAN* Assistant Vice President, Marketing None
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
GAIL S. CUSHING* Assistant Vice President, None
National Accounts Manager
JOSEPH M. MCGILL* Vice President, None
Compliance Officer
JACK TALVY* Assistant Vice President, Internal None
Marketing Services Manager
JOYCE PERESS* Assistant Secretary 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
801 Pennsylvania
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 years ended December 31, 1997, 1996 and 1995 the
approximate cost of these services were:
1997 1996 1995
---- ---- ----
Class A Shares $56,682.48 $61,000 $ 63,300
Class B Shares 1,693.44 380 --
Class D Shares 20,066.76 21,500 15,300
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>
File No. 2-10837
811-525
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. 75 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 29th day of April, 1998.
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. 75 has been
signed below by the following persons in the capacities indicated on April
29, 1998.
Signature Title
--------- -----
/s/ WILLIAM C. MORRIS
- --------------------------------- Chairman of the Board (Principal executive
William C. Morris* officer) and Director
/s/ BRIAN T. ZINO
- --------------------------------- Director and President
Brian T. Zino
/s/ THOMAS G. ROSE
- --------------------------------- Treasurer
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, 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
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
File No. 2-10837
811-525
SELIGMAN INCOME FUND, INC.
Post-Effective Amendment No. 75 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
24(b)(7)(a) Deferred Compensation Plan for Directors
24(b)(11) Consent of Independent Auditors
24(b)(17) Financial Data Schedules
Other exhibits Power of Attorney
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF
SELIGMAN INCOME FUND, INC.
("FUND")
1. ELECTION TO DEFER PAYMENTS. Any member of the Board of Directors (herein, a
"Director") of the Fund may elect to have payment of that Director's annual
retainer or meeting fees or both for Board service deferred as provided in this
Plan. The election shall be made in writing prior to, and to take effect from,
the beginning of a calendar year. For any Director in the year in which this
Plan is adopted or for a person elected a director in other than the last
calendar month of a year, the election shall be made within 30 days after that
event and prior to, and to take effect from, the beginning of the calendar
quarter next ensuing after that event. Elections shall continue in effect until
terminated in writing, any such termination to take effect on the first day of
the calendar year beginning after receipt of the notice of termination. An
election shall be irrevocable as to payments deferred in conformity with that
election.
2. DEFERRED PAYMENT ACCOUNT. Each deferred retainer or fee shall be credited at
the time when it otherwise would have been payable to an account to be
established in the name of the Director on the books of the Fund (the "Deferred
Payment Account") adjusted for notional investment experience as hereinafter
described.
3. RETURN ON DEFERRED PAYMENT ACCOUNT BALANCE. (a) For purposes of measuring the
investment return on his Deferred Payment Account, the Director may elect to
have the aggregate amount of his deferred compensation (or a specified portion
thereof) receive a return (i) at a rate equal to the return earned on
three-month U.S. Treasury Bills at the beginning of each calendar quarter (the
"Treasury Bill Rate") and such interest shall be credited to the account
quarterly at the end of each calendar quarter, or (ii) at a rate of return
(positive or negative) equal to the rate of return on the shares of any of the
registered investment companies managed by J. & W. Seligman & Co. Incorporated
("Seligman") or any other entity controlling, controlled by, or under common
control with (as such terms are defined in the Investment Company Act of 1940)
Seligman (each, a "Notional Fund"), assuming reinvestment of dividends and
distributions from the Notional Funds. (b) A Director may amend his designation
of investment return as of the end of each calendar quarter by giving written
notice to the President of the Fund at least 30 days prior to the end of such
calendar quarter. A timely change to a Director's designation of investment
return shall become effective on the first day of the calendar quarter following
receipt by the President of the Fund (the "President").
4. NOTIONAL INVESTMENT EXPERIENCE. Amounts credited to a Deferred Payment
Account shall be periodically adjusted for notional investment experience. In
each case such notional investment experience shall be determined by treating
the Deferred Payment Account as though an equivalent dollar amount had been
invested and reinvested in one or more of the Notional Funds. The Notional Funds
used as a basis for determining notional investment experience with respect to
any Director's Deferred Payment Account shall be designated by the Director in
writing by instrument of election substantially in the form attached hereto as
Exhibit C and may be changed prospectively by similar written election effective
as of the first day of any calendar quarter. The President may from time to time
limit the Notional Funds available for purposes of such election. If at any time
any Notional Fund that has previously been
(3/98)
<PAGE>
designated by a Director as a notional investment shall cease to exist or shall
be unavailable for any reason, or if the Director fails to designate one or more
Notional Funds pursuant to this Section 4, the President may, at his discretion
and upon notice to the Director, treat any amounts notionally invested in such
Notional Fund (whether representing past amounts credited to a Director's
Deferred Payment Account or subsequent fee deferrals or both) as having been
invested at the Treasury Bill Rate, only until such time as the Director shall
have made another investment election in accordance with the foregoing
procedures. Deferred Payment Accounts shall continue to be adjusted for notional
investment experience until distributed in full in accordance with the
distribution method elected by the Director pursuant to Section 5 hereof.
5. PAYMENT OF DEFERRED AMOUNTS. All amounts credited to an account pursuant to
any election by the Director made as provided in Section 1 hereof shall be paid
to the Director
(a) in, or beginning in, the calendar year following the calendar
year in which the Director ceases to be a Director of the
Fund, or
(b) in, or beginning in, the calendar year following the earlier
of the calendar year in which the Director ceases to be a
Director of the Fund or attains age 70,
and shall be paid
(c) in a lump sum payable on the first day of the calendar year in
which payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of each
year commencing with the calendar year in which payment is to
begin, all as the Director shall specify in making the
election. If the payment is to be made in installments, the
amount of each installment shall be equal to a fraction of the
total of the amounts in the account at the date of the payment
the numerator of which shall be one and the denominator of
which shall be the then remaining number of unpaid
installments (including the installment then to be paid). If
the Director dies at any time before all amounts in the
account have been paid, such amounts shall be paid at that
time in a lump sum to the beneficiary or beneficiaries
designated by the Director in writing to receive such payments
or in the absence of such a designation to the estate of the
Director.
The Board of Directors may, in the case of an unforseeable emergency, at its
sole discretion accelerate the payment of any unpaid amount for any or all
Directors. For purposes of this paragraph, an unforseeable emergency is severe
financial hardship to the Director resulting from a sudden and unexpected
illness or accident of the Director or of a dependent (as defined in section
152(a) of the Internal Revenue Code) of the Director, loss of the Director's
property due to casualty, or other similar extraordinary and unforseeable
circumstances arising as a result of events beyond the control of the Director.
Payment due to an unforseeable emergency may not be made to the extent that such
hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Director's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under the Plan. Examples of what
are not considered to be unforseeable emergencies include the need to send a
Director's child to college or the desire to purchase a home.
(3/98)
<PAGE>
Withdrawals of amounts because of an unforseeable emergency are only permitted
to the extent reasonably necessary to satisfy the emergency need.
6. ASSIGNMENT. No deferred amount or unpaid portion thereof may be assigned or
transferred by the Director except by will or the laws of descent and
distribution.
7. WITHHOLDING TAXES. The Fund shall deduct from all payments any federal, state
or local taxes and other charges required by law to be withheld with respect to
such payments.
8. NATURE OF RIGHTS; NONALIENATION. A Director's rights to deferred payment
under the Plan shall be solely those of an unsecured general creditor of the
Fund, and any payments by the Fund pursuant to the Plan will be made solely from
the Fund's general assets and property. The Fund will be under no obligation to
purchase, hold or dispose of any investment for the specific benefit of any
Director but, if the Fund should choose to purchase shares of any Notional Fund
in order to cover all or a portion of its obligations under the Plan, then such
investments will continue to be a part of the general assets and property of the
Fund. A Director's rights under the Plan may not be transferred, assigned,
pledged or otherwise alienated, and any attempt by the Director to do so shall
be null and void.
9. STATUS OF DIRECTOR. Nothing in the Plan nor any election hereunder shall be
construed as conferring on any Director the right to remain a Director of the
Fund or to receive fees at any particular rate.
10. AMENDMENT AND ACCELERATION. The Board of Directors may at any time at its
sole discretion amend or terminate this Plan, provided that no such amendment or
termination shall adversely affect the right of Directors to receive deferred
amounts credited to their account.
11. ADMINISTRATION. The Plan shall be administered by the President or by such
person or persons as the President may designate to carry out administrative
functions hereunder. The President shall have complete discretion to interpret
and administer the Plan in accordance with its terms, and his determinations
shall be binding on all persons.
Amended as of March 19, 1998
(3/98)
<PAGE>
EXHIBIT A
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLAN
ELECTION FORM
Pursuant to the Deferred Compensation Plan for Directors, as amended as
of March 19, 1998, (the "Plan") adopted by each of the Seligman Investment
Companies (the "Funds"), I hereby elect to have ___% of my annual retainer fees
and ___% of my meeting fees for service to the Funds deferred as provided in the
Plan. This election will take effect at such time as is provided in section 1 of
the Plans, and shall continue in effect until terminated in writing, any such
termination to take effect of the first day of the next calendar year beginning
after receipt of the notice of termination.
The Deferred Compensation Plan Return Designation Form attached hereto
indicates the percentage of each of the above amounts that should earn the
designated returns. Such designations shall remain in effect until changed by
submission of a new form as provided in the Plan.
All amounts deferred with respect to any Fund and the earnings thereon
made pursuant to any election by me shall be credited to an account for my
benefit and shall be paid to me:
CHECK (a) OR (b)
(a) in, or beginning in, the calendar year following the
calendar year in which I cease to be a director of the
------ Fund, or
(b) in, or beginning in, the calendar year following the
earlier of the calendar year in which I cease to be a
------ director of the Fund or attain age 70,
and shall be paid
CHECK (c) OR (d)
(c) in a lump sum payable on the first day of the calendar
------ year in which payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of
each year commencing with the calendar year in which
------ payment is to begin.
IF (d) IS SELECTED, ENTER NUMBER OF ANNUAL INSTALLMENTS _________.
If the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts in the
account at the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If I die at any time before all
amounts in the account have been paid, such amounts shall be paid at that time
in a lump sum to the beneficiary or beneficiaries designated by me on the
attached Beneficiary Designation Form or in the absence of such a designation
to my estate.
- -------------------------------- --------------------------------------
Date Signature
(3/98)
<PAGE>
EXHIBIT B
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
I hereby designate the following beneficiary or beneficiaries to receive at my
death the amounts held in my Deferred Payment Accounts from my participation in
the Deferred Compensation Plans for Directors/Trustees of all registered
investment companies advised by J. & W. Seligman & Co. Incorporated for which I
serve as a director or trustee (the "Plans").
A. PRIMARY BENEFICIARY(IES)
1. Name: % Share:
----------------------------- ----------------------------
Address:
---------------------------------------------------------------
Relationship: DOB: Social Security #:
---------- ------- ----------------
Trustee Name and Date (if beneficiary is a trust):
---------------------
Trustee of Trust:
------------------------------------------------------
2. Name: % Share:
----------------------------- ----------------------------
Address:
---------------------------------------------------------------
Relationship: DOB: Social Security #:
---------- ------- ----------------
Trustee Name and Date (if beneficiary is a trust):
---------------------
Trustee of Trust:
------------------------------------------------------
B. CONTINGENT BENEFICIARY(IES)
1. Name: % Share:
----------------------------- ----------------------------
Address:
---------------------------------------------------------------
Relationship: DOB: Social Security #:
---------- ------- ----------------
Trustee Name and Date (if beneficiary is a trust):
---------------------
Trustee of Trust:
------------------------------------------------------
2. Name: % Share:
----------------------------- ----------------------------
Address:
---------------------------------------------------------------
Relationship: DOB: Social Security #:
---------- ------- ----------------
Trustee Name and Date (if beneficiary is a trust):
---------------------
Trustee of Trust:
------------------------------------------------------
(3/98)
I understand that I may revoke or amend the above designation at any time. I
understand that payment will be made to my Contingent Beneficiary(ies) only if
there is no surviving Primary Beneficiary(ies). I further understand that if I
am not survived by any Primary or Contingent Beneficiaries, payment will be made
to my estate as set forth under the Plans.
- -------------------------------- --------------------------------------
Date Signature
--------------------------------------
Participant's Name Printed
(3/98)
<PAGE>
EXHIBIT C
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLANS
RETURN DESIGNATION FORM
<TABLE>
<CAPTION>
I elect to have my deferred compensation for all registered investment companies
advised by J. & W. Seligman & Co. Incorporated for which I serve as a Director
or Trustee deemed to be invested as specified below:
- ------------------------------------------------------- --------------- ---------------
% Allocation
% Allocation for accumulated
for future fees balances
- ------------------------------------------------------- --------------- ---------------
<S> <C> <C>
At the prevailing three-month U.S. Treasury Bill Rate
- ------------------------------------------------------- --------------- ---------------
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 Henderson Emerging Markets Growth Fund
- ------------------------------------------------------- --------------- ---------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Growth Opportunities Fund
- ------------------------------------------------------- --------------- ---------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Smaller Companies Fund
- ------------------------------------------------------- --------------- ---------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Technology Fund
- ------------------------------------------------------- --------------- ---------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson International Fund
- ------------------------------------------------------- --------------- ---------------
Seligman High Income Fund Series -
Seligman High-Yield Bond Series
- ------------------------------------------------------- --------------- ---------------
Seligman High Income Fund Series -
Seligman U.S. Government Securities Series
- ------------------------------------------------------- --------------- ---------------
Seligman Income Fund, Inc.
- ------------------------------------------------------- --------------- ---------------
Seligman Value Fund Series, Inc. -
Seligman Large-Cap Value Fund
- ------------------------------------------------------- --------------- ---------------
Seligman Value Fund Series, Inc. -
Seligman Small-Cap Value Fund
- ------------------------------------------------------- --------------- ---------------
Tri-Continental Corporation
- ------------------------------------------------------- --------------- ---------------
Total 100% 100%
- ------------------------------------------------------- --------------- ---------------
</TABLE>
(3/98)
<PAGE>
I acknowledge that I may amend this Return Designation in the manner,
and at such time as permitted, under the Plans. Furthermore, I acknowledge that
in certain circumstances, and pursuant to Section 4 of the Plans, the President
may at his discretion, and upon notice to me, disregard the designations made
above and cause all or a portion of my Deferred Account to receive a return
equal to the prevailing three-month U.S. Treasury Bill Rate.
- --------------------------- --------------------------------
Date Signature
(3/98)
CONSENT OF INDPENDENT AUDITORS
Seligman Income Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 75 to Registration
Statement No. 2-10837 of our report dated January 30, 1998, appearing in the
Annual Report of Shareholders for the year ended December 31, 1997, which is
incorporated by reference in the Statement of Additional Information, which is
included in such Registration Statement, and to the references to us under the
captions "Financial Highlights" in the Prospectus and "General Information" in
the Statement of Additional Information, which are also included in such
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 24, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN INCOME
FUND, INC., a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 1st day of April, 1998.
/s/ RICHARD R. SCHMALTZ (L.S.)
---------------------------------
Richard R. Schmaltz
(3/98)
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN INCOME FUND, INC. CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 321625
<INVESTMENTS-AT-VALUE> 356472
<RECEIVABLES> 4329
<ASSETS-OTHER> 854
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 361655
<PAYABLE-FOR-SECURITIES> 5027
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1139
<TOTAL-LIABILITIES> 6166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 318093
<SHARES-COMMON-STOCK> 18271<F1>
<SHARES-COMMON-PRIOR> 19787<F1>
<ACCUMULATED-NII-CURRENT> 406
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34845
<NET-ASSETS> 270688<F1>
<DIVIDEND-INCOME> 4814<F1>
<INTEREST-INCOME> 11536<F1>
<OTHER-INCOME> (29)<F1>
<EXPENSES-NET> (3218)<F1>
<NET-INVESTMENT-INCOME> 13103<F1>
<REALIZED-GAINS-CURRENT> 28173
<APPREC-INCREASE-CURRENT> 2927
<NET-CHANGE-FROM-OPS> 47453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13457)<F1>
<DISTRIBUTIONS-OF-GAINS> (25022)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 981<F1>
<NUMBER-OF-SHARES-REDEEMED> (4482)<F1>
<SHARES-REINVESTED> 1985<F1>
<NET-CHANGE-IN-ASSETS> (25721)
<ACCUMULATED-NII-PRIOR> 889
<ACCUMULATED-GAINS-PRIOR> 6597
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1691<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3218<F1>
<AVERAGE-NET-ASSETS> 281778<F1>
<PER-SHARE-NAV-BEGIN> 14.97<F1>
<PER-SHARE-NII> 0.71<F1>
<PER-SHARE-GAIN-APPREC> 1.31<F1>
<PER-SHARE-DIVIDEND> (0.74)<F1>
<PER-SHARE-DISTRIBUTIONS> (1.44)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 14.81<F1>
<EXPENSE-RATIO> 1.14<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> SELIGMAN INCOME FUND, INC. CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 321625
<INVESTMENTS-AT-VALUE> 356472
<RECEIVABLES> 4329
<ASSETS-OTHER> 854
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 361655
<PAYABLE-FOR-SECURITIES> 5027
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1139
<TOTAL-LIABILITIES> 6166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 318093
<SHARES-COMMON-STOCK> 582<F1>
<SHARES-COMMON-PRIOR> 198<F1>
<ACCUMULATED-NII-CURRENT> 406
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34845
<NET-ASSETS> 8607<F1>
<DIVIDEND-INCOME> 94<F1>
<INTEREST-INCOME> 224<F1>
<OTHER-INCOME> (1)<F1>
<EXPENSES-NET> (104)<F1>
<NET-INVESTMENT-INCOME> 213<F1>
<REALIZED-GAINS-CURRENT> 28173
<APPREC-INCREASE-CURRENT> 2927
<NET-CHANGE-FROM-OPS> 47453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (247)<F1>
<DISTRIBUTIONS-OF-GAINS> (633)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 423<F1>
<NUMBER-OF-SHARES-REDEEMED> (86)<F1>
<SHARES-REINVESTED> 47<F1>
<NET-CHANGE-IN-ASSETS> (25721)
<ACCUMULATED-NII-PRIOR> 889
<ACCUMULATED-GAINS-PRIOR> 6597
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 104<F1>
<AVERAGE-NET-ASSETS> 5480<F1>
<PER-SHARE-NAV-BEGIN> 14.95<F1>
<PER-SHARE-NII> 0.59<F1>
<PER-SHARE-GAIN-APPREC> 1.31<F1>
<PER-SHARE-DIVIDEND> (0.62)<F1>
<PER-SHARE-DISTRIBUTIONS> (1.44)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 14.79<F1>
<EXPENSE-RATIO> 1.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN INCOME FUND, INC. CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 321625
<INVESTMENTS-AT-VALUE> 356472
<RECEIVABLES> 4329
<ASSETS-OTHER> 854
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 361655
<PAYABLE-FOR-SECURITIES> 5027
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1139
<TOTAL-LIABILITIES> 6166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 318093
<SHARES-COMMON-STOCK> 5155<F1>
<SHARES-COMMON-PRIOR> 5483<F1>
<ACCUMULATED-NII-CURRENT> 406
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34845
<NET-ASSETS> 76194<F1>
<DIVIDEND-INCOME> 1335<F1>
<INTEREST-INCOME> 3198<F1>
<OTHER-INCOME> (8)<F1>
<EXPENSES-NET> (1488)<F1>
<NET-INVESTMENT-INCOME> 3037<F1>
<REALIZED-GAINS-CURRENT> 28173
<APPREC-INCREASE-CURRENT> 2927
<NET-CHANGE-FROM-OPS> 47453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3132)<F1>
<DISTRIBUTIONS-OF-GAINS> (6970)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 823<F1>
<NUMBER-OF-SHARES-REDEEMED> (1743)<F1>
<SHARES-REINVESTED> 592<F1>
<NET-CHANGE-IN-ASSETS> (25721)
<ACCUMULATED-NII-PRIOR> 889
<ACCUMULATED-GAINS-PRIOR> 6597
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 469<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1488<F1>
<AVERAGE-NET-ASSETS> 78142<F1>
<PER-SHARE-NAV-BEGIN> 14.95<F1>
<PER-SHARE-NII> 0.59<F1>
<PER-SHARE-GAIN-APPREC> 1.30<F1>
<PER-SHARE-DIVIDEND> (0.62)<F1>
<PER-SHARE-DISTRIBUTIONS> (1.44)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 14.78<F1>
<EXPENSE-RATIO> 1.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
