File No. 2-56805
811-2650
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. 76 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 22 |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)
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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):
|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|X| on May 1, 1999 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.
<PAGE>
SELIGMAN
-------------------
INCOME
FUND, INC.
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals and time horizons. We recommend
that you consult your financial advisor to determine if this Fund is suitable
for you.
EQIN1 5/99
[GRAPHIC]
PROSPECTUS
MAY 1, 1999
-----
Seeking High Current
Income and Improvement of
Income and Capital Value
Over the Long Term
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund
Investment Objectives/Principal Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Year 2000 6
Shareholder Information
Deciding Which Class of Shares to Buy 7
Pricing of Fund Shares 9
Opening Your Account 9
How to Buy Additional Shares 10
How to Exchange Shares Between
The Seligman Mutual Funds 11
How to Sell Shares 11
Important Policies That May Affect
Your Account 12
Dividends and Capital Gain Distributions 13
Taxes 13
The Seligman Mutual Funds 14
Financial Highlights 15
How to Contact Us 17
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
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The Fund
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Fund's objectives are high current income consistent with what is believed
to be prudent risk of capital and the possibility of improvement in income and
capital value over the longer term.
The Fund uses the following principle strategies to seek its objectives:
The Fund generally invests at least 80% of its assets in income-producing
securities. The Fund has a fundamental policy that, at all times, it must invest
at least 25% of the market value of its gross assets in cash, bonds and/or
preferred stocks.
Subject to these requirements, the Fund may be invested in many different types
of securities, including, but not limited to: money market instruments,
fixed-income securities (such as notes, bonds, debentures, and preferred
stocks), US Government securities, senior securities convertible into common
stocks, common stocks, and American Depositary Receipts (ADRs). ADRs are
publicly traded instruments generally issued by domestic banks or trust
companies that represent securities of foreign issuers. Securities are carefully
selected in light of the Fund's investment objectives and are diversified among
many different types of securities and market sectors.
The Fund allocates its assets between equity securities and fixed-income
securities. If equity valuations become excessive, then the Fund will invest
more of its assets in fixed-income securities. The Fund may also invest more of
its assets in fixed-income securities if the investment manager believes that
interest rates are at attractive levels.
Equity securities are chosen for purchase by the Fund using a bottom-up stock
selection approach. This means the investment manager concentrates on individual
company fundamentals, rather than on a particular industry. The Fund seeks to
purchase strong, well-managed companies, generally large US companies, which
have the potential for solid earnings growth and dividend increases. The
investment manager looks to identify companies that it believes offer attractive
dividend yields relative to the market and, typically, that display relatively
low valuations.
Fixed-income securities are chosen for purchase by the Fund using a method that
combines macro analysis of the fixed-income market with fundamental research
into individual securities, customized by market sector. This means that the
investment manager considers the trends in the fixed-income market and evaluates
the long-term trends in interest rates, and then selects individual securities
for the Fund based on its evaluation of each security's particular
characteristics (for example, duration, yield, quality, relative value) and
total return opportunities.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold) and may invest up to 10% of its total
assets directly in foreign securities (which does not include ADRs). The Fund
generally does not invest a significant amount, if any, in illiquid or foreign
securities.
Except for its fundamental policy, which can only be changed with the approval
of shareholders, the Fund may change its principal strategies if the Fund's
Board of Directors believes doing so is consistent with the Fund's objectives.
The Fund's objectives are a fundamental policy and may be changed only with the
approval of shareholders. As with any mutual fund, there is no guarantee the
Fund will achieve its objectives.
1
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PRINCIPAL RISKS
A significant portion of the Fund's assets is generally invested in common
stocks. Stock prices fluctuate. Therefore, as with any fund that invests in
stocks, the Fund's net asset value will fluctuate, especially in the short term.
You may experience a decline in the value of your investment and you could lose
money.
While the Fund maintains exposure to varied industry sectors over the longer
term, it may invest more heavily in certain industries believed to offer good
investment opportunities. To the extent that an industry in which the Fund is
invested falls out of favor, the Fund's performance may be negatively affected.
Stocks of large US companies, like those in which the Fund may invest, are
experiencing an extended period of strong performance. However, if investor
sentiment changes, the value of large company stocks may decline. This could
have an adverse effect on the Fund's yield, net asset value, and total return.
The portion of the Fund's assets that are invested in fixed-income securities
will be subject to interest rate risk and credit risk, as discussed below.
Changes in market interest rates will affect the value of the fixed-income
securities held by the Fund. In general, the market value of fixed-income
securities, like the securities in which the Fund invests, move in the opposite
direction of interest rates: the market value decreases when interest rates rise
and increases when interest rates fall. Long-term securities are generally more
sensitive to changes in interest rates, and therefore subject to a greater
degree of market price volatility. Changes in the value of the fixed-income
securities held by the Fund may affect the Fund's net asset value. The extent to
which the Fund is affected will depend on the percentage of the Fund's assets
that is invested in fixed-income securities and the duration of the securities
held.
A fixed-income security could deteriorate in quality to such an extent that its
rating is downgraded or its market value declines relative to comparable
securities. Credit risk also includes the risk that an issuer of a security
would be unable to make interest and principal payments. To the extent the Fund
holds securities that have been downgraded, or default on payment, its
performance could be negatively affected.
Fixed-income securities, like those in which the Fund invests, are traded
principally by dealers in the over-the counter market. The Fund's ability to
sell securities it holds is dependent on the willingness and ability of market
participants to provide bids that reflect current market levels. Adverse market
conditions could result in a lack of liquidity by reducing the number of ready
buyers.
The Fund may actively and frequently trade securities in its portfolio to carry
out its principal strategies. A high portfolio turnover rate results in
correspondingly greater transaction costs and a possible increase in short-term
capital gains and losses. This may increase the Fund's expenses and have tax
consequences for investors in the Fund.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
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PAST PERFORMANCE
The Fund offers three Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how each Class's
performance compares to three widely-used measures of performance.
The following performance information is designed to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table below the chart
do reflect the effect of the applicable sales charges. Both the bar chart and
table assume that all dividends and capital gain distributions were reinvested.
Class A Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Annual Total
Calendar Year Returns
------------- -------
1989 15.1%
1990 (8.3%)
1991 30.1%
1992 17.5%
1993 16.0%
1994 (5.4%)
1995 20.6%
1996 8.2%
1997 14.1%
1998 7.3%
Best calendar quarter return: XX.X% - quarter ended ____
Worst calendar quarter return: XX.X% - quarter ended ____
<TABLE>
<CAPTION>
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Average Annual Total Returns - Periods Ended 12/31/98
Class B Class D
One Five Ten Since Inception Since Inception
Year Years Years 4/22/96 5/3/93
------- ------- ------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Class A 2.16% 7.54% 10.41% -- --
Class B 1.45 n/a n/a 9.12% --
Class D 5.39 7.74 n/a -- 8.26%
Lehman Bros. Aggregate Bond Index 8.69 7.27 9.26 9.20(1) 7.25(2)
S&P 500 Index 28.58 24.06 19.21 29.00(1) 22.63(2)
Lipper Income Funds Average 7.85 10.68 11.61 11.98(1) 10.62(2)
The S&P 500 Index, the Lehman Bros. Aggregate Bond Index and the Lipper Income
Funds Average are unmanaged benchmarks that assume the reinvestment of
dividends. The Lipper Income Funds Average does not reflect any sales charges
and the S&P 500 Index and Lehman Bros. Aggregate Bond Index do not reflect any
fees or sales charges. The S&P 500 Index measures the performance of large-cap
stocks, the Lehman Bros. Aggregate Bond Index measures the performance of
government and corporate bonds, and the Lipper Income Funds Average measures the
performance of mutual funds with investment objectives similar to the Fund.
(1) From April 30, 1996.
(2) From April 30, 1993.
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</TABLE>
3
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<PAGE>
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FEES AND EXPENSES
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to you. Annual fund operating expenses are deducted from Fund assets
and are therefore paid indirectly by you and other shareholders of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class D
- ---------------- ------ ------ ------
<S> <C> <C> <C>
Maximum Sales Charge (Load) on Purchases
(as a % of offering price) .................................................... 4.75%(1) none none
Maximum Contingent Deferred Sales Charge (Load) (CDSC) on Redemptions
(as a % of original purchase price or current net asset value,
whichever is less) ............................................................ none(1) 5% 1%
Annual Fund Operating Expenses for 1998
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(as a percentage of average net assets)
Management Fees ................................................................. .60% .60% .60%
Distribution and/or Service (12b-1) Fees ........................................ .24% 1.00% 1.00%
Other Expenses .................................................................. .26% .26% .26%
----- ----- -----
Total Annual Fund Operating Expenses ............................................ 1.10% 1.86% 1.86%
===== ===== =====
</TABLE>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
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Management Fees:
Fees paid out of Fund assets to the
investment manager to compensate it for
managing the Fund.
12b-1 Fees:
Fees paid by each Class, pursuant to a
plan adopted by the Fund under Rule
12b-1 of the Investment Company Act of
1940. The plan allows each Class to pay
distribution and/or service fees for the
sale and distribution of its shares and
for providing services to shareholders.
Other Expenses:
Miscellaneous expenses of running the
Fund, including such things as transfer
agency, registration, custody, and
auditing and legal fees.
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Example
This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses may
be higher or lower, based on these assumptions your expenses would be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $ $ $ $
Class B
Class D
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $ $ $ $
Class B
Class D
+ Class B shares will automatically convert to Class A shares after eight
years.
4
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<PAGE>
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MANAGEMENT
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
The Fund's manager is J. & W. Seligman & Co. Incorporated (Seligman), 100 Park
Avenue, New York, New York 10017. Seligman manages the investment of the Fund's
assets, including making purchases and sales of portfolio securities consistent
with the Fund's investment objective and strategies, and administers the Fund's
business and other affairs.
Established in 1864, Seligman currently serves as manager to 18 USregistered
investment companies, which offer more than 50 investment portfolios with
approximately $XX.X billion in assets as of March 31, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at March 31, 1999, of approximately $XX.X billion.
The Fund pays Seligman a fee for its management services. The fee rate declines
as the Fund's net assets increase. It 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. The fee
paid by the Fund to Seligman for the Fund's fiscal year ended December 31, 1998,
was equal to an annual rate of .60% of the Fund's average daily net assets.
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Affiliates of Seligman:
Seligman Advisors, Inc. (Seligman
Advisors): The Fund's general
distributor; responsible for accepting
orders for purchases and sales of Fund
shares.
Seligman Services, Inc.: A limited
purpose broker/dealer; acts as the
broker/dealer of record for shareholder
accounts that do not have a designated
financial advisor.
Seligman Data Corp. (SDC): The Fund's
shareholder service agent; provides
shareholder account services to the Fund
at cost.
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Portfolio Management
The Fund is managed by the Seligman Growth and Income Team, headed by Charles C.
Smith, Jr. Mr. Smith, a Managing Director of Seligman, is a Vice President of
the Fund and has been Portfolio Manager of the Fund since December 1991. Mr.
Smith joined Seligman in 1985 as Vice President, Investment Officer. He became
Senior Vice President, Senior Investment Officer in 1992, and Managing Director
in January 1994. Mr. Smith also manages Seligman Common Stock Fund, Inc.; and he
manages the Seligman Common Stock Portfolio and the Seligman Income Portfolio,
two portfolios of Seligman Portfolios, Inc.
Rodney D. Collins, Senior Vice President, Investment Officer of Seligman since
January 1999, co-manages the Fund. Mr. Collins joined Seligman in 1992 as a Vice
President, Investment Officer. Mr. Collins also co-manages Seligman Common Stock
Fund, Inc.; and he co-manages the Seligman Common Stock Portfolio and the
Seligman Income Portfolio, two portfolios of Seligman Portfolios, Inc.
5
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<PAGE>
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YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Fund relies upon
service providers and their computer systems for its day-to-day operations. Many
of the Fund's service providers in turn depend upon computer systems of their
vendors. Seligman and SDC have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Fund's
other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to the Board of Directors of the Fund and its Audit
Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Fund, including securities firms that
execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans - recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund. The team anticipates
finalizing these plans in the near future.
The Fund anticipates the team will implement all significant components of the
team's year 2000 plans by mid-1999, including appropriate testing of critical
systems and receipt of satisfactory assurances from critical service providers
and vendors regarding their year 2000 compliance. The Fund believes that the
critical systems on which it relies will function properly on and after the year
2000, but this is not guaranteed. If these systems do not function properly, or
the Fund's critical service providers are not successful in implementing their
year 2000 plans, the Fund's operations may be adversely affected, including
pricing, securities trading and settlement, and the provision of shareholder
services.
In addition, the Fund may hold securities of issuers whose underlying business
leaves them susceptible to year 2000 issues. The Fund may also hold securities
issued by governmental or quasi-governmental issuers, which, like other
organizations, are also susceptible to year 2000 concerns. Year 2000 issues may
affect an issuer's operations, creditworthiness, and ability to make timely
payment on any indebtedness and could have an adverse impact on the value of its
securities. If the Fund holds these securities, the Fund's performance could be
negatively affected. Seligman seeks to identify an issuer's state of year 2000
readiness as part of the research it employs. However, the perception of an
issuer's year 2000 preparedness is only one of the many factors considered in
determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the exchanges, markets, depositories, clearing agencies, or government or third
parties responsible for infrastructure needs do not address their year 2000
issues in a satisfactory manner.
SDC has informed the Fund that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Fund will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
6
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<PAGE>
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Shareholder Information
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule and is
subject to different ongoing 12b-1 fees. When deciding which Class of shares to
buy, you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another
Seligman mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing
12b-1 fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you
buy or sell shares. Your financial advisor will be able to help you
decide which Class of shares best meets your needs.
<TABLE>
<CAPTION>
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Class A
o Initial sales charge on Fund purchases, as set forth below:
Sales Charge Regular Dealer
Sales Charge as a % Discount
as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
------------------------- -------------------- --------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more,
but you will be subject to a 1% CDSC if you sell your shares within 18
months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain distributions.
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</TABLE>
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Class B
o No initial sales charge on purchases.
o A declining CDSC on shares sold within 6 years of purchase:
Years Since Purchase CDSC
---------------- ------
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
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
o No CDSC on redemptions of shares purchased with reinvested dividends
or capital gain distributions.
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Your purchase of Class B shares must be
for less than $250,000, because if you
are investing $250,000 or more you will
pay less in fees and charges if you buy
another Class of Shares.
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7
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<PAGE>
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Class D
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC on redemptions of shares purchased with reinvested dividends
or capital gain distributions.
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Because 12b-1 fees are paid out of each Class's assets on an ongoing basis, over
time these fees will increase your investment expenses and may cost you more
than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, and Class D shares. On an ongoing
basis, the Directors, in the exercise of their fiduciary duties under the
Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
How CDSCs Are Calculated
To minimize the amount of CDSC you may pay when you sell your shares, the Fund
assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
8
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<PAGE>
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PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares. Purchase or sale
orders received by an authorized dealer or financial advisor by the close of
regular trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time) and accepted by Seligman Advisors before the close of business
(5:00 p.m. Eastern time) on the same day will be executed at the Class's NAV
calculated as of the close of regular trading on the NYSE on that day. Your
broker/dealer or financial advisor is responsible for forwarding your order to
Seligman Advisors before the close of business.
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of the Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class B and Class D shares will generally be lower than the NAV of Class
A shares.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
- -----------------------------------------
NAV:
Computed separately for each Class by
dividing that Class's share of the net
assets of the Fund (i.e., its assets
less liabilities) by the total number of
outstanding shares of the Class.
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OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges. Ask your
financial advisor if any of these programs apply to you.
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
- -----------------------------------------
You may buy shares of the Fund for all
types of tax-deferred retirement plans.
Contact Retirement Plan Services at the
address or phone number listed on the
inside back cover of this prospectus for
information and to receive the proper
forms.
- -----------------------------------------
The required minimum initial investments are:
o Regular (non-retirement) accounts: $1,000
o For accounts opened concurrently with Invest-A-Check(R): $100 to open
if you will be making monthly investments $250 to open if you will be
making quarterly investments
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your Fund purchase, and any subsequent
transactions in your account. You will also be sent at least annually, a
statement detailing all your transactions in the Fund and all other Seligman
funds you own. Duplicate account statements will be sent to you free of charge
for the current year and most recent prior year. Copies of year-end statements
for prior years are available for a fee of $10 per year, per account, with a
maximum charge of $150 per account. Send your request and a check for the fee to
SDC.
If you want to be able to buy, sell, or exchange shares by telephone, you
should complete an application when you open your account. This will
prevent you from having to complete a supplemental election form (which
may require a signature guarantee) at a later date.
9
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HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Shares may be purchased through your
authorized financial advisor, or you may send a check directly to SDC. Please
provide either an investment slip or a note that provides your name(s), Fund
name, and account number. Your investment will be made in the Class you already
own. Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-5051
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-A-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares, you may pay an
initial sales charge to buy Fund shares.
Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
Seligman Time Horizon Matrix(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
Seligman Harvester. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
10
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<PAGE>
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HOW TO EXCHANGE SHARES BETWEEN THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares of
Seligman Cash Management Fund to buy Class A shares of the Fund or another
Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-a-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es), which you should read and understand before
investing.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may always send a written request to sell Fund
shares; however, it may take longer to get your money.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners, or
(3) mailed to other than your address of record.
- -----------------------------------------
Signature Guarantee:
Protects you and the Fund from fraud. It
guarantees that a signature is genuine.
A guarantee must be obtained from an
eligible financial institution.
Notarization by a notary public is not
an acceptable guarantee.
- -----------------------------------------
You may need to provide additional documents to sell Fund shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account services to sell Fund shares:
Systematic Withdrawal Plan. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed amount (minimum of $50) of uncertificated shares at
regular intervals. A check will be sent to you at your address of record or, if
you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B or Class D shares and
reinvest your dividends and capital gain distributions, you may withdraw 12% or
10%, respectively, of the value of your Fund account (at the time of election)
annually without a CDSC.
Check Redemption Service. If you have at least $25,000 in the Fund, you may ask
SDC to provide checks which may be drawn against your account in amounts of $500
or more. You can elect this service on your initial application, or contactSDC
for the appropriate forms to establish this service.
Check Redemption Service. If you have at least $25,000 in the Fund, you may ask
SDC to provide checks which may be drawn against your account in amounts of $500
or more. You can elect this service on your initial application, or contact SDC
for the appropriate forms to establish this service.
11
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<PAGE>
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IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of $1,000,000
or 1% of the Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been considered
excessive.
o Refuse any request to buy Fund shares.
o Reject any request received by telephone.
o Suspend or terminate telephone services.
o Reject a signature guarantee that SDC believes may be fraudulent.
o Close your fund account if its value falls below $500.
o Close your account if it does not have a certified taxpayer
identification number.
Telephone Services
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record)
o Exchange shares between funds
o Change dividend and/or capital gain distribution options
o Change your address
o Establish systematic withdrawals to address of record
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form.
Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not sell
Fund shares by phone.
o Corporations may not sell Fund shares by phone.
o IRAs may only exchange Fund shares or request address changes by
phone.
o Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supplemental election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone as
long as it was reasonable to believe that the request was genuine.
Reinstatement Privilege
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
12
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<PAGE>
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DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund generally pays any dividends from its net investment income and
distributes net capital gains realized on investments annually. It is expected
that the Fund's distributions will be primarily capital gains.
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus, or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B and Class D shares will be lower than the dividends on
Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
- -----------------------------------------
Dividend:
A payment by a mutual fund, usually
derived from the fund's net investment
income (dividends and interest earned on
portfolio securities less expenses).
Capital Gain Distribution:
A payment to mutual fund shareholders
which represents profits realized on the
sale of securities in a fund's
portfolio.
Ex-dividend Date:
The day on which any declared
distributions (dividends or capital
gains) are deducted from a fund's assets
before it calculates its NAV.
- -----------------------------------------
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
You may be taxed at different rates on capital gains distributed by the Fund
depending on the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
13
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<PAGE>
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THE SELIGMAN MUTUAL FUNDS
EQUITY
SPECIALTY
- --------------------------------------------------------------------------------
Seligman Communications and
Information Fund
Seeks capital appreciation by investing in companies operating in all aspects of
the communications, information, and related industries.
Seligman Henderson Global Technology Fund
Seeks long-term capital appreciation by investing primarily in global securities
(US and non-US) of companies in the technology and technology-related
industries.
Seligman Henderson Emerging Markets Growth Fund
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging markets.
SMALL COMPANY
- --------------------------------------------------------------------------------
Seligman Frontier Fund
Seeks growth of capital by investing primarily in small company growth stocks.
Seligman Small-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
Seligman Henderson Global Smaller Companies Fund
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
MEDIUM COMPANY
- --------------------------------------------------------------------------------
Seligman Capital Fund
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
LARGE COMPANY
- --------------------------------------------------------------------------------
Seligman Growth Fund
Seeks long-term growth of capital value and an increase in future income.
Seligman Henderson Global Growth Opportunities Fund
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
Seligman Large-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
Seligman Common Stock Fund
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
Seligman Henderson International Fund
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
BALANCED
- --------------------------------------------------------------------------------
Seligman Income Fund
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
FIXED-INCOME
INCOME
- --------------------------------------------------------------------------------
Seligman High-Yield Bond Fund
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
Seligman U.S. Government Securities Fund
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
MUNICIPAL
- --------------------------------------------------------------------------------
Seligman Municipal Funds:
National Fund
Seeks maximum income, exempt from regular federal income taxes.
State-specific funds:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
California Louisiana New Jersey
o High-Yield Maryland New York
o Quality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
* A small portion of income may be subject to state taxes.
MONEY MARKET
- --------------------------------------------------------------------------------
Seligman Cash Management Fund
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00 per
share.
14
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<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
The tables below are intended to help you understand each Class's financial
performance for the past five years or, if less than five years, the period of
the Class's operations. Certain information reflects financial results for a
single share of a Class that was held throughout the periods shown. "Total
return" shows the rate that you would have earned (or lost) on an investment in
the Fund, assuming you reinvested all your dividends and capital gain
distributions. Total returns do not reflect any sales charges. ,
independent auditors, have audited this information. Their report, along with
the Fund's financial statements, is included in the Fund's annual report, which
is available upon request.
CLASS A
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Per Share Data*:
Net asset value, beginning of period ........... $14.81 $14.97 $14.63 $13.05 $14.58
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ........................ 0.64 0.71 0.74 0.76 0.76
Net gains or losses on securities
(both realized and unrealized) ............. 0.41 1.41 0.38 1.89 (1.57)
Net gains or losses on foreign currency
transactions (both realized and unrealized) -- (0.10) 0.04 (0.01) 0.03
----- ----- ----- ----- -----
Total from investment operations ............... 1.05 2.02 1.16 2.64 (0.78)
----- ----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ....... (0.65) (0.74) (0.73) (0.78) (0.75)
Distributions (from capital gains) ........... (0.86) (1.44) (0.09) (0.28) --
----- ----- ----- ----- -----
Total distributions ............................ (1.51) (2.18) (0.82) (1.06) (0.75)
----- ----- ----- ----- -----
Net asset value, end of period ................. $14.35 $14.81 $14.97 $14.63 $13.05
===== ===== ===== ===== =====
Total return ................................... 7.26% 14.06% 8.22% 20.60% (5.43)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ....... $256,060 $270,688 $296,291 $318,307 $286,355
Ratio of expenses to average net assets ........ 1.10% 1.14% 1.14% 1.00% 1.02%
Ratio of net income to average net assets ...... 4.25% 4.66% 5.11% 5.38% 5.51%
Portfolio turnover rate ........................ 124.79% 138.90% 125.92% 111.78% 66.62%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
15
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<PAGE>
- --------------------------------------------------------------------------------
CLASS B
<TABLE>
<CAPTION>
Year ended
December 31, 4/22/96**
------------------- to
1998 1997 12/31/96
----- ----- ------
<S> <C> <C> <C>
Per Share Data*:
Net asset value, beginning of period ........... $14.79 $14.95 $14.43
----- ----- -----
Income from investment operations:
Net investment income ........................ 0.52 0.59 0.43
Net gains or losses on securities
(both realized and unrealized) ............. 0.39 1.41 0.59
Net gains or losses on foreign currency
transactions (both realized and unrealized) -- (0.10) 0.05
----- ----- -----
Total from investment operations ............... 0.91 1.90 1.07
----- ----- -----
Less distributions:
Dividends (from net investment income) ....... (0.54) (0.62) (0.46)
Distributions (from capital gains) ........... (0.86) (1.44) (0.09)
----- ----- -----
Total distributions ............................ (1.40) 2.06 (0.55)
----- ----- -----
Net asset value, end of period ................. $14.30 $14.79 $14.95
===== ===== =====
Total return ................................... 6.28% 13.24% 7.58%+
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ....... $21,096 $8,607 $2,961
Ratio of expenses to average net assets ........ 1.86% 1.90% 1.89%+
Ratio of net income to average net assets ...... 3.49% 3.90% 4.36%+
Portfolio turnover rate ........................ 124.79% 138.90% 125.92%++
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------
CLASS D 1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Per Share Data*:
Net asset value, beginning of period ........... $14.78 $14.95 $14.60 $13.01 $14.55
----- ----- ----- ----- -----
Investment operations:
Net investment income ........................ 0.52 0.59 0.63 0.65 0.65
Net gains or losses on securities
(both realized and unrealized) ............. 0.40 1.40 0.38 1.88 (1.57)
Net gains or losses on foreign currency
transactions (both realized and unrealized) -- (0.10) 0.04 (0.01) 0.03
----- ----- ----- ----- -----
Total from investment operations ............... 0.92 1.89 1.05 2.52 (0.89)
----- ----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ....... (0.54) (0.62) (0.61) (0.65) (0.65)
Distributions (from capital gains) ........... (0.86) (1.44) (0.09) (0.28) --
----- ----- ----- ----- -----
Total distributions ............................ (1.40) (2.06) (0.70) (0.93) (0.65)
----- ----- ----- ----- -----
Net asset value, end of period ................. $14.30 $14.78 $14.95 $14.60 $13.01
===== ===== ===== ===== =====
Total return ................................... 6.36% 13.17% 7.43% 19.66% 6.20%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ....... $78,263 $76,194 $81,957 $86,701 $67,946
Ratio of expenses to average net assets ........ 1.86% 1.90% 1.90% 1.79% 1.82%
Ratio of net income to average net assets ...... 3.49% 3.90% 4.37% 4.58% 4.74%
Portfolio turnover rate ........................ 124.79% 138.90% 125.92% 111.78% 66.62%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
16
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<PAGE>
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How to Contact Us
The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
Your Retirement
Account Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
--------------------------------------------------------
24-hour telephone access is available by dialing (800)
622-4597 on a touchtone telephone. You will have instant
access to price, yield, account balance, most recent
transaction, and other information.
--------------------------------------------------------
17
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<PAGE>
- --------------------------------------------------------------------------------
For More Information
------------------------------------------------------------
The following information is available without charge upon
request: Call toll-free (800) 221-2450 in the US or (212)
682-7600 outside the US.
Statement of Additional INformation (SAI) contains
additional information about the Fund. It is on file with
the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally part of) this
prospectus.
Annual/Semi-Annual Reports contain additional information
about the Fund's investments. In the Fund's annual report,
you will find an discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance during its last fiscal year.
------------------------------------------------------------
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Wasington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC. 20549-6009.
SEC FILE NUMBER: 811-525
- --------------------------------------------------------------------------------
<PAGE>
SELIGMAN INCOME FUND, INC.
Statement of Additional Information
May 1, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of the Seligman Income Fund,
Inc., dated May 1, 1999. This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the Prospectus, which you may obtain by writing or calling
the Fund at the above address or telephone numbers.
The financial statements and notes included in the Fund's Annual Report, and the
Independent Auditors' Report thereon, are incorporated herein by reference. The
Annual Report will be furnished to you without charge if you request a copy of
this SAI.
Table of Contents
Fund History................................................. 2
Description of the Fund and its Investments and Risks........ 2
Management of the Fund....................................... 5
Control Persons and Principal Holders of Securities.......... 10
Investment Advisory and Other Services....................... 10
Brokerage Allocation and Other Practices..................... 16
Capital Stock and Other Securities .......................... 17
Purchase, Redemption, and Pricing of Shares.................. 17
Taxation of the Fund......................................... 22
Underwriters................................................. 23
Calculation of Performance Data ............................. 25
Financial Statements......................................... 27
General Information.......................................... 27
Appendix .................................................... 28
<PAGE>
Fund History
The Fund was incorporated under the laws of the state of Maryland in 1947.
Description of the Fund and Its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectus.
Convertible bonds. 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 investment manager evaluates such factors as
economic and business conditions involving the issuer, future earnings growth
potential of the issuer, potential for price appreciation of the underlying
equity, the value of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits and capability of
management. In evaluating a convertible security, the investment 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 investment 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 Appendix "A" to this document. The investment
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 rated below investment grade (BB or lower by S&P or
Ba or lower by Moody's). Although bonds rated in the fourth credit rating
category (BBB or Baa) are commonly referred to as investment grade, they may
have speculative characteristics.
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 either 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
2
<PAGE>
unfavorably by changes in currency rates and exchange control regulation. There
may be less information available about a foreign company than about a US
company and foreign companies may not be subject to reporting standards and
requirements comparable to those applicable to US companies. Foreign securities
may not be as liquid as US securities and there may be delays and risks
attendant in local settlement procedures. Securities of foreign companies may
involve greater market risk than securities of US companies, and foreign
brokerage commissions and custody fees are generally higher than those in United
States. Investments in foreign securities may also be subject to local economic
or political risks, political instability, the possible nationalization of
issuers and the risk of expropriation or restrictions on the repatriation of
proceeds of sale. In addition, foreign investments may be subject to withholding
and other taxes. ADRs, which are traded in dollars on US Exchanges or
over-the-counter, are issued by domestic banks and evidence ownership of
securities issued by foreign corporations. 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 or to commercial paper and certificates of deposit issued by foreign
banks.
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 investment 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 investment 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
3
<PAGE>
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 investment 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.
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 investment
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 broker/dealers as a short-term cash management tool. A
repurchase agreement is an agreement under
4
<PAGE>
which the Fund acquires a security, generally a US Government obligation,
subject to resale at an agreed upon price and date. The resale price reflects an
agreed upon interest rate effective for the period of time the Fund holds the
security and is unrelated to the interest rate on the security. The Fund's
repurchase agreements will at all times be fully collateralized.
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, a decline in value of the
underlying securities and a loss of interest. Repurchase agreements are
typically entered into for periods of one week or less. 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 invested in such agreements.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, including restricted securities (i.e., securities not readily
marketable without registration under the Securities Act of 1933 (the "1933
Act")) and other securities that are not readily marketable. The Fund may
purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Directors, may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities. Should
the Board of Directors make this determination, it will carefully 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.
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.
Any gain in the value of securities purchased with money borrowed in excess of
the cost of amounts borrowed would cause the net asset value of the Fund's
shares to increase more than otherwise would be the case. Conversely, any
decline in the value of securities purchased with money borrowed or any gain in
value less than the cost of amounts borrowed would cause net asset value to
decline more than would otherwise be the case.
Rights and Warrants. The Fund may invest in common stock rights and warrants
believed by the investment 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.
Lending of Portfolio Securities. The Fund may lend portfolio securities to
broker/dealers or other institutions, if the investment manager believes such
loans will be beneficial to the Fund. 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 any dividend or interest paid on the securities. The Fund
may invest the collateral and earn additional income or receive an agreed upon
amount of interest income from the borrower. Loans made by the Fund will
generally be short-term. 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 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
5
<PAGE>
vote if that were considered important with respect to the investment. The Fund
may loose money if a borrower defaults on its obligation to return securities
and the value of the collateral held by the Fund is insufficient to replace the
loaned securities. In addition, the Fund in responsible for any loss that might
result from its investment of the borrower's collateral.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fund Policies
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the Fund's outstanding voting securities. Under these policies, the
Fund may not:
- - Borrow money, except for temporary or emergency purposes in an amount not
to exceed 15% of the value of its total assets;
- - Mortgage or pledge any of its assets, except to the extent necessary to
effect permitted borrowings on a secured basis and except to enter into
escrow arrangements in connection with the sales of permitted call options.
The Fund has no present intention of selling call options, and will not do
so without the prior approval of the Fund's Board of Directors;
- - Purchase securities (other than closing call options) except for
investment, buy on "margin," or sell "short";
- - Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded from this
calculation;
- - Invest more than 5% of its total assets (taken at market) in securities of
any one issuer, other than the U.S. Government, its agencies or
instrumentalities, buy more than 10% of the outstanding voting securities
or more than 10% of all the securities of any issuer, or invest to control
or manage any company;
- - Invest more than 25% of total assets at market value in any one industry;
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Directors;
- - Purchase or hold any real estate, including limited partnership interests
in real property, except the Fund may invest in securities secured by real
estate or interests therein or issued by persons (including real estate
investment trusts) which deal in real estate or interests therein;
- - Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more
than 0.5% of the securities of that other company own in the aggregate more
than 5% of such securities;
- - Deal with its directors or officers, or firms they are associated with, in
the purchase or sale of securities of other issuers, except as broker;
- - Purchase or sell commodities and commodity contracts;
6
<PAGE>
- - Underwrite the securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security;
- - Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, the entry
into repurchase agreements or deposits with banks may be considered loans;
or
- - Write or purchase put, call, straddle or spread options except that the
Fund may sell covered call options listed on a national securities exchange
or quoted on NASDAQ and purchase closing call options so listed or quoted.
The Fund has no present intention of entering into these types of
transactions, and will not do so without the prior approval of the Fund's
Board of Directors.
The Fund also may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940 (1940 Act), a "vote of a majority of
the outstanding voting securities" of the Fund means the affirmative vote of the
lesser of (l) 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.
Temporary Defensive Position
When the investment manager believes that market conditions warrant a temporary
defensive position, the Fund may invest up to 100% of its assets in short-term
instruments, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The Fund's investments in foreign short-term instruments will be
limited to those that, in the opinion of the investment manager, equate
generally to the standards established for US short-term instruments.
Investments in bank obligations will be limited at the time of investment to the
obligations of the 100 largest domestic banks in terms of assets which are
subject to regulatory supervision by the US Government or state governments, and
the obligations of the 100 largest foreign banks in terms of assets with
branches or agencies in the United States.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
of the value of the portfolio securities owned during the year. Securities whose
maturity or expiration date at the time of acquisition were one year or less are
excluded from the calculation. The Fund's portfolio turnover rates for the years
ended December 31, 1998 and 1997 were ______% and 138.90%, respectively.
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
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.
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(60) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc, Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College; and a Member
of the Board of Governors of the Investment
Company Institute. Formerly, Director, Daniel
Industries Inc., manufacturer of oil and gas
metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee 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.;
Director, ICI Mutual Insurance Company; Seligman
Advisors, Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of
investment companies; Director, Seligman Henderson
Co., and Trustee Emeritus of Colby College.
Formerly, Director, Investment Research at
Neuberger & Berman from May 1993 to September
1996.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at
(69) Tufts University; Director or Trustee, the
Tufts University Seligman Group of investment companies; Chairman,
Packard Avenue, American Council on Germany; a Governor of the
Medford, MA 02155 Center for Creative Leadership; Director; Raytheon
Co., electronics; National Defense University; and
the Institute for Defense Analysis. Formerly,
Director, USLIFE Corporation; 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.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
Alice S. Ilchman Director Retired President, Sarah Lawrence College;
(63) Director or Trustee, the Seligman Group of
18 Highland Circle investment companies; Director, the Committee for
Bronxville, NY 10708 Economic Development; and 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.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(65) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Seligman Group of investment companies; Director,
Suite 805E Kimberly-Clark Corporation, consumer products;
Oklahoma City, OK 73112 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, Oklahoma
City Public Schools Foundation; and Director,
Federal Reserve System's Kansas City Reserve Bank
and the Oklahoma City Chamber of Commerce.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the
125 Broad Street, Seligman Group of investment companies; Director,
New York, NY 10004 Commonwealth Industries, Inc., manufacturers of
aluminum sheet products; the Foreign Policy
Association; Municipal Art Society of New York;
the U.S. Council for International Business; and
New York Presbyterian Hospital; Chairman, American
Australian Association; and New York Presbyterian
Healthcare Network, Inc.; Vice-Chairman, the
U.S.-New Zealand Council; and Member of the
American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group
(56) of investment companies; Trustee, The Geraldine R.
P.O. Box 449 Dodge Foundation, charitable foundation; and
Gladstone, NJ 07934 Chairman of the Board of Trustees of St. George's
School (Newport, RI). Formerly, Director, the
National Association of Independent Schools
(Washington, DC).
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of
(71) investment companies; Director, The Houston
675 Third Avenue, Exploration Company; The Brooklyn Museum, KeySpan
Suite 3004 Energy Corporation; and Public Broadcasting
New York, NY 10017 Service; and Trustee, the Committee for Economic
Development. Formerly, Co-Chairman of the Policy
Council of the Tax Foundation; Director, Tesoro
Petroleum Companies, Inc. and Dow Jones & Company,
Inc.; Director and President, Bekaert Corporation;
and Co-Chairman, Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment
96 Evergreen Avenue, companies. Formerly, Director, USLIFE Corporation.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises,
(63) Inc.; Director or Trustee, the Seligman Group of
6606 Forestshire Drive investment companies; C-SPAN; and CommScope, Inc.
Dallas, TX 75230 manufacturer of coaxial cables. Formerly,
Executive Vice President, Chief Operating Officer,
Sammons Enterprises, Inc.; and Director, Red Man
Pipe and Supply Company, piping and other
materials.
Charles C. Smith, Jr. Vice President and Portfolio Managing Director (formerly, Senior Vice President
(41) Manager and Senior Investment Officer), J. & W. Seligman &
Co. Incorporated; Vice President and Portfolio
Manager, two other open-end investment companies
in the Seligman Group and Tri-Continental
Corporation, closed-end investment company.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies, and Seligman
Services, Inc.; and Treasurer, Seligman Henderson
Co.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W.
Seligman & Co. Incorporated; Secretary, the
Seligman Group of investment companies, Seligman
Advisors, Inc., Seligman Henderson Co., Seligman
Services, Inc., and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available, and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Directors (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
John R. Galvin, Director $ N/A $79,000
Alice S. Ilchman, Director N/A 73,000
Frank A. McPherson, Director N/A 79,000
John E. Merow, Director N/A 77,000
Betsy S. Michel, Director N/A 79,000
James C. Pitney, Director N/A 75,000
James Q. Riordan, Director N/A 75,000
Robert L. Shafer, Director N/A 75,000
James N. Whitson, Director (d) N/A 79,000(d)
</TABLE>
- ----------
(1) For the Fund's year ended December 31, 1998. 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) The Seligman Group of investment companies consists of eighteen investment
companies. (d) Deferred.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund has adopted a Deferred Compensation Plan
under which a director who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
bills, or (2) the rate of return on the shares of any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
director. The cost of such fees and earnings is included in directors' fees and
expenses, and the accumulated balance thereof is included in other liabilities
in the Fund's financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Fund to Mr. Whitson as of
December 31, 1998 was $________. Messrs.
11
<PAGE>
Merow and Pitney no longer defer current compensation; however, they have
accrued deferred compensation in the amounts of $________ and $_________,
respectively, as of December 31, 1998.
The Fund may, but is not obligated to, purchase shares of Seligman Group
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan.
Sales Charges
Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated and its affiliates. 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 may also be made to employee benefit plans and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by J. & W. Seligman & Co. Incorporated or any
affiliate. The sales may be made for investment purposes only, and shares may be
resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
Control Persons and Principal Holders of Securities
Control Persons
As of January 31, 1999, there was no person or persons who controlled the Fund,
either through a significant ownership of shares or any other means of control.
Principal Holders
As of January 31, 1999, 7.64% of the Fund's Class A common stock then
outstanding, 24.42% of the Fund's Class B common stock then outstanding; and,
24.37% of the Fund's Class D common stock then outstanding, were owned of record
by Merrill Lynch Pierce Fenner & Smith for the Sole Benefit of Its Customers,
Attn. Fund Administrator, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL
32246.
Management Ownership
Directors and officers of the Fund as a group owned less than 1% of the Fund's
Class A capital stock as of January 31, 1999. As of the same date, no Directors
or officers owned shares of the Fund's Class B or Class D capital stock.
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman 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 Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix for further history of
Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
The Fund pays Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to .60% per annum of the Fund's
average daily net assets on the first $1 billion
12
<PAGE>
of net assets and .55% per annum of the Fund's average daily net assets on the
next $1 billion of net assets, and .50% per annum of the Fund's average daily
net assets in excess of $2 billion. For the year ended December 31, 1998, the
Fund paid Seligman $__________, equal to ______% per annum of its average daily
net assets. For the year ended December 31, 1997, the Fund paid Seligman
$2,192,400, equal to .60% per annum of its average daily net assets, and for the
year ended December 31, 1996, the Fund paid Seligman $2,342,764 equal to .60%
per annum of its average daily net assets. Seligman paid fees to Seligman
Henderson Co., pursuant to a subadvisory contract, of $271,414 and $248,704 for
the years ended December 31, 1997 and 1996, respectively. On March 30, 1998, the
subadvisory agreement was terminated. For the period January 1, 1998 through
March 30, 1998, Seligman paid fees to Seligman Henderson Co. of $__________.
The Fund pays all of its expenses other than those assumed by Seligman,
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 of 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 provides that Seligman will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss arising out of any
investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
The Management Agreement was initially approved by the Board of Directors at a
Meeting held on September 30, 1988 and by the shareholders at a special meeting
held on December 16, 1988. 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
(i.e., 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) Seligman 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 or by Seligman, without
penalty, on 60 days' written notice to Seligman and will terminate automatically
in the event of its assignment. The Fund has agreed to change its name upon
termination of the Management Agreement if continued use of the name would cause
confusion in the context of Seligman's business.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics 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 Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within
13
<PAGE>
the preceding two weeks, (3) is being purchased or sold by any client, (4) is
being considered by a research analyst, (5) is being acquired in a private
placement, unless prior approval has been obtained from Seligman's Compliance
Officer, or (6) is being acquired during an initial or secondary public
offering. The Code of Ethics also imposes a strict standard of confidentiality
and requires portfolio managers to disclose any interest they may have in the
securities or issuers that they recommend for purchase by any client.
The Code of Ethics also prohibits (1) 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 (2) 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 Seligman'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.
Principal Underwriter
Seligman Advisors, Inc., (Seligman Advisors) an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
the Fund and of the other mutual funds in the Seligman Group. Seligman Advisors
is an "affiliated person" (as defined in the 1940 Act) of Seligman, which is
itself an affiliated person of the Fund. Those individuals identified above
under "Management Information" as directors or officers of both the Fund and
Seligman Advisors are affiliated persons of both entities.
Services Provided by the Investment Manager
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,
Seligman 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. Seligman provides the Fund with such office space, administrative and
other services and executive and other personnel as are necessary for Fund
operations. Seligman pays all of the compensation of directors of the Fund who
are employees or consultants of Seligman and of the officers and employees of
the Fund. Seligman also provides senior management for Seligman Data Corp., the
Fund's shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares of the Fund, as set forth below:
14
<PAGE>
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For years ended December 31,
1998, 1997, and 1996, Seligman Services received commissions in the amounts of
$_______ , $8,141 and $10,898, respectively.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, and Class D shares. Payments under the 12b-1 Plan may include, but are
not limited to: (1) compensation to securities dealers and other organizations
(Service Organizations) for providing distribution assistance with respect to
assets invested in the Fund; (2) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Fund shareholders; and (3) 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 Seligman Advisors' costs incurred in
connection with its marketing efforts with respect to shares of the Fund.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the management fee that
Seligman receives from the Fund. Payments made by the Fund under the 12b-1 Plan
are intended to be used to encourage sales of the Fund, as well as to discourage
redemptions.
Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund will be allocated between the classes in accordance with a methodology
approved by the Fund's Board of Directors. Expenses of distribution activities
that benefit both the Fund and other Seligman funds will be allocated among the
applicable funds based on relative gross sales over the prior quarter, in
accordance with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, the Fund, with respect to Class A shares, pays quarterly
to Seligman Advisors a service fee at an annual rate of up to .25% of the
average daily net asset value of the Class A shares. These fees are used by
Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors 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
15
<PAGE>
personal service and/or maintenance of shareholder accounts. The fee payable to
Service Organizations from time to time shall, within such limits, be determined
by the Directors of the Fund. The Fund is not obligated to pay Seligman Advisors
for any such costs it incurs in excess of the fee described above. No expense
incurred in one year by Seligman Advisors with respect to Class A shares of the
Fund may be paid from Class A 12b-1 fees received from the Fund in any other
year. If the Fund's 12b-1 Plan is terminated in respect of Class A shares, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to Seligman Advisors with respect to Class A shares. The total amount paid by
the Fund to Seligman Advisors in respect of Class A shares for the year ended
December 31, 1998 was $__________, equivalent to ______% of the Class A shares'
average daily net assets.
Class B
Under the 12b-1 Plan, the Fund, with respect to Class B shares, pays monthly a
12b-1 fee at an annual rate of up to 1% of the average daily net asset value of
the Class B shares. The fee is comprised of (1) a distribution fee equal to .75%
per annum, which is paid directly to a third party, FEP Capital, L.P., to
compensate it for having funded, at the time of sale of Fund shares (i) a 4%
commission payment to Service Organizations in connection with the sale of the
Class B shares and (ii) a payment of up to .25% of sales to Seligman Advisors to
help defray its costs of distributing Class B shares; and (2) a service fee of
up to .25% per annum which is paid to Seligman Advisors. The service fee is used
by Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing service fee of up to .25% on an
annual basis, payable quarterly, of the average daily net assets of Class B
shares attributable to the particular Service Organization for providing
personal service and/or maintenance of shareholder accounts. The amounts
expended by Seligman Advisors or FEP Capital, L.P. in any one year upon the
initial purchase of Class B shares of the Fund may exceed the 12b-1 fees paid by
the Fund in that year. The Fund's 12b-1 Plan permits expenses incurred in
respect of Class B shares in one year to be paid from Class B 12b-1 fees
received from the Fund in any other year; however, in any year the Fund is not
obligated to pay any 12b-1 fees in excess of the fees described above. Seligman
Advisors and FEP Capital, L.P. are not reimbursed for expenses which exceed such
fees. If the Fund's 12b-1 Plan is terminated in respect of Class B shares, no
amounts (other than amounts accrued but not yet paid) would be owed by that Fund
to Seligman Advisors or FEP Capital, L.P. with respect to Class B shares. The
total amount paid by the Fund in respect of Class B shares for the year ended
December 31, 1998 was $__________, equivalent to _____% per annum of the average
daily net assets of Class B shares.
Class D
Under the 12b-1 Plan, the Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class D shares. The Fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to Class D
share is used, along with any CDSC proceeds, to (1) reimburse Seligman Advisors
for its payment at the time of sale of Class D shares of a .75% sales commission
to Service Organizations, and (2) pay for other distribution expenses, 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 other marketing costs of Seligman Advisors. In addition, during
the first year following the sale of Class D shares, a service fee of up to .25%
of the average daily net assets attributable to such Class D shares is used to
reimburse Seligman Advisors for its prepayment to Service Organizations at the
time of sale of Class D shares of a service fee of up to .25% of the net asset
value of the Class D share sold (for shareholder services to be provided to
Class D shareholders over the course of the one year immediately following the
sale). The payment to Seligman Advisors is limited to amounts Seligman Advisors
actually paid to Service Organizations at the time of sale as service fees.
After the initial one-year period following a sale of Class D shares, the entire
12b-1 fee attributable to such Class D shares is paid to Service Organizations
for providing continuing shareholder services and distribution assistance in
respect of assets invested in
16
<PAGE>
the Fund. The total amount paid by the Fund in respect of Class D shares for the
year ended December 31, 1998 was $_____, equivalent to __% per annum of the
average daily net assets of Class D shares.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one year to be paid from Class D 12b-1 fees in any other
year; however, in any year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above.
As of December 31, 1998 Seligman Advisors has incurred $______ of unreimbursed
expenses in respect of the Fund's Class D shares. This amount is equal to __% of
the net assets of Class D shares at December 31, 1998.
If the 12b-1 Plan is terminated in respect of Class D shares of the Fund, no
amounts (other than amounts accrued by not yet paid) would be owed by the Fund
to Seligman Advisors with respect to Class D shares.
Payments made by the Fund under the 12b-1 Plan for its fiscal year ended
December 31, 1998, were spent on the following activities in the following
amounts:
Class A Class B Class D
------- ------- -------
Compensation to underwriters $ $
Compensation to broker/dealers $ $ $
Other* $
* Payment is made to FEP Capital, L. P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
The 12b-1 Plan was approved on July 16, 1992 by the Directors, 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 12b-1 Plan (the
"Qualified Directors") and was approved by shareholders of the Fund at a Special
Meeting of the Shareholders held on November 23, 1992. The 12b-1 Plan became
effective in respect of the Class A shares on January 1, 1993. The 12b-1 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 12b-1
Plan was approved in respect of the Class D shares on March 18, 1993 by the
Directors, including a majority of the Qualified Directors, and became effective
in respect of the Class D shares on May 1, 1993. The 12b-1 Plan will continue in
effect until December 31 of each year so long as such continuance is approved
annually by a majority vote of both the Directors of the Fund and the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. The 12b-1 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 12b-1 Plan is proposed to be
increased materially, the Fund will either (1) permit holders of Class B shares
to vote as a separate class on the proposed increase or (2) establish a new
class of shares subject to the same payment under the 12b-1 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 12b-1
Plan may be made except by vote of a majority of both the Directors and the
Qualified Directors.
The 12b-1 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 12b-1 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
17
<PAGE>
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Fund pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the years
ended December 31, 1998, 1997, and 1996, Seligman Services received distribution
and service fees from the Fund pursuant to its 12b-1 Plan of $__________,
$51,665 and $57,842, respectively.
Brokerage Allocation and Other Practices
Brokerage Transactions
Seligman will seek the most favorable price and execution in the purchase and
sale of portfolio securities of the Fund. When two or more of the investment
companies in the Seligman Group or other investment advisory clients of Seligman
desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by Seligman 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.
In over-the-counter markets, the Fund deals with responsible 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.
For the years ended December 31, 1998, 1997, and 1996, the Fund paid total
brokerage commissions to others for execution, research and statistical services
in the amounts of $__________, $298,513 and $86,967, respectively.
Commissions
For the years ended December 31, 1998, 1997, and 1996, the Fund did not execute
any portfolio transactions with, and therefore did not pay any commissions to,
any broker affiliated with either the Fund, Seligman, or Seligman Advisors.
Brokerage Selection
Consistent with seeking the most favorable price and execution when buying or
selling portfolio securities, Seligman may give consideration to the research,
statistical, and other services furnished by brokers or dealers to Seligman for
its use, as well as 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 Seligman to be beneficial to the Fund. In
addition, Seligman is authorized to place orders with brokers who provide
supplemental investment and market research and security 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 Seligman in connection with its services to clients other than the
Fund.
Directed Brokerage
During the year ended December 31, 1998 neither the Fund nor Seligman directed
any of the Fund's brokerage transactions to a broker because of research
services provided.
18
<PAGE>
Regular Broker-Dealers
During the year ended December 31, 1998, the Fund did not acquire securities of
its regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
of their parents.
Capital Stock and Other Securities
Capital Stock
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, designated Class A, Class B, and
Class D shares. 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 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. All shares have noncumulative voting rights for the election of
directors. Each outstanding share is fully paid and non-assessable, and each is
freely transferable. There are no liquidation, conversion, or preemptive rights.
Other Securities
The Fund has no authorized securities other than common stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below) may be
eligible for the following reductions in initial sales charges:
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 mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
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 an initial sales charge at the time of purchase to determine
reduced sales charges 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 charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors 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.
19
<PAGE>
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge 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 an initial sales charge at the time of
purchase. Reduced sales charges 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.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge in accordance with the sales charge schedule in the Fund's
Prospectus, or pursuant to a Volume Discount, Right of Accumulation, or Letter
of Intent are subject to a CDSC of 1% on redemptions of such shares within
eighteen months of purchase. Employee benefit plans eligible for net asset value
sales (as described below) may be subject to a CDSC of 1% for terminations at
the plan level only, on redemptions of shares purchased within eighteen months
prior to plan termination. The 1% CDSC will be waived on shares that were
purchased through Morgan Stanley Dean Witter & Co. 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 Dean Witter will reimburse Seligman Advisors a pro rata portion of the
fee it received from Seligman Advisors at the time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Persons Entitled To Reductions. Reductions in initial sales charges 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) of the
Internal Revenue Code, 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 charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 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.
"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.
20
<PAGE>
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 financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge 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 Seligman Advisors; 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 Seligman 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 (1) $500,000 invested
in the Seligman mutual funds or (2) 50 eligible employees to whom such plan is
made available.
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares are
subject to a CDSC 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 CDSC
- -------------------- ----
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%
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 CDSC schedule if such schedule is
higher or longer than the CDSC 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 CDSC schedule if such schedule is higher or longer than the CDSC schedule
relating to the Class B shares of the Seligman Mutual Fund from which the
exchange has been made.
21
<PAGE>
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less.
Systematic Withdrawals. Class B and Class D shareholders who reinvest both their
dividends and capital gain distributions to purchase additional shares of the
Fund, may use the Fund's Systematic Withdrawal Plan to withdraw up to 12% and
10%, respectively, of the value of their accounts per year without the
imposition of a CDSC. Account value is determined as of the date the systematic
withdrawals begin.
CDSC Waivers. The CDSC on Class B and Class D shares (and certain Class A
shares, as discussed above) will be waived or reduced in the following
instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue 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), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund;
(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, or Class D shares sold
by a dealer, the CDSC is waived because the redemption qualifies for a waiver as
set forth above, the dealer shall remit to Seligman Advisors promptly upon
notice, an amount equal to the payment or a portion of the payment made by
Seligman Advisors at the time of sale of such shares.
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 and, if applicable, any sales charge), 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 Seligman 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 charges, 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.
22
<PAGE>
Fund Reorganizations
Class A shares may be issued without an initial sales charge in connection with
the acquisition of cash and securities owned by other investment companies. Any
CDSC will be waived in connection with the redemption of shares of the Fund if
the Fund is combined with another Seligman mutual fund, or in connection with a
similar reorganization transaction.
Offering Price
When you buy or sell fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares.
NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. 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 NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's 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 management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class B and Class D shares will generally be lower than the NAV of Class
A shares as a result of the higher 12b-1 fees with respect to such shares.
Portfolio securities are valued at the last sale price on the securities
exchange or securities market on which such securities primarily are traded.
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. 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 by
primary market makers in such securities. Any securities or other assets for
which recent market quotations are not readily available are valued at fair
value as determined in accordance with procedures approved by the Board of
Directors. Short-term obligations with less than sixty days remaining to
maturity are generally valued at amortized cost. Short-term obligations with
more than sixty days remaining to maturity will be valued at current market
value until the sixtieth day prior to maturity, and will then be valued on an
amortized cost basis based on the value on such date unless the Board determines
that this amortized cost value does not represent fair market value. Expenses
and fees, including the investment management fee, are accrued daily and taken
into account for the purpose of determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
23
<PAGE>
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares are sold with a maximum initial sales charge of 4.75%
and Class B and Class D shares are sold at NAV(1). Using each Class's NAV at
December 31, 1998, the maximum offering price of the Fund's shares is as
follows:
Class A
Net asset value per share................................. $
Maximum sales charge (4.75% of offering price)............ $
Offering price to public.................................. $
=
Class B
Net asset value and offering price per share(1) .......... $
Class D
Net asset value and offering price per share(1) .......... $
- --------------
(1) Class B shares are subject to a CDSC declining from 5% in the first year
after purchase to 0% after six years. Class D shares are subject to a CDSC
of 1% on redemptions within one year of purchase.
Redemption in Kind
The procedures for selling 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. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.
Taxation of the Fund
The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue 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 gains (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 the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate 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 generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from the Fund's capital gains from property held
for more than one year.
24
<PAGE>
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 gains at a maximum rate of
20% in respect of shares held for more than one year. 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 (including shares
acquired 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 charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge 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
shareholder on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax 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 US 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.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. Seligman Advisors accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Fund's common stock, Seligman Advisors allows reallowances to all dealers
on sales of Class A shares, as set forth above under "Dealer Reallowances."
Seligman Advisors retains the balance of sales charges and any CDSCs paid by
investors.
25
<PAGE>
Total sales charges paid by shareholders of Class A shares of the Fund for the
years ended December 31, 1998, 1997 and 1996, amounted to $ , $312,439 and
$568,667, respectively, of which $ , $36,070 and $65,484, respectively, was
retained by Seligman Advisors.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, received the following commissions and other
compensation from the Fund during its fiscal year ended December 31, 1998:
Net Underwriting Compensation on
Discounts and Redemptions and
Commissions Repurchases
(Class A Sales (CDSC on Class A and Brokerage Other
Charge Retained) Class D Retained) Commissions Compensation (1)
- ---------------- ---------------- ----------- ------------
$ $ $ $
(1) Seligman Advisors has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to FEP Capital, L.P., in connection with an
arrangement with FEP Capital, L.P. as discussed above under "12b-1 Plan."
In connection with this arrangement, Seligman Advisors receives payments
from FEP Capital, L.P. based on the value of Class B shares sold. Such
payments received for the year ended December 31, 1998 are reflected in the
table.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (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," 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 purchases made on behalf of any other fiduciary or
individual account.
Seligman Advisors 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" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 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.
Seligman Advisors 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. Seligman Advisors may from time
to time pay a bonus or other incentive to dealers that sell shares of the
Seligman mutual funds. 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 Seligman
Advisors of such promotional activities and payments shall be consistent with
the rules of the National Association of Securities Dealers, Inc., as then in
effect.
26
<PAGE>
Calculation of Performance Data
The average annual total returns for the Fund's Class A shares for the one-year,
five-year, and ten-year periods through December 31, 1998, were 2.16%, 7.54%,
and 10.41%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of public offering price and assuming that all of the
dividends and capital gain distributions paid by the Fund over the relevant time
period were reinvested. It was then assumed that at the end of each period, the
entire amount was redeemed. The average annual total return was then calculated
by calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon such redemption (i.e., the average
annual compound rate of return). Table A below illustrates the total return
(income and capital) on Class A shares of the Fund, assuming all dividend and
capital gain distributions are reinvested in additional shares. It shows that a
$1,000 investment in Class A shares, assuming payment of the initial 4.75% sales
charge, made on December 31, 1988, had a value of $___ on December 31, 1998,
resulting in an aggregate total return of __%.
The average annual total returns for the Fund's Class B shares for the one-year
period ended December 31, 1998 and for the period from April 22, 1996
(inception) through December 31, 1998, were 1.45% and 9.12%, respectively. These
returns were computed assuming that all dividends and capital 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 each period, the entire
amount was redeemed, subtracting the applicable CDSC. Table B illustrates the
total return (income and capital) on Class B shares of the Fund, assuming all
dividends and capital gain distributions are reinvested in additional shares. It
shows that a $1,000 investment in Class B shares on April 22, 1996 (commencement
of operations of Class B shares) had a value of $___ on December 31, 1998,
resulting in an aggregate total return of __%.
The average annual total returns for the Fund's Class D shares for the one-year
and five-year periods ended December 31, 1998 and for the period from May 3,
1993 (inception) through December 31, 1998, were 5.39%, 7.74% and 8.26%,
respectively. These returns were computed assuming that all of the dividends and
capital gain distributions paid by the Fund's Class D shares, if any, were
reinvested over the relevant time period. It was then assumed that at the end of
each period, the entire amount was redeemed, subtracting for the one year period
the 1% CDSC, if applicable. Table C illustrates the total return (income and
capital) on Class D shares of the Fund, assuming all dividends and capital gain
distributions are reinvested in additional shares. It shows that a $1,000
investment in Class D shares made on May 3, 1993 (commencement of operations of
Class D shares) had a value of $___ on December 31, 1998, resulting in an
aggregate total return of __%.
The results shown below should not be considered a representation of the
dividend income or gain or loss in capital value which may be realized from an
investment made in a class of shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A
Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
- -------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/89 $
12/31/90
12/31/91
12/31/92
12/31/93
12/31/94
12/31/95
12/31/96
12/31/97
12/31/98
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS B
Value of Value of Total Value
Period Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(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
12/31/98 %
<CAPTION>
TABLE C - CLASS D
Value of Value of Total Value
Period Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(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
12/31/98 %
</TABLE>
- -------------------------
1 For the ten-year period ended December 31, 1998 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996 and from
commencement of operations of Class D shares on May 3, 1993.
2 The "Value of Initial Investment" as of the date indicated (1) reflects the
effect of the maximum initial sales charge or CDSC, if applicable, (2)
assumes that all dividends and capital gain distributions were taken in
cash, and (3) reflects changes in the net asset value of the shares
purchased with the hypothetical initial investment. "Total Value of
Investment" (1) reflects the effect of the CDSC, if applicable, and (2)
assumes investment of all dividends and capital gain distributions.
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 charge 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 CDSC on Class B and 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.
The total returns and average annual total returns of Class A shares quoted from
time to time for periods through December 31, 1992, do not reflect the deduction
of 12b-1 fees, effective January 1, 1993. The total returns and average annual
returns of Class A shares quoted from time to time for periods through April 10,
1991, do not reflect the increased management fee approved by shareholders on
April 10, 1991. The total returns and average annual returns of the Class A and
Class D shares quoted from time to time for periods 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. These fees, if reflected,
would reduce the performance quoted.
From time to time, reference may be made in advertising or promotional material
to performance information, including mutual fund rankings, prepared by Lipper
Analytical Service, Inc., 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
charges. The Fund may also refer in advertisements 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/WIESENBERGER MUTUAL FUNDS INVESTMENT
REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING, FINANCIAL TIMES,
FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR,
28
<PAGE>
INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES,
MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW
YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT,
WORTH MAGAZINE, WASHINGTON POST AND YOUR MONEY.
The Fund's advertising or promotional material may make reference to the Fund's
"Beta." "Standard Deviation," or "Alpha." Beta measures the volatility of the
Fund, as compared to that of the overall market. Standard deviation measures how
widely the Fund's performance has varied from its average performance, and is an
indicator of the Fund's potential for volatility. Alpha measures the difference
between the returns of the Fund and the returns of the market, adjusted for
volatility.
Financial Statements
The Annual Report to shareholders for the year ended December 31, 1998 contains
a schedule of the investments of the Fund as of December 31, 1998, as well as
certain other financial information as of that date. The financial statements
and notes included in the Annual Report, and the Independent Auditors' Report
thereon, are incorporated herein by reference. The Annual Report will be
furnished without charge to investors who request copies of this SAI.
General Information
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. ____________,independent auditors, have been selected as auditors of
the Fund. Their address is Two World Financial Center, New York, NY 10281.
29
<PAGE>
Appendix A
MOODY'S INVESTORS SERVICE, INC. (MOODY'S)
DEBT SECURITIES
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 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 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 in 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 sometime in the future.
Baa: Bonds 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 lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
Ba: Bonds 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 thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds 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 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 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 which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
30
<PAGE>
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to repay
punctually promissory senior debt obligations not having an original maturity in
excess of one year. Issuers rated "Prime-1" or "P-1" indicates the highest
quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an acceptable
capacity for repayment of short-term promissory obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high Financial leverage.
Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATING SERVICE ("S&P")
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible 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 an adequate capacity to pay
interest and re-pay 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 re-pay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and pre-pay
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 exposure 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.
COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of timely
payment of debts having an original maturity of no more than 365 days.
31
<PAGE>
A-1: The A-1 designation indicates that the degree of safety regarding timely
payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.
32
<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 successful 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 $2 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.
33
<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 J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. 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 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.
34
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION
Item 23. Exhibits.
All Exhibits have been previously filed, except Exhibits marked with an
asterisk (*) which will be filed by amendment.
(a) Articles of Amendment and Articles Supplementary to Articles of
Incorporation of Registrant. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 74, filed on April 29,
1997.)
(b) By-laws of the Corporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 74, filed on April 29, 1997.)
(c) Specimen Stock Certificate of Class B Capital Stock. (Incorporated by
reference to Form SE filed on April 16, 1996).
(c)(1) Specimen Stock Certificate of Class D Capital Stock. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 70 filed on
April 23, 1993.)
(d) Amended Management Agreement between Registrant and J. & W. Seligman &
Co. Incorporated. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 73 filed on April 19, 1996.)
(e) Copy of Amended Distributing Agreement between Registrant and Seligman
Advisors, Inc. (formerly, Seligman Financial Services, Inc.).
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 74, filed on April 29, 1997.)
(e)(1) Copy of Amended Sales Agreement between Registrant and Seligman
Advisors, Inc. (formerly, Seligman Financial Services, Inc.).
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 73 filed on April 19, 1996.)
(e)(2) Form of Sales Agreement between Seligman Advisors, Inc. (formerly,
Seligman Financial Services, Inc.) and Dean Witter Reynolds, Inc.
(Incorporated by reference to Exhibit 6b of Registration Statement No.
2-33566, to Registrant's Post-Effective Amendment No. 53 filed on
April 28, 1997.)
(e)(3) Form of Sales Agreement between Seligman Advisors, Inc. (formerly,
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, to
Registrant's Post-Effective Amendment No. 53 filed on April 28, 1997.)
(e)(4) Form of Dealer Agreement between Seligman Advisors, Inc. (formerly,
Seligman Financial Services, Inc.) and Smith Barney Inc. (Incorporated
by reference to Exhibit 6d of Registration Statement No. 2-33566, to
Registrant's Post-Effective Amendment No. 53, filed on April 28,
1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Exhibit 7 of Registration Statement No.
2-92487, to Registrant's Post-Effective Amendment No. 21, filed on
January 29, 1997.)
(f)(1) Deferred Compensation Plan for Directors of Seligman Income Fund, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 75, filed on April 29, 1998.)
(g) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 74, filed on April 29, 1997.)
(h) Not applicable.
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
(i) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 74 filed on April 29, 1997.)
(j) *Consent of Independent Auditors.
(k) Not applicable.
(l) Purchase Agreement (Investment Letter) for Initial Capital between
Registrant's Class B shares and J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 73 filed on April 19, 1996.)
(l)(1) Purchase Agreement (Investment Letter) 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 on April 29, 1997.)
(m) Form of Administration, Shareholder Services and Distribution Plan of
Registrant. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 73 filed on April 19, 1996.)
(m)(1) Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. (formerly, Seligman
Financial Services, Inc.) and Dealers. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 73 filed on April 19, 1996.)
(n) *Financial Data Schedules.
(o) Copy of Multi-class Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment Company Act of 1940. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 73 filed on
April 19, 1996.)
Other Exhibits: Power of Attorney for Richard R. Schmaltz. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 75
filed on April 29, 1998.)
Powers of Attorney. (Incorporated by reference to
Registrant's Post-Effective Amendment No.74 filed on April
29, 1997.)
Item 24. 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 25. 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.
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
Item 26. Business and Other Connections of Investment Adviser. J. & W. Seligman
& Co. Incorporated, a Delaware corporation, ("Manager"), is the
Registrant's investment manager. 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 25, 1998.
Item 27. 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.
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of each principal
underwriter named in the answer to Item 20:
Seligman Advisors, Inc.
As of January 31, 1999
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and Chief Executive
Officer
Brian T. Zino* Director President and Director
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 and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Divisional None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
T. Wayne Knowles Senior Vice President, None
104 Morninghills Court Divisional Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of January 31, 1999
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside
Rumson, NJ 07760
J. Brereton Young* Senior Vice President, National None
Accounts Manager
Peter J. Campagna Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
Matthew A. Digan* Senior Vice President, Director of None
Mutual Fund Marketing
Mason S. Flinn Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
Robert T. Hausler* Senior Vice President, Senior None
Portfolio Specialist
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
William W. Johnson* Vice President, Order Desk None
Michelle L. McCann (Rappa)* Senior Vice President, Director of None
Retirement Plans
Scott H. Novak* Senior Vice President, Insurance None
Ronald W. Pond* Vice President, Portfolio Advisor None
Tracy A. Salomon* Vice President, Retirement Marketing None
Michael R. Sanders* Vice President, Product Manager None
Managed Money Services
Helen Simon* Vice President, Sales None
Administration Manager
Gary A. Terpening* Vice President, Director of Business None
Development
Charles L. von Breitenbach, II* Senior Vice President, Director of None
Managed Money Services
Joan M. O'Connell Vice President, Regional Retirement None
3707 5th Avenue #136 Plans Manager
San Diego, CA 92103
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Bradford C. Davis Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
Christopher J. Derry Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of January 31, 1999
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
David L. Gardner Regional Vice President None
2504 Clublake Trail
McKinney, TX 75070
Carla A. Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
Stephen A. Mikez Regional Vice President None
11786 E. Charter Oak
Scottsdale, AZ 85259
Tim O'Connell Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
Thomas Parnell Regional Vice President None
5250 Greystone Drive #107
Inver Grove Heights, MN 55077
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
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Eugene P. Sullivan Regional Vice President None
8 Charles Street, Apt. 603
Baltimore, MD 21201
</TABLE>
<PAGE>
File No. 2-10837
811-525
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of January 31, 1999
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Kelli A. Wirth Dumser Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Jeffrey S. Dean* Vice President, Business Analyst None
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Gail S. Cushing* Assistant Vice President, National None
Accounts Manager
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Jack Talvy* Assistant Vice President, Internal None
Marketing Services Manager
Joyce Peress* Assistant Secretary Assistant Secretary
</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 28. Location of Accounts and Records. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J. & W. Seligman & Co. Incorporated at its offices at
100 ParkAvenue, New York, NY 10017 or at the following locations:
(1) Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 is custodian of the Registrant's cash and securities.
It is also agent to perform certain accounting and record-keeping
functions relating to portfolio transactions and to calculate the net
asset value of the Registrant; and,
(2) Seligman Data Corp., 100 Park Avenue, New York, NY 10017, as
shareholder servicing agent, maintains shareholder records for the
Registrant.
Item 29. Management Services. Not Applicable.
Item 30. Undertakings. The Registrant undertakes to: (1) 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 10% 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 has duly caused this
Post-Effective Amendment No. 76 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 24th day of February, 1999.
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. 76 has been
signed below by the following persons in the capacities indicated on February
24, 1999.
Signature Title
--------- -----
/s/ Brian T. Zino Chairman of the Board (Principal executive
- ------------------------------- officer) and Director
William C. Morris*
/s/ Brian T. Zino Director and President
- -------------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -------------------------------
Thomas G. Rose
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 )
