<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. __ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. __ [ ]
- --------------------------------------------------------------------------------
SELIGMAN VALUE FUND SERIES, INC.
(Exact name of registrant as specified in charter)
- --------------------------------------------------------------------------------
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
- --------------------------------------------------------------------------------
THOMAS G. ROSE, Treasurer,
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<CAPTION>
<S> <C>
[ ] upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (b) [ ] 75 days after filing pursuant to paragraph (a)(2)
of rule 485
[X] 60 days after filing pursuant to [ ] on (date) pursuant to paragraph (a)(2) of rule 485.
paragraph (a)(1)
</TABLE>
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant elects to register an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1).
<PAGE>
SELIGMAN VALUE FUND SERIES, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A of Form N-1A
- -------------------
Item No. Location in Prospectus
- -------- ----------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Series Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Organization and Capitalization
5. Management of the Fund Management Services
5a. Manager's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities Organization and Capitalization
7. Purchase of Securities Being Offered Alternative Distribution System; Purchase of Shares; Administration,
Shareholder Services and Distribution Plan
8. Redemption or Repurchase Telephone Transactions; Redemption of Shares; Exchange Privilege
9. Pending Legal Proceedings Not Applicable
Part B of Form N-1A
- -------------------
Item No. Location in Statement of Additional Information or Prospectus
- -------- -------------------------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information; Organization and Capitalization (Prospectus); Appendix B
13. Investment Objectives and Policies Investment Objectives, Policies And Risks; Investment Limitations
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Other Services Management and Expenses; Distribution Services
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Other Securities General Information; Organization and Capitalization (Prospectus)
19. Purchase, Redemption and Pricing Purchase and Redemption of Fund Shares; Valuation
of Securities being Offered
20. Tax Status Federal Income Taxes (Prospectus)
21. Underwriter Distribution Services
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statement
</TABLE>
<PAGE>
SELIGMAN VALUE FUND SERIES, INC.
Seligman Large-Cap Value Fund
Seligman Small-Cap Value Fund
100 Park Avenue . New York, New York 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450 all continental United States
For Retirement Plan Information--Toll-Free Telephone: (800) 445-1777
, 1997
SELIGMAN LARGE-CAP VALUE FUND (the "Large-Cap Value Fund") seeks long-term
capital appreciation. The Large-Cap Value Fund seeks to achieve this objective
by investing primarily in equity securities of companies with large market
capitalizations deemed to be "value" companies by the investment manager.
SELIGMAN SMALL-CAP VALUE FUND (the "Small-Cap Value Fund") seeks long-term
capital appreciation. The Small-Cap Value Fund seeks to achieve this objective
by investing primarily in equity securities of companies with small market
capitalizations deemed to be "value" companies by the investment manager.
The Large-Cap Value Fund and the Small-Cap Value Fund (each, individually, a
"Series") are each a separate series of Seligman Value Fund Series, Inc. (the
"Fund"), an open-end, diversified management investment company. The Fund may
offer additional series in the future. For a description of each Series' in-
vestment objective and policies, including the risk factors associated with an
investment in the Fund, see "Investment Objectives, Policies and Risks." There
can be no assurance that a Series' investment objective will be achieved.
Investment advisory and management services are provided to the Fund by
J.&W. Seligman & Co. Incorporated (the "Manager") and, to the extent requested
by the Manager in respect of foreign assets, Seligman Henderson Co. (the
"Subadviser"). The Fund's distributor is Seligman Financial Services, Inc.
Each Series offers three classes of shares. Class A shares are sold subject
to an initial sales load of up to 4.75% and an annual service fee currently
charged at a rate of up to .25% of the average daily net asset value of the
Class A shares. Class A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales load but are subject to a contingent de-
ferred sales load ("CDSL") of 1% on redemptions within eighteen months of pur-
chase. Class B shares are sold without an initial sales load but are subject
to a CDSL of 5% on redemptions in the first year after purchase of such
shares, declining to 1% in the sixth year and 0% thereafter, an annual distri-
bution fee of .75% and an annual service fee of up to .25% of the average
daily net asset value of the Class B shares. Class B shares will automatically
convert to Class A shares on the last day of the month that precedes the
eighth anniversary of their date of purchase. Class D shares are sold without
an initial sales load but are subject to a CDSL of 1% imposed on redemptions
within one year of purchase, an annual distribution fee of up to .75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class D shares. Any CDSL payable upon redemption of shares will be assessed on
the lesser of the current net asset value or the original purchase price of
the shares redeemed. No CDSL will be imposed on shares acquired through the
reinvestment of dividends or distributions received from any class of shares.
See "Alternative Distribution System." Shares of the Fund may be purchased
through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund and the Series before investing. Please read it
carefully before you invest and keep it for future reference. Additional in-
formation about the Fund, including a Statement of Additional Information, has
been filed with the Securities and Exchange Commission. The Statement of Addi-
tional Information is available upon request without charge by calling or
writing the Fund at the telephone numbers or the address set forth above. The
Statement of Additional Information is dated the same date as this Prospectus
and is incorporated herein by reference in its entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF SERIES EXPENSES
<TABLE>
<CAPTION>
LARGE-CAP VALUE FUND SMALL-CAP VALUE FUND
---------------------------------------------------- ----------------------------------------------------
CLASS A CLASS B CLASS D CLASS A CLASS B CLASS D
------------------- --------------- ---------------- ------------------- --------------- ----------------
SHAREHOLDER (INITIAL SALES (DEFERRED SALES (DEFERRED SALES (INITIAL SALES (DEFERRED SALES (DEFERRED SALES
TRANSACTION LOAD LOAD LOAD LOAD LOAD LOAD
EXPENSES ALTERNATIVE) ALTERNATIVE) ALTERNATIVE) ALTERNATIVE) ALTERNATIVE) ALTERNATIVE)
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales
Load Imposed
on Purchases
(as a
percentage of
offering
price)........ 4.75% None None 4.75% None None
Sales Load on
Reinvested
Dividends..... None None None None None None
Deferred Sales
Load (as a
percentage of
original None; except 1% 5% in 1st year 1% in first year None; except 1% 5% in 1st year 1% in first year
purchase price in first 18 months 4% in 2nd year None thereafter in first 18 months 4% in 2nd year None thereafter
or redemption if initial 3% in 3rd and if initial 3% in 3rd and
proceeds, sales load was 4th years sale load was 4th years
whichever is waived in full due 2% in 5th year waived in full due 2% in 5th year
lower)........ to size of purchase 1% in 6th year to size of purchase 1% in 6th year
None thereafter None thereafter
Redemption
Fees.......... None None None None None None
Exchange Fees.. None None None None None None
ANNUAL SERIES
OPERATING
EXPENSES*
(as a
percentage of
average net
assets) CLASS A CLASS B CLASS D CLASS A CLASS B CLASS D
------------------- --------------- ---------------- ------------------- --------------- ----------------
Management
Fees.......... .80% .80% .80% 1.00% 1.00% 1.00%
12b-1 Fees..... .25% 1.00%** 1.00%** .25% 1.00%** 1.00%**
Other Expenses. % % % % % %
--- ---- ---- --- ---- ----
Total Fund
Operating
Expenses...... % % % % % %
=== ==== ==== === ==== ====
</TABLE>
The purpose of this table is to assist investors in understanding the vari-
ous costs and expenses which shareholders of the Fund bear directly or indi-
rectly. The sales load on Class A shares is a one-time charge paid at the time
of purchase of shares. Reductions in initial sales loads are available in cer-
tain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however, such shares are subject to a
CDSL, a one time charge, only if the shares are redeemed within eighteen
months of purchase. The CDSLs on Class B and Class D shares are one-time
charges paid only if shares are redeemed within six years or one year of pur-
chase, respectively. For more information concerning reductions in sales loads
and for a more complete description of the various costs and expenses, see
"Purchase of Shares," "Redemption of Shares" and "Management Services" herein.
The Fund's Administration, Shareholder Services and Distribution Plan to which
the caption "12b-1 Fees" relates, is discussed under "Administration, Share-
holder Services and Distribution Plan" herein.
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP
VALUE FUND VALUE FUND
EXAMPLE --------------- ---------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period:..... Class A $ $ $ $
Class B+ $ $ $ $
Class D $ ++ $ $ ++ $
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5% AN-
NUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
* Estimated.
** Includes an annual distribution fee of up to .75% and an annual service fee
of up to .25%. Pursuant to the Rules of the National Association of Securi-
ties Dealers, Inc., the aggregate deferred sales loads and annual distribu-
tion fees on Class B and Class D shares of the Fund may not exceed 6.25% of
total gross sales, subject to certain exclusions. The maximum sales charge
rule is applied separately to each class. The 6.25% limitation is imposed
on the Fund rather than on a per shareholder basis. Therefore, a long-term
Class B or Class D shareholder of the Fund may pay more in total sales
loads (including distribution fees) than the economic equivalent of 6.25%
of such shareholder's investment in such shares.
+ Assuming (1) 5% annual return and (2) no redemption at the end of the peri-
od, the expenses on a $1,000 investment would be: Large-Cap Value Fund--$
for 1 year and $ for 3 years; Small-Cap Value Fund --$ for 1 year and
$ for 3 years.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: Large-Cap Value Fund--$ ;
Small-Cap Value Fund--$ .
2
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
Each Series offers three classes of shares. Class A shares are sold to in-
vestors who have concluded that they would prefer to pay an initial sales load
and have the benefit of lower continuing fees. Class B shares are sold to in-
vestors choosing to pay no initial sales sold, a higher distribution fee and a
CDSL with respect to redemptions within six years of purchase and who desire
shares to convert automatically to Class A shares after eight years. Class D
shares are sold to investors choosing to pay no initial sales load, a higher
distribution fee and, with respect to redemptions within one year of purchase,
a CDSL. The Alternative Distribution System allows investors to choose the
method of purchasing shares that is most beneficial in light of the amount of
the purchase, the length of time the shares are expected to be held and other
relevant circumstances. Investors should determine whether under their partic-
ular circumstances it is more advantageous to incur an initial sales load and
be subject to lower ongoing fees, as discussed below, or to have the entire
initial purchase price invested in a Series with the investment thereafter be-
ing subject to higher ongoing fees and either a CDSL for a six-year period
with automatic conversion to Class A shares after eight years or a CDSL for a
one-year period with no automatic conversion to Class A shares.
Investors who expect to maintain their investment for an extended period of
time might choose to purchase Class A shares because over time the accumulated
continuing distribution fees of Class B and Class D shares may exceed the ini-
tial sales load and lower distribution fee of Class A shares. This considera-
tion must be weighed against the fact the amount invested in a Series will be
reduced by the initial sales load on Class A shares deducted at the time of
purchase. Furthermore, the higher distribution fees on Class B and Class D
shares will be offset to the extent any return is realized on the additional
funds initially invested therein that would have been equal to the amount of
the initial sales load on Class A shares. Investors who qualify for reduced
initial sales loads, as described under "Purchase of Shares" below, might also
choose to purchase Class A shares because the sales load deducted at the time
of purchase would be less. However, investors should consider the effect of
the 1% CDSL imposed on shares on which the initial sales load was waived be-
cause the amount of Class A shares purchased reached $1,000,000 or more. In
addition, Class B shares will be converted automatically to Class A shares af-
ter a period of approximately eight years, and thereafter investors will be
subject to lower ongoing fees. Shares purchased through reinvestment of divi-
dends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Alternatively, some investors might choose to have all of their funds in-
vested initially in Class B or Class D shares, although remaining subject to a
higher continuing distribution fee and, for a six-year or one-year period, a
CDSL as described below. For example, an investor who does not qualify for re-
duced sales loads would have to hold Class A shares for more than 6.33 years
for the Class B or Class D distribution fee to exceed the initial sales load
plus the distribution fee on Class A shares. This example does not take into
account the time value of money, which further reduces the impact of the Class
B and Class D shares' 1% distribution fee, other expenses charged to each
class, fluctuations in net asset value or the effect of the return on the in-
vestment over this period of time.
Investors should bear in mind that total asset based sales charges (i.e. the
higher continuing distribution fee plus the CDSL) on Class B shares that are
redeemed may exceed the total asset based sales charges that would be payable
on a purchase of the same amount of Class A or Class D shares, particularly if
the Class B shares are redeemed shortly after purchase or if the investor
qualifies for a reduced sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales load (and deferred sales load, when applicable) with respect to Class A
shares is the same as those of the deferred sales loads and higher distribu-
tion fees with respect to Class B and Class D shares in that the sales loads
and distribution fees applicable to each class provide for the financing of
the distribution of the shares of the Series.
3
<PAGE>
Class B and Class D shares are subject to the same ongoing distribution fees
but Class D shares are subject to a CDSL for a shorter period of time (one
year as opposed to six years) than Class B shares. However, unlike Class D
shares, Class B shares automatically convert to Class A shares after eight
years, which are subject to lower ongoing distribution fees.
The three classes of shares of a Series represent interests in the same
portfolio of investments, have the same rights and are generally identical in
all respects except that each class bears its separate distribution and, po-
tentially, certain other class expenses and has exclusive voting rights with
respect to any matter to which a separate vote of any class is required by the
Investment Company Act of 1940, as amended (the "1940 Act"), or Maryland law.
The net income attributable to each class and dividends payable on the shares
of each class will be reduced by the amount of distribution and other expenses
of each class. Class B and Class D shares bear higher distribution fees, which
will cause the Class B and Class D shares to pay lower dividends than the
Class A shares. The three classes also have separate exchange privileges.
The Directors of the Fund believe that no conflict of interest currently ex-
ists between the Class A, Class B and Class D shares of each Series. On an on-
going basis, the Directors, in the exercise of their fiduciary duties under
the 1940 Act and Maryland law, will seek to ensure that no such conflict aris-
es. For this purpose, the Directors will monitor the Fund for the existence of
any material conflict among the classes and will take such action as is rea-
sonably necessary to eliminate any such conflicts that may develop.
DIFFERENCES BETWEEN CLASSES. The primary differences between Class A, Class
B and Class D shares are their sales load structures and ongoing expenses as
set forth below. The primary differences between Class B and Class D shares
are that Class D shares are subject to a shorter CDSL period and a lower CDSL
rate but Class B shares automatically convert to Class A shares after eight
years, resulting in a reduction in ongoing fees. Investors in Class B shares
should take into account whether they intend to redeem their shares within the
CDSL period and, if not, whether they intend to remain invested until the end
of the conversion period and thereby take advantage of the reduction in ongo-
ing fees resulting from the conversion to Class A shares. Other investors,
however, may elect to purchase Class D shares if they determine that it is ad-
vantageous to have all their assets invested initially and they are uncertain
as to the length of time they intend to hold their assets in the Fund or an-
other mutual fund in the Seligman Group for which the exchange privilege is
available. Although Class D shareholders are subject to a shorter CDSL period
at a lower rate, they forgo the Class B automatic conversion feature, making
their investment subject to higher distribution fees for an indefinite period
of time. Each class has advantages and disadvantages for different investors,
and investors should choose the class that best suits their circumstances and
their objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE OTHER
SALES LOAD DAILY NET ASSETS) INFORMATION
---------- ------------------ ------------------
<S> <C> <C> <C>
CLASS A Maximum Service fee Initial sales load
initial of .25%. waived or reduced
sales load for
of 4.75% of certain purchases.
the public CDSL of 1% on
offering redemptions within
price. 18 months of
purchase on shares
on which initial
sales load was
waived in full due
to the size of the
purchase.
CLASS B None Service fee CDSL of:
of .25% 5% in 1st year 4%
Distribution in 2nd year 3% in
fee of .75% 3rd and 4th years
until 2% in 5th year 1%
conversion* in 6th year
0% after 6th year.
CLASS D None Service fee CDSL of 1% on
of .25% redemptions within
Distribution one year of
fee of up to purchase.
.75%.
</TABLE>
- -------
* Conversion occurs at the end of the month which precedes the 8th anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class
B shares of another Seligman Mutual Fund, the conversion period applicable
to the Class B shares acquired in the exchange will apply, and the holding
period of the shares exchanged will be tacked onto the holding period of the
shares acquired.
4
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Large-Cap Value Fund and the Small-Cap Value Fund are each a series of
Seligman Value Fund Series, Inc., an open-end diversified management investment
company, as defined in the 1940 Act, or mutual fund, incorporated in Maryland
on January 27, 1997. The Fund is a newly organized investment company with no
previous operating history.
SELIGMAN LARGE-CAP VALUE FUND. The investment objective of the Large-Cap
Value Fund is long-term capital appreciation. The investment objective is a
fundamental policy and may not be changed without shareholder approval. The Se-
ries seeks to achieve this objective by investing at least 65% of its assets in
equity securities of companies with market capitalizations at the time of pur-
chase by the Series of $2 billion or more and identified by the Manager as
value companies. There can be no assurance that the Series will meet its in-
vestment objective.
SELIGMAN SMALL-CAP VALUE FUND. The investment objective of the Small-Cap
Value Fund is long-term capital appreciation. The investment objective is a
fundamental policy and may not be changed without shareholder approval. The Se-
ries seeks to achieve this objective by investing at least 65% of its assets in
equity securities of companies with market capitalizations at the time of pur-
chase by the Series of up to $1 billion and identified by the Manager as value
companies. There can be no assurance that the Series will meet its investment
objective.
A value company, as determined by the Manager, is a company that typically
displays, among other things, a relatively low price-to-book and/or price-to-
earnings ratio. The Manager, in selecting securities for inclusion in each Se-
ries' portfolio, may also consider, among other factors, evaluation of a
company's growth prospects, quality of management and liquidity. The Manager
will also look for companies in which new management or proposed restructuring
plans are expected by the Manager to have a positive impact on the company's
overall business operations and productivity.
Under normal market conditions, each Series anticipates that it will be in-
vested primarily in equity securities of domestic issuers, including common
stock, preferred stock and stock convertible into or exchangeable for such se-
curities. Each Series expects that no more than 15% of its assets will be in-
vested in cash or fixed-income securities except for temporary defensive pur-
poses.
SMALL COMPANY INVESTMENT RISK FACTORS. Investments in smaller companies may
involve greater risks than larger companies, such as limited product lines,
markets and financial or managerial resources. Less frequently traded securi-
ties may be subject to more abrupt price movements than securities of larger
companies.
DERIVATIVES. Each Series may invest in financial instruments commonly known
as "derivatives" only for hedging or investment purposes. A Series will not in-
vest in derivatives for speculative purposes, i.e., where the derivative in-
vestment exposes the Series to undue risk of loss, such as where the risk of
loss is greater than the cost of the investment.
A derivative is generally defined as an instrument whose value is derived
from, or based upon, some underlying index, reference rate (e.g., interest
rates or currency exchange rates), security, commodity or other asset. A Series
will not invest in a specific type of derivative without prior approval from
the Fund's Board of Directors, after consideration of, among other things, how
the derivative instrument serves the Series' investment objective, and the risk
associated with the investment. The only types of derivatives in which each Se-
ries is currently permitted to invest are stock purchase rights and warrants,
and, as described more fully below, put options.
OPTIONS TRANSACTIONS. Each Series may purchase put options on portfolio secu-
rities in an attempt to hedge against a decrease in the price of a security
held by such Series. A Series will not purchase options for speculative purpos-
es. Purchasing a put option gives a Series the right to sell, and obligates the
writer to buy, the underlying security at the exercise price at any time during
the option period.
5
<PAGE>
When a Series purchases an option, it is required to pay a premium to the
party writing the option and a commission to the broker selling the option. If
the option is exercised by the Series, the premium and the commission paid may
be greater than the amount of the brokerage commission charged if the security
were to be purchased or sold directly. See "Investment Objectives, Policies and
Risks" in the Statement of Additional Information.
ILLIQUID SECURITIES. Each Series 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. Each Series
may purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1993 Act, and the Manager, acting
pursuant to procedures approved by the Fund's Board of Directors, may
determine, when appropriate, that specific Rule 144A securities are liquid and
not subject to the 15% limitation on illiquid securities. Should this determi-
nation be made, the Manager, acting pursuant to such procedures, will carefully
monitor the security (focusing on such factors, among others, as trading activ-
ity 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
Series, if, and to the extent that, qualified institutional buyers become for a
time uninterested in purchasing Rule 144A securities.
FOREIGN SECURITIES. Each Series may invest in commercial paper and certifi-
cates of deposit issued by foreign banks and may invest in other securities of
foreign issuers directly or through American Depositary Receipts ("ADRs"), Eu-
ropean Depositary Receipts ("EDRs") or Global Depositary Receipts ("GDRs")
(collectively, "Depositary Receipts").
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and ex change control regulations. There may be less infor
mation available about a foreign company than about a U.S. company and foreign
companies may not be subject to reporting standards and requirements comparable
to those applicable to U.S. companies. Foreign securities may not be as liquid
as U.S. securities. Securities of foreign companies may involve greater market
risk than securities of U.S. companies, and foreign brokerage commissions and
custody fees are generally higher than those in the United States. Investments
in foreign securities may also be subject to local economic or political risks,
political instability and possible nationalization of issuers. Depositary Re-
ceipts are instruments generally issued by domestic banks or trust companies
that represent the deposits of a security of a foreign issuer. ADRs may be pub-
licly traded on exchanges or over-the-counter in the United States and are
quoted and settled in dollars at a price that generally reflects the dollar
equivalent of the home country share price. EDRs and GDRs are typically traded
in Europe and in both Europe and the United States, respectively. Depositary
Receipts may be issued under sponsored or unsponsored programs. In sponsored
programs, the issuer has made arrange-ments 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 re-
quirements with respect to sponsored and unsponsored Depositary Receipt pro-
grams are generally similar, the issuers of securities represented by
unsponsored Depositary Receipts are not obligated to disclose material informa-
tion in the United States, and therefore, the import of such information may
not be reflected in the market value of such receipts. Each Series 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 Re-
ceipts which are traded in the United States or to commercial paper and certif-
icates of deposit issued by foreign banks.
LENDING OF PORTFOLIO SECURITIES. Each Series may lend portfolio securities to
brokers or dealers in corporate or government securities, or banks or other
6
<PAGE>
institutional borrowers of securities. The borrower must maintain with the Fund
cash or equivalent collateral equal to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the bor-
rower pays the Fund an amount equivalent to any dividends or interest paid on
the securities and the Fund may invest the cash collateral and earn additional
income or may receive an agreed upon amount of interest income from the borrow-
er.
BORROWING. Each Series may borrow money only from banks and only for tempo-
rary 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.
REPURCHASE AGREEMENTS. Each Series may enter into repurchase agreements with
commercial banks or broker/dealers under which the Series acquires a U.S. Gov-
ernment or a short-term money market instrument subject to resale at a mutually
agreed-upon price and time. The resale price reflects an agreed upon interest
rate effective for the period the Series holds the instrument that is unrelated
to the interest rate on the instrument.
A Series' repurchase agreements will at all times be fully collateralized,
and the Series will make payment for such securities only upon physical deliv-
ery or evidence of book entry transfer to the account of its custodian. Repur-
chase agreements could involve certain risks in the event of bankruptcy or
other default of the seller, including possible delays and expenses in liqui-
dating the underlying security, decline in the value of the underlying security
and loss of interest.
TEMPORARY INVESTMENTS. When the Manager believes that market conditions war-
rant a temporary defensive position, a Series may invest up to 100% of its as-
sets in short-term instruments such as commercial paper, bank certificates of
deposit, bankers' acceptances, or repurchase agreements for such securities and
securities of the U.S. Government and its agencies and instrumentalities, as
well as cash and cash equivalents denominated in foreign currencies. Invest-
ments in domestic bank certificates of deposit and bankers' acceptances will be
limited to banks that have total assets in excess of $500 million and are sub-
ject to regulatory supervision by the U.S. Government or state governments. A
Series' investments in commercial paper of U.S. issuers will be limited to (a)
obligations rated Prime-1 by Moody's or A-1 by Standard & Poor's or (b) unrated
obligations issued by companies having an outstanding unsecured debt issue cur-
rently rated A or better by Standard & Poor's. A description of various commer-
cial paper ratings and debt securities ratings appears in Appendix A to the
Statement of Additional Information. A Series' investments in foreign short-
term instruments will be limited to those that, in the opinion of the Manager,
equate generally to the standards established for U.S. short-term instruments.
Except as noted above, the foregoing investment policies are not fundamental
and the Fund's Board of Directors may change such policies without the vote of
a majority of a Series' outstanding voting securities. A more detailed descrip-
tion of the Series' investment policies, including a list of those restrictions
on the Series' investment activities which cannot be changed without such a
vote, appears in the Statement of Additional Information. Under the 1940 Act, a
"vote of a majority of the outstanding voting securities" of a Series means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares
of the Series or (2) 67% or more of the shares present at a shareholders' meet-
ing if more than 50% of the outstanding shares are represented at the meeting
in person or by proxy.
MANAGEMENT SERVICES
THE MANAGER. The Board of Directors provides broad supervision over the af-
fairs of the Fund. Pursuant to a Management Agreement between the Fund, on be-
half of each Series, and the Manager, the Manager manages the investments of
the Fund and admin-
7
<PAGE>
isters the business and other affairs of the Fund. The address of the Manager
is 100 Park Avenue, New York, NY 10017.
The Manager also serves as manager of seventeen other investment companies
which, together with the Fund, comprise the "Seligman Group." These companies
are: Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Selig-
man Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Hen-
derson Global Fund Series, Inc., Seligman High Income Fund Series, Seligman
Income Fund, Inc., 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. and Tri-Continental Corpora-
tion. The aggregate assets of the Seligman Group were approximately $14.2 bil-
lion at December 31, 1996. The Manager also provides investment management or
advice to institutional accounts having an aggregate value at December 31,
1996 of approximately $4.2 billion.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a wholly-
owned subsidiary of certain investment companies in the Seligman Group, which
performs, at cost, certain recordkeeping functions for the Fund, maintains the
records of shareholder accounts and furnishes dividend paying, redemption and
related services.
The Manager is entitled to receive a management fee from each Series, calcu-
lated daily and payable monthly, equal to an annual rate of .80% of the Large-
Cap Value Fund's average daily net assets and 1.00% of the Small-Cap Value
Fund's average daily net assets.
The Fund pays all of its expenses other than those assumed by the Manager,
including fees for necessary professional and brokerage services, costs of
regulatory compliance, costs associated with maintaining corporate existence,
custody and shareholder service, shareholder relations and insurance costs and
fees and expenses of directors of the Fund not employed by (or serving as a
Director of) the Manager or its affiliates.
THE SUBADVISER. The Subadviser provides investment management services to
the Fund with respect to all or a portion of the Fund's foreign investments,
as designated by the Manager ("Qualifying Assets"). Each Series has a non-fun-
damental policy under which it may invest up to 10% of its total assets in
foreign securities that are held directly. The 10% limit does not apply to
foreign securities held through Depositary Receipts which are traded in the
United States or to commercial paper and certificates of deposit issued by
foreign banks. Pursuant to a Subadvisory Agreement between the Manager and the
Subadviser, the Subadviser, with respect to the Qualifying Assets, provides
investment management services including investment research, advice and su-
pervision, determines which securities will be purchased or sold, makes pur-
chases and sales on behalf of the Series and determines how voting and other
rights with respect to securities held by a Series shall be exercised, subject
in each case to the control of the Fund's Board of Directors and in accordance
with the Series' investment objectives, policies and principles. For this
service, the Subadviser receives a fee from the Manager, payable monthly. The
subadvisory fee rate, which is applied to the average monthly net Qualifying
Assets of each Series (i.e., the Qualifying Assets less any liabilities as
designated by the Manager), is the same as the overall rate paid to the Man-
ager by each Series.
The Subadviser was founded in 1991 as a joint venture between the Manager
and Henderson International, Inc., a controlled affiliate of Henderson Admin-
istration Group plc. The Subadviser, headquartered in New York, was created to
provide international and global investment advice to institutional and indi-
vidual investors and investment companies. The Subadviser
8
<PAGE>
currently serves as subadviser to Seligman Capital Fund, Inc., Seligman Common
Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman Income Fund, Inc., the Global Growth Opportunities Port-
folio, the Global Smaller Companies Portfolio, the Global Technology Portfolio
and the International Portfolio of Seligman Portfolios, Inc. and Tri-Continen-
tal Corporation. The address of the Subadviser is 100 Park Avenue, New York, NY
10017.
PORTFOLIO MANAGERS. Mr. Neil T. Eigen is Vice President of the Fund and Port-
folio Manager of each Series. Mr. Eigen joined the Manager on January 3, 1997
as a Managing Director and Head of the Manager's Value Investment Team. Before
joining the Manager, Mr. Eigen served as Senior Managing Director, Chief In-
vestment Officer and Director of Equity Investing at Bear Stearns Asset Manage-
ment.
Mr. Richard S. Rosen is Co-Portfolio Manager of each Series. Mr. Rosen joined
the Manager on January 3, 1997 as a Senior Vice President, Investment Officer.
Before joining the Manager, Mr. Rosen served as a Managing Director and Portfo-
lio Manager at Bear Stearns Asset Management.
The Manager's discussion of each Series' performance as well as a line graph
illustrating comparative performance information between each Series and appro-
priate broad-based indices will be included in the Fund's Annual Report to
Shareholders.
PORTFOLIO TRANSACTIONS. The Management Agreement recognizes that in the pur-
chase and sale of portfolio securities, the Manager will seek the most favora-
ble price and execution and, consistent with that policy, may give considera-
tion to the research, statistical and other services furnished by brokers or
dealers to the Manager. The use of brokers who provide investment and market
research and securities and economic analysis may result in higher brokerage
charges than the use of brokers selected on the basis of the most favorable
brokerage commission rates, and re search and analysis received may be useful
to the Manager in connection with its services to other clients as well as to
the Series. In over-the-counter markets, orders are placed with responsible
primary market makers unless a more favorable execution or price is believed to
be obtainable.
Consistent with the Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution available
and such other policies as the Directors of the Fund may determine, the Manager
may consider sales of shares of the Series and, if permitted by applicable
laws, may consider sales of shares of the other mutual funds in the Seligman
Group as a factor in the selection of brokers or dealers to execute portfolio
transactions for the Series.
PORTFOLIO TURNOVER. A change in securities held by a Series is known as
"portfolio turnover" which may result in the payment by such Series of dealer
spreads or underwriting commissions and other transaction costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
Although it is the policy of each Series to hold securities for investment,
changes in securities held by a Series will be made from time to time when the
Manager believes such changes will strengthen such Series portfolio. The
portfolio turnover of any Series is not expected to exceed 100%.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager, acts
as general distributor of the Series' shares. Its address is 100 Park Avenue,
New York, NY 10017.
Each Series issues three classes of shares: Class A shares are sold to in-
vestors choosing the initial sales load alternative; Class B shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and
a CDSL with respect to redemptions within six years of purchase and who desire
9
<PAGE>
shares to convert automatically to Class A shares after eight years; and Class
D shares are sold to investors choosing no initial sales load, a higher distri-
bution fee and a CDSL on redemptions within one year of purchase. See "Alterna-
tive Distribution System" above.
Shares of the Series may be purchased through any authorized investment deal-
er. All orders will be executed at the net asset value per share next computed
after receipt of the purchase order plus, in the case of Class A shares, a
sales load which, except for shares purchased under one of the reduced sales
load plans, will vary with the size of the purchase as shown in the schedule
under "Class A Shares--Initial Sales Load" below.
THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN A SERIES IS $1,000; SUBSEQUENT
INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (EXCEPT FOR INVESTMENT OF
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS). THE FUND RESERVES THE RIGHT TO RE-
TURN INVESTMENTS THAT DO NOT MEET THESE MINIMUMS. EXCEPTIONS TO THESE MINIMUMS
ARE AVAILABLE FOR FUND ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE INVEST-
A-CHECK (R) SERVICE. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE SELIGMAN
TIME HORIZON MATRIX SM ASSET ALLOCATION PROGRAM IS $10,000. FOR INFORMATION
ABOUT THIS PROGRAM, CONTACT SELIGMAN DATA CORP.
No purchase order may be placed for Class B shares for an amount of $250,000
or more.
Orders received by an authorized dealer before the close of the New York
Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and accepted by SFSI
before the close of business (5:00 p.m. Eastern time) on the same day will be
executed at the Fund's net asset value determined as of the close of the NYSE
on that day plus, in the case of Class A shares, any applicable sales load. Or-
ders accepted by dealers after the close of the NYSE, or received by SFSI after
the close of business, will be executed at the Fund's net asset value as next
determined plus, in the case of Class A shares, any applicable sales load. The
au- thorized dealer through which a shareholder purchases shares is responsible
for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire pay-
ments, dealer orders must first be placed through SFSI's order desk and as-
signed a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C (Name of Series) (A, B
or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE CONFIRMATION
NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons other than
dealers who wish to wire payment should contact Seligman Data Corp. for spe-
cific wire instructions. Although the Fund makes no charge for this service,
the transmitting bank may impose a wire service fee.
Current shareholders may purchase additional shares of the Series at any time
through any authorized dealer or by sending a check payable to the "Seligman
Group of Funds" in our postage-paid return envelope or directly to P.O. BOX
3947, NEW YORK, NY 10008-3947. Checks for investment must be in U.S. dollars
drawn on a domestic bank. The check should be accompanied by an investment slip
(provided on the bottom of shareholder account statements) and include the
shareholder's name, address, account number, Series' name and class of shares
(A, B or D). If a shareholder does not provide the required information, Selig-
man Data Corp. will seek further clarification and may be forced to return the
check to the shareholder. Orders sent directly to Seligman Data Corp. will be
executed at the Series' net asset value next determined after the order is ac-
cepted plus, in the case of Class A shares, any applicable sales load.
Seligman Data Corp. may charge a $10.00 service fee for checks returned to it
as uncollectable. This charge will be deducted from the shareholder's account.
For the protection of the Fund and its share-
10
<PAGE>
holders, no redemption proceeds will be remitted to a shareholder with respect
to shares purchased by check (unless certified) until Seligman Data Corp. re-
ceives notice that the check has cleared, which may be up to 15 days from the
credit of the shares to the shareholder's account.
VALUATION. The net asset value of a Series' shares is determined each day,
Monday through Friday, as of the close of trading on the NYSE (normally, 4:00
p.m. Eastern time) on each day that the NYSE is open for business. Net asset
value is calculated separately for each class of a Series. Securities traded on
a U.S. or foreign exchange or over-the-counter market are valued at the last
sales price on the primary exchange or market on which they are traded. United
Kingdom securities and securities for which there are no recent sales transac-
tions are valued based on quotations provided by primary market makers in such
securities. Any securities for which recent market quotations are not readily
available are valued at fair value determined in accordance with procedures ap-
proved by the Fund's Board of Directors. Short-term holdings maturing in 60
days or less are generally valued at amortized cost if their original maturity
was 60 days or less. Short-term holdings with more than 60 days remaining to
maturity will be valued at current market value until the 61st day prior to ma-
turity, and will then be valued on an amortized cost basis based on the value
as of such date unless the Board determines that amortized cost value does not
represent fair market value.
Although the legal rights of Class A, Class B and Class D shares are substan-
tially identical, the different expenses borne by each class will result in
different net asset values and dividends. The net asset values of Class B and
Class D shares will generally be lower than the net asset value of Class A
shares as a result of the higher distribution fees charged to Class B and Class
D shares. In addition, net asset value per share of the three classes will be
affected to the extent any other expenses differ among classes.
CLASS A SHARES--INITIAL SALES LOAD. Class A shares are subject to an initial
sales load which varies with the size of the purchase as shown in the following
schedule, and an annual service fee of up to .25% of the average daily net as-
set value of Class A shares. See "Administration, Shareholder Services and Dis-
tribution Plan" below.
CLASS A SHARES--SALES LOAD SCHEDULE
<TABLE>
<CAPTION>
SALES LOAD AS A
PERCENTAGE OF
-------------------
REGULAR
DEALER
NET AMOUNT DISCOUNT
INVESTED AS A % OF
AMOUNT OF OFFERING (NET ASSET OFFERING
PURCHASE PRICE VALUE) PRICE
------------------------------------ ---------- ---------
<S> <C> <C> <C> <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 or more* 0 0 0
</TABLE>
-------
* Shares acquired at net asset
value pursuant to the above
schedule will be subject to a
CDSL of 1% if redeemed within 18
months of purchase. See
"Purchase Of Shares--Contingent
Deferred Sales Load."
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if re-
deemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a fee on assets
of certain investments in Class A shares of the Seligman Mutual Funds partici-
pating in an "eligible employee benefit plan" (as
11
<PAGE>
defined below under "Special Programs") that are attributable to the particular
broker/dealer. The shares eligible for the fee are those on which an initial
front-end sales load was not paid because either the participating eligible em-
ployee benefit plan has at least (i) $500,000 invested in the Seligman Group of
Mutual Funds or (ii) 50 eligible employees to whom such plan is made available.
Class A shares representing only an initial purchase of Seligman Cash Manage-
ment 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 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 in-
cluding $5 million; and .25% of sales from $5 million and above.
Through April 30, 1997, dealers will receive the full sales load in accor-
dance with the sales load schedule for Class A shares of the Series for sales
of up to $999,000.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class A
shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary ac-
count or single trust. Purchases made by a trustee or other fiduciary for a fi-
duciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant to a Volume Discount, Right of Accumulation or Letter
of Intent are subject to a CDSL of 1% on redemptions within eighteen months of
purchase.
. VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the Seligman Mu-
tual Funds that are sold with an initial sales load, reaches levels indicated
in the above sales load schedule.
. THE RIGHT OF ACCUMULATION allows an investor to combine the amount being in-
vested in shares of the other Seligman Mutual Funds sold with an initial sales
load with the total net asset value of shares of those Seligman Mutual Funds
already owned that were sold with an initial sales load and the total net asset
value of shares of Seligman Cash Management Fund that were acquired by the in-
vestor through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load to determine reduced sales loads in accordance
with the sales load schedule. An investor or a dealer purchasing shares on be-
half of an investor must indicate that the investor has existing accounts when
making investments or opening new accounts.
. A LETTER OF INTENT allows an investor to purchase Class A shares over a 13-
month period at reduced initial sales loads, based upon the total amount the
investor intends to purchase plus the total net asset value of shares of the
Seligman Mutual Funds already owned that were sold with an initial sales load
and the total net asset value of shares of Seligman Cash Management Fund that
were acquired through an exchange of shares of another Seligman Mutual Fund on
which there was an initial sales load. An investor or a dealer purchasing
shares on behalf of an investor must indicate that the investor has existing
accounts when making investments or opening new accounts. For more information
concerning terms of Letters of Intent, see "Terms and Conditions" on page 27.
SPECIAL PROGRAMS. The Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees and their spouses
(and family members of the foregoing) of the Fund, the other investment compa-
nies in the Seligman Group, the Manager and other companies affiliated with the
Manager. Family members are defined to include lineal descendants and lineal
ancestors, siblings (and
12
<PAGE>
their spouses and children) and any company or or-ganization controlled by any
of the foregoing. Such sales also may be made to employee benefit and thrift
plans for such persons and to any investment advisory, custodial, trust or
other fiduciary account managed or advised by the Manager or any affiliate.
Class A shares also may be issued without an initial sales load in connection
with the acquisition of cash and securities owned by other investment companies
and personal holding companies; to any registered unit investment trust which
is the issuer of periodic payment plan certificates, the net proceeds of which
are invested in Fund shares; to separate accounts established and maintained by
an insurance company which are exempt from registration under Section 3(c)(11)
of the 1940 Act; to registered representatives and employees (and their spouses
and minor children) of any dealer that has a sales agreement with SFSI; to
shareholders of mutual funds with objectives and policies similar to the Fund
who purchase shares with redemption proceeds of such funds; to financial insti-
tution trust departments; to registered investment advisers exercising discre-
tionary investment authority with respect to the purchase of Fund shares; to
accounts of financial institutions or broker/dealers that charge account man-
agement fees, provided the Manager or one of its affiliates has entered into an
agreement with respect to such accounts; pursuant to sponsored arrangements
with organizations which make recommendations to or permit group solicitations
of, its employees, members or participants in connection with the purchase of
shares of the Fund; to other investment companies in the Seligman Group; and to
"eligible employee benefit plans" which have at least (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. "Eligible employee benefit plan" means any plan or ar-
rangement, whether or not tax qualified, which provides for the purchase of
Fund shares. Sales of shares to such plans must be made in connection with a
payroll deduction system of plan funding or other system acceptable to Seligman
Data Corp.
Section 403(b) plans sponsored by public educational institutions are not el-
igible for net asset value purchases based on the aggregate investment made by
the plan or number of eligible employees. Employee benefit plans eligible for
net asset value sales, as described above, will be subject to a CDSL of 1% for
terminations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination. Sales pursuant to a 401(k) alliance
program which has an agreement with SFSI are available at net asset value and
are not subject to a CDSL.
CLASS B SHARES. Class B shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSL
- -------------------- ----
<S> <C>
less than 1 year........................................................... 5%
1 year or more but less than 2 years....................................... 4%
2 years or more but less than 3 years...................................... 3%
3 years or more but less than 4 years...................................... 3%
4 years or more but less than 5 years...................................... 2%
5 years or more but less than 6 years...................................... 1%
6 years or more............................................................ 0%
</TABLE>
Class B shares are also subject to an annual distribution fee of .75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class B shares. SFSI will make a 4% payment to dealers in respect of purchases
of Class B shares. Approximately eight years after purchase, Class B shares
will convert automatically to Class A shares, which are subject to an annual
service fee of .25% but no distribution fee. Shares purchased through reinvest-
ment of dividends and distributions on Class B shares also will convert auto-
matically 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 an-
niversary of the purchase date. If Class B shares of a Series are exchanged for
Class B shares of another Seligman Mutual Fund, the conversion period applica-
ble to the Class B shares acquired in the
13
<PAGE>
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
a Series exercising the exchange privilege will continue to be subject to such
Series' CDSL schedule if such schedule is higher or longer than the CDSL sched-
ule relating to the new Class B shares. In addition, Class B shares of a Series
acquired by exchange will be subject to such Series' CDSL schedule if such
schedule is higher or longer than the CDSL schedule relating to the Class B
shares of the fund from which the exchange has been made.
CLASS D SHARES. Class D shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within one year, an annual dis-
tribution fee of up to .75% and an annual service fee of up to .25%, of the av-
erage daily net asset value of the Class D shares. SFSI will make a 1% payment
to dealers in respect of purchases of Class D shares. Unlike Class B shares,
Class D shares do not automatically convert to Class A shares after eight
years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on any redemption of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares). The amount of any
CDSL will initially be used by SFSI to defray the expense of the payment of 4%
(in the case of Class B shares) or 1% (in the case of Class D shares) made by
it to Service Organizations (as defined under "Administration, Shareholder
Services and Distribution Plan") at the time of sale. Pursuant to an agreement
with FEP Capital, L.P. ("FEP") to fund payments in respect of Class B shares,
SFSI has agreed to sell any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on any redemption of Class A shares pur-
chased during the preceding eighteen months if such shares were acquired at net
asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee benefit plans eligible for net asset
value sales as described above under "Special Programs" may be subject to a
CDSL of 1% for terminations at the plan level only, on redemption of shares
purchased within eighteen months prior to plan termination. No CDSL will be im-
posed on shares acquired through the investment of dividends or distributions
from any Class A, Class B or Class D shares of mutual funds in the Seligman
Group.
To minimize the application of a CDSL to a redemption, shares acquired pursu-
ant to the investment of dividends and distributions (which are not subject to
a CDSL) will be redeemed first; followed by shares held for a period of time
longer than the applicable CDSL period. Shares held for the longest period of
time within the applicable CDSL period will then be redeemed. Additionally, for
those shares determined to be subject to a CDSL, the CDSL will be assessed on
the current net asset value or original purchase price, whichever is less.
For example, assume an investor purchased 100 Class D shares in January at a
price of $10.00 per share. During the first year, 5 additional Class D shares
were acquired through investment of dividends and distributions. In January of
the following year, an additional 50 Class D shares are purchased at a price of
$12.00 per share. In March of that year, the investor chooses to redeem
$1,500.00 from the account which now holds 155 Class D shares with a total
value of $1,898.75 ($12.25 per share). The CDSL for this transaction would be
calculated as follows:
<TABLE>
<S> <C>
Total shares to be redeemed
(122.449 @ $12.25) as follows:...................................... $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25)........................................................ $ 61.25
Shares held more than 1 year
(100 @ $12.25)...................................................... 1,225.00
</TABLE>
<TABLE>
<S> <C>
Shares held less than 1 year subject to CDSL (17.449 @ $12.25)....... 213.75
---------
Gross proceeds of redemption........................................ $1,500.00
Less CDSL (17.449 shares @
$12.00 = $209.39 X 1% = $2.09)..................................... (2.09)
---------
Net proceeds of redemption.......................................... $1,497.91
=========
</TABLE>
14
<PAGE>
For federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the re-
demption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as de-
fined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"); (b) in connection with (i) distributions from retirement plans quali-
fied under section 401(a) of the Code when such redemptions are necessary to
make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii) dis-
tributions from a custodial account under section 403(b)(7) of the Code or an
individual retirement account ("IRA") due to death, disability, or attainment
of age 59 1/2, and (iii) a tax-free return of an excess contribution to an IRA;
(c) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund; (d) in whole or in part, in connection with shares sold
to any state, county, or city or any instrumentality, department, authority, or
agency thereof, which is prohibited by applicable investment laws from paying a
sales load or commission in connection with the purchase of shares of any reg-
istered investment management company; (e) pursuant to an automatic cash with-
drawal service; and (f) in connection with the redemption of shares of the Fund
if the Fund is combined with another mutual fund in the Seligman Group, or an-
other similar reorganization transaction.
If, with respect to a redemption of any Class A, Class B or Class D shares
sold by a dealer, the CDSL is waived because the redemption qualifies for a
waiver as set forth above, the dealer shall remit to SFSI promptly upon notice
an amount equal to the payment or a portion of the payment made by SFSI at the
time of sale of such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales in-
centive programs which may require the sale of minimum dollar amounts of shares
of the Seligman Mutual Funds. SFSI may from time to time pay a bonus or other
incentive to dealers that sell shares of the mutual funds in the Seligman
Group. In some instances, these bonuses or incentives may be offered only to
certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by the Manager during a specified period of time. Such bonus or
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered rep-
resentatives and members of their families to places within or outside the
United States. The cost to SFSI of such promotional activities and payments
shall be consistent with the Rules of the National Association of Securities
Dealers, Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, will have the ability to effect the following
transactions via telephone: (i) redemption of Series shares, (ii) exchange of
Series shares for shares of the same class of another Seligman Mutual Fund,
(iii) change of a dividend and/or capital gain distribution option, and (iv)
change of address. All telephone transactions are effected through Seligman
Data Corp. at (800) 221-2450.
For investors who purchase shares by completing and submitting an Account Ap-
plication (except those accounts registered as trusts (unless the trustee and
sole beneficiary are the same person), corporations or group retirement plans):
Unless an election is made otherwise on the Account Application, a shareholder
and the shareholder's broker/dealer of record as designated on the Account Ap-
plication, will automatically receive telephone services.
15
<PAGE>
For investors who purchase shares through a broker/dealer: Telephone services
for a shareholder and the shareholder's representative may be elected by com-
pleting a supplemental election application available from the broker/dealer of
record.
For accounts registered as IRAs. Telephone services will include only ex-
changes or address changes.
For accounts registered as trusts (unless the trustee and sole beneficiary
are the same person), corporations or group retirement plans: Telephone redemp-
tions are not permitted. Additionally, group retirement plans are not permitted
to change a dividend or gain distribution option.
All Seligman Mutual Fund accounts with the same account number (i.e., regis-
tered exactly the same) as an existing account, including any new fund in which
the shareholder invests in the future, will automatically include telephone
services if the existing account has telephone services. Telephone services may
also be elected at any time on a supplemental telephone services election form.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of Series shares via telephone.
In these circumstances, the shareholder or the shareholder's representative
should consider using other redemption or exchange procedures. (See "Redemption
of Shares" below.) Use of these other redemption or exchange procedures will
result in the request being processed at a later time than if a telephone
transaction had been used, and the Series' net asset value may fluctuate during
such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. These will include:
recording all telephone calls requesting account activity, requiring that the
caller provide certain requested personal and/or account information at the
time of the call for the purpose of establishing the caller's identity, and
sending a written confirmation of redemptions, exchanges or address changes to
the address of record each time activity is initiated by telephone. As long as
the Fund and Seligman Data Corp. follow instructions communicated by telephone
that were reasonably believed to be genuine at the time of their receipt, nei-
ther they nor any of their affiliates will be liable for any loss to the share-
holder caused by an unauthorized transaction. In any instance where the Fund or
Seligman Data Corp. is not reasonably satisfied that instructions received by
telephone are genuine, the requested transaction will not be executed, and nei-
ther they nor any of their affiliates will be liable for any losses which may
occur due to a delay in implementing the transaction. If the Fund or Seligman
Data Corp. does not follow the procedures described above, the Fund or Seligman
Data Corp. may be liable for any losses due to unauthorized or fraudulent in-
structions. Telephone transactions must be effected through a representative of
Seligman Data Corp., i.e., requests may not be communicated via Seligman Data
Corp.'s automated telephone answering system. Shareholders, of course, may ref-
use or cancel telephone services. Telephone services may be terminated by a
shareholder at any time by sending a written request to Seligman Data Corp.
TELEPHONE SERVICES MAY NOT BE ESTABLISHED BY A SHAREHOLDER'S BROKER/DEALER
WITHOUT THE WRITTEN AUTHORIZATION OF THE SHAREHOLDER. Written acknowledgment of
the addition of telephone services to an existing account or termination of
telephone services will be sent to the shareholder at the address of record.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit form ("uncertificated")
without charge (except a
16
<PAGE>
CDSL, if applicable) at any time by SENDING A WRITTEN REQUEST to Seligman Data
Corp., P.O. Box 3947, New York, NY 10008-3947; or if request is being sent by
overnight delivery service, to 100 Park Avenue, New York, NY, 10017. The re-
demption request must be signed by all persons in whose name the shares are
registered. A shareholder may redeem shares that are not in book credit form,
by surrendering certificates in proper form to the same address. Certificates
should be sent by registered mail. Share certificates must be endorsed for
transfer or accompanied by an endorsed stock power signed by all share owners
exactly as their name(s) appear(s) on the account registration. The sharehold-
er's letter of instruction or endorsed stock power should specify the Series
name, account number, class of shares (A, B or D) and the number of shares or
dollar amount to be redeemed. The Fund cannot accept conditional redemption re-
quests (i.e., requests to sell shares at a specific price or on a future date).
If the redemption proceeds are (i) $50,000 or more, (ii) to be paid to some-
one other than the shareholder of record (regardless of the amount) or (iii) to
be mailed to other than the address of record (regardless of the amount), the
signature(s) of the shareholder(s) must be guaranteed by an eligible financial
institution including, but not limited to, the following: banks, trust compa-
nies, credit unions, securities brokers and dealers, savings and loan associa-
tions and participants in the Securities Transfer Association Medallion Program
(STAMP), the Stock Exchanges Medallion Program (SEMP) or the New York Stock Ex-
change Medallion Signature Program (MSP). The Fund reserves the right to reject
a signature guarantee where it is believed that the Fund will be placed at risk
by accepting such guarantee. A signature guarantee is also necessary in order
to change the account registration. Notarization by a notary public is not an
acceptable signature guarantee. ADDITIONAL DOCUMENTATION MAY ALSO BE REQUIRED
BY SELIGMAN DATA CORP. IN THE EVENT OF A REDEMPTION BY A CORPORATION, EXECUTOR,
ADMINISTRATOR, TRUSTEE, CUSTODIAN OR RETIREMENT PLANS. FOR FURTHER INFORMATION
WITH RESPECT TO REDEMPTION REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERV-
ICES DEPARTMENT OF SELIGMAN DATA CORP. FOR ASSISTANCE.
In the case of Class A shares (except for shares purchased without an initial
sales load due to the size of the purchase), and in the case of Class B shares
redeemed after six years and Class D shares redeemed after one year, a share-
holder will receive the net asset value per share next determined after receipt
of a request in good order. If Class A shares which were purchased without an
initial sales load because the purchase amount was $1,000,000 or more, are re-
deemed within eighteen months of purchase, a shareholder will receive the net
asset value per share next determined after receipt of a request in good order,
less a CDSL of 1% as described under "Purchase of Shares--Class A Shares--Ini-
tial Sales Load" above. If Class B shares are redeemed within six years of pur-
chase, a shareholder will receive the net asset value per share next determined
after receipt of the request in good order less the applicable CDSL, as de-
scribed under "Purchase of Shares--Class B Shares" above. If Class D shares are
redeemed within one year of purchase, a shareholder will receive the net asset
value per share next determined after receipt of the request in good order,
less a CDSL of 1% as described under "Purchase Of Shares--Class D Shares"
above.
A shareholder also may "sell" shares to the Fund through an investment dealer
and, in that way, be certain, providing the order is timely, of receiving the
net asset value established at the end of the day on which the dealer is given
the repurchase order (less any applicable CDSL). The Fund makes no charge for
this transaction, but the dealer may charge you a service fee. "Sell" or repur-
chase orders received from an authorized dealer before the close of the NYSE
and received by SFSI, the repurchase agent, before the close of business on the
same day will be executed at the net asset value per share determined as of the
close of the NYSE on that day, less any applicable CDSL. Repurchase orders re-
ceived from authorized
17
<PAGE>
dealers after the close of the NYSE or not received by SFSI prior to the close
of business will be executed at the net asset value determined as of the close
of the NYSE on the next trading day, less any applicable CDSL. Shares held in a
"street name" account with a broker/dealer may be sold to the Fund only through
a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares payable
to the address of record may be made once per day, in an amount of up to
$50,000 per account. Telephone redemption requests received by Seligman Data
Corp. at (800) 221-2450 between 8:30 a.m. and 4:00 p.m. Eastern time, on any
business day will be processed as of the close of business on that day. Redemp-
tion requests by telephone will not be accepted within 30 days following an ad-
dress change. Qualified Plans, IRAs or other retirement plans are not eligible
for telephone redemptions. The Fund reserves the right to suspend or terminate
its telephone redemption service at any time without notice.
For more information about telephone redemptions and the circumstances under
which a share- holder may bear the risk of loss for a fraudulent transaction,
see "Telephone Transactions" above.
GENERAL. With respect to shares redeemed, a check for the proceeds will be
sent to the shareholder's address of record within seven calendar days after
acceptance of the redemption order and will be made payable to all of the reg-
istered owners on the account. With respect to shares repurchased by the Fund,
a check for the proceeds will be sent to the investment dealer within seven
calendar days after acceptance of the repurchase order and will be made payable
to the investment dealer. The Fund will not permit redemptions of shares pur-
chased by check (unless certified) until Seligman Data Corp. receives notice
that the check has cleared, which may be up to 15 days from the credit of such
shares to the shareholder's account. The proceeds of a redemption or repurchase
may be more or less than the shareholder's cost.
The Fund reserves the right to redeem shares owned by a shareholder whose in-
vestment in a Series has a value of less than a minimum amount specified by the
Fund's Board of Directors, which is presently $500. Shareholders would be sent
a notice before the redemption is processed stating that the value of the in-
vestment in the Series is less than the specified minimum and that they have
sixty days to make an additional investment.
REINSTATEMENT PRIVILEGE. If a shareholder redeems Class A shares and then de-
cides to reinvest them, or to shift the investment to one of the other Seligman
Mutual Funds, the shareholder may, within 120 calendar days of the date of the
redemption, use all or any part of the proceeds of the redemption to reinstate,
free of an initial sales load, all or any part of the investment in shares of
the Series or in shares of any of the other Seligman Mutual Funds. If a share-
holder redeems shares and the redemption was subject to a CDSL, the shareholder
may reinstate the investment in shares of the same class of a Series or of any
of the other Seligman Mutual Funds within 120 calendar days of the date of re-
demption and receive a credit for the CDSL paid. Such investment will be rein-
stated at the net asset value per share established as of the close of the NYSE
on the day the request is received. Seligman Data Corp. must be informed that
the purchase represents a reinstated investment. REINSTATED SHARES MUST BE REG-
ISTERED EXACTLY AND BE OF THE SAME CLASS AS THE SHARES PREVIOUSLY REDEEMED; AND
THE MINIMUM INITIAL INVESTMENT MUST BE MET AT THE TIME OF REINSTATEMENT.
Generally, exercise of the Reinstatement Privilege does not alter the federal
income tax status of any capital gain realized on a sale of Series shares, but
to the extent that any shares are sold at a loss and the proceeds are rein-
vested in shares of the same Series, some or all of the loss will not be al-
lowed as a deduction, depending upon the percentage of the proceeds reinvested.
18
<PAGE>
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
Under the Fund's Administration, Shareholder Services and Distribution Plan
(the "Plan"), each Series may pay to SFSI an administration, shareholder serv-
ices and distribution fee in respect of such Series' Class A, Class B and Class
D shares. Payments under the Plan may include, but are not limited to: (i) com-
pensation to securities dealers and other organizations ("Service Organiza-
tions") for providing distribution assistance with respect to assets invested
in the Series, (ii) compensation to Service Organizations for providing admin-
istration, accounting and other shareholder services with respect to Series
shareholders, and (iii) otherwise promoting the sale of shares of the Series,
including paying for the preparation of advertising and sales literature and
the printing and distribution of such promotional materials and prospectuses to
prospective investors and defraying SFSI's costs incurred in connection with
its marketing efforts with respect to shares of the Series. The Manager, in its
sole discretion, may also make similar payments to SFSI from its own resources,
which may include the management fee that the Manager receives from the Fund.
Under the Plan, each Series reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in re-
spect of Class A shares will be used primarily to compensate Service Organiza-
tions which enter into agreements with SFSI. Such Service Organizations will
receive from SFSI a continuing fee of up to .25% on an annual basis, payable
quarterly, of the average daily net assets of Class A shares attributable to
the particular Service Organization for providing personal service and/or the
maintenance of shareholder accounts. The fee payable from time to time is,
within such limit, determined by the Directors of the Fund.
Under the Plan, each Series reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the respective av-
erage daily net asset value of the Class B and Class D shares. Proceeds from
the Class B distribution fees are used to pay Service Organizations a continu-
ing fee of up to .25% on an annual basis of the average net asset value of
Class B shares attributable to particular Service Organizations for providing
personal service and/or maintenance of shareholder accounts and will also be
used by SFSI to defray the expense of the payment of 4% made by it to Service
Organizations at the time of sale of Class B shares. Proceeds from the Class D
distribution fees are used primarily to compensate Service Organizations for
administration, shareholder services and distribution assistance (including a
continuing fee of up to .25% on an annual basis of the average daily net asset
value of Class D shares attributable to particular Service Organizations for
providing personal services and/or the maintenance of shareholder accounts) and
will initially be used by SFSI to defray the expense of the payment of 1% made
by it to Service Organizations at the time of the sale of Class D shares. The
amounts expended by SFSI in any one year upon the initial purchase of Class B
and Class D shares may exceed the amounts received by it from Plan payments re-
tained. Expenses of administration, shareholder services and distribution of
Class B and Class D shares in one fiscal year of the Fund may be paid from
Class B and Class D Plan fees, respectively, received from the Fund in any
other fiscal year. The Plan is reviewed by the Fund's Directors annually.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as a broker/dealer of record for most share-
holder accounts that do not have a designated broker/dealer of record and re-
ceives compensation for providing personal service and account maintenance to
such accounts of record.
EXCHANGE PRIVILEGE
A shareholder may, without charge, exchange at net asset value any part or
all of an investment in a
19
<PAGE>
Series for shares of any of the other mutual funds in the Seligman Group. Ex-
changes may be made by mail, or by telephone if the shareholder has telephone
services.
Class A, Class B or Class D shares may be exchanged only for Class A, Class B
or Class D shares, respectively, of another Seligman Mutual Fund on the basis
of relative net asset value.
If shares that are subject to a CDSL are exchanged for shares of another
fund, for purposes of assessing the CDSL payable upon disposition of the ex-
changed shares, the applicable holding period shall be reduced by the holding
period of the original shares.
Class B shareholders of a Series exercising the exchange privilege will con-
tinue to be subject to such Series' CDSL schedule if such schedule is higher or
longer than the CDSL schedule of the new Class B shares. In addition, Class B
shares of a Series acquired by exchange will be subject to such Series' CDSL
schedule if such schedule is higher or longer than the CDSL schedule relating
to the Class B shares of the fund from which such shares were exchanged.
The Seligman Mutual Funds available under the Exchange Privilege are:
. SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation. Current
income is not an objective.
. SELIGMAN CASH MANAGEMENT FUND, INC. invests in high quality money market
instruments. Shares are sold at net asset value.
. SELIGMAN COMMON STOCK FUND, INC. seeks favorable current income and long-
term growth of both income and capital value without exposing capital to undue
risk.
. SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
. SELIGMAN FRONTIER FUND, INC. seeks to produce growth in capital value; in-
come may be considered but will only be incidental to the Fund's investment ob-
jective.
. SELIGMAN GROWTH FUND, INC. seeks longer-term growth in capital value and an
increase in future income.
. SELIGMAN HENDERSON GLOBAL FUND SERIES, INC. consists of the Seligman Hen-
derson International Fund, the Seligman Henderson Emerging Markets Growth Fund,
the Seligman Henderson Global Growth Opportunities Fund, the Seligman Henderson
Global Smaller Companies Fund and the Seligman Henderson Global Technology
Fund, which seek long-term capital appreciation primarily by investing in com-
panies either globally or internationally.
. SELIGMAN HIGH INCOME FUND SERIES seeks high current income by investing in
debt securities. The Fund consists of the Seligman U.S. Government Securities
Series and the Seligman High-Yield Bond Series.
. SELIGMAN INCOME FUND, INC. seeks high current income and the possibility of
improvement of future income and capital value.
. SELIGMAN NEW JERSEY MUNICIPAL FUND, INC. invests in investment grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
. SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
. SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series and a
National Series. The National Municipal Series seeks to provide maximum income
exempt from regular federal income taxes; individual state series, each seeking
to maximize income exempt from regular federal income taxes and from personal
income taxes in designated states, are available for Colorado, Georgia, Louisi-
ana, Maryland,
20
<PAGE>
Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon and South
Carolina. (Does not currently offer Class B shares.)
. SELIGMAN MUNICIPAL SERIES TRUST includes the California Municipal Quality
Series, the California Municipal High-Yield Series, the Florida Municipal Se-
ries and the North Carolina Municipal Series, each of which invests in munici-
pal securities of its designated state. (Does not currently offer Class B
shares.)
All permitted exchanges will be based on the net asset values of the respec-
tive funds determined at the close of the NYSE on that day. Telephone requests
for exchanges received between 8:30 a.m. and 4:00 p.m. Eastern time, on any
business day, by Seligman Data Corp. at (800) 221-2450, will be processed as of
the close of business on that day. The registration of an account into which an
exchange is made must be identical to the registration of the account from
which shares are exchanged. When establishing a new account by an exchange of
shares, the shares being exchanged must have a value of at least the minimum
initial investment required by the mutual fund into which the exchange is being
made. THE METHOD OF RECEIVING DISTRIBUTIONS, UNLESS OTHERWISE INDICATED, WILL
BE CARRIED OVER TO THE NEW FUND ACCOUNT, AS WILL TELEPHONE SERVICES. ACCOUNT
SERVICES, SUCH AS INVEST-A-CHECK (R) SERVICE, DIRECTED DIVIDENDS AND AUTOMATIC
CASH WITHDRAWAL SERVICE WILL NOT BE CARRIED OVER TO THE NEW FUND ACCOUNT UNLESS
SPECIFICALLY REQUESTED AND PERMITTED BY THE NEW FUND. Exchange orders may be
placed to effect an exchange of a specific number of shares, an exchange of
shares equal to a specific dollar amount or an exchange of all shares held.
Shares for which certificates have been issued may not be exchanged via tele-
phone and may be exchanged only upon receipt of a written exchange request to-
gether with certificates representing shares to be exchanged in proper form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. The terms of the
exchange offer described herein may be modified at any time; and not all of the
mutual funds in the Seligman Group are available to residents of all states.
Before making any exchange, a shareholder should contact an authorized invest-
ment dealer or Seligman Data Corp. to obtain prospectuses of any of the Selig-
man Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges on
behalf of a shareholder only if the shareholder has telephone services or if
the broker/dealer has entered into a Telephone Exchange Agreement with SFSI
wherein the broker/dealer must agree to indemnify SFSI and the Seligman Mutual
Funds from any loss or liability incurred as a result of the acceptance of tel-
ephone exchange orders. Written confirmation of all exchanges will be forwarded
to the shareholder to whom the exchanged shares are registered and a duplicate
confirmation will be sent to the dealer of record listed on the account.
SFSI reserves the right to reject a telephone exchange request. Any rejected
telephone exchange order may be processed by mail. For more information about
telephone exchange privileges, which unless objected to, are assigned to most
shareholders automatically, and the circumstances under which shareholders may
bear the risk of loss for a fraudulent transaction, see "Telephone Transac-
tions" above.
Exchanges of shares are sales, and may result in a gain or loss for federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE SERIES
Because excessive trading (including short-term, "market timing" trading) can
hurt a Series' performance, the Fund, on behalf of a Series may refuse any ex-
change (1) from any shareholder account from which there have been two ex-
changes in the preceding three month period, or (2) where the exchanged shares
equal in value the lesser of $1,000,000 or 1% of the Series' net assets. The
Fund may also refuse any exchange or purchase order from any shareholder ac-
count if the shareholder or the shareholder's
21
<PAGE>
broker/dealer has been advised that previous patterns of purchases and redemp-
tions or exchanges have been considered excessive. Accounts under common owner-
ship or control, including those with the same Taxpayer Identification Number
and those administered so as to redeem or purchase shares based upon certain
predetermined market indicators, will be considered one account for this pur-
pose. Additionally, the Fund reserves the right to refuse any order for the
purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
Dividends payable from each Series' net investment income are distributed at
least annually. Payments vary in amount depending on income received from port-
folio securities and the costs of operations. Each Series distributes substan-
tially all of any taxable net long-term and short-term gain realized on invest-
ments to shareholders at least annually. Dividends and distributions will gen-
erally be taxable to shareholders in the year in which they are declared by the
Fund if paid before February 1 of the following year.
Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares;
(3) to receive both dividends and gain distributions in cash. Cash dividends
and gain distributions are paid by check. In the case of prototype retirement
plans, dividends and gain distributions are reinvested in additional shares.
Unless another election is made, dividends and capital gain distributions will
be credited to shareholder accounts in additional shares. Shares acquired
through a dividend or gain distribution and credited to a shareholder's account
are not subject to an initial sales load or a CDSL. Dividends and gain distri-
butions paid in shares are invested on the payable date using the net asset
value of the ex-dividend date. Shareholders may elect to change their dividend
and gain distribution options by writing Seligman Data Corp. at the address
listed below. If the shareholder has telephone services, changes may also be
telephoned to Seligman Data Corp. between 8:30 a.m. and 6:00 p.m. Eastern time,
by either the shareholder or the broker/dealer of record on the account. For
information about telephone services, see "Telephone Transactions." These elec-
tions must be received by Seligman Data Corp. before the record date for the
dividend or distribution in order to be effective for such dividend or distri-
bution.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a result
of the higher distribution fees applicable with respect to Class B and Class D
shares. Per share dividends of the three classes may also differ as a result of
differing class expenses. Distributions of net capital gains, if any, will be
paid in the same amount for Class A, Class B and Class D shares. See "Purchase
of Shares--Valuation."
Shareholders exchanging shares of a fund for shares of another Seligman Mu-
tual Fund will continue to receive dividends and gains as elected prior to such
exchange unless otherwise specified. In the event that a shareholder redeems,
transfers or exchanges all shares in an account between the record date and the
payable date, the value of dividends or gain distributions declared will be
paid in cash regardless of the existing election.
FEDERAL INCOME TAXES
Each Series intends to qualify as a regulated investment company under the
Code. For each year so qualified, each Series 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.
22
<PAGE>
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether re-
ceived in cash or reinvested in additional shares, and, to the extent desig-
nated as derived from a Series' dividend income that would be eligible for the
dividends received deduction if the Series were not a regulated investment com-
pany, they are eligible, subject to certain restrictions, for the 70% dividends
received deduction for corporations.
Distributions of net capital gain, i.e., the excess of net long-term capital
gains over any net short-term losses, are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long shares have been held by the shareholders; such distributions are not eli-
gible for the dividends received deduction allowed to corporate shareholders.
Any gain or loss realized upon a sale or redemption of shares in a Series by
a shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any
loss realized will be treated as long-term capital loss to the extent that it
offsets the long-term capital gain distribution. In addition, no loss will be
allowed on the sale or other disposition of shares of a Series if, within a pe-
riod beginning 30 days before the date of such sale or disposition and ending
30 days after such date, the holder acquires (such as through dividend rein-
vestment) securities that are substantially identical to the shares of such Se-
ries.
In determining gain or loss on shares of a Series that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales load incurred
in acquiring such shares to the extent of any subsequent reduction of the sales
load by reason of the Exchange or Reinstatement Privilege offered by the Fund.
Any sales load not taken into account in determining the tax basis of shares
sold or exchanged within 90 days after acquisition will be added to the share-
holder's tax basis in the shares acquired pursuant to the Exchange or Rein-
statement Privilege.
A Series will generally be subject to an excise tax of 4% on the amount of
any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to share-
holders in the calendar year in which it was earned. Furthermore, dividends de-
clared 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 Series 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 (SO-
CIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND CERTIFIES
THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS REQUIRED
TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS AND OTHER
REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING IS 31%.
SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED BY THE INTER-
NAL 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
WHICH MAY BE DEDUCTED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET AGAINST ANY UN-
DISTRIBUTED DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. THE FUND ALSO RESERVES
THE RIGHT TO CLOSE ANY ACCOUNT WHICH DOES NOT HAVE A CERTIFIED TAXPAYER IDENTI-
FICATION NUMBER.
23
<PAGE>
SHAREHOLDER INFORMATION
Shareholders will be sent reports semi-annually regarding the Fund. General
information about the Fund may be requested by writing the Corporate Communi-
cations/ Investor Relations Department, J. & W. Seligman & Co. Incorporated,
100 Park Avenue, New York, NY 10017 or by telephoning the Corporate
Communications/Investor Relations Department toll-free at (800) 221-7844 from
all continental United States, except New York or (212) 850-1864 in New York
State and the Greater New York City area. Information about shareholder ac-
counts may be requested by writing Shareholders Services, Seligman Data Corp.
at the same address or by toll-free telephone by dialing (800) 221-2450 from
all continental United States. Seligman Data Corp. may be telephoned Monday
through Friday (except holidays), between the hours of 8:30 a.m. and 6:00 p.m.
Eastern time, and calls will be answered by a service representative.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BAL-
ANCE, MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT
STATEMENTS AND FORM 1099-DIVS CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF
DISTRIBUTION CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA
CORP. SHOULD BE NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS
CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS
ELECTED TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial transac-
tions in their Account.
Other investor services are available. These include:
. INVEST-A-CHECK(R) SERVICE enables a shareholder to authorize additional pur-
chases of shares automatically by electronic funds transfer from the share-
holder's savings or checking account, if the bank that maintains the account
is a member of the Automated Clearing House ("ACH"), or by preauthorized
checks to be drawn on the shareholder's checking account at regular monthly
intervals in fixed amounts of $100 or more per fund, or regular quarterly
intervals in fixed amounts of $250 or more per fund, to purchase shares. Ac-
counts may be established concurrently with the Invest-A-Check(R) Service only
if accompanied by a $100 minimum in conjunction with the monthly investment
option, or a $250 minimum in conjunction with the quarterly investment option.
For investments into the Seligman Time Horizon Matrix SM Asset Allocation Pro-
gram, the minimum amount is $500 at regular monthly intervals or $1,000 at
regular quarterly intervals. (See "Terms and Conditions" on page 27).
. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of Seligman
Cash Management Fund to exchange a specified amount, at regular monthly inter-
vals in fixed amounts of $100 or more per fund, or regular quarterly intervals
in fixed amounts of $250 or more per fund, from shares of any class of the
Cash Management Fund into shares of the same class of any other Seligman Mu-
tual Fund registered in the same name. For exchanges into the Seligman Time
Horizon Matrix SM Asset Allocation Program, the minimum amount is $500 at reg-
ular monthly intervals or $1,000 at regular quarterly intervals. The share-
holder's Cash Management Fund account must have a value of at least $5,000 at
the initiation of the service and all shares must be in "book credit" form.
Exchanges will be made at the public offering price.
. DIVIDENDS FROM OTHER INVESTMENTS permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Fund or another Seligman Mutual Fund. (Dividend checks must meet
or exceed the required minimum purchase amount and include the shareholder's
name, account number, the name of the Fund and the class of shares in which
the investment is to be made.)
24
<PAGE>
. AUTOMATIC CD TRANSFER SERVICE permits a shareholder to instruct a bank to in-
vest the proceeds of a maturing bank certificate of deposit ("CD") in shares of
any designated Seligman Mutual Fund. Shareholders who wish to use this service
should contact Seligman Data Corp. or a broker to obtain the necessary documen-
tation. Banks may charge a penalty on CD assets withdrawn prior to maturity.
Accordingly, it will not normally be advisable to liquidate a CD before its ma-
turity.
. AUTOMATIC CASH WITHDRAWAL SERVICE permits payments at regular intervals to be
made to a shareholder who owns or purchases shares worth $5,000 or more held as
book credits. Holders of Class A shares purchased at net asset value because
the purchase amount was $1,000,000 or more should bear in mind that withdrawals
may be subject to a 1% CDSL if made within eighteen months of purchase of such
shares. Holders of Class B shares may elect to use this service immediately,
although certain withdrawals may be subject to a CDSL. Please contact Seligman
Data Corp. at (800) 221-2450 for more information. Holders of Class D shares
may elect to use this service with respect to shares that have been held for at
least one year. (See "Terms and Conditions" on page 27.)
. DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person or
to direct the payment of such dividends to another Seligman Mutual Fund for
purchase at net asset value. Dividends on Class A, Class B and Class D shares
may only be directed to shares of the same class of another Seligman Mutual
Fund.
. OVERNIGHT DELIVERY to service shareholder requests is available for a $15.00
fee which will be deducted from a shareholder's account, if requested.
. COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of charge
for the current year and most recent prior year. Copies of year-end statements
for prior years back to 1970 are available for a fee of $10.00 per year, per
account, with a maximum charge of $150 per account. Statement requests should
be forwarded, along with a check, to Seligman Data Corp.
TAX-DEFERRED RETIREMENT PLANS. Shares of the Fund may be purchased for all
types of tax-deferred retirement plans. SFSI makes available plans, plan forms
and custody agreements for:
--Individual Retirement Accounts (IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
--Pension and Profit Sharing Plans for sole proprietorships, corporations and
partnerships.
These types of plans may be established only upon receipt of a written appli-
cation form. The Fund may register an IRA investment for which an account ap-
plication has not been received as an ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also may receive information through an au-
thorized dealer.
ADVERTISING A SERIES' PERFORMANCE
From time to time a Series may advertise its "total return" and "average an-
nual total return," each of which are calculated separately for Class A, Class
B and Class D shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" shows what an
investment in shares of Class A, Class B and Class D of a Series would have
earned over a specified period of time (for example, one, five and ten-year
25
<PAGE>
periods or since inception) assuming the payment of the maximum sales load, if
any (or CDSL upon redemption, if applicable), when the investment was made and
that all distributions and dividends paid by such Series were reinvested on the
reinvestment dates during the period. The "average annual total return" is the
annual rate required for the initial payment to grow to the amount which would
be received at the end of the specified period (one, five and ten-year periods
or since inception); i.e., the average annual compound rate of return. Total
return and average annual total return may also be presented without the effect
of the initial sales load or CDSL, as applicable.
From time to time, reference may be made in advertising or promotional mate-
rial to performance information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ("Lipper"), an independent reporting service
which monitors the performance of mutual funds. In calculating the total return
of the Series' Class A, Class B and Class D shares, the Lipper analysis assumes
investment of all dividends and distributions paid but does not take into ac-
count applicable sales loads. The Fund may also refer in advertisements or in
other promotional material to articles, comments, listings and columns in the
financial press pertaining to a Series' performance. Examples of such financial
and other press publications include Barron's, Business Week, CDA/Weisenberger
Mutual Funds Investment Report, Christian Science Monitor, Financial Planning,
Financial Times, Financial World, Forbes, Fortune, Individual Investor, Invest-
ment Advisor, Investors Business Daily, Kiplinger's, Los Angeles Times, MONEY
Magazine, Morningstar, Inc., Pensions and Investments, Smart Money, The New
York Times, USA Today, U.S. News and World Report, The Wall Street Journal,
Washington Post, Worth Magazine and Your Money.
ORGANIZATION AND CAPITALIZATION
The Large-Cap Value Fund and the Small-Cap Value Fund are each separate se-
ries of Seligman Value Fund Series, Inc., an open-end, diversified management
investment company incorporated under the laws of the State of Maryland on Jan-
uary 27, 1997. The Directors of the Fund are authorized to issue, create and
classify shares of capital stock in separate series without further action by
shareholders. Shares of capital stock of each Series have a par value of $.001
and are divided into three classes. Each share of a Series' Class A, Class B
and Class D common stock is equal as to earnings, assets and voting privileges,
except that each class bears its own separate distribution and, potentially,
certain other class expenses and has exclusive voting rights with respect to
any matter to which a separate vote of any class is required by the 1940 Act or
Maryland law. The Fund has adopted a Plan (the "Multiclass Plan") pursuant to
Rule 18f-3 under the 1940 Act permitting the issuance and sale of multiple
classes of common stock. In accordance with the Articles of Incorporation, the
Board of Directors may authorize the creation of additional classes of common
stock with such characteristics as are permitted by the Multiclass Plan and
Rule 18f-3. The 1940 Act requires that where more than one class exists, each
class must be preferred over all other classes in respect of assets specifi-
cally allocated to such class. Shares have non-cumulative voting rights for the
election of directors. Each outstanding share will be fully paid and non-
assessable, and freely transferable. There are no liquidation, conversion or
prescriptive rights.
26
<PAGE>
TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the third
decimal place, as can be purchased at the net asset value plus a sales load,
if applicable, at the close of business on the day payment is received. If a
check in payment of a purchase of shares is dishonored for any reason, Selig-
man Data Corp. will cancel the purchase and may redeem additional shares, if
any, held in the shareholder's account in an amount sufficient to reimburse
the Fund for any loss it may have incurred and charge a $10.00 return check
fee. Shareholders will receive dividends from investment income and any dis-
tributions from gain realized on investments in shares or in cash according to
the option elected. Dividend and gain options may be changed by notifying Se-
ligman Data Corp. These option changes must be received by Seligman Data Corp.
before the record date for the dividend or distribution in order to be effec-
tive for such dividend or distribution. Stock certificates will not be issued,
unless requested. Replacement stock certificates will be subject to a surety
fee.
INVEST-A-CHECK(R) SERVICE
The Invest-A-Check(R) Service is available to all shareholders. The applica-
tion is subject to acceptance by the shareholder's bank and Seligman Data
Corp. The electronic funds transfer ("ACH debit") or preauthorized check in
the amount specified will be drawn automatically on the shareholder's bank on
the fifth day (unless otherwise specified) of each month (or on the prior
business day if such day of the month falls on a weekend or holiday) in which
an investment is scheduled and invested at the close of business on the same
date. After the initial investment, the value of shares held in a sharehold-
er's account must equal not less than two regularly scheduled investments. If
an ACH debit or preauthorized check is not honored by the shareholder's bank,
or if the value of shares held falls below the required minimum, the Invest-A-
Check(R) Service may be suspended. In the event that a check or ACH debit is
returned uncollectable, Seligman Data Corp. will cancel the purchase, redeem
shares held in the shareholder's account for an amount sufficient to reimburse
the Fund for any loss it may have incurred as a result, and charge a $10.00
return check fee. This fee may be deducted to the shareholder's account. The
Invest-A-Check(R) Service may be reinstated upon written request indicating
that the cause of interruption has been corrected. The Invest-A-Check(R) Serv-
ice may be terminated by the shareholder or Seligman Data Corp. at any time by
written notice. The shareholder agrees to hold the Fund and its agents free
from all liability which may result from acts done in good faith and pursuant
to these terms. Instructions for establishing Invest-A-Check(R) Service are
given on the Account Application. In the event a shareholder exchanges all of
the shares from one mutual fund in the Seligman Group to another, the Invest-
A-Check(R) Service will be terminated in the Seligman Mutual Fund that was
closed as a result of the exchange of all shares and the shareholder must re-
apply for the Invest-A-Check(R) Service in the Seligman Mutual Fund into which
the exchange was made. In the event of a partial exchange, the Invest-A-
Check(R) Service will be continued, subject to the above conditions, in the
Seligman Mutual Fund from which the exchange was made. Accounts established in
connection with the Invest-A-Check(R) Service must be accompanied by a minimum
initial investment of at least $100 in connection with the monthly investment
option or $250 in connection with the quarterly investment option. If a share-
holder uses the Invest-A-Check(R) Service to make an IRA investment, the pur-
chase will be credited as a current year contribution. If a shareholder uses
the Invest-A-Check(R) Service to make an investment in a pension or profit
sharing plan, the purchase will be credited as a current year employer contri-
bution.
AUTOMATIC CASH WITHDRAWAL SERVICE
The Automatic Cash Withdrawal Service is available to Class A shareholders,
to Class B shareholders and to Class D shareholders with respect to Class D
shares held for one year or more. A sufficient number of full and fractional
shares will be redeemed to provide the amount required for a scheduled payment
and any applicable CDSL. Redemptions will be made at the asset value at the
close of business on the specific day designated by the shareholder of each
month (or on the prior business day if the day specified falls on a weekend or
holiday). Redemptions of Class A shares which were purchased at net asset
value because the purchase amount was $1,000,000 or more may be subject to a
CDSL if made within 18 months of purchase of such shares. Redemptions of Class
B shares may also be subject to a CDSL. A shareholder may change the amount of
scheduled payments or may suspend payments by written notice to Seligman Data
Corp. at least ten days prior to the effective date of such a change or sus-
pension. Service may be terminated by the shareholder or Seligman Data Corp.
at any time by written notice. It will be terminated upon proper notification
of the death or legal incapacity of the shareholder. This Service is consid-
ered terminated in the event a withdrawal of shares, other than to make sched-
uled withdrawal payments, reduces the value of shares remaining on deposit to
less than $5,000. Continued payments in excess of dividend income invested
will reduce and ultimately exhaust capital. Withdrawals, concurrent with pur-
chases of shares of this or any other investment company, will be disadvanta-
geous because of the payment of duplicative sales loads, if applicable. For
this reason, additional purchases of Fund shares are discouraged when the
Withdrawal Service is in effect.
LETTER OF INTENT--CLASS A SHARES ONLY
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to the shareholder or credited to their account.
Upon completion of the specified minimum purchase within the thirteen-month
period, all shares held in escrow will be deposited into the shareholder's ac-
count or delivered to the shareholder. A shareholder may include toward com-
pletion of a Letter of Intent the total asset value of shares of the Seligman
Mutual Funds on which an initial sales load was paid as of the date of the
Letter. If the total amount invested within the thirteen-month period does not
equal or exceed the specified minimum purchase, a shareholder will be re-
quested to pay the difference between the amount of the sales load paid and
the amount of the sales load applicable to the total purchase made. If, within
20 days following the mailing of a written request, a shareholder has not paid
this additional sales load to Seligman Financial Services, Inc. sufficient
escrowed shares will be redeemed for payment of the additional sales load.
Shares remaining in escrow after this payment will be released to the account.
The intended purchase amount may be increased at any time during the thirteen-
month period by filing a revised Agreement for the same period, provided that
the Dealer furnishes evidence that an amount representing the reduction in
sales load under the new Agreement, which becomes applicable on purchases al-
ready made under the original Agreement, will be refunded to the Fund and that
the required additional escrowed shares will be purchased by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Seligman Mutual Fund on which there is a front-
end sales load may be taken into account in completing a Letter of Intent, or
for Right of Accumulation. However, shares of the Seligman Cash Management
Fund which have been purchased directly may not be used for purposes of deter-
mining reduced sales loads on additional purchases of the other mutual funds
in the Seligman Group.
/97
27
<PAGE>
SELIGMAN VALUE FUND SERIES, INC.
- --------------------------------------------------------------------------------
Seligman Large-Cup Value Fund
Seligman Small-Cup Value Fund
- --------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
Table of Contents
Page
Summary of Series Expenses....................... 2
Alternative Distribution Systems................. 3
Investment Objectives, Policies and Risks........ 5
Management Services.............................. 7
Purchase of Shares............................... 9
Telephone Transactions........................... 15
Redemption of Shares............................. 16
Administration, Shareholder Services
and Distribution Plan.......................... 19
Exchange Privilege............................... 19
Further Information about Transactions In
The Funds...................................... 21
Dividends and Distributions...................... 22
Federal Income Taxes............................. 22
Shareholder Information.......................... 24
Advertising a Series' Performance................ 25
Organization and Capitalization.................. 26
- --------------------------------------------------------------------------------
P R O S P E C T U S
SELIGMAN
VALUE
FUND
SERIES, INC.
Seligman Large-Cap Value Fund
Seligman Small-Cap Value Fund
, 1997
- --------------------------------------------------------------------------------
A Capital Appreciation Fund
EQVA 0/97
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
, 1997
SELIGMAN LARGE-CAP VALUE FUND
SELIGMAN SMALL-CAP VALUE FUND
series of
SELIGMAN VALUE FUND SERIES, INC.
100 Park Avenue
New York, New York 10017
New York City Telephone (212) 850-1864
Toll Free Telephone (800) 221-2450 all continental United States
For Retirement Plan Information - Toll Free Telephone (800) 445-1777
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus, dated April 1, 1997, which
covers the Seligman Large-Cap Value Fund (the "Large-Cap Value Fund") and the
Seligman Small-Cap Value Fund (the"Small-Cap Value Fund"), each a separate
series (individually, a "Series") of Seligman Value Fund Series, Inc., (the
"Fund"). It should be read in conjunction with the Fund's Prospectus, which may
be obtained by writing or calling the Fund at the above address or telephone
numbers. This Statement of Additional Information, although not in itself a
Prospectus, is incorporated by reference into the Prospectus in its entirety.
Each Series of the Fund offers three classes of shares. Class A
shares may be purchased at net asset value plus a sales load of up to 4.75%.
Class A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales load but are subject to a contingent deferred sales load ("CDSL")
of 1% (of the current net asset value or the original purchase price, whichever
is less) if such shares are redeemed within 18 months of purchase. Class B
shares may be purchased at net asset value and are subject to a CDSL, if
applicable, in the following amount (as a percentage of the current net asset
value of the original purchase price, whichever is less, if redemption occurs
within the indicated number of years of purchase of such shares: 5% (less than
one year), 4% (1 but less than 2 years), 3% (2 but less than 4 years), 2% (4 but
less than 5 years) 1% (5 but less than six years) and 0% (6 or more years).
Class B shares automatically convert to Class A shares after approximately eight
years resulting in lower ongoing fees. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Class D shares may be purchased at net asset value and are subject to a CDSL of
1% (of the current net asset value or the original purchase price, whichever is
less) if redeemed within one year of purchase.
Each Series' Class A, Class B and Class D share represents an
identical legal interest in the investment portfolio of the Series and has the
same rights except for certain class expenses and except that Class B and Class
D shares bear a higher distribution fee that generally will cause the Class B
and Class D shares to have a higher expense ratio and pay lower dividends than
Class A shares. Each Class has exclusive voting rights with respect to its
distribution plan. Although holders of Class A, Class B and Class D shares have
identical legal rights, the different expenses borne by each Class will result
in different net asset values and dividends. The three classes also have
different exchange privileges.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C>
Investment Objectives, Policies and Risks.. 2 Purchase And Redemption Of Series Shares... 8
Investment Limitations..................... 3 Distribution Services...................... 10
Directors And Officers..................... 4 Valuation.................................. 10
Management And Expenses.................... 6 Performance................................ 11
Administration, Shareholder Services And General Information........................ 11
Distribution Plan........................ 7 Financial Statement........................ 11
Portfolio Transactions..................... 7 Appendix A................................. 12
Appendix B................................. 15
</TABLE>
EQFR1A
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Large-Cap Value Fund and the Small-Cap Value Fund are each a separsate
series of Seligman Value Fund Series, Inc. The Large-Cap Value Fund seeks
maximum capital appreciation primarily by investing in equity securities of
companies with large market capitalization. The Small-Cap Value Fund seeks
maximum capital appreciation by primarily investing in equity securities of
companies with small market capitalization. The following information regarding
the Series' investment policies supplements the information contained in the
Prospectus.
PURCHASING PUT OPTIONS ON SECURITIES. A Series may purchase put options to
protect its portfolio holdings in an underlying security against a decline in
market value. This hedge protection is provided during the life of the put
option since a Series, as holder of the put option, can sell the underlying
security at the put exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be profitable, the market
price of the underlying security must decline sufficiently below the exercise
price to cover the premium and transaction costs. By using put options in this
manner, a Series will reduce any profit it might otherwise have realized in the
underlying security by the premium paid for the put option and by transaction
costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, a Series would let the put option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option. The cost of the put option is limited to the premium plus
commission paid. A Series' maximum financial exposure will be limited to these
costs.
A Series may purchase options listed on public exchanges as well as over-the-
counter. Options listed on an exchange are generally considered very liquid.
OTC options are considered less liquid, and therefore, will only be considered
where there is not a comparable listed option. Because options will be used
solely for hedging, and due to their relatively low cost and short duration,
liquidity is not a significant concern.
A Series' ability to engage in option transactions may be limited by tax
considerations.
RIGHTS AND WARRANTS. A Series may invest in common stock rights and warrants
believed by the Manager to provide capital appreciation opportunities.
REPURCHASE AGREEMENTS. A Series may enter into repurchase agreements with
commercial banks and with broker/dealers to invest cash for the short-term. A
repurchase agreement is an agreement under which a Series acquires a money
market instrument, generally a U.S. Government obligation, subject to resale at
an agreed upon price and date. Such resale price reflects an agreed upon
interest rate effective for the period of time the instrument is held by the
Series and is unrelated to the interest rate on the instrument. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating the
securities underlying the agreement, decline in value of the underlying
securities and loss of interest. Repurchase agreements usually are for short
periods, such as one week or less, but may be for longer periods. However, as a
matter of fundamental policy, a Series will not enter into repurchase agreements
of more than one week's duration if more than 10% of its net assets would be so
invested. Each Series has no present intention of entering into repurchase
agreements.
ILLIQUID SECURITIES. A Series 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. Each Series
does not currently expect to invest more than 5% of its assets in such
securities. A Series may purchase restricted securities that can be offered and
sold to "qualified institutional buyers" under Rule 144A of the 1933 Act, and
the Manager, acting pursuant to procedures approved by the Fund's Board of
Directors, may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities. Should
this determination be made, the Manager, acting pursuant to such procedures,
will carefully monitor the security (focusing on such factors, among others, as
trading activity and availability of information) to determine that the Rule
144A security continues to be liquid. It is not possible to predict with
assurance exactly how the market for restricted securities sold and offered
under Rule 144A will develop. This investment practice could have the effect of
increasing the level of illiquidity in the Series to the extent that qualified
institutional buyers become for a time uninterested in purchasing Rule 144A
securities.
2
<PAGE>
BORROWING. A Series may from time to time borrow money for temporary,
extraordinary or emergency purposes in an amount up to 5% of its total assets
from banks at prevailing interest rates and invest the funds in additional
securities. A Series' borrowings are limited so that immediately after such
borrowing the value of the Series' assets (including borrowings) less its
liabilities (not including borrowings) is at least three times the amount of the
borrowings. Should a Series, for any reason, have borrowings that do not meet
the above test, then within three business days, such Series must reduce such
borrowings so as to meet the foregoing test. Under these circumstances, a
Series may have to liquidate portfolio securities at a time when it is
disadvantageous to do so. Gains made with additional funds borrowed will
generally cause the net asset value of a Series' shares to rise faster than
could be the case without borrowings. Conversely, if investment results fail to
cover the cost of borrowings, the net asset value of a Series
LENDING OF PORTFOLIO SECURITIES. A Series may lend portfolio securities to
certain institutional borrowers of securities and may invest the cash collateral
and obtain additional income or receive an agreed upon amount of interest from
the borrower. Loans are subject to termination at the option of the or the
borrower. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the cash or equivalent collateral to the borrower or placing broker. The
Fund does not have the right to vote securities on loan, but would terminate the
loan and regain the right to vote if that were considered important with respect
to the investment.
Except as otherwise specifically noted above and below, the Series' investment
policies are not fundamental and the Board of Directors of the Fund may change
such policies without the vote of a majority of a Series' outstanding voting
securities, as defined below.
PORTFOLIO TURNOVER. A Series' portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average value of the portfolio securities owned during the fiscal
year. Securities with remaining maturities of one year or less at the date of
acquisition are excluded from the calculation. The portfolio turnover for any
Series is not expected to exceed 100%.
INVESTMENT LIMITATIONS
Under each Series' fundamental policies, which cannot be changed except by vote
of a majority of a Series' outstanding voting securities, each Series may not:
* Issue senior securities or borrow money, except for temporary or emergency
purposes in an amount not to exceed 15% of the value of its total assets. A
Series will not purchase any securities while outstanding borrowings are greater
than 5% 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;
* Make "short sales" of securities, or purchase securities on "margin", or
write or purchase put or call options, except a Series may purchase put options
for hedging purposes as approved by the Fund's Board of Directors and as
described in the Prospectus and herein;
* As to 75% of the value of its total assets, 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 of any issuer, or invest to control or manage any
company;
* Invest more than 25% of total assets at market value in the securities of
issuers of any one industry, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
* Purchase securities of open-end or closed-end investment companies, except as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act"),
and other applicable law;
* Purchase or hold any real estate, except each Series 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.
3
<PAGE>
* Purchase or hold the securities of any issuer (other than shares of the
Series), if to the Fund's knowledge, those directors or officers of the Fund
individually own beneficially more than 0.5% of the outstanding securities of
such issuer, together own beneficially more than 5% of such outstanding
securities;
* Purchase or sell commodities and commodity futures contracts;
* Underwrite securities of other issuers, except insofar as a Series may be
deemed an underwriter when purchasing or selling portfolio securities; or
* 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.
Under the 1940 Act, a "vote of a majority of the outstanding voting securities"
of a Series means the affirmative vote of the lesser of (l) more than 50% of the
outstanding shares of the Series or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below.
Each Director who is an "interested person" of the Fund, as defined in the 1940
Act, is indicated by an asterisk. Unless otherwise indicated, their addresses
are 100 Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive Officer
(58) and Chairman of the Executive Committee
Managing Director and Chairman, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisors, Inc., advisers; Chairman and Chief
Executive Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial Services, Inc.,
broker/dealer; Seligman Holdings, Inc., holding company;
Seligman Services, Inc., broker/dealer; and Carbo Ceramics
Inc., ceramic proppants for oil and gas industry; Director
or Trustee, Seligman Data Corp., shareholder service agent;
Kerr-McGee Corporation, diversified energy company; and
Sarah Lawrence College; and a Member of the Board of
Governors of the Investment Company Institute; formerly,
President, J. & W. Seligman & Co. Incorporated; Chairman,
Seligman Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company; and Director, Daniel
Industries Inc., manufacturer of oil and gas metering
equipment.
BRIAN T. ZINO* Director, President and Member of the Executive Committee
(44)
Director, President and Managing Director, J. & W. Seligman
& Co. Incorporated, investment managers and advisers; and
Seligman Advisors, Inc., advisers; President (with the
exception of Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.) and Director or
Trustee, the Seligman Group of Investment Companies;
Chairman, Seligman Data Corp., shareholder service agent;
Director, Seligman Financial Services, Inc., broker/dealer;
Seligman Services, Inc., broker/dealer; and Senior Vice
President, Seligman Henderson Co., advisers; formerly,
Director and Secretary, Chuo Trust - JWS Advisors, Inc.,
advisers; and Director, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust Company, trust
company.
4
<PAGE>
NEIL T. EIGEN Vice President and Portfolio Manager
(54)
Managing Director, J. & W. Seligman and Co., Incorporated;
formerly, Senior Managing Director, Chief Investment
Officer and Director of Equity Investing, Bear, Stearns
Asset Management,
LAWRENCE P. VOGEL Vice President
(40)
Senior Vice President, Finance, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; Seligman
Financial Services, Inc., broker/dealer; Seligman Advisors,
Inc., advisers and Seligman Data Corp., shareholder service
agent; Vice President, the Seligman Group of Investment
Companies; and Seligman Services, Inc., broker/dealer; and
Treasurer, Seligman Holdings, Inc., holding company and
Seligman Henderson Co. advisers; formerly, Senior Vice
President, Seligman Securities, Inc., broker/dealer; and
Senior Vice President, J. & W. Seligman Trust Company,
trust company.
FRANK J. NASTA Secretary
(32)
Senior Vice President, Law and Regulation and Corporate
Secretary, J. & W. Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors, Inc.,
advisers; Secretary, the Seligman Group of Investment
Companies, Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealer; and Seligman Data Corp.,
shareholder service agent; formerly, Secretary, J. & W.
Seligman Trust Company, trust company; and attorney, Seward
& Kissel, law firm.
THOMAS G. ROSE Treasurer
(39)
Treasurer, the Seligman Group of Investment Companies and
Seligman Data Corp., shareholder service agent; formerly,
Treasurer, American Investors Advisors, Inc. and the
American Investors Family of Funds.
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
<S> <C> <C> <C>
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
- ---------------------------------------- ------------ ------------------- ------------------
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
</TABLE>
_____________________
(1) Estimated based on remunerations to be received by the Directors for the
first fiscal year of the Fund.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
(d) Deferred.
5
<PAGE>
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. Under this arrangement, interest is accrued on
the deferred balances. The annual cost of such interest is included in the
directors' fees and expenses, and the accumulated balance thereof is included in
"Liabilities" in the Fund's financial statements.
Directors and officers of the Fund are also directors or trustees and officers
of some or all of the other investment companies in the Seligman Group. No
Directors or officers of the Fund own any shares of the Fund's Capital Stock as
of the date of the Prospectus.
MANAGEMENT AND EXPENSES
Under the Management Agreement, dated , 1997, subject to the control of
the Board of Directors, J. & W. Seligman & Co. Incorporated ( the "Manager")
manages the investment of the assets of the Series, including making purchases
and sales of portfolio securities consistent with each Series' investment
objectives and policies, and administers its business and other affairs. The
Manager provides the Fund with such office space, administrative and other
services and executive and other personnel as are necessary for Fund operations.
The Manager pays all of the compensation of directors of the Fund who are
employees or consultants of the Manager and of the officers and employees of the
Fund. The Manager also provides senior management for Seligman Data Corp., the
Fund's shareholder service agent.
Each Series pays the Manager a management fee for its services, calculated
daily and payable monthly, equal to .80% of the Large-Cap Value Fund's average
daily net assets and 1.00% of the Small-Cap Value Fund's average daily net
assets.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees including fees and expenses for qualifying the Fund
and its shares under Federal and state securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder recordkeeping 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 Fund's expenses are allocated between the Series in a
manner determined by the Directors to be fair and equitable.
The Management Agreement provides that the Manager 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 on
, 1997 and by the sole shareholder of each Series on , 1997. The
Management Agreement will continue in effect until December 31, 1998 and
thereafter from year to 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 each Series 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) the Manager shall not have
notified the Fund at least 60 days prior to December 31 of any year that it does
not desire such continuance. The Management Agreement may be terminated by any
Series, without penalty, on 60 days' written notice to the Manager and will
terminate automatically in the event of its assignment. Each Series has agreed
to change its name upon termination of the Management Agreement if continued use
of the name would cause confusion in the context of the Manager's business.
The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. On December 29, 1988, a majority of the
outstanding voting securities of the Manager was purchased by Mr. William C.
Morris and a simultaneous recapitalization of the Manager occurred. See
Appendix B for further history of the Manager.
Officers, directors and employees of the Manager are permitted to engage in
personal securities transactions, subject to the Manager's Code of Ethics (the
"Ethics Code"). The Ethics Code proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Director of Compliance, and sets forth a procedure of identifying, for
disciplinary action,
6
<PAGE>
those individuals who violate the Ethics Code. The Ethics Code prohibits each of
the officers, directors and employees (including all portfolio managers) of the
Manager from purchasing or selling any security that the officer, director or
employee knows or believes (i) was recommended by the Manager for purchase or
sale by any client, including the Fund, within the preceding two weeks, (ii) has
been reviewed by the Manager for possible purchase or sale within the preceding
two weeks, (iii) is being purchased or sold by any client, (iv) is being
considered by a research analyst, (v) is being acquired in a private placement,
unless prior approval has been obtained from the Manager's Director of
Compliance, or (vi) is being acquired during an initial or secondary public
offering. The Ethics Code also imposes a strict standard of confidentiality and
requires portfolio managers to disclose any interest they may have in the
securities or issuers that they recommend for purchase by any client.
The Ethics Code also prohibits (i) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very limited
circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may
not be purchased due to a possible conflict with clients. All officers,
directors and employees are also required to disclose all securities
beneficially owned by them on December 31 of each year.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan for each Class of the Series (the "Plan") in accordance with Section 12(b)
of the 1940 Act and Rule 12b-1 thereunder.
The Plan was approved on , 1997 by the Board of Directors of the
Fund, including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Directors"). The Plan will continue in effect through
December 31 of each year so long as such continuance is approved annually by a
majority vote of both the Directors and the Qualified Directors of the Fund,
cast in person at a meeting called for the purpose of voting on such approval.
The Plan may not be amended to increase materially the amounts payable to
Service Organizations with respect to a Class without the approval of a majority
of the outstanding voting securities of the Class. If the amount payable in
respect of Class A shares under the Plan is proposed to be increased materially,
the Fund will either (i) permit holders of Class B shares to vote as a separate
class on the proposed increase or (ii) establish a new class of shares subject
to the same payment under the Plan as existing Class A shares, in which case the
Class B shares will thereafter convert into the new class instead of into Class
A shares. No material amendment to the Plan may be made except by a majority of
both the Directors and Qualified Directors.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefore) under the Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors.
PORTFOLIO TRANSACTIONS
The Management Agreement recognizes that in the purchase and sale of portfolio
securities the Manager will seek the most favorable price and execution, and,
consistent with that policy, may give consideration to the research, statistical
and other services furnished by brokers or dealers to the Manager for its use,
as well as to the general attitude toward and support of investment companies
demonstrated by such broker or dealers. Such services include supplemental
investment research, analysis and reports concerning issuers, industries and
securities deemed by the Manager to be beneficial to the Series. In addition,
the Manager 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 that the
use of brokers selected solely on the basis of seeking the most favorable price
and execution and although such research and analysis may be useful to the
Manager in connection with its services to clients other than the Fund.
7
<PAGE>
In over-the-counter markets, the Fund deals with primary market makers unless a
more favorable execution or price is believed to be obtainable. Each Series may
buy securities from or sell securities to dealers acting as principal, except
dealers with which the Fund's directors and/or officers are affiliated.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager desire to buy or sell the same
security at the same time the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or saleable.
PURCHASE AND REDEMPTION OF SERIES SHARES
Each Series issues three classes of shares: Class A shares may be purchased at
a price equal to the next determined net asset value per share, plus a sales
load. Class B shares may be purchased at a price equal to the next determined
net asset value without an initial sales load, but a CDSL may be charged on
redemptions within 6 years of purchase. Class D shares may be purchased at a
price equal to the next determined net asset value without an initial sales
load, but a CDSL may be charged on redemptions within one year of purchase. See
"Alternative Distribution System," "Purchase Of Shares," and "Redemption Of
Shares" in the Prospectus.
CLASS A SHARES - REDUCED INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with an initial
sales load in a continuous offering will be eligible for the following
reductions:
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of a Series alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales load, reaches
levels indicated in the sales load schedule set forth in the Prospectus.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of a Series and shares of the other mutual funds in
the Seligman Group that were sold with an initial sales load with the total net
asset value of shares of those Seligman Mutual Funds already owned that were
sold with an initial sales load and the total net asset value of shares of
Seligman Cash Management Fund which were acquired through an exchange of shares
of another mutual fund in the Seligman Group on which there was an initial sales
load at the time of purchase to determine reduced sales loads in accordance with
the schedule in the Prospectus. The value of the shares owned, including the
value of shares of Seligman Cash Management Fund acquired in an exchange of
shares of another mutual fund in the Seligman Group on which there was an
initial sales load at the time of purchase will be taken into account in orders
placed through a dealer, however, only if Seligman Financial Services, Inc.
("SFSI") is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares over a
13-month period at reduced initial sales loads in accordance with the schedule
in the Prospectus, based on the total amount of Class A shares of the Series
that the letter states the investor intends to purchase plus the total net asset
value of shares that were sold with an initial sales load of the other Mutual
Funds in the Seligman Group already owned and the total net asset value of
shares of Seligman Cash Management Fund which were acquired through an exchange
of shares of another Mutual Fund in the Seligman Group on which there was an
initial sales load at the time of purchase. Reduced sales loads also may apply
to purchases made within a 13-month period starting up to 90 days before the
date of execution of a letter of intent. For more information concerning the
terms of the letter of intent see "Terms and Conditions - Letter of Intent -
Class A Shares Only" in the back of the Prospectus.
Class A shares purchased without an initial sales load in accordance with the
sales load schedule in the Fund's prospectus, or pursuant to a Volume Discount,
Right of Accumulation or Letter of Intent are subject to a CDSL of 1% on
redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial sales loads apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code, of 1986,
as amended (the "Code"), organizations tax exempt under Section 501 (c)(3) or
(13)of the Code,
8
<PAGE>
and non-qualified employee benefit plans that satisfy uniform criteria are
considered "single persons" for this purpose. The uniform criteria are as
follows:
1. Employees must authorize the employer, if requested by the Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
Prospectus, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event,
the dropped participant would lose the discount on share purchases to which the
plan might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
ELIGIBLE EMPLOYEE BENEFIT PLANS. The table of sales loads in the Prospectus
applies to sales to "eligible employee benefit plans" (as defined in the
Prospectus), except that the Fund may sell shares at net asset value to
"eligible employee benefit plans" which have at least (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. Such sales must be made in connection with a payroll
deduction system of plan funding or other systems acceptable to Seligman Data
Corp, the Fund's shareholder service agent. Such sales are believed to require
limited sales effort and sales-related expenses and therefore are made at net
asset value. Contributions or account information for plan participation also
should be transmitted to Seligman Data Corp. by methods which it accepts.
Additional information about "eligible employee benefit plans" is available from
investment dealers or SFSI.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales load), although the Fund does not presently
intend to accept securities in payment for Fund shares. Generally, the Fund
will only consider accepting securities (l) to increase its holdings in a
portfolio security, or (2) if the Manager determines that the offered securities
are a suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales loads, and may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will not accept restricted securities in
payment for shares. The Fund will value accepted securities in the manner
provided for valuing portfolio securities of the Fund. (See "Valuation".)
FURTHER TYPES OF REDUCTIONS. Class A shares may be issued without an initial
sales load in connection with the acquisition of cash and securities owned by
other investment companies and other personal holding companies to financial
institution trust departments, to registered investment advisers exercising
investment discretionary authority with respect to the purchase of Fund shares,
or pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitation of, its employees, members or
participants in connection with the purchase of shares of the Fund, to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act, to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI and shareholders of mutual funds
with investment objectives similar to the Fund's who purchase shares with
redemption proceeds of such funds and to certain unit investment trusts as
described in the Prospectus.
Class A shares may be issued without a sales load to present and retired
directors, trustees, officers, employees (and their family members, as defined
in the Prospectus) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Such sales
may also be made to employee benefit plans and thrift plans for such persons and
to any investment advisory, custodial, trust or other fiduciary account managed
or advised by the Manager or any affiliate. 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.
MORE ABOUT REDEMPTIONS. The procedures for redemption of Series 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
9
<PAGE>
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.
DISTRIBUTION SERVICES
SFSI, an affiliate of the Manager, acts as general distributor of the shares of
the Series and of the other mutual funds in the Seligman Group on a best efforts
basis. The Fund and SFSI are parties to a Distributing Agreement, dated ,
1997. As general distributor of the Fund's Capital Stock, SFSI allows
commissions to all dealers, as indicated in the Prospectus. Pursuant to
agreements with the Fund, certain dealers may also provide sub-accounting and
other services for a fee. SFSI receives the balance of sales loads and any
CDSLs on Class A or Class D shares paid by investors. SFSI has sold its rights
to collect any CDSL imposed on redemptions of Class B shares to FEP Capital,
L.P. ("FEP") in connection with an agreeement with FEP to provide funding to
SFSI to enable it to pay commissions to dealers at the time of the sale of
related Class B shares.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is eligible to
receive commissions from certain sales of Fund shares, as well as distribution
and service fees pursuant to the Plan.
VALUATION
Net asset value per share of each class of a Series of the Fund is determined
as of the close of trading on the NYSE, (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open. The NYSE is currently closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund will also determine net asset
value for each class of a Series on each day in which there is a sufficient
degree of trading in the Series' portfolio securities that the net asset value
of Series shares might be materially affected. Net asset value per share for a
class of a Series is computed by dividing such class' share of the value of the
net assets of the Series (i.e., the value of its assets less liabilities) by the
total number of outstanding shares of such class. All expenses of a Series,
including the Manager's fee, are accrued daily and taken into account for the
purpose of determining net asset value. The net asset value of Class B and
Class D shares will generally be lower than the net asset value of Class A
shares od such Series as a result of the higher distribution fee with respect to
such shares.
Portfolio securities, including open short positions and options written, are
valued at the last sale price on the securities exchange or securities market on
which such securities primarily are traded. Securities traded on a foreign
exchange or over-the-counter market are valued at the last sales price on the
primary exchange or market on which they are traded. United Kingdom securities
and securities for which there are no recent sales transactions are valued based
on quotations provided by primary market makers in such securities. Any
securities for which recent market quotations are not readily available,
including restricted securities, are valued at fair value as determined in
accordance with procedures approved by the Board of Directors. Short-term
obligations with less than sixty days remaining to maturity are generally valued
at amortized cost. Short-term obligations with more than sixty days remaining
to maturity will be valued on an amortized cost basis based on the value of such
date unless the Board determines that this amortized cost value does not
represent fair market value. Expenses and fees, including the investment
management fee, are accrued daily and taken into account for the purpose of
determining the net asset value of Fund shares. Premiums received on the sale
of call options will be included in the net asset value, and the current market
value of the options sold by the Fund will be subtracted from net asset value.
Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of the shares of the
Fund are determined prior to the close of the NYSE, which will not be reflected
in the computation of net asset value. If during such periods events occur
which materially affect the value of such securities, the securities will be
valued at their fair market value as determined in accordance with procedures
approved by the Fund's Board of Directors.
For purposes of determining the net asset value per share of a Series, all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against
10
<PAGE>
U.S. dollars quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks.
PERFORMANCE
Each Series may from time to time advertise its total return and average total
return in advertisements or in information furnieshed to present or prospective
shareholders. These returns are computed by assuming that all of the dividends
and distributions paid by a Series' were reinvested over the relevant time
period. It is then assumed that at the end of each period, the entire amount
was redeemed. The average annual total return is determined by calculating the
annual rate required for the initial payment to grow to the amount which would
have been received upon redemption (i.e., the average annual compound rate of
return).
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on , 1997.
CAPITAL STOCK. The Board of Directors is authorized to classify or reclassify
and issue any unissued Capital Stock of the Fund into any number of other Series
or classes without further action by shareholders. The 1940 Act requires that
where more than one class exists, each class must be preferred over all other
classes in respect of assets specifically allocated to such class.
CUSTODIAN. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105 serves as custodian of the Fund. It also maintains, under
the general supervision of the Manager, the accounting records and determines
the net asset value for the Fund.
AUDITORS. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York,
New York 10281.
FINANCIAL STATEMENT
The Series' balance sheet presented blow has been audited by ,
independent auditors.
Consolidated Statement of Net Assets
, 1997
Total Assets $
Total Liabilities $
Net Assets $
Shares of Capital Stock Outstanding
Net Asset Value Per Share $
11
<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 a 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.
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" indicate 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
12
<PAGE>
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 CORPORATION ("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 high degree of safety and 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 degree of safety and capacity to pay interest and repay principal
although it is somewhat more susceptible in the long term to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt issues rated BBB are regarded as having a satisfactory degree of
safety and 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.
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.
13
<PAGE>
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
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.
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.
14
<PAGE>
APPENDIX B
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale
of government securities to help finance the Civil War - Joseph Seligman, with
his brothers, established the international banking and investment firm of J. &
W. Seligman & Co. In the years that followed, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
.... Prior to 1900
. Helps finance America's fledgling railroads through underwriting.
. Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
. Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
. Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
. Is appointed U.S. Navy fiscal agent by President Grant.
. Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
. Helps Congress finance the building of the Panama Canal.
...1910s
. Participates in raising billions for Great Britain, France and Italy, helping
to finance World War I.
...1920s
. Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
. Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
. Assumes management of Broad Street Investing Co. Inc., its first mutual fund,
today known as Seligman Common Stock Fund, Inc.
. Establishes Investment Advisory Service.
...1940s
15
<PAGE>
. Helps shape the Investment Company Act of 1940.
. Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the investment
banking industry.
. Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
. Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
. Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
. Helps pioneer state-specific, tax-exempt municipal bond funds, today managing
a national and 18 state-specific tax-exempt funds.
. Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
. Establishes Seligman Portfolios, Inc., an investment vehicle offered through
variable annuity products.
16
<PAGE>
...1990s
. Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two closed-end funds that invest in high-quality municipal bonds.
. In 1991 establishes a joint venture with Henderson Administration Group plc,
of London, known as Seligman Henderson Co., to offer global investment
products.
. Introduces to the public Seligman Frontier Fund, Inc., a small capitalization
mutual fund.
. Launches Seligman Henderson Global Fund Series, Inc., which today offers five
separate series: Seligman Henderson International Fund, Seligman Henderson
Global Growth Opportunities Fund, Seligman Henderson Global Smaller Companies
Fund, Seligman Henderson Global Technology Fund and Seligman Henderson
Emerging Markets Growth Fund.
17
<PAGE>
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
- ---------------------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
<S> <C>
(a) Financial Statements:
Part A: None
Part B Consolidated Statement of Net Assets (to be filed by amendment)
(b) Exhibits: Exhibits marked with an asterisk (*) will be filed by amendment.
(1) Articles of Incorporation of Registrant.
(2 ) By-laws of Registrant.*
(3) Not Applicable
(4) Specimen Stock Certificate.*
(5)(a) Management Agreement between Registrant and J. & W. Seligman & Co. Incorporated.*
(5)(B) Subadvisory Agreement between J.& W. Seligman & Co. Incorporated and Seligman Henderson Co.*
(6)(a) Distributing Agreement between Registrant and Seligman Financial Services, Inc.*
(6)(b) Sales Agreement between Seligman Financial Services, Inc. and Dealers.*
(7)(a) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.*
(7)(b) Deferred Compensation Plan for Directors of Seligman Group of Funds.*
(8) Custody Agreement between Registrant and Investors Fiduciary Trust Company.*
(9) Not Applicable
(10) Opinion and Consent of Counsel.*
(11) Consent of Independent Auditors.*
(12) Not Applicable
(13) Investment Letter between Registrant and J. & W. Seligman & Co. Incorporated.*
(14)(a) Copy of Amended Individual Retirement Account Trust and Related Documents.*
(14)(b) Copy of Amended Comprehensive Retirement Plans for Money Purchase and/or Prototype Profit Sharing Plan.*
(14)(c) Copy of Amended Basic Business Retirement Plans for Money Purchase and/or Profit Sharing Plans*
(14)(d) Copy of Amended 403(b)(7) Custodial Account Plan.*
(14)(e) Copy of Amended Simplified Employee Pension Plan (SEP).*
(14)(e) Copy of Amended J. & W. Seligman & Co. Incorporated (SARSEP) Salary Reduction and Other Elective
Simplified Employee Pension-Individual Retirement Accounts Contribution Agreement (Under Section 408(k) of the
Internal Revenue Code).
(15) Administration, Shareholder Services and Distribution Plan and Form of Agreement of Registrant.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(16) Performance Date Computation Schedule: Not applicable
(17) Financial Data Schedules: Not applicable
(18) Seligman Group of Funds Multiclass Plan pursuant to Rule 18f-3.*
Item 25. Persons Controlled by or Under Common Control with Registrant - None
- ------- -------------------------------------------------------------
Item 26. Number of Holders of Securities
- -------- -------------------------------
(1) (2)
Number of Record Holders
Title of Class as of the date of this Registration Statement
-------------- ---------------------------------------------
<S> <C> <C>
Seligman Large-Cap Value Fund
Class A Common Stock 0
Class B Common Stock 0
Class D Common Stock 0
Seligman Small-Cap Value Fund
Class A Common Stock 0
Class B Common Stock 0
Class D Common Stock 0
</TABLE>
Item 27. Indemnification (to be filed by amendment)
- -------- ---------------
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
J. & W. Seligman & Co. Incorporated, a Delaware corporation
("Manager"), is the Registrant's investment adviser. The Manager also
serves as investment adviser to several 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 Income Fund,
Inc., 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. and Tri-
Continental Corporation.
Seligman Henderson Co. ("Subadviser") is the Registrant's subadviser.
The Subadviser also serves as subadviser to several other associated
investment companies. They are Seligman Capital Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc.,
Seligman Henderson Global Fund Series, Inc., Seligman Income Fund,
Inc., the Global Growth Opportunities, Global Smaller Companies,
Global Technology and International Portfolios of Seligman Portfolios,
Inc. and Tri-Continental Corporation.
The Manager and Subadviser each have 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 and Subadviser, 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 Forms ADV,
filed by the Manager and Subadviser pursuant to the Investment
Advisers Act of 1940 (SEC File Nos. 801-5798 and 801-4067,
respectively) which were filed on August 7, 1996 and October 3, 1996,
respectively.
<PAGE>
Item 29. Principal Underwriters
- ------- ----------------------
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter currently distributing securities of
the Registrant also acts as a principal underwriter, depositor or investment
adviser follow:
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in the answer to Item 21:
Seligman Financial Services, Inc.
---------------------------------
As of December 31, 1996
-----------------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and Chief
Executive Officer
BRIAN T. ZINO* Director President and Trustee
RONALD T. SCHROEDER* Director Trustee
FRED E. BROWN* Director Trustee
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, Director None
of Marketing
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway
Pompton Plains, NJ 07444
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive
Danville, CA 94526
D. IAN VALENTINE Senior Vice President of Sales None
307 Braehead Drive
Fredericksburg, VA 22401
BRADLEY F. HANSON Senior Vice President of Sales, None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
KAREN J. BULLOT* Vice President, Retirement Plans None
JOHN CARL* Vice President, Marketing None
</TABLE>
<PAGE>
Seligman Financial Services, Inc.
---------------------------------
As of December 31, 1996
-----------------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
HELEN SIMON* Vice President, Sales None
Administration Manager
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
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
JONATHAN G. EVANS Regional Vice President None
222 Fairmont Way
Ft. Lauderdale, FL 33326
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
SUSAN R. GUTTERUD Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
MARK LIEN Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
RANDY D. LIERMAN Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID L. MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
MELINDA A. NAWN Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
ROBERT H. RUHM Regional Vice President None
167 Derby Street
Melrose, MA 02176
</TABLE>
<PAGE>
Seligman Financial Services, Inc.
---------------------------------
As of December 31, 1996
-----------------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
BRUCE M. TUCKEY Regional Vice President None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Regional Vice President None
14 Woodside
Rumson, NJ 07760
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* Assistant Vice President, None
Annuity Product Manager
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
FRANK P. MARINO* Assistant Vice President, Mutual
Fund Product Manager None
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
JOYCE PERESS* Assistant Secretary None
</TABLE>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
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 Park Avenue, New York, NY
10017 or at one of the following locations:
(1) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
(2) Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Item 31. Management Services
- -------- -------------------
Seligman Data Corp. ("SDC") the Registrant's shareholder service
agent, has an agreement with First Data Investor Services Group
("FDISG") pursuant to which FDISG provides a data processing system
for certain shareholder accounting and recordkeeping functions
performed by SDC.
<PAGE>
Item 32. Undertakings
- -------- ------------
(a) Not appliable.
(b) Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified within four to six
months from the effective date of its Registration Statement under the
Securities Act of 1933.
(c) Not Applicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, The Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 29th day of
January, 1997.
SELIGMAN VALUE FUND SERIES, 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 Registration Statement has been signed
below by the following persons in the capacities indicated on January 29, 1997.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board (Chief
- ----------------------------- Executive Officer) and Director
William C. Morris*
/s/ Brian T. Zino President and Director
- -----------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer (Principal financial
- ----------------------------- and accounting officer)
Thomas G. Rose
<PAGE>
SELIGMAN VALUE FUND SERIES, INC.
Registration Statement on Form N-1A
EXHIBIT INDEX
ITEM NO. DESCRIPTION
-------- -----------
24 (b) (1) Articles of Incorporation of Registrant
<PAGE>
ARTICLES OF INCORPORATION
OF
SELIGMAN VALUE FUND SERIES, INC.
FIRST: I, the subscriber, Frank J. Nasta, whose post office address in 100
Park Avenue, New York, New York 10017, being at least twenty-one years of age,
do, under and by virtue of the General Laws of the State of Maryland authorizing
the formation of corporations, associate myself as incorporator with the
intention of forming a corporation (hereinafter called the "Corporation").
SECOND: Name. The name of the corporation is
SELIGMAN VALUE FUND SERIES, INC.
THIRD: Purposes and Powers. The purposes for which the Corporation is
formed and the business or objects to be carried on or promoted by it are to
engage in the business of an investment company, and in connection therewith, to
hold part or all of its funds in cash, to acquire by purchase, subscription,
contract, exchange or otherwise, and to own, hold for investment, resale or
otherwise, sell, assign, negotiate, exchange, transfer or otherwise dispose of,
or turn to account or realize upon, and generally to deal in and with, all forms
of stocks, bonds, debentures, notes, evidences of interest, evidences of
indebtedness, warrants, certificates of deposit, bankers' acceptances,
repurchase agreements, options on securities and other securities, commodity
futures contracts and options thereon and similar instruments, irrespective of
their form, the name by which they may be described, or the character or form of
the entities by which they are issued or created (hereinafter sometimes called
"Securities"), and to make payment therefor by any lawful means; to exercise any
and all rights, powers and privileges of individual ownership of interest in
respect of any and all such Securities, including the right to vote thereon and
to consent and otherwise act with respect thereto; to do any and all acts and
things for the preservation, protection, improvement and enhancement in value of
any and all such Securities; to acquire or become interested in any such
Securities as aforesaid, irrespective of whether or not such Securities be fully
paid or subject to further payments, and to make payments thereon as called for
or in advance of calls or otherwise;
<PAGE>
And, in general, to do any or all such other things in connection with the
objects and purposes of the Corporation hereinabove set forth, as are, in the
opinion of the Board of Directors of the Corporation, necessary, incidental,
relative or conducive to the attainment of such objects and purposes; and to do
such acts and things; and to exercise any and all such powers to the same extent
authorized or permitted to a Corporation under any laws that may be now or
hereafter applicable or available to the Corporation.
In addition, the Corporation may issue, sell, acquire through purchase,
exchange, or otherwise hold, dispose of, resell, transfer, reissue or cancel
shares of its capital stock in any manner and to the extent now or hereafter
permitted by the laws of Maryland and by these Articles of Incorporation.
The foregoing matters shall each be construed as purposes, objects and
powers, and none of such matters shall be in any wise limited by reference to,
or inference from, any other of such matters or any other Article of these
Articles of Incorporation, but shall be regarded as independent purposes,
objects and powers and the enumeration of specific purposes, objects and powers
shall not be construed to limit or restrict in any manner the meaning of general
terms or the general powers of the Corporation now or hereafter conferred by the
laws of the State of Maryland, nor shall the expression of one thing be deemed
to exclude another, although it be of like nature, not expressed.
Nothing herein contained shall be construed as giving the Corporation any
rights, powers or privileges not permitted to it by law.
FOURTH: Principal Office. The post office address of the principal office
of the Corporation in this State is c/o The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202. The resident agent of the Corporation
is The Corporation Trust Incorporated, the post office address of which is 32
South Street, Baltimore, Maryland 21202. Said resident agent is a Corporation of
the State of Maryland.
FIFTH: Capital Stock. A. The total number of shares of capital stock of all
series and classes which the Corporation has authority to issue is 2,000,000,000
shares ("Shares") of the par value of $.001 per share, having an aggregate par
value of $2,000,000. The Shares shall be known and designated as "Common Stock".
The Board of Directors shall have power and authority to increase or decrease,
from time to time, the aggregate number of shares of stock, or of any series or
class of stock, that the Corporation shall have the authority to issue.
-2-
<PAGE>
Pursuant to Section 2-105 of the Maryland General Corporation Law, the
Board of Directors of the Corporation shall have the power to designate one or
more series of Shares of Common Stock, to fix the number of Shares in any such
series and to classify or reclassify any unissued Shares with respect to such
series. Any series of Common Stock shall be referred to herein individually as a
"Series" and collectively, together with any further series from time to time
established, as the "Series". Any such Series (subject to any applicable rule,
regulation or order of the Securities and Exchange Commission or other
applicable law or regulation) shall have such preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption and other characteristics as
the Board of Directors may determine in the absence of a contrary provision set
forth herein. The aforesaid power shall include the power to create, by
classifying or reclassifying unissued Shares in the aforesaid manner, one or
more Series in addition to those initially designated as named below and to
increase the aggregate number of Shares of a Series. Subject to such aforesaid
power, the Board of Directors has initially designated two Series of Shares of
Common Stock of the Corporation. The names of such Series and the number of
Shares of Common Stock initially classified and allocated to these Series are as
follows:
NAME OF SERIES NUMBER OF SHARES OF COMMON STOCK
- -------------- INITIALLY CLASSIFIED AND ALLOCATED
----------------------------------
Seligman Large-Cap Value Fund ........... 1,000,000,000
Seligman Small-Cap Value Fund ........... 1,000,000,000
B. A description of the relative preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
other characteristics of all Series of Shares is as follows, unless otherwise
set forth herein or in Articles Supplementary filed with the appropriate
authorities of the State of Maryland describing any further Series or classes
thereof from time to time created by the Board of Directors:
(1) Assets Belonging to Series. All consideration received by the
Corporation for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of the account of the Corporation. Such consideration, assets, income,
earnings, profits and proceeds, including any proceeds derived from the sale,
exchange or liquidation
-3-
<PAGE>
of such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any General
Items (as hereinafter defined) allocated to that Series as provided in the
following sentence, are herein referred to as "assets belonging to" that
Series. In the event that there are any assets, income, earnings, profits or
proceeds thereof, funds or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the Board
of Directors shall allocate such General Items to and among any one or more
of the Series created from time to time in such manner and on such basis as
it, in its sole discretion, deems fair and equitable; and any General Items
so allocated to a particular Series shall belong to that Series. Each such
allocation by the Board of Directors shall be conclusive and binding upon the
stockholders of all Series for all purposes.
(2) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Corporation in
respect of that Series and with all expenses, costs, charges and reserves
attributable to that Series, and shall be so recorded upon the books of
account of the Corporation. Such liabilities, expenses, costs, charges and
reserves, together with any General Items (as hereinafter defined) allocated
to that Series as provided in the following sentence, so charged to that
Series are herein referred to as "liabilities belonging to" that Series. In
the event there are any general liabilities, expenses, costs, charges or
reserves of the Corporation which are not readily identifiable as belonging
to any particular Series (collectively "General Items"), the Board of
Directors shall allocate and charge such General Items to and among any one
or more of the Series created from time to time in such manner and on such
basis as the Board of Directors in its sole discretion deems fair and
equitable; and any General Items so allocated and charged to a particular
Series shall belong to that Series. Each such allocation by the Board of
Directors shall be conclusive and binding upon the stockholders of all Series
for all purposes.
(3) Dividends. Dividends and distributions on Shares of a particular
Series may be paid to the holders of Shares of the Series at such times, in
such manner and from such of the income and capital gains, accrued or
realized, from the assets belonging to that Series, after providing for
actual and accrued liabilities belonging to that Series, as the Board of
Directors may determine.
(4) Liquidation. In event of the liquidation or dissolution of the
Corporation, the stockholders of each Series therein that has been created
shall be entitled to receive, as a Series, when and as declared by the Board
of
-4-
<PAGE>
Directors, the excess of the assets belonging to that Series over the
liabilities belonging to that Series. The assets so distributable to the
stockholders of any particular Series shall be distributed among such
stockholders in proportion to the number of Shares of that Series held by
them and recorded on the books of the Corporation.
(5) Voting. On each matter submitted to vote of the stockholders, each
holder of a Share of Common Stock shall be entitled to one vote for each such
Share standing in his name on the books of the Corporation irrespective of
the Series thereof and all Shares of all Series shall vote as a single class
("Single Class Voting"); provided, however, that (a) as to any matter with
respect to which a separate vote of any Series is required by the Investment
Company Act of 1940 or would be required under the Maryland General
Corporation Law, such requirements as to a separate vote by that Series shall
apply in lieu of Single Class Voting as described above; (b) in the event
that the separate vote requirements referred to in (a) above apply with
respect to one or more Series, then, subject to (c) below, the Shares of all
other Series shall vote as a single class; and (c) as to any matter which
does not affect the interest of a particular Series, only the holders of
Shares of the one or more affected Series shall be entitled to vote. Holders
of Shares of Common Stock of the Corporation shall not be entitled to
cumulative voting in the election of Directors or on any other matter.
(6) Equality. Subject to the foregoing, all Shares of each particular
Series shall represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be equal to each other
Share of that Series; but the provisions of this sentence shall not restrict
any distinctions permissible under these Articles of Incorporation that may
exist with respect to stockholder elections to receive dividends or
distributions in cash or Shares of the same Series or that may otherwise
exist with respect to dividends and distributions on Shares of the same
Series .
C. The Board of Directors may, from time to time and without stockholder
action, classify Shares of a particular Series into one or more additional
classes of that Series, the voting, dividend, liquidation and other rights of
which shall differ from the classes of Common Stock of that Series to the extent
provided in Articles Supplementary for such additional class, such Articles
Supplementary to be filed for record with the appropriate authorities of the
State of Maryland. Any class of a Series of Common Stock shall be referred to
herein individually as a "Class" and
-5-
<PAGE>
collectively, together with any further class or classes of such Series from
time to time established, as the "Classes".
D. The voting, dividend, liquidation and other rights of the Common Stock
of each Series of the Corporation designated herein or hereafter designated by
the Board of Directors shall be qualified further as follows:
(1) The Common Stock of each Series shall initially be further classified
into three Classes of Shares, which shall be designated Class A, Class B and
Class D. The number of authorized Shares of Class A, Class B and Class D of
each Series shall each consist of the sum of x and y, where x equals the
issued and outstanding shares of such Class and y equals one-third of the
authorized but unissued Shares of Common Stock of all Classes of that Series;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B and Class D of such Series shall not exceed the
authorized number of Shares of Common Stock of each Series; and, in the event
application of the formula above would result, at any time, in fractional
shares, the applicable number of authorized shares of each Class shall be
rounded down to the nearest whole number of Shares of such Class.
(2) All Classes shall represent the same interest in the Corporation and
have identical voting, dividend, liquidation, and other rights; provided,
however, that notwithstanding anything in the charter of the Corporation to
the contrary:
(A) Class A Shares may be subject to such front-end sales loads as may
be established by the Board of Directors from time to time in accordance
with the Investment Company Act of 1940 and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the NASD").
(B) Class B Shares may be subject to such contingent deferred sales
charges as may be established from time to time by the Board of Directors
in accordance with the Investment Company Act of 1940 and applicable
rules and regulations of the NASD. Subject to paragraph (E) below, each
Class B Share of a Series shall convert automatically into Class A Shares
of such Series on the last business day of the month that precedes the
eighth anniversary of the date of issuance of such Class B Share; such
conversion shall be effected on the basis of the relative net asset
values of Class B Shares and Class A Shares as determined by the
Corporation on the date of conversion.
-6-
<PAGE>
(C) Class D Shares may be subject to such contingent deferred sales
charges as may be established from time to time by the Board of Directors
in accordance with the Investment Company Act of 1940 and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Class (including, without
limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement,
plan or other arrangement, however designated, which may differ between
the Classes) shall be borne by that Class and shall be appropriately
reflected (in the manner determined by the Board of Directors) in the net
asset value, dividends, distribution and liquidation rights of the shares
of that Class.
(E) At such time as shall be permitted under the Investment Company
Act of 1940, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and as
may be determined by the Board of Directors and disclosed in the then
current prospectus of any Series, Shares of a particular Class may be
automatically converted into shares of another Class of that Series;
provided, however, that such conversion shall be subject to the
continuing availability of an opinion of counsel to the effect that such
conversion does not constitute a taxable event under Federal income tax
law. The Board of Directors, in its sole discretion, may suspend any
conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Class is required by the Investment Company Act of 1940 or by the
Maryland General Corporation Law (including, without limitation, approval
of any plan, agreement or other arrangement referred to in paragraph (D)
above), such requirement as to a separate vote by the Class shall apply
in lieu of Single Class Voting, and, if permitted by the Investment
Company Act of 1940 or any rules, regulations or orders thereunder and
the Maryland General Corporation Law, all Classes of a particular Series
shall vote together as a single class on any such matter that shall have
the same effect on each such Class of that Series. As to any matter that
does not affect the interest of a particular Class, only the holders of
Shares of the affected Class shall be entitled to vote.
-7-
<PAGE>
E. The Board of Directors may provide for a holder of Shares of any Series
or Class of stock of the Corporation, who surrenders his certificate in good
form for transfer to the Corporation or, if the Shares in question are not
represented by certificates, who delivers to the Corporation a written request
in good order signed by the stockholder, to convert the Shares in question on
such basis as the Board may provide, into Shares of stock of any other Series or
Class of the Corporation or otherwise as permitted by the Board of Directors.
F. No holder of shares shall be entitled as such, as a matter of right, to
purchase or subscribe for any part of any new or additional issue of Shares or
securities of the Corporation.
All Shares now or hereafter authorized, and of any Series or Class, shall
be subject to redemption and redeemable at the option of the stockholder, in the
sense used in the Maryland General Corporation Law, at the redemption or
repurchase price for shares of that Series or Class, determined in the manner
set out in these Articles of Incorporation or in any amendment thereto. In the
absence of any contrary specification as to the purpose for which Shares are
repurchased by it, all Shares so repurchased shall be deemed to be acquired for
retirement in the sense contemplated by the Maryland General Corporation Law.
Shares retired by repurchase or retired by redemption shall thereafter have the
status of authorized but unissued Shares of the Corporation.
All persons who shall acquire Shares shall acquire the same subject to the
provisions of these Articles of Incorporation.
SIXTH: Directors. The initial number of directors of the Corporation shall
be two, which shall be the minimum number of directors for so long as there is
only one or no stockholders. The names of the directors who shall act until the
first annual meeting or until their successors are duly chosen and qualified are
William C. Morris and Brian T. Zino. Upon such time as the Corporation has
issued three or more shares of its capital stock, the minimum number of
directors shall be increased in accordance with the provisions of Section 2-402
of the Maryland General Corporation Law. The number of directors may be changed
from time to time in such lawful manner as is provided in the By-Laws of the
Corporation. Unless otherwise provided by the By-Laws of the Corporation, the
directors of the Corporation need not be stockholders.
SEVENTH: Provisions for Defining, Limiting and Regulating the Powers of the
Corporation, Directors and Stockholders.
-8-
<PAGE>
A. Board of Directors. The Board of Directors shall have the general
management and control of the business, affairs and property of the Corporation,
and may exercise all the powers of the Corporation, except such as are by
statute or by these Articles of Incorporation or by the By-Laws conferred upon
or reserved to the stockholders. In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is hereby empowered:
(1) To authorize the issuance and sale, from time to time, of Shares of any
Series or Class whether for cash at not less than the par value thereof or
for such other consideration as the Board of Directors may deem advisable, in
the manner and to the extent now or hereafter permitted by the laws of
Maryland; provided, however, the consideration (or the value thereof as
determined by the Board of Directors) per share to be received by the
Corporation upon the sale of shares of any Series or Class (including
treasury Shares) shall not be less than the net asset value (determined as
provided in Article NINTH hereof) per Share of that Series or Class
outstanding at the time (determined by the Board of Directors) as of which
the computation of such net asset value shall be made.
(2) To authorize the execution and performance by the Corporation of an
agreement or agreements, which may be exclusive contracts, with Seligman
Financial Services, Inc., a Delaware corporation, or any other person, as
distributor, providing for the distribution of Shares of any Series or
Class.
(3) Subject to the General Corporation Law of the State of Maryland, to
specify, in instances in which it may be desirable, that Shares of any Series
or Class repurchased by the Corporation are not acquired for retirement and
to specify the purposes for which such Shares are repurchased.
(4) To authorize the execution and performance by the Corporation of an
agreement or agreements with J. & W. Seligman & Co. Incorporated, a Delaware
corporation, or any successor to the corporation, providing for the
investment and other operations of the Corporation.
The Corporation may in its By-Laws confer powers on the Board of Directors
in addition to the powers expressly conferred by statute.
B. Quorum; Adjournment; Majority Vote. The presence in person or by proxy
of the holders of record of one-third of the Shares of all Series and Classes
issued and outstanding and entitled to vote thereat shall constitute a quorum
for the transaction of any business at all meetings of the shareholders except
as otherwise
-9-
<PAGE>
provided by law or in these Articles of Incorporation and except that where the
holders of Shares of any Series or Class are entitled to a separate vote as a
Series or Class (a "Separate Class") or where the holders of Shares of two or
more (but not all) Series or Classes are required to vote as a single Series or
Class (a "Combined Class"), the presence in person or by proxy of the holders of
one-third of the Shares of that Separate Class or Combined Class, as the case
may be, issued and outstanding and entitled to vote thereat shall constitute a
quorum for such vote. If, however, a quorum with respect to all Series and
Classes, a Separate Class or a Combined Class, as the case may be, shall not be
present or represented at any meeting of the shareholders, the holders of a
majority of the Shares of all Series and Classes, such Separate Class or such
Combined Class, as the case may be, present in person or by proxy and entitled
to vote shall have power to adjourn the meeting from time to time as to all
Series and Classes, such Separate Class or such Combined Class, as the case may
be, without notice other than announcement at the meeting, until the requisite
number of Shares entitled to vote at such meeting shall be present. At such
adjourned meeting at which the requisite number of Shares entitled to vote
thereat shall be represented any business may be transacted which might have
been transacted at the meeting as originally notified. The absence from any
meeting of stockholders of the number of Shares in excess of one-third of the
Shares of all Series and Classes, or of the affected Series, Class or Classes,
as the case may be, which may be required by the laws of the State of Maryland,
the Investment Company Act of 1940 or any other applicable law or these Articles
of Incorporation, for action upon any given matter shall not prevent action of
such meeting upon any other matter or matters which may properly come before the
meeting, if there shall be present thereat, in person or by proxy, holders of
the number of Shares required for action in respect of such other matter or
matters. Notwithstanding any provision of law requiring any action to be taken
or authorized by the holders of a greater proportion than a majority of the
Shares of all Series and Classes or of the Shares of a particular Series, Class
or Classes, as the case may be, entitled to vote thereon, such action shall be
valid and effective if taken or authorized by the affirmative vote of the
holders of a majority of the Shares of all Series and Classes or of such
particular Series, Class or Classes, as the case may be, outstanding and
entitled to vote thereon.
EIGHTH: Redemptions and Repurchases.
A. The Corporation shall under some circumstances redeem, and may under
other circumstances redeem or repurchase, Shares as follows:
(1) Obligation of the Corporation to Redeem Shares. Each holder of Shares
of any Series or Class shall be entitled at his option to require the
Corporation to redeem all or any part of the Shares owned by such holder,
upon
-10-
<PAGE>
written or telegraphic request to the Corporation or its designated
agent, accompanied by surrender of the certificate or certificates for such
Shares, or such other evidence of ownership as shall be specified by the
Board of Directors, at a redemption price per Share equal to an amount
determined by the Board of Directors in accordance with any applicable laws
and regulations, subject to the provisions of paragraph B of this Article and
with any procedures or methods further prescribed or approved by the Board of
Directors; provided that (i) such amount shall not exceed the net asset value
per Share determined in accordance with Article NINTH hereof, and (ii) if so
authorized by the Board of Directors, the Corporation may, at any time from
time to time, charge fees for effecting such redemption, at such rates as the
Board of Directors may establish, as and to the extent permitted under the
Investment Company Act of 1940. Notwithstanding the foregoing (or any other
provision of these Articles of Incorporation), the Board of Directors of the
Corporation may suspend the right of the holders of Shares of any Series or
Class to require the Corporation to redeem such Shares (or may suspend any
voluntary purchase of shares pursuant to the provisions of the charter of the
Corporation) or postpone the date of payment or satisfaction upon redemption
of such Shares during any financial emergency.
For the purpose of these Articles, a "financial emergency" is defined as
the whole or part of any period (i) during which the New York Stock Exchange
is closed other than customary weekend and holiday closings, (ii) during
which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Corporation of
securities owned by such Series or Class is not reasonably practicable or it
is not reasonably practicable for the corporation fairly to determine the
value of the net assets of such Series or Class, or (iv) during any other
period when the Securities and Exchange Commission (or any succeeding
governmental authority) may for the protection of security holders of the
Corporation by order permit suspension of the right of redemption or
postponement of the date of payment on redemption.
(2) Right of the Corporation to Redeem Shares. In addition the Board of
Directors may, from time to time in its discretion, authorize the Corporation
to require the redemption of all or any part of the outstanding Shares of any
Series or Class, for the proportionate interest per Share in the assets of
the Corporation belonging to that Series or Class, or the cash equivalent
thereof (being the net asset value per Share of that Class determined as
provided in Article NINTH hereof), subject to and in accordance with the
provisions of paragraph B of this Article, upon the sending of written notice
-11-
<PAGE>
thereof to each stockholder any of whose Shares are so redeemed and upon such
terms and conditions as the Board of Directors shall deem advisable.
(3) Right of the Corporation to Repurchase Shares. In addition the Board of
Directors may, from time to time in its discretion, authorize the officers of
the Corporation to repurchase Shares of any Series or Class, either directly
or through an agent, subject to and in accordance with the provisions of
paragraph B of this Article. The price to be paid by the Corporation upon any
such repurchase shall be determined, in the discretion of the Board of
Directors, in accordance with any provision of the Investment Company Act of
1940 or any rule or regulation thereunder, including any rule or regulation
made or adopted pursuant to Section 22 of the Investment Company Act of 1940
by the Securities and Exchange Commission or any securities association
registered under the Securities Exchange Act of 1934.
B. The following provisions shall be applicable with respect to
redemptions and repurchases of Shares of any Series or Class pursuant to
paragraph A hereof:
(1) The time as of which the net asset value per Share of a particular
Series or Class therein applicable to any redemption pursuant to subparagraph
A(1) or A(2) of this Article shall be computed shall be such time as may be
determined by or pursuant to the direction of the Board of Directors (which
time may differ from Series to Series and Class to Class).
(2) Certificates for Shares of any Series or Class to be redeemed or
repurchased shall be surrendered in proper form for transfer, together with
such proof of the authenticity of signatures as may be required by resolution
of the Board of Directors.
(3) Payment of the redemption or repurchase price by the Corporation or its
designated agent shall be made in cash within seven days after the time used
for determination of the redemption or repurchase price, but in no event
prior to delivery to the Corporation or its designated agent of the
certificate or certificates for the Shares of the particular Series or Class
so redeemed or repurchased, or of such other evidence of ownership as shall
be specified by the Board of Directors; except that any payment may be made
in whole or in part in securities or other assets of the Corporation
belonging to that Series or Class if, in the event of the closing of the New
York Stock Exchange or the happening of any event at any time prior to actual
payment which makes the liquidation of Securities in orderly fashion
impractical or
-12-
<PAGE>
impossible, the Board of Directors shall determine that payment in cash would
be prejudicial to the best interests of the remaining stockholders of that
Series or Class. In making any such payment in whole or in part in Securities
or other assets of the Corporation belonging to that Series or Class, the
Corporation shall, as nearly as may be practicable, deliver Securities or
other assets of a gross value (determined in the manner provided in Article
NINTH hereof) representing the same proportionate interest in the Securities
and other assets of the Corporation belonging to that Series or Class as is
represented by the Shares of that Series or Class so to be paid for. Delivery
of the Securities included in any such payment shall be made as promptly as
any necessary transfers on the books of the several corporations whose
Securities are to be delivered may be made.
(4) The right of the holder of Shares of any Series or Class redeemed or
repurchased by the Corporation as provided in this Article to receive
dividends thereon and all other rights of such holder with respect to such
Shares shall forthwith cease and terminate from and after the time as of
which the redemption or repurchase price of such Shares has been determined
(except the right of such holder to receive (a) the redemption or repurchase
price of such Shares from the Corporation or its designated agent, in cash
and/or securities or other assets of the Corporation belonging to that Series
or Class, and (b) any dividend to which such holder had previously become
entitled as the record holder of such Shares on the record date for such
dividend, and, with respect to Shares otherwise entitled to vote, except the
right of such holder to vote at a meeting of stockholders such Shares owned
of record by him on the record date for such meeting).
NINTH: Determination of Net Asset Value. For the purposes referred to in
Articles SEVENTH and EIGHTH hereof the net value per Share of any Series or
Class of the Corporation's Common Stock shall be determined by or pursuant to
the direction of the Board of Directors in accordance with the following
provisions:
A. Such net asset value per Share of a particular Series or Class on any
day shall be computed as follows:
The net asset value per Share of that Series or Class shall be the quotient
obtained by dividing the "net value of the assets" of the Corporation
belonging to that Series or Class by the total number of Shares of that
Series or Class, as the case may be, at the time deemed to be outstanding
(including Shares sold whether paid for and issued or not, and excluding
Shares redeemed or
-13-
<PAGE>
repurchased on the basis of previously determined values, whether paid for,
received and held in treasury, or not).
The "net value of the assets" of the Corporation belonging to a particular
Series or Class shall be the "gross value" of the assets belonging to that
Series or Class after deducting the amount of all expenses incurred and
accrued and unpaid belonging to that Series or Class, such reserves belonging
to that Series or Class as may be set up to cover taxes and any other
liabilities, and such other deductions belonging to that Series or Class as
in the opinion of the officers of the Corporation are in accordance with
accepted accounting practice.
The "gross value" of the assets belonging to a particular Series or Class
shall be the amount of all cash and receivables and the market value of all
Securities and other assets held by the Corporation and belonging to that
Series or Class at the time as of which the determination is made. Securities
held shall be valued at market value or, in the absence of readily available
market quotations, at fair value, both as determined pursuant to methods
approved by the Board of Directors and in accordance with applicable statutes
and regulations.
B. The Board of Directors is empowered, in its absolute discretion, to
establish other methods for determining such net asset value whenever such other
methods are deemed by it to be necessary or desirable and are consistent with
the provisions of the Investment Company Act of 1940 and the rules and
regulations thereunder and any other applicable Federal securities law or rule
or regulation.
TENTH: Determination Binding. Any determination made by or pursuant to the
direction of the Board of Directors in good faith, and so far as accounting
matters are involved in accordance with accepted accounting practice, as to the
amount of the assets, obligations or liabilities of the Corporation belonging to
any Series or Class, as to the amount of the net income of the Corporation
belonging to any Series or Class for any period or amounts that are any time
legally available for the payment of dividends on shares of any Series or Class,
as to the amount of any reserves or charges set up with respect to any Series or
Class and the propriety thereof, as to the time of or purpose for creating any
reserves or charges with respect to any Series or Class, as to the use,
alteration or cancellation of any reserves or charges with respect to any Series
or Class (whether or not any obligation or liability for which such reserves or
charges shall have been created or shall have been paid or discharged or shall
be then or thereafter required to be paid or discharged), as to the price or
closing bid or asked price of any security owned or held by the Corporation and
belonging to any Series or Class, as to the market value of any security or fair
value of any other
-14-
<PAGE>
asset owned by the Corporation and belonging to any Series or Class, as to the
number of Shares of any Series or Class outstanding or deemed to be outstanding,
as to the impracticability or impossibility of liquidating Securities in orderly
fashion, as to the extent to which it is practicable to deliver the
proportionate interest in the Securities and other assets of the Corporation
belonging to any Series or Class represented by any Shares belonging to any
Series or Class redeemed or repurchased in payment for any such Shares, as to
the method of payment for any such Shares redeemed or repurchased, or as to any
other matters relating to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of Securities or Shares of the Corporation shall be
final and conclusive and shall be binding upon the Corporation and all holders
of Shares of all Series and Classes past, present and future, and Shares of all
Series and Classes are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid. No provision of
these Articles of Incorporation shall be effective to (a) bind any person to
waive compliance with any provision of the Securities Act of 1933 or the
Investment Company Act of 1940 or of any valid rule, regulation or order of the
Securities and Exchange Commission thereunder or (b) protect or purport to
protect any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ELEVENTH: Liabilities of Director or Officer. A director or officer of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a Director or Officer, except
to the extent such exemption from liability or limitation thereof is not
permitted by law (including the Investment Company Act of 1940 as currently in
effect or as the same may hereafter be amended).
No amendment, modification or repeal of this Article ELEVENTH shall
adversely affect any right or protection of a Director or Officer that exists at
the time of such amendment, modification or repeal.
TWELFTH: Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the fullest extent permitted by law (including
the General Laws of the State of Maryland and the Investment Company Act of 1940
as currently in effect or as the same may hereafter be amended) any person made
or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was a Director, Officer
or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a Director, Officer or employee. To the
fullest extent permitted by law (including the General
-15-
<PAGE>
Laws of the State of Maryland and the Investment Company Act of 1940 as
currently in effect or as the same may hereafter be amended), expenses incurred
by any such person in defending any such action, suit or proceeding shall be
paid or reimbursed by the Corporation promptly upon receipt by it of an
undertaking of such person to repay such expenses if it shall ultimately be
determined that such person is not entitled to be indemnified by the
Corporation. The rights provided to any person by this Article shall be
enforceable against the Corporation by such person who shall be presumed to have
relied upon it in serving or continuing to serve as a Director, Officer or
employee as provided above. No amendment of this Article TWELFTH shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment. For purposes of this Article TWELFTH, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
Director, Officer or employee of the Corporation which imposes duties on, or
involves services by, such Director, Officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed to
be indemnifiable expenses; and action by a person with respect to any employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such By-Laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law.
THIRTEENTH: Amendments. The Corporation reserves the right to take any
lawful action and to make any amendment of these Articles of Incorporation,
including the right to make any amendment which changes the terms of any Shares
of any Series or Class now or hereafter authorized by classification,
reclassification, or otherwise, and to make any amendment authorizing any sale,
lease, exchange or transfer of the property and assets of the Corporation or
belonging to any Series, Class or Classes as an entirety, or substantially as an
entirety, with or without its good will and franchise, if a majority of all the
Shares of all Series and Classes or of the affected Series, Class or Classes, as
the case may be, at the time issued and outstanding and entitled to vote, vote
in favor of any such action or amendment, or consent thereto in writing, and
reserves the right to make any amendment of these Articles of
-16-
<PAGE>
Incorporation in any form, manner or substance now or hereafter authorized or
permitted by law.
FOURTEENTH: Corporate Books. The books of the Corporation may be kept
(subject to any provisions contained in applicable statutes) outside the State
of Maryland at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Election of
directors need not be by ballot unless the By-Laws of the Corporation shall so
provide.
FIFTEENTH: Duration. The duration of the Corporation shall be perpetual.
I acknowledge this document to be my act, and state under penalties of
perjury that with respect to all matters and facts therein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects.
DATE: January 25, 1997 BY: /s/ Frank J. Nasta
----------------------
FRANK J. NASTA
